STATE OF FLORIDA
DIVISION OF ADMINISTRATIVE HEARINGS
SHANDS TEACHING HOSPITAL AND | ) | |||
CLINICS, INC., d/b/a SHANDS | ) | |||
REHAB HOSPITAL, | ) | |||
) | ||||
Petitioner, | ) ) | |||
vs. | ) ) | Case | No. | 08-3814CON |
HEALTHSOUTH REHABILITATION | ) | |||
HOSPITAL OF OCALA, LLC AND | ) | |||
AGENCY FOR HEALTH CARE | ) | |||
ADMINISTRATION, | ) | |||
) | ||||
Respondents. | ) | |||
| ) | |||
LEESBURG REGIONAL MEDICAL | ) | |||
CENTER, INC., | ) | |||
) | ||||
Petitioner, | ) | |||
) | ||||
vs. | ) ) | Case | No. | 08-3815CON |
HEALTHSOUTH REHABILITATION | ) | |||
HOSPITAL OF OCALA, LLC and | ) | |||
AGENCY FOR HEALTH CARE | ) | |||
ADMINISTRATION | ) | |||
) | ||||
Respondents. | ) | |||
| ) |
RECOMMENDED ORDER
Pursuant to notice, the Division of Administrative Hearings, by its designated Administrative Law Judge, Charles A. Stampelos, held a final hearing in the above-styled cases on June 9-12, 15-17, 22-26, 29-30 and July 1-2, 2009, in
Tallahassee, Florida.
APPEARANCES
For Shands Teaching Hospital and Clinics, Inc. d/b/a Shands Rehab Hospital:
F. Philip Blank, Esquire Blank & Meenan, P.A.
204 South Monroe Street Tallahassee, Florida 32301
For Leesburg Regional Medical Center, Inc.:
Susan L. St. John, Esquire Amundsen & Smith
502 East Park Avenue Tallahassee, Florida 32302
For HealthSouth Rehabilitation Hospital of Ocala, LLC: Mark A. Emanuele, Esquire
Deborah S. Platz, Esquire Elizabeth Pederson, Esquire Panza, Maurer & Maynard, P.A.
3600 North Federal Highway, Third Floor Fort Lauderdale, Florida 33308
For the Agency for Health Care Administration: Richard Joseph Saliba, Esquire
Agency for Health Care Administration
Fort Knox Building, Mail Stop 3 2727 Mahan Drive, Suite 3431
Tallahassee, Florida 32308 STATEMENT OF THE ISSUE
Whether Certificate of Need (CON) Application No. 10009, filed by HealthSouth Rehabilitation Hospital of Ocala, LLC (the applicant or HS-Ocala) to establish a new freestanding 40-bed comprehensive medical rehabilitation (CMR) hospital in Marion County, Agency for Health Care Administration (AHCA or Agency)
District 3, satisfies, on balance, the applicable statutory and rule review criteria for approval.
PRELIMINARY STATEMENT
In the 2008-1st "Hospital Beds and Facilities" Batching Cycle, the Agency published a zero (0) fixed need for CMR beds in Agency health service planning District 3 (District 3) for the applicable planning horizon.
On June 13, 2008, the Agency issued its State Agency Action Report (SAAR) preliminarily approving HS-Ocala's CON Application.
On July 18, 2008, Shands Teaching Hospital and Clinics, Inc. d/b/a Shands Rehab Hospital (Shands) and Leesburg Regional Medical Center, Inc. (LRMC) filed petitions challenging the Agency's preliminary decision.
On September 15, 2008, Shands and LRMC filed a motion for an order relinquishing jurisdiction regarding whether the Agency's 60-bed minimum requirement (by rule) can be weighed and balanced or is a mandatory rule criterion. The Agency and the applicant filed a joint response opposing the motion. On September 30, 2008, by Order on Motion to Relinquish Jurisdiction, the parties were afforded the opportunity to file supplemental responses, which were filed on November 3, 2008.
On November 18, 2008, a Supplemental Order on Motion to Relinquish Jurisdiction was entered granting the parties the
opportunity to provide evidence during an evidentiary hearing or during the final hearing. The parties agreed that an evidentiary hearing should be held, and, accordingly, an evidentiary hearing was held on February 3, 2009.
During the evidentiary hearing, Shands, LRMC, and the Agency presented the testimony of Jeffrey Gregg, the Agency's Bureau Chief for the Office of Certificate of Need and Financial Analysis. HS-Ocala presented the testimony of Mr. Gregg and Patricia Greenberg, president of National Healthcare Association, Inc. HS-Ocala's Exhibits 1 and 2 were admitted into evidence without objection and Exhibit 3, excerpts from the deposition of Cindy Kelleher, was admitted over objection. A two-volume transcript of the hearing and the exhibits are a part of this proceeding record. At the conclusion of the hearing, an oral ruling was announced denying the motion to relinquish jurisdiction without prejudice.
On February 9, 2009, an Order was entered supplementing the oral ruling. It also allowed the parties at the final hearing to further develop their positions on whether the 60-bed minimum requirement can be weighed and balanced or is a mandatory rule criterion.
On February 11, 2009, official recognition was taken of the SAAR issued by the Agency in CON Application No. 9722 and the Final Order approving the CON application.
On May 21, 2009, Shands and LRMC filed the first of four separate requests for official recognition, items A through L. On May 28, 2009, Shands and LRMC filed a second and third request for official recognition, items M through DD and items EE through LL, respectively. On May 2, 2009, Shands and LRMC filed a fourth request for official recognition, items MM through SS. On May 28, 2009, HS-Ocala and AHCA filed a general response to the first request and on June 3, 2009, HS-Ocala filed a general response to the second, third, and fourth requests for official recognition. On June 4, 2009, an Order was entered taking official recognition of Items A-C, F-L, R-T, W, AA, BB, GG, and MM-SS, with several caveats noted in the Order.
On June 5, 2009, the parties filed a Joint Pre-Hearing Stipulation (JPS) prior to the commencement of the final hearing.
At the final hearing, HS-Ocala presented the testimony of Linda Wilder, senior vice-president for HealthSouth Corporation (HealthSouth) and an expert in CMR hospital operations, development, and nursing; Cynthia Kelleher, vice-president for corporate development for HealthSouth and an expert in CMR development and operations and health planning; Arthur E. Wilson, Jr., senior vice president for HealthSouth for real estate and an expert in land acquisition with an emphasis on
healthcare; Edmond Fay, treasurer for HealthSouth and an expert in financial feasibility with an emphasis on healthcare finance; Jeffrey P. Blackwood, director of design and construction for HealthSouth and an expert in architecture, healthcare facility construction and design; Lori Bedard, CEO for HealthSouth Rehabilitation Hospital-Spring Hill and an expert in CMR administration and operations, CMR staffing, and physical therapy; Bill House, controller for the southeast region for HealthSouth and an expert in healthcare finance, financial feasibility, and CMR finance; Dexanne Clohan, M.D., chief medical officer and senior vice president for HealthSouth and an expert in rehabilitative medicine and quality of care and an expert as a physician; Patricia Greenberg, an expert in healthcare planning, healthcare finance, and healthcare feasibility; Cheryl Miller, national director of therapy operations for HealthSouth and an expert in CMR clinical services and operations with an emphasis in rehabilitation therapy; Lorin Brissett, an expert in traffic engineering; Edward Stall, employed by Healthcare Concepts Group of Dixon Hughes; and Carl Denney a principal for Health InfoTechnics and holder of the MedPar data use agreement (DUR). HS-Ocala presented the rebuttal testimony of Ms. Greenberg and Lori Bedard.
HS-Ocala offered the following deposition transcripts and exhibits (HS Ex.) which were admitted without objection: HS Exs.
63 (Mary Ellen Hatch); 64 (Becky Bradley); 65 (Cheryl Levy);
66 (Dr. James Atchison); 67 (Suzanne Questell); 68 (Rebecca Jones); 69 (Marina Cecchini); 70 (Jeff Gregg); 71 (excerpts) (Dr. Dexanne Clohan); 72 (Allison Lansdowne); and 73 (William Tipton, Jr.).
HS-Ocala Exhibits 2, 4, 5, 5a-5e, 6-9, 10, 16, 18-20, 23,
25, 25e, 25h 25i, 25l, 25n, 25o, 25p, 26-28, 31, 33-43, 45-48,
50-51, 53b, 53c, 54, 59, and 75 were admitted without objection. The following HS-Ocala Exhibits were received into evidence over objection: 1, 9a-9c (confidential), 11, 24, 25m, 32, 44, 49 (p.
495 after PMATF), 53, 53a, 70 and 71. HS-Ocala Exhibits 25m1- m3, 74 (incomplete) and 76 (reserved ruling) were identified, but not admitted into evidence. (HS-Ocala Exhibit 76 is admitted.)
Shands and LRMC called the following witnesses: Michael Ridenour, an expert in the area of assessment of patients for admission to skilled nursing facilities; Richard L. Soehner, director of admissions at TimberRidge Nursing and Rehab Center (TimberRidge), a skilled nursing facility, and an expert in the administration of skilled nursing facilities; James W. Atchison, M.D., an expert in the area of the provision of CMR services; Suzanne Questell, director of rehabilitation and case management
at Shands Rehabilitation Hospital and an expert in the admission and case management of patients in a CMR hospital; Harriet Gill, a principal for Gill Consulting and an expert in health planning, including CMR, long-term care, home health and nursing home services; Rebecca Jones, director of LRMC's Ohme Rehabilitation Center; Ladonna Kellum, employed with Munroe Regional Medical Center and an expert in the case management of acute care patients; Armand Balsano, an expert in health planning, financial feasibility and CON preparation and Jeffrey Gregg.
Shands and LRMC introduced the deposition transcript of Gayla Beach along with attached exhibits as Shands/LRMC Ex. (SL Ex.) 252. The following Shands/LRMC Exhibits were admitted without objection: 82, 85-87, 90-91, 93, 93.a., 94-95, 97, 101-
105, 108, 112, 114-118, 121-135, 140-141, 163-167, 176-180, 189-
192, 196-197, 200-203, 206-207, 221-222, 224, 229, 283, 283a,
and b.
Subject to ruling on various objections, Shands/LRMC Exhibits 45-46, 49-50, 88-89, 92, 169-175, 199, 204-205, 208-
220, 230, 2331/, 234, and 242 were admitted. Shands/LRMC Exhibit
78 was proffered, but not admitted. Shands/LRMC Exhibits 1, 2, 25, 32, 37, 56, 63-66, 68, 168 and 168a, and 239 were identified, but not admitted into evidence.
The transcript (T.) (Volumes 1 through 20) of the final hearing was filed with DOAH on August 4, 2009. The parties were directed to file their proposed recommended orders on
September 3, 2009. On August 11, 2009, an Order was entered granting an extension until September 14, 2009.
All citations are to the 2008 Florida Statutes unless otherwise noted.
On September 14, 2009, HS-Ocala (joined by the Agency) filed a joint proposed recommended order and a memorandum of law. Shands and LRMC filed a joint proposed recommended order and a memorandum of law. All post-hearing submissions have been considered.
FINDINGS OF FACT
The Parties
The Applicant
HS-Ocala is a wholly-owned subsidiary of HealthSouth Corporation (HealthSouth). Founded in 1984, HealthSouth is the nation's largest provider of inpatient rehabilitative healthcare services in terms of revenue, number of hospitals, and patients treated.
HealthSouth employs over 22,000 people in approximately
93 rehabilitation hospitals, six long-term care hospitals, approximately 48 outpatient rehabilitation satellites and 25
hospital-based home health agencies across 26 states and Puerto Rico.
All HealthSouth facilities, including the facilities in Florida, are either accredited by the Joint Commission (f/k/a the Joint Commission on Accreditation of Healthcare Organizations – JCAHO) or the Commission on Accreditation of Rehabilitation Facilities (CARF) or both.
HealthSouth has created specific programs for different conditions, including a specialized Stroke Rehabilitation Program nationwide. HealthSouth is one of only four hospital companies receiving Joint Commission Stroke Rehabilitation Certification: 21 of 25 hospitals that have this certification are HealthSouth facilities.
HealthSouth owns and operates nine freestanding CMR hospitals in Florida. HealthSouth also owns and operates a 40- bed long-term acute care hospital in Sarasota and owns eight outpatient centers in the state.
HealthSouth will provide patients with an interdisciplinary team that includes the services of a physician/physiatrist, physical therapists, occupational therapists, speech/language pathologists, psychologists, rehabilitative nurses, case managers, therapeutic recreation specialists, dieticians, and respiratory therapists.
Shands
Shands Teaching Hospital and Clinics, Inc., was incorporated in 1979 as a Florida not-for-profit corporation. Shands is located in Gainesville, Florida, and operates a health care delivery system that includes the flagship teaching hospital for the School of Medicine of the University of Florida and Shands Rehab Hospital (a division of Shands), a 40-bed freestanding inpatient rehabilitation hospital.
Shands serves patients throughout District 3, as well as other areas of Florida. Co-located in the same building with Shands Rehab Hospital is Shands Vista (a division of Shands), an inpatient psychiatric and substance abuse facility licensed to operate 81 beds, of which 57 are psychiatric and 24 are substance abuse.
Shands also operates Shands AGH, a 367-bed acute care community hospital in Gainesville; Shands at Lake Shore, a 99- bed acute care community hospital located in Starke, Florida; and Shands Live Oak, a 15-bed acute care hospital located in Live Oak, Florida.
Another subsidiary of Shands is Shands Jacksonville Medical Center, a 696-bed teaching hospital in Jacksonville, Florida.
Shands Rehab is accredited by the Joint Commission, the Florida Brain and Spinal Cord Injury Program and CARF. Shands Rehab offers a full array of CMR services.
Patients at Shands Rehab are served by an interdisciplinary team.
LRMC
LRMC is a 309-bed acute care hospital located in Leesburg, Florida. LRMC provides a broad array of services including open-heart surgery and neurosurgery and also offers stroke specialty service.
LRMC's CMR unit, also known as the Ohme Rehabilitation Center (Ohme), is a 15-bed hospital-based CMR unit located in its North Campus in Leesburg, Florida. Ohme is accredited by the Joint Commission and CARF.
CARF has also accredited Ohme as a stroke specialty program.
