Findings Of Fact In its 1969 legislative session, the Florida Legislature enacted Section 409.266, Florida Statutes, entitled "Medical Assistance for the Needy," providing the original state legislative basis and authority for Florida's entry into the Medicaid program. Section 409.266(2), Florida Statutes, as enacted, authorized the Florida Department of Social Services or any other department that the Governor might designate to: Enter into such agreement with other state agencies or any agency of the federal government and accept such duties with respect to social welfare or public aid as may be necessary to implement the provisions of subsection (1) and to qualify for federal aid including compliance with provisions of Public Law 86-778 and the "Social Security Amendments of 1965" [estab- lishing Title XIX of the Social Security Act] Section 409.266(3), Florida Statutes, as enacted, stated that: The Department is authorized and directed to prepare and operate a program and budget in order to implement and comply with the provisions of public law 86-778 and the "Social Security Amendments of 1965." No provisions of Florida law other than Section 409.266, Florida Statutes, as enacted, authorized any agency to perform any function specifically to implement the Medicaid program. The State of Florida formally commenced participation in the Medicaid program effective January 1, 1970. At all times pertinent to this controversy, respondent, Florida Department of Health and Rehabilitative Services or its predecessor agencies (referred to as "HRS"), has been and continues to be the "State Agency" identified in 42 U.S.C. Section 1396a(a)(5), and charged under Section 409.266, Florida Statutes, as amended, with the formulation of a State Plan for Medical Assistance ("State Plan"), 42 U.S.C. Section 1396a, and with the ongoing responsibility for the administration of the Medicaid program in the State of Florida. Since Florida's entry into the Medicaid program in 1970, HRS has been authorized essentially to "[e]nter into such agreements with appropriate agents, other State agencies, or any agency of the Federal Government and accept such duties in respect to social welfare or public aid as may be necessary or needed to implement the provisions of Title XIX of the Social Security Act pertaining to medical assistance." Section 409.266(2)(a), Fla. Stat., as amended. HRS has never been authorized to enter into any agreements, accept any duties, or perform any functions with respect to the Medicaid program that are in contravention of or not authorized by Title XIX of the Social Security Act and implementing federal regulations and requirements. As a prerequisite for Florida's entry into the Medicaid program, HRS prepared and filed with the United States Department of Health, Education, and Welfare ("HEW") a State Plan, pursuant to Title XIX of the Social Security Act, and pursuant to its delegated legislative authority set forth in Section 409.266(2)(a), Florida Statutes. (In May, 1980, HEW was redesignated the United States Department of Health and Human Services, but for purposes of this action both shall be referred to as HEW.) C.W. Hollingsworth was the HRS official who had the responsibility for supervising the preparation, the filing, and for obtaining the approval of HEW of Florida's initial State Plan. Florida's initial State Plan was approved by HEW effective January 1, 1970. At the time that Florida received approval of its initial State Plan, Title XIX of the Social Security Act required state plans to provide for the payment of the reasonable cost of inpatient hospital services. At the time that Florida received approval of its initial State Plan, HEW regulations governing reimbursement for inpatient hospital services under Medicaid required the State Plan to provide for reimbursement of Medicaid inpatient hospital services furnished by those hospitals also participating in the Medicare program, applying the same standards, cost reimbursement principles, and methods of cost apportionment used in computing reimbursement to such hospitals under Medicare. 45 C.F.R. Section 250.30(a), and (b), 34 Fed. Reg. 1244 (January 25, 1969). At the time that Florida entered the Medicaid program, Medicare cost reimbursement principles in effect governing reimbursement for the cost of inpatient hospital services required payment of a participating hospital's actual and reasonable costs of providing such services to Medicare beneficiaries, and, moreover, that such payment be made on the basis of the hospital's current costs rather than upon the costs of a prior period or upon a fixed negotiated rate. 42 U.S.C. Section 1395x(v)(1)(A); 20 C.F.R. Sections 405.451(c)(2), 405.402(a) [later renumbered 42 C.F.R. Section 405.451(c)(2) and Section 405.402(a)]. Such Medicare principles and standards also provided for interim payments to be made to the hospital during its fiscal year. At the conclusions of the subject fiscal year, the hospital was required to file a cost report wherein the hospital included all of its costs of providing covered inpatient services to Medicare beneficiaries. A settlement or "retroactive adjustment" process then was required to reconcile the amount of interim payments received by the hospital during the fiscal period with its allowable costs incurred during that period. If the hospital had been overpaid during the year, it was required to refund the amount of that overpayment to the Medicare program. Conversely, if the hospital had been underpaid during the year, the Medicare program was required to make an additional payment to the hospital, retroactively, in the amount of the underpayment. 20 C.F.R. Sections 405.402(b)(2), 405.451(b)(2). Essentially the same Medicare principles and standards governing reimbursement of inpatient hospital services described in the two preceding paragraphs have been in effect at all times pertinent to this controversy. 42 C.F.R. Section 405.401, et seq. Florida's approved State Plan as of January 1, 1970, governing reimbursement of inpatient hospital services under the Medicaid program, committed HRS to reimburse hospitals that also participated in the Medicare program for their reasonable costs of providing inpatient hospital services to Medicaid patients, applying Medicare cost reimbursement principles and standards. The only versions of Florida's State Plan provisions that have been approved by HEW and that have governed HRS's reimbursement of inpatient hospital services prior to July 1, 1981, each commit HRS to reimburse hospitals that also participated in the Medicare program for their reasonable costs of providing inpatient hospital services to Medicaid patients, applying Medicare cost reimbursement principles and standards. Attached as an appendix to the recommended order is the form agreement drafted with the supervision of C.W. Hollingsworth, which has been in use from January 1, 1970, until July 1, 1981. From the inception of the Florida Medicaid program, and as a prerequisite for participation therein, a hospital has been required to execute a copy of the form agreement. A hospital may not participate in the Medicaid program without having executed such an agreement, nor may it propose any amendments thereto. The intent and effect of the form agreement is to require HRS to reimburse hospitals that also participated in the Medicare program for their reasonable costs of providing inpatient hospital services to Medicaid patients, applying Medicare cost reimbursement principles and standards. The form agreement requires HRS to compute a percentage allowance in lieu of the retroactive adjustments ("percentage allowances") in determining the rates that hospitals will be paid for providing inpatient hospital services to Medicaid patients. The form agreement requires HRS to compute a new percentage allowance each year based on hospital cost trends. The meanings of the terms "allowance in lieu of retroactive adjustments" in all pertinent state plans and "percentage allowance for the year in lieu of retroactive payment adjustment" contained in the form agreement are identical. In drafting the form agreement HRS intended that the "percentage allowance for the year in lieu of retroactive payment adjustment" be set at a level sufficient to ensure that hospitals participating in the Medicaid program would be reimbursed their "reasonable costs" of providing inpatient hospital services to Medicaid patients, applying Medicare cost reimbursement principles and standards. At all times pertinent to this controversy, participating hospitals, like petitioner, have been reimbursed by HRS for inpatient hospital services provided to Medicaid patients in the following manner: Within ninety (90) days following the close of its fiscal year, the partici- pating hospital files a Form 2551 or 2552 Annual Statement of Reimbursable Costs, as applicable, with both Blue Cross of Florida, Inc., the major fiscal intermediary respon- sible for the administration of Part A of the federal Medicare program in the State of Florida, and with HRS. This document, also referred to as a "cost report" details various hospital and financial statistical data relating to the patient care activities engaged in by the hospital during the sub- ject fiscal period. Upon receipt of the participating hospital's cost report for a fiscal period, HRS makes an initial determination based upon Medicare cost reimbursement principles and standards of the hospital's total allow- able inpatient costs, charges, and total patient days during the subject fiscal period, and then determines an inpatient per diem reimbursement rate for the period. To the inpatient per diem reimburse- ment rate is then added a percentage allow- ance in lieu of making any further retroactive corrective adjustments in reimbursement which might have been due the hospital applicable to the reporting period. The adjusted inpa- tient per diem reimbursement rate is applied prospectively, and remains in effect until further adjustments in the rate are required. If HRS determines that total inpa- tient Medicaid reimbursement to a partici- pating hospital during a fiscal period exceeds the hospital's allowable and rea- sonable costs of rendering such covered inpatient services applying Medicare cost reimbursement principles and standards, then the hospital is required to remit to HRS the amount of such overpayment. If, however, HRS determines that the total inpatient Medicaid reimbursement received by a participating hospital is less than the hospital's actual and reason- able costs of rendering such covered inpa- tient services to Medicaid patients during the period applying Medicare cost reimburse- ment principles and standards, no further retroactive corrective adjustments are made; provided, however, that should an overpayment occur in a fiscal period, it may be offset and applied retroactively against an under- payment to the participating hospital which occurred during the next preceding fiscal period only. HRS has used the following "percentage allowances" in determining Medicaid reimbursement rates for inpatient hospital services: a. January 1, 1970 - June 30, 1972 . . . 12 percent July 1, 1972 - approximately March 30, 1976 . . . . . . . . . . 9 percent Approximately March 31, 1976 - June 30, 1981 . . . . . . . . . . . 6 percent Since at least January 1, 1976, HRS has not recomputed the "percentage allowance" on an annual basis. Since at least January 1, 1976, HRS has not based the "percentage allowance" that it has applied in determining Medicaid inpatient hospital reimbursement rates upon hospital cost trends. HRS has used no technical methodology based upon hospital cost trends to develop any of the "percentage allowances." At least since January 1, 1974, HRS's "percentage allowances" have been less than the corresponding average annual increases in the costs incurred by Florida hospitals of providing inpatient hospital services. Prior to March 30, 1976, all of HRS's published regulations addressing reimbursement of participating hospitals for their costs of providing inpatient hospital services to Medicaid patients required HRS to reimburse such hospitals in accordance with Medicare cost reimbursement principles and standards. In certain internal documents, Petitioner's Exhibits P-44 and P-12, HRS states that the average costs of providing inpatient hospital services in the State of Florida rose at least 18 percent during calendar year 1975. In November, 1975, the Secretary of HRS was informed by HRS officials that HRS faced a projected budgetary deficit for its fiscal year ended June 30, 1976. A decision memorandum presented options to the HRS Secretary for reducing the projected deficit. Among such options presented to and approved by the HRS Secretary was to reduce the "percentage allowance" from 9 percent to 6 percent. The reduction of the "percentage allowance" by HRS from 9 percent to 6 percent was effected in response to HRS's projected deficit, and was not based upon an analysis of hospital cost trends. HRS incorporated the 6 percent "percentage allowance" into its administrative rules which were published on March 30, 1976. In response to objections raised by the Florida Hospital Association to the reduction in the percentage allowance by HRS from 9 percent to 6 percent, HRS officials reexamined that reduction. During HRS's reexamination of its previous "percentage allowance" reduction, HRS was aware of and acknowledged the fact that Florida hospital costs were increasing at an average annual rate in excess of both the earlier 9 percent and the resulting 6 percent "percentage allowance." In a memorandum dated September 13, 1976, from HRS official Charles Hall to the Secretary of HRS, Petitioner's Exhibit P-45, Charles Hall informed the Secretary that the methods and standards then used by HRS to reimburse participating hospitals for their costs of providing inpatient hospital services to Medicaid patients was out of compliance with federal requirements. Charles Hall further informed the Secretary that the reason HRS had not theretofore been cited by HEW for noncompliance was the manner in which the Florida State Plan had been drafted, i.e., that the State Plan required HRS to reimburse hospitals under Medicaid for the reasonable costs that they would have been reimbursed applying Medicare cost reimbursement principles and standards. In a letter dated September 20, 1976, Petitioner's Exhibit P-31, HEW informed HRS that HEW had received a complaint from the Florida Hospital Association that the methods HRS was actually using to reimburse hospitals for the costs of providing inpatient hospital services to Medicaid patients were in violation of Federal Regulation 45 C.F.R. Section 250.30(a). A proposed amendment to Florida's State Plan submitted by HRS to HEW in November, 1976, Petitioner's Exhibit P-49, if approved, would have allowed HRS to reimburse hospitals for the cost of providing inpatient hospital services to Medicaid patients under methods differing from Medicare cost reimbursement principles and standards (an "alternative plan"). "Alternative plans" have been permitted under applicable federal regulations since October 21, 1974. A state participating in the Medicaid program may elect to establish an "alternative plan, but may not implement such "alternative plan" without the prior written approval of HEW. Florida has not had in effect an "alternative plan" of reimbursing participating hospitals for their costs of providing inpatient hospital services to Medicaid patients that was formally approved by HEW at any time prior to July 1, 1981. By letter dated January 7, 1977, Petitioner's Exhibit P-32, HEW notified HRS that it had formally cited HRS for noncompliance with federal regulations governing reimbursement of inpatient hospital services under Medicaid. HRS acknowledged their noncompliance and between November, 1976, and October 30, 1977, HRS attempted to revise its proposed "alternative plan" on at least two occasions in an attempt to obtain HEW approval. In October, 1977, HRS withdrew its proposed "alternative plan" then pending with HEW. HRS then contracted with an outside consultant, Alexander Grant & Company, to assist in the formulation of a new "alternative plan" proposal. In January, 1978, Alexander Grant & Company delivered its draft of an "alternative plan" to HRS. In October, 1978, HRS submitted a draft "alternative plan" to HEW for review and comment, and HEW expected HRS to submit a formal "alternative plan" proposal to HEW for its approval by November 1, 1978. HRS did not submit the formal "alternative plan" proposal to HEW until August 12, 1980. In a letter dated February 21, 1979, from Richard Morris, HEW Regional Medicaid Director, Region IV, to United States Senator Richard Stone of Florida, Mr. Morris advised Senator Stone: For more than two years the Florida Medicaid Program has not met Federal Requirements for inpatient hospital services reimbursement. Their payment methodology under-reimburses certain hospitals year after year. The pros- pective interim per diem rate paid by Florida to hospitals includes a percentage allowance to cover increased costs during the forthcom- ing year that is consistently less than increased costs in some hospitals. If the payments are less than costs, the difference is not reimbursed. This results in underpay- ments. We