STATE OF FLORIDA
DIVISION OF ADMINISTRATIVE HEARINGS
KENDALL HEALTHCARE GROUP, LTD., d/b/a KENDALL REGIONAL MEDICAL CENTER,
Petitioner,
vs.
THE PUBLIC HEALTH TRUST OF MIAMI-DADE COUNTY, FLORIDA, d/b/a JACKSON HOSPITAL WEST; AND AGENCY FOR HEALTH CARE ADMINISTRATION,
Respondents.
/ VARIETY CHILDREN’S HOSPITAL, d/b/a NICKLAUS CHILDREN’S HOSPITAL,
Case No. 16-0112CON
vs.
Petitioner,
Case No. 16-0113CON
THE PUBLIC HEALTH TRUST OF MIAMI-DADE COUNTY, FLORIDA, d/b/a JACKSON HOSPITAL WEST; AND AGENCY FOR HEALTH CARE ADMINISTRATION,
Respondents.
/
CGH HOSPITAL, LTD., d/b/a CORAL GABLES HOSPITAL; TENET HIALEAH HEALTHSYSTEM, INC., d/b/a HIALEAH HOSPITAL; AND LIFEMARK HOSPITALS, INC., d/b/a PALMETTO GENERAL HOSPITAL,
Petitioners,
vs.
THE PUBLIC HEALTH TRUST OF MIAMI-DADE COUNTY, FLORIDA, d/b/a JACKSON HOSPITAL WEST; AND AGENCY FOR HEALTH CARE ADMINISTRATION,
Respondents.
/ EAST FLORIDA-DMC, INC.,
Case No. 16-0114CON
vs.
Petitioner,
Case No. 16-0115CON
AGENCY FOR HEALTH CARE ADMINISTRATION,
Respondent,
and
THE PUBLIC HEALTH TRUST OF MIAMI-DADE COUNTY, FLORIDA, d/b/a JACKSON HOSPITAL WEST; CGH HOSPITAL, LTD., d/b/a CORAL GABLES HOSPITAL; TENET HIALEAH HEALTHSYSTEM, INC., d/b/a HIALEAH HOSPITAL; LIFEMARK HOSPITALS, INC., d/b/a PALMETTO GENERAL HOSPITAL; AND VARIETY CHILDREN’S HOSPITAL, d/b/a NICKLAUS CHILDREN’S HOSPITAL,
Intervenors.
/
RECOMMENDED ORDER
A final hearing was held in this matter before Robert S. Cohen, Administrative Law Judge with the Division of Administrative Hearings (“DOAH”), on July 14, 15, 18 through 22,
25 through 29, and September 6 through 8, 21 through 22, and 26 through 30, 2016, in Tallahassee, Florida.
APPEARANCES
For Kendall Healthcare Group, Ltd., d/b/a Kendall Regional Medical Center and East Florida-DMC, Inc.:
Stephen A. Ecenia, Esquire
R. David Prescott, Esquire Craig D. Miller, Esquire Rutledge Ecenia, P.A. Suite 202
119 South Monroe Street Tallahassee, Florida 32302-0551
For Variety Children’s Hospital, d/b/a Nicklaus Children’s Hospital:
Geoffrey D. Smith, Esquire Susan Crystal Smith, Esquire Corinne T. Porcher, Esquire Smith & Associates
3301 Thomasville Road, Suite 201
Tallahassee, Florida 32308
For CGH Hospital, Ltd., d/b/a Coral Gables Hospital; Tenet Hialeah Healthsystem, Inc., d/b/a Hialeah Hospital; and Lifemark Hospitals, Inc., d/b/a Palmetto General Hospital:
Michael J. Glazer, Esquire Eugene Dylan Rivers, Esquire Steven M. Hogan, Esquire Ausley McMullen
123 South Calhoun Street Post Office Box 391 Tallahassee, Florida 32302
For The Public Health Trust of Miami-Dade County, Florida, d/b/a Jackson Hospital West:
Thomas Francis Panza, Esquire Paul C. Buckley, Esquire Angelina Gonzalez, Esquire Elizabeth L. Pedersen, Esquire Panza, Maurer & Maynard, P.A. Suite 905
2400 East Commercial Boulevard Fort Lauderdale, Florida 33308
Abigail Price-Williams, Esquire Eugene Shy, Jr., Esquire
Laura E. Wade, Esquire
Christopher Charles Kokoruda, Esquire Miami-Dade County
West Wing, Suite 109
1611 Northwest 12th Avenue Miami, Florida 33136
For the Agency for Healthcare Administration (“AHCA” or “Agency”):
Richard Joseph Saliba, Esquire Kevin M. Marker, Esquire
Agency for Health Care Administration Mail Stop 3
2727 Mahan Drive
Tallahassee, Florida 32308 STATEMENT OF THE ISSUE
Whether, on balance, Certificate of Need (“CON”) application number 10395 by The Public Health Trust of Miami-Dade County, Florida (“JW”) to build a 100-bed acute care hospital in Miami- Dade County, Florida, AHCA District 11, and/or CON application number 10394 by East Florida-DMC, Inc. (“DMC”), to build an 80- bed acute care hospital in Miami-Dade County, Florida, satisfy the applicable criteria and should be approved.
PRELIMINARY STATEMENT
This case involves the comparative review of applications filed by JW and DMC for CONs to establish an acute care hospital in Miami-Dade County, AHCA acute care District 11. On August 3, 2015, JW filed its letter of intent to establish a 100-bed acute care hospital, CON No. 10395. On the same date, DMC also filed its letter of intent to establish a 100-bed acute care hospital, CON No. 10394, which was later scaled down to 80 beds in its CON application. Subsequently, JW and DMC each filed its own CON application. Opposition statements to both proposals were filed by Coral Gables Hospital, Palmetto General Hospital, Hialeah Hospital, Palm Springs General Hospital, and Nicklaus Children’s Hospital (“NCH”) in November 2015. Jackson Health System (“JHS”) filed an opposition statement to the DMC project, while Kendall Regional Medical Center (“KRMC”) filed an opposition statement to the JW project as well. On December 4, 2015, AHCA issued its State Agency Action Report (“SAAR”) preliminarily approving JW’s application and denying DMC’s application. In late
December 2015, several existing providers and the denied applicant timely filed individual administrative challenges to AHCA’s preliminary decision. Petitioners included Coral Gables Hospital, Palmetto General Hospital, Hialeah Hospital (collectively “Tenet”), KRMC, DMC, and NCH. AHCA referred the petitions to the DOAH on January 11, 2016. Case numbers
16-0112CON, 16-0113CON, 16-114CON, and 16-0115CON were issued and
assigned to an ALJ in order to conduct a formal administrative hearing and issue a recommended order. The cases were consolidated on January 14, 2016. JW timely filed a motion to intervene, which was granted on January 15, 2016. The final hearing was held on July 14, 15, 18 through 22, 25 through 29,
September 6 through 8, 21, 22, and 26 through 30, 2016. At the final hearing, JW presented the testimony of: Carlos Migoya, CEO of JHS; Laura Hunter, Senior VP of Business Development and Strategic Planning; Mark Knight, CFO of JHS; Pedro Alfaro, Interim CEO and the CFO of Holtz Children’s Hospital; Yasmene McDaniel, Associate VP of Program Development and Physician Services at JHS; Daniel Armstrong, Ph.D., Associate Chief of Staff, Holtz Children’s Hospital; Physicians: Allan Levi, M.D.; Alexandre Ferreira, M.D.; Peter Paige, M.D.; Michael Goldberg, M.D.; Girish Kapur, M.D.; John Lew, M.D.; Nicholas Namias, M.D.; Juan Zambrano, M.D.; Experts: Armand Balsano, healthcare planner; David Levitt, healthcare planner; Henry Iler, land use expert; Cathy Sweetapple, traffic expert; and Wilfredo Alvarez, emergency services expert. JW offered the deposition transcripts of Rosa Kasse, a community witness, and Sanjay Razdan, M.D., a JHS physician. JW’s Exhibits 1, 2, 10, 15-26, 28-32, 34, 42, 45,
49, 63, 64, 78-84, 86-89, 103, 108, 109, 112, 114-116, 123, 125,
151, 158, 159, 161, 170, 172 (pp. 7, 25), 173, 175, 176, 180,
181, 183, 186 (JAX p. 1501), 202 (p. 4), 204 (pp. 1-10, 12, 13),
221, 223, 232 (pp. 2, 4, and 7), 234 (pp. 3 and 4), 235 (pp. 3,
6, and 18-22), and 247 (p. 15) were admitted into evidence. KRMC and DMC presented the testimony of: Michael Joseph, CEO of HCA East Florida Division; Scott Cihak, CEO of KRMC; Physicians: Orlando Enrizo, M.D.; Jack Klem, M.D.; Mark McKenney, M.D.; Ed Franca, M.D.; Braulio Sabates, M.D.; Experts: Daniel Sullivan, healthcare planner; Kathy Platt, healthcare planner; John McWilliams, traffic expert; and Darryl Weiner, healthcare finance expert. KRMC and DMC offered the deposition transcripts of the physicians: Joseph Averbach, M.D.; Enrique Fernandez, M.D.; Ulises Militano, M.D.; and Robert Hernandez, M.D. KRMC and DMC’s Exhibits 1, 3, 5, 7, 9, 10, 12, 14, 15, 17-20, 22-24, 27, 29, 44,
45, 59, 132, 153-55, 161-64, 167 (re: zip codes 33731, 33733,
33734 and 33735), 172, 173-2, 173-3, 174, and 176-1 were admitted into evidence. Tenet presented the testimony of Ana Mederos, CEO of Palmetto General Hospital; Patrick Downes, CEO of Coral Gables Hospital; and Patricia Greenberg, healthcare planner. Tenet also offered the deposition transcript of Lourdes Camps, COO of Hialeah Hospital. Tenet’s Exhibits 1, 2, 2A, 5, 6, 12-16, 18,
19, 21, 23, 24, 32, 33, 36-38, 41, 42, 51, and 54 were admitted into evidence. NCH presented the testimony of: M. Narendra Kini, M.D., CEO of NCH; Deise GranadoVillar, Chief Medical Officer; Michael Davis, VP of Strategic Business Development and
Innovation; Michael Durr, Interim CFO; Armando Llechu, VP of Clinical Operations; Michael Kushner, VP and Chief Talent Officer; Jackie Gonzalez, Chief Nursing Officer; Physicians: Jefry Biehler, M.D.; Marcos Mestre, M.D.; Leonard Feld, M.D.; and Expert: Patricia Greenberg, healthcare planner. NCH offered the deposition transcripts of Nancy Humbert, VP of Outpatient Services, and Keith Meyer, M.D., a NCH physician. NCH’s Exhibits 1-12, 14, 15, 22-24, 27-45, 52 (pp. 7 and 25), 53 (p. 13), 54
(pp. 36 and 73), 55 (p. 36), 62, 74, 78A, 78B, 79, and 94 (only
Circle Study, Google map runs, and impact analysis) were admitted into evidence. AHCA presented the testimony of Marisol Fitch, Health Services and Facilities Consultant Supervisor. AHCA’s Exhibit 15 was admitted into evidence. The 34-volume transcript of the final hearing was filed with DOAH on October 24, 2016.