LRMC is part of the Central Florida Health Alliance, which also includes The Villages Regional Hospital (120 beds) located within the development known as The Villages, located in Lake, Sumter, and Marion Counties, and north of LRMC. The Villages is located approximately 15-to-20 minutes from LRMC.
Ohme's patients work with an interdisciplinary team of professionals, including a medical director, case managers, registered nurses, rehabilitation techs, certified nursing
assistants, physical therapists, occupational therapists, speech/language pathologists, recreational therapists, rehabilitation therapists, social workers, and dieticians.
AHCA
AHCA is the state health planning agency and administers the CON program pursuant to the Health Facility and Services Development Act, Sections 408.031-.0455, Florida Statutes.
CMR Services and Facilities
CMR facilities are licensed pursuant to Chapter 395, Florida Statutes. CMR services are defined by Section 408.032(17), Florida Statutes, as tertiary health services, which "means a health service which, due to its high level of intensity, complexity, specialized or limited applicability, and cost should be limited to, and concentrated in, a limited number of hospitals to ensure the quality, availability, and cost- effectiveness of such service." Id. The services are integrated and intensive, provided in an inpatient setting by a multidisciplinary team to patients with severe physical disabilities, such as stroke, spinal cord or brain injury, congenital deformities, amputation, major multiple trauma, femur fracture, neurological disorders, polyarthritis, and burns. The patients served by CMR facilities are clinically complex and
require an acute care level of nursing and rehabilitative therapies.
Facilities such as the one proposed are reimbursed prospectively by the Medicare program under the inpatient rehabilitation prospective payment system, 42 C.F.R. Part 412, and are exempt from the Medicare inpatient prospective patient system for short-term acute care inpatient hospitals.
To be eligible for Medicare reimbursement as an inpatient rehabilitation facility, 60 percent of the patients admitted to a CMR facility must have a medical condition that falls within one or more of 13 diagnoses established by the Centers for Medicare and Medicaid Services (CMS), which indicate a need for intensive rehabilitative services. These are commonly known as the "CMS-13" criteria. The CMS-13 criteria include: stroke, spinal cord injury, congenital deformity, amputation, major multiple trauma, femur fracture (hip fracture), brain injury, neurological disorders, burns, active polyarthritis, systemic vasculidities, advanced osteoarthritis, and knee or hip replacement with additional co-morbidities.
If a CMR facility falls below the 60 percent threshold, it will be reimbursed by CMS as a short-term acute care inpatient hospital.
In addition to the above requirements, the federal government mandates that a patient admitted to a CMR facility
must require an acute care level of nursing services; that physicians determine the admission of the patient to be medically necessary; and that the patient be able to tolerate three hours of therapy services per day (900 minutes over five days) over a five-day period administered by licensed therapists. Therapy services included in the three-hour requirement include physical, occupational, speech, recreational, neuropsychological, and prosthetics and orthotic. Services or treatments rendered by aides may not be included in the three-hour per day minimum therapy requirement; however, services or treatments provided by licensed assistants can be included in the three-hour per day requirement.
Unlike acute care services, access to CMR services is non-emergent. The process used to identify and admit patients from an acute care setting to a CMR facility begins early in the patient's stay, e.g., at an acute care facility. (Patients can be admitted from other entities or from home, but most are admitted from hospitals.) Typically, a patient will be assessed upon admission to an acute care hospital to determine what services they will need upon leaving the hospital. The assessment process involves discharge planners, case managers, physicians, nurses, the patient's insurance provider, and the patient and his or her family.
In making the decision as to where a patient should be discharged, those involved in the decision-making process determine the amount of therapy the patient can tolerate; the age of the patient; and any co-morbidities or other conditions the patient may have. Once a decision is made as to what types of post-acute care services are needed, the acute care hospital's discharge planner or case manager is charged with coordinating the required care for the patient.
CMR services include the close involvement of a physician (physiatrist) and the availability of 24-hour nursing care because the patients requiring CMR services typically have significant medical conditions and co-morbidities.
In the CMR setting, nurses are trained to be a part of the entire therapeutic team.
In coordinating post-acute care for a patient, some Marion County acute care hospitals such as Munroe Regional use the Allscripts or ECIN electronic referral system. Other local hospitals, such as Ocala Regional and West Marion, do not. However, the director of admissions at TimberRidge has access to patient charts at Ocala Regional and West Marion. (It appears that eight Ocala-area SNFs are listed on the ECIN system.)
The ECIN system allows hospitals to transmit a patient's medical information to post-acute care facilities for consideration for admission in electronic format. The system
also allows a hospital and the potential discharge facility to communicate if additional information or explanation is needed. The system is viewed as a valuable tool because it allows CMR facilities to obtain detailed information on potential admissions without having to travel to the referring facility to review medical records. The Allscripts system is also utilized by a CMR facility to assist with placement decisions at the time the patient is discharged from the CMR facility.
Once the patient is referred to a CMR facility, the CMR admissions team receives the patient's information and begins its own assessment to determine whether the patient is a good candidate for admission.
Typically, a nurse liaison is assigned to a referred case and gathers information on the patient to be used in the admissions decision.
A patient assessment sheet is typically completed and the CMR admitting physician will be called on to review the information.
The admitting physician will look for information regarding the nature and extent of a patient's illnesses and whether the patient had any complications that could affect the patient's ability to participate in rehabilitation. The ability to participate in rehabilitation is significant to a CMR
facility because the patient is typically expected to begin exercising as soon as possible after admission.
All of the above factors are considered in addition to the CMS-13 criteria. Even if a patient falls within one of the CMS-13 diagnosis codes, the CMR facility staff also determines if the patient requires at least two disciplines of therapy as required by Medicare. A patient who does not meet this criterion may not be considered a candidate for admission to a CMR facility notwithstanding the fact that he or she may fall within one of the CMS-13 diagnoses.
Utilizing all of the above indicators, a final decision is made and communicated to the acute care facility or other referring entity to coordinate the transfer of the patient or re-refer the patient to a more appropriate setting.
When a patient is admitted to a CMR facility, a patient assessment instrument that captures the patient's diagnostic and functional abilities must be completed. During this admission assessment process, the patient's level of independent functioning is measured for a number of activities. This comprehensive review of the patient's functions is performed within three days of admission. This measurement is known as the patient's functional independence measurement (FIM) score. The FIM score is both a quality and outcome and progress measure.
The FIM measures 18 items on a scale of 1 (most severe) to 7 (independent).
FIM scores are not utilized in the skilled nursing home industry, which has made it more difficult to compare the care delivered in CMR facilities and skilled nursing homes.
All CMR providers utilize FIM scores. The FIM score in part determines the level of reimbursement the facility receives from Medicare because it indicates that the patient will typically require more services. FIM scores are measured again upon discharge.
The Proposal
HS-Ocala proposes to build a new 40-bed freestanding CMR hospital in Ocala, Florida, at a cost of $19,620,449 in a 49,900 square foot facility. All of the beds will be private. This prototype has been built by HealthSouth at least ten times since 2001, including twice within Florida.
HS-Ocala plans to build the hospital on 6.2 acres located on Southwest 19th Avenue Road in, Ocala, Florida. The property is a portion of the approximately 7.63-acre tract identified as Marion County tax parcel number 23721-003-00. HealthSouth has an active contract to purchase the property.
The projected construction cost contained in the application is $9,237,800 or $185.12 per gross square feet.
The applicant agreed to condition the proposed project on the following: providing a minimum of 2.5 percent of the hospital's annual inpatient patient days to Medicaid and charity patients; implementing a Stroke Rehabilitation Program to begin upon licensure; obtaining Joint Commission Certification of its stroke rehabilitation program; and providing an AutoAmbulator and other appropriate technology upon licensure.
In its preliminary approval of the application, AHCA conditioned the approval on the conditions indicated above, and that the facility is located in close proximity to the intersections triangulated by Interstate 75, SR 200, SR 40, and
U.S. Highway 27.
The applicant proposes to offer a full range of CMR services.
The applicant does not propose to have a spinal cord or brain injury unit. These patients are typically transferred to a facility like Shands Rehab consistent with the tertiary nature of CMR services.
HealthSouth CMR facilities have traditionally offered high quality CMR services at all of its facilities, including the nine facilities in Florida.
Consistent with the general description of CMR services provided herein, HealthSouth has developed diagnostically distinct programs which offer specialized
inpatient and outpatient services with an interdisciplinary approach. These programs are developed and implemented at each HealthSouth facility consistent with the needs of the market.
These specific programs improve outcomes for the patients.
HealthSouth's interdisciplinary therapy team primarily consists of physical, occupational, and speech therapists. The physical therapy team integrates with the other interdisciplinary team members, including physicians, nurses, prosthetists, orthotics, and other team members.
From the initial assessment, the interdisciplinary team develops a plan of care through treatment interventions provided to the patient. A comprehensive review of the patient's functionality, including the FIM score determination, is performed on each patient is performed within three days of admission. Throughout the patient's stay, patient goals are constantly being assessed and implemented. Conferences are held with the patient and family to make sure the goals are being accomplished. The team also evaluates the home setting and prepares the patient and the family for discharge.
HealthSouth's main mission is to provide quality outcomes. The outcomes are measured on admission, throughout the patient's stay and on discharge. HealthSouth takes the necessary measures to assure that it provides the patient with at least three hours of therapy a day.
HealthSouth uses state-of-the-art technology as part of its ongoing quality initiatives. The Ocala facility will have access to state-of-the-art equipment including the AutoAmbulator, a device developed and implemented by HealthSouth and only offered at most of the HealthSouth facilities in the United States. (The AutoAmbulator is a sophisticated treadmill using the therapeutic concept of body weight supported ambulation and robotics to help patients with gait disorders. The equipment has produced quality outcomes for HealthSouth patients. There are no studies that compare the use of this device with other similar devise such as a LocoMat.)
HealthSouth also proposes to offer other technology such as the Balance Master (assessment of balance); EquiTest (used to diagnose and treat imbalance and postural instability); Visipitch (computerized analysis of voice); SaeboFlex wrist splint and exercise station (promotes increased function in shoulder, wrist, elbow, and hand); Interactive Metronome (promotes motor learning); and VitalStim (targets swallow function); and Bioness (helps patients regain lost mobility for upper and lower extremities). See T. 707-16.
HealthSouth tracks and measures quality provided to the patient pursuant to its contract with the Uniform Data System for Medical Rehabilitation, which is the most widely used system in the country. This system tracks function outcomes for
CMR patients through the use of FIM data captured from approximately 900 rehabilitation hospitals in the United States.
HealthSouth monitors patient satisfaction outcomes.
Each HealthSouth CMR facility has a quality review council that examines patient safety measures, FIM outcome data, patient satisfaction data, and infection controls.
HealthSouth encourages family participation before admission, during treatment, and after the patient is discharged from one of its CMR facilities. Travel barriers may impact the ability of family members to access a CMR facility.
District 3 and the Proposed Service Area (PSA)
District 3 is the largest health service planning district in the state of Florida composed of 16 counties, including Hamilton, Suwannee, Lafayette, Dixie, Columbia, Gilchrist, Levy, Union, Bradford, Putnam, Alachua, Marion, Citrus, Hernando, Sumter, and Lake. § 408.032(5), Fla. Stat.
District 3 encompasses more than 11,000 square miles with nearly 1.6 million residents. Much of District 3 is rural covering approximately 20 percent of the state's land areas, but home to approximately eight percent of the state's population. Marion County is the most populated county within District 3 with more than 317,000 residents.
There is a natural geographic barrier in the area with the forest to the east of Marion County.
The service area for the proposed facility defined in the application comprises zip codes in Marion County and the easternmost portion of Levy County. A portion of zip code 32784 is located in Lake County. As of calendar year 2007, the total population for all of the zip codes within the PSA was 334,868 and is projected to increase to 377,543 by calendar year 2012, a
12.7 percent increase.
The applicant projects receiving approximately 95 percent of its patients from within the PSA.
Ms. Kelleher and Ms. Greenberg developed the PSA with the assistance of Wanda Pearman of Dixon Hughes. The process included the creation of various maps outlining the service area as it evolved prior to filing the application.
The process utilized an August 2007 market analysis performed by Dixon Hughes on 27 or 28 markets across the United States, including the Marion County/Ocala market. The August 2007 market analysis was not performed specifically for the purpose of the CON Application. Rather, it was performed on potential markets across the country as a "50,000-foot" level market analysis of demographics and lack of CMR services in an effort to identify potential markets. HealthSouth would use the information to look further into each identified potential market and decide what the appropriate service area would be.
Beginning on January 22, 2008, a number of zip codes were realigned and deleted from the original Dixon Hughes document to form the service area identified in the application.
The HealthSouth team examined existing in and out- migration patterns for existing hospitals within Marion County. Existing roadways were driven. Local providers, including local doctors, were contacted and provided favorable comments regarding the proposed project.
The Villages were excluded because they were not in close proximity to Ocala. Any area south of the Marion County line was also excluded due to travel distances.
The analysis led to the conclusion that the Ocala area has developed into its own medical market and that the placement of a CMR facility in the Ocala area would not overlap with Ohme's or Shands Rehab's service areas such that their CMR services (quality of care, e.g.) would be compromised in any significant way.
It was also important to the applicant that trauma patients, spinal cord and brain injury patients would continue to go to the Shands system for their post-acute care.
From a demographic standpoint, 2007 data indicated that approximately 23 percent of the residents in the Ocala area are 65 years of age or older (increasing to approximately 25 percent by 2012) compared to the statewide average of 17
percent. This age cohort is expected to increase approximately
20 percent between 2007 and 2012 with some zip codes increasing between 24 and 37 percent.
Approximately 75 percent of CMR patients are covered under Medicare and Medicare managed care.
Statutory and Rule Review Criteria
Section 408.035(1)(a): The need for the health care facilities and health services being proposed.
"A favorable need determination for proposed new or expanded [CMR] inpatient services shall not normally be made unless a bed need exists according to the numeric need methodology in paragraph (5)(c) of this rule." Fla. Admin. Code
R. 59C-1.039(5)(a). "The future need for [CMR] inpatient services shall be determined twice a year and published by the agency as a fixed need pool for the applicable planning horizon." Fla. Admin. Code R. 59C-1.039(5)(b).
