STATE OF FLORIDA
DIVISION OF ADMINISTRATIVE HEARINGS
TIDEWELL HOSPICE, INC.,
Petitioner,
vs.
AGENCY FOR HEALTH CARE ADMINISTRATION,
Respondent, and
CONTINUUM CARE OF SARASOTA, LLC,
Intervenor.
/
Case No. 20-1712CON
RECOMMENDED ORDER
Pursuant to notice, a formal administrative hearing was conducted via Zoom video teleconferencing on September 21 through 25, September 28 through October 2, October 5, and October 22, 2020, before Administrative Law Judge Garnett W. Chisenhall of the Division of Administrative Hearings (“DOAH”).
APPEARANCES
For Petitioner: Jeffrey L. Frehn, Esquire
Radey Law Firm, P.A.
301 South Bronough Street, Suite 200
Tallahassee, Florida 32301
For Respondent: Julia Elizabeth Smith, Esquire
Julia E. Smith, P.A.
2727 Mahan Drive, Mail Stop 3
Tallahassee, Florida 32308
For Intervenor: Geoffrey D. Smith, Esquire
Smith & Associates
3301 Thomasville Road, Suite 201
Tallahassee, Florida 32308
STATEMENT OF THE ISSUE
Whether the Agency for Health Care Administration (“AHCA” or “the Agency”) should approve Continuum Care of Sarasota, LLC’s (“Continuum of Sarasota”), application for a Certificate of Need (“CON”) to provide hospice services in Sarasota County, Florida.
PRELIMINARY STATEMENT
On October 4, 2019, AHCA published in Volume 45, Number 194 of the Florida Administrative Register, its Hospice Program Fixed Need Pool for the Second Batching Cycle. While AHCA determined that four hospice service areas had a need for an additional hospice provider, the Agency determined that there was no need for an additional hospice provider in Service Area 8D, Sarasota County, Florida. Nevertheless, Continuum of Sarasota timely filed an application seeking to establish a new hospice program in Sarasota County based on “not normal” or “special circumstances.”
After a public hearing on January 8, 2020, in North Port, Florida, AHCA published notice on February 21, 2020, in the Florida Administrative
Register, announcing its preliminary approval of Continuum of Sarasota’s CON application. Tidewell Hospice, Inc. (“Tidewell”), timely challenged AHCA’s decision, and the Agency referred this matter to DOAH on April 1, 2020, for a formal administrative hearing. In response to a Motion to Intervene filed on April 6, 2020, the undersigned issued an Order on April 15, 2020, granting intervenor status to Tidewell.
The undersigned issued a Notice on April 15, 2020, scheduling a final hearing for September 21 through 25 and September 28 through October 2,
2020.
On July 30, 2020, Tidewell filed a Motion in Limine seeking to prevent Continuum of Sarasota from presenting any evidence contradicting AHCA’s determination that the relevant fixed need pool for Service Area 8D is zero. The undersigned issued an Order on August 13, 2020, granting Tidewell’s Motion in Limine:
A review of past cases involving hospice certificate of need applications indicates that Tidewell’s argument is well taken. See Odyssey Healthcare of Collier Cnty, Inc. v. HPH South, Inc. and Ag. for Health Care Admin, Case No. 10-1605CON (Fla. DOAH Nov. 30, 2010; AHCA Jan. 31
2011)(concluding in paragraph #101 that “HPH expended a considerable amount of time at final hearing and in its Proposed Recommended Order arguing that Suncoast misreported its admissions data, and thereby [caused] an erroneous need determination by AHCA. Specifically, HPH argued that Suncoast double-counted some admissions and reported admissions differently than other hospice providers around the state. [That] erroneous data, argued HPH, would result in a fixed need pool of one if they were corrected. However, those arguments, even if true, cannot now alter the existing fixed need pool of zero and are, therefore, outside the jurisdiction of the Administrative Law Judge in the present case.”); Compassionate Care Hospice of The Gulf Coast, Inc. v. Ag. for Health Care Admin & Tidewell Hospice, Inc., Case No. 15- 2005CON (Fla. DOAH Sept. 19, 2016; AHCA
Oct. 26, 2016)(finding in paragraphs 26 through 29 that Compassionate Care Hospice’s attempt to demonstrate error in AHCA’s fixed need pool calculation was untimely and that its “purported evidence of an error in the calculation of the fixed need pool has not been considered, and the
rebuttable presumption that a new hospice is not needed has not been diminished by [Compassionate Care Hospice]’s criticism of the fixed need calculation.”).
Accordingly, the Motion in Limine is GRANTED, but Continuum may proffer evidence contradicting AHCA’s determination that the relevant fixed need pool for Service Area 8D is zero. See Thunderbird Drive-In Theatre, Inc. v. Reed, 571 So. 2d 1341, 1345 (Fla. 4th DCA 1990)(noting that “[o]rdinarily, where the court refuses to allow a proffer, it prevents a determination of the propriety of the trial court’s ruling by the reviewing court and is prejudicial to the party making the proffer and generally is reversible error.”).
On September 9, 2020, Tidewell filed its “Second Motion in Limine” seeking an order prohibiting the introduction of anonymous internet reviews of Tidewell and other Florida-based hospice providers from third-party websites such as Yelp, Glassdoor, and Indeed. In support thereof, Tidewell asserted that online reviews from the aforementioned sources could not be authenticated, constitute inadmissible hearsay, and are inherently unreliable.
The undersigned issued an Order on September 17, 2020, denying the Second Motion in Limine without prejudice to it being renewed during the final hearing. In doing so, the undersigned specified that if Continuum of
Sarasota “is able to sufficiently authenticate the online reviews at issue, then the undersigned is presently inclined to accept them into evidence.” Nevertheless, the undersigned announced his expectation that the online reviews would not be given much weight because it was unlikely that the authors thereof would be available for cross examination.
Because the final hearing lasted longer than anticipated, the undersigned extended the final hearing to October 5 and 22, 2020.
Tidewell presented testimony from Stacey Groff, Pauline Mailey, Jonathan Fleece, Jeanne Henrich, Lisa McCoy, Jessica Stevenson, and Armand Balsano. Tidewell introduced the following exhibits into evidence: 1 through 4, 6, 8, 9, 19, 20, 22, 24 through 31, 33, 41, 43 through 58, 60 through
63, 671, 70, 81, 82, and 85. At the undersigned’s request, Tidewell filed a
notice on October 9, 2020, designating portions of Shirley Mackey’s deposition transcript for admission as record evidence. The deposition portions in question were attached to the aforementioned notice as Exhibit A.
On December 1, 2020, the undersigned issued an Order accepting the aforementioned Exhibit A into evidence. The undersigned also accepted into evidence the portions of Ms. Mackey’s deposition that were identified in paragraph 1 of Continuum of Sarasota’s “Response to Tidewell Hospice’s Notice of Designating Portions of Deposition Transcript of Shirley Mackey for Admission as Record Evidence.”
Continuum of Sarasota presented testimony from Samuel Stern, Shauni- Lee Medeiros, Marybeth Marshall, Courtney Lamothe, Dalita Getzoyan, Cristi Keith, Catherine Cuthbert-Allman, Shirley Mackey, Patricia Greenberg, and Robert Maness. Continuum of Sarasota introduced the following exhibits into evidence: 1, 3, 4, 8, 29, 31, 34, 35, 37 through 43, 45,
472 through 53, 61, 63, 65, 66a, 66b, 67 through 69, 70a, 70b, 71a, 71b, 72a,
72b, 72c, 73 through 75, 77 through 80, 82 through 96, 983 through 101, 104
through 118, 119h, 120, 121, 123 through 127, the portions of 132 pertaining
1 The handwritten notes in Tidewell Exhibit 67 shall be disregarded.
2 The website links in Continuum of Sarasota’s Exhibit 47 shall be disregarded.
3 The information regarding national averages in Continuum of Sarasota’s Exhibit 98 shall be disregarded.
to equine therapy, music therapy, virtual reality, and CNET, 133 through 151, 153, and 155 through 158. The undersigned also accepted Continuum of Sarasota’s rebuttal Exhibit 2 into evidence. On December 3, 2020, the undersigned issued an Order Pertaining to Petitioner's Written Objections to Depositions that ruled on objections to specific portions of the deposition transcripts that were received in evidence as Continuum of Sarasota Exhibits 136 through 148, 150, 153, and 155 through 157, an Order that was clarified by the December 11, 2020, Order Granting Motion to Correct Record, both of which are adopted herein. Those depositions were received in evidence in lieu of live testimony, and will be given the weight as if those witnesses testified in person at the final hearing.
AHCA presented testimony from Erica Floyd Thomas and James McLemore. The Agency introduced Exhibits 1 through 3, 5, and 9 through 11 into evidence.
After receiving one extension, the parties timely filed proposed recommended orders on December 14, 2020, that were considered in the preparation of this Recommended Order.
Unless stated otherwise, all statutory references shall be to the 2020 version of the Florida Statutes.
FINDINGS OF FACT
Based on the evidence adduced at the final hearing, the record as a whole, and matters subject to official recognition, the following Findings of Fact are made:
The Parties
AHCA is the state agency responsible for evaluating and rendering final determinations on CON applications. See § 408.034(1), Fla. Stat. In
order to establish a hospice program in Florida, one must apply for and receive a certificate of need from the Agency. See § 408.036(1), Fla. Stat.
Tidewell is a not-for-profit corporation that is the sole hospice provider in Service Area 8D, which consists of Sarasota County. Tidewell has been providing hospice services in Sarasota County since 1980. Tidewell is also the sole hospice provider in: (a) Service Area 6C, which consists of Manatee County; and (b) Service Area 8A, which consists of Charlotte and DeSoto Counties. Manatee, Charlotte, and DeSoto Counties are all contiguous to Sarasota County, and there is no other Florida hospice that is the sole provider in three adjacent service areas.
Continuum of Sarasota is a for-profit development stage corporation formed for providing hospice services in Sarasota County. When Continuum of Sarasota filed the CON application at issue in the instant case, it was affiliated with six other hospices in California, Massachusetts, New Hampshire, Washington, and Rhode Island. At that time, all of the aforementioned hospices were owned by Samuel Stern. After the application at issue was filed and prior to the final hearing, Mr. Stern sold his ownership interest in the California, Massachusetts, and New Hampshire hospices. Now that he has been awarded a CON to operate a hospice in Broward County, Florida, Mr. Stern intends to focus his energies on the Washington and Florida hospices.4
Overview of Hospice Services
In Florida, hospice programs must provide a continuum of palliative and supportive care for terminally ill patients and their families.