Proposed Recommended Orders were due on or before December 5, 2016. The due date was later extended by stipulated order to December 19, 2016.
FINDINGS OF FACT
The Parties
Jackson Hospital West
JHS is a taxpayer funded health system located in and owned by Miami-Dade County. It is governed by The Public Health Trust of Miami Dade-County, Florida (“PHT”), a seven-member board. JHS owns and operates three hospitals in Miami-Dade
County (the “County”), Jackson Memorial Hospital (“JM”), Jackson North Medical Center (“JN”), and Jackson South Community Hospital (“JS”), as well as three specialty hospitals, Holtz Children’s Hospital (“Holtz”), Jackson Rehabilitation Hospital (“JRH”), and Jackson Behavioral Health Hospital (“JBHH”), and other healthcare facilities. Its applicant in this proceeding is JW which, if approved, will be another hospital in JHS.
JHS is an academic teaching institution, and the University of Miami (“UM”) is JHS’s medical school partner.
Over 1,000 UM residents staff JM pursuant to an operating agreement with JHS. JN and JS are not academic medical centers, and both facilities are predominately staffed by community physicians.
JHS’s mission is centered on its mandate to treat all Miami-Dade County residents regardless of their ability to pay. JHS provides millions of dollars of uncompensated care per year to charity and indigent patients, pursuant to its charitable mission as mandated by the County. In order to fund the provisions of indigent care, JHS annually receives substantial ($389 million in Fiscal Year 2015) sales tax and ad valorem tax revenues from the County, as well as supplemental Medicaid payments and Low Income Pool (“LIP”) funds from the State of Florida.
JM is a tertiary/quaternary care hospital and the major teaching facility for UM’s School of Medicine, with an extensive continuum of care. With over 1,490 licensed beds, JM is the only tertiary/quaternary hospital of its kind in Miami-Dade County. JM is home to Ryder Trauma Center, which is the only verified Level I trauma center in the county, and is the only hospital in Miami-Dade County that is licensed for adult and pediatric solid organ transplants.
JS and JN are both community hospitals operated as part of JHS in order to meet its countywide mandate. JS was acquired in 2001 to expand JHS’s service access into the southern portion of Miami-Dade County. This helped to ensure that as the county continued to expand southward, the residents in those newly developed areas would have access to JHS and its breadth of services. JS is licensed for 226 beds and is also home to a provisionally approved Level II trauma center. JS is a strong financial contributor to JHS. It has seen steady growth in its financial margins, as well as its average daily census in recent years.
Similarly, the JN facility was acquired by JHS in 2006 to facilitate access to the JHS network for the residents of the northern part of Miami-Dade County. At that time, many residents from that area of the county were seeking care at JM. The
facility is licensed for 382 beds and is also a financial contributor to JHS overall.
JHS’s experience in operating community care hospitals stems from operating its own community hospitals, and is supplemented by the experienced leadership team it has assembled. Many of the individuals who hold high-level leadership positions at JHS have an extensive history in establishing and/or operating governmental entities and community hospitals from a variety of healthcare systems, as well as hiring architects and construction companies for various development projects.
JHS is also largely complemented by its partnership with UM’s School of Medicine and UHealth, UM’s physician group. As UM’s major teaching hospital, JHS employs over 1,100 full-time residents and fellows, which translates to over 1,400 full-time equivalent (“FTE”) positions dedicated solely to the training and education of future doctors.
JHS’s partnership with UM fosters significant research and scholarship, which helps ensure JHS is at the forefront of medical innovation and a leader in quality medical care. This is a benefit that is embedded in all of the JHS hospitals. Senior VP Laura Hunter testified that “what distinguishes Jackson really from other organizations is there are other providers that really provide that tertiary, that specialized care, but it’s the link that makes [JHS] a quaternary care facility that ties in those
programs that are highly specialized and includes research, education and teaching, and really pushes JHS beyond any provider in this region.”
East Florida
DMC is an affiliate of Hospital Corporation of America (“HCA”), the largest provider of acute care hospital services in the world. East Florida will operate as part of HCA’s East Florida Division (“EFD”). The EFD is comprised of 14 hospitals,
12 surgery centers, six diagnostic imaging centers, and a regional laboratory, along with other related services. HCA, through the EFD, operates three hospitals in Miami-Dade County: KRMC, Aventura Hospital and Medical Center (“Aventura”), and Mercy Hospital, a Campus of Plantation General Hospital (“Mercy”).
Kendall
KRMC is also an affiliate of HCA and operates as part of the EFD. KRMC, a 417-bed tertiary provider, is comprised of
380 acute care beds, 23 inpatient adult psychiatric beds, eight Level II neonatal intensive care unit (“NICU”) beds, and five Level III NICU beds. KRMC is a verified Level II trauma center and a provisional Level I trauma center.
KRMC is also an academic teaching facility, receiving freestanding institutional accreditation from the Accrediting Council for Graduate Medical Education (“ACGME”) in 2013. KRMC’s
residency programs consist of surgery, internal medicine, emergency medicine, and anesthesia, and KRMC has an application pending for a surgical critical care fellowship program. KRMC is one of only six private hospitals in the country to receive ACGME approval for an anesthesia residency program. Its teaching programs are affiliated with the University of South Florida, Nova Southeastern University, and Florida International University. KRMC also participates in scholarly and clinic research.
KRMC has garnered many quality indicator awards. It has received the Joint Commission key quality award every year since 2011, is a Joint Commission top 400 hospital, has received the Truven Analytics top 100 award for clinical excellence eight times, is a gold standard facility with the American Heart Association, and has been awarded The Distinguished Hospital Award for Overall Clinical Excellence for eight years from HealthGrades, the largest independent healthcare ratings organization in the United States. This rating is within the top 5% of hospitals in the nation for overall clinical quality.
KRMC continuously receives 5-star ratings in many clinical service areas, including stroke care, pulmonary care, cardiac care, gastroenterology care, respiratory care, and maternity care. It is recognized as the top hospital in Miami- Dade County for its work in orthopedics. It has also developed a
Stroke Program which received the "Get with the Guidelines" Gold Stroke Award given by the American Heart Association and Stroke Association.
In 2013, KRMC became the first trauma program in Miami- Dade County to receive verification from the American College of Surgeons for trauma services.
Tenet
Palmetto General Hospital (“PGH”), Hialeah Hospital (“Hialeah”), and Coral Gables Hospital (“CGH”) are wholly-owned subsidiaries of Tenet South Florida.
PGH, a 368-bed tertiary facility that opened in the early 1970s, has 297 licensed acute care beds, 48 adult psychiatric beds, 52 ICU beds, and 15 Level II NICU beds. It is located at the Palmetto Expressway and Northwest 122nd Street. The hospital employs about 1,800 people and has approximately 600 physicians on its medical staff.
PGH is a tertiary level facility offering adult open heart surgery, a comprehensive stroke center and robotic surgery. It has inpatient mental health beds and serves the community as a Baker Act receiving facility. It also offers obstetric (“OB”) and Level II NICU services with approximately 1,800 births a year. Both as a nurse and an administrator, CEO Ana Mederos testified that it is important for a hospital that has OB services to also have a NICU.
PGH’s emergency department treats approximately 65,000 patients a year and has pediatric and general adult emergency room sections. While it is a busy department, PGH has the capacity for more patients.
PGH had approximately 22,000 inpatient admissions in its most recent year, but that is a decline of approximately 7% from the prior year. There are many reasons for this decline, including pressure from managed care organizations, the continued increase in the use of outpatient procedures, improvements in technology, and increased competition in the Miami-Dade County market. Ms. Mederos observed that the demand for inpatient beds in the future is going to continue to decline.
PGH is moving forward with a project to add an additional 31 observation beds to help improve throughput and to better accommodate the increasing number of observation patients.
PGH is accredited and serves a significant teaching function in the community. It has 89 residents and fellows. The hospital provides fellowships in cardiology, critical care and interventional cardiology, and is beginning rotations in neurology and gastroenterology. Residents from Larkin General Hospital also rotate through PGH.
PGH offers high-quality care and uses various metrics and indicators to measure and monitor what is going on in the
hospital. The hospital has also been recognized with numerous awards.
The hospital treats Medicaid and indigent patients.
The hospital also serves a largely Hispanic community. PGH’s Medicaid rate of approximately $4,200 per patient is significantly lower than the almost $7,300 per patient rate at JHS.
Through Tenet, PGH has contracts with nearly every insurance and managed care company that serves the community.
PGH has an office dedicated to helping patients get qualified for Medicaid or other financial resources which not only helps the hospital get paid for its services, but also assists patients and families to ensure they have benefits on a going forward basis. About 12% to 15% of PGH’s patients annually are completely unfunded.
PGH only transfers patients if there is a need for a service not provided at the hospital or upon request by the patient. PGH does not transfer patients to JHS or anywhere else just because the patient cannot pay. With regard to trauma patients, JHS is accommodating when there is a request for transfer. JHS is not as easy to deal with on other transfers.
PGH pays physicians to take calls in the emergency department, which also obligates those physicians to provide care to patients that are seen at the hospital.
PGH is a for-profit hospital that pays income taxes and property taxes and does not receive any taxpayer subsidies like those received by JHS.
PGH generally serves the communities of Opa Locka, Hialeah, Miami Lakes, Hialeah Gardens, Doral, and Miami Springs. In reality, all of the hospitals in the county are competitors, but more direct competition comes from Palm Springs Hospital, Memorial in Miramar, Mount Sinai, KRMC, Mercy and even its sister hospital Hialeah.
Hialeah first opened in 1951 and is a 378-bed acute care facility employing 900, with 356 acute care beds, 12 adult psychiatric beds, and ten Level II NICU beds. The emergency department has 25 beds. It offers services including cardiac, stroke, robotic surgery, colorectal surgery, and OB.
While it has 378 licensed beds, its average daily census is approximately 142 patients. The hospital has plenty of available capacity.
Inpatient admissions are on the decline at Hialeah and were down approximately 1.6% year to date in 2016 compared to the prior year.
The hospital treats Medicaid and indigent patients.
Approximately 12% of the patients are unfunded. Hialeah also has contracts with most or all of the 30 Medicaid-managed care plans
that serve the area. Hialeah does not receive tax dollars for providing care to the indigent.
Like other hospitals in the county, Hialeah competes with numerous other hospitals such as Palm Springs, Larkin, PGH, Westchester, Jackson Main, UM, CGH, Miami Medical Center, and North Shore Medical Center.
Hialeah serves the Doral area. It has physicians with offices in the Doral area that regularly admit patients to the hospital. Hialeah also participates on the Doral Business Council and provides outreach services in that community. The hospital also provides educational meetings and free screenings such as health fairs.
CGH is located in the City of Coral Gables and is near the border between Coral Gables and the City of Miami on Douglas Road. It first opened in 1926. Portions of the original structure are still in use.
CGH has 245 licensed beds, approximately 570 employees, and 350 members on its medical staff. The hospital has a full service emergency room. Its service lines include general surgery, geriatrics, urology, treatment of cardiovascular and pulmonary disease, and others. The hospital has eight operating rooms and offers robotic surgery. The emergency department has
28 beds divided into the main area and a geriatric emergency
room. The hospital provides about 26,000 emergency room visits a year. The emergency room is never at maximum capacity.