Pursuant to the Agency's need methodology, Florida Administrative Code Rule 59C-1.039(5)(c), the Agency published a fixed need pool of zero (0) for CMR beds for District 3 in the CON batching cycle at issue in this case in the Florida Administrative Weekly, Volume 34, Number 4 (January 25, 2008). By Agency precedent, this determination creates a presumption of no need. The applicant seeks approval based on "not normal" circumstances.
Generally, pursuant to Subsection 408.035(1)(a), the need for a tertiary health service such as CMR is to be determined on a district-wide basis. See T. 2324, 2327-2332. But see Conclusions of Law 349-52. By its express terms, Subsection 408.035(1)(b) requires consideration of the stated criteria in reference to the service district of the applicant.
Using the applicant's service area approach yields bed need projections in excess of those established by the Agency's rule, in large part because the applicant established a PSA using a series of zip codes in an area where there is no existing CMR facility. The applicant ultimately concluded that the PSA is a unique (and not-normal) market for which CMR services are unavailable.
The Agency preliminarily approved the project based on the applicant's representations in its CON application of need for the service in the 25 zip code area. See generally T. 2327- 2390. The Agency considered several factors including the disparity in the "conversion rate" of patients who reside in the
25 zip codes comprising the applicant's PSA compared to other areas of the state where HealthSouth operates CMR hospitals; transportation difficulties; letters of support; and physician concerns in transferring patients to existing hospitals in the District.
B. Section 408.035(1)(b): The availability, quality of care, accessibility, and extent of utilization of existing health care facilities and health services in the service district of the applicant.
Availability, accessibility, and utilization
There are four acute care hospitals, ten skilled nursing facilities, and one long-term care hospital within the PSA.
The acute care hospitals are: Munroe Regional Medical Center (Munroe Regional)(421 beds); Ocala Regional Medical Center (ORMC) (200 beds); West Marion Community Hospital (West Marion)(70 beds), a satellite of Ocala Regional Medical Center; and Nature Coast Regional Hospital (Nature Coast) (40 beds). The long-term care hospital, Kindred Hospital Ocala (31 beds), is located on the fifth floor of Munroe Regional. There is no persuasive evidence that area hospitals are experiencing problems placing patients in post-acute care settings.
Munroe Regional has an average daily census of approximately 300 and offers open-heart surgery, cardiovascular services and neurological services, and orthopedic surgery.
HS-Ocala's application contained numerous letters of support, including letters from ORMC and West Coast.2/ See HS Ex. 1 at 663-705 and JPS at HealthSouth's exhibit list, p. 1,
n.1. Most of the letters were not authenticated. There was no objection to letters of support submitted by Drs. Tabbaa and
Canon and the letter of support submitted by Linda F. Berry, RN, PCRM, employed with the University of Florida College of Medicine, Department of Orthopaedics and Rehabilitation, apparently as a case manager. Id. T. 497-98, 504-505, 525-27, 579; HS Ex. 1 at 664 and 667; HS Ex. 24.
There are three existing CMR facilities in District 3.
HealthSouth Rehabilitation Hospital-Spring Hill (Spring Hill), in Hernando County, is a 70-bed (16 private and 54 semi- private rooms) freestanding rehabilitation hospital and has been approved to add ten beds pursuant to a CON exemption. Spring Hill is approximately 70 miles from the downtown Ocala area. Spring Hill's primary service area is Hernando County and a small piece of Pasco County and Spring Hill receives 85-to-90 percent of its patients from its primary service area. (In seeking approval of the original 60-bed Spring Hill hospital around the Fall of 1999, the applicant used Marion County data to support its argument that there was a need for the facility and included Marion County as part of its defined service area.)
Between 2004 and 2007, Spring Hill comprised 60 beds, a majority of which were semi-private. During that same time period, the average daily census at Spring Hill ranged from 50 to 57, with the average number of available beds ranging from three to ten. In 2008 and thus far in 2009, Spring Hill was at
92 and 94 percent occupancy, respectively, with an ADC of 64 and
66 for these years for 70 beds.
Shands Rehab Hospital is a 40-bed freestanding rehabilitation hospital, and is part of the larger Shands Health Care System (with over 1,000 acute care beds) described above and which provides over 70 percent of the referrals to the Shands Rehab unit. Shands Rehab has 16 private and 24 semi-private beds.
Shands Rehab is located approximately 40 miles from the downtown Ocala area or the center point of the PSA.
There are two primary physician groups that work within Shands Rehab: University of Florida Division of Physical Medicine and Rehabilitation, which includes Shands Rehab's medical director, Dr. James Atchison and Southeastern Integrated Medical (SIMED). While it may vary from week to week, SIMED covers approximately 60 percent of the inpatient population at Shands Rehab, whereas Dr. Atchison's group has the remaining 40 percent.
The two physician groups have agreed to accept only two unfunded (charity) patients each "at any particular time," although for key diagnostic groups that are seen regularly, such as brain and spinal cord injury and stroke patients, the physicians will consider serving them if Shands Rehab is the best facility for the patient. Dr. Atchison further explained that if Shands Rehab did not have an opening for an unfunded patient on a
particular day, the referring facility would be told to consider waiting a few days to refer a patient as an alternative pathway with the decision to refer or not left with the referring facility. No such restriction exists for other patients including Medicaid patients. (From approximately April 2006 through November 2008, it appears that a few patients were not admitted to Shands Rehab because the allotted charity beds (not other beds) were full, including approximately three patients at Munroe Regional and one patient from West Marion Community Hospital.)
Between 2004 and 2007, Shands Rehab operated with an average daily census (ADC) of between 26 and 31, and runs at functional capacity at an ADC of 39 for its 40 beds. T. 1653, 1688; HS Ex. 66 at 25, 41, and 53. But see SL Ex. 212 for years 2004 through 2007 - ADC range of 25 to 28 and an average of 12 to
15 available beds. For 2008, the ADC was 29 and up to 31 in 2009. HS Ex. 69 at 144.
Shands Rehab has a strong referral base from within the Shands Health Care System. Shands Rehab does not admit many patients from the Ocala area acute care hospitals and has not been successful in increasing referrals from the "northern tier" in and around Lake City, and "southern tier" in and around the Ocala area, notwithstanding a potential patient population to be served. But see Findings of Fact (FOF) 319-20.
LRMC's Ohme Rehabilitation Center is a 15-bed unit (seven private and eight semi-private beds) located in the north campus of and approximately one mile from LRMC. Ohme is located approximately 50 miles from the downtown Ocala area. The CMR unit is located on the third floor of a building that also houses the 120-bed nursing home on the second floor. The gym for the CMR unit is located on the first floor of the same building.
Between 2004 and 2007, the ADC at LRMC ran between 11 and 12 beds and the available number of beds ranged between three and four.
In or around 2006, LRMC received an exemption from the Agency to add seven beds to its existing CMR facility. However, at the time of the final hearing the exemption granted to LRMC had expired. It appears that LRMC's senior executive team decided not to add the beds in light of a declining census and because of the significant expense to satisfy code requirements. LRMC considers the Spring Hill location as a distinct medical market.
Since 2005, approximately 90 percent of Ohme's CMR patients were admitted from hospitals within the LRMC system or hospitals within the Lake County area. Since 2005, between 69 to 77 percent of the CMR patient admissions have come from LRMC. See also FOFs 328-339. A negligible number of patients have been referred to and admitted from Ocala area acute care
hospitals, i.e., Munroe Regional, Nature Coast Regional Hospital, Ocala Regional Medical Center, and West Marion Community Hospital.
The persuasive evidence indicates that LRMC does not do any meaningful marketing in the Ocala area for CMR patients.
Sixteen CMR beds have also been approved for Seven Rivers Medical Center in Citrus County. The Seven Rivers unit was scheduled to become operational by June 2009. However, testimony indicated that the beds were still under development at the time of the hearing.
For the year ending December 31, 2007, the occupancy rate for all CMR beds in District 3 was 82 percent.
As noted, there are ten skilled nursing facilities in the PSA with 1,552 licensed beds.
TimberRidge Nursing and Rehabilitation Center (TimberRidge), is a skilled nursing facility (SNF) and comprises
180 beds (174 semi-private and six private) and owned by Munroe Regional. TimberRidge provides nursing and rehabilitative care based on a patient's needs and is Medicare-certified.
TimberRidge is located on the west side of Interstate
75 next to Munroe Regional's new freestanding emergency department. TimberRidge is not at functional capacity and had
50 available beds at the time of this hearing.
Approximately 40-to-50 percent of TimberRidge's admissions come from Munroe Regional and approximately 25-to-30 percent from Ocala Regional and the same percentage from West Marion. (If Munroe Regional has 100 discharges, TimberRidge receives 20 percent of those which comprise 40-to-50 percent of TimberRidge's admissions.) TimberRidge and Oakhurst Rehab and Nursing Center are the Ocala area largest SNF recipients of discharges from Munroe Regional.
TimberRidge has not had a physiatrist on staff for approximately seven years.
The applicant argued that approval of the proposed facility would promote quality of care based on the assertion that patients in the PSA are not being admitted to a CMR facility but are instead admitted to a "lesser, and often inappropriate, level of care" such as long-term acute care hospitals or SNFs. However, this contention was not persuasively supported by the facts.
The issue of whether patients are better served in one post-acute care setting versus another, and in particular, whether particular patients should be admitted to SNF or CMR facilities, including resulting outcomes, is a debated topic.
In response to the debate, CMS has engaged the services of Research Triangle Institute (RTI) to conduct a study known as the CARE Project. The CARE Project was created to
undertake research to develop a common tool or instrument that could be used to assess patients in multiple settings so that home health agencies, CMRs, and SNFs would be able to report comparative data.
CMRs and SNFs provide different levels of care service. SNFs, even when providing rehabilitation services and therapies, do not provide the level of intense interdisciplinary rehabilitation services provided at CMR facilities.
In general, a SNF, such as TimberRidge, offering rehabilitation services in a distinct portion of the SNF, provides appropriate rehab care for the patients it serves. TimberRidge, however, is not a pure substitute for a CMR facility.
Richard Soehner, the Administrator for TimberRidge testified in opposition to HS-Ocala's representation that SNFs are often inappropriate levels of care for patients needing inpatient rehabilitation.
TimberRidge's 180 beds are split into three 60-bed wings -- West, East, and South. The West Wing houses the most acute, intensive rehabilitation patients. Additionally, the rehabilitation population overflows into the East Wing. The remainder of the East Wing and South Wing house long-term residents.
TimberRidge provides nursing and rehabilitation services to geriatric patients in and around Ocala.
Employees of TimberRidge are involved in daily communications with discharge planners at hospitals, and help to determine whether TimberRidge can accept a resident. A registered nurse will often visit patients in hospitals and discharge planners to gather necessary information for admission to TimberRidge.
TimberRidge employs or contracts with 30 to 35 therapists and has a medical director. Rehabilitation therapy disciplines include physical, occupational, and speech therapy. Therapists are available seven days a week and coordinate a patient's particular clinical needs with one another. Nursing care is provided 24-hours a day.
After admission, each patient at TimberRidge undergoes a lengthy assessment process by therapy staff, nursing staff, social services, activities, dining services, and dietician. Then, a care plan is formed that outlines the goals and objectives and how these goals and objectives are going to be reached by the interdisciplinary care plan team.
Physician orders and a therapist's judgment are used to determine how much therapy a patient can tolerate and what the patient needs. TimberRidge also receives input from families from the assessment standpoint. Families are
encouraged to visit, attend and participate in care-planning meetings. Families are a key component of successful rehabilitation. Family members are also provided training by nurses or therapists. In like manner, families are an important component of the patient services offered at CMR facilities.
Mr. Soehner reviewed HS-Ocala Exhibit 1, Bates Stamp 556, which contains the chart summarizing differences in care between area SNFs and Florida CMR hospitals. Although not a clinician, he testified the average charges for therapy of $62 per patient day indicated in the exhibit is diluted because the calculation includes patient or resident days related to patients not receiving rehab therapy.
As a SNF administrator, Mr. Soehner knows of no correlation in the size of gym space or lack of gym space being detrimental to care provided. Therapy is still provided with successful outcomes. (On average, among CMR facilities in Florida, more space is devoted to gym space as a percent of the total square footage, than in Ocala area SNFs.)
The chart on HS-Ocala Exhibit 1, Bates Stamp 556, states that the average pharmacy and lab charges are $16 and $2 a day, respectively, which would indicate that the patients are not receiving very much medication or lab work. However, this data tends to dilute the numbers for pharmacy and lab charges
per patient day because the total patient days used includes long-term patients.
Notwithstanding the testimony of Mr. Soehner, Ms. Greenberg's analysis of the different levels of service generally offered at SNFs and CMR facilities is at least consistent with the finding that CMR facilities offer more
intense levels of rehabilitation services (for the categories shown) to its patients.
Patients are admitted to a SNF. The first five days are considered to be an initial assessment period.
TimberRidge provides different levels of rehabilitation based on a patient's needs. The Medicare program has established Resource Utilization Groups or RUGs. SNFs are reimbursed according to dollar allocations among the various RUG codes. But, RUGs are not outcome based. Each code represents a specific skilled level code or reimbursement code. The "R" codes are rehabilitation codes.
There are several rehabilitation RUGs. There are five ultrahigh categories, i.e., RUX, RUL, RUC, RUB, and RUA. This means that each patient in this ultrahigh category must receive a minimum of 720 minutes (12 hours) of therapy over a five-day period (within a seven-day period) and includes more than one discipline. This also equates to 2.40 hours per day.
(The rehab very high category requires 500 minutes of therapy per week.)
In contrast, a person in a CMR facility must be able to tolerate three hours per day of therapy over a five-day period, whereas a patient receiving rehab in a SNF may have a minimum of approximately 2.40 hours per day if they are classified in the ultra high category.
There are other levels of rehabilitation categories very high, high medium, and low, with RUG subcategories within each. For example, there are five RUG classifications within the very high category, e.g., RVC, RVB, RVA, RVX, and RVL.
The RUGs categories are represented by a three-digit alpha code, with the first two digits representing the level of rehab, e.g., RU being rehab ultrahigh, and the last character, C, B, A, X, or L representing activities of daily living scores and the nursing care needs of the patient.3/
The RUG category for a patient can change throughout their stay. In other words, a patient may initially be assigned and placed in an ultra-high RUG category and later assigned a lower category.