Under Medicare, a terminally ill patient is eligible for the Medicare Hospice benefit if his or her life expectancy is six months or less. “Palliative care” refers to services or interventions that are not curative, but are provided in order to reduce pain and suffering.
4 The Continuum organization as a whole will be referred to herein as “Continuum.”
There are four levels of hospice services: routine home care; continuous care; general inpatient care (“GIP”); and respite care. Routine home care is provided where patients reside and describes a situation in which the patient is not receiving continuous care. Routine home care accounts for the vast majority of hospice admissions and patient days.
Continuous care is provided wherever the patient resides for short durations when symptoms become so severe that around-the-clock care is necessary for pain and symptom management.
GIP care is provided in either a hospital setting, a skilled nursing unit, or in a freestanding hospice inpatient unit. GIP care occurs for short durations when symptoms become so severe that they cannot be managed in the patient’s home.
Respite care is intended for caregiver relief. It allows patients to stay in facilities for brief periods.
Hospice services are provided pursuant to an individualized plan of care developed by an interdisciplinary team consisting of physicians, nurses, home health aides, social workers, bereavement counselors, spiritual care counselors, chaplains, and others.
As a condition of participation in Medicare, there is a baseline of care that hospices must provide, but hospices can differentiate themselves by using different staffing levels, offering different programs, and utilizing different approaches to pain management and nonessential medication.
Sarasota County – Service Area 8D
Sarasota County has 417,442 residents, and 34.4 percent of those residents are 65 and older. Sarasota County’s three-year average death rate is among the highest in Florida and is 43 percent higher than the State’s three-year average death rate.
Sarasota County’s population is expected to grow, and it is anticipated that people 65 and older will make up at least 39.3 percent of the County’s population by 2030. Sarasota County’s substantial elderly population is
significant to the instant case because the elderly are the most frequent users of hospice services.
Sarasota County has six hospitals with 1,542 licensed beds, 29 skilled nursing facilities with 3,058 beds, 86 assisted living facilities with 4,858 beds, and 68 home health agencies.
With only one hospice provider, Service Area 8D ranks fourth in the State in terms of population per hospice program.
Comparing deaths to the number of hospice programs shows that Service Area 8D had 5,873 deaths in 2018 and 5,986 deaths in 2019. As a result, Service Area 8D has the third highest ratio of deaths per hospice program in Florida, and that is two times the State average. With regard to deaths of residents 65 and older, Service Area 8D has the second highest number of elderly deaths to hospice programs.
IV. The Fixed Need Pool Calculation and AHCA’s Justification for Granting Continuum of Sarasota’s Application
AHCA determines the need for a new hospice program in a service area by utilizing a formula set forth in Florida Administrative Code
Rule 59C-1.0355(4). The formula applies a three-year historical death rate to a service area’s forecasted population to project the number of deaths for a future “planning horizon.” Then, the formula determines the statewide hospice-use penetration rate (i.e., the number of hospice admissions divided by current total deaths for four categories: cancer over age 65; cancer under age 65; non-cancer over age 65; and non-cancer under age 65). By multiplying the statewide penetration rates by the projected number of service area deaths in each of the four categories, the formula derives the service area’s projected hospice admissions in each category. The service area’s most recent published actual admissions are then subtracted from the projected admissions to determine the number of unserved patients for a future planning horizon. If the number of unserved patients equals or exceeds 350, then a new hospice program is needed.
AHCA determined in October of 2019 that there would be 4,311 hospice patients in Service Area 8D during the course of 2021. Because Tidewell had recently served 4,410 patients on an annual basis, AHCA calculated that there was a negative net need of 99 for Service Area 8D, and the Agency announced on October 4, 2019, that there was a fixed need pool of zero for new hospice programs in Service Area 8D for the January 2021 planning horizon.
The aforementioned fixed need pool calculation was not timely challenged by any party. As a result, the lack of numeric need for a new hospice program in Sarasota County for the January 2021 planning horizon and the underlying date used to make that determination could not be challenged during any subsequent CON cases for the relevant batching cycle. See Fla. Admin. Code R. 59C-1.008(2)(a)2. (providing that “[a]ny person who identifies an error in the Fixed Need Pool numbers must advise the Agency of the error within 10 days of the date the Fixed Need Pool was published in the Florida Administrative Register. If the Agency concurs in the error, the Fixed Need Pool number will be adjusted and re-published in the first available edition of the Florida Administrative Register. Failure to notify the Agency of the error during this time period will result in no adjustment to the Fixed Need Pool number for that batching cycle.”).
AHCA’s determination results in the creation of a rebuttable presumption that a new hospice program is not needed in Sarasota County for the January 2021 planning horizon. See Fla. Admin. Code R. 59C-
1.0355(3)(b)(providing that “[a] Certificate of Need for the establishment of a new Hospice program or construction of a freestanding inpatient Hospice facility shall not be approved unless the applicant meets the applicable review criteria in Sections 408.035 and 408.043(2), F.S., and the standards and need determination criteria set forth in this rule. Applications to establish a new Hospice program shall not be approved in the absence of a numeric need indicated by the formula in paragraph (4)(a) of this rule, unless
other criteria in this rule and in Sections 408.035 and 408.043(2), F.S.,
outweigh the lack of numeric need.”).
Despite the lack of a fixed need for Service Area 8D, Continuum of Sarasota filed an application to provide hospice services in Sarasota County premised on the following circumstances that Continuum of Sarasota
characterized as being “not normal and special circumstances”: (a) Tidewell operates a regional monopoly that includes Service Area 8D and two other contiguous hospice subdistricts; (b) Tidewell’s hospice house model of care breaks a patient’s continuity of care; (c) admissions and readmissions to Tidewell have resulted in an artificial suppression of fixed need; (d) Florida’s Medicaid managed care statute requires “hospice choice” to maintain network adequacy and health plans have the right to terminate hospice providers based on quality metrics; and (e) the local community wants choice and competition among its hospice providers.
Continuum of Sarasota’s application was buttressed by three letters of support from hospitals, seven from skilled nursing facilities, 14 from assisted living facilities, 15 from other healthcare organizations, and five from community/business leaders. Those letters asserted that the residents of Sarasota County should have more than one hospice provider.
James McLemore, the manager of AHCA’s CON unit, presented the following testimony as to why the Agency approved Continuum of Sarasota’s CON application:
Q: And overall, in the weighing and balancing, just tell me in your own words, when you are weighing and balancing all the factors, what do you come down to and say this is how we weigh and balance this as an agency, weighing towards approval as set forth in the state agency action report?
A: Basically we found that there is a regional monopoly here, and that we felt like and do feel like that there was a possibility that the hospice [house]
model of care does indeed break the continuity of care between the ALF patients and the nursing home patients. Again, there was evidence or statements from these people saying that it did.
We also agreed that admissions and readmissions could, could result in an artificial suppressing of fixed need. That’s why I keep getting back to [hospice admissions for] cancer 65 and older and 64 and under, because the situation is you’ve got more admissions than you’ve got deaths.
We also took into account that Florida’s Medicaid managed program indicates that the Medicaid recipient should have a choice of hospice providers, and in this instance, you can’t, they have to get a waiver to meet that criteria.
And we did take into account that there is a lack of competition, and the community voiced a need for such competition and at least an alternative provider.
And that’s pretty much how – we basically, on those factors, felt like that that was [sufficient] reason to approve this application, that and [the] care that they proposed.
Q: The factor of promoting competition and discouraging regional monopoly, was that a factor that you gave more weight to than some of the other factors?
A: I presented all of the information to the deputy secretary, who discussed the recommendations that I made with the Secretary.
So, you know, I – a regional monopoly is a very important factor in this, of course, especially in light of the DCA ruling[5]. But the other factors all factored in.
AHCA’s approval was premised on Continuum of Sarasota satisfying the following conditions: (a) implementing virtual reality, music therapy, and equine therapy programs at the onset of its hospice services; (b) becoming accredited by the Community Health Accreditation Partner; (c) assuring that each patient has five to seven home health aide visits per week and at least two registered nurse visits per week, provided that is acceptable to the interdisciplinary team, patient, and family; (d) responding to all referrals within one hour, initiating the assessment process within two hours, and expediting admission subject to having a physician order and the patient/family selecting the hospice option; (e) implementing a palliative resources program within six months of receiving Medicare certification;
(f) not building or operating any freestanding hospice houses in Sarasota County; and (g) implementing a Veterans outreach program.
The Statutory and Rule Review Criteria
As will be discussed in more detail in the Conclusions of Law, the
evaluation of Continuum of Sarasota’s application is based on the criteria set
5 Mr. McLemore was referring to Compassionate Care Hospice of the Gulf Coast, Inc. v. State of Florida, Agency for Health Care Administration, 247 So. 3d 99 (Fla. 1st DCA 2018). As will be discussed in the Conclusions of Law below, the Compassionate Care case also involved
Service Area 8D and is substantially similar to the instant case. In affirming AHCA’s decision to deny a CON to Compassionate Care Hospice, the First District Court of Appeal held that “[i]n this case, Tidewell likes the balance that AHCA has struck, supporting
Tidewell’s continued regional monopoly in Sarasota County. But AHCA could alter course policy-wise and give greater weight to eliminating regional monopolies and increasing competition by allowing more entry into Hospice Service Area 8D; that change of policy would alter the dynamics of the hospice marketplace, potentially putting Tidewell in the position of explaining why the issuance of a certificate of need to CCH or another competition was improper.”
forth in section 408.035, Florida Statutes, and rule 59C-1.0355. The relevant criteria are discussed below.6
Section 408.035(1)(a) – The Need for the Healthcare Facilities and Health Services being Proposed and the Existence of Special and/or “Not Normal” Circumstances in Service Area 8D.
As noted above, AHCA determined that there was no need for an additional hospice in Service Area 8D for the January 2021 planning horizon, and no one timely challenged that determination. Nevertheless, Continuum of Sarasota devoted a substantial amount of time at the final hearing attempting to discredit the data used to determine that there is no need for an additional hospice in Sarasota County. Patricia Greenberg, Continuum of Sarasota’s health planning expert, opined that AHCA’s fixed need pool determination should be given little weight because AHCA allows a patient transferred from one service area to another to be counted as two admissions. Tidewell’s status as the only hospice provider in the contiguous counties of Sarasota, Manatee, Charlotte, and DeSoto leads to a distortion in the data used to calculate the fixed need for hospice services in Sarasota County.