The hospital also has about 8,500 inpatient admissions per year and has never reached maximum inpatient capacity. The hospital has plenty of capacity to serve additional patients as its average occupancy is less than 40%.
Mr. Patrick Downes has been involved in initiatives to make CGH more efficient. Overall, the hospital’s length of stay is dropping which adds to the decreasing demand for inpatient services. The hospital is accredited by the Joint Commission, has received multiple awards and provides high-quality healthcare to its patients. The hospital also has a full range of contracts with a broad array of managed care companies as do the other Tenet hospitals.
The hospital treats Medicaid patients and, like PGH, its total Medicaid rate is about $4,200 per inpatient. Coral Gables has a similar program to PGH to help patients get qualified for Medicaid and other financial services. Mr. Downes described the success they have had in helping patients apply for coverage under the Affordable Care Act. This is a “win–win” situation for the hospital, the patients and their families.
CGH also provides services to indigent patients and self-pay/charity is about 8% to 10% of the hospital’s care. The hospital does not transfer patients just because they are
indigent. Physicians are compensated to provide care in the emergency room and are expected to continue with that care if the patients are admitted to the hospital, even if they do not have financial resources. CGH also pays income and property taxes, and does not receive any taxpayer support.
Coral Gables competes with all of the Miami-Dade hospitals although some are more immediate competitors such as South Miami Hospital, Doctor’s Hospital, JM, UM, Mercy, Westchester, Miami Medical Center, JS, PGH, Hialeah, KRMC, and Mount Sinai.
Nicklaus
NCH, formerly Miami Children's Hospital, was established in 1950 by Variety Club International. NCH is South Florida’s only licensed specialty hospital exclusively for children, with more than 650 attending physicians and 130 pediatric subspecialists. NCH has 289 licensed beds, of which
218 are acute acre, 20 are child psychiatric, 21 are Level II NICU, and 30 are Level 3 NICU. NCH is part of the Miami Children’s Health System, a not-for-profit corporation.
Through testimony elicited from nearly every witness called during the hearing, NCH has an outstanding reputation for providing high-quality care for children in Miami-Dade County. No witnesses, including those called on behalf of JHS and DMC, offered any testimony contrary to NCH providing excellent care.
Like JHS, NCH is an academic medical center offering training for residents and fellows. NCH is the largest pediatric medical education center in the southeastern United States. NCH participates in numerous clinical trials and is on the forefront of innovation in pediatric medicine.
NCH has one of the largest pediatric emergency departments in the country, with nearly 90,000 visits per year. It is a designated Pediatric Trauma Center. NCH’s Life Flight Services has won numerous awards, including the most prestigious award available to an acute care transport team, ranking it among the very elite in the Country. NCH provides pediatric ECMO (Extracorporeal Membrane Oxygenation), and has one of the few portable FFA approved pediatric ECMO machines in the County.
NCH is focused on providing pediatric patients in Miami-Dade County with the right care, in the right setting, at the right time. To this end, NCH has expanded its urgent and ambulatory care centers throughout Miami-Dade County to ensure that patients have convenient access to outpatient and specialty care, including one located in Doral and one located near Doral in Miami Springs. NCH has invested hundreds of millions of dollars in creating a telehealth program to allow access to pediatric specialists in areas where specialists are in short supply.
NCH has developed affiliations and partnerships with other Florida hospitals, including Golisano Children's Hospital at Lee Memorial Health System in Fort Myers and Jupiter Medical Center in Jupiter, to help spread its expertise and specialties throughout Florida.
NCH is the dominant provider of pediatric services in the proposed service areas of JW and DMC. There is some dispute over the number of potential pediatric inpatient admissions at each of the proposed hospitals. However, there is no dispute that the volume of pediatric inpatients treated at each of the proposed hospitals would be low. NCH witnesses presented substantial testimony on the link between pediatric volume and quality of care.
Patients served by low volume pediatric providers do not have access to the same range and caliber of pediatric subspecialists as are available at NCH. For example, one of the leading causes of childhood death is unrecognized child abuse. The ability to properly identify child abuse victims is compromised at low volume pediatric providers.
Pediatric patients referred to NCH for tertiary care from a community hospital, have significant and potentially life- threatening delays in receiving the appropriate care they need.
AHCA
AHCA is the state agency responsible for Florida’s certificate of need program, pursuant to chapter 408, Florida Statutes.
The Proposals
Jackson West
In fiscal year 2013-2014, JHS’s leadership team began discussing possible expansion opportunities in order to meet ongoing community needs. Among the options discussed was the expansion of JHS’s presence in the western Miami-Dade County area, the only quadrant of the county where the JHS hospitals and related outpatient facilities do not have a major presence.
The initial discussion of expansion into the western quadrant was based on the idea of placing a Children’s Ambulatory Pavilion and a free-standing emergency department (“FSED”) in that area. With that in mind, JHS’s internal planning team conducted an initial study in 2014 of the western Miami-Dade County market in order to ascertain whether the type of services being discussed could feasibly be expanded into that part of Miami-Dade County.
After an internal review of the data, it became apparent to JHS’s leadership team that significant need and opportunity for expansion existed in the western area of the county. Accordingly, in 2014, JHS hired an outside consulting
firm, Kurt Salmon & Associates (“KSA”), to validate the internal study completed by JHS’s team, and to consult on the advisability of several land acquisition options available to JHS. The initial thrust of the study centered on outpatient services and attendant facilities.
KSA completed its initial analysis on opportunities to meet the county residents’ healthcare needs and advised that there was an unmet need in western Miami-Dade County for both adult and pediatric outpatient services, including a FSED.
Among the properties considered for purchase by JHS was a site located at 7800 Northwest 29th Street, Doral, Florida 33122. Through a collaborative review done by KSA and JHS, it became apparent that this site would be best suited for a medical campus, such as what was envisioned for JW. In the eyes of JHS administrators, the site has a threefold benefit: easy access to residents of the area through an improved roadway system, an expansive daytime working and visitor population, and its location outside of residential neighborhoods.
Once JHS’s leadership decided to move forward with purchasing the site, they obtained all necessary approval from the PHT and the Miami-Dade Board of County Commissioners. In March 2015, the PHT acquired the 27.3 acre site.
Simultaneously, when KSA found sufficient unmet need for the proposed outpatient services being considered by JHS, it
also preliminarily identified an unmet need for adult inpatient services in western Miami-Dade County. At that time, no decision was made on the feasibility of an acute care hospital. KSA identified the need for adult acute care services that prompted JHS’s leadership team to further investigate and validate this preliminary finding.
In April 2015, the JHS leadership team engaged Balsano Consulting to conduct an independent CON analysis for an acute care hospital on the recently purchased Doral property in order to assess whether a real need existed in the area and whether JHS could fill the demand. Balsano’s analysis was completely separate from the assessment originally conducted by JHS in 2014 and the assessment completed by KSA in 2014-2015. Once completed, Balsano’s CON analysis indicated that there was need in western Miami-Dade County for a 100-bed acute care hospital located on the JW medical campus.
Based on Balsano’s analysis and the comprehensive review conducted by JHS’s leadership team, JHS decided to apply for a CON for a 100-bed hospital to be located on JW’s medical campus. The campus is intended to be a fully integrated facility that will have a full range of outpatient and adult inpatient services that will improve access to needed inpatient services for the residents of the western quadrant of the county. The project is also conditioned on the provision of care for high
levels of Medicaid covered patients (22% of hospital discharges) and uninsured patients (3.2% of hospital discharges). Based on the projections indicating a low pediatric census, JW will not have an inpatient pediatric unit, but proposed to care for pediatric patients under certain circumstances, especially if they presented through the emergency room.
Doral Medical Center
DMC proposes to build an 80-bed community hospital in the residential district of Doral, consisting of 72 medical/surgical (acute care) and eight OB beds. The hospital will offer a full range of non-tertiary services, including emergency, imaging, surgery, intensive care, cardiac catheterization, and women’s services, including an OB unit and pediatric care.
The hospital will be located in the city of Doral’s growing residential district on Northwest 41st Street between Northwest 109th Avenue to the east, and Northwest 112th Avenue to the west. Before the hospital is built, KRMC will construct and operate a freestanding emergency department at this location that will eventually become the emergency department of DMC. Engineering work for the freestanding emergency department is already in progress and is due to open in fall 2017.
HCA EFD’s proposal to build DMC stems, in part, from its desire to decompress KRMC, which is the dominant provider of
hospital services to the Doral community. KRMC currently operates a family medicine clinic in Doral that provides primary care services to pediatric, adult, and geriatric patients.
KRMC has grown significantly from a community hospital to a regional tertiary provider. Since 2011, KRMC has spent
$40 million on new equipment, and added a number of significant new services including a trauma program, a burn care unit, a Level III NICU program, and pediatrics.
Overall, KRMC consistently operates above 75% occupancy, and during the busy winter season, its occupancy regularly exceeds its 417-bed count. Depending on the mix of patients on any given day, units can run at 95-plus percent capacity, even though the hospital’s overall occupancy is only at 75%. KRMC’s intensive care unit and special care unit are at
90-plus percent occupancy. Its emergency department treats approximately 95,000 patients per year.
KRMC is currently expanding its facility through a $90 million, 57-net bed addition. The addition includes construction of a 96-bed tower, and converting semi-private rooms into private rooms and ancillary service units, netting an additional 57 new beds. KRMC is also adding four more operating rooms at a cost of
$10 million, to bring the total number of operating rooms to 14. The hospital is planning the new beds, in large part, to meet existing capacity constraints so that it can focus on more
tertiary services and higher acuity services such as ICU, pediatric ICU, trauma ICU, and burn ICU. These additional beds will not affect the need for the beds at DMC because these are services that DMC does not plan to offer.
KRMC is a landlocked facility, and its limited ability to expand in the future will not keep pace with the demand for its services. KRMC will require increased capacity over and above that for which it already has plans.
KRMC’s current market share in Doral is in excess of 40%, whereas the nearest competitor is around 20%.
Currently, KRMC provides services to patients from Doral, Hialeah, Homestead, east toward the City of Miami, Sweetwater, and generally the southwestern quadrant of Miami-Dade County. As a tertiary provider, the hospital receives transfer patients from all over Miami-Dade County, as well as from west Florida, Broward County, Palm Beach, and the Treasure Coast.
Aside from the letters of support received from several KRMC medical staff members, community physicians on the KRMC medical staff testified about the patients they treat at the hospital that are from Doral, as well as their desire to seek medical staff privileges at DMC should it be constructed. KRMC’s medical executive committee, on behalf of the KRMC medical staff, as well as the KRMC board of trustees, unanimously passed resolutions supporting the establishment of DMC in Doral.
AHCA’s Decision
Although both applications met the statutory criteria for approval, the Agency preliminarily approved JW’s CON application and denied DMC’s Application.
The Agency published its preliminary approval on December 4, 2016, in a SAAR.