The RUG factors, like RUC (ultra high), are a measure of the intensity of therapy. It does not necessarily mean that the patient is any sicker than other patients, but it does mean that at least they have the stamina to tolerate more therapy.
Medicare reimburses SNFs for rehabilitation services based on RUG scores and the amount of rehabilitation therapy a patient receives, whereas Medicare pays a CMR facility a total amount depending on a particular diagnosis of a patient.
Like Ms. Gill, Mr. Soehner testified that reimbursement is determined by a comprehensive assessment, including the amount of rehabilitation projected or provided. Although it is not an outcome based reimbursement system, the RUG system is designed to reimburse a skilled nursing facility based on the resources a patient is expected to consume while admitted.
TimberRidge's goal is to provide patients the services needed to attain and maintain the highest level of functioning the patient can sustain regardless of whether TimberRidge is reimbursed for it. In rare cases, this goal may allow for three hours of therapy a day, but for most cases, the patient cannot tolerate that intense level of care nor is it medically necessary.
Ms. Gill examined data regarding rehabilitation patients admitted and discharged from TimberRidge by RUG classification based on age and length of stay during 2008.4/ Patients fitting within the rehab ultra high and very high, high, medium, and low were separated from the other rehab categories. The ultra-high category was chosen because any
patient admitted to a SNF and deemed appropriate for any category lower than ultra high means that the patient cannot tolerate any more than 500 minutes (two and a half hours of therapy a day) of therapy a week, which would disqualify them from admission to a CMR facility. Thus, the ultra-high category was chosen as a proxy for CMR services, at least for therapy utilization.
Approximate 35.8 percent of the ultra-high patients were over the age of 75 and 28.9 percent were 85 and older. Approximately 60 percent of the patient population is over 75 years of age, which is different from what one would normally see in a CMR facility.
Of the 881 total rehab patients admitted and discharged from TimberRidge in 2008, 461 (or approximately 52 percent) were placed in the ultra-high category and 420 in the remaining rehab categories. (Based on a 2008 Medicare cost report, TimberRidge's ultra-high RUGs have grown from 26 percent to 50 percent, which, according to Ms. Greenberg, places TimberRidge on par with the state averages.) The ultra-high category has increased significantly since 2001. Of the 461 patients, 28.7 percent returned to home; 43.8 percent returned to home with home health; 18.7 percent returned to a hospital; and other small percentages were discharged to other settings.
The percentages are slightly higher for those patients returning to home and some with home health when age is considered.
Patients in the other rehab categories (very high, high, medium and low) had lower percentages of patients discharged to the home (20.1 percent) and home with home health (30.8 percent) and a higher percentage discharged to a hospital (27.2 percent). It is a fair inference that these patients may not have been able to tolerate significant therapy and were also sicker and with co-morbidities.
The number of patients in the ultra-high and high RUG therapy categories is consistent with statewide averages and is normal. The same is true for the level of RUG therapy provided by SNFs in areas where HealthSouth has a CMR facility. The applicant views this information as an indication that SNFs are "filling a role, but they are not filling a gap."
TimberRidge has won the local area's rehabilitation award and Reader's Choice award as the area's number one nursing home. The facility receives a lot of repeat business and referrals. There is a fair inference that TimberRidge is an appropriate placement for patients.
TimberRidge is not at functional capacity; as of June 22, 2009, TimberRidge had 50 available beds.
The evidence at the hearing demonstrated that the care provided through SNFs in the Ocala area is appropriate and
produces quality outcomes. On the other hand, the rehabilitation services provided to SNF rehabilitation patients is not a pure substitute for the rehabilitation services, including therapies, provided at a CMR facility for patients requiring that particular service. Also, as noted herein, there are several material differences between CMRs and SNFs.5/
Thirty-to-50 percent of the patients at a SNF such as TimberRidge could be placed in a CMR or in a SNF.
Overall, patients receiving rehabilitation services in the Ocala area appear to be receiving appropriate care, and the quality and intensity of care being provided by the existing SNF rehabilitation providers is equivalent to, if not better, than national averages and does not present a not normal circumstance.
Alternative bed-need methodologies
HS-Ocala's healthcare planner performed several bed- need analyses. The applicant assumed that 95 percent of the patients would come from within the proposed service area of 25 zip codes.
The first methodology considered bed need by age mix.
The bed-need methodology yielded a need for 45, 46, and 48 beds by 2010-2012 at 85 percent occupancy. The second bed need was based on a discharge use rate for freestanding CMR market areas versus the areas that did not have a freestanding CMR. This
methodology yielded a bed need of 53, 55, and 57 for 2010-2012 with the same occupancy rate.
A third bed-need approach was based on an analysis of CMS 13 diagnostic codes in relation to the population within the proposed 25 zip code service area. This analysis is also known as the conversion rate analysis. Based on this analysis, the applicant projected a bed need of 51, 52, and 54, for years 2010, 2011, and 2012, respectively.
The applicant projected that 12 of the 54 beds or 22 percent of the bed need is potentially attributable to stroke patients and 42 to non-stroke patients. These projections are based on a 15 percent conversion rate.
The "conversion rate"
The argument that "not normal" circumstances exist in District 3 is based in large part on a comparison of "conversion rates" in various areas of the state with the proposed service area.
The "conversion rate" is a ratio calculated by the applicant to determine the utilization of CMR services by Medicare fee-for-service patients in the primary service area of each of HealthSouth's facilities. HealthSouth has used this conversion rate as a means of evaluating the success of its facilities since approximately 2004.
The calculation begins by determining the primary service area for each HealthSouth Florida facility.
The applicant defines the primary service area of any particular facility as the zip codes from which that facility derives between 75 percent and 85 percent of its patients.
The HealthCare Concepts Group of Dixon Hughes, a consulting firm retained by HealthSouth, determined the zip codes comprising the primary service area for each HealthSouth Florida facility using HealthSouth patient admission information (not Medicare or MedPar data) for calendar year 2007.
Dixon Hughes determined the zip codes from which each facility derived approximately 80 percent of its patient admissions for each HealthSouth CMR facility. Although Dixon Hughes sought a goal of 80 percent, the percentage of patient admissions comprising the primary service area for the Florida facilities used in calculating the conversion rate varied somewhat, ranging from as low as 73.6 percent at HealthSouth Treasure Coast, to as high as 90.83 percent at HealthSouth Sea Pines. HS Ex. 53A, Bates Stamp 515-44.
After establishing the zip codes comprising the primary service area of each facility, Dixon Hughes requested another consulting firm, Health InfoTechnic (HIT), to provide summary data for certain CMS-13 discharges and admissions for each primary service area for the nine HealthSouth CMR
facilities. This CMS-13 data was collected from HIT in 2008 and available to HealthSouth in January of 2009.
The summary tabulated data provided by HIT was generated from the MedPar database (approximately 13,300,000 records per year) for federal fiscal year 2006 (October 2005 through September 2006). (HIT received the MedPar data file around September 2007.)
MedPar data only includes fee-for-service patients and does not include any Medicare HMO or Medicare Advantage patients.
The MedPar database records and generates information contained in the medical history of patients covered by the Medicare fee-for-service program and discharged from acute care hospitals. The MedPar database records up to nine diagnosis codes for each patient.
Using the MedPar database, HIT first determined the number of Medicare fee-for-service patients discharged from only acute care hospitals who resided in a HealthSouth facility's primary service area (by zip code provided by Dixon Hughes) and who had one of the CMS-13 diagnosis codes in their medical history. These were identified as CMS "qualifying patients."
Once the qualifying patients were identified, HIT determined how many of those qualifying patients (within the
primary service area for each HealthSouth CMR facility) were discharged to a CMR facility anywhere in the United States.
HIT used the diagnosis procedure codes that are HIPPA protected fields to determine whether the patient is a CMS qualified patient. Other information, such as the patient's name, date of birth, and the codes are prohibited from release. HIT is prohibited by CMS and pursuant to a data use agreement from providing any of the underlying claims data to anyone including HealthSouth.
The number of diagnosis codes examined to determine whether a patient qualified as a potential admission to a CMR facility under CMR rules varied depending on the particular impairment group being examined. For example, for brain injury and for burns, only two of the nine available diagnosis codes were examined. For stroke, only four of the nine available diagnosis codes were examined. For joint replacement and hip fractures, all nine available procedure codes were examined.
No evidence was presented to determine the number of diagnosis codes examined for the other CMS-13 diagnoses, such as amputation, major multiple trauma, neurological disorders, spinal cord injury, congenital deformities, osteoarthritis, rheumatoid arthritis, and systemic vasculidities.
A patient with a psychiatric or obstetrical condition who may have also had a qualifying CMS-13 diagnosis code in his
or her medical history was automatically excluded from the total CMS-13 qualifying patients for purposes of determining the conversion rate. Patients who died in an acute care hospital were not excluded. Patients in rehab facilities were excluded.
A summary of the analysis generated by HIT was provided to Dixon Hughes in order to calculate a conversion rate for each of the nine HealthSouth Florida facilities by dividing the number of qualifying patients discharged to a CMR facility by the total number of qualifying patients.
For example, for HealthSouth Spring Hill, there were 1,206 total CMS-13 cases (by discharge and derived from MedPar data and HIT) that were discharged from acute care hospitals for patients residing within one of the zip codes within the facility's primary service area. Of the 1,206 patient discharges, 305 or approximately 23 percent were discharged to a CMR facility somewhere in the United States. See, e.g., HS Ex. 53A at 2. The 23 percent number is the conversion rate for that facility. (Again, in order to establish the zip codes for each HealthSouth CMR facility, all of the admissions (not just Medicare fee-for-service) were recorded from HealthSouth's internal admission data.)6/
The conversion rate for each of HealthSouth's nine Florida facilities, as determined in the manner described above, is contained in HS-Ocala Exhibit 53, Bates Stamp 484.
The numbers on HS-Ocala Exhibit 53 are a subset of all the CMS 13 discharges because the data used is MedPar data.
As stated by Mr. Edward Stall for Dixon Hughes, the conversion rate is not a market penetration rate. "It's really a measure of does a specific market utilize rehab care or does it not? It's more of an indicator of reasonable access to care" for the nine HealthSouth CMR facilities.
Ms. Greenberg opined that the conversion rate was synonymous with a penetration rate, i.e., it is a determinant of what percentage of patients are likely users of a service.
Ms. Bedard considers a conversion rate to mean the number of patients coming to rehab. She was not used to seeing data arrayed in the manner depicted on HS-Ocala Exhibit 53, Bates Stamp 484.
The applicant originally calculated a conversion rate of 17.7 percent. However, the applicant was unable to produce any persuasive documentation supporting the calculation and, upon attempting to recreate the conversion rate, arrived at an average conversion rate of 17.9 percent.
The Ocala Conversion Rate
Once the PSA was defined, the applicant determined the Ocala Conversion Rate using the area from which the proposed facility would generate 95 percent of its patients.
The Ocala Conversion Rate was generated using discharge information from the AHCA database for calendar year 2006, rather than MedPar data.
Unlike the MedPar database, the AHCA database captures discharge information for all patients discharged from acute care hospitals, regardless of payor.
Also unlike the MedPar database, the AHCA database records up to 31 diagnosis codes for each. The AHCA database is far less restrictive than the MedPar data base.
The AHCA database was used to determine the Ocala conversion rate "because that's the universe of the patients that [the applicant] will serve." She did not use MedPar data because it contains only Medicare fee-for-service patients only. She used MedPar data to determine the conversion rate for the nine HealthSouth facilities because HealthSouth uses MedPar data as a benchmark to compare their market across the country and the data was available.
Using the AHCA database, it was determined the number of patients residing in each of the 25 zip codes comprising the PSA who were discharged from an acute care hospital with a medical history including one or more CMS-13 diagnosis code
In short, the applicant's analysis assumed that any discharge with a CMS-13 diagnosis code in the patient's medical history as described in the above paragraph would be a
"qualifying patient" for purposes of calculating the Ocala Conversion Rate.
This method yielded a total of 3,658 qualifying patients from the PSA for calendar year 2006. This method is also called a resident service rate.
Of the 3,658 discharges, approximately 80 percent came from the four acute care hospitals in the service area; two percent from Leesburg; and 10 percent from Shands. The remaining discharges came from facilities outside the service area other than the facilities mentioned.
Having identified the qualifying patients, the AHCA rehab data base was used to determine how many of the qualifying patients were discharged to a CMR facility. The determination of the number of patients discharged to a CMR facility included patients discharged to a CMR facility anywhere. This method yielded a total of 90 qualifying patients who were discharged to a CMR facility.7/
Dividing the number of qualifying patients discharged to CMR facilities (90) by the total number of qualifying patients (3,658) yielded the Ocala Conversion Rate of 2.46 percent.
HS-Ocala contends that the Ocala Conversion Rate of
2.46 percent is unacceptably low compared to the 17-to-18 percent average conversion rate for HealthSouth's nine Florida
facilities. According to the applicant, this comparison indicates "not normal" circumstances which are indicative of artificial geographic and programmatic barriers to accessibility to CMR services to residents of the proposed PSA.
However, there are numerous problems with the conversion rate approach that make it inappropriate for use in determining need.
The "conversion rate" is a self-defined concept unique to HealthSouth. It is not a use rate, nor a concept recognized in any rule governing the CON process, or recognized in the discipline of health planning, but it is used by HealthSouth.
Rather, the conversion rate analysis is a marketing tool that is driven by and relies solely on HealthSouth's own experience.
The HealthSouth Conversion Rate is driven by, among other things, HealthSouth's determination of what constitutes a primary service area for its own facilities. HealthSouth is the sole determinant of what constitutes a particular facility's primary service area. Because the calculation of the HealthSouth Conversion Rate begins with the determination of each HealthSouth facility's primary service area, the procedure cannot truly be replicated except in those areas where existing HealthSouth facilities are located. For example, there is no
way to determine if Orange County has a conversion rate consistent with the HealthSouth Conversion Rate because HealthSouth does not have an established facility with a primary service area there.
HealthSouth's determination of what constitutes the service area of the proposed Ocala facility also drives the determination of the Ocala Conversion Rate.