have worked closely with Florida to develop an acceptable alternative system that would meet Federal requirements. To date, Florida has not implemented such a system despite having received informal HEW agreement on a draft plan developed more than a year ago. It is our understanding that this alternative plan is not a high priority item at this time. We will continue to work with HRS staff to secure Florida compliance re- garding this requirement. Petitioner's Exhibit P-46. Since August 12, 1980, HRS has submitted to HEW for its approval at least four more versions of an "alternative plan." Petitioner's Exhibits P-120, P-121, P-123, and P-152. Each of these versions was approved by the Secretary of HRS, and HRS believes each to comply with applicable Florida law. Mr. Erwin Bodo, Ph.D., was and is the HRS official responsible for the development and drafting of Exhibits P-120, P-121, P-123, and P-152. In June, 1981, HEW approved an "alternative plan" for the State of Florida (Exhibit P-152), and such "alternative plan" was implemented effective July 1, 1981. Until July 1, 1981, HRS continued to use the 6 percent "percentage allowance" to compute inpatient hospital reimbursement under Medicaid. Even after its repeal, Rule 10C-7.39(6), Florida Administrative Code, is applied by respondent in calculating reimbursement for Medicaid services provided between March 30, 1976, and July 1, 1981. From November 20, 1976, until July 1, 1981--the period in which HRS was attempting to secure HEW approval for an alternative plan--HRS was aware that the costs of inpatient hospital se vices were increasing at an average annual rate in excess of the 6 percent "percentage allowance." From September 1, 1976, through July 1, 1981, HRS has been out of compliance with its a proved State Plan provisions, and HEW regulations governing reimbursement for inpatient hospital services under Medicaid because HRS's methods for reimbursing hospitals for the cost of providing those services to Medicaid patients have resulted in a substantial number of hospitals-- including petitioner--being reimbursed at a lower rate than the hospitals would have been reimbursed applying Medicare cost reimbursement principles and standards. Since the quarter ending December 31, 1976, until July 1, 1981, HEW has formally cited HRS as being in contravention of its approved State Plan provisions, and HEW (now HHS) regulations, governing reimbursement for inpatient hospital services under Medicaid because HRS's methods for reimbursing hospitals for the cost of providing those services to Medicaid patients have resulted in a substantial number of hospitals--including petitioner--being reimbursed at a lower rate than the hospitals would have been reimbursed applying Medicare cost reimbursement principles and standards. PAN AMERICAN HOSPITAL CORPORATION Petitioner, Pan American Hospital Corporation, is a not-for-profit corporation, duly organized and existing under the laws of the State of Florida. Petitioner is a tax-exempt organization as determined by the Internal Revenue Service pursuant to Section 501(c)(3) of the Internal Revenue Code of 1954, as amended. At all times pertinent to this controversy, petitioner has operated and continues to operate a duly licensed 146-bed, short-term acute care general hospital, located at 5959 Northwest Seventh Street, Miami, Florida 33126. At all times pertinent to this controversy, petitioner has been and continues to be a duly certified provider of inpatient hospital services, eligible to participate in the Florida Medicaid program since January 27, 1974. The appendix to this recommended order is a true and correct copy of the "Participation Agreement" entered into between petitioner and HRS, whereunder, inter alia, petitioner became eligible to receive payment from HRS for covered inpatient hospital services provided to Medicaid patients. At all times pertinent to this controversy, petitioner has been a certified "provider of services" participating in the Medicare program. During the fiscal periods in dispute in this action, petitioner did provide covered inpatient hospital services to Medicaid patients, and became eligible for payment by HRS of its reasonable costs of providing such services, determined in accordance with Medicare cost reimbursement principles and standards. With respect to each of the fiscal periods in dispute in this action, petitioner timely filed all cost reports and other financial data with HRS or its contracting agents, including Blue Cross of Florida, Inc., to enable HRS to determine petitioner's reasonable costs of providing covered inpatient hospital services to Medicaid patients. During each of the fiscal periods in dispute in this action, to reimburse petitioner for its reasonable costs of providing covered inpatient hospital services to Medicaid patients, determined in accordance with applicable Medicare cost reimbursement principles and standards. Such costs incurred by petitioner were reasonable, necessary, related to patient care, and less than customary charges within the meaning of those Medicare principles and standards. With respect to each of the fiscal periods in dispute, HRS and/or its contracting agent, Blue Cross of Florida, Inc., reviewed and audited the cost reports filed by petitioner, and as a result of such review and audits set or adjusted, as applicable, the Medicaid inpatient per diem reimbursement rate at which petitioner would be paid during the next succeeding fiscal period or until that rate was again adjusted. On May 3, 1976, a Notice of Program Reimbursement was issued to petitioner applicable to its fiscal year ended March 31, 1975, and setting forth the audited amount of petitioner's reasonable costs of providing covered inpatient hospital services to Medicaid patients during such period and the amount of interim Medicaid payments made to petitioner by HRS during the period in respect to those services. During its fiscal year ended March 31, 1975, petitioner received $86,469 less than its reasonable costs of providing covered inpatient hospital services to Medicaid patients, and no retroactive corrective adjustment has been made in connection with such underpayment. On February 14, 1979, a Notice of Program Reimbursement was issued to petitioner applicable to its fiscal year ended March 31, 1976, and setting forth the audited amount of petitioner's reasonable costs of providing covered inpatient hospital services to Medicaid patients during such period and the amount of interim Medicaid payments made to petitioner by HRS during the period with respect to those services. During its fiscal year ended March 31, 1976, petitioner received $199,328 less than its reasonable costs of providing covered inpatient hospital services to Medicaid patients, and no retroactive corrective adjustment has been made in connection with such underpayment. On September 29, 1978, a Notice of Program Reimbursement was issued to petitioner applicable to its fiscal year ended March 31, 1977, and setting forth the audited amount of petitioner's reasonable costs of providing covered inpatient hospital services to Medicaid patients during such period and the amount of interim Medicaid payments made to petitioner by HRS during the period with respect to those services. During its fiscal year ended March 31, 1977, petitioner received $6,083 less than its reasonable costs of providing covered inpatient hospital services to Medicaid patients, and no retroactive corrective adjustment has been made in connection with such underpayment. On March 13, 1980, a Notice of Program Reimbursement was issued to petitioner applicable to its fiscal year ended March 31, 1978, and setting forth the audited amount of petitioner's reasonable costs of providing covered inpatient hospital services to Medicaid patients during such period and the amount of interim Medicaid payments made to petitioner by HRS during the period with respect to those services. During its fiscal year ended March 31, 1978, petitioner received $178,506 less than its reasonable costs of providing covered inpatient hospital services to Medicaid patients, and no retroactive corrective adjustment has been made in connection with such underpayment. On June 30, 1981, a Notice of Program Reimbursement was issued to petitioner applicable to its fiscal year ended March 31, 1979, and setting forth the audited amount of petitioner's reasonable costs of providing covered inpatient hospital services to Medicaid patients during such period and the amount of interim Medicaid payments made to petitioner by HRS during the period with respect to those services. During its fiscal year ended March 31, 1979, petitioner received $302,347 less than its reasonable costs of providing covered inpatient hospital services to Medicaid patients, and no retroactive corrective adjustment has been made in connection with such underpayment. On or about June 30, 1981, the audit of petitioner's Medicaid cost report for the period ending March 31, 1980, was concluded. A formal Notice of Program Reimbursement had not been issued at the time of the hearing. MOTION TO DISMISS DENIED Respondent contends that these proceedings should be summarily concluded "for failure to join an indispensable party," viz., the Federal Government, because it "is Respondent's intention, should any liability result from this action, to make a claim for federal financial participation as to approximately fifty-nine percent of such liability . . . [See generally] 42 U.S.C. Section 1320b-2(a)(2)." Motion to Dismiss, p. 2. This contention must fail for several reasons. Neither the Division of Administrative Hearings nor the Department of Health and Rehabilitative Services has the power or means to bring an unwilling party into a proceeding instituted pursuant to Section 120.57, Florida Statutes (1979). At most, "the presiding officer may, upon motion of a party, or upon his own initiative enter an order requiring that the absent person be notified of the proceeding and be given an opportunity to be joined as a party of record." Rule 28-5.107, Florida Administrative Code. There exists no administrative writ for joining a non-petitioning party in a substantial interest proceeding in the way judicial process can join a party within a court's jurisdiction in a pending judicial proceeding. The two cases respondent cites in support of its motion, Bannon v. Trammell, 118 So. 167 (Fla. 1928), and Heisler v. Florida Mortgage Title and Bonding Co., 142 So.2d 242 (Fla. 1932), are inapposite, because both cases involve judicial, not administrative proceedings. HRS does not really seek joinder of the United States Department of Health and Human Services; instead, HRS argues that the petition should be dismissed and the controversy relegated to federal court because it "believes that the Secretary [of the United States Department of Health and Human Services] will not succumb voluntarily to the jurisdiction of the Division of Administrative Hearings." 2/ Motion to Dismiss, p. 3. Participation by the Department of Health and Human Services in the present proceedings would have been welcomed, as the Hearing Officer indicated at the prehearing conference, but neither the Department itself nor either of the parties requested such participation. In any event, petitioner is seeking additional reimbursement from respondent HRS, not from any federal agency. Medicaid providers like petitioner do not receive any funds directly from the Department of Health and Human Services. Since "[t]he contracts involved are clearly between the hospitals and [H]RS [, n]o third party requirement appears," Montana Deaconess Hospital v. Department of Social and Rehabilitation Services, 538 P.2d 1021, 1024 (Mont. 1975), and the Department of Health and Human Services is not an indispensable party to administrative proceedings arising out of contracts between HRS and Medicaid providers. HRS protests that it might find itself making additional reimbursement to petitioner, yet be deprived of the federal component of such expenditures. See 42 U.S.C. Section 1396b. This prospect is an unlikely one in view of the fact that the Department of Health, Education, and Welfare has repeatedly cited HRS for noncompliance because of under-reimbursements to Medicaid providers. If the Federal Government fails to contribute to any additional reimbursement, it would not be for want of a forum in which HRS could present its claim. There are administrative mechanisms within the Department of Health and Human Services, including its Grant Appeals Board. See 42 U.S.C. Section 1116(d). After exhaustion of administrative remedies, HRS would have access to the courts, if necessary. See Georgia v. Califano, 446 F. Supp. 404 (N.D. Ga. 1977). There is no danger that HRS will be deprived of an opportunity to litigate any question about federal contribution because the United States Department of Health and Human Services is not a party to the present proceedings. MOTION FOR PARTIAL SUMMARY JUDGMENT Petitioner's motion for partial summary judgment was amended ore tenus at the final hearing to delete "and FYE March 31, 1981," on page 1 of the motion, after leave to amend was granted, without objection by respondent. As a technical matter, the motion is a misnomer, since substantial interest proceedings before the Division of Administrative Hearings eventuate in recommended orders, not judgments. But, petitioner's contention that there is no genuine issue as to any material fact is well founded. The parties have so stipulated. (T. 70; Mr. Weiss's letter of November 12, 1981.) At the time the petition was filed, the parties contemplated numerous factual disputes which, however, had all been resolved by the time of final hearing through the commendable efforts of counsel. In the absence of a disputed issue of material fact, the Administrative Procedure Act provides for informal proceedings pursuant to Section 120.57(2), Florida Statutes (1979), "[u]nless otherwise agreed." Section 120.57, Florida Statutes (1979). On December 7, 1981, the parties filed their Stipulation and Agreement to proceed pursuant to Section 120.57(1), Florida Statutes (1979), notwithstanding the absence of any factual dispute. DISPUTE COGNIZABLE In the present case, as in Graham Contracting, Inc. v. Department of General Services, 363 So.2d 810 (Fla. 1st DCA 1978), there "can be no doubt that the Department's contract . . . calls for agency action which potentially affects . . . substantial interests," 363 So.2d at 812, of the petitioning contractor. Cf. Solar Energy Control, Inc. v. State Department of Health and Rehabilitative Services, 377 So.2d 746 (Fla 1st DCA 1979) (reh. den. 1980) (disappointed bidder substantially affected). See Section 120.52(10)(a), Florida Statutes (1979). In Graham Contracting, Inc. v. Department of General Services, 363 So.2d 810 (Fla. 1st DCA 1978), the petitioner sought "additional money and construction time under its contract," 363 So.2d at 813, with a state agency. The court found "no difficulty . . . with sovereign immunity," 363 So.2d at 813, and held that a contractor with a state agency could invoke the Administrative Procedure Act in order to enforce its contract, even though the contract purported to establish another method for settling the contract dispute. A clause in the contract at issue in the Graham Contracting case contemplated agency action outside the parameters of Chapter 120, Florida Statutes, in resolving certain disputes under the contract. In contrast, each of the successive contracts on which petitioner predicates its claim in the present case contains the following provision: "The hospital agrees to comply with the rules, policies, and procedures required by [HRS's] Division of Family Services for this program." Among the rules thus incorporated by reference into the contracts between petitioner and respondent is Rule 10C-7.35, Florida Administrative Code, which provides: An official representative of a facility participating in Medicaid, . . . or . . . representative, may appeal Medicaid Program policy, procedure, or administrative rulings whenever the provider feels there has been an unfair, illegal or inappropriate action by the Department affecting them or their facility. (1) Provider Appeals The Administrative Procedures [sic] Act, Chapter 120 F.S., provides for provider appeals and hearings, which are conducted by the Division of Administrative Hearings in the Department of Administration. The spe- cific rule relative to the appeal and hearing process is Chapter 28-3 [sic] of the Florida Administrative Rules. . . Since, by reference to Rule 10C-7.35, Florida Administrative Code, the contract in the present case incorporates Chapter 120, Florida Statutes, the applicability of the Administrative Procedure Act is even clearer here than in the Graham Contracting case. THE MERITS The parties have stipulated that petitioner has been reimbursed by respondent less than its reasonable costs of providing covered inpatient hospital services over the time period in question. Under-reimbursement of this kind is not authorized by Section 409.266, Florida Statutes, which incorporates the federal statutory requirement that hospitals which, like petitioner, provide Medicaid services be reimbursed by respondent for reasonable costs incurred, in accordance with an approved State Plan, and not some lesser amount. 