Ms. Greenberg reviewed hospice admission data reported to AHCA (which includes double counts of admissions) and compared it to hospice admission data reported to the Florida Department of Elder Affairs (“DEA”) (which does not include double counts of admissions). Ms. Greenberg found a substantial number of double counted admissions in the AHCA reports for Sarasota County, which she described as “noise” or “distortion” in the data, and that caused her to doubt the accuracy of AHCA’s fixed need calculation.
6 With regard to the criteria set forth in section 408.035, the following subsections were not at issue in the instant case: subsection (8) pertaining to the “costs and methods of the proposed construction, including the costs and methods of energy provision and the
availability of alternative, less costly, or more effective methods of construction”; and subsection (10) pertaining to “[t]he applicant’s designation as a Gold Seal Program nursing facility pursuant to s. 400.235, when the applicant is requesting additional nursing home beds at that facility.”
Ms. Greenberg examined the statewide data and found that the existence and degree of double counting of admissions was unique and far more prevalent in Sarasota County when compared to all other counties in Florida. Overall, the data showed that other than the service areas where Tidewell operates, there were no other areas in Florida where there was a material difference between the data reported to AHCA (with double counts) and the data reported to DEA (without double counts). Ms. Greenberg concluded that this anomaly resulted from the fact that Tidewell is a monopoly provider in three adjoining service areas and transfers patients back and forth. According to Ms. Greenberg, no other hospice in Florida has a comparable ability to transfer patients back and forth between contiguous service areas. In sum, Ms. Greenberg asserts that Service Area 8D is less well-served than AHCA’s fixed need pool would indicate.
The double counting described by Ms. Greenberg is not an attempt by Tidewell to manipulate the fixed need pool calculation. Tidewell reports its admission data in the manner required by AHCA. In addition, Armand
Balsano, Tidewell’s health planning expert, explained that there are legitimate reasons why a single hospice patient could be counted as two admissions:
Q: Mr. Balsano, are you aware of multiple different scenarios where under AHCA’s methodology for counting admissions, the same person may be counted more than one time as an admission?
A: Yes.
Q: And what are some of those scenarios?
A: A patient is in a hospice program in the county, rebounds and goes off hospice. And then at some point in the future, because unfortunately we are all mortal, they realize either the condition or some other condition has reoccurred and they reenter the
hospice program. So that admission is appropriately counted twice.
If a patient is in a hospice program and transfers to another subdistrict, that admission is counted twice. If a patient goes to a hospice house outside their district, and I am not speaking specifically of Tidewell here, that admission is counted twice.
So, there’s a variety of very legitimate reasons which the State has established and has a long- term establishment as to how we count admissions.
To whatever extent that Continuum of Sarasota is attempting to
undermine AHCA’s determination that there is zero fixed need for additional hospice services in Sarasota County, that argument is rejected as an untimely challenge to the fixed need pool. Accordingly, Continuum of Sarasota must overcome the rebuttable presumption described in rule 59C- 1.0355(3)(b) by demonstrating that “not normal” or special circumstances justify granting its CON application. However, Continuum of Sarasota’s evidence about a distortion in the admission data for Service Area 8D will be considered when considering the accessibility and utilization of hospice services in Sarasota County under section 408.035(2).
Rule 59C-1.0355(4)(d) sets forth special circumstances that can override the lack of numeric need, and the special circumstance applicable to the instant case pertains to whether a specific terminally ill population is not being served.
Continuum of Sarasota argues that African-Americans needing hospice care are a specific terminally ill population that is not being served. In support thereof, Continuum of Sarasota notes that Tidewell’s penetration rate among Caucasians rose from 61.5 percent in 2015 to 68.65 in 2019. In contrast, Tidewell’s penetration rate among African-Americans rose from
35.2 percent in 2015 to 42.4 percent in 2019. Because a Continuum affiliate had success in California with a minority outreach program, Continuum of
Sarasota argues that it can increase the number of African-Americans utilizing hospice services in Sarasota County.
However, Mr. Balsano explained that the disparity between the Caucasian and African-American penetration rates is not unique to Sarasota County or Florida:
Q: Mr. Balsano, do you have an opinion as to whether this exhibit demonstrates the existence of a specifically terminally ill population that is not being served within the meaning of paragraph of (4)(d)?
A: It’s my opinion that this exhibit does not, nor the supporting testimony indicate a not-normal circumstance.
And why do I say that? Well, if you look at the penetration rates, you can see that for Caucasians, it was roughly 62 percent to 68 percent. And then when you look at the penetration rates for the identified minorities, it’s a high of 49 percent for Asian, high of 45 percent for African-Americans, and for Hispanic, about 41 percent.
So clearly the exhibit shows that Caucasians access hospice are to a higher degree, and by that I mean a greater percentage of the population accesses it compared to minorities. Higher penetration rate in Caucasians compared to minorities.
What the exhibit – what it fails to recognize or fails to deal with is any identification that somehow this is indicative of a unique situation or not reflective of a broader comparison. In other words – well, let me simplify it for you, Mr. Frehn. Anyone who does hospice work in planning or in operations knows that black and Hispanic patients for cultural or other reasons access hospice to a lesser extent. Much has been written about this in the literature.
So this is what’s happening here. There’s no basis
of comparison, given this general recognition that
minority access to hospice is lower than Caucasian access to hospice.
I would also point out this [Continuum of Sarasota Exhibit #95] is looking at the penetration rate by race and ethnicity for all three of the hospice markets that Tidewell serves, all three of the service areas, so it’s not specific to Sarasota.
So looking at about half of the numbers that are reflected here, a little bit more than half the numbers that are reflected here are residents and deaths that are occurring outside of Sarasota County. Just to put a finer point on it, I think what is missing here is some recognition that there’s unmet access, indicative of a problem.
Q: Now, what evidence did you see or did you hear through the testimony as to why the disparity exists between the usage or the access by minorities versus the white population?
A: I didn’t hear any explanation on that and, again, my recognition is that is just a reality in the district. So what was missing, what would have perhaps provided some quantifiable support to that was if there was a comparison to the state of Florida, for example, that says within the state of Florida, we know there is an overall penetration rate of about 60, 66 percent, but for the Hispanic community that number is 50%, and yet Tidewell is only at 42. I mean, something that was a frame of reference beyond just the absolute numbers here.
The greater weight of the evidence demonstrates that the disparity in
Tidewell’s penetration rates between Caucasians and minority groups is
common in the hospice industry, and there is no evidence that Tidewell denies hospice services to any minority group.7
In addition to African-Americans, Continuum of Sarasota identifies the following groups as terminally-ill populations who are not being served:
(a) people who had a bad experience with Tidewell; (b) healthcare providers who will not refer patients to Tidewell based on a prior bad experience; and
(c) patients who desire the opportunity to select a hospice provider that offers a different model of care. As was the case with African-Americans, there is no evidence that Tidewell denies hospice services to anyone. Also, Continuum of Sarasota’s arguments on this point pertain more to Tidewell’s quality of care than its failure to serve a specific terminally-ill population.
While not set forth as a special circumstance that could rebut the lack of numeric need, Continuum of Sarasota cites multiple “not normal” circumstances supposedly demonstrating the need for another hospice provider in Sarasota County.8 Specifically, Continuum of Sarasota cites Tidewell’s alleged status as a “regional monopoly” provider in Sarasota County and two other contiguous subdistricts; an outmigration rate of 35.8 percent that disrupts continuity of care; the readmission data that results in an artificially reduced fixed need pool calculation for Service Area 8D; the fact that Medicaid requires that there be at least two hospice providers; and
7 Tidewell asserts that Continuum of Sarasota is attempting to impermissibly amend its CON application by asserting that African-Americans are not being served. See Fla. Admin. Code R. 59C-1.010(4)(e)(stating that “[s]ubsequent to an application being deemed complete by the Agency, no further application information or amendment will be accepted by the Agency, unless a statutorily required item was omitted and the Agency failed to clearly
request the specific item in its omission request.”). Because Continuum of Sarasota’s argument on this point has no factual support, the undersigned considers the question as to whether it amounts to an application amendment to be moot.
8 Wellington Regional Medical Center, Inc. v. Agency for Health Care Administration, Case No. 03-2701(Fla. DOAH Sept. 29, 2004), rejected in part, Case No. 2003004778 (Fla. AHCA Mar. 7, 2005) instructs that “[t]here is not a list of enumerated ‘not normal’ circumstances; however, ‘not normal’ circumstances traditionally involve ‘issues related to financial, geographic, or programmatic access to the proposed service by potential patients, and not facility specific concerns.”
the desire within Sarasota County for competition and choice among hospice providers.
Continuum of Sarasota’s argument regarding Tidewell’s regional monopoly status is summarized in the following excerpt from its proposed recommended order:
Tidewell is the sole hospice provider in three adjoining hospice Service Areas encompassing Sarasota County (Service Area 8D), Charlotte and Desoto Counties (Service Area 8A), and Manatee County (Service Area 6C). This situation is unique in the state. There are only 6 subdistricts [consisting of nine counties] Florida with a sole hospice provider. Tidewell is the sole hospice provider in three of those subdistricts, which are all contiguous. The other three sole hospice provider subdistricts are operated by three different providers who do not operate hospices in adjoining subdistricts. Thus, there is no other part of the state consisting of multiple contiguous hospice Service Areas with only a single hospice provider. In fact, there is no other part of the state where there are even two adjoining Service Areas with a single hospice provider.
The four counties that comprise the three hospice Service Areas where Tidewell is the sole hospice provider are recognized as a “region” by the U.S. Bureau of the Census and the Office of Management and Budget. These four counties constitute a recognized combined statistical area (“CSA”) used for federal planning and budgeting decisions.
It was found in a prior CON case, Compassionate Care Hospice of the Gulf Coast v. AHCA, DOAH Case No. 15-2005 CON (2016), that Tidewell’s sole hospice provider status in these three contiguous Service Areas was a regional monopoly. The evidence presented in this case consistently demonstrated that five years after the filing of the Compassionate Care CON Application, Tidwell
continues to have a regional monopoly in the three adjoining service areas.