Because there is no existing HealthSouth facility in the PSA, there is no historical HealthSouth patient admission data from which to determine a primary service area.
Instead, HealthSouth "carved out" a 25 zip-code area within District 3 from which it claims the proposed Ocala facility will derive approximately 95 percent of its patient admissions.
Even among the nine HealthSouth facilities in Florida, the areas HealthSouth has designated as the primary service area varies greatly. For example, while the primary service area for HealthSouth Treasure Coast constitutes the area from which the facility derives approximately 73.6 percent of its admissions, the primary service area for HealthSouth Sea Pines constitutes the area from which that facility derives approximately 90.83 percent of its admissions. Put another way, the primary service area of HealthSouth Sea Pines is over 23 percent larger in terms of admissions than the primary service
area of HealthSouth Treasure Coast. The record is devoid of any explanation of whether this difference affects the HealthSouth Conversion Rate and, if so, how.
Moreover, the variance in the conversion rate among HealthSouth's nine Florida facilities is also substantial, ranging from a low of 10.8 percent at HealthSouth Treasure Coast to a high of 25.29 percent at HealthSouth Spring Hill. There is no persuasive evidence in the record to explain why the conversion rate for HealthSouth Spring Hill is almost two and a half times that of HealthSouth Treasure Coast.
According to the applicant, based on 93 HealthSouth markets around the United States, HealthSouth's conversion rate is approximately 16 percent.
As noted above, the PSA constitutes the area from which the proposed facility will derive approximately 95 percent of its admissions. This service area is almost 30 percent larger in terms of patient admissions than that for HealthSouth Treasure Coast and is over 18 percent larger than the stated goal of 80 percent used to determine the HealthSouth Conversion Rate. The result of the larger patient origin percentage for the PSA is that it tends to overstate the potential demand for CMR services.
The conversion rate is also driven by the manner in which HealthSouth chose to analyze the patient data to calculate
the rate. HealthSouth used MedPar data, which only captures Medicare fee-for-service patients, for the calculation of the HealthSouth Conversion Rate.
HealthSouth further limited the potential pool of patients by only using a portion of the data available in the MedPar database. For example, HealthSouth's consultant reviewed only primary and secondary diagnosis codes for certain CMS-13 categories, four diagnosis codes for others, and potentially all nine diagnosis codes in the MedPar database for other CMS-13 diagnosis categories.
However, when the PSA conversion rate was determined, the potential patient pool was not limited in a similar manner. Rather, there was testimony that the use of the AHCA database, which includes patients from all payors, increased the pool of CMS-13 qualifying patients used for the calculation of the Ocala conversion rate. Since the MedPar data is a subset of the AHCA data, the number 3,658 would have been approximately 70 percent of 3,658 if MedPar data was used. Stated otherwise, the 3,658 number contains approximately 30 percent more people than would have been included if MedPar data was used.
The MedPar database captures far less diagnosis codes than the AHCA database. This difference serves to further inflate the pool of CMS-13 qualifying patients in the PSA.
Although the applicant could have evaluated the patient population for the PSA in the same manner that HealthSouth did to arrive at the HealthSouth Conversion Rate, the applicant chose not to do so.
The MedPar and AHCA databases are not comparable.
Mr. Balsano, in an attempt to compare apples-to-apples, calculated a conversion rate for HealthSouth's nine Florida facilities using AHCA data limited to Medicare fee-for-service patients only.
Utilizing the same zip codes that HealthSouth used to calculate the HealthSouth Conversion Rate, Mr. Balsano calculated a conversion rate of 13.2 percent for the nine HealthSouth facilities, compared to the 17.9 percent determined using the MedPar database. Thus, the AHCA database, even when limited to Medicare fee-for-service like MedPar, yields a lower conversion rate.
Mr. Denney, with HIT, testified that there are several reasons not to use the AHCA database for such an analysis. For example, the discharge status codes used by AHCA are not the same as universal billing codes and are not always in what are called UB04, or universal bill 04, codes as used by MedPar. Another problem with using the AHCA database is that Florida law allows distinct rehabilitation units of acute care hospitals not to report admissions to AHCA.
The inconsistencies described herein do not allow for a valid comparison of the HealthSouth and Ocala Conversion Rates.
The HealthSouth Spring Hill Case Study
The application also contains a historical analysis of the conversion rate for the HealthSouth Spring Hill facility to support the argument that there is a need for the proposed facility. HS Ex. 1, Bates Stamp 550.
Ms. Greenberg testified at length regarding the method by which she personally conducted the HealthSouth Spring Hill Case Study, including the method she used to determine the Spring Hill conversion rate utilized in the case study.
Ms. Greenberg performed the Spring Hill Case Study using the AHCA database for calendar year 2006, but limited to only Medicare fee-for-service patients, arriving at the conversion rate for Spring Hill of 25.6 percent for calendar year (CY) 2006 (4.3 percent in CY 2002 prior to operation).
This means that 25.6 percent of the CMS 13 discharges were residents within Spring Hill's primary service area (as defined by the applicant) who went to a CMR facility somewhere. (In HS-Ocala Ex. 53, Bates Stamp 484, the conversion rate is
25.3 percent.)
Ms. Greenberg testified that the similarity in the numbers generated using the AHCA database limited only to
Medicare fee-for-service and those generated using the MedPar database supports her conclusion that the MedPar and AHCA databases are comparable data sources.
It was ultimately acknowledged that, in fact, like the HealthSouth Conversion Rate, the Spring Hill Case Study presented on pages 41-43 of the CON Application was derived from a summary of MedPar data for fiscal years 2002 and 2006
(October 1, 2005-September 30, 2006) that HealthSouth provided to Ms. Greenberg. The actual MedPar database was not reviewed. Rather, the analysis for the Spring Hill Case Study consisted of calculating the percentages based on the summary MedPar data provided by HealthSouth.
Because the HealthSouth Spring Hill Conversion Rate was calculated in the same fashion as was the HealthSouth Conversion Rate, it does not reasonably serve as a comparison to the Ocala Conversion Rate for the same reasons.
A conversion rate for the HealthSouth Spring Hill facility was calculated using the AHCA database prior to completing the application. However, that calculation was not included in the application.
The summary data sheet, HS-Ocala Ex. 53, was sent to counsel for Shands and LRMC in a letter dated April 24, 2009. The information was then conveyed with the HealthSouth
Conversion Rate to the applicant's health care planner. The underlying work papers were not saved.
The applicant had to examine the 2006 Medpar data base and rerun the numbers. HS Ex. 53. The applicant produced a document indicating the reworked HealthSouth Conversion Rate along with the April 24, 2009, letter (written to counsel for Shands). HS Ex. 53, Bates Stamp 484. The document appearing as HS-Ocala Ex. 53, Bates Stamp 484 is a recreation of the numbers given to Ms. Greenberg.
The underlying data upon which the applicant based the HealthSouth Conversion Rate, including the zip codes comprising the primary service area for the HealthSouth facilities, was available and in HealthSouth's possession (its computers) throughout the discovery phase of this proceeding.
While some summary documents were provided, the underlying data which apparently would support the evidence was not.
Instead, Mr. Stall and Mr. Denney described the process that was used to calculate the HealthSouth Conversion Rate. However, the testimony only served to further highlight some of the inconsistencies between the methodologies used to calculate the HealthSouth and Ocala conversion rates and to further support the conclusion that the rates are not necessarily comparable.
Without the underlying data, it was difficult to confirm the comparison between the Spring Hill Conversion Rate and the Ocala Conversion Rate.
Geographic and Programmatic Access
The applicant alleges that there are geographic and clinical (programmatic) access problems that compromise the level of care and clinical outcomes of patients who would benefit from CMR services.
Family travel distance can impact a patient's decision to access CMR services. The family access issue described by the applicant in this proceeding is not unique to District 3 or Marion County.
Transportation of patients from acute care to CMR facilities is accomplished by emergency vehicles and, in some instances other forms of transport, including family automobiles. Potential patients within the applicant's PSA would not have typical or not normal problems accessing existing CMR providers in District 3.
Shands provides free transportation to families who visit patients at its facility, and to those who need to be involved in the discharge planning process. Shands also provides other accommodations either free or at reduced costs.
HealthSouth has a corporate policy of not providing transportation for Medicare patients to bring their family
members to one of its CMR facilities for visits. The same policy applies for all patients. For HealthSouth, it is a compliance issue and considered an improper inducement. T. 544.
Whether free transportation is improper is not resolved based on the record in this proceeding. But see HS Ex. 76.
Interstate 75 is the main road through the Ocala area and runs north to Gainesville and south to Leesburg. Interstate
75 is a four-lane road and even six lanes in some instances.
There are segments of road configurations which are composed of two-lane black tops with little or no lighting. Roadway segments north and south of the PSA are often rural with soft shoulders. There is evidence that some of these roads north and south out of the PSA are congested depending on the time of day and other conditions.
The forest east of Marion County represents a natural geographic barrier.
Florida Administrative Code Rule 59C-1.039(6) addresses the access standards for patients in need of CMR services. CMR "inpatient services should be available within a maximum ground travel time of 2 hours under average travel conditions for at least 90 percent of the district's total population."
The applicant, and Shands and LRMC jointly, engaged traffic experts to conduct travel time studies to measure the length of time it takes for residents of the area to reach area hospitals.
The applicant's travel expert, Lorin Brissett of Kimley-Horn and Associates, Inc., conducted a travel time study from Shands Rehab Hospital and LRMC to various locations or points within the PSA.
Locations 1 through 4 were based on zip code information provided by the applicant in terms of the general coverage of the PSA, and denote the centroid of different population densities in the four quadrants of the PSA.8/
Location 5 represented the approximate center of the City of Ocala and the PSA.
Mr. Brissett used a floating car method in performing the travel time study between locations one through four and location five. This method involves the driver attempting to pass as many cars as passed him, that is, the car would float with the traffic. Two runs were performed for each of the routes, going from locations one through four to location five. Two runs were performed for each return route.
The runs were performed during peak travel times (typically between 4:00 p.m. and 6:00 p.m.) on a typical weekday,
that is, Tuesday, Wednesday, or Thursday. The weather was clear and no accidents were noted.
The travel study indicated that the average travel time to and from Shands was 52 minutes, with a high of 67 minutes and a low of 33 minutes. The average travel time from and to LRMC was 63 minutes, with a high of 90 minutes and a low of 37 minutes. The overall average travel time was 46 minutes from the center of the PSA to either Shands or LRMC.
Mr. Brissett also commented that these travel times may be a bit longer for elderly drivers and that elderly drivers tend to travel more on local roads. Also, older drivers are not likely to drive using the floating car method. (None of the drivers used in the study were 65 years of age or older.) The travel study also noted that many of the roadway segments were rural in nature and there were conditions where the road was not properly lit.
Mr. Brissett was not asked to conduct any study that would indicate what percentage of the District 3 population would be within two hours' average travel time to any existing CMR facility in District 3. Mr. Brissett was not asked to conduct travel studies for any CMR facility in District 3 other than Shands and LRMC and he did not do so.
Mr. Brissett stated that rural roadways are not unique to Marion and Levy Counties, but exist in other Florida counties as well.
Mr. Brissett concluded that anyone within the five zones would be able to access Shands Rehab Hospital in less than
70 minutes, even driving from 4:00 p.m. to 6:00 p.m., although it may take the elderly a bit longer.
The travel expert retained by Shands and LRMC, William
Tipton, Jr., based travel time runs on the location of the existing CMR facilities and population data for 2008 and 2013 published by AHCA for District 3. According to Mr. Tipton, "[l]ooking at the district and knowing the road systems available and the orientation of the populations to the existing facilities, it was evident that the adjacent counties to existing facilities could certainly make their runs within the access rule standard of less than two hours" or "substantially less time than two hours by each of the existing facilities within District III."
Mr. Tipton's team conducted two runs in the morning peak hour, 7 a.m. to 9 a.m.; two runs in the midday off-peak hour, 11 a.m to 1 p.m.; and two runs in the evening peak hour, 4
p.m. to 6 p.m. to arrive at a complete cross section of the different travel patterns throughout the day.9/ Additionally, one of the test drivers in Mr. Tipton's team, was 70 years old and
accomplished runs on 441 from Ocala to Shands, and on U.S. Highway 441 from Ocala down to Leesburg Regional Medical Center, and also the Interstate 75 runs. The elderly test driver's results were consistent with other runs accomplished by non- elderly drivers.
Mr. Tipton's team also used the floating car method, but adjusted the methodology so that none of the drivers exceeded the posted speed limit by more than five miles per hour. In
Mr. Tipton's opinion, this adjustment would give results that are more typical of what an average driver would do and more accurately reflects the driving patterns of elderly drivers.
Mr. Tipton's results show that all of the facilities could be reached by at least 90 percent of the population in one hour or less; half the time required by rule. The roads traveled for Mr. Tipton's analysis were typical roadways found throughout central Florida. Mr. Tipton's study concluded that existing CMR facilities could be accessed within the requirements in Florida Administrative Code Rule 59C-1.039(6) and that a geographic access issue for an elderly person or someone else did not exist.
Although the applicant argued that conditions existed that led to patients and family members not accessing CMR services, no testimony at hearing from area residents supported the contention.
No residents of the PSA testified as to their personal experiences accessing existing CMR hospitals in the District. Rather, several of the applicant's expert witnesses testified as to their experience with local road conditions driving from the PSA to and from Shands Rehab and LRMC.
Dr. Lohan opined that elderly persons may find it more difficult to drive at night versus the daytime, which is consistent with the evidence in this record.
Further, the transportation of patients to CMR facilities is not problematic because they are usually transported by ambulance or similar method of transport. It does not appear that patient safety or quality of care has been compromised because of the alleged travel times and distances to existing CMR hospitals.
On the other hand, the construction of the proposed facility would reduce the average travel time to an existing CMR hospital for persons residing within the PSA.
However, the number of persons whose travel time will likely be enhanced was not persuasively quantified by the applicant, aside from projecting occupancy rates for the first two years of operation.
It is expected that patients with multiple trauma, brain, and spinal cord injuries would most likely be referred to Shands Rehab. For the most part, patients with brain and spinal
cord injuries are receiving rehabilitation and typically are referred to Shands Rehab. The applicant does not propose a spinal cord and brain injury unit like the service offered at HealthSouth's Spring Hill facility. Consequently, whatever travel challenges might exist for these patients and their families would still exist even after HealthSouth is approved.