42 U.S.C. Section 1396a(a)(13)(B), Pub. L. 89-97, Section 121(a) redesignated 42 U.S.C. Section 1396a(a)(13)(D), Pub. L. 90-248, Section 224(a). All Florida "State Plan provisions . . . approved by HEW and . . . govern[ing] HRS's reimbursement of inpatient hospital services prior to July 1, 1981, commit HRS to reimburse hospitals [like petitioner] that also participated in the Medicare program for their reasonable costs of providing inpatient hospital services to Medicaid patients, applying Medicare cost reimbursement principles and standards." Prehearing Stipulation, Paragraph 19. The record is clear. Respondent consistently reimbursed petitioner less than its reasonable costs of providing inpatient hospital services in order to cut its own expenses and in doing so jeopardized the entire Medicaid program. This cannot be condoned, even though respondent acted under color of law, viz., Rule 10C-7.39(6), Florida Administrative Code [now repealed and declared invalid; see Pan American Hospital Corporation v. Department of Health and Rehabilitative Services, No. 81-1480R (DOAH; December 4, 1981)], and even though a lack of money or, at least, an apparent shortage was the reason for respondent's parsimony. The question remains, however, whether this dereliction on respondent's part should inure to the benefit of petitioner; and the answer turns on the construction of the agreement between the parties attached as an appendix to this order. Petitioner argues cogently that public policy has clearly been enunciated by statute to be full reimbursement for costs reasonably incurred by Medicaid providers in furnishing covered services. There can be no clearer expression of public policy than a statute duly enacted; and the reasons behind the full reimbursement policy are themselves compelling: to deal fairly with the providers, not only for fairness sake, but also to assure their participation in the program, and to remove any temptation to give indigent patients substandard care, inter alia. But, there is surely an overriding public policy requiring that a contractor with state government who voluntarily agrees to forego a claim against the public fisc be held to that agreement in administrative proceedings like these. The form agreement between petitioner and respondent, which they renewed annually, states: "It is understood that reimbursement will be made on the basis of an interim payment plan in the form of a per diem cost rate, plus a percentage allowance for the year in lieu of retroactive payment adjustment. However, . . . in the event the hospital did not receive its audited reasonable costs in the year prior to the current year then the hospital may deduct from the refund the prior year deficiency." (Emphasis supplied.) The agreement thus contemplated under-reimbursement and specified the method for recoupment, if there was to be any. Any "retroactive payment adjustment," as the result of administrative proceedings or otherwise, is specifically ruled out. Elsewhere in the parties' agreement is found this language: [T]he fiscal responsibility of [respondent's] Division of Family Services is subjected [sic] to the appropriation and availability of funds to the Medicaid program . . . by the state legislature every year." The terms of the agreement make clear that under-reimbursement is not in itself a breach. Respondent's failure to compute annually a "new percentage . . . based on hospital cost trends" was attributable to a shortage of funds; and the agreement provided that respondent's "fiscal responsibility" was subject to just such a shortage. In sum, provisions of the agreement petitioner voluntarily entered into with respondent operate in much the same way as a liquidated damages clause and preclude the relief petitioner seeks. Petitioner's invocation of the parol evidence rule is unavailing. Even if the stipulated facts outside the four corners of the form agreement are looked to, the course of dealing between these parties buttresses the construction outlined above. The fact that respondent may have settled a case it litigated against another hospital in some other way, as asserted by petitioner, is technically irrelevant.
Recommendation Upon consideration of the foregoing, it is RECOMMENDED: That respondent deny the prayer of the petitioner for additional reimbursement. DONE AND ENTERED this 10th day of December, 1981, in Tallahassee, Florida. ROBERT T. BENTON II Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32301 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 10th day of December, 1981.
The Issue Whether there is need for a new Pediatric Heart Transplant and/or Pediatric Heart and Lung Transplant program in Organ Transplant Service Area (OTSA) 3; and, if so, whether Certificate of Need (CON) Application No. 10471 (heart) and/or 10472 (heart and lung), filed by The Nemours Foundation, d/b/a Nemours Children’s Hospital (Nemours or NCH), to establish a Pediatric Heart Transplant and/or Pediatric Heart and Lung Transplant program, satisfy the applicable statutory and rule review criteria for award of a CON.
Findings Of Fact Based upon the demeanor and credibility of the witnesses and other evidence presented at the final hearing and on the entire record of this proceeding, the following Findings of Fact are made: The Parties The Applicant, Nemours Nemours Children’s Hospital is a licensed Class II specialty children’s hospital located in Orange County, Health Planning District 7, Subdistrict 7-2, OTSA 3, which is owned and operated by The Nemours Foundation. Nemours is licensed for 100 beds, including 73 acute care, nine comprehensive medical rehabilitation, two Level II neonatal intensive care unit (NICU), and 16 Level III NICU beds, and is a licensed provider of pediatric inpatient cardiac catheterization and pediatric open-heart surgery. As the primary beneficiary of the Alfred I. duPont Testamentary Trust established in the will of Alfred duPont, the Foundation was incorporated in Florida in 1936. The Foundation set out to provide children and families medical care and services, its mission being “[t]o provide leadership, institutions, and services to restore and improve the health of children through care and programs not readily available, with one high standard of quality and distinction regardless of the recipient’s financial status.” Foundation assets reached $5.5 billion, by the end of 2015. The Foundation has funded $1.5 billion of care to Florida’s pediatric population through subspecialty pediatric services, research, education, and advocacy. Nemours has established a pediatric care presence throughout the State of Florida. Nemours operates over 40 outpatient clinics throughout Florida that offer primary care, specialty care, urgent care, and cardiac care services to pediatric patients in central Florida, Jacksonville, and the panhandle region. Nemours also provides hospital care to pediatric inpatients at Nemours Children’s Hospital in Orlando, as well as through affiliations with Wolfson’s Children’s Hospital in Jacksonville, West Florida Hospital in Pensacola, and numerous hospital partners in central Florida. The resources Nemours offers in the greater Orlando area are especially significant with 17 Primary Care Clinics, five Urgent Care Clinics, 10 Specialty Care Clinics, nine Nemours Hospital partners, and, of course, NCH itself. These clinics are located throughout OTSA 3 where Nemours determined access to pediatric care was lacking, including Orlando, Melbourne, Daytona Beach, Titusville, Kissimmee, Lake Mary, and Sanford, as well as neighboring Lakeland. The clinics are fully staffed with hundreds of Nemours-employed physicians who live in the clinic communities. Through these satellite locations, as well as the Nemours CareConnect telemedicine platform, Nemours is able to bring access to its world-class subspecialists located at NCH to children throughout the State of Florida who otherwise would not have access to such care. Nemours was established to provide state of the art medical care to children through its integrated model. Nemours’ development has been and continues to be driven by its mission and objective to be a top-tier, world-class pediatric healthcare system. NCH is the first completely new “green field” children’s hospital in the United States in over 40 years, allowing Nemours to integrate cutting-edge technology and a patient-centered approach throughout. Nemours has created a unique integrated model of care that addresses the needs of the child across the whole continuum, connecting policy and prevention, to the highest levels of specialized care for the most complex pediatric patients. From its inception, Nemours envisioned the development of a comprehensive cardiothoracic transplant program as proposed by the CON applications at issue in this proceeding. NCH is located in the Lake Nona area, just east of downtown Orlando in a development known as Medical City. Medical City is comprised of a new VA Hospital, the University of Central Florida (UCF) College of Medicine and School of Biomedical Sciences, the University of Florida (UF) Research and Academic Center, the Sanford Burnham Medical Research Institute, and a CON-approved hospital, which is a joint venture between UCF and AHCA, which will serve as UCF’s teaching hospital. Medical City is intended to bring together life scientists and research that uses extraordinarily advanced technology. Co- location in an integrated environment allows providers and innovators of healthcare, “the brightest minds,” so to speak, to interact and to share ideas to advance healthcare and wellness efforts. Agency for Health Care Administration AHCA is the state health-planning agency that is charged with administration of the CON program as set forth in sections 408.031-408.0455, Florida Statutes. Context of the Nemours Applications Pursuant to Florida Administrative Code Rule 59C-1.044, AHCA requires applicants to obtain separate CONs for the establishment of each adult or pediatric organ transplantation program, including: heart, kidney, liver, bone marrow, lung, lung and heart, pancreas and islet cells, and intestine transplantations. “Transplantation” is “the surgical grafting or implanting in its entirety or in part one or more tissues or organs taken from another person.” Fla. Admin. Code R. 59A-3.065. Heart transplantation, lung transplantation, and heart/lung transplantation are all defined by rule 59C-1.002(41) as “tertiary health services,” meaning “a health service which, due to its high level of intensity, complexity, specialized or limited applicability, and cost, should be limited to, and concentrated in, a limited number of hospitals to ensure the quality, availability, and cost effectiveness of such service.” AHCA rules define a “pediatric patient” as “a patient under the age of 15 years.” Fla. Admin. Code R. 59C-1.044(2)(c). AHCA rules divide Florida into four OTSAs, corresponding generally with the northern, western central, eastern central, and southern regions of the state. Fla. Admin. Code R. 59C-1.044(2)(f). The programs at issue in this proceeding will be located in OTSA 3, which is comprised of Brevard, Indian River, Lake, Martin, Okeechobee, Orange, Osceola, Seminole, and Volusia Counties. Currently, there are no providers of PHT in OTSA 3, and there are no approved PHLT programs statewide. The incidence of PHT in Florida, as compared to other types of solid organ transplants, is relatively small. The chart below sets forth the number of pediatric (ages 0-14) heart transplant discharges by year for the four existing Florida PHT programs during Calendar Years (CY) 2013 through 2016, and the 12-month period ending June 2017: HOSPITAL HEART TRANSPLANT CY 2013 CY 2014 CY 2015 CY 2016 12 MONTHS ENDING JUNE 2017 All Children’s Hospital 7 14 9 8 7 UF Health Shands Hospital 6 8 15 15 9 Memorial Regional Hospital 5 5 5 7 4 Jackson Health System 2 2 1 4 1 Total 20 29 30 34 21 The above historic data demonstrates that the incidence of PHT statewide is relatively rare, and does fluctuate from program to program and from year to year. As can be seen, the most recent available 12-month data reflects that only 21 PHTs were performed during that time, for an average program volume of only 5.25 cases. Florida has more existing and approved PHT programs than every other state in the country except California, which has more than double the pediatric population of Florida. And like Florida, two of the California programs are extremely low- volume programs. Additionally, evidence regarding the number of PHLT patients demonstrated just how rare this procedure is. From 2013 to 2016, there was an annual average of only four PHLTs nationally, with only one actual transplant on a Floridian. Nemours’ health planner stated that although Nemours projected in its application that it would perform one heart/lung procedure each year, it is a “very low-volume service,” and Nemours in actuality expects that there will be years with zero volume of PHLT. The CON Applications Nemours filed its applications for heart transplantation, heart/lung transplantation, and lung transplantation in the second Other Beds and Programs Batching Cycle of 2016. Nemours is proposing the development of a comprehensive cardiothoracic transplant program, which will be the only such program in Florida. This will be achieved by combining three types of transplant services (heart, lung, and heart/lung) in one comprehensive cardiothoracic transplant program. Each application was conditioned on the development of all three transplantation programs. Nemours is located in OTSA 3, where there is currently no PHT provider, PLT provider, or PHLT provider. There are, however, three providers of pediatric open-heart surgery and pediatric cardiac catheterization, and a large, growing pediatric population. Unlike any other facility in Florida, the Nemours Cardiac Center (Cardiac Center) is uniquely organized to treat all forms of congenital heart disease. The Cardiac Center employs a “programmatic approach” to offer the most beneficial environment and the finest care available for pediatric patients. The Cardiac Center, physically located at NCH, throughout Florida, is organized as a single Department of Cardiovascular Services to house Cardiac Surgery, Cardiac Anesthesia, Cardiac Intensive Care Unit (ICU), and Cardiology. Cardiac Center physicians throughout Florida are organized as a single entity with the goal of providing the highest quality, patient-centered care to all patients without the usual barriers created by the departmental “silos.” The entire Cardiac Center clinical team, including nurses and physicians, is dedicated solely to the special challenges of congenital heart abnormalities and makes the care of children with heart disease the life’s work of team members. The fully integrated organizational structure permits the team to take shared responsibility for all aspects of the delivery of quality care to these pediatric patients from admission to discharge. The Cardiac Center holds weekly patient consensus conferences, where all providers, including physicians, nurses, and the patients’ caregivers, participate in case reviews of all inpatients and those patients scheduled for surgery or catheterization. The Cardiac Center is “state of the art” with a designated cardiovascular operating room, a designated cardiovascular lab that includes an electrophysiology lab, and a dedicated comprehensive care unit. In addition, The Foundation has furthered the commitment to the Cardiac Center by funding an additional $35 million expansion to the sixth floor of NCH, adding an additional 31 inpatient beds, an additional operating room, and a comprehensive cardiovascular intensive care unit. Dr. Peter D. Wearden joined Nemours in 2015 as the chief of cardiac surgery, chair of the Department of Cardiovascular Services, and director of the Cardiac Center at Nemours. Dr. Wearden will serve as director of the Comprehensive Cardiothoracic Transplant Program at Nemours and will be instrumental in the development and implementation of the program. Dr. Wearden was recruited from the Children's Hospital of Pittsburgh (CHP), where he served as the surgical director of Heart, Lung, and Heart/Lung Transplantation. He was also the director of the Mechanical Cardiopulmonary Support and Artificial Heart Program. CHP rose to a US News and World Report top 10 program during Dr. Wearden’s tenure. CHP is at the forefront of organ transplantation and is where the first pediatric heart/lung transplantation was performed. Dr. Wearden is a trained cardiothoracic surgeon who completed fellowships in both cardiothoracic surgery (University of Pittsburgh) and Pediatric and Congenital Heart Surgery (Hospital for Sick Children, Toronto, Canada). He is certified by the American Board of Thoracic Surgery and holds additional qualifications in Congenital Heart Surgery from that organization. In his tenure as a board-certified pediatric transplant specialist, he has participated in over 200 pediatric cardiothoracic transplantations, of which he was the lead surgeon in over 70. In addition, he has procured over $20 million in National Institutes of Health research funding since 2004 specific to the development of artificial hearts and lungs for children and their implementation as a live-saving bridge to