Regardless of whether Tidewell is a monopoly or a regional monopoly, its status as the only provider of hospice services in a county is not typical in Florida. Of Florida’s 67 counties, only nine are served by a single hospice provider, and three of those nine are served by Tidewell. Therefore, Tidewell’s status as the only provider of hospice services in Sarasota County is a “not
normal” circumstance.
With regard to the assertion that Tidewell has an excessively high outmigration rate of 35.8, Continuum of Sarasota argues that patients should be treated in their homes and transferring them to hospice houses outside
Service Area 8D disrupts the continuity of the patients’ care. This argument will be addressed below when the factors determining whether all of the relevant criteria justify approving or denying Continuum of Sarasota’s application.
As for the fact that Medicaid requires that there be at least two hospice providers, AHCA has transitioned its Medicaid program to a
managed care delivery model and was thus required to develop “adequate network” standards for healthcare services offered to Medicaid patients, including hospice services. The model contracts developed by AHCA for managed care plans include “adequate network” standards for hospices and mandates that there must be at least two hospice providers per county.
This circumstance will be addressed below in the analysis of the factors determining whether all of the relevant criteria justify approving or denying Continuum of Sarasota’s application.
Continuum of Sarasota also argues that another “not normal” circumstance includes the strong support among the community in Sarasota County for having a choice in hospice providers. Continuum of Sarasota also cites residents who have had a bad experience with Tidewell and want the
ability to choose a different provider if they need to utilize hospice services in the future.
The letters of support and the deposition testimony of community members who support the application overwhelmingly cite a generalized need for there to be a choice among hospice providers in Sarasota County. The depositions also cite a belief that the presence of competition motivates providers to stay diligent in their provision of care.
In general, the letters of support and the depositions do not claim that Tidewell is a bad provider, but there are descriptions of instances in which Tidewell staff could have been more responsive or acted more quickly.
Given that Tidewell serves well over 4,000 patients a year, it is not surprising that there are individual instances when Tidewell could have provided better service. To the extent that Tidewell’s program could be improved, it is reasonable to expect that the presence of a competitor in Sarasota County would encourage Tidewell to be as diligent as possible with ensuring that it provides good service.
The undersigned reviewed the Yelp reviews submitted by Continuum of Sarasota. As described above, they were given little weight, but they corroborated the depositions’ recurring theme that there have been individual instances during which Tidewell could have been more responsive to client needs.
Section 435.035(2), Florida Statutes – the availability, quality of care, accessibility, and extent of utilization of existing healthcare facilities and health services in the service district of the applicant.
Sarasota County has a robust healthcare delivery system with 6 acute care hospitals, 29 skilled nursing facilities, 86 assisted living facilities, 68 home health agencies, and 1,606 physicians serving a population of over 400,000 people. However, Tidewell is the only hospice in Sarasota County. Continuum of Sarasota’s application included letters from 30 percent of all nursing home operators and 15 to 20 percent of all assisted living facility
(“ALF”) operators in Sarasota County supporting the idea that residents should have a choice in hospice providers.
Tidewell’s model of care is substantially based on providing services via hospice houses. Tidewell’s hospice houses are designed and furnished to be home-like settings so that the patient and family feel like they are in the comfort of their own home rather than in an institution. All of the rooms are private and spacious. The hospice houses also have kitchenettes and living- room-like spaces where families can congregate.
Hospice houses are costly to operate partially because of the
significant staffing that is required to provide GIP care. Each of Tidewell’s hospice houses is staffed with persons from a variety of disciplines who are available to address the needs of patients. The hospice house staffing includes a medical director trained in hospice care, as well as a registered nurse (“RN”), certified nursing assistant (“CNA”), licensed practical nurse (“LPN”), social worker, grief specialist, dietary aide, nurse practitioners,
chaplains, and volunteers. The RNs and CNAs remain on site at each hospice house 24 hours a day, seven days a week. Patients also receive complementary service visits by pet therapists, music therapists, and horticulturists.
Despite the high cost associated with hospice house care, Tidewell made the decision to establish hospice houses as one part of a comprehensive continuum of hospice services. As expressed by Tidewell’s CEO:
[I]f our goal is to make money and drive the bottom line, we would not have hospice houses. This is not . . . about money. This is about giving people the most comfortable, caring and compassionate end-of-life experience that they can have.
* * *
We were built as a hospice that was committed to serving all of the various levels of hospice services
needed across the continuum of the benefit. That certainly includes GIP. . . . We are committed to providing every single component of service necessary to provide the comprehensive hospice benefit so that patients can come in and out of that continuum throughout their end-of-life experience.
* * *
So this is not about the bottom line, as a not-for- profit community rooted organization. We have invested millions and millions of dollars in these hospice houses because of our mutual commitment to the community. They donate to us so that we can provide the service back to the community for their loved ones at the end of life. I will say it a second time. If our goal was to make money, we would not have hospice houses, which is the way most for- profit hospices are operated.
The two hospice houses Tidewell operates in Sarasota County have a total of 18 inpatient beds. Two other Tidewell hospice houses are located in close proximity to Sarasota County and were established to serve communities that include portions of Sarasota County.
Any shortage in hospice house availability is about to be corrected by new capacity within Sarasota County. Tidewell opened a new 7-bed inpatient unit in January of 2020, and anticipated opening an 8-bed inpatient unit at a skilled nursing facility in October of 2020.
Tidewell has also developed multiple programs that are ancillary to basic hospice care. Examples include a We Honor Veterans program; a grief education and support program intended for families who suffer a loss due to suicide, car accident, or other tragedy; the Blue Butterfly center, which specializes in helping children through grief; a nurse residency program for training new nursing graduates on how to be hospice nurses; the transitions program, which helps pre-hospice patients or those who lose hospice
eligibility; and the Partners in Care program, which provides palliative care services to children not in hospice.
Complementary services provided by Tidewell include massage therapy, music therapy, a bedside music program, a certified music and memory program, pet therapy, a horticulture program, a humor program, a Reiki9 program, and an expressive arts program. These programs are referred to as “complimentary services” because they are nonpharmacological services that complement traditional medical care and help distract patients from pain. Some of the complimentary services are staffed with volunteers; however, that is only the case for services such as pet therapy and expressive arts that are not licensed or certified therapies. As to complementary services that are volunteer-based, each volunteer receives a comprehensive orientation and training, is subject to ongoing supervision, and receives annual competency and performance evaluations.
Many of Tidewell’s special programs and services, which are not part of the Medicare benefit, required a substantial initial capital investment and have ongoing operating costs, which are also substantial and generally must be funded through donations.
Tidewell receives high scores from surveys intended to assess a
healthcare provider’s quality. One such survey is the Consumer Assessment of Healthcare Provides and Systems (“CAHPS”) developed by the Centers for Medicare and Medicaid Services (“CMS”) to provide consumers with a means of objectively comparing healthcare providers. CAHPS presents a series of 47 questions to the individual most knowledgeable about a patient’s care, and that individual responds to each question by selecting from answers such as definitely, probably, always, sometimes, or never. Respondents can also give ratings from 1 to 10.
9 Reiki is a form of alternative therapy commonly referred to as energy healing. See Reiki, Wikipedia, http://en.wikipedia.org/wiki/Reiki (last visited January 6, 2021).
Using CAHPS data from August of 2020, Mr. Balsano reported that 82 percent of respondents rated Tidewell a 9 or 10, and 89 percent of respondents gave Tidewell a 9 or 10 with regard to whether they would be willing to recommend Tidewell. Both of the aforementioned scores exceeded like scores for the national average, the Florida average, and the scores for Continuum hospices based in California and Rhode Island.
Mr. Balsano also reported that Tidewell’s CAHPS scores have increased in recent years with regard to the following categories: communication with family; getting timely help; treating the patient with respect; providing emotional and spiritual support; helping with pain and symptoms; training family members to care for the patient; and willingness to recommend this hospice.
Mr. Balsano testified that 89 percent of respondents indicated they would definitely recommend Tidewell and 7 percent said they would probably recommended Tidewell. Only 4 percent said they would not recommend Tidewell.
Mr. Balsano’s CAHPS data also includes ratings from caregivers in which 82 percent of caregivers rated Tidewell a 9 or 10, and 13 percent rated Tidewell a 7 or 8. A rating of 6 or lower is considered to be a poor rating.
Continuum of Sarasota is critical of Tidewell’s hospice house-based model of care. Continuum of Sarasota notes that between 23 and 27 percent of Tidewell patients die in hospice houses each year, and over 32 percent of patients spend a portion of their time on hospice in a hospice home. According to Continuum of Sarasota, that is an unusually high percentage of patients to die in a setting that is not their home.10
In addition, Continuum of Sarasota asserts that Tidewell’s hospice
house-based model of care is responsible for outmigration and a resulting
10 As will be discussed in more detail in a subsequent section, Continuum’s model of care is
substantially based on keeping patients in their homes.
disruption in continuity of care for patients residing in ALFs and skilled nursing facilities. As explained by Ms. Greenberg:
Tidewell reports that [ ] about 33 percent of their patients are served in hospice houses. That means that they are relocated from their home to a licensed hospice facility, whether they are sending them for general inpatient care or even routine care. They have routine patients in there, they would be called residential or routine patients. So they are relocating them out of their homes to a different facility, and many of those facilities are outside of Sarasota County, so they are actually outmigrating them to the other – their other hospice houses in Charlotte, DeSoto, and Manatee Counties.
Another criticism leveled by Continuum of Sarasota is that nearly 40 percent of Tidewell patients die while on GIP, which is far in excess of the national average of 8.6 percent. This is significant because the GIP level of care is only appropriate for those patients whose pain and other symptoms cannot be managed at home.
While the parties appear to agree that hospice care is best when it is provided in a patient’s home, there is no indication that patients are dissatisfied with receiving care in a hospice house or that any disruption to continuity of care is a significant problem. According to a survey from Healthcare First conducted between October of 2017 and March of 2020, 91.9 percent of residents in Tidewell’s Sarasota Hospice House and 94.2 percent of residents in Tidewell’s Venice Hospice House rated their patient care as a 9 or 10. That compares to a national average of 85.4 percent. As for being willing to recommend a hospice, 93.2 percent of residents of Tidewell’s Sarasota hospice house residents and 96.6 percent of residents in Tidewell’s Venice hospice house gave a rating of a 9 or 10. That compared to a national average of 86.6 percent.