The SAAR is mostly a restatement of the information presented in the applications. There is only one paragraph in the entire document that purports to explain why the Agency chose to preliminarily approve JW over DMC:
The Agency has determined that pursuant to the criteria specified in 408.035(2), Florida Statutes, CON application #10395, on balance, best satisfied the statutory criteria including the extent to which the proposed service will enhance access to healthcare for residents of the service district and the applicant's past and proposed provision of healthcare services to Medicaid patients and the medically indigent.
Marisol Fitch, supervisor of AHCA’s CON and commercial- managed care unit, testified for the Agency, and pointed to this paragraph as the reason the Agency preferred JW’s Application over DMC’s. The paragraph generally alludes to JHS’s historic provision of Medicaid services and the condition JW placed on its application that 22% of its discharges will be Medicaid patients.
Ms. Fitch also testified that two other factors weighed heavily in favor of approving JW’s CON application over that of
DMC’s. First, at the time the applications were reviewed by the Agency, JHS had already purchased the site on which it intended to build its proposed hospital; DMC had not. Second was the fact of the EFD’s decision not to implement a CON it was awarded in the mid-2000’s in an area south of KRMC with a completely different service area.
Statutory Review Criteria
The Applicants’ Views
Section 408.035(1): The Need for the Health Care Facilities and Health Services Being Proposed
Generally, applicants are responsible for demonstrating need for new acute care hospitals. DMC established that geographic features surrounding Doral create access barriers for the residents of the area. Doral is a densely-populated community that is growing quickly and lacks a readily accessible hospital. KRMC is a growing tertiary facility that cannot expand to meet its future demands, and DMC will help decompress KRMC’s acute care load so it can focus on its tertiary service lines.
Unusually, the greater Doral area (including Doral's residential, commercial, manufacturing and warehousing districts) is disconnected from the rest of Miami-Dade County to the North and East by a waterway or canal. The canal runs under the Turnpike (the western edge of Doral), and travels north and east past the Miami International Airport (the southeastern edge of
the Doral area). Few streets cross the canal, which limits the access Doral residents have to the rest of the county and the Tenet hospitals to the northeast of Doral. State Route 934, State Route 826 (the “Palmetto Expressway”), State Route 969 and the Ronald Reagan Turnpike (the “Turnpike”) are the only major thoroughfares that provide broad access into and out of the greater Doral area to the north and east of the area. Federal Highway 27 parallels the canal on the north side of the canal- further obstructing travel flow between Doral and north/northeastern Miami-Dade County.
A few blocks to the south of the canal and Highway 27 is a railroad line that links to a large rail switching yard just north and west of the Miami International Airport (“MIA”). The rail yard is a major obstruction to ingress and egress of the greater Doral area. The rail line runs parallel to the canal and Highway 27. The rail line travels under the Turnpike, as does the canal. From the Turnpike to the north and the MIA to the southeast, warehouses, auto and marine salvage yards, and other heavy industrial businesses populate the landscape.
The rail switching yard extends from State Road 934 down to the edge of the MIA. There is no ability to access the eastern portions of the county without driving north to State Route 934, or south to State Route 836 on the southern edge of the greater Doral area. In addition, any access to the eastern
portion of the county requires a traveler to drive around the
MIA.
Hospitals near the Doral area, other than KRMC, are
located to the east/northeast of these geographic barriers to access. Data shows that few Doral area patients are willing to cross the canal and make their way north to seek hospital services from the Tenet facilities. Based upon historical data and utilization patterns, it is also unlikely that a large portion of patients from the Hialeah or Palmetto area will travel south to seek hospital services from DMC.
West of the greater Doral area is the Turnpike, and to the west of the Turnpike is the East Coast Buffer Zone for the Everglades, as well as multiple retention ponds. The City of Doral is bordered on the west by the Everglades, and thus there is no access to healthcare or any other amenities to the west of the city and the greater Doral area. Immediately east of the Turnpike is the Doral residential area, where the DMC site is located.
These barriers to access, Doral’s dense and growing population, and KRMC’s growing volume clearly support the need for the DMC proposal.
As a new 80-bed community hospital, DMC projects to serve the greater Doral community. Specifically, its Primary Service Area (“PSA”) includes zip codes 33172, 33178, 33182,
33174, and 33184, and it is the area from which DMC expects to draw 75% of its patients. The Secondary Service Area (“SSA”) includes zip codes 33194, 33126, 33144, 33185, 33010, 33012,
33016, 33018, 33165, 33166, and 33175, which is the area from which approximately 25% of DMC's patients will be drawn.
DMC received over 1,000 letters of support for its proposed hospital, including letters from the chairman of the board of the Doral Business Council, the Employees of Hasbro Latin America, the former Mayor of Doral, Juan Carlos Bermudez, and State Representative Jose Felix Diaz.
JW set out six factors in its application that it believed demonstrated need for its proposed hospital:
The proposed project will serve a significant portion of patients who historically have care access problems – the indigent and Medicaid populations;
The Jackson Health System currently serves residents of the defined 8-ZIP Code Primary Service Area (PSA) and 4-ZIP Code Secondary Service Area (SSA) and the proposed service area represents a fragmented medical market capable of supporting its own community hospital without impact to existing providers;
The Jackson West Freestanding ED and ambulatory center development project is underway and provides unique development infrastructure for the proposed hospital;
The Jackson West Campus provides additional opportunity for partnership with University of Miami's Miller School of Medicine and further affiliation with Florida
International University's Herbert Wertheim College of Medicine;
There is strong physician and community support for the development of an integrated network of services in West Miami-Dade; and
The new hospital will add to the financial viability of JHS and its ability to continue to support its charitable mission.
JW’s PSA consists of zip codes 33122, 33126, 33144, 33166, 33172, 33174, 33178, and 33182. JW’s SSA includes zip codes 33155, 33165, 33175, and 33184.
JW’s health planners defined its service area by analyzing Miami-Dade County population data, JW’s service area population data, JHS patient historical utilization by zip code, use rates, the proposed location of JW, the location of other hospitals, major roadways, other geographic barriers, and market shares.
When identifying the zip codes for JW’s PSA and SSA, JW’s health planner, Armand Balsano, carefully assessed the impact of the factors outlined above in order to create a service area that was consistent with the supporting data, but also reasonable in light of the population’s travel patterns and geographic restrictions. Rather than designating zip codes into the PSA and SSA based solely on a strict ranking system by projected admissions, Mr. Balsano, while following the statutory criteria, also considered proximity to JW’s proposed location.
This resulted in the inclusion of the immediately adjacent zip code, 33166, in the PSA. While different from the approach employed by DMC’s health planner, Kathryn Platt, this is a reasonable approach, particularly since identifying the service area in ranking order would place JW’s home zip code and the adjacent zip code, 33166, in the SSA. This would be an illogical and skewed outcome as residents from both zip codes are highly likely to utilize JW’s facility due to its close proximity to their homes. This methodology was found to be reasonable and compliant with section 408.037(2), Florida Statutes (2016) by AHCA and Marisol Fitch.
Mr. Balsano also projected JW’s future utilization. As part of his methodology, Mr. Balsano looked at all discharges from JW’s PSA, grouped them into age cohorts, and created an
area-wide use rate. Mr. Balsano intentionally chose this methodology, instead of a zip code specific methodology, in order to minimize the outlier year-to-year fluctuations one would get using a smaller sample size.
Ms. Platt criticized JW’s CON application for using an area-wide use rate instead of a zip code specific use rate. As part of her critique, Ms. Platt put forth an alternative methodology for calculating JW’s utilization projection by using the zip code specific use rate; however, this alternative projection only has a difference of one patient from
Mr. Balsano’s original utilization projection. Ms. Platt’s results support the reasonableness of Mr. Balsano’s methodology.
Similarly, comparing DMC’s projected discharges to JW’s projected discharges shows they are nearly identical. Regardless of Ms. Platt’s disagreement with the accuracy of JW’s projections, for their first year, DMC is projecting 3,142 discharges and JW is projecting 3,141 discharges; they are off by only one discharge. For the last year projected by each hospital, both DMC and JW projected 4,886 discharges.
As Mr. Balsano testified at the final hearing, “although there are subtle distinctions between both applications and how they define the market, or what their market share was, or the zip codes included in their primary and secondary service area, [both applicants are] essentially saying there’s a need.” Mr. Balsano’s area-wide use rate methodology is appropriate and has produced a reasonable utilization projection for the JW project.
As the Tenet witnesses eloquently pointed out, the lack of a hospital in Doral is not itself an indication of need. In addition, population growth, and the demands of the population for inpatient hospital beds, cannot be considered in a vacuum. Sound healthcare planning requires an analysis of existing area hospitals, including the services they offer and their respective locations; how area residents travel to existing hospitals, and
any barriers to access; the utilization of existing hospitals and amount of capacity they have; and other factors which may be relevant in a given case.
The population of Doral currently is only about 56,000 people. It is not as densely populated as many areas of Miami- Dade County, has a number of golf course communities, and is generally a more affluent area with a higher average household income than much of Miami-Dade County. As set forth in JW’s CON application, the better payer mix in Doral was a significant factor behind its decision to file its CON application.
Although there is not a hospital in Doral itself, there are a number of hospitals nearby. PGH and Palm Springs Hospital are just north of Doral. KRMC is just south of Doral. Hialeah is northeast of Doral. CGH, Westchester General Hospital and NCH are southeast of Doral. JHS and all of the facilities in and around JHS’s main campus are east of Doral. However, as described in paragraphs 82-84 above, there are perceived, and based upon patient flow and utilization, actual geographic barriers to many of these facilities.
Residents of the Doral area have many choices in hospitals with a wide array of services, and they are accessing them. The parties to this case, as well as other existing hospitals, all have a share of the Doral area market. JW calls this “fragmentation” of the market and casts it in a negative
light, but the evidence showed this to be a normal phenomenon in an urban area like Miami with several hospitals in healthy competition with each other.
Among the experts testifying at the hearing, it was undisputed that inpatient acute care hospital use rates are on the decline. There are different reasons for this, but it was uniformly recognized that decreasing use rates for inpatient services, and a shift toward outpatient services, are ongoing trends in the market. Recognizing the need for outpatient services in the Doral area, both JW and DMC (or, more accurately, their related entities) have proposed outpatient facilities and services to be located in Doral.
JW’s overall argument for need is not compelling.
The fact that it will serve Medicaid and indigent patients is of relatively little value considering DMC projects to serve essentially the same number of Medicaid and indigent patients, and at a much lower cost to the Medicaid program. Further, while JHS already generates some discharges from the Doral area, the number of discharges is not significant. Other providers, particularly KRMC, have historically provided a much higher level of service to Medicaid patients within the service area.
Also, although claiming that the development of the JW freestanding ED and ambulatory center is “underway,” JHS has not started to build anything on its site.
While the extensive teaching and training relationships between JHS, UM, and Florida International University (“FIU”) are laudable, there is no evidence that the JW project will provide additional opportunities to partner with UM or FIU, as UM’s role staffing JW with physicians has not been defined or formalized, and none of the UM or JHS affiliated physicians who testified at the final hearing have made a commitment to actually provide services at JW. JW did not call anyone from FIU to testify at hearing as to that entity’s involvement, if any, in the proposed new hospital project.