transplantation. Dr. Wearden was a member of the clinical team that presented to the Food and Drug Administration (FDA) panel for approval of the Berlin Heart, the only FDA-approved pediatric heart ventricular assist device (VAD)1/ currently available, and he proctored the first pediatric artificial heart implantation in Japan in 2012. A VAD is referred to as “bridge to transplant” in pediatric patients because the device enables a patient on a waiting list for a donated heart to survive but is a device on which a child could not live out his or her life. Both utilization of VADs and heart transplantation procedures are in the “portfolio of surgical interventions” that can save the life of a child with heart failure. Dr. Wearden is an international leader in the research and development of VADs. Victor Morell, an eminent cardiac surgeon and chief of Pediatric Cardiac Surgery at CHP, testified that Dr. Wearden’s presence in Orlando alone and the work that he will be able to do with VADs and a PHT program will likely save lives. Many of the physicians that comprise the Nemours Cardiac Center transplant team not only have significant transplant experience, but also have experience performing transplants together. These physicians came with Dr. Wearden from CHP, were trained by Dr. Wearden, or otherwise worked with Dr. Wearden at some point in their careers. The physicians recruited to the Nemours transplantation team were trained at or hail from among the most prestigious programs in the country. For example, Dr. Kimberly Baker, a cardiac intensivist, was trained by Dr. Wearden in the CHP ICU. Dr. Constantinos Chrysostomou, Nemours’ director of cardiac intensive care, worked with Dr. Wearden at CHP, and has experience starting the pediatric ICU in Los Angeles at Cedar Sinai Hospital. Dr. Steven Lichtenstein, chief of cardiac anesthesia, held the same position at CHP for 12 years before he was recruited to Nemours. Dr. Karen Bender, a cardiac anesthesiologist, was recruited by Dr. Wearden from the Children’s Hospital of Philadelphia – one of the leading programs in the country. Dr. Michael Bingler, a cardiac interventionalist, was at Mercy Children’s Hospital in Kansas City for eight years. Dr. Adam Lowry of the Nemours cardiac intensive care center previously trained at both Texas Children’s Hospital (the number one program in the country) and Stanford. The 11 physicians that comprise the Cardiac Center’s Cardiothoracic Physician Team have collectively participated in 1,146 cardiothoracic transplantations. These physicians came to Nemours to care for the most acute, critically ill patients, including those requiring PHT. In addition to the physician team, the expertise and skill of the non-physician staff in the catheterization lab, the operating room, and the cardiac ICU are crucial to a successful program. Dr. Dawn Tucker is the administrative director of NCH’s Cardiac Center and heads the nursing staff for NCH’s Cardiac Center, which includes 23 registered nurses with transplant experience. Dr. Tucker holds a doctorate of Nursing Practice and was formerly the director of the Heart Center at Mercy Children’s Hospital in Kansas City, where she oversaw the initiation of a PHT program. The average years of experience for total nursing care in cardiac units across the nation is two years. The average years of experience in the Nemours Cardiac Center is eight years. Medical literature shows the greater the years of nursing staff experience, the lower the mortality and morbidity rates. The nursing staff at Nemours, moreover, has extensive experience in dealing not only with pediatric cardiac patients, but with pediatric heart transplants as well. The Cardiac Center’s cardiothoracic nursing staff has over 220 years of collective cardiothoracic transplant experience. Nemours operates a “simulation center” that allows the Cardiac Center to simulate any type of cardiac procedure on a model patient before performing that procedure on an actual patient. The model patient’s “heart” is produced using a three- dimensional printer that creates a replica of the heart based on MRI’s or other medical digital imaging equipment. These replica hearts are printed on-site, using the only FDA-approved software for such use, and are ready for use in the simulation center within a day after medical imaging. Nemours Cardiac Center currently performs what the Society of Thoracic Surgeons has coined “STAT 5” cardiac procedures. STAT 5 cardiac procedures are the most complex; STAT 1 procedures are the least complex. A PHT is a STAT 4 procedure. Since Dr. Wearden’s arrival at the Nemours Cardiac Center, there have been no patient mortalities. The uncontroverted evidence established that Nemours has assembled a high-quality, experienced, and unquestionably capable team of physicians and advanced practitioners for its cardiothoracic transplantation programs and is capable of performing the services proposed in its applications at a high level. UF Health Shands While not a party to this proceeding,2/ UF Health Shands’ (Shands) presence at the final hearing was pervasive. AHCA called numerous witnesses affiliated with Shands in its case-in-chief. The scope of the testimony presented by Shands- affiliated witnesses was circumscribed by Order dated December 13, 2017 (ruling on NCH’s motion in limine) that: At hearing, the Agency may present evidence that the needs of patients within OTSA 3 are being adequately served by providers located outside of OTSA 3, but may not present evidence regarding adverse impact on providers located outside of OTSA 3. Baycare of Se. Pasco, Inc. v. Ag. for Health Care Admin., Case No. 07-3482CON (Fla. DOAH Oct. 28, 2008; Fla. AHCA Jan. 7, 2009). UF Health Shands Hospital is located in Gainesville, Florida. UF Health Shands Children’s Hospital is an embedded hospital within a larger hospital complex. Shands Children’s Hospital has 200 beds and is held out to the public as a children’s hospital. The children’s hospital has 72 Level II and III NICU beds. Unlike Nemours, Shands offers obstetrical services such that babies are delivered at Shands. It also has a dedicated pediatric intensive care unit (PICU) as well as a dedicated pediatric cardiac intensive care unit. The Shands Children’s Hospital has its own separate emergency room and occupies four floors of the building in which it is located. It is separated from the adult services. Shands Children’s Hospital is nationally recognized by U.S. News & World Report as one of the nation’s best children’s hospitals. The children’s hospital has its own leadership, including Dr. Shelley Collins, an associate professor of pediatrics and the associate chief medical officer. As a comprehensive teaching and research institution, Shands Children’s Hospital has virtually every pediatric subspecialty that exists and is also a pediatric trauma center. The children’s hospital typically has 45 to 50 physician residents and 25 to 30 fellows along with medical students. Over $139 million has been awarded to Shands for research activities. As a teaching hospital, Shands is accustomed to caring for the needs of patients and families that come from other parts of the state or beyond. Jean Osbrach, a social work manager at Shands, testified for AHCA. Ms. Osbrach oversees the transplant social workers that provide services to the families with patients at Shands Children’s Hospital. Ms. Osbrach described how the transplant social workers interact with the families facing transplant from the outset of their connection with Shands. They help the families adjust to the child’s illness and deal with the crisis; they provide concrete services; and these social workers help the families by serving as navigators through the system. These social workers are part of the multidisciplinary team of care, and they stay involved with these families for years. Shands is adept at helping families with the issues associated with getting care away from their home cities. Shands has apartments specifically available in close proximity to the children’s hospital and relationships with organizations that can help families that need some financial support for items such as lodging, transportation, and gas. Ms. Osbrach’s ability to empathize with these families is further enhanced because her own daughter was seriously ill when she was younger. Ms. Osbrach testified that, while she was living in Gainesville, she searched out the best options for her child and decided that it was actually in Orlando. Despite the travel distance, she did not hesitate to make those trips in order to get the care her child needed at that time. The Shands Children’s Hospital is affiliated with the Children’s Hospital Association, the Children’s Miracle Network, the March of Dimes, and the Ronald McDonald House Charities. Shands operates ShandsCair, a comprehensive emergency transport system. ShandsCair operates nine ground ambulances of different sizes, five helicopters, and one fixed-wing jet aircraft. ShandsCair does over 7,000 transports a year, including a range of NICU and other pediatric transports. ShandsCair is one of the few services in the country that owns an EC-155 helicopter, which is the largest helicopter used as an air ambulance. This makes it easier to transport patients that require a lot of equipment, including those on extracorporeal membrane oxygenation (ECMO). Patients on ECMO can be safely transported by ground and by air by ShandsCair. Shandscair serves as a first responder and also provides facility-to- facility transport. It has been a leader in innovation. The congenital heart program at Shands includes two pediatric heart surgeons, as well as pediatric cardiologists Dr. Jay Fricker and Dr. Bill Pietra, both of whom testified for AHCA. Dr. Fricker did much of his early work and training at the Children’s Hospital of Pittsburgh, and came to the University of Florida in 1995. He is a professor and chief of the Division of Cardiology in the Department of Pediatrics at Shands. He is also the Gerold L. Schiebler Eminent Scholar Chair in Pediatric Cardiology at UF. He has been involved in the care of pediatric heart transplant patients his entire career. Dr. Bill Pietra received his medical training in Cincinnati and did his early work at several children’s hospitals in Colorado. He came to the University of Florida and Shands in July 2014 and is now the medical director, UF Health Congenital Heart Center. Shands performed its first pediatric heart transplant in 1986. Shands treats the full range of patients with heart disease and performs heart transplants on patients, from infants through adults, with complex congenital heart disease. Shands provides transplants to pediatric patients with both congenital heart defects and acquired heart disease (cardiomyopathy). Shands will accept the most difficult cases, including those that other institutions will not take. Data presented by AHCA dating back to the beginning of 2014 demonstrate that Shands has successfully transplanted numerous patients that were less than six months old at the time of transplantation. This data also demonstrates that Shands serves all of central and north Florida, as well as patients that choose to come to Shands from other states. PHT patients now survive much longer than in the past, and in many cases, well into adulthood. Because Shands cares for both adult and pediatric patients, it has the ability to continue to care for PHT patients as they transition from childhood to adulthood. Managed care companies are now a significant driver of where patients go for transplantation services. Many managed- care companies identify “centers of excellence” as their preferred providers for services such as PHT. Shands is recognized by the three major managed-care companies that identify transplant programs as a center of excellence for PHT services. AHCA’s Preliminary Decision Following AHCA’s review of Nemours’s applications, as well as consideration of comments made at the public hearing held on January 10, 2017, and written statements in support of and in opposition to the proposals, AHCA determined to preliminarily deny the PHT and PHLT applications, and to approve the PLT application. AHCA’s decision was memorialized in three separate SAARs, all dated February 17, 2017. Marisol Fitch, supervisor of AHCA’s CON and commercial-managed care unit, testified for AHCA. Ms. Fitch testified that AHCA does not publish a numeric need for transplant programs, as it does for other categories of services and facilities. Rather, the onus is on the applicant to demonstrate need for the program based on whatever methodology they choose to present to AHCA. In addition to the applicant’s need methodology, AHCA also looks at availability and accessibility of service in the area to determine whether there is an access problem. Finally, an applicant may attempt to demonstrate that “not normal” circumstances exist in its proposed service area sufficient to justify approval. Statutory Review Criteria Section 408.035(1) establishes the statutory review criteria applicable to CON Applications 10471 and 10472. The parties have stipulated that each CON application satisfies the criteria found in section 408.035(1), (d), (f), and (h), Florida Statutes. The only criteria at issue essentially relate to need and access. However, the Agency maintains that section 408.035(1)(c) is in dispute to the extent that center transplant volume as a result of Nemours’ approval would lead to or correlate with negative patient outcomes. AHCA believes that there is no need for the PHT or PHLT programs that Nemours seeks to develop because the needs of the children in the Nemours service area are being met by other providers in the state, principally Shands and Johns Hopkins All Children’s Hospital. Section 408.035(1)(a) and (b): The need for the health care facilities and health services being proposed; and the availability, quality of care, accessibility, and extent of utilization of existing health care facilities and health services in the district of the applicant. Florida Administrative Code Rule 59C-1.044(6)(b).3/ The criteria for the evaluation of CON applications, including applications for organ transplantation programs, are set forth at section 408.035 and rule 59C-1.044. However, neither the applicable statutes nor rules have a numeric need methodology that predicts future need for PHT or PHLT programs. Thus, it is up to the applicant to demonstrate need in accordance with rule 59C-1.044. There are four OTSAs in Florida, numbered OTSA 1 through OTSA 4. NCH is located in OSTA 3, which includes the following counties: Seminole, Orange, Osceola, Brevard, Indian River, Okeechobee, St. Lucie, Martin, Lake, and Volusia. (See § 408.032(5), Fla. Stat; Fla. Admin. Code R. 59C- 01.044(2)(f)3.) OTSA 3 also generally corresponds with the pediatric cardiac catheterization and open-heart surgery service areas defined by AHCA rule. (See Fla. Admin. Code R. 59C- 1.032(2)(g) and 59C-1.033(2)(h)). Currently, there is no provider of PHT in OTSA 3, but there are three providers of pediatric cardiac catheterization and pediatric open-heart surgery: Orlando Health Arnold Palmer Hospital for Children; Florida Hospital for Children; and Nemours. There are no licensed providers of PHLT anywhere in the State of Florida. There are four existing providers and one approved provider of PHT services in Florida: UF Shands in OTSA 1; Johns Hopkins All Children’s Hospital in OTSA 2; Jackson Memorial Hospital in OSTA 4; and Memorial Regional Hospital, d/b/a Joe DiMaggio’s Hospital in OTSA 4; and a third approved program in OTSA 4, Nicklaus Children’s Hospital, which received final approval from AHCA in August 2017. As noted above, there is no fixed-need pool published for PHT, PHLT, or PLT programs. Alternatively, AHCA follows rule 59C-1.008(2)(e)2., which requires consideration of population demographics and dynamics; availability, utilization and quality of like services in the district, subdistrict, or both; medical treatment trends; and market conditions. To quantify the need for a new PHT program in District 7, OTSA 3, Nemours created and presented a methodology that started with the statewide use rate in its projected first year. Then for the second year, Nemours aggressively increased the use rate to the highest rate in any of the other transplant service areas in the state. Then, in an even more aggressive (and unreasonable) assumption, Nemours projected that it would essentially capture all of the cases in OTSA 3 by the second year of the program. In its application, the assumptions resulted in a projection that Nemours would do four transplants in the first year of operation and eight in the second. These projections fall short of the rule requirement that the applicant project a minimum of 12 transplants per year by the second year of operation. Fla. Admin. Code R. 59C-1.044(6)(b)2. At hearing, Nemours updated (increased) those first and second year projections to 7 and 13 cases, respectively. However, these updated projections included one child, aged 15 to 17, in year one, and two in year two. There are several reasons these projections lack credibility. First, as noted, Nemours assumed a near- 100 percent market share based on the highest use rate in the state by just year two. Second, when Nemours prepared its update, it used the most recent