The testimony was consistent that, in part due to the nature of CMR services as tertiary, patients and their families at times experience problems accessing such services. These problems, or challenges, include not only the time and distance required to reach such facilities, but other factors, such as whether a patient should be admitted to a CMR facility rather than to other post-acute care settings and whether the patient's insurance policy provides coverage for such services.
The testimony was also consistent that these challenges occur not only throughout Florida but, in fact, occur throughout the nation on a daily basis. These challenges do not represent "not normal" circumstances but are normal.
Quality of Care
No evidence was presented indicating any deficiencies in the quality of care provided by Shands or LRMC.
The services or equipment to be provided at the proposed facility are not necessarily superior to the services that are provided at Shands or LRMC.
The applicant will offer the use of an AutoAmbulator to its patients.
The AutoAmbulator was developed for and is exclusively available at HealthSouth facilities.
No independent study indicates that the use of the AutoAmbulator results in better outcomes for patients, compared to similar equipment used at existing District 3 CMR facilities. Economic Access
Notwithstanding the applicant's proposed commitment to provide at least 2.5 percent of its annual inpatient days to Medicaid and charity patients, there is no persuasive evidence that there are financial barriers to access CMR services by the residents of the PSA.
It was not proven that the resident population of the PSA, including the medically indigent, Medicare recipients, and the elderly, has been or is likely to be denied access based on economic factors. See Fla. Admin. Code R. 59C-1.030(2).
Section 408.035(1)(c): The ability of the applicant to provide quality of care and the applicant's record of providing quality of care.
The applicant's quality of care will benefit from the hospital's affiliation with its parent, HealthSouth, which offers high quality CMR services country-wide. HealthSouth has invested in state-of-the-art quality measurement systems to
monitor processes and outcomes, allowing each facility to maintain high standards of quality of care.
The applicant has demonstrated that it has the ability to adequately staff the facility and will provide high quality of care.
Section 408.035(1)(d): The availability of resources, including health personnel, management personnel, and funds for capital and operating expenditures, for project accomplishment and operation.
HealthSouth is a publicly traded corporation and is the largest provider in inpatient rehabilitative health services in the United States in terms of revenue, number of hospitals, and patient treated.
HealthSouth has the financial resources needed to ensure project accomplishment and operation of the proposed project.
HealthSouth is committed to assisting the applicant with fiscal and legal services, specialized accounting functions, and reimbursement expertise and information system services.
There continues to be a shortage of healthcare personnel in Florida and it is inevitable that a portion of the staff for the proposed facility may come from other facilities in District 3.
Nevertheless, the applicant is able to draw upon the managerial resources and broad range of established and services provided by HealthSouth, including the recruitment and retention of staff.
The applicant has the available resources, including health and management personnel for the completion and operation of the project.
Schedule 6 of the application describes the applicant's estimate of the projected staff and staff needed for the project
HealthSouth will need 17 new RNs in Year Two based on its staffing projections.
HealthSouth recruits personnel to staff its facilities locally as well as on a national and international level. HealthSouth also satisfies its staffing demands internally, as its employees have the ability to transfer from one HealthSouth facility to another.
HealthSouth has been successful in recruiting therapists and nurses to staff its facilities.
HealthSouth uses a variety of tools to recruit its nurses, and once hired, HealthSouth invests significant efforts in training its employees.
From time-to-time, HealthSouth has paid for contract nurses to fulfill its staffing demands.
HealthSouth is not expected to limit its recruiting efforts to the Ocala area, but will recruit from other areas as is necessary to appropriately staff the facility.
There was a difference of opinion offered by the parties' experts as to whether the applicant's staffing projections in its application were reasonable.
Testimony from the applicant's experts indicated that the staffing projections included in the application were reasonable and appropriate based upon the projected occupancy and utilization numbers for the proposed facility.
Shands' and LRMC's experts testified that the applicant's projected therapist staffing needs in the application were inadequate to fulfill the projected utilization by patients at the proposed facility.
It was also estimated that the FTEs projected in the application for therapy staff was short by anywhere from four- to-five FTEs.
Despite the challenges presented by medical personnel shortages and the shortfall in the staffing needs projected in the CON application, it is reasonable to conclude that the applicant will be able to recruit the staff needed for the proposed facility. Staffing of the proposed facility may impair to some degree the ability of Shands and LRMC to staff their
facilities, but not to the extent that the services and the quality of care provided will be reduced.
Weighing all the testimony presented on this issue, the evidence supports the conclusion that the applicant's staffing projections are reasonable.
The proposed average annual salaries in Schedule 6A are reasonable.
Appropriate funds have been budgeted for management personnel.
Section 408.035(1)(e): The extent to which the proposed services will enhance access to health care for residents of the service district.
The applicant's proposed CMR facility will enhance access to health care for the residents of that portion of District 3 within the PSA, except for patients with brain injury or spinal cord injury who are expected to go to Shands.
Notwithstanding historical referral and admission patterns, at the very least, Shands and LRMC are viable alternatives for the residents needing CMR services residing within the applicant's PSA.
Section 408.035(1)(f): The immediate and long-term financial feasibility of the proposal.
Immediate Financial Feasibility
Immediate or short-term financial feasibility refers to the ability of an applicant to fund construction, start-up, and operation of the proposed project.
By rule, the Agency incorporated by reference Schedule 3 among other portions of the CON application. Fla. Admin. Code R. 59C-1.008(1)(f).
The applicant's witnesses testified it was feasible for the project to be financed internally or by a third party in which case the third party would finance the acquisition of the property and the construction of the building and the applicant would lease the property from the third party.
In support of its ability to obtain financing for the project, the applicant submitted a letter from GE Healthcare Financial Services (GE) with its application. The letter from GE did not represent a binding or enforceable commitment to provide the financing described in the letter.
Notwithstanding the testimony regarding the GE letter, the ability of the applicant to obtain funding through a third party or to internally finance the building and startup costs of the project was established. Neither Shands' nor LRMC's witnesses disagreed with the applicant's ability to
obtain sufficient funds for capital and initial operating expenses.
The project is financially feasible in the short- term.
Long-term Financial Feasibility
Long-term financial feasibility is generally referred to as the ability of a project to show a profit at the end of its second year of operation. The projected utilization of a proposed facility is a critical factor to assess when determining whether the facility will be financially feasible in the long-term, given that projected revenues and expenses are driven by utilization projections.
Schedules 7 and 8 set forth the financial projections for the project for years one and two. The applicant projects a net profit for Year Two from operations of $483,512 (net operating revenue minus total operating expenses) and an overall net profit of $299,777. These dollar amounts are derived based on projected utilization of the project in Year Two minus projected expenses.
Shands and LRMC contend that HealthSouth overstated projected revenues and understated projected expenses. The projected revenues appear to be overstated, whereas the projected expenses appear to be reasonable.
The projected utilization was determined by applying the "conversion rate" equal to 15 percent of the discharges identified.
The conversion rate was then applied, which is based only on Medicare fee-for-service patients, to both Medicare and non-Medicare patients.
Application of the use rate to the projected population in the proposed service area yielded 9,828 patient days and approximately 677 admissions in the second year of the facility's operation.
The patient days projected in turn yielded an occupancy rate of 67.3 percent in year two. HS-Ocala Ex. 1, Bates Stamp 639-640.
The 3,658 patients identified by Ms. Greenberg as potential patients requiring CMR services generated 90 admissions to a CMR facility in 2006.
It is not reasonable to assume that the population defined in the PSA area will generate almost six times the number of admissions to CMR facilities that are presently generated.
The applicant also assumed that 95 percent of the patients would come from the PSA area and five percent from other areas (in-migration).
Mr. Balsano noted the financial projections are based upon the assumption that CMR admissions of patients residing in the PSA would increase from 90 patients in 2006 to approximately 644 patients by Year Two of the proposed project. Mr. Balsano testified that such a significant increase is not a reasonable assumption and overstates the market. As a result, Mr. Balsano's opinion was that revenues included in the applicant's financial projections were significantly overstated and that he had serious concerns about the proposed project's financial feasibility.
The applicant did not provide financial projections assuming it would build and own the proposed facility itself without the involvement of a third party. According to
Mr. House, this was because the costs were greater to HealthSouth if it were to utilize third party financing, so basing the financial projections on such a scenario presented a more conservative picture of the financial projections.
Mr. House testified that the financial projections included in the application were reasonable. The rent expense included in the financial projections in Schedule 8 of the application included a cushion of approximately $371,000.
Applying the cushion results in an increase in year two profit from $483,512 to $854,512. It appears that funding
is available on the same terms as proposed in the GE letter and that that the rent projections are reasonable.
Schedule 8 of the application did not include a management fee charged by HealthSouth to its subsidiaries despite the fact that the application's narrative assumptions represented that a management fee of five percent was included. Ms. Greenberg prepared the assumptions and she inadvertently indicated that a management fee was included.
The actual management fee charged by HealthSouth at the time of the hearing was approximately three percent (2.78 percent in 2008).
If the management fee referenced in the application is factored into the equation at the rate of five percent, it adds $515,548 in expenses to the project. If the management fee is factored at the rate of three percent, it adds $309,328 in expenses to the project expenses.
Ms. Greenberg stated that the rent expense included in the financial projections did not include an adjustment for sales tax. At 6.5 percent, this would add approximately $95,000 to the expenses. Assuming this additional expense for Year Two, the effect would be to reduce the net profit from operations from $854,512 to $759,512, which would not affect the long-term financial feasibility of the project.
Mr. Balsano also opined that the real estate taxes included in the financial projections were understated by approximately $158,000. In response, Ms. Greenberg opined that if a shortage existed, it would be between $113,341 and
$153,244, with an average of $133,293.
When coupled with the omitted sales tax (-$95,000), and after adjusting for the inflated rent expense (+$371,000), this reduces Schedule 8, Line 27 from $854,512 ($483,512 plus
$371,000) to approximately $450,184 (-$309,328/management fee of three percent and -$95,000/sales tax on rent at 6.5 percent).
The profitability in year two would be reduced further if the real estate taxes are considered, i.e., $316,891(Greenberg projection) versus $292,184 (Balsano projection).
Further, according to Mr. Balsano, the staff projections included in the application are understated by
$469,391 assuming a shortage of 6.2 FTEs, or approximately
$300,000 assuming a shortage of four FTEs. The applicant did not concede a shortfall existed. Also, as noted herein, the staffing projections are reasonable and there is no projected shortage.
In balancing the net effect of the adjustments suggested by Shands and LRMC and the applicant's responses, it is concluded that the project will be profitable in Year Two if the applicant achieves the projected net operating revenue on
Schedule 8A, Line 1. (It was conceded that if the management fee charged by HealthSouth to its subsidiaries was 2.7 percent as opposed to five percent as stated in the application's assumptions, a $20,000 profit in year two would be projected.)
While reasonable persons could differ as to whether the expenses in the financial projections included in Schedule 8A are reasonable, the long-term financial feasibility of the proposed project is based upon revenues which are calculated using the projected utilization from Schedule 5 of the application. The projected utilization is driven by the conversion rate calculated by the applicant that materially overstates the potential market for these services in the proposed PSA. Because the applicant's revenue projections are not reasonable, the proposed facility is not likely to be financially feasible in the long-term.
Section 408.035(1)(g): The extent to which the proposal will foster competition that promotes quality and cost- effectiveness.
Mr. Gregg testified that there is no evidence within the Agency's ability to analyze whether the application will foster competition that promotes quality and cost-effectiveness. However, as Mr. Gregg testified, the ability of healthcare providers to promote competition is very limited because payors have very narrow policies about what they will pay.
The overwhelming portion of patients who require CMR services are served by the Medicare program. There is no price competition involved in the provision of the services proposed in this application.
306 There is no persuasive evidence showing that competition for the services proposed is lacking, that the quality of the care provided to residents of the District is other than excellent, or that the services or equipment proposed are superior to those already available to patients in the District.
While approval of the project will likely provide some residents of the PSA a closer alternative to CMR services and perhaps some savings in terms of travel expenses and time, no persuasive evidence proved that the project is likely to foster competition that promotes quality and cost-effectiveness.
Section 408.035(1)(h): The costs and methods of the proposed construction, including the costs and methods of energy provision and the availability of alternative, less costly, or more effective methods of construction.
The projected costs of construction in Schedule 1 are reasonable.
The architectural plans are a reasonable. The architectural design and space for the proposed 40-bed freestanding rehabilitation facility are reasonable.
The projected duration for construction of the facility is reasonable. The dates for construction are no longer accurate and would need to be extended due to the timing of the hearing.
The projected land cost for the hospital is reasonable.
The equipment listed in HS-Ocala Exhibit 6 is reasonable for the proposed facility. The equipment list does not include certain equipment, such as the AutoAmbulator, Bioness, and SaeboFlex, identified on pages 56-57 of the application. The cost of the AutoAmbulator was not included in equipment costs (although it is included on HS-Ocala Exhibit 6 at 8 of 16) because it is part of HealthSouth's research and development budget.
The projected costs of the equipment are reasonable.
Section 408.035(1)(i): The applicant's past and proposed provision of health care services to Medicaid patients and the medically indigent.
HealthSouth has a history of providing health care services to Medicaid patients and the medically indigent, notwithstanding compliance issues relating to several of HealthSouth's Florida CMR facilities.
Overall and based on the experience of HealthSouth, the applicant meets this criterion.
Section 408.035(1)(j): The applicant's designation as a Gold Seal Program nursing facility pursuant to s. 400.235, when the applicant is requesting additional nursing home beds at that facility.
This criterion is not applicable.
Adverse Impact
Shands and LRMC contend that approval of the proposed project would have a substantial negative impact on their operations. The issue of adverse impact is resolved in favor of Shands and LRMC, although it is a closer call than suggested by these parties, given the historical referral and admission of patients from within the PSA to Shands and LRMC.