JHS’s claim that JW would add to the “financial viability” of JHS is directly contrary to JHS’s operational experience with all of its various healthcare ventures, including the operations of all of its hospitals. The Agency reviewed this statement and included it in the SAAR; however, because there was “not much evidence provided” in the JW CON application pertaining to the statement, the Agency was not able to give it much weight.
The evidence at final hearing demonstrated that contrary to JW’s statement in its application, the addition of JW to JHS will actually further diminish, rather than enhance, the financial viability of JHS.
JS, which was used as an operational example for JW, loses money from operations and only makes up those losses through redistribution of tax dollars. This finding is not made
to imply that JHS is not entitled to use the dollars it legally receives from tax revenues for operations and even expansion of its facilities and services. However, the need for tax dollars to support JHS’s various campuses that are not self-supporting, whether through a disproportionate share of indigent care being provided by JHS, leads to the need to examine whether the construction of yet another JHS campus in Miami-Dade County will have a positive impact on JHS’s ability to provide care throughout its system.
JW stated in its application that “insured patients' use of the Jackson Hospital West will provide a positive financial contribution margin allowing for continued service to the uninsured.” However, a contribution margin does not equate to bottom line profitability. Contribution margin is revenues minus variable expenses; the leftover funds are to cover fixed costs. Thus, the assertion that JW, a small community-based hospital, will post a positive contribution margin does not support the claim that JW will ensure the financial viability of JHS.
Even using a contribution margin analysis, the JW project will have a negative financial impact on the JHS system. DMC healthcare finance expert Darryl Weiner performed a contribution margin analysis that demonstrated the development of
the JW hospital will, conservatively, cause an $11 million negative impact on JHS.
There is strong historical support for Mr. Weiner’s conclusion. Small community hospitals, like JW, are generally not profitable. The last small community hospital constructed in South Florida was the new 80-bed Bethesda Memorial West facility in 2013. Bethesda West is affiliated with the 400-bed Bethesda East Hospital. Like JHS, both Bethesda facilities file consolidated financial statements with AHCA because they are on the same license. In 2010, 2011, and 2012, prior to Bethesda West opening, Bethesda East posted operating margins of $11 million, $15 million, and $13 million, and total margins of $15 million, $17 million, and $20 million. After Bethesda West opened, Bethesda East posted operating margins of negative
$6 million in 2013 and 2014, and negative total margin, an approximate $20 million loss.
Added to the profitability issue of JW is the fact that at least one quarter, and probably more, of the patients that JW will serve will be charity, bad debt, or Medicaid patients.
Considering the historical lack of profitability of community hospitals generally, and JHS’s in particular, JW would have to operate extraordinarily efficiently to break from this trend.
It is true that JHS does operate profitably when the nearly $500 million in nonoperative revenue (i.e., taxes, LIP, other government subsidies) it receives is included. However, without its tax support, JHS’s operating margin in 2015 was a loss of almost $270 million. If JW is poorly utilized, like JHS’s other community hospitals, it will likely increase JHS’s systemwide operating loss. If this occurs, in order to operate positively, even with tax dollars, JHS will have to petition the county or another governmental body for more tax dollars, or will otherwise need to reduce services to maintain some level of profitability even with the public funds they receive. This reality works strongly against the need for the JW facility in
Doral.
Section 408.035(1)(b): The availability, accessibility, and extent of utilization of existing health care facilities and health services in the service district of the applicant.
Section 408.035(1)(e): The extent to which the proposed services will enhance access to health care for residents of the service district.
DMC’s proposed location and its service area was developed in consideration of the geographic boundaries or barriers within Doral, as well as the roadways, patient travel patterns, and current utilization patterns within each service
area zip code, in consideration of the utilization of existing providers.
Other than KRMC, no other existing provider’s PSA overlaps with DMC’s. Also other than KRMC, no other provider relies on DMC’s PSA for more than 7.5% of its patient volume.
JW’s service area is focused on central and western Miami-Dade County, areas that are already well served by existing hospitals.
There are a number of problems with the JW service area. First, patients in zip code 33166, to the north of the MIA, will have poor access to JW due to the geographic barrier created by the airport and the rail switch yard. Further, these patients are already served by PGH, Hialeah, and other acute care and tertiary providers in the area. The 28 zip-codes to the south of the JW site are also already served by existing facilities, such as Westchester General and Miami Medical Center, and will also be walled off from the JW site by the MIA.
In effect, JW has determined it will draw most of its patients from zip codes 33174, 33165, and 33155, which are very close to KRMC and Westchester General. In the unlikely event that JW is able to draw these patients away from a closer, established provider in their communities to a new provider in a heavily trafficked industrial warehouse district, there is no legitimate healthcare need or principle served by doing so.
Service Area Population
In 2014, the greater Doral area had a population of 54,116, with 3,899 residents per square mile. On a per square mile basis, this area is more densely populated than Miami-Dade.
The population for the entire DMC service area is projected to grow from 634,020 in 2015 to 673,887 in 2020, an increase of 6.29%. The population in the PSA is projected to grow at a faster rate than the SSA. The population of the PSA is expected to increase from 161,655 in 2015 to 174,948 in 2020, an increase of 8.22%, whereas the SSA is projected to increase from 472,365 in 2015 to 498,939 in 2020, an increase of 5.63%. In zip code 33178, where DMC’s proposed hospital will be located, the total population is expected to grow faster than any of the other service area zip codes: 13.57% over the five-year period. By contrast, JW’s home zip code, which is essentially an industrial district, contains no resident population.
The 45 to 64 and 65 and older age cohorts are projected to experience the largest percentage growth in the service area. The number of service area residents 45 to 64 is projected to grow from 177,304 in 2015 to 197,259 in 2020, a growth of 11.25%. Residents 65 and older are projected to increase at an even faster rate, increasing from 110,906 in 2015 to 125,818 in 2020, a growth of 13.45%. The growth in the older age cohort is significant because older individuals utilize
healthcare resources, including hospital services, at a higher rate than other groups.
The service area’s female population in this older age cohort is expected to increase from 141,649 in 2015 to 143,076 in 2020. The PSA is expected to increase by 2.0% from 2015 to 2020, while the SSA is expected to grow by 0.3% over this time period. In zip code 33178, DMC’s proposed home zip code, the female population is projected to grow faster than the service area as a whole at 5.6%.
The African-American population of the service area is projected to grow by 9.45% between 2015 and 2020, from 19,636 to 21,492. Additionally, the Asian population is projected to experience significant growth during this time, from 8,026 to 10,142, a growth of 26.36%. The service area's white population is also projected to increase by 6.11% between 2015 and 2020, from 581,760 to 617,291.
The Hispanic population in the PSA is projected to grow by 26,927, from 562,928 in 2015 to 589,885 in 2020, a growth of 4.78%. The PSA is expected to experience greater growth in the Hispanic population than the SSA. The Hispanic population in the PSA is expected to grow from 137,043 in 2015 to 145,965 in 2020, an increase of 6.51%, whereas the SSA is expected to grow from 425,885 in 2015 to 443,890 in 2020, an increase of 4.23%.
Regarding the service area payor mix, Medicare accounted for 41.5% of the inpatient non-tertiary and OB discharges in 2014. Medicaid accounted for 21.0% of patients, which provides further evidence of the need for enhanced access to inpatient services for this community. Additionally, Self/Non-Pay accounted for 7.7% of patients. DMC’s home zip code, 33178, had 11.2% Self/Non-Pay patients in 2014, the highest of all the PSA zip codes.
Economic Development Trends
Doral currently is home to 14 business parks;
48 hotels; 12 television stations; and ten universities, trade schools, and private schools. Commercial and industrial sectors in Doral are growing and an additional one million square feet of Class A office space is planned to be developed within the next ten years. Doral is home to various state, county, and federal headquarters: US Southern Command, Dade County Police Department, Dade County Elections Department, Dade County Government Information Center, Miami Dade County Fire Rescue Department, Miami-Dade Road and Bridge Maintenance, the Miami Branch of the Federal Reserve Bank, and the Fire Department Training Center.
The city is home to the following employers: Carnival Cruise Line, Superb Auto Sales, Boston Scientific Corp, Doral Golf Resort and Spa, Miami Free Zone, Univision Network 31 LTD,
Amadeus North American, Supreme International Corporation, Perry Ellis International, and Blue Cross and Blue Shield.
Extent of Utilization of Existing Healthcare Facilities
Historically, patients in DMC’s PSA and Miami-Dade County as a whole have shown a clear preference for EFD facilities when compared to the utilization of those patients of other providers and health systems.
KRMC has the highest market share in the PSA for non- tertiary services at 40.4%, and has a 15.1% market share in the SSA, for a total market share of 19.9%. PGH has 2.2% market share in the PSA, and 16.8% market share in the SSA, for a total market share of 14.0%. Baptist Hospital of Miami has an 18.1% market share in the PSA and 8.8% market share in the SSA, for a total market share of 10.6%. Hialeah has a 0.8% market share in the PSA and a 10.6% market share in the SSA, and an overall market share of 8.7%. Palm Springs General Hospital has a total market share in the service area of 6.5%. Finally, JM has only a 4.2% market share in the PSA, a 4.3% market share in the SSA, for an overall service area market share of 4.3%. NCH and CGH have service area market shares below 3.6%.
KRMC has more than seven times the market share in the PSA than JHS, and a market share nearly four times higher in the SSA.
Overall, EFD's hospitals in Miami-Dade County are highly utilized. In fact, two of its three hospitals operated at more than 70% occupancy in 2014. KRMC, the most proximate EFD facility to the Doral area, operated at 70.1% occupancy in 2014.
At the same time, JHS hospitals have experienced low and declining occupancy rates during recent years. In 2014, two of JHS's three hospitals operated at occupancy rates of below 40%. JHS's cumulative occupancy rate for 2014 was just 50.5%, meaning that half of its beds were empty.
Examining historical utilization levels of affiliated hospitals gives an indication of how efficiently and effectively systems are using their existing bed capacity. It can also be a tool to judge the reasonableness of the proposed hospital’s utilization projections. JW projects a year two occupancy rate of 57%, but from 2013-2015 JHS’s other community hospitals, JN and JS posted occupancy rates in the 33-40% range.
DMC projects a year three occupancy of 74.8%, and two of the three EFD hospitals posted occupancy rates in the 66-78% range. (Mercy was recently acquired by the EFD and has a large bed capacity; therefore, its lower occupancy rate was not applied to this analysis.)
Comparing the utilization of the hospitals operated by the JHS and EFD systems provides an indication of the likely operating experience of a new JW or East Florida hospital. In
this case, JHS, a large academic, safety-net provider acquired two community hospitals and has not yet effectively or efficiently utilized those assets. There is no reason to expect that a new JHS-branded community hospital located in an area where JHS has no meaningful historical presence will be any different. Further, JSH has never developed a new hospital, much less a community hospital, whereas HCA has successfully developed many affiliated community hospitals.
Medical Treatment Trends
Overall, non-tertiary use rates are declining slightly in the service area. However, the use rate in the Doral area is still significantly above the use rate for Miami-Dade County as a whole.