calendar year data. However, this was not the most current data. Calendar Year 2016 reflected 34 cases statewide, but that number had dropped to 21 for the most recent 12-month period available at the time of the hearing. Use of this most recent 12-month data would have significantly decreased the Nemours PHT volume projections. In addition, the projection of 13 cases by year two would place Nemours at a higher PHT case volume than three of the four established programs in the state, and would be at a level that is nearly equivalent to the much more established Shands program. This is not credible, especially considering that Nemours also admitted at hearing that only two OTSA 3 residents received pediatric heart transplants in 2016. The existence of unmet need cannot be based solely on the absence of an existing service in the proposed service area. Fla. Admin. Code R. 59C-1.008(2)(e)3. While Nemours’ own health planner agreed that the absence of a PHT program in OTSA 3 is not itself a basis for finding need, Nemours nevertheless argues that this rule is inapplicable in this proceeding because the title to this subsection of the rule is “Comparative Review” and a portion of this subsection addresses competing applications in the same cycle. As detailed further in the Conclusions of Law section herein, this interpretation is unconvincing and rejected. AHCA interprets this rule provision to apply to those batched applications submitted without the submission of a competing application in the same batching cycle, as with Nemours in this proceeding. Nemours initiated its cardiac catheterization and cardiac surgery program in June/July 2016. In its PHT application, Nemours projected that it would meet or exceed the rule minimum required volumes of 200 cardiac catheterizations and 125 open-heart surgery cases by the end of 2017. Actual volumes achieved by Nemours in CY 2017 were 97 open-heart cases and 196 cardiac catheterizations. The incidence of PHLT is extremely low. During the four calendar years, 2013 through 2016, there were only 16 PHLT transplants performed nationwide. Only one Florida resident received a PHLT during that four-year period, and that was performed in Massachusetts. Also during that four-year period, only three Florida residents were registered for PHLT. There is no evidence in this record as to why two of the three registered Florida residents did not obtain a PHLT. Based on the national use rate for PHLTs from CY 2013 through CY 2016, Nemours projects that it will perform an average of one PHLT per year. Nemours acknowledges that due to the extremely low incidence of PHLTs, there may be some years that no PHLTs are performed at Nemours. Geographic Access There is no evidence of record that families living in central Florida are currently being forced to travel unreasonable distances to obtain PHT services. Indeed, there are five existing or approved programs within the state, with at least two located very reasonably proximate to OTSA 3. According to the analysis of travel distances for PHT patients living in OTSA 3 contained in the Nemours application (Exhibit 15), only some residents located in Brevard and Indian River Counties are not within 120 miles of an existing PHT program. There was agreement that patients that need a PHT are approaching the end-stage of cardiac function, and in the absence of a PHT will very likely die. Accordingly, it is reasonable to infer that the parents of a child living in central Florida and needing a PHT will travel to St. Petersburg or Gainesville for transplant services rather than let their child die because the travel distance is too far. To the contrary, the evidence in this record from witnesses on both sides, as well as common sense, is that families will go as far as necessary to save their child. The notion that there is some pent-up demand for PHT services among central Florida residents (especially when there is no evidence of a single OTSA 3 patient being turned down or unable to access a PHT) is without support in this record. The parents of four pediatric patients testified at the final hearing. Two testified for Nemours. The other two testified for AHCA and were parents of children that received PHTs at Shands. One of the Nemours witnesses was the parent of a child that has not received a transplant. The other received transplant services at Johns Hopkins All Children’s Hospital in St. Petersburg. The parents of the two Shands patients were representative of the two broad categories of PHT patients. One was a patient with a congenital heart defect that lives in Cocoa Beach (Brevard County). The patient likely had the heart defect since birth, but it was not diagnosed until she was six years old. That patient was asymptomatic at the time of diagnosis but deteriorated over a period of years. While she was first seen at Shands, the family had the time and researched other prominent institutions, including Texas Children’s Hospital, Boston Children’s Hospital, Children’s Hospital of Pittsburgh, and the Mayo Clinic in Rochester, Minnesota. They did this because, like all of the parents that testified, they “would have gone to the ends of the earth” to save their child. This family researched the volumes and experience of the programs they considered and looked for what they felt was the best program for their child, and ultimately chose Shands. It was clear that they felt Shands was the right choice. Their daughter received her heart transplant at Shands, is doing well, and is now considering what college to attend. Additionally, this family did not find the two hours and 35 minute travel time from their home in Brevard County to Shands to be an impediment, and actually consider Shands as being relatively close to their home. This testimony supports the obvious truism that obtaining the best possible outcome for a sick child is the paramount goal of any parent. The other parent witness called by AHCA has a daughter that, on Christmas Eve in 2008, went from perfectly healthy to near death and being placed on life support within a 24-hour period. As opposed to a congenital heart defect, this patient had cardiomyopathy. This family lives in Windermere, a suburb of Orlando. She acquired a virus that attacked her heart. She was initially treated at Arnold Palmer Children’s Hospital where she had to be placed on ECMO. From there, she was safely airlifted to Shands while still on ECMO where, upon arrival, the receiving team of physicians informed the family that she was one of the most critically ill children they had ever seen. After an 11-hour open-heart surgery, a Berlin Heart was successfully implanted and kept her alive for four months until an appropriate donor heart became available. This patient also had an excellent outcome and is now a student at the University of Florida. The following exchange summarizes how the child’s mother felt about the inconvenience of having to travel from the Orlando area to Gainesville: Q If a family in Orlando told you, or in your city of residence told you that their child was critically ill and they were worried about having to travel and potentially spend time in Gainesville to get care, what would you tell them? A Well, I would tell them to just take it a day at a time and – when your child is critically ill, convenience never really comes into your mind. What comes into your mind is how do I help my child live. And so you will go anywhere. And it’s just an hour and a half, it just doesn’t matter. When you are talking about saving your child, it means nothing. It literally means nothing. It is clear from the testimony of these two parents that nothing about having a gravely ill child is “convenient.” It creates great stress, but it was also clear that having an experienced provider was more important than just geographic proximity. The mothers of the two Shands patients persuasively spoke of their concerns about further diluting the volumes of the existing programs that could result from approval of a sixth pediatric heart transplant program in Florida, particularly when there are two other programs that are not that far from the Orlando area.4/ While transplantation is not an elective service, it is not done on an emergent basis. As noted, the number of families affected is, quite fortunately, very small. While having a child with these issues is never “convenient,” the travel issues that might exist do not outweigh the weight of the evidence that fails to demonstrate a need for approval of either application. The Orlando area, being centrally located in Florida, is reasonably accessible to all of the existing providers. Most appear to go to Shands, which is simply not a substantial distance away. The credible evidence is that families facing these issues are able to deal with the travel inconvenience. In addition, Nemours presented evidence regarding the various locations at which they provide services, ranging from Pensacola to Port St. Lucie. Clearly, Nemours sees itself as providing some cardiac services to patients in these locations, but it would also suggest that patients seen at these locations may be referred to NCH for transplant services, which would mean that some patients would be bypassing closer facilities. As observed by AHCA, for Nemours to posit that it is appropriate for patients to travel from Pensacola or Jacksonville to Orlando while asserting that it is not acceptable for patients in Orlando to go to Gainesville or St. Petersburg is an illogical inconsistency. Financial Access Nemours asserts that approval of its proposed programs will enhance financial access to care. Nemours currently serves patients without regard to ability to pay and will extend these same policies to transplant recipients. Approximately half of Nemours’ projected PHTs are to be provided to Medicaid recipients, the other half to commercially insured patients.5/ However, there was no competent evidence of record that access to PHT or PHLT services was being denied by any of the existing transplant providers because of a patient’s inability to pay. Transplant Rates at Shands In its need methodology, Nemours utilized the use rate from OTSA 1 where Shands is located because it is the highest use rate in the state. Despite this, Nemours then asserted that Shands is not performing as many PHTs as it could or should. The Nemours CON applications are not predicated on any argument that their proposed programs are needed because of poor quality care at any of the existing pediatric transplant programs in Florida. Indeed, Dr. Wearden stated his belief that Shands provides good quality care in its transplant programs, and he respects the Shands lead surgeon, Dr. Mark Bleiweis. As evidence of his respect for the Shands PHT program, Dr. Wearden has referred several transplant patients to Dr. Bleiweis at Shands. Despite that position, Nemours argued that the Shands program is unduly conservative and cautious in its organ selection and may have some “capacity” issues due to a few cited instances of apparent surgeon unavailability. These assertions, made by Nemours witnesses with no first-hand knowledge of the operations of the Shands program, are not persuasive. With regard to whether the Shands program is unduly “cautious,” “conservative,” or “picky,” Nemours relied on a document produced by Shands in discovery. Nemours also relied on data reported by Shands to the Scientific Registry of Transplant Recipients (SRTR). The data included a list of all of the organs offered to Shands since the beginning of 2015, the sequencing of the offer of that organ to Shands, whether the organ was transplanted at Shands or elsewhere, the primary and secondary reasons the organ was refused (if refused) and other information. The SRTR exhibit demonstrates that a high number of the organs that are offered are not acceptable for transplant on patients waitlisted at Shands. It also shows that organs that are accepted may have to be examined by many different centers before being deemed potentially acceptable. This demonstrates the extensive level of complexity, nuance, and clinical judgment involved in the decision to accept an organ for transplant in a pediatric patient. Indeed, Dr. Wearden agreed that the decision by a program to accept or turn down an organ involves both clinical expertise and judgment, and that there are many reasons an organ might be turned down, which helps explain why the transplanted percentage of total organs offered nationally is on average, so small. Dr. Wearden chose a few examples of organs that were not taken by Shands to express an opinion that Shands may be unduly conservative in its organ selection. However, this assertion was credibly refuted by Dr. Pietra, a transplant cardiologist and the medical director of the UF Health Congenital Heart Center. Dr. Pietra discussed the complexity of these cases and how simply looking at the SRTR data does not provide enough information to reach Dr. Wearden’s conclusion. An organ that might be acceptable for one patient would not be acceptable for another for a host of reasons. Many more organs are rejected by transplant centers than are accepted. Dr. Pietra credibly opined that being conservative and cautious are important traits for a transplant surgeon, particularly for one that wants the accepted organ to work well for the patient long-term. That does not mean that Shands is rejecting organs when it should have taken them, nor does the SRTR data support the proposition that the Nemours program should be approved because its program may have accepted an organ for a particular patient that Shands might have rejected. Nemours also argues that Shands performs PHTs at a rate lower than the region and the country, and that this should mitigate for the approval of another program. This assertion is predicated on waitlist information reported in the SRTR data. Patients that are placed on the waitlist have different status designations, depending on the severity of their condition. That status may change, up or down, over time. Due to the shortage of organs, until a patient reaches status 1A, he or she is unlikely to be offered an organ. The evidence reflected that Shands puts patients on the PHT organ waitlist at a time earlier than the moment they require the transplant surgery under what is called the “pediatric prerogative.” This helps those patients maintain their status on the list but does not result in organs being provided to less severely ill patients to the detriment of those in greater need. Further, the record evidence supports the finding that Shands waitlists patients because the clinical determination has been made that the child will ultimately require a transplant. This was corroborated by the parent of a Shands PHT patient who testified that when her daughter was placed on the waitlist, Dr. Fricker concluded at that time that her daughter would ultimately need a PHT, even though she was placed on a lower status initially, and it was a few years before the transplant occurred. Transplant surgeon Dr. Victor Morell, of the Children’s Hospital of Pittsburgh, testified that he waitlists his PHT patients not only when they need the procedure performed immediately, but rather when, in his clinical judgment, he determines the patient will ultimately need a PHT. This testimony supports the finding that there is nothing clinically unusual or inappropriate about how the Shands program waitlists patients. Shands realizes that its philosophy, which is contemplated within and permitted under the United Network for Organ Sharing (UNOS) rules, makes its statistics, both in terms of percent of patients transplanted and waitlist mortality, look worse. While Shands’ waitlist mortality may be higher than expected as reflected in the SRTR data, it is still significantly lower than in the UNOS region or the United States. Shands advocates for its patients by their waitlist practices because it believes it helps secure the best outcomes for its patients. It does not indicate need for a new PHT program. Nemours also suggests that there may be a “capacity” problem at Shands because the organ rejection information provided by Shands shows that, during the 3-year period of CY 2015 through CY 2017, there were seven entries showing as either a primary or secondary reason for organ rejection that the surgeon was unavailable. However, this included both adult and pediatric hearts, and further investigation revealed that in only four instances were there potential PHT recipients at Shands. Of those four hearts that were rejected, two were not accepted by any PHT provider, and the two that were accepted were placed with adult transplant patients, not PHT patients. Shands has two PHT transplant surgeons. In very few instances at Shands, an organ was offered but not accepted because the surgeon was not available for one of several reasons. In one instance, there was another transplant scheduled. A surgeon could be ill, could be gone, or may have just completed another long surgery and be too fatigued to safely perform another. Like Shands, Nemours also has two experienced PHT surgeons. Although Dr. Wearden believes that Nemours would endeavor to not reject an organ for this reason, this ambition ignores reality. He cannot guarantee that the same could not or would not happen at Nemours for the same reasons it occasionally occurs