Consideration of adverse impact on existing providers is relevant to prove standing in a formal hearing involving a CON application pursuant to Section 120.57, Florida Statutes, and is a relevant factor to consider under Section 408.035(2), Florida Statutes, which includes consideration of the impact of approving a new hospital on an existing hospital in the same service district. Baptist Med. Ctr. of Clay, Inc. v. Agency for Health Care Admin. and Orange Park Med. Ctr., Inc. d/b/a Orange Park Med. Ctr., Case Nos. 06-0555CON, 06-0563CON, and 06-0843CON (DOAH Dec. 3, 2007, at ¶ 316; AHCA May 30, 2008), per curiam aff'd, 12 So. 3d 756 (Fla. 1st DCA 2009).
Impact on Shands
Mr. Balsano and Ms. Greenberg looked at the admissions to Shands from the defined PSA to determine the projected impact of the proposed facility on Shands. For the 12-month period ending June 30, 2007, Shands admitted 119 CMR patients from the zip codes comprising the PSA.
To assess impact, Mr. Balsano and Ms. Greenberg agreed that patients with spinal cord or brain injury should not be considered, because those patients will likely continue to be treated at Shands. This left a total of 77 admissions.
Mr. Balsano multiplied Shands' average contribution margin per patient, which he calculated to be $6,673, by the 77 patients to conclude that Shands would lose $513,821 in contribution margin.
Mr. Balsano also considered the admissions to Shands from the secondary service area for the proposed facility that was referenced in the pre-application materials developed by Dixon Hughes. In 2007, Shands admitted 24 cases from this extended service area after subtracting the brain and spinal cord injury cases. Mr. Balsano concluded that Shands would lose half of those admissions. Applying the contribution margin to those cases resulted in an additional $80,076 of lost contribution for a total of $593,897.
Ms. Greenberg disagreed with Mr. Balsano's use of the patients from the extended service area in his analysis of the potential impact on Shands. Ms. Greenberg opined that the use of these patients was inappropriate given the service area defined in the CON application, and the fact that HealthSouth considers the PSA a distinct medical market.
Ms. Greenberg testified that major multiple trauma patients would also continue to be treated at Shands and, therefore, should be removed from the pool of at-risk patients. By doing so, Ms. Greenberg determined there were approximately
54 at-risk patients. Ms. Greenberg further reduced this number to account for patients who were admitted to Shands Rehab from within the Shands system because, according to Ms. Greenberg, those patients are likely to continue to be treated at Shands rehab. Applying this methodology to the 54 at-risk patients, Ms. Greenberg determined that the maximum number of at-risk patients was 19.3 and that the minimum number of at-risk patients was 13.5.
Ms. Greenberg then multiplied Shands' average contribution margin per patient, which she determined to be
$5,98410/ by the minimum and maximum at-risk patients she calculated, to determine that the impact to Shands would range from $80,787 to $115,196 in lost contribution margin. Using the contribution margin determined by Mr. Balsano resulted in a
range of impact from $90,086 to $128,789 in lost contribution margin.
Assuming consideration of the criticisms, Mr. Balsano testified that his estimate of 77 cases lost from the PSA was reasonable. Mr. Balsano based his conclusion, in part, on the fact that HealthSouth is projecting in excess of 600 admissions from the PSA in the Year Two. According to Mr. Balsano, to meet those projections, it is reasonable to assume the 77 non- spinal/non-traumatic brain injury patients that Shands is currently serving from the PSA will be redirected to the proposed facility.
Having considered all of the evidence on this issue, including the historical referrals and admissions of patients to Shands, see, e.g., FOF 87, and while there is a wide variation in projected losses, it is concluded that Shands would lose significant dollars in contribution margin if the proposed facility were constructed.
Impact on LRMC
Similar to the analysis conducted with respect to Shands, Mr. Balsano looked to the admissions to LRMC from the applicant's HealthSouth defined PSA to determine the projected impact of the proposed facility on LRMC. For the 12-month period ending June 30, 2007, LRMC admitted 13 patients from the zip codes comprising the applicant's PSA.
Notwithstanding the financial impact noted herein, from 2006 through 2008, the financial performance (excess revenues over expenses) of LRMC's CMR facility has improved.
Mr. Balsano then multiplied LRMC's average contribution margin per patient which he calculated to be
$8,007, by these 13 at-risk patients from the applicant's defined PSA to determine that the impact to LRMC for these 13 patients if the proposed facility is built would be $104,091 in lost contribution margin.
Mr. Balsano also considered the admissions to LRMC from the extended service area for the proposed facility that was referenced in the pre-application materials developed by Dixon Hughes. In 2007, LRMC admitted 205 cases from the extended service area. Mr. Balsano determined that it was reasonable to assume that LRMC would lose half of those cases. Applying the contribution margin to those cases would result in an additional $824,721 in lost contribution for a total combined impact of $928,812 in lost contribution margin to LRMC if the proposed facility is built.
Ms. Greenberg disagreed with Mr. Balsano's use of the patients from the extended service area in his analysis of the potential impact on LRMC. Ms. Greenberg felt that the use of these patients was inappropriate, given the service area defined
in the CON application, and the fact that the applicant considers the PSA a distinct medical market. See FOFs 91-92.
Ms. Greenberg's impact analysis focused on the hospitals from which LRMC derives its patients. Based on LRMC's data, Ms. Greenberg determined that in 2007, approximately 89 percent of LRMC's patients came from Leesburg Regional, Villages, Waterman or South Lake hospitals. In 2008, approximately 90 percent of LRMC's patients came from those hospitals with 81 percent coming from the Leesburg facilities. Since there were no admissions to LRMC from the three acute care hospitals in Marion County in 2007 and 2008, Ms. Greenberg determined that the likely impact to Leesburg if the proposed facility is built would be zero.
For purposes of determining an upper limit of the potential impact on LRMC, Ms. Greenberg assumed that LRMC would lose the 10 percent of patients not coming from Leesburg Regional, Villages, Waterman or South Lake. Multiplying the 10 percent by the 13 total cases admitted to LRMC from the PSA, Ms. Greenberg determined that a total of 1.3 patients were at risk. Multiplying these at-risk patients by the contribution margin used by Ms. Greenberg of $7,27011/ results in an impact to LRMC of $9,451 in lost contribution margin.
Notwithstanding the minimal impact to LRMC calculated by Ms. Greenberg, there is considerable overlap, in terms of
either like or contiguous zip codes, between the Leesburg area and the PSA. For example, in fiscal year 2008, LRMC admitted eight patients from zip code 34491, three patients from zip code 32195, two patients from zip code 34420, and three patients from zip code 32784, or 16 patients. These zip codes are included in the defined PSA.
LRMC admitted 37 patients from zip code 32159, 39 patients from zip code 32162, and 21 patients from zip code 34788, which are all zip codes that are contiguous to the defined PSa. In all, for fiscal year 2008, LRMC admitted 113 patients from zip codes that are either within or contiguous to the PSA. See also T. 2119. Applying Ms. Greenberg's contribution margin for LRMC to those 113 cases results in a loss to LRMC of $821,510.
These 113 patients represent approximately 41 percent of LRMC's admissions. According to the Agency, a loss of approximately one-third of LRMC's admissions would be considered a substantial disruption of the patient flow pattern. Additionally, it is reasonable to assume that the applicant may attract patients from zip codes contiguous to its service area. Further, it is expected that the applicant will aggressively market to areas including contiguous zip codes and not stop at a bright line between zip codes.
Having considered all of the evidence on this issue, including but not limited to the number of patients admitted from Ocala area hospitals, see, e.g., FOFs 91-92, it is concluded that while there is a wide variation in projected losses, LRMC, like Shands, would potentially lose significant dollars if the proposed facility were constructed. Such a loss in contribution margin and therefore admissions would substantially affect the facility.
The loss of the contribution margins, coupled with the potential impact on existing staff and programs, is substantial enough to recognize the standing of Shands and LRMC.
CONCLUSIONS OF LAW
Jurisdiction
The Division of Administrative Hearings has jurisdiction over the parties to and the subject matter of this proceeding. §§ 120.569, 120.57(1), and 408.039(5)(b), Fla. Stat.
Standing
Shands and LRMC proved by a preponderance of the evidence that each has standing to participate as a party in this proceeding.
Burden of Proof
An administrative hearing involving disputed issues of material fact is a de novo proceeding in which the
administrative law judge independently evaluates the evidence presented. Fla. Dep't of Transp. v. J.W.C. Co., 396 So. 2d 778, 787 (Fla. 1st DCA 1981); § 120.57(1), Fla. Stat. The Agency's preliminary decisions on a CON application, including its findings in the SAAR, are not entitled to a presumption of correctness. Id.
HS-Ocala has the burden of proving, by the preponderance of the evidence, entitlement to a CON. Boca Raton Artificial Kidney Ctr., Inc. v. Dep't of Health & Rehabilitative Servs., 475 So. 2d 260 (Fla. 1st DCA 1985);
§ 120.57(1)(j), Fla. Stat.
Consideration of the Applicable Statutory and Rule Criteria
The award of a CON must be based on a balanced consideration of all applicable statutory and rule criteria. Balsam v. Dep't of Health & Rehabilitative Servs., 485 So. 2d 1341 (Fla. 1st DCA 1986).
"[T]he appropriate weight to be given to each individual criterion is not fixed, but rather must vary on a case-by-case basis, depending upon the facts of each case." Collier Med. Ctr., Inc. v. Dep't of Health & Rehabilitative
Servs., 462 So. 2d 83, 83 (Fla. 1st DCA 1985). See also Lawnwood Med. Ctr., Inc. v. Agency for Health Care Admin., 678 So. 2d 421, 426 (Fla. 1st DCA 1996)("Perhaps in a proper case AHCA might attribute greater weight to certain of the review
criteria than that attributed by the hearing officer."); Morton F. Plant Hosp. Ass'n, Inc. v. State of Fla., Dep't of Health & Rehabilitative Servs., 491 So. 2d 586 (Fla. 1st DCA 1986)(the hearing officer and AHCA afforded more weight to one criterion over other criteria in denying a CON application).
Florida Administrative Code Rule 59C-1.039(3)(d) provides in part: "A certificate of need for the establishment of new comprehensive medical rehabilitation inpatient services, the construction or addition of new comprehensive medical rehabilitation inpatient beds, or the conversion of licensed hospital acute care beds to comprehensive medical rehabilitation inpatient beds shall not normally be approved unless the applicant meets the applicable review criteria in section 408.035, F.S., and the standards and need determination criteria set forth in this rule." See also Fla. Admin. Code R. 59C- 1.039(5)(a) ("A favorable need determination for proposed new
. . . comprehensive medical rehabilitation inpatient services shall not normally be made unless a bed need exists according to the numeric need methodology in paragraph (5)(c) of this rule.").
A positive projected numeric need establishes a rebuttable presumption of need, although it serves only as the starting point of an analysis of need. If there is no projected numeric need, then there is a rebuttable presumption of no need.
Vitas Healthcare Corp. of Cent. Fla., Inc. v. Agency for Health Care Admin., Case No. 04-3858CON (DOAH June 14, 2005; AHCA
July 7, 2005). A conclusive presumption is not permissible. Dep't of Health & Rehabilitative Servs. v. Johnson & Johnson
Home Health Care, Inc., 447 So. 2d 361 (Fla. 1st DCA 1984).
The determination of need for a new hospital must be based upon sound health planning principles. Manatee Mem'l Hosp., L.P. v. Agency for Health Care Admin., Case No. 04- 2723CON (DOAH Dec. 1, 2005; AHCA April 11, 2006).
It is generally agreed that need for a new CMR hospital is determined on a district or subdistrict basis (if applicable), notwithstanding that Subsection 408.035(1)(a) provides for consideration of need without any such limitation.
Subsection 408.035(1)(a) provides: "The need for the health care facilities and health services being proposed."
§ 408.035(1)(a), Fla. Stat. However, Subsection 408.035(1)(b), requires consideration of "[t]he availability, quality of care, accessibility, and extent of utilization of existing health care facilities and health services in the service district of the applicant"; Subsection 408.035(1)(e), requires consideration of "[t]he extent to which the proposed services will enhance access to health care for residents of the service district." (emphasis added).
A "District" means a health service planning district; in this case District 3 and the counties it composes.
§ 408.032(5), Fla. Stat.
According to the Agency, the applicant's attempt to carve out a PSA as an applicant-specific defined service area composed of 25 zip codes within the District is not per se contrary to the provisions of Section 408.035, Florida Statutes, and Agency rules, if "not normal" circumstances exist.
The use of a provider specific "conversion rate," when considered together with the PSA conversion rate, are not, in light of the facts presented in this case, persuasive indicators of need for the service proposed.
The summary of the data (HS Ocala Ex. 53, Bates Stamp 484), which arguably supports the manner in which the conversion rate was determined for the HealthSouth Florida CMR facilities, was supplied by the applicant during discovery and at the hearing. The underlying information that supports the summary data was not produced during discovery or offered into evidence during the hearing. See generally T. 1376-88, 1523-28.
Notwithstanding the requirements of Section 90.956, Florida Statutes,12/ HS-Ocala argues that it (and its agents) were legally prohibited from producing the MedPar data for discovery or hearing.
Mr. Denney and Mr. Stall testified persuasively on behalf of the applicant regarding the underlying MedPar data and the use of the underlying data giving rise to the summary, HS Ocala Ex. 53, Bates Stamp 484. (It appears that health care planners use MedPar data with some regularity and that MedPar data is generally reliable.)
2006 MedPar data was used to determine the 17.9 percent overall conversion rate for the HealthSouth Florida facilities. HealthSouth internal data was used to determine the zip codes for each facility such that all admissions were not limited to Medicare fee-for-service patients.
Notwithstanding the testimony of Mssrs. Denney and Stall, the applicant has the burden of proof and persuasion in this proceeding, and it was incumbent on the applicant to produce the data or make some suitable arrangements for the other parties to review the data and respond accordingly. The use of the summary of the data is inconsistent with the requirements of Subsection 90.956.
An expert can rely on facts which have not been admitted into evidence upon which the expert bases his or her opinion, if experts in the field reasonably rely upon those facts in forming their professional opinion. But, this general proposition does not allow the admission of the summary to
establish the truth of what the summary asserts. C. Ehrhardt, Florida Evidence §§ 702.2 and 704.1 (2008 Edition). See also T. 181-88.