As for Continuum of Sarasota’s criticism about Tidewell not providing care in patients’ homes, Mr. Balsano provided data indicating that 45 percent of Tidewell’s patient care in 2019 was provided in a patient’s home as opposed to a nursing home, ALF, hospice facility, or inpatient hospital. In contrast, 37 percent of Continuum Care Hospice, LLC’s (located in California), and 24 percent of Continuum of Rhode Island, LLC’s, care was provided in a patient’s home.
With regard to Tidewell patients spending an inordinate amount of time on GIP, Mr. Balsano noted that not all providers offer GIP care.
Mr. Balsano also noted that Tidewell receives about half of its patients directly from hospitals, and patients discharged directly from hospitals tend to be more acutely ill and thus more likely to require GIP care.
The depositions and letters of support submitted by Continuum of Sarasota indicate there may be areas of Tidewell’s program that could be improved. However, the greater weight of the evidence demonstrates that Tidewell is a quality provider of hospice services. Any problem with
availability/accessibility is likely to be resolved by Tidewell’s addition of two
new hospice houses.
Section 435.035(3) – the applicant’s ability to provide quality of care and
the applicant’s record of providing quality of care
Continuum of Sarasota has no operational history because it is a development stage corporation formed for the purpose of initiating hospice services in Sarasota County. However, inferences about the future performance of a Continuum hospice in Sarasota County can be drawn from the past performance of the other hospices founded by Mr. Stern.
Since 2015, Mr. Stern has founded six hospice programs located in five states: California, Rhode Island, Massachusetts, New Hampshire, and Washington.
One common characteristic among all of the Continuum hospices is their service intensity model that was described as follows in Continuum of Sarasota’s application:
There are several characteristics of Continuum Care Hospice Programs that distinguish [them] from the other hospice programs. But most significant, Continuum Care Hospice prides itself on its service intensity, which far surpasses NHPCO minimum requirements for staffing. If approved to establish services in Sarasota County, Continuum Care of Sarasota will introduce a level of service that extends beyond what is currently available in [the Sarasota County] market.
First, every new patient at Continuum Care of Sarasota will be seen within two hours of referral, seven days a week. The two hour turnaround time is a testament to Continuum Care’s dedication to serving the needs of any and all hospice appropriate patients. Most hospice organizations will tell a caller on a Saturday that someone will be out to see the patient first thing Monday. Continuum Care will see that patient within two hours.
Second, Continuum Sarasota patients will be visited by a certified nursing assistant (CNA) 5 to 7 days per week which will enable Continuum Care to recognize changes in the patient ahead of the curve and be proactive rather than reactive. This will assist in providing more comfortable outcomes for the patient and dually prevent unnecessary hospitalizations. The 5 to 7 visits weekly are an enormous benefit not only for the patient but for facilities in which the patients reside as it helps with their staffing levels.
A third service intensity feature that will be employed by the Applicant is that a registered nurse will visit every patient at least two times weekly, and daily if the patient is actively passing
to provide symptom management and proper planning.
Lastly, Continuum Care of Sarasota will provide a social worker and chaplain (if the patient and family want a chaplain visit) at least weekly, which helps to keep families and loved ones well supported. The support can be a preventative measure so as to not have a crisis at the end of life resulting in a hospitalization or the patient being moved to an inpatient unit. The social worker and chaplain work vigorously to support the family so they are adequately prepared.
Indicative of its commitment to providing a service intense hospice program, Continuum of Sarasota has conditioned its CON application on providing minimum core staffing:
The Applicant will assure each patient has 5 to 7 Home Health Aide visits per week, provided this is acceptable to the [interdisciplinary team], patient and family. This will be measured by a signed declaratory statement submitted by the Applicant to AHCA
The Applicant will assure each patient has a minimum of 2 RN visits per week, provided this is acceptable to the [interdisciplinary team], patient and family. This will be measured by a signed declaratory statement submitted by the Applicant to AHCA.
The Applicant will seek to respond to all of its referrals within one hour, initiate the assessment process within two hours, and expedite admission to the hospice subject to having a physician order in hand and the patient/family selecting the hospice option. This will be measured by a signed declaratory statement submitted by the Applicant to AHCA.
In the second year following licensure, Continuum of Sarasota’s proposed staffing model will exceed the guidelines set forth by the National Hospice and Palliative Care Organization (“NHPCO”), a national trade group of hospices. While the NHPCO calls for one nurse manager for every 11.2 patients, a social services employee for every 24.3 patients, one hospice aide for every 10.8 patients, and one chaplain for every 31.4 patients, Continuum of Sarasota expects to have one nurse case manager for every 10.0 patients, one social services employee for every 22.6 patients, one hospice aide for every 6.1 patients, and one chaplain for every 22.6 patients.
Nevertheless, Continuum of Sarasota agrees that the amount of care provided to a particular patient will ultimately depend on that patient’s care plan and an individualized assessment of that patient’s needs.
As discussed above, Continuum of Sarasota is critical of Tidewell’s percentage of GIP care, and Ms. Greenberg explained how Continuum of Sarasota promises to use high cost GIP care to a much lesser extent:
A: With respect to competition, these exhibits relate to GIP and death in a hospice house. And death on GIP is – the national average is eight and a half percent, and Continuum – Tidewell is nearly 40 percent. So that’s five times the ratio.
Continuum’s experience has only been between 2 and 3 percent of the patients actually pass while they are on GIP. And GIP means they are not in their own home, and it also means that you have an inability to control their acute pain and manage their symptoms in their own home.
And Continuum has been successful in accomplishing that and having basically 1 out of 50
– 1 out of 40 to 50 patients only be on GIP, . . . ; so
it’s significant.
So again, I would suggest that the people in – the program and the model of care takes people out of their home and puts them on GIP. Because to have
4 in 10 uncontrollable acute symptoms seems unusual when there is only eight and a half percent nationally. And, of course, Continuum is much less than the national average.
So disrupting them and taking them out of their home and relocating them as a place to die is the Tidewell model of care, but it seems to be an unfortunate model of care. And Continuum is going to give the population in that market the option to die at home.
Q: Is the reimbursement rate under Medicare higher for GIP level of service?
A: Yes, significantly higher. Within the market itself, within Sarasota County, the actual – the GIP reimbursement is almost a thousand dollars, $978, versus the routine reimbursement, depending on how long the person is on service, ranges between
$147 and 185. So an average of about 160 compared to 978.
Continuum hospices have a history of offering unique and innovative hospice programming to improve quality of care. A virtual reality program offered at each of the Affiliates allows patients and their families to experience “bucket list trips,” engage virtually in treasured activities or life experiences, or re-live precious memories such as visits to a family home or favorite vacation spot. A Continuum hospice was the first hospice in the country to implement virtual reality technology for the benefit of hospice patients.
Another innovative program offered by Continuum hospices is equine assisted healing or equine therapy. Continuum of Sarasota has already contracted with a horse stable in Sarasota so that it can offer this program upon licensure.
Many hospices offer music therapy programs staffed with volunteers. Continuum of Sarasota will have a certified music therapist.
Continuum of Sarasota’s application is conditioned on providing
virtual reality, music therapy, and equine therapy programs:
The Applicant will implement its Virtual Reality Program at the onset of its program. It will be made available to all eligible Continuum Sarasota patients. This will be measured by a signed declaratory statement submitted by the Applicant to AHCA
The Applicant will implement its Music Therapy Program at the onset of its program. It will staff a minimum of one Board Certified Music Therapist. It will be made available to all eligible Continuum Sarasota patients. This will be measured by a signed declaratory statement submitted by the Applicant to AHCA
The Applicant will implement its Equine Therapy Program at the onset of its program. It will be made available to all eligible Continuum Sarasota patients who are physically able to make the trip to the stable partner. This will be measured by a signed declaratory statement submitted by the Applicant to AHCA.
Continuum of Sarasota seeks accreditation from the Community Health Accreditation Program (“CHAP”) for each of its hospices and has conditioned the instant application on obtaining CHAP accreditation.
An independent, not-for-profit accrediting body for home health and hospices awards this credential.
An examination of the Medicare database for Continuum hospices in California and Rhode Island indicates that Continuum typically exceeds the national average for the following quality of care indicators: (a) percentage of patients getting at least one visit from an RN, a physician,
a nurse practitioner, or a physician assistant in the last 3 days of life;
(b) patients who got an assessment of all seven Hospice Item Set (“HIS”)
quality measures at the beginning of hospice care to meet the HIS
Comprehensive Assessment Measure requirements; (c) patients or caregivers who were asked about treatment preferences at the beginning of hospice-care;
(d) patients or caregivers who were asked about their beliefs and values at the beginning of hospice care; (e) patients who were checked for pain at the beginning of hospice care; (f) patients who got a timely and thorough pain assessment when pain was identified as a problem; (g) patients who were checked for shortness of breath at the beginning of hospice care; (h) patients who got timely treatment for shortness of breath; and (i) patients taking opioid medication who were offered care for constipation.
Tidewell offered critiques of Continuum’s operations. For example, the Continuum hospice programs provide a greater proportion of hospice services to patients residing in ALFs and nursing homes than the norm. In 2019, 63 percent of patient care days provided by Continuum’s California hospice were to patients residing in either an ALF or nursing home. ALFs accounted for 44 percent of that hospice’s total patient care days. Another Continuum hospice provided an even higher percentage of its patient care days to patients in one of these settings, with ALFs and nursing homes accounting for a combined 76 percent of the total days. Continuum hospices’ level of service to ALFs and nursing homes greatly exceeds the national average. Nationally, ALFs only account for 19.74 percent of the total patient days while nursing homes account for 17.27 percent.
Continuum’s focus on serving patients in ALFs and nursing homes has
resulted in an above average and steadily increasing average length of
service (“ALOS”) at its hospices. The ALOS at Continuum’s first hospice, which opened in 2015, increased from 86.2 days in 2018 to 126.4 days in 2019, a 47 percent increase substantially above the 89.6-day national average. A newer Continuum hospice, which had its first full year in 2018, saw a similarly dramatic jump in its ALOS from 60.1 days in its first year to
87.7 days in its second year, which represents a 46 percent increase. For the
sake of comparison, the ALOS for all hospices only increased 1.3 percent between 2016 and 2017, and only 1.7 percent between 2017 and 2018.
As explained by Mr. Balsano, one critique concerned Continuum’s
propensity to focus on residents of ALFs and nursing homes:
Q: And can you describe what you view as
Continuum’s business model?