The use rate for OB service has also increased between 2012 and 2014, from 55.6% to 61.0% discharges per 1,000 women ages 15 to 44. The use rate for the SSA has increased from 59.9% to 64.1%, while the use rate for the whole service area increased from 58.7% to 63.3%.
DMC's utilization projections assumed an increase in the OB use rate and a continued decline in non-tertiary use rates without regard to the enhanced accessibility that the DMC project will bring.
JW projected a decrease in only the 65 and older age group. The JW projections also rely on highly speculative shifts
in affiliate market share to offset adverse impact. DMC provided detailed market share assumptions by zip code, but JW projected market shares based on the entire service area, not individual zip codes.
Projected Utilization and Market Share
DMC took a reasonable and realistic approach to its projected utilization methodology. DMC has projected the first three years of operation for its proposed hospital based on population growth by zip code, age, and use rates by age from the AHCA Florida Inpatient Database. These projections have been performed on a zip code level within the defined DMC service area.
DMC grouped zip codes in its service area into four different market share zones (“Zones”) to recognize that the proposed hospital will achieve different levels of market penetration based on factors such as population density, geographic barriers to care, and locations of existing hospitals.
Zone 1 consist of zip codes 33172, 33178, and 33182; Zone 2 consists of zip codes 33174, 33184, and 33194; Zone 3 consists of zip codes 33126, 33144, and 33185; and Zone 4 consists of zip codes 33010, 33012, 33016, 33018, 33165, 33166, and 33175.
The projected non-tertiary and OB market shares by zip code increase at different rates. Each has a common base market
share during DMC’s first year of operation in 2018. Due to the factors cited previously, such as population density, geographic barriers to care, and locations of existing hospitals, some zip code market shares increase at a faster rate than others within the same zone.
For example, a variation occurs in Zone 4 with the zip codes located north of the canal: 33010, 33012, 33016, and 33018. These four zip codes increase more slowly than the remaining zip codes in Zone 4 due to their geographic location, population densities, and other facilities located in the region. DMC believes that due to these factors, patients will be less willing to travel down to the proposed location, so the market share for these zip codes is projected to be lower than the rest in Zone 4.
DMC began projections of its non-tertiary inpatient utilization by calculating the actual 2014 use rate per 1,000 in the service area. Based on the analysis of the use rates in the service area from 2012 to 2014, it was noted that the PSA, SSA, and total service area use rates were declining. Therefore, DMC assumed a slight reduction in market share for non-tertiary services in all of its service area zip codes by 1% per year for the interim years, as well as the first three years of operation for the hospital (2018, 2019, and 2020). The projected use rates
were applied to the service area population by age group to calculate the total discharges from the service area.
DMC utilized a similar methodology to project the utilization for its OB patients. DMC’s proposed hospital utilization is based largely on the market share zone assumption made along with the use rate trend between the years of 2012 to 2014. For OB services, it was noted that the PSA, SSA, and total service OB use rates were increasing for the entire service area. Therefore, for the purposes of this analysis DMC assumed a 1% increase in the projected use rate for OB services in all of its service area zip codes. Following this change, the same processes were performed for the utilization projection to get total OB discharges, average length of stay, average daily census, and bed need at 75% occupancy.
DMC’s total projected utilization and PSA definition, which includes both non-tertiary and OB and is required by section 408.037(2), was described in detail. The total discharges assume DMC will receive 5% of its discharges from outside of the PSA or SSA. This is a conservative and reasonable assumption in light of the enhanced accessibility that DMC’s proposed location will provide to residents of its service area and in consideration of KRMC’s strong market presence in the area.
JW’s service area covers the City of Doral like DMC’s, but its focus is much broader and extends to the service areas of existing providers. The JW PSA extends further east toward zip codes 33166, and south into zip codes 33144, 33126, 33122, 33106, and 33206. The JW SSA reaches even further south into zip codes 33184, 33175, 33165, and 33155.
JW’s projections of service area and utilization are not as reasonable as DMC’s for numerous reasons. The JW service area excludes zip codes such as 33016, 33012, and 33010, even though those zip codes are as or more proximate to JW than other zip codes included in its service area, such as 33155 and 33165.
Zip code 33126 is from where JW projects most of its discharges to come. However, JW would not be the closest hospital to that zip code, and would not materially improve access to the patients in that zip code.
The one zip code that perhaps best illustrates the unreasonableness, and inexplicability, of the JW projections is zip code 33165. Zip code 33165 is directly east of KRMC, and its western border is the Turnpike. Currently, KRMC has 38.9% market share in the zip code; Baptist Hospital has 26.2%; and JM has only 4.6%. DMC would be a greater distance away from the zip code than JW, but would be more easily accessible due to the location of the Turnpike. JW projects it will get 400 of its discharges from this zip code in year two of operation, whereas
DMC projects it will receive only 99 discharges from there in year three. JW’s projection for this zip code is clearly unreasonable considering the location of KRMC and the market shares of existing established providers.
Regarding zip code 33126, JW argues that the large population and high percentage of low income residents can easily access JW by taking State Road 836 west and then driving north on the Palmetto Expressway. However, those patients now could just as easily drive on the State Road 836 to access JM, but do not. By and large, those patients access KRMC, South Miami Baptist, Mercy, and Doctors Hospital over that of all the hospitals in the JHS combined.
Similarly, JM is easily accessible to the patients of zip code 33144, which is directly south of zip code 33126, yet the dominant market shares belong to South Miami Hospital, Doctors Hospital, KRMC, and Baptist Hospital. This is credible evidence that JW will not be able to attract the patients it has projected in its application.
DMC’s expert pointed out fundamental flaws in the methodology employed to project JW’s utilization projections that lead to these problems. First, JW used a combined use rate for non-tertiary services that did not separately project OB patients. Second, JW used one use rate per age for all of the zip codes in its service area. These factors, explained fully
below, cause substantial variations and inaccuracies in the JW projections when compared to historical use rates of individual zip codes.
By using one use rate per age group for all zip codes in its service area, instead of the historical use rates of particular zip codes, JW’s utilization projections fail to account for the fact that utilization patterns vary because some zip codes are simply “sicker” than others and generate more hospital admissions. The failure to make zip code specific projections results in overstated projections throughout JW’s
PSA.
By example, in zip code 33172, a core Doral community
zip code, JW projects a 15.7% growth in discharges from 2014 to 2021. This far outpaces the projected population growth of 9.6%.
In zip code 33182, JW projects a 16.9% increase in discharges from 2014 to 2021 despite the fact that the population was only growing at a 6.6% rate.
In zip code 33178, JW projected an extraordinarily high 75% increase in discharges from 2014 to 2021. The population of that zip code is growing at a rate of 17.3% over that time, but that alone does not support a 75% increase in discharges, and JW offered no other evidence to support such dramatic rise in discharges.
Using actual historical use rates per zip code to project utilization reveals that JW grossly overestimated, and in some cases underestimated, the number of discharges in various zip codes. In zip code 33178, JW over-projected discharges by 31%; in 33182, there was a 12% over-projection; and projected discharges in zip code 33166 were under-projected by almost 20%.
Although the total number of projected discharges for both East Florida and JW (purely by coincidence) remain about the same, these errors in the JW projections influence the analysis of adverse impact, are contrary to the statutory requirement that new hospital applications project at the zip code level, and most importantly, result in lower second-year utilization for JW.
Additionally, section 408.037(2) requires a CON applicant to identify its PSA and SSA by listing zip codes in which it will receive discharges in descending order, beginning with the zip code with the highest amount of discharges then proceeding in diminishing order to the zip code with the lowest amount of discharges. The zip codes which comprise 75% of discharges constitute the PSA, and the remaining zip code, which consist of the remaining 25% of discharges, makes up the SSA. However, JW did not project its utilization in this manner.
When the JW service area zip codes are correctly sorted, its PSA consists of zip codes 33126, 33172, 33178, 33174,
33144, and 33165; its SSA consists of 33175, 33166, 33155, 33182,
and 33184.
JW argues that since JW’s and DMC’s utilization projections are almost identical, they must be reasonable. This, however, misses the point. These are not identical applications or proposals, and DMC is affiliated with the predominant provider of services in the service area, whereas JHS and JW have no historical presence in the area. The mere coincidence of similar results does not make the JW methodology for reaching them reasonable.
DMC’s projected market shares are built on a more reasonable analytic approach and a more solid historical foundation than JW’s. First, DMC has an existing volume of patients from which to draw by way of members of KRMC’s medical staff eventually coming on staff at DMC. Thus, DMC will be able to accomplish redirection of those patients much more easily than JW, which will have to shift a much higher level of market share away from existing competitors, with no real presence in the market. That is a steep hill to climb for JW.
Further, JHS’s ability to attract community physicians to join JW’s medical staff is questionable. No evidence of any community physician support was presented by JW at final hearing, and not one of the eight JHS employed or UM physicians who testified at final hearing said they would seek to join the JW
medical staff. Aside from that, almost all of the physicians who testified on behalf of JW/JHS are involved in research at JM that they would not be able to perform at JW, a community hospital.
DMC’s projected discharges per zip code are reasonably based upon the proposed location of DMC, geographic barriers, the location of other providers in and around a particular zip code, and the respective market shares of those existing providers. DMC’s discharges are highly concentrated in the Doral area, whereas JW’s are more diffuse, and do not seem to take into account the proposed location of JW or that of existing providers.
Adverse Impact
Tenet’s and NHC’s objections to the proposals are twofold: there is no need for a hospital, and if DMC or JW is built, it will adversely impact their respective facilities. However, need has been demonstrated, Tenet and NCH have a relatively low market share in the service area, and DMC will not materially impact those market shares, especially when compared with the adverse impact that approval of JW would have.
NCH is a specialized pediatric hospital, and East Florida will not have a dedicated pediatric unit. Testimony supports the fact that pediatric services will be provided by DMC only to the extent necessary to stabilize a pediatric patient presenting to the emergency room only until such patient can be
transferred to another hospital with pediatric services, such as NCH or KRMC. Additionally, to the extent NHC’s adverse impact claims rest on lost outpatient services that originate from such emergency room visits, KRMC is already in the process of constructing a freestanding emergency department on the DMC site, which will open regardless of the outcome of this proceeding and will direct stabilized patients to NCH or KRMC, depending upon the patient’s individual needs and preference.
DMC’s adverse impact analysis assumed existing providers would lose patients in relation to their existing market share. DMC’s greatest proposed impact is expected to be on KRMC, its sister healthcare facility (subject to CON approval of DMC), which would lose 3.1% of its volume, or 748 discharges. JM and CGH are both projected to lose 0.1% of their volume, representing 60 and eight discharges, respectively. PGH and Hialeah will not lose any volume or discharges. NCH would lose 1.8% of its volume, or 193 patients.
The JW project poses a greater potential adverse impact on NCH and Tenet than does DMC. The JW service area extends father to the east and south, closer to NCH and the Tenet facilities, than does DMC’s. Further, as it relates to NCH, JW and the overall JW campus and its pediatric-centric focus pose a greater risk of loss of pediatric patient volume to existing providers than does the DMC proposal.