at Shands. As explained by Dr. Pietra, when there are only small to medium volume programs, there is not likely to be a sufficient number of surgeons such that this scenario can be avoided entirely. Not Normal Circumstances In both its heart and heart/lung applications, Nemours articulated the following “not normal circumstances” in seeking approval: Florida does not have any approved pediatric heart/lung transplant programs. Florida's only two approved pediatric lung transplant programs have not performed any lung transplant programs in the last two reporting years according to AHCA reporting data. Significantly, there are no pediatric heart transplant or lung transplant programs in AHCA's Organ Transplant Service Area OTSA 3 in which NCH is located-an area of the State with one the fastest growing and youngest populations. Florida has no other pediatric comprehensive, multi-organ thoracic transplant program. Florida has no other pediatric comprehensive, multi-organ thoracic transplant program that is part of a pediatric specific integrated delivery system such as Nemours offers. NCH offers a unique, dedicated model of cardiothoracic care developed at its Alfred I. duPont Hospital for Children (AIDHC) in Wilmington, Delaware and implemented upon the opening of the program at NCH. The key and differentiating element of this Model of Care is a unified team of cardiac clinical and administrative professionals who serve children with cardiac problems in dedicated facilities (the "Cardiac Team"). The Cardiac Team only cares for children with cardiac diagnoses. As such, the Cardiac Team of anesthesiologists, surgeons, cardiologists, nurses, and other support personnel do not "float" to other hospital floors or departments as in a typical hospital setting. This dedicated model of cardiac care allows the Cardiac Team to develop highly specialized knowledge and relationships to provide the best treatment protocols for patients with cardiac conditions. NCH has developed state-of-the art facilities and innovative clinical pathways for the care of the most complex pediatric thoracic patients. NCH has and will bring new opportunities for research in pediatric cardiology, cardiac surgery, and pulmonary medicine, particularly clinical translational and basic research into the linkages between childhood obesity and cardiac conditions. Nemours operates a regional network of clinics in Florida, with primary locations in Pensacola, Jacksonville, and Orlando, that will operate in partnership with NCH for the appropriate regional referral of patients in Florida for pediatric thoracic care. NCH can reduce the out-migration of pediatric, thoracic transplant patients from OTSA 3 to other parts of the State as well as the out-migration of these patients to other out-of-state transplant programs. Similarly, NCH will reduce the outmigration of organs donated in Florida to other states ensuring that Florida recipient patients are first priority for organs donated in Florida. NCH has in place the infrastructure, facilities, and resources to seamlessly add thoracic transplant services to its existing comprehensive cardiac surgery program. Additional needed staff are already being recruited to this program. As a result, the project has minimal incremental cost that will need to be incurred. Total project costs are, therefore, estimated to be $715,425.00. In addition, according to Nemours, an additional “not normal” circumstance has emerged since the filing of the applications: the approval of Nemours’ PLT application in the absence of a PHT program at the facility, which it contends is “a very unusual situation.” Noteworthy about these purported reasons for approval are that: (1) none of them are specifically directed at a unique circumstance relating to a need for another PHT program; and (2) most of them are either a recitation of the fact that there is no existing program in the service area or are about Nemours’ capability to provide these services. They are not directed at whether there is a need for its proposed programs. In fact, the main thrust of Nemours’ case was directed at proof regarding its capabilities. But the flaw in this theme is best demonstrated in the testimony of Dawn Tucker, the last witness called by Nemours. Ms. Tucker is the cardiac program administrative director for Nemours. When asked why she supported the proposed program, she talked about the experience of the team, a desire to care for sick patients, an organization (Nemours) that financially supports the program, and the network of centers that Nemours has in Florida. These factors address why Nemours “wants” these CONs. None of them addresses the threshold issue of whether there is a “need” for these programs in OTSA 3. More specifically, the first, third, and fourth bullet points are all based on the absence of a program in OTSA 3. By rule, that is not a basis for establishing need. Fla. Admin. Code R. 59C-1.009(2)(e)3. AHCA appropriately rejected the absence of a program in OTSA 3 as the sole basis upon which need for the proposed projects could be established. The second bullet point relates to the pediatric lung transplant application that is not at issue in this matter. The fifth and sixth bullet points relate to the Nemours integrated model of care. But again, this does not address whether there is a need for the proposed programs. The fact that Nemours has an employed-physician model is not unique or “not normal.” AHCA considered the information regarding the model of care and correctly noted that the model of care does not itself enhance access or improve outcomes. It should be noted that Shands’ doctors are employed by the University of Florida. In addition, the reliance on this model does not guarantee a robust program. This bullet point references the much older and more established Alfred I. duPont Hospital for Children in Wilmington, Delaware, that is touted as the model for Nemours. Nemours presented evidence relating to its more established hospital in Delaware that also provides PHT services. However, the PHT program at duPont is a low-volume program, performing only one PHT in 2016. None of the managed- care companies that recognize Shands as a center of excellence also recognizes the duPont Hospital as such. One of the companies--Lifetrac--acknowledges duPont as a “supplemental” program, whereas Shands is one of its “select” programs. This demonstrates that simply having the financial resources of the duPont Foundation or the model of care used by that organization does not guarantee high volumes or success. The “not normal circumstance” bullet points regarding Nemours’ facilities, research, and other infrastructure similarly do not demonstrate need. Otherwise, a hospital could obtain a CON for a new program by spending the money in advance and then demanding approval based upon those expenditures. AHCA recognized that Nemours had recruited some very qualified clinicians, but correctly noted that that does not create or evidence need for the proposed programs. The remaining bullet point asserts that approval of the PHT and PHLT programs could reduce outmigration of both patients and organs. By definition, because neither of these transplant programs exists in OTSA 3, all patients leave OTSA 3 for these services. Again, that alone does not establish need, nor is it automatically a “not normal” circumstance. As discussed herein, Nemours has not demonstrated a sufficient need or an access problem that justifies approval of either application. With regard to the outmigration of organs from Florida, Nemours has argued that Florida is a net exporter of organs and that this is a “not normal” circumstance justifying approval of its application. However, organs harvested in one state are commonly used in another. There is nothing unusual or negative about that fact. Indeed, Dr. Wearden agreed that in his experience, this is a common occurrence. There is a national allocation system through UNOS and this sharing, as explained by Dr. Pietra, facilitates the best match for organs and patients. UNOS divides the country into regions for the purpose of allocation of donor organs, with Florida being one of six states in Region 3. The evidence of record did not establish that approval of the Nemours applications would result in the reduction of organs leaving Florida, or even that such would be a desirable result. Nemours also argued at hearing that approving their applications would increase the number of donor organs that are procured and transplanted in Florida. Nemours suggested that its programs would increase public awareness and implied that it would accept organs for future patients that surgeons at other programs turn down. However, these arguments are purely conjectural and are rejected. No record evidence exists which demonstrates that a Nemours program would increase the supply of organs in Florida. Indeed, Nemours presented no such relevant data or statistical evidence in its applications to demonstrate that this will occur. Finally, Nemours argues that its PHT and PHLT applications should be approved because it does not make sense for AHCA to have approved the PLT program but denied the other two applications. Nemours goes on to note that while there are hospitals in the country that do PHTs but not PLTs, there are no hospitals that do lungs but not hearts. Regardless of whether that is true, Florida law separates these three services into separate CON applications, which are reviewed independently. The wisdom of the rule is not at issue in this proceeding. Regardless of any overlap in the skill sets required to perform these procedures, approval of the pediatric lung transplant application does not determine need for pediatric heart or pediatric heart/lung programs. Nemours failed to establish that “not normal” circumstances currently exist that would warrant approval of either the PHT or PHLT programs. Nor did Nemours credibly demonstrate any other indicators of need for its proposed programs. Section 408.035(1)(c): The ability of the applicant to provide quality of care and the applicant’s record of providing quality of care. The parties stipulated that Nemours is a quality provider. However, AHCA maintains that this criterion is in dispute to the extent that center transplant volume as a result of Nemours’ approval would lead to or correlate with negative patient outcomes. Nemours failed to demonstrate that it would achieve the volumes it projected unless it takes significant volumes from other Florida providers.6/ Approval of Nemours will not create transplant patients that do not exist or are not currently able to reasonably access services. While Nemours has assembled a team of professionals with varying levels of transplant experience, it has not been demonstrated that it will achieve volume sufficient to reasonably assure quality care.7/ Section 408.035(1)(e): The extent to which the proposed services will enhance access to health care for residents of the service district. Approval of the Nemours PHT and PHLT programs would unquestionably improve geographic access to those services for the very few residents of OTSA 3 that need them. However, given the extreme rarity of pediatric heart and heart/lung transplants, approval of the Nemours programs would not result in enhanced access for a significant number of patients. Moreover, there was no credible non-hearsay evidence presented at hearing that any resident of OTSA 3 that needed PHT or PHLT services was unable to access those services at one of the existing PHT programs in Florida or, for PHLT, at a facility elsewhere. Based upon persuasive evidence at hearing, there is also clearly a positive relationship between volume and outcomes. As with any complex endeavor, practice makes perfect. In this instance, maintaining a minimum PHT case volume provides experience to the clinicians involved and helps maintain proficiency. According to the credible testimony of Dr. Pietra, programs should perform no fewer than 10 PHTs per year. “If you can stay above 10, then your program is going to be exercised at a minimum amount to keep everybody sort of at a peak performance.” The clear intent of the minimum volume requirement of 12 heart transplants per year contained in rule 59C- 1.044(6)(b)2. is to ensure a sufficient case volume to maintain the proficiency of the transplant surgeons and other clinicians involved in the surgical and post-surgical care of PHT patients. In addition, pediatric transplant programs are measured statistically based on outcomes, such as mortality and morbidity. Because of this, the loss of even one patient in a small program can be devastating to that hospital’s mortality statistics. As such, small programs may become less willing to take more complicated patients. In a perverse sort of way, adding more programs that dilute volumes may decrease, rather than increase, access because of the fear a small program might have for taking more complex patients. Adequate case volume is also important for teaching facilities, such as Shands, to benefit residents of all the OTSAs by being able to train the next generation of transplant physicians. The mothers of the two Shands patients that testified made note of the complexity of their daughters’ conditions and how their cases were used for training purposes. There was no persuasive evidence of record that approval of the Nemours applications would meaningfully and significantly enhance geographic access to transplant services in OTSA 3. The modest improvement in geographic access for the few patients that are to be served by the two programs is not significant enough to justify approval in the absence of demonstrated need. There is no evidence that approval of the Nemours applications will enhance financial access nor that patients are not currently able to access PHT or PHLT services because of payor status. Section 408.035(1)(g): The extent to which the proposal will foster competition that promotes quality and cost- effectiveness. It is clear that establishing and maintaining a transplant program is expensive. Given the limited pool of patients, the added expense of yet a sixth Florida program is not a cost-effective use of resources. This criterion also relates to the Nemours position that AHCA should approve the PHT and PHLT applications simply because the PLT application was approved, and it would not be cost-effective for Nemours unless the PHT and PHLT applications were also approved. However, each of these applications must rise or fall on its own merit. As of the hearing, Nemours had not yet implemented its PLT program. Given the absence of need for either the PHT or PHLT programs, the cost-effective solution might be for Nemours to reconsider implementation of the PLT program. 408.035(1)(i): The applicant’s past and proposed provision of health care services to Medicaid patients and the medically indigent. AHCA agreed at hearing that Nemours satisfies section 408.035(1)(i). Nonetheless, Nemours provides a very high level of Medicaid services, and projects a high-level volume related to Medicaid patients and charity care patients. As noted, approximately half of the PHTs projected by Nemours will be performed on Medicaid patients. Conformance with this criterion would mitigate toward approval had there been persuasive evidence that Medicaid and medically indigent patients are currently being denied access to PHT and PHLT services. However, no such evidence was presented.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a final order be entered denying CON Application Nos. 10471 and 10472 filed by The Nemours Foundation, d/b/a Nemours Children’s Hospital. DONE AND ENTERED this 31st day of July, 2018, in Tallahassee, Leon County, Florida. S W. DAVID WATKINS 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 31st day of July, 2018.
The Issue Whether Certificate of Need application (Number 9078) for an adult kidney transplantation program, filed by St. Luke's Hospital Association, meets the statutory and rule criteria for approval.