A: Well, their business model is a very successful one. They have strong operating margins and they seem to focus on the patient population that [resides] within ALFs and nursing homes. Within the Sarasota application they talk about these sources of potential referrals and indeed their letters of support largely come from ALFs and nursing homes.
These locations, not specific to Continuum, but these locations tend to produce longer lengths of stay and higher profitability compared to other locations.
Q: What is the connection between the length of stay and higher profitability?
A: Well, it’s twofold. If you are a longer length of stay, then the whole admission process, initial evaluation, all those upfront activities that need to be on a patient that stays 10 days or [ ] zero days, is the same. So by elongating the length of stay, those kind of upfront activities get distributed over a longer stay at lower cost.
And then secondly, given that long length of stay patients reside in nursing homes and ALFs, not exclusively but that’s a big part of it, there is just a very pragmatic consideration.
If a hospice program has multiple patients in a nursing home or multiple patients in an ALF, then that part of the nurse or social worker or home health aid activity that is normally spent from
going from patient A to patient B to patient C, you don’t have to get in the car to go there if you are simply going down the hall or a different floor. So it adds to the efficiency aspect of care delivery if you have patients concentrated in an inpatient setting like a nursing home or an ALF.
Q: And how does the intensity of visits for a hospice patient compare at the beginning and end of a patient’s stay in a hospice as compared to the middle portion of the patient’s stay?
A: If I understand your question, I alluded to the fact that there’s a greater cost in the beginning, there’s also greater cost at the end. So the longer the middle part, the more profitable the stay, as a general consideration.
Tidewell also points out that Continuum’s provision of care is heavily skewed toward home health aides and away from more expensive care such as skilled nursing. In 2019, Tidewell provided an average of 188 home care minutes a week in skilled nursing and 64 minutes a week of home health aides. In contrast, Continuum Care Hospice, LLC, located in California, provided 136 minutes per week of skilled nursing and 175 minutes a week of home health aides. Likewise, Continuum Care of Rhode Island, LLC, provided 113 minutes of skilled nursing and 225 minutes of home health aides.
Tidewell also points out that several of the people responsible for
Continuum’s operations are no longer affiliated with the company.
Specifically, Continuum of Sarasota’s application relied to a great extent on the experience of its six affiliated Continuum hospice programs and their key employees. This included three key employees (excluding the owner Sam
Stern) who were expressly identified in the “Managerial Resources” section of the application: Christi Keith, Continuum’s Chief Operations Officer; Ariel Joudai, Continuum’s Chief Financial Officer; and Patricia Putzbach,
Continuum’s Chief Compliance Officer. However, just prior to the final
hearing, Mr. Stern sold his interest in all but one of his six hospices. As a result, Ms. Keith no longer works for Mr. Stern, and Ms. Putzbach is waiting for an offer from another hospice provider. Although identified by name in the application, Continuum’s National Clinical Director is now working on a temporary basis for Continuum and another hospice provider as a “shared” employee with her future with Continuum undetermined.
Mr. Balsano summarized the impact of a talent drain on Continuum as follows:
When you look at the application as a whole, there’s multiple references. It’s very clear the applicant is proud of the job that it’s done in these markets and says we would plan on operating the proposed Sarasota facility in a similar fashion.
And also the resources that were part of Continuum Care, folks in administration, clinical, patient care, et cetera, at kind of the corporate or oversight level, it calls into question two things.
Could they really commit to operating a hospice in Sarasota County when, in fact, all of the other models that they’ve developed have been successfully sold.
And secondly, from [that resource] standpoint, just [to] put it bluntly, who’s left when these hospices were entered into the transaction. Again, my understanding that people were still waiting to figure out what was happening, but a lot of them expected that they would be going to the acquired – the acquiring organization, which I think was Hospice Care was the name of the organization.
So, as we sit here today, I am not sure who is still left in the clinical and senior leadership positions at Continuum.
The greater weight of the evidence demonstrates that Continuum has a substantial record of being a high-quality provider of hospice services.
The greater weight of the evidence also demonstrates that Continuum of Sarasota will be a high-quality provider of hospice services if its CON application is granted.
Section 408.035(4) – The Availability of Resources, Including Health Personnel, Management Personnel, and Funds for Capital and Operating Expenditures, for Project Accomplishment and Operation
Continuum of Sarasota has the resources for project accomplishment and operation, and Mr. Stern has a demonstrated history of successful start- up hospice operations.
In terms of health personnel, Schedule 6A of the CON Application provides the proposed staffing plan in terms of full-time employees (“FTEs”) and salaries. The undisputed testimony is that the staffing and salaries are reasonable for the proposed operations. Included specifically within the Schedule are sufficient staff to implement the proposed intensive staffing model for increased hospice visit frequency, as well as specific proposed service programs such as dedicated FTEs for music therapy. The intensive service model is an enforceable condition of the CON Application.
With respect to funds for capital and operating expenses, Schedule 1 shows the total project costs of $324,650.00, and Schedule 3 showed
$500,000.00 in cash in the operating account, more than sufficient to cover start-up costs. Additionally, Mr. Stern presented evidence of additional financial resources in excess of $4.5 million and his commitment to fund and support the project. At the time of the final hearing, he had made an additional capital contribution of $2 million, with the current cash balance in the operating account of $2.5 million.
The greater weight of the evidence demonstrates that Continuum of Sarasota has the resources to be a successful hospice provider in Sarasota County.
Section 408.035(5) – The Extent to Which the Proposed Services Will Enhance Access to Healthcare for Residents of the Service Area
As discussed above, the opening of two new hospice houses in Sarasota
County should eliminate any problems with accessing hospice services.
Section 408.035(6) – The Immediate and Long-Term Financial Feasibility of the Proposal
The parties stipulated that the proposed project will be profitable and financially feasible in the long term.
Section 408.035(7) – The Extent to Which the Proposal Will Foster Competition that Promotes Quality and Cost-Effectiveness
Ms. Greenberg is of the opinion that granting Continuum of Sarasota’s application will lead to increases in the quality of hospice services and in the utilization of hospice services in Service Area 8D. As a result of the latter, Continuum of Sarasota and Tidewell will be competing in a growing, as opposed to a static, market of hospice patients.
Ms. Greenberg’s opinion is based on an examination of three service areas in Florida in which competitors had entered service areas in the last five years that had previously been served by only one provider. The service areas in question were Lake and Sumter Counties in Service Area 3E, Hillsborough County in Service Area 6A, and Pinellas County in Service Area 5B. Ms. Greenberg examined the HIS scores for the existing providers during the year before the new competition entered the service area and for the two years following the competitors’ entry. Ms. Greenberg also examined the market utilization before and after the competitors’ entry.
In Service Area 3E, quarterly hospice admissions averaged 732 during the four quarters of 2014 and then peaked at 976 just when Compassionate Care Hospice of Lake and Sumter Counties initiated services in the first quarter of 2015. While hospice admissions declined during the rest of 2015, they rose to 996 during the first quarter of 2016 and remained above 900 for the remainder of 2016.
In Service Area 5B, hospice admissions in Pinellas County were 1,692 during the second quarter of 2018 when Seasons Hospice and Palliative Care entered the market. Hospice admissions increased to 1,755 the next quarter and reached 2,099 by the fourth quarter of 2019. In comparing the incumbent hospice’s HIS scores for quality measures such as treatment preferences, addressing beliefs and values, pain screening, pain assessment, dyspnea screening, dyspnea treatment, and treatment with opioids for the year before and after the competitor entered the market, Ms. Greenberg observed that there was “an uptick in overall quality in just about every measurement ”
In Service Area 6A, hospice admissions in Hillsborough County were 1,559 when Seasons Hospice and Palliative Care of Tampa entered the market. Admissions climbed to 1,741 by the first quarter of 2018 and were 1,787 during the first quarter of 2019. In comparing the incumbent provider’s HIS scores during the years before and after the competitor’s entry,
Ms. Greenberg observed that nearly all of the scores increased marginally, and a few increased substantially.
Ms. Greenberg is of the opinion that Continuum of Sarasota’s service intensity will lead to an across the board increase in Tidewell’s quality.
Q: So if Continuum goes forward with the proposed project and meets the conditions that it has set forth in the application and agreed to be conditioned with respect to service intensity, your opinion as a health planner, will that promote
competition that fosters quality?
A: Absolutely. Because providing that level -- an intensive level of service will have a ripple effect on the community. The existing provider is going to start upping its game, admitting quicker, providing a higher level of service or service intensity. I mean, having an average of less then ten minutes a day on average or 70 minutes a week of nurse’s aides is minimal compared to what’s being proposed and offered by Continuum.
As for whether granting Continuum of Sarasota’s CON application will lead to hospice patients in Service Area 8D having a greater variety of programs, Ms. Greenberg testified that Tidewell has already taken actions to address Continuum of Sarasota’s potential entry into the market by duplicating some of the unique services Continuum of Sarasota proposes to offer:
Exhibit 110 is entitled Competition at Work, and this relates to criteria that foster competition that promotes quality and cost effectiveness. And specifically, relative to the need for the additional competition, if you will, what we have seen in that market is historically when you actually see more competition enter the market, the existing provider will up its game, and I showed how some of those things happen with quality in some prior exhibits. But what I found in the Sarasota market is, in response to Continuum [of Sarasota]’s proposal and discussions in the community, is that Tidewell was already attempting to up its game.
Tidewell earlier this year announced it was having a virtual reality program. And again, Continuum had been in the Sarasota market since mid last summer, and so then that appears to be a . . . reaction to the Continuum [of Sarasota] virtual reality program, which Continuum conditioned its application on.
Similarly, music therapy, that was a new program that was added at the end of 2019, and historically, the music therapy provided by Tidewell was limited to . . . volunteers, not therapists . . . So the upping game has already started.
They recently announced they are going to do equine therapy, and lastly, they’ve just produced a policy that involves a two-hour admission process for patients that are high acuity or are in the hospital. Historically, that’s where the high acuity patients would be.
So my conclusion is, even the threat of competition is already demonstrating that Continuum is upping its game in certain areas.
As for cost effectiveness, Ms. Greenberg discussed how nearly 40 percent of Tidewell’s patients die while on GIP care. In contrast, the national average is 8.5 percent and between 2 and 3 percent of Continuum’s patients die while on GIP. Therefore, with the daily per diem Medicare reimbursement for GIP care being $978.00 as opposed to $160.00 for routine care, Ms. Greenberg is of the opinion that granting Continuum of Sarasota’s application will increase cost effectiveness.