Nevertheless, under the APA, the above analysis does not mean that expert opinion testimony regarding the summary data and the conversion rates may not be considered.13/ The applicant's expert health care planner and Dr. Clohan, among others, opined that the 17.9 percent conversion factor, when compared to the 2.4 percent PSA conversion rate, is an indicator of need for a new CMR facility in the PSA. They also testified that the 17.9 percent rate is consistent with HealthSouth's experience in Florida and nation-wide (approximately 16 percent).
Assuming that the summary data is admissible and the expert testimony based thereon considered, such evidence is not persuasive regarding the need for the project.
Aside from the limited weight given to the applicant's conversion rate analyses, the main factor giving rise to a need for the proposed facility are alleged problems with geographic access for persons in the applicant's PSA needing CMR services and their families.
The roads in and out of the PSA area generally not congested, although there is testimony to the contrary, see, e.g., T. 545. Under normal driving conditions, all residents of
the PSA are able to access an existing CMR facility in less than approximately 70 minutes.
For residents who are not able to drive to the existing facilities to visit patients or participate in training prior to discharge, Shands provides assistance in the form of free transportation and other services, although whether this assistance is appropriate is not decided in this proceeding.
A "geographical barrier" that consists of inconvenient traffic patterns or a travel time of approximately
70 minutes is not a sufficient barrier to access when the application, as here, involves the establishment of CMR services, a tertiary health service.
The applicant did not sufficiently quantify the number of residents or families experiencing problems accessing existing CMR facilities in District 3.
The evidence did not show that existing providers or travel conditions compromised patient safety or quality of care.
The evidence did not show any inordinate delays in transferring patients to existing facilities.
Even if only the needs of the residents of the PSA are considered, the applicant did not show a need for the proposed project.
There is no specific statutory or rule definition of what constitutes "not normal" circumstances. However, it has
been said that "[t]he applicant must demonstrate and there must be some finding of fact that, without the requested lab [here CMR beds], the existing facilities are (or will be) unavailable or inaccessible, or the quality of care is (or will be) suffering from over utilization, or other evidence of that nature." Humana, Inc. v. Dep't of Health & Rehabilitative Servs., 492 So. 2d 388, 392 (Fla. 4th DCA 1986) (citations omitted).
By their nature, "not normal" circumstances are not classified as typical. To the contrary, "not normal" circumstances must be a departure from the normal state of affairs. See Fla. Health Scis. Ctr., Inc. v. Agency for Health
Care Admin., Case Nos. 00-0481, 00-0482, and 00-0485 (DOAH
March 30, 2001; AHCA Aug. 6, 2001, at 3-4), per curiam aff'd,
827 So. 2d 984 (Fla. 1st DCA 2002).
Here, the facts and circumstances which indicate problems associated with travel and admissions to existing CMR facilities in the District are normal and typical of the circumstances encountered by patients and families accessing tertiary health services throughout Florida, if not the nation.
"[T]raffic congestion in a health care district in Florida has, unfortunately, become a 'normal' condition. . . .
Likewise, a large elderly population in a health care district is also becoming a 'normal' circumstance in Florida." Tarpon
Springs Hosp. Found., Inc. v. Agency for Health Care Admin., Case No. 05-1465CON (DOAH Jan. 16, 2007; AHCA May 14, 2007, at
11), per curiam aff'd, 977 So. 2d 585 (Fla. 1st DCA 2008).
"In examining any application for a CON to perform tertiary health services, this Agency must necessarily focus on the applicable criteria as they impact the patient, not the patient's family." Bethesda Mem'l Hosp., Inc. v. Agency for Health Care Admin., Case No. 96-1029 (DOAH Feb. 24, 1998; AHCA June 9, 1998)(no need for additional neonatal intensive care unit beds).
Existing CMR providers can add comprehensive rehabilitation beds without CON review under certain conditions. Fla. Admin. Code R. 59C-1.005(6)(c); § 408.036(3)(j), Fla. Stat.
As a condition of participation, the federal Medicare system requires hospitals to discharge patients to appropriate care settings. No evidence indicated that patients referred home or to home health agencies were discharged to inappropriate settings.
The quality of care rendered by area CMR providers, including Shands and LRMC was unquestioned. The utilization at these hospitals is within acceptable limits, and not such that quality of care has been compromised.
It was not proven that the resident population of the PSA, or District 3, including the medically indigent population,
Medicare recipients and the elderly, has been or is likely to be denied access based on economic factors. See Fla. Admin. Code R. 59C-1.030(2).
The letters of support from physicians and hospitals are insufficient to support a finding of need for the project.
The evidence presented by the applicant in support of the access argument is not persuasive to justify approval of the project.
Long-term financial feasibility generally refers to the ability of the project to break even or show a profit within a reasonable period in the future and at an achievable volume. The projected volume of patient days submitted by the applicant is not reasonable and, in turn, places into question the long- term financial feasibility of the project. Osceolasc, LLC v. Agency for Health Care Admin., Case No. 08-0612CON (DOAH
Dec. 31, 2008; AHCA March 4, 2009).
Rule 59C-1.039(3)(c) provides: "A general hospital providing comprehensive medical rehabilitation in-patient services should normally have a minimum of 20 comprehensive medical rehabilitation beds. A specialty hospital providing comprehensive medical rehabilitation in-patient services shall have a minimum of 60 comprehensive medical rehabilitation in- patient beds. . . ." (emphasis added).
In adopting the original rule and in a rule challenge proceeding, a finding of fact was made that the Department of Health and Rehabilitative Services, the Agency's predecessor, "determined that it was generally more cost effective to utilize existing facilities, through conversion or expansion, than to start a new one." Hillsborough County Hosp. Auth. v. Dep't Health & Rehabilitative Servs., Case Nos. 91-6791RP, etc. (DOAH Feb. 28, 1992)(proposed amendments, including the 60-minimum bed rule, are valid)(emphasis added).
An agency is accorded broad discretion and deference in the interpretation of the statues and rules which it administers. Bd. of Podiatric Med. v. Fla. Med. Ass'n, 779 So. 2d 658, 660 (Fla. 1st DCA 2001)(citing Public employees Relations Comm'n v. Dade County Police Benevolent Ass'n, 467 So. 2d 987 (Fla. 1985)). Also, an agency's interpretation "should be upheld when it is within the range of permissible interpretations." Id. (citing Bd. of Trustees of Internal Improvement Trust Fund v. Levy, 656 So. 2d 1359 (Fla. 1st DCA 1995)). See also Fla. Dep't of Educ. v. Cooper, 858 So. 2d 394,
396 (Fla. 1st DCA 2003).
An agency is required to follow its rules. Gadsden State Bank v. Lewis, 348 So. 2d 343 (Fla. 1st DCA 1977). However, unlike the situation in Vantage Healthcare v. Agency for Health Care Admin., 687 So. 2d 306 (Fla. 1st DCA 1997), the
60-bed minimum requirement, although written in mandatory terms, appears to be a review criterion that must be balanced and weighed with other statutory and rule criteria. This is not an unreasonable interpretation of the rule, especially in light of the applicant's allegations of "not normal" circumstances. If there were a need for anything less than 60 beds within the District or a subpart thereof, under the alternative interpretation, at the very least, the needy would have to await the arrival of additional beds from an existing provider to meet the need.
RECOMMENDATION
Based on the foregoing Findings of Fact and Conclusions of Law, it is
RECOMMENDED that a final order be entered denying CON Application No. 10009.
DONE AND ENTERED this 24th day of November, 2009, in Tallahassee, Leon County, Florida.
S
CHARLES A. STAMPELOS
Administrative Law Judge
Division of Administrative Hearings The DeSoto Building
1230 Apalachee Parkway
Tallahassee, Florida 32399-3060
(850) 488-9675
Fax Filing (850) 921-6847 www.doah.state.fl.us
Filed with the Clerk of the Division of Administrative Hearings this 24th day of November, 2009.
ENDNOTES
1/ Shands/LRMC Exhibit 233 is incorrectly referred to as "223" in Volume 18 at 2516.
2/ For example, Ginger Carroll, CEO from West Marion, estimated that perhaps ten patients per month should go to inpatient rehab upon discharge. HS Ex. 1 at Bates Stamp 666; T. 93-94, 113, 254, 497. No one from West Marion corroborated this number.
See also HS Ex. 1 at Bates Stamp 677 for a letter similar to the Carroll letter from Ocala Regional Medical Center. T. 256.
3/ "The A, B, C is - that comes off of clinical codes; . . . more medical codes than rehabilitation." [T]he RU depicts how much rehabilitation the patient needs, and then the A, B, or C is more how much nursing care that patient needs."
4/ Ms. Gill reviewed the entire rehabilitation population of the TimberRidge facility for calendar year 2008 to determine whether those patents were receiving substandard care. To refine the scope of her analysis to those patients who were potential candidates for admission to a CMR facility, Ms. Gill segregated and analyzed only those patients who fell within the Ultra High RUG classification because, by definition, any patient falling within a lower classification would not qualify for admission to a CMR facility.
Ms. Gill's analysis demonstrated that the patients admitted to TimberRidge in 2008 were an older population which presents a more difficult case but that the patients were not staying in the facility for prolonged periods of time and that the percentage of patients discharged back to the community were above the national averages, even for CMR facilities.
In addition, Ms. Greenberg testified that her review of SNFs in Marion County to determine what percentage of patients were classified in the ultra high RUG grouping indicated that the numbers in Marion County were in fact consistent with statewide numbers.
5/ For example, the admission criteria are different; the average length of stays are different (approximately 14.5 days
versus thirty or more days at a SNF); minimum hours of therapy required per day are different; the hours of RN nursing care provided per patient day and the number of physician visits is different.
6/ The 1,206 CMS-13 cases reflects all patients residing within HealthSouth Springhill's primary service area zip code who were admitted to an acute care hospital, whether within or outside the zip code, with a CMS-13 code.
7/ Ms. Greenberg also determined the discharge status of the remaining patients. For example, it was determined that 1,344 patients were discharged to home or self care; 1,239 discharged to and ICF or SNF; 508 discharged to home health; 188 expired;
161 were discharged to hospice; and so forth. There is no tangible evidence that any of the patients discharged to a setting other than to a CMR facility was receiving inappropriate care after being discharged from an acute care hospital.
Rather, the applicant stressed that they might have received more appropriate care in a CMR setting. Appropriateness is generally determined by the patient's physician in conjunction with the care team. T. 1087.
8/ Location or zone one (northwest) contained zip codes 32696 and 32688: zone two (southwest) contained zip codes 34431, 34432, and 34481; zone three (northeast) contained zip codes 32113, 32134, and 34488; and zone four (southeast) contained zip codes 32179, 32195, 32784, and 34472.
9/ Mr. Tipton's study included one common point of origin, the Ocala location at U.S. 441 and State Road 40. The Kimley-Horn study travel times from this common point of origin were similar to the Tipton Travel Time Analysis.
10/ Ms. Greenberg stated that the difference between the two contribution margins was negligible and not material to the overall impact analysis.
11/ Like the contribution margin calculated by Ms. Greenberg for Shands, the contribution margin she calculated for LRMC was approximately 10 percent lower than the contribution margin used by Mr. Balsano for LRMC.
12/ "Section 90.956 requires that the proponent of the evidence make the summary and the data upon which the summary is based available to the other parties for examination and copying at a reasonable time and place. This provision ensures that the
parties have an adequate opportunity to inspect the material upon which the summary is based and make certain that it is accurate. . . .Summaries are admissible if the documents upon which they are based are admissible. For example, if the documents upon which the summary is based are hearsay, section 90.956 does not overrule a hearsay objection." C. Ehrhardt, Florida Evidence § 90.956 (2008 Edition). Also, "[t]o lay a foundation for the admission of a summary, section 90.956 requires the testimony of a 'qualified witness' that the summary is an accurate summary, chart, or calculation." Id.
13/ "Irrelevant, immaterial, or unduly repetitious evidence shall be excluded, but all other evidence of a type commonly relied upon by reasonably prudent persons in the conduct of their affairs shall be admissible, whether or not such evidence would be admissible in a trial in the courts of Florida."
§ 120.569(2)(g), Fla. Stat. Also, under Chapter 120, Florida Statutes, "any type of competent evidence (evidence 'admissible over objection in civil actions,' id.) may support a finding of fact, as long as it is substantial in light of the record as a whole." Miller v. State, Div. of Ret., 796 So. 2d 644 (Fla. 1st DCA 2001)(citation omitted). Further, "[h]earsay evidence may be used for the purpose of supplementing or explaining other evidence, but it shall not be sufficient in itself to support a finding unless it would be admissible over objection in civil actions." § 120.57(1)(c), Fla. Stat.
COPIES FURNISHED:
Richard Joseph Saliba, Esquire
Agency for Health Care Administration Fort Knox Building, Mail Stop 3
2727 Mahan Drive, Suite 3431
Tallahassee, Florida 32308
Mark A. Emanuele, Esquire Panza, Maurer & Maynard, P.A.
3600 North Federal Highway, Third Floor Fort Lauderdale, Florida 33308
Philip Blank, Esquire Blank & Meenan, P.A.
204 South Monroe Street Tallahassee, Florida 32301
Susan L. St. John, Esquire Amundsen & Smith
502 East Park Avenue Post Office Drawer 1759
Tallahassee, Florida 32302
Richard J. Shoop, Agency Clerk
Agency for Health Care Administration 2727 Mahan Drive, Mail Station 3
Tallahassee, Florida 32308
Justin Senior, General Counsel
Agency for Health Care Administration Fort Knox Building, Suite 3431
2727 Mahan Drive, Mail Stop 3
Tallahassee, Florida 32308
Thomas W. Arnold, Secretary
Agency for Health Care Administration Fort Knox Building, Suite 3116
2727 Mahan Drive
Tallahassee, Florida 32308-5403
NOTICE OF RIGHT TO SUBMIT EXCEPTIONS
All parties have the right to submit written exceptions within
15 days fro 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 cause.
| Issue Date | Document | Summary |
|---|---|---|
| Feb. 16, 2010 | Agency Final Order | |
| Feb. 16, 2010 | Agency Final Order | |
| Nov. 24, 2009 | Recommended Order | The applicant for a CON to provide comprehensive medical rehabilitation services did not prove by a preponderance of the evidence that, on balance, it satisfied the applicable statutory and rule criteria. |