Findings Of Fact The Agency for Health Care Administration (AHCA) is the state agency authorized to administer the Certificate of Need (CON) program for health care facilities and services in Florida. Pursuant to Rule 59C-1.044, Florida Administrative Code, AHCA requires applicants to obtain separate CONs for the establishment of each adult or pediatric organ transplantation program, including heart, kidney, liver, bone marrow, lung, lung and heart, pancreas and islet cells, and intestines transplantations. For purposes of determining the need for organ transplantation services, the State of Florida is divided, by rule, into four service planning areas, corresponding generally with the northern, western central, eastern central and southern regions of the state. St. Luke's and Existing Providers St. Luke's Hospital Association operates St. Luke's Hospital (St. Luke's), a 289-bed, non-for-profit hospital with 17 beds for skilled nursing care and 272 acute care beds. St. Luke's is located on Belfort Road in Jacksonville, Duval County, Florida, AHCA, District 4, organ transplantation service planning area one. Available services at St. Luke's include obstetrics, open heart surgery, neurosurgery, adult bone marrow, and adult liver transplantation. The transplant services have been added during the last six or seven years. The severity of the illnesses and diseases treated at St. Luke's is represented by its relatively high Medicare case weight of 1.7 in 1997, after the addition of relatively low intensity obstetrics services. In 1998, St. Luke's applied for CONs to establish adult pancreas and islet cell, and adult kidney transplant programs. St. Luke's received the CON to establish the pancreas and islet cell transplant program. The application for a CON to establish an adult kidney transplant program is at issue in this proceeding. The parties stipulated that the letter of intent and application, for CON Number 9078, to establish the adult kidney transplant program, were timely filed. Methodist Medical Center, Inc., d/b/a Methodist Medical Center (Methodist) is a 244-bed acute care hospital, serving primarily adults, with special units for diabetes, hospice, and occupational medicine programs. The services do not include either obstetrics or pediatrics. In 1989, Methodist received a CON allowing its establishment of kidney transplant services. Methodist is located approximately one and a half miles north of downtown Jacksonville. Methodist's representatives contend that an additional kidney transplant program in Jacksonville, at St. Luke's, is not needed and will be detrimental to Methodist. St. Luke's, it was argued, will draw from a limited supply of organs and increase Methodist's financial losses. Those losses at Methodist were expected to range between $5 million and $8 million in 1999. Methodist's accountant described the hospital's financial health as poor to critical. The kidney transplant program provides a positive financial contribution at Methodist, largely due to Medicare reimbursements. At the time of the final hearing, Methodist was managed by Shands-Jacksonville, an affiliate of Shands Teaching Hospital and Clinics (Shands) at the University of Florida in Gainesville, and of University Medical Center in Jacksonville (University Hospital). Shands is also located in organ transplant service area one, but Gainesville is in AHCA District 3, not in 4 like Jacksonville. University Hospital is located across the street from Methodist and serves essentially the same inner-city, lower socio-economic population. St. Luke's was first established in the late 1800's. Previously located directly across the street from Methodist, St. Luke's was relocated near the intersection of J. Turner Butler Boulevard at Interstate 95, south of downtown Jacksonville in 1984. In 1987, St. Luke's became affiliated with the Mayo Clinic in Jacksonville (Mayo-Jacksonville). The two facilities share an administrator. St. Luke's receives approximately three- fourths of its admissions from Mayo-Jacksonville physicians. The Mayo-Jacksonville clinic is located approximately 12 miles from St. Luke's at J. Turner Butler Boulevard and Highway A-1-A. The multi-specialty and multi-subspecialty clinic, is staffed by 230 full-time salaried physicians. The governing board of Mayo-Jacksonville reports to the executive committee of its sole corporate member, the Mayo Foundation for Medical Education and Research (Foundation) in Rochester, Minnesota. The Foundation is the parent organization for the original Mayo Clinic in Rochester (Mayo-Rochester) and its affiliated hospitals, St. Mary's Hospital (with 1100 beds) and Methodist Hospital (with 700 to 800 beds), both in Rochester, Minnesota. In addition to the one in Jacksonville, the Foundation has also established a clinic in Scottsdale, Arizona (Mayo-Scottsdale). The Mayo-Scottsdale clinic is affiliated with a local inpatient hospital. Other related organizations include the Mayo Medical School and the Mayo Graduate School of Medicine. Issues Related to Need St. Luke's contends that its transplant surgeons would increase the total number of kidney transplants in Florida, by using less than ideal donor organs and by expanding waiting lists to enhance the possibility of donor/recipient matches. St. Luke's expects to overcome some of the usual limitations on available cadaveric organs because living donors can also be used to provide kidneys. Finally, St. Luke's maintains that a need exists for dual transplant programs, particularity the combination of kidney and pancreas programs. St. Luke's proposes to provide adult kidney transplants as an alternative to life-long dialysis or death for patients suffering from end-stage renal disease. Nationally, the number of dialysis patients increased from 123,822 in 1987 to 287,000 in 1996. The number of patients waiting for kidney transplants increased from 13,000 in 1987 to 41,000 in 1999. The mortality for patients on waiting lists also increased from over 1700 in 1996 to over 2000 in 1997. Due to the large and growing demand for organs, the federal government contracts with the United Network for Organ Sharing (UNOS) to coordinate the allocation of cadaveric organs. UNOS has designated five organ procurement organizations (OPOs) in Florida, one at the University of Florida in Gainesville (the UF OPO), and the others at centers in Orlando, Tampa, Fort Myers, and Miami. When cadaveric organs become available and are retrieved by surgeons from the nearest OPO, UNOS governs the priority in offering the organs. Organs are offered first to the United States military transplant centers, second to potential recipients who are six antigen or "perfect matches," then as paybacks to OPOs who have provided "perfect matches," and finally to various categories of other high-grade matches. After the organ is offered but not taken in the mandatory UNOS sharing hierarchy, the organ becomes available to local programs within the procuring OPO. St. Luke's will participate in the UNOS program for kidneys as it currently does for other organs, and expects to follow the medical protocols established at Mayo-Rochester, where kidney transplants have been performed for 30 years. St. Luke's has included $100,000 in start-up costs for Mayo-Rochester staff to train the St. Luke's staff. In establishing its successful liver transplant program, St. Luke's allocated $75,000 for comparable start-up costs. Rule 59C-1.044(8)(d), Florida Administrative Code, provides for the determination of the need for new programs, in part, based on the number of transplants performed at existing providers, which must exceed 30. An applicant must also provide a reasonable projection of volume, in excess of 15 a year by the second year of the proposed new program. Currently, two adult kidney transplant programs are approved or operational in each of the four service planning areas of Florida: at Shands in Gainesville and Methodist in Jacksonville in the north, which is service planning area one and coincides with the UF OPO; at Southwest Florida Regional in Fort Myers and Tampa General in western central Florida, which is service planning area two; at Florida Hospital in Orlando and Bert Fish Memorial in Volusia County in eastern central Florida, in service planning area three; and at the Cleveland Clinic Florida in Broward County and Jackson Memorial in Miami in the south, in service planning area four. At the time of this hearing, Bert Fish Memorial and the Cleveland Clinic were approved but not operational. The six operational Florida programs increased in volume from 442 transplants in 1994 to 641 in 1997, or an average increase of 13.2% a year. However, recent growth has been less dramatic. Using one year longer to establish a trend, from 1994 to 1998 data, the average annual increase was 9% a year. Kidney transplant volumes ranged, in 1997, from a low of 45 at Southwest Florida to highs of 150 at Jackson Memorial and 162 at Tampa General. From 1994 to 1997, the volume of kidney transplants within service planning area one increased from 35 to 52 at Methodist, and from 106 to 127 at Shands. As the parties stipulated, that volume exceeds the required minimum of 30 transplants at each provider in the service planning area. As also required by rule and stipulated by the parties, there are no new approved but not yet operational providers within service planning area one. Methodist notes that St. Luke's would be the first Florida program approved in a city which already has an existing kidney transplant service. The United States Renal Disease System (USRDS) is a national organization which collects and reports statistics on patients with end-stage renal disease (ESRD). USRDS is divided into regional networks, including Network Seven which is the ESRD Network of Florida, Inc. The Board of Directors of Network Seven adopted the following motion: The Network Seven Board of Directors reviewed the report of the Network's task force regarding the need for additional renal transplant resources for Service Area 1. After a lengthy discussion, the Board unanimously agreed that the Standardized Transplantation Ratio for Florida's Service Area 1 would not justify the establishment of a new stand-alone renal transplant program in this area. However, it agreed that the availability of a multi-organ transplant service (ie: pancreas and kidney) would be beneficial to those ESRD patients in residing [sic] Service Area 1. Two dual organ kidney and pancreas transplant programs are currently located in Florida, at Shands in Gainesville and at Jackson Memorial in Miami. Methodist notes that both are associated with medical schools at teaching hospitals, and are geographically well-suited to serve north and south Florida. Methodist's transplant surgeon who is the medical director of its program, and served on the Network 7 task force, agreed that a kidney/pancreas program is desirable. Apparently, most pancreas transplants are also done with kidneys but not vice versa. Relatively, few kidney/pancreas transplants are performed, although the number has doubled nationally since 1991. In 1997, there were 3 kidney/pancreas transplants at Shands, 3 at Mayo- Rochester and 33 at Jackson Memorial. The low volume of the dual transplant procedures reflected both medical skepticism and the absence of insurance reimbursement for the procedure when it was considered experimental. Having performed six dual transplants for no charge in 1998, Shands has been able to convince a majority of its third-party payors in Florida to pay for the procedure. The federal government, through the Medicare program, also changed its policy and now reimburses for kidney/pancreas transplants. As a result, the number of dual transplants is reasonably expected to increase. No CON is issued, under the Florida system, to authorize the dual kidney/pancreas program only. As Methodist noted, St. Luke's did not offer to condition its CON by limiting itself to a dual transplant program. The standardized transplantation ratio (STR), on which the Network Seven Board relied, is the ratio of first kidney transplants to the expected number based on the estimated national rate adjusted for age. For the four Florida organ transplant service planning areas, the STRs reported by Network Seven are as follows: Region 1 (North) 1.00 Region 2 (West Central) 1.35 Region 3 (East Central) 1.19 Region 4 (South) .66 A STR of 1.0 indicates generally, that a region is performing transplants as expected based on the national average. Therefore, the suggestion that the performance is mediocre is rejected. Methodist supports its argument that no need exists for an additional kidney transplant program at St. Luke's, based on Network Seven's finding that the STR for the region is roughly what should be expected. St. Luke's, however, asserted that the STR could be raised to the level of region two with the approval of a new program. In fact, the approval of a program at the Cleveland Clinic in Broward County, in region four, was supported by Methodist's expert health planner, among others, in part, by the desire to raise the STR. That situation can be distinguished based on geography and the failure in region four to meet expectations, while a better performance than the national average is not to be expected necessarily from the approval of another program in the same city in region one. While the STR is helpful in an analysis of need, Rule 59C-1.044(8)(d), Florida Administrative Code, requires consideration of the projected transplant volume based on the number of end-stage renal disease patients. Basically, these are patients whose kidneys have ceased to function. From June to December 1998, Network Seven estimated that the number of patients with kidney failure in service planning area one increased from approximately 2800 to 3000. Using expected population growth only, not the historical growth rate, St. Luke's conservatively estimated in its CON that number of patients would reach approximately 2900 by the end of the year 2000. Because some patients are not medically appropriate transplant candidates or will, for other reasons, never receive the service, St. Luke's used a ratio of patients to project transplant cases. Using only 20% of patients between ages 14 and 65, St. Luke's reasonably projects a need for over 300 kidney transplant surgeries in service planning area one in the year 2000. Using population increase and the lower historical growth rate of 9.5%, St. Luke's established a need for up to 450 kidney transplants in 2000 in service planning area one. Either number is sufficient to document St. Luke's ability to perform at least 15 kidney transplants by the end of the second year of operation, as required by rule. Methodist's expert further reduced by 40% the number of potential transplant patients to get what the projected to be the actual number of surgeries. This number is intended to take into consideration the limited number of cadaveric organs. The result is, however, unrealistically lower numbers, in the range of the actual number of surgeries currently performed in area one and is, therefore, rejected. In fact, despite the limitations on cadaveric organs, the number of kidney transplants has continued to increase. St. Luke's experience with liver transplants is also evidence of its ability to exceed the minimum number of 15 kidney transplants in the second year of operation. Specifically, St. Luke's expects to perform 15 kidney transplants in the first year, and 30 in the second year. More than double the projected number of Florida residents received liver transplants, 25 or 26 as compared to 12 or 13 cases in the first seven months of that program at St. Luke's. Compared to projections of 15 liver transplants in year one, 30 in year two, St. Luke's transplant surgeons actually performed 113 after 18 months. Significantly, the volume at Shands has also increased based on the annualized volume for the first quarter of 1999. St. Luke's also demonstrated that it is successfully transplanting livers which were rejected by other Florida programs. Currently, the same team of transplant surgeons harvests all abdominal organs, livers, kidneys, and pancreases, but can use only the livers at St. Luke's. The surgeons who perform the liver transplants at St. Luke's will also perform kidney transplants. As a result of the team's aggressive use of organs and recent changes in federal government requirements for notice of potential donors and reimbursement policies, St. Luke's is reasonably expected to assist in expanding the available supply of cadaveric organs and in increasing the number of transplant surgeries. Subsection 408.035(1)(a) - need in relation to district plan The District 4 health plan, developed by the Health Planning Council of Northeast Florida, Inc., includes preferences applicable to the evaluation of St. Luke's application. Preference one applies to applicants who will meet identified needs with acceptable quality in an economical manner. St. Luke's expert conceded that its proposal will be more costly and require longer average lengths of stay when compared to that at Methodist but not as compared to other Florida programs. St. Luke's projected an average length of stay of 7.6 days at $50,123 per case, but the Florida average is 10.5 days at $81,048. No construction is required for implementation of the project which has a total cost of $238,450. Therefore, St. Luke's proposal generally meets the requirements of preference one. Preference two, for applicants who will alleviate a geographic access problem, is not met by St. Luke's. One argument advanced by St. Luke's and rejected is that the existing providers are not using organs at the appropriate rate. Considering 1997 data, Shands and Methodist appear not to accept and use kidneys at the expected rate, as calculated and assigned by UNOS. The reported expected acceptance rate for Methodist is 30.7% in contrast to an actual rate of 11.5%. Shand's assigned expected rate is reported to be 53.8% but its actual rate of acceptance is shown as 37.4%. Corrected UNOS data shows the opposite result, that acceptance rates are higher than expected. UNOS data is inconsistent and inconclusive. In general, the data is so unreliable as to have no significant probative value. St. Luke's meets preference three by caring for HIV positive patients. St. Luke's also demonstrated its access to adequate staff for a kidney transplant program, meeting the requirement of preference four. Methodist questioned St. Luke's failure to list a certified transplant nephrologist on its staff, but physician services are provided by salaried employees of Mayo-Jacksonville. Preference