Overall, the greater weight of the evidence demonstrates that granting Continuum of Sarasota’s application is likely to lead to marginal increases in Tidewell’s service quality and to an increase in the utilization of hospice
services in Service Area 8D, especially in light of Continuum’s prior
experience with minority outreach.11
The parties offered a great deal of evidence regarding what impact granting Continuum of Sarasota’s application would have on Tidewell’s financial condition.12 In order to understand the potential impact on Tidewell, it is necessary to discuss the creation of Stratum Health Services (“Stratum”).
Stratum was established in 2016 to act as a parent/management
company for Tidewell. Tidewell’s senior management works under the
11 The fixed need pool calculation and the supporting data suggested that hospice utilization in Sarasota County is close to 100 percent. However, Continuum of Sarasota persuasively demonstrated that the counting of readmissions caused the fixed need pool calculation to be skewed. While that information does not excuse Continuum of Sarasota from demonstrating that special and/or not normal circumstances in Sarasota County justify granting the CON application, it is relevant for demonstrating that utilization of hospice services in Service Area 8D can rise.
12 The statutory and rule-based criteria by which hospice CON applications are judged do not expressly call for an evaluation of how granting the application will impact a current
provider’s financial situation. Nevertheless, consideration of the impact on the existing provider is customarily considered in CON cases. See Hospice of Naples, Inc. v. Ag. For Health Care Admin, Case No. 07-1264CON (Fla. DOAH Mar. 3, 2008), rejected in part, Case No. 2007002739 (Fla. AHCA, Apr. 3, 2008)(discussing in paragraphs 251 through 262 and 270 the impact on the existing provider).
Stratum umbrella and several of Tidewell’s essential administrative functions are performed by Stratum. In order to reimburse Stratum for those services, Tidewell typically transfers at least $12 million a year to Stratum.
When asked why it was appropriate to consider Stratum and Tidewell together when evaluating the impact on Tidewell of granting
Continuum of Sarasota’s CON application, Ms. Greenberg testified as follows:
A: You have to look at them as a combined entity because the parent – there [are] only two tax returns filed for that combined entity, one is Tidewell and one is the parent. And the parent’s primary business is managing Tidewell. And all of the senior executives and the chief medical officer and chief nursing officer and chief clinical officer, if you look at the tax returns, are identical between the two, and they are identified on both tax returns with the same salaries and same benefits but they’re sitting in Stratum.
So it’s not akin to a company that manages a hundred facilities and there’s a CEO at every facility and you have actually support services at the corporate level. This is – it was just a shifting of the whole management team to the parent.
And there are a few other small operating businesses, but on a comparative basis, Tidewell is the one that’s $90 million a year in revenues, and these other small businesses are about $5 million in revenues now.
So it really – you have to look at it as a combined entity, it’s just a shifting of assets and income that were once Tidewell’s as a corporation.
Q: Just so we are clear on that, does Tidewell own the parent company? They gave them $135 million in assets. Do they own it?
A: No, they don’t. The parent owns them, or the parent is the sole member. It’s a nonprofit
corporation, so the parent is the only stockholder. If you were a for-profit, but it’s the sole member of the corporation.
The combined entities of Tidewell and Stratum are very strong from a financial perspective. For the 12 months ending on June 30, 2012, Tidewell had net assets of $113,152,959. For the 12 months ending September 30, 2019, Tidewell and Stratum had combined net assets of $196,940,081.
That represents a 74 percent increase and an average annual dollar increase
of $13.4 million. Prior to the formation of Stratum, Tidewell’s net income was
$12,128,594 for the 12 months ending June 30, 2015. For the 12 months ending September 30, 2018, Stratum and Tidewell’s combined net income was $14,034,322.
The impact incurred by the combined entities of Stratum and Tidewell is evaluated via a contribution margin analysis. In the instant case, one forecasts how many patients Tidewell will lose in the second year of hospice operations by Continuum of Sarasota. The next step is to calculate the ALOS for each patient Tidewell will lose to Continuum of Sarasota. Multiplying the number of lost patients by the ALOS results in the number of lost patient days.
The next step in the contribution analysis is to determine Tidewell’s variable cost per patient day. This figure is Tidewell’s decrease in daily costs for every patient that it loses to Continuum of Sarasota. With Tidewell’s variable cost per patient day in hand, one calculates Tidewell’s contribution margin per patient day by subtracting the variable cost per patient day from the revenue per patient day.
Ms. Greenberg determined that Tidewell could expect its net income to be lower by $565,436.00 by year two of Continuum of Sarasota’s hospice operations. However, her analysis is flawed. First, she assumed that all, or a substantial portion of, the management fee paid from Tidewell to Stratum is 100 percent variable. That assumption is not credible because Tidewell will
incur a certain amount of expenses for accounting, budgeting, human resources, and management regardless of its patient volume. It is unreasonable to assume that the aforementioned expenses would decrease in perfect lockstep with a decrease in patient volume.
Ms. Greenberg’s analysis is also undermined by basing the
calculation on Tidewell’s average length of stay rather than Continuum of
Sarasota’s anticipated average length of stay. As discussed above, Continuum has a history of focusing on patients from ALFs and nursing homes who tend to have longer lengths of stay in hospice care. Thus, it is reasonable to assume that the patients that Continuum of Sarasota takes from Tidewell
will tend to be those with longer lengths of stay than Tidewell’s average.
Mr. Balsano calculated that Tidewell and Stratum’s combined net
income would be reduced by an amount ranging between $1,426,763 and
$2,539,347 by year two of hospice operations by Continuum of Sarasota.
Mr. Balsano’s calculation was more reasonable than Ms. Greenberg’s. Given that Stratum and Tidewell’s combined net income was $14,034,322 for the 12 months ending September 30, 2018, the greater weight of the evidence demonstrates that Tidewell will still be able to operate as the dominant provider of hospice services in Sarasota County even if AHCA grants
Continuum of Sarasota’s CON application.13
13 Tidewell makes the following assertion in its proposed recommended order: “But based on 2019 financial results, which is the last complete year, a contribution margin loss of only $1.4 million, which is on the low end of the possible range, would reduce Tidewell’s operating income to only $2.7 million (which, again, includes $3.3 million in charitable contributions) and reduces its operating margin to only 2.9 percent. Essentially, without the charitable
contributions, Tidewell’s hospice business would be on the verge of breaking even or, perhaps, even losing money. As a result, Tidewell might be forced to use nonoperating income to fund the basic core Medicaid benefits Tidewell is required to provide in addition to the complementary services and programs that are outside the Medicare benefit.” This statement does not seem to account for the possibility that the Sarasota County market is growing and that any patient volume lost to Continuum of Sarasota is likely to be regained in the near future through market growth. In addition, this statement from Tidewell is based on the premise that a financial analysis should only focus on Tidewell and ignore the reality that Tidewell and Stratum are essential components of the same enterprise rather than separate operations. Finally, given that Tidewell’s charitable receipts are likely a product of
Ultimate Findings
If Continuum of Sarasota was not required by rule 59C-1.0355(4)(d) to demonstrate that a specific terminally ill population was not being served, then the undersigned would conclude that the statutory criteria in section 408.035 and “not normal” circumstances justify granting the CON application. Tidewell’s status as a monopoly provider and the resulting lack of choice for residents of Sarasota County are “not normal” circumstances that weigh heavily in favor of granting the application. As for the statutory criteria, the greater weight of the evidence demonstrates that Continuum of Sarasota will be a quality provider of hospice services and will enable residents to choose between two different models of care. Moreover, even if
Tidewell and Stratum’s combined net income would be reduced by an amount ranging between $1,426,763 and $2,539,347 by year two of hospice operations by Continuum of Sarasota, the greater weight of the evidence demonstrates that Tidewell will still be able to operate as the dominant provider of hospice services in Sarasota County.
However and as discussed in more detail in the Conclusions of Law, the undersigned’s assessment of the present state of the law indicates that Continuum of Sarasota is required by rule 59C-1.0355(4)(d) to demonstrate that a specific terminally ill population was not being served. Because Continuum of Sarasota was unable to carry its burden of proof on that point, the CON application must be denied.
CONCLUSIONS OF LAW
DOAH has jurisdiction over the parties and the subject matter of this proceeding. §§ 120.569, 120.57(1), and 408.039(5), Fla. Stat.
its not-for-profit status, Tidewell has not presented a sufficiently compelling justification as to why those receipts should be excluded from a financial analysis.
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)(c), Fla. Stat. In order to be substantially affected by the outcome of a proceeding, a party must show: (a) an injury in fact of sufficient immediacy; and (b) that the person’s substantial injury is of a type or nature that which the proceeding is designed to protect. Agrico Chem. Co. v. Dep’t of Envtl. Reg., 406 So. 2d 478 (Fla. 2d DCA 1981).
Tidewell proved by a preponderance of the evidence that it has standing to participate as a party in this proceeding. As discussed above, approval of Continuum of Sarasota’s application is likely to reduce the combined net income of Tidewell and Stratum by an amount ranging between
$1,426,763 and $2,539,347 by year two of hospice operations by Continuum of Sarasota. That is the type of injury that the instant proceeding is designed to protect, and it is substantial enough to establish standing.
Continuum of Sarasota, as the CON applicant, has the burden of demonstrating that its application should be granted. Boca Raton Artificial Kidney Ctr. v. Dep’t of HRS, 475 So. 2d 250 (Fla. 1st DCA 1985). The award of a CON must be based on a balanced consideration of applicable statutory and rule criteria. Dep’t of HRS v. Johnson and Johnson Home Healthcare Inc., 447 So. 2d 361 (Fla. 1st DCA 1984); Balsam v. Dep’t of HRS, 486 So. 2d 1314 (Fla. 1st DCA 1988). The weight to be given each criterion is not fixed but varies depending on the facts of each case. Collier Med. Ctr., Inc. v. Dep’t of HRS, 462 So. 2d 83 (Fla. 1st DCA 1985).
The criteria to be considered are set forth in section 408.035, which provides that:
The agency shall determine the reviewability of applications and shall review applications for certificate-of-need determinations for health care facilities in context with the following criteria:
The need for the health care facilities being proposed.
The availability, quality of care, accessibility, and extent of utilization of existing health care facilities and health services in the service district of the applicant.
The ability of the applicant to provide quality of care and the applicant’s record of providing quality of care.
The availability of resources, including health personnel, management personnel, and funds for capital and operating expenditures, for project accomplishment and operation.