JW would have an adverse impact on every single existing provider because of the shift in market share that it would have to create in order to achieve its utilization projections. JW claims that 75% of the patients in its service area that currently utilize JHS hospitals will be redirected to JW. This is highly optimistic, perhaps even unrealistic, and it is more likely that should JW achieve its projected utilization, it would be by way of taking market share from other providers. KRMC, as the largest provider of services in the area, would experience the brunt of that impact. Further, JW would necessarily have to disrupt the existing relationships between patients and existing providers in the community to attract patients to its proposed hospital.
Considering the fact that JHS does not have a strong historical presence in most of the area that JW intends to serve, and due to the existence of geographic barriers that will inhibit access to its hospital, JW will likely not be able to draw the large number of patients from the broad area of zip codes that it projects it will in its application. DMC, however, has existing physician relationships and an existing patient base from which to draw, and reasonably projected its market share in each zip code across its service area based on the location of its proposed hospital and that of existing providers. DMC will also
not adversely impact any existing provider. For those reasons, this criterion weighs heavily in favor of DMC over JW.
The extent to which the proposed services will enhance access to health care for residents of the service district.
§ 408.035(1)(e), Fla. Stat.
Currently, the Baptist system serves just over 25% of Miami-Dade County, which is the largest market share of all providers in the district. HCA affiliated facilities KRMC, Aventura, and Mercy, collectively, serve 20% of the market. Tenet serves just below 18% of the market, and JHS serves 15% of the market.
Miami-Dade is a highly competitive healthcare market countywide, and competition spans a broader geographic area than the city of Doral or the service areas of the respective proposals at issue here. When managed care companies are negotiating contracts with providers, they do not negotiate for one hospital and one location; they are negotiating across the entire system, which includes a broad geographic area. The addition of a small community hospital in a discrete, secluded region of the County is not likely to have a material impact on the market shares of the dominant providers.
This specific statutory criterion requires the Agency and the undersigned to analyze “the extent to which the proposal will foster competition that promotes quality and cost
effectiveness,” not solely competition for competition’s sake.
§ 408.035(1)(g), Fla. Stat. Despite JW’s insistence, the analysis here is deeper than adding together the market shares of affiliated system hospitals in an isolated area and concluding that because one system’s market shares are lower it will better foster competition than the other. “Cost effectiveness” must also be part of the equation.
The JW project will adversely impact competition and cost effectiveness because it will cost more for a Medicaid patient to receive care at JW than at DMC due to JHS’s high automatic Medicaid rate enhancement. This is not to imply that JHS (or any of the hospitals operating under its license) is not legally entitled to the enhanced Medicaid rate, but is a statement of simple economics. A Medicaid-eligible patient presenting for care at a JHS versus an HCA facility in Miami-Dade County will cost the Medicaid system more on a per discharge basis in the former facility than in the latter.
This DRG Medicaid automatic rate enhancement, or “add- on,” is a calculation that is based on the per diem (per day) rate. Under the per diem system, hospitals were reimbursed based on their costs, on a per day basis, subject to county ceilings and cost limits. JHS, however, was not subject to these cost limits or the county ceiling and was reimbursed according to its actual costs.
In 2012, under the per diem model, JHS received 33% more than the average acute care hospital for inpatient Medicaid services and 50% more than the average acute care hospital for outpatient Medicaid services. The outpatient figure rose to 66% in 2015.
In 2013, on a net revenue per adjusted patient-day basis, JHS received Medicaid reimbursements at twice the rate KRMC did; in 2014, it was at least 50% more than KRMC.
Medicaid now reimburses hospitals for inpatient services on a DRG basis. This means the hospital is reimbursed per discharge instead of on a per diem, or per day, basis. Under this system, JHS receives an automatic rate enhancement of
$4,027.44. KRMC’s automatic rate enhancement is $750.82. JW, by virtue of being on the same license as the other JHS facilities, will receive this add-on for every Medicaid patient it serves.
DMC will operate under its own license and will not receive an automatic rate enhancement. Thus, DMC, when compared to JW, will have a positive impact on the Florida Medicaid program for the patients it serves, as its rate of Medicaid reimbursement will be substantially less than that of JW.
JW’s argument that any hospital, such as KRMC, can get the same add-on that JHS has is simply not accurate. As explained above, the add-on that is in place today is based on the historic per diem reimbursement model. JHS was not subject
to the same County cost ceiling as KRMC, and other community hospitals, thus DMC cannot benefit from the built-in advantage that JHS (and JW operating under the JHS license) has under the new system.
Aside from the Medicaid program, JHS received $389 million in tax revenue from Miami-Dade County and paid no taxes in fiscal year 2015. KRMC received no tax dollars and paid
$1.5 million in taxes during that same time period. JW will be tax exempt, whereas DMC will be a tax-paying entity.
The applicant’s past and proposed provision of health care services to Medicaid patients and the medically indigent. § 408.035(1)(i), Fla. Stat.
HCA EFD-affiliated facilities in Miami-Dade have provided significant amounts of free and discounted care to area residents. DMC is committed to matching this level of historic accessibility for patients with little or no insurance, as well as those covered by Medicaid.
HCA's affiliated hospitals in the service area have a history of providing care to Miami-Dade County residents regardless of payor source, and without receiving any County tax revenues to offset the cost of providing that care. KRMC, Aventura, and Mercy, collectively, served 8,389 Medicaid patients in 2014, accounting for 15.4% of their total patients. Additionally, they served 4,715 self-pay patients, which comprise
8.6% of its total patients. These numbers remained essentially unchanged in 2015.
Florida recently created a Commission on Healthcare and Hospital Funding to investigate the role of taxpayer funding for hospitals, insurers, and healthcare providers. The Commission's website contains data reflecting, among other things, the combined percentage of charity, Medicaid, and Medicaid HMO discharges as a percentage of total discharges across all 54 of Florida's acute care hospitals. The most recent data provided is for 2013. Two of the EFD's hospitals were among the top 21 hospitals in the state, with KRMC having a combined percentage of charity/Medicaid/Medicaid HMO of 30.5% and Plantation General Hospital with a combined percentage of 31.1%, further demonstrating the commitment of EFD hospitals to serve all payor categories.
The EFD provided $291,643,000 in charity and uncompensated care and served 268,139 Medicaid patients and 163,240 uninsured patients in 2014. The EFD's facilities in Miami-Dade County provided $85,602,000 in charity and uncompensated care.
Without dispute, JHS provides a high percentage of Medicaid, and is well compensated for those services. Currently, JHS receives twice as much reimbursement from the Medicaid
program for treating a patient with the same diagnosis as does KRMC.
Also, without dispute, JHS provides a tremendous amount of indigent care. However, unlike any other similar government-owned or teaching facility that provides substantial amounts of indigent care, JHS receives more than enough in tax revenues to cover the costs of those services.
In 2014 and 2015, JHS received $178 million and
$194 million, respectively, in LIP funding. KRMC received
$435,000 and $1 million in those same years.
DMC's payor mix was projected by applying the 2014 service area payor mix by zip code to DMC's projected patient volume by zip code. Medicare is projected to be 40.4% of total patient days while Medicaid is projected to be 21% of total patient days. For OB services, Medicaid is projected to be 42.4% of total patient days.
JW did not provide a payor mix projection. It did, however, condition its application on Medicaid patients comprising 22% of its discharges, and self/non-pay patients comprising 3.2% of its discharges. It was unreasonable for AHCA to base its decision significantly on JW’s proposed Medicaid condition, especially considering that DMC’s projected Medicaid discharges are almost exactly the same as JW’s.
Moreover, AHCA has the discretion to take any statement in the application and make it a condition of the CON. The President of the EFD, Michael Joseph, testified at final hearing that he would accept a condition placed on DMC’s CON that Medicaid patients comprise 22% of patient days and Self/Non-pay patients comprise 3% of patient days at the proposed hospital. This is consistent with KRMC’s actual experience and what is projected in the DMC application.
CONCLUSIONS OF LAW
The Division of Administrative Hearings has jurisdiction over the subject matter of and the parties to this proceeding. §§ 120.569, 120.57(1), and 408.039(5), Fla. Stat.
In order for an existing healthcare facility to have standing to intervene in a CON proceeding, it must show that it will be “substantially affected” by approval of the CON application at issue. § 408.039(5), Fla. Stat.
JW and DMC as applicants have party status and, therefore, appropriate standing in this matter. §§ 120.52(13) and 408.039(5), Fla. Stat. The others have standing to participate as existing providers who allege the addition of a new hospital in Miami-Dade County will have a substantial and adverse impact on their operations.
The parties stipulated that section 408.035(2) establishes the statutory review criteria applicable to general
hospital applications. The review criteria are set forth in section 408.035(1).
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., 486 So. 2d
1341 (Fla. 1st DCA 1986). The appropriate weight to be given to each criterion is not fixed, but rather varies based upon the facts of the case. See, e.g., Morton F. Plant Hosp. Ass’n, Inc.
v. Dep’t of Health & Rehabilitative Servs., 491 So. 2d 586, 589 (Fla. 1st DCA 1986) (quoting North Ridge Gen. Hosp., Inc. v. NME
Hosps., Inc., 478 So. 2d 1138, 1139 (Fla. 1st DCA 1985)); Collier Med. Ctr., Inc. v. Dep’t of Health & Rehabilitative Servs., 462
So. 2d 83, 84 (Fla. 1st DCA 1986).
A CON applicant bears the burden to prove by a preponderance of the evidence that its CON application should be approved. See, e.g., Boca Raton Artificial Kidney Ctr., Inc. v.
Dep’t of Health & Rehabilitative Servs., 475 So. 2d 260, 263
(Fla. 1st DCA 1985); § 120.57(1)(j), Fla. Stat.
An administrative hearing involving disputed issues of material fact is a de novo proceeding in which the ALJ 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. AHCA’s preliminary decision with regard to
JW’s and DMC’s CON applications and its findings in the SAARs are not entitled to a presumption of correctness. Id.
AHCA is tasked with utilizing the statutory review criteria in section 408.035 in evaluating each hospital’s proposed project. Section 408.035(2) specifically outlines the CON review criteria that are applicable to general hospital applications, which include the following:
The need for the health care facilities and health services being proposed.
The availability, accessibility, and extent of utilization of existing health care facilities and health services in the service district of the applicant.
* * *
(e) The extent to which the proposed services will enhance access to health care for residents of the service district.
* * *
(g) The extent to which the proposal will foster competition that promotes quality and cost-effectiveness.
* * *
(i) The applicant’s past and proposed provision of health care services to Medicaid patients and the medically indigent.
§ 408.035(1), Fla. Stat.
In addition, since AHCA no longer issues a fixed need pool for acute care beds, the applicants are bound to follow
Florida Administrative Code Rule 59C-1.008(2)(e)2., which states
that:
[T]he applicant will be responsible for demonstrating need through a needs assessment methodology which must include, at a minimum, consideration of the following topics . . . .
Population demographics and dynamics;
Availability, utilization and quality of like services in the district, subdistrict or both;
Medical treatment trends; and,
Market conditions.
When reviewing the evidence presented, in totality, by the parties at the final hearing, it is evident that there is a clear need in acute care District 11 for an acute care hospital to serve the City of Doral and the surrounding area.