The extent to which the proposed services will enhance access to health care for residents of the service district.
The immediate and long-term financial feasibility of the proposal.
The extent to which the proposal will foster competition that promotes quality and cost- effectiveness.
The costs and methods of the proposed construction, including the costs and methods of energy provision and the availability of alternative, less costly, or more effective methods of construction.
The applicant’s past and proposed provision of health care services to Medicaid patients and the medically indigent.
The applicant’s designation as a Gold Seal Program nursing facility pursuant to s. 400.235, when the applicant is requesting additional nursing home beds at that facility.
Hospice CON applications are also reviewed pursuant to rule 59C- 1.0355(3)(b), which provides that:
A Certificate of Need for the establishment of a new Hospice program or construction of a freestanding inpatient Hospice facility shall not be approved unless the applicant meets the applicable review criteria in Section 408.035 and 408.043(2), F.S., and the standards and need determination criteria set forth in this rule. Applications to establish a new Hospice program shall not be approved in the absence of a numeric need indicated by the formula in paragraph (4)(a) of this rule, unless other criteria in this rule and in Section 408.035 and 408.043(2), F.S., outweigh the lack of a numeric need. (emphasis added).
Continuum of Sarasota presented a great deal of evidence intended to demonstrate that AHCA’s calculation of the fixed need pool was not representative of the true need for an additional hospice in Sarasota County. To whatever extent that Continuum of Sarasota intended to challenge AHCA’s fixed need pool calculation, that attempt is rejected as untimely. As a result, Continuum of Sarasota must demonstrate that other criteria in
rule 59C-1.0355 and section 408.035 outweigh the lack of numeric need.
As for other criteria in rule 59C-1.0255, subsection (4)(d) pertains to approval of a CON application when there is an absence of numeric need and provides that:
[i]n the absence of numeric need identified in paragraph (4)(a), the applicant must demonstrate that circumstances exist to justify the approval of a new Hospice. Evidence submitted by the applicant must document one or more of the following:
That a specific terminally ill population is not being served.
That a county or counties within the service area of a licensed Hospice program are not being served. (emphasis added)
Continuum of Sarasota argues that there are multiple special
circumstances and “not normal” circumstances that justify approval of its CON application. With regard to the rule-based special circumstances in rule 59C-1.0255(4)(d), Continuum of Sarasota argues that African-Americans are a specific terminally ill population that is not being served. However, and as discussed above, the undersigned finds that the fact that Tidewell’s penetration rate among the African-American community is lower than its penetration rate among Caucasians is not a special circumstance. As a result, a question arises as to whether Continuum of Sarasota’s CON application can be approved based on the existence of “not normal” circumstances alone. See Fla. Admin. Code R. 59C-1.0255(4)(d)(mandating that in the absence of
numeric need, a CON applicant “must demonstrate that circumstances exist to justify the approval of a new Hospice. Evidence submitted by the applicant must document” that a specific terminally ill population is not being served or that a county or counties within the service area of a licensed Hospice program are not being served)(emphasis added).
AHCA addressed this question in the final order of Odyssey Healthcare of Collier County, Inc. d/b/a Odyssey Healthcare of Central Florida v. HPH South, Inc., and Agency for Health Care Administration, Case No. 10-1605CON (Fla. DOAH Nov. 30, 2010; AHCA Feb. 2, 2011). In ruling on an exception filed by a CON applicant, AHCA concluded as follows:
In Exception No. 1, HPH takes exception to the conclusions of law in Paragraphs 101, 102 and 107 of the Recommended Order because the ALJ erred in concluding that HPH did not demonstrate the presence of special circumstances that warranted the approval of its CON application. Pursuant to Rule 59C-1.0355(4)(d), F.A.C., a hospice CON
applicant must demonstrate that 1) a specific terminally ill population is not being served; 2) a county or counties within the service area of a licensed hospice program are not being served; or 3) there are a specific number of persons referred to hospice programs who are not being admitted within 48 hours.[14] In regards to the first criteria, the Agency interprets it to allow applicants to demonstrate that the specific terminally ill populations that the applicant has identified as not being served are actually underserved populations. These populations would include 1) patients residing in assisted living facilities; 2) patients in need of continuous care; and 3) medically complex patients. HPH includes an extensive list of facts it believes justifies the approval of its CON application. However, none of those facts demonstrates the existence of special circumstances under any of the three criteria listed in Rule 59C- 1.0355(4)(d), F.A.C. Thus, even if there are other special circumstances that may warrant the approval of HPH’s CON application, the absence of any of the three special circumstances listed in the rule must result in the denial of HPH’s CON application. Any other interpretation of the rule, as encouraged by HPH, would be erroneous and contrary to established legal precedent. (emphasis added).
In Compassionate Care Hospice of the Gulf Coast, Inc. v. Agency for Health Care Administration and Tidewell Hospice, Inc., Case No. 15- 2005CON (Fla. DOAH Sept. 19, 2016; AHCA Oct. 26, 2016) ALJ James Peterson found that the applicant “did not sufficiently identify or quantify an underserved group” and ultimately recommended that the application be denied. In doing so, ALJ Peterson concluded that:
[c]onsidering all of the evidence, review criteria and applicable law, CCH did not sufficiently identify or
14 Rule 59C-1.0355(4)(d) was amended in 2014 so that the failure to admit a specific number of persons referred to hospice programs within 48 hours was no longer one of the rule-based special circumstances.
quantify an underserved group, nor did CCH prove the existence of special circumstances that outweigh the applicable statutory criteria and the foreseeable adverse impact of a new program on the existing provider and community.
AHCA rendered a Final Order adopting ALJ Peterson’s recommendation without reservation, and the applicant appealed to the First District Court of Appeal.
The Court issued an opinion on May 25, 2018, affirming AHCA’s Final Order. In doing so, the Court quoted rule 59C-1.0355(3)(b) and stated that:
even if AHCA has determined that no need exists, an applicant can still receive a certificate for a new facility, but must demonstrate that the discouragement of regional monopolies/promotion of competition – combining with other rule-based criteria – “outweigh the lack of a numeric need.” It may also show a “specific terminally ill population is not being served” and “a county or counties within the service area of a licensed Hospice program are not being served.”
While AHCA’s past precedent stated that demonstrating the existence of one of the rule-based special circumstances in rule 59C- 1.0355(3)(b) was a prerequisite to issuance of a CON in the absence of
numeric need, the First District Court of Appeal’s opinion in Compassionate Care contains language indicating that demonstrating the existence of one of the rule-based special circumstances in rule 59C-1.0355(3)(b) is not a prerequisite to issuance of a CON. In other words, the Court’s opinion appears to indicate that in the absence of numeric need, an applicant can obtain a CON without demonstrating that a specific terminally ill population is not being served or that a county or counties within the service area of a licensed Hospice program are not being served.
Because the Court did not need to rule on whether demonstrating that one of the rule-based special circumstances was a prerequisite to obtaining a CON in the absence of numeric need, the portion of the Court’s Compassionate Care opinion quoted above appears to be dicta with no binding legal effect. Doherty v. Brown, 14 So.3d 1266, 1267 (Fla. 1st DCA 2009)(stating that “a purely gratuitous observation or remark made in pronouncing an opinion and which concerns some rule, principle, or application of law not necessarily involved in the case or essential to its determination is obiter dictum, pure and simple.”); State ex rel. Biscayne Kennel Club v. Bd. of Bus. Reg. of the Dep’t of Bus. Reg., 276 So. 2d 823, 826
(Fla. 1973)(holding that “[t]he statement of the District Court of Appeal in its opinion requiring the allocation of dates to be on the fiscal year basis in the future was not essential to the decision of that court and is without force as precedent.”).
The statutory review criteria in section 408.035 and certain “not
normal” circumstances would justify granting the CON application. However, the lack of a fixed need for hospice services in Sarasota County during the relevant planning horizon requires Continuum of Sarasota to demonstrate that one of the special circumstances under rule 59C-1.0355(4)(d) exists in Sarasota County. Because Continuum of Sarasota was unable to carry its burden on that point, its CON application must be denied.
Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Agency for Health Care Administration deny Continuum Care of Sarasota, LLC’s, application for a Certificate of Need to provide hospice services in Sarasota County, Florida.
DONE AND ENTERED this 13th day of January, 2021, in Tallahassee, Leon County, Florida.
S
G. W. CHISENHALL 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 13th day of January, 2021.
COPIES FURNISHED:
Jeffrey L. Frehn, Esquire Radey Law Firm, P.A.
301 South Bronough Street, Suite 200
Tallahassee, Florida 32301 (eServed)
Julia Elizabeth Smith, Esquire Julia E. Smith, P.A.
2727 Mahan Drive, Mail Stop 3
Tallahassee, Florida 32308 (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)
Sabrina B. Dieguez, Esquire Smith & Associates
709 South Harbor City Boulevard, Suite 540 Melbourne, Florida 32901
(eServed)
Laura M. Dennis, Esquire Radey Law Firm
301 South Bronough Street, Suite 200
Tallahassee, Florida 32301 (eServed)
Christopher Brian Lunny, Esquire Radey Thomas Yon & Clark
301 South Bronough Street, Suite 200
Tallahassee, Florida 32301 (eServed)
Angela D. Miles, Esquire
Radey Thomas Yon & Clark, P.A.
301 South Bronough Street, Suite 200
Tallahassee, Florida 32301 (eServed)
D. Carlton Enfinger, Esquire
Agency for Health Care Administration 2727 Mahan Drive, Mail Stop 7
Tallahassee, Florida 32308 (eServed)
Maurice Thomas Boetger, 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)
Shevaun L. Harris, Acting Secretary Agency for Health Care Administration 2727 Mahan Drive, Mail Stop 1
Tallahassee, Florida 32308 (eServed)
Bill Roberts, Acting General Counsel Agency for Health Care Administration 2727 Mahan Drive, Mail Stop 3
Tallahassee, Florida 32308 (eServed)
Shena L. Grantham, Esquire
Agency for Health Care Administration Building 3, Room 3407B
2727 Mahan Drive
Tallahassee, Florida 32308 (eServed)
Thomas M. Hoeler, Esquire
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 |
|---|---|---|
| Mar. 09, 2021 | Agency Final Order | |
| Jan. 13, 2021 | Recommended Order | Continuum Care of Sarasota failed to demonstrate the existence of a special circumstance that would overcome the lack of a fixed need. |