§ 408.035(1)(a), Fla. Stat. Further, DMC demonstrated that, on balance, it best satisfies the statutory criteria and warrants approval of its application over that of JW.
DMC clearly established a need for its hospital based on Doral’s growing population and relative isolation from area providers. Data shows that most of these patients travel south to KRMC or Baptist, despite the Tenet facilities to the north being more proximate to the Doral residential district.
KRMC’s ability to continue providing care to lower acuity patients from Doral is limited by its physical capacity,
and despite ongoing expansion, DMC is needed to decompress KRMC so it can focus on its growing tertiary services. JW will not attract the patients it projects from the Doral area, or to the south near KRMC, but will attract patients that are already going to JM and from other providers, thereby creating a greater adverse impact on existing providers than will DMC.
JW’s reasons for why its proposal is needed are not compelling. It produced little evidence to support those reasons.
JHS offered no evidence that the indigent and Medicaid patients of the service area are underserved, except to say indigent and Medicaid patients are traditionally underserved. While that may be a true statement to a certain extent, without statistical evidence supporting it, the undersigned cannot draw the conclusion sought by JW.
The more compelling reason to approve the JW proposal, if proven to be true, is that JW would ensure the financial viability of the entire JHS because of the better payor mix offered by the Doral service area. However, the evidence showed that JW would not add financial viability to, and could potentially negatively impact the JHS system, by being a further drain on the system and the tax proceeds it receives from Miami- Dade County taxpayers.
This is a relevant factor to consider when evaluating JW’s application, considering the Agency lacks a need methodology, and the applicants can try to demonstrate need through whatever methodologies and metrics they see fit.
In addressing the financial viability that JW will provide to the system, JW discusses the current patients JHS serves from the service area, and how JHS serves a higher percentage of Medicaid and non-paying patients than the service area average:
[T]he payer mix of the discharges JHS currently captures from the proposed service area is significantly different than the overall payer mix of discharges generated by the area. For example, the area produces a large proportion of Medicare discharges (46.2 percent), yet JHS only experienced
18.8 percent of its service area discharges covered through Medicare. Similarly,
21.6 percent of service area discharges were covered through Medicaid, but JHS' experience was that 38.3 percent of its service area discharges were covered through the program. Finally, the area produced 3.2 percent non- pay patients, but JHS' payer mix from the area was 8.9 percent non-pay, nearly three times the area average.
The JW application continues with “the proposed development of the comprehensive JW campus is the first step for JHS to complement the mix of patients it currently serves in the proposed 12-ZIP area.” However, JW did not provide payor mix projections and otherwise offered no proof that JHS’s payor mix
will be any different than what JHS currently experiences from the service area.
Rather, the evidence showed that JW’s projected discharges from zip codes near KRMC and the proposed DMC location, where a large percentage of commercially insured patients reside, were grossly overstated. JW offered no evidence that it has the relationships with Doral area community physicians that would cause a shift in the market from KRMC and other established providers to a new JW. No significant evidence was produced by JW that such a shift would occur in the absence of such relationships and there was no legitimate healthcare principle presented to support a shift of patients traveling to JM, who would now seek care at JW with its significantly fewer and less comprehensive services offered.
DMC proved that its EFD hospitals are well utilized and DMC is a far more cost-effective and competitive option than JW.
Overall, nearly every one of the statutory criteria weighs in favor of the DMC application.
Although AHCA put on a limited case and justification for its approval of JW over DMC, what is apparent is that AHCA preliminarily approved JW simply because JHS provides a substantial amount of Medicaid, indigent, and charity care to the residents of Miami-Dade County. While JHS’s service to the
County’s underserved is vital to the healthcare delivery system in Miami-Dade County, it is not a compelling enough reason, standing alone, to approve the JW application over DMC’s. As noted by DMC and the existing providers standing in opposition to the JW proposal, the Medicaid, indigent, and charity care provided by JHS comes at a great cost to the taxpayers of Miami- Dade County. Pulling more of those dollars away from care of the underserved population to initiate a new facility in the county is not an efficient use of taxpayer dollars when JHS has significant capacity at its other Miami-Dade County campuses.
AHCA’s additional justifications for its preliminary decision are not supported by credible evidence. Having a site secured is not within the statutory criteria for approval, and there was no evidence presented that the proposed outpatient JW campus is under development as promised by JHS regardless of whether the JW CON is approved. In any event, DMC conditioned its application on building its hospital at the site it now owns. Additionally, the proposed site owned by DMC is superior to that selected by JW.
Further, the 2003 CON that the EFD was awarded and chose not to implement was under previous EFD leadership, and, unusually, another competing provider was also awarded a CON to serve the same area without regard to the fact that neither applicant proposed the approval of two new hospitals. In its CON
application, JW alleged that this called into question DMC’s “true commitment” to the project it now proposes. AHCA took this one-line allegation in JW’s CON application and, without any evidence to support it, attempted to claim that it was relevant to “the availability, accessibility and extent of utilization of existing health care facilities and health services in the service district of the applicant.” The substantial evidence produced by DMC at hearing shows a commitment to the project proposed for Doral, especially in light of the stage of development of the DMC outpatient facilities.
There was simply no evidence presented at hearing that the EFD’s decision not to pursue the 2003 CON is in any way relevant to DMC’s application in this proceeding. As stated above, reference to this issue came from one line in the JW application. AHCA’s reliance on this matter and the 2003 SAAR to formulate its preliminary decision is questionable, especially considering AHCA’s refusal to analyze the claim that JW would add financial viability to the JHS because, according to Ms. Fitch, there was not enough information provided by JW to evaluate the claim. Furthermore, if commitment to implement a project is relevant, as AHCA posited in the SAAR, the precariousness of JHS’s commitment due to its financial frailty and great reliance upon taxpayer-generated funds to shore up its finances, is much more threatening to actual implementation of its project than is
HCA’s justifiable decision to forego implementation of a CON under different management more than a decade ago, and at a time when two projects were approved for the same area.
DMC persuasively established need for its hospital, its ability to meet its financial projections, its community and physician support, and demonstrated, on balance, it better satisfied the statutory criteria than the JW proposal.
Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Agency for Health Care Administration enter a final order approving East Florida-DMC, Inc.’s CON application No. 10394 and denying Jackson Hospital West’s CON application No. 10395.
DONE AND ENTERED this 16th day of March, 2017, in Tallahassee, Leon County, Florida.
S
ROBERT S. COHEN
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 16th day of March, 2017.
COPIES FURNISHED:
Carlos A. Migoya
Public Health Trust of Miami-Dade County West Wing 117
1611 Northwest 12th Avenue Miami, Florida 33136-1096
Stephen A. Ecenia, Esquire Rutledge Ecenia, P.A. Suite 202
119 South Monroe Street Tallahassee, Florida 32302-0551 (eServed)
R. David Prescott, Esquire Rutledge Ecenia, P.A. Suite 202
119 South Monroe Street Tallahassee, Florida 32302-0551 (eServed)
Craig D. Miller, Esquire Rutledge Ecenia, P.A. Suite 202
119 South Monroe Street Tallahassee, Florida 32302 (eServed)
Geoffrey D. Smith, Esquire Smith & Associates
3301 Thomasville Road, Suite 201
Tallahassee, Florida 32308 (eServed)
Susan Crystal Smith, Esquire Smith & Associates
3301 Thomasville Road, Suite 201
Tallahassee, Florida 32308 (eServed)
Corinne T. Porcher, Esquire Smith & Associates
3301 Thomasville Road, Suite 201
Tallahassee, Florida 32308 (eServed)
Christopher Charles Kokoruda, Esquire Miami-Dade County
West Wing, Suite 109
1611 Northwest 12th Avenue Miami, Florida 33136 (eServed)
Laura E. Wade, Esquire Miami-Dade County
West Wing, Suite 109
1611 Northwest 12th Avenue Miami, Florida 33136 (eServed)
Eugene Shy, Jr., Esquire Miami-Dade County
West Wing, Suite 109
1611 Northwest 12th Avenue Miami, Florida 33136 (eServed)
Abigail Price-Williams, Esquire Miami-Dade County
West Wing, Suite 109
1611 Northwest 12th Avenue Miami, Florida 33136 (eServed)
Paul C. Buckley, Esquire Panza, Maurer & Maynard, P.A. Suite 905
2400 East Commercial Boulevard Fort Lauderdale, Florida 33308 (eServed)
Thomas Francis Panza, Esquire Panza, Maurer & Maynard, P.A. Suite 905
2400 East Commercial Boulevard Fort Lauderdale, Florida 33308 (eServed)
Elizabeth L. Pedersen, Esquire Panza, Maurer & Maynard, P.A. Suite 905
2400 East Commercial Boulevard Fort Lauderdale, Florida 33308 (eServed)
Angelina Gonzalez, Esquire Panza, Maurer & Maynard, P.A. Suite 905
2400 East Commercial Boulevard Fort Lauderdale, Florida 33308 (eServed)
Michael J. Glazer, Esquire Ausley McMullen
123 South Calhoun Street Post Office Box 391 Tallahassee, Florida 32302 (eServed)
Steven M. Hogan, Esquire Ausley McMullen
123 South Calhoun Street Post Office Box 391 Tallahassee, Florida 32302 (eServed)
Eugene Dylan Rivers, Esquire Ausley McMullen
123 South Calhoun Street Post Office Box 391 Tallahassee, Florida 32302 (eServed)
Richard Joseph Saliba, Esquire
Agency for Health Care Administration 2727 Mahan Drive, Mail Stop 3
Tallahassee, Florida 32308 (eServed)
Kevin M. Marker, Esquire
Agency for Health Care Administration 2727 Mahan Drive, Mail Stop 3
Tallahassee, Florida 32308 (eServed)
Stuart Williams, General Counsel Agency for Health Care Administration 2727 Mahan Drive, Mail Stop 3
Tallahassee, Florida 32308 (eServed)
Justin Senior, Secretary
Agency for Health Care Administration 2727 Mahan Drive, Mail Stop 1
Tallahassee, Florida 32308 (eServed)
Shena L. Grantham, Esquire
Agency for Health Care Administration 2727 Mahan Drive, Mail Stop 3
Tallahassee, Florida 32308 (eServed)
Thomas M. Hoeler, Esquire
Agency for Health Care Administration 2727 Mahan Drive, Mail Stop 3
Tallahassee, Florida 32308 (eServed)
Richard J. Shoop, Agency Clerk
Agency for Health Care Administration 2727 Mahan Drive, Mail Stop 3
Tallahassee, Florida 32308 (eServed)
NOTICE OF RIGHT TO SUBMIT EXCEPTIONS
All parties have the right to submit written exceptions within
15 days from the date of this Recommended Order. Any exceptions to this Recommended Order should be filed with the agency that will issue the Final Order in this case.
| Issue Date | Document | Summary |
|---|---|---|
| Apr. 26, 2018 | Agency Final Order | |
| Mar. 16, 2017 | Recommended Order | The evidence supported a need for a new hospital to be located in Doral, Miami-Dade County. On balance, East Florida-DMC better satisfied the applicable criteria and should be awarded CON 10394 to construct 80-bed hospital on its site in Doral. |