five favors applicants who demonstrate that a new service will not have a significant negative impact on similar facilities. Even though there may be sufficient numbers of kidney disease patients who qualify for and have access to transplants in service area one, the geographic overlap of the programs is an issue of concern related to impact. Methodist primarily serves transplant service area one patients. St. Luke's draws 50% of its patients from Duval and the five surrounding counties, 35% from other areas of Florida, and 15% from elsewhere, primarily Georgia and the southeastern United States, but that also includes 3% of international origin. It is reasonable to expect St. Luke's to maintain approximately the same patient origin mix in a kidney program. This mix will require St. Luke's to perform only 8 kidney transplants on patients from service area one in order to reach the minimum volume requirement of 15 in the second year, which is actually projected for the first year. Currently, 16 Mayo-Jacksonville patients who are on the waiting list for kidney transplants at Methodist would likely receive transplants at St. Luke's if it had a program. Taking into consideration growth and applying a traditional impact analysis, Methodist will lose two to four cases, and Shands will lose nine cases in the first year of a competing program at St. Luke's. With that level of impact, both programs remain substantially above the minimum required by AHCA rule. One expert equated the loss of ten cases from Methodist, to a financial loss of $100,000, after reimbursement deductions and reduced expenses. The overall magnitude of Methodist's financial losses is so great that the loss of the contribution from the kidney transplant program is insufficient to affect the hospital's profitability. Similarly, the loss of nine cases from Shands leaves volume significantly above the minimum required. Methodist and St. Luke's differ in their reliance on cadaveric and living donors, which also should help alleviate any impact of competition for cadaveric organs on the existing program at Methodist. While Methodist uses 50% living donors, St. Luke's projects a more traditional mix of 30% living. It is reasonable to expect that the growth in transplants, and the differences in patient and organ origins will allow Methodist to avoid any detrimental effect from the establishment of a program at St. Luke's. Methodist suggested that the approved program in Volusia County, and to a lesser extent, that in Broward County will also be unable to achieve minimum volumes if a program is established at St. Luke's. Methodist's support for the Volusia County program, however, lends credence to St. Luke's assertion that the geographic overlap is minimal. St. Luke's demonstrated that the number of projected transplants, taking into consideration the approved programs, is considerably lower than the expected numerical increase in surgeries. Projections of 30 at St. Luke's, six at the Cleveland Clinic, and 25 at Bert Fish during the year 2000 are achievable from the projected growth in kidney transplants. The data also indicates that the Florida waiting lists for transplant candidates could and should be expanded. Separate transplant provider lists are coordinated into the organ sharing list maintained by UNOS. Nationally, 150 people for every one million are on waiting lists for kidney transplants. That number, even adjusted to exclude older patients, is double the ratio for the Florida waiting list. Some expansion is reasonably expected as a result of the establishment of a new Florida program. The numbers needed and projected at each program, the differences in projected patient origins, the ability to expand the waiting list and the absence of an adverse impact from the establishment of the liver transplant program at St. Luke's provide some assurance that a kidney transplant program will not be detrimental to the existing providers. Preference six, for applicants who will maximize services to rural county residents, is met by St. Luke's service to surrounding rural areas. In addition to the general health plan preferences for CON applicants, the District 4 health plan includes specific preferences for transplant services. The parties stipulated that preferences one and five for applicants in major population areas (over 250,000) and for pediatric services are not at issue. Specific preference two applies to applicants with relationships with a broad spectrum of other health care providers, including agreements for patient transfers and organ procurement. In response, St. Luke's refers to its active participation in the UF OPO. As Methodist notes, however, a continuation of the existing relationship, with Mayo physicians performing kidney transplants at Methodist, is the most cost- effective and non-duplicative alternative. St. Luke's transplant surgeons will continue to provide coverage for the surgeons at Methodist. Transplant-specific preference three favors applicants who have a significant role in regional and national research efforts, including by government contracts or research grants. Methodist insists that a distinction be made between the well- known work of the Mayo Foundation and that of St. Luke's. The Mayo Foundation divides its services into three major segments - medical care, medical research, and medical education. Research is supported by over $100 million from government agencies and $80 million from the Foundation. Over a thousand residents and fellows are enrolled in Mayo educational programs. Over 75 transplant-specific research projects within the Mayo system are coordinated by a single institutional review board. Admittedly, a non-university facility, St. Luke's does participate in Mayo educational and research activities. Over 60 Mayo-Rochester physicians, residents, and fellows were rotating through Mayo-Jacksonville and practicing at St. Luke's at the time the CON application was filed. St. Luke's separate budget for basic science research also exceeded $10 million for over 200 active research protocols. The medical research building at Mayo-Jacksonville exceeds 80,000 square feet in size. For these reasons, St. Luke's demonstrated that its participation in educational and research activities satisfies the preference. Transplant preference four favors applicants with a specific commitment to provide charity care. In its application, St. Luke's commits to providing 6% of total kidney transplants to Medicaid or charity patients. One expert witness noted that St. Luke's commitment exceeds the statewide volume of 4% Medicaid/charity kidney transplant patients, which was the condition for approval of the Bert Fish CON. Most patients with end-stage renal disease are covered by Medicare. In calendar years 1996-1998, Shands provided over 30% Medicaid and from 4 to 8% charity care. Methodist provided from 9 to 11% Medicaid and approximately 2% charity care. By contrast, St. Luke's provided from .7% to 1.2% Medicaid and just over 2% charity case. St. Luke's meets the preferences by specifying a reasonable commitment for the kidney transplant program, although it has historically provided comparatively insignificant Medicaid and charity care. Since organ transplant service area one includes Districts 1, 2, and 3, as well as 4, St. Luke's and AHCA also considered the local health plans for those districts. Both noted that District 3 has a preference for organ transplant applicants which are teaching hospitals, as defined by Florida Statutes. St. Luke's does not meet that preference. It is not a statutory teaching hospital. On balance, St. Luke's does meet the intent of local health plans preferences and, therefore, the requirements of Subsection 408.035(1)(a), Florida Statutes. Subsection 408.035(1)(b) - increase/improve availability, access, quality of care, efficiency, utilization, and adequacy of like and existing facilities in the district In its application, St. Luke's illustrated the concern for renal patients as follows: End-stage renal disease is a large and growing problem in Florida and north Florida. with 14,168 ESRD patients in Florida and 2,822 ESRD patients in service planning area one during 1998, with 787 Florida residents added to the kidney waiting list during 1997, and with Florida resident deaths due to diabetes growing to 3,828 deaths by 1997, the magnitude of the ESRD problem is evident. St. Luke's Exhibit 1 at p. 96. St. Luke's plans to serve an increasing pool of patients within the District and the service planning area. With its aggressive use of organs, St. Luke's can also increase available cadaveric organs, thus increasing numerically, the accessibility, availability and utilization of kidney transplant services in the district. The efficiency of all providers is also reasonably expected to be enhanced due to the introduction of competition into the market. Currently, the relationship between Methodist and Shands is not competitive. Subsection 408.035(1)(c) - quality of care Modeled after that of the Mayo Clinic Rochester, St. Luke's kidney transplant program will be emulating a program with the nation's best survival rates despite its use of organs which have been rejected by others. St. Luke's is licensed by the AHCA, certified to participate in the Medicare and Medicaid programs, accredited by the Joint Commission on the Accreditation of Health Care Organizations (JCAHO), and certified by UNOS to perform transplants. The parties stipulated that St. Luke's has a history of providing a high quality of care. The evidence also supported a finding that St. Luke's will also provide the same high quality of care in kidney transplantation services, using the same physical spaces, by essentially the same staff. St. Luke's staff will require only specialized kidney transplant training and equipment. Subsection 408.035(1)(d) - available and adequate alternatives An alternative to a new kidney transplant provider is the expansion of the volume of cases performed at existing providers. There are no physical constraints to the alternative, only the need for additional staff and supplies. Methodist and Shands can absorb the projected increase in kidney transplant surgeries in the service planning area. Given that lack of constraint, the minimum volume established for existing providers by rule, gives the guidance to determine whether it is appropriate to expand volumes at existing providers or to introduce a new provider. Because there is no competition in the service area in which the existing providers are well above the minimum volume, and the projected volumes for the new programs are exceeded by the projected additional transplants, the establishment of an additional program is appropriate. Subsection 408.035(1)(e) - economies and improvements from joint operative or shared resources The advantages of developing a kidney transplant program at St. Luke's include: the ability to utilize the existing infrastructure which supports the liver and bone marrow transplant programs; and the ability to adopt Mayo Rochester's treatment protocols, standards, and training resources, and to participate in its research projects. The only clearly identified disadvantage is the risk of undermining the cooperation of Mayo-Jacksonville transplant surgeons with Methodist and the loss of some transplant surgeries from Methodist and Shands. On balance, the introduction of a kidney program in Florida, emulating the Mayo-Rochester program, offers a valuable sharing of Mayo resources. Subsection 408.035(1)(f) - need for equipment or services not accessible in adjoining areas St. Luke's proposal will not result in the introduction of any special equipment or services which are not reasonably or economically accessible in adjoining areas. Subsection 408.035(1)(g) - need for research and educational facilities; (1)(h) - needs of training programs and schools for health professionals Mayo-Jacksonville has active research, medical residency, and fellowship training programs in Jacksonville. Most of the inpatient care associated with the research and educational programs is provided at St. Luke's. A new program at St. Luke's offers new educational opportunities for Mayo- Jacksonville physicians. Subsection 408.035(1)(h) - availability of personnel for project accomplishment (see also Rule 59C-1.044) While the statutory criteria generally, considers whether CON proposals include plans to employ the necessary personnel, the organ transplant rule gives much greater detail. As required by rule, St. Luke's has the staff needed to care for the transplant patients. It offers 24-hour on-site dialysis, and is staffed by renal care and dialysis nurses, nutritionists, respiratory therapists, social workers, psychologists, dialysis laboratory workers and administrators. Physicians include board and UNOS certified transplant surgeons, anesthesiologists, pathologists, psychiatrists, nephrologists, endocrinologists, and immunologists and infectious disease specialists. In addition to the health care professionals needed for operation of a kidney transplant program, St. Luke's has significant experience with the data collection process necessary to evaluate adequately a transplant program. Among the requirements of the Rule are a 24-hour shared call system for organ procurement, and clinical review committees, which already exist. St. Luke's operates a 17-bed intensive care transplant unit capable of prolonged reverse isolation, if required. Equipment is available and in operation for cooling, flushing, and transporting organs, as are an on-site tissue typing laboratory and an in-house blood bank, as the parties stipulated. Subsection 408.035(1)(h) - availability of funds for project accomplishment and Subsection 408.035(1)(i) - immediate and long-term financial feasibility The total project cost is $238,450, which covers filing fees, staff training, and equipment. No renovation or construction costs are anticipated because St. Luke's has adequate capacity to implement the kidney program in existing spaces. Methodist's expert testified that the financial feasibility of the project cannot be determined due to errors on Schedule 2 of the CON application and the lack of reliable utilization projections. As previously determined, the utilization projections are supported by the projected number of area one patients with kidney failure who ultimately have transplant surgeries. Schedule 2 of the CON application lists the capital project commitments of the applicant. St. Luke's listed projects which total $35.9 million taken from a "1998 Capital Budget Request Summary." The total, in excess of $35 million, represents the budget request summary of just over 34 million, minus approximately $4 million that had already been spent, plus a little over $5 million for the two pending CONs and expansion of an intensive care unit (ICU). The ICU expansion cost of $500,000, was understated by $766,000. At the hearing, however, St. Luke's expert testified that he mistakenly listed St. Luke's "wish list," when he used $34 million, which exceeded "approved" projects by $17 to $18 million. That total would have been approximately $16,974,000. The available cash and investments for St. Luke's, approximately $80 million, is sufficient to cover the project costs and other capital projects at either $35 million or $16 million, or $21 million if, as asserted at hearing, the $16 million is understated by $5 million. The proposal is financially feasible in the short-term, even considering the decline in available cash and investments to $65 million at the time of the final hearing. In terms of long-term financial feasibility, the experts considered profits or losses from operations. St. Luke's experienced losses from operations of $4.5 million, $4 million, and $12.9 million in the years 1996, 1997, and 1998, respectively. When investment income is considered, however, St. Luke's had a positive income figure of $5.2 million in 1997 and losses reduced to $.7 million in 1998. St. Luke's explained the losses as temporary due to the initiation of costly new services, the enhancement of information systems, and an increase in charity care. The charges for kidney transplants at St. Luke's are expected to equal $57,200 a case, or $1.7 million in gross revenue for 30 cases at the end of the second year of operations. The expected charges are reasonable when compared to charges, in 1996, of $50,000 at Mayo-Rochester, $42,000 at Shands, $38,000 at Methodist, and a Florida average of $81,000. Kidney transplants continue to receive cost-based reimbursements from Medicare. From the $1.7 million in gross revenue, St. Luke's expert projected an incremental profit of approximately $100,000. In addition, the audited financial statements of the Foundation were submitted with St. Luke's CON, with a statement of the Foundation's willingness to fund the project. With over $1 billion in cash and investments and, for 1997, net income over $31 million, the Foundation is able to assure the short and long- term financial feasibility of the kidney transplant program at St. Luke's. Subsection 408.035(1)(j) - needs of a health maintenance organization (HMO) Although the Mayo organization includes a licensed Florida HMO, the proposal is not intended to serve its needs any more than those of any other potential patients. Mayo- Jacksonville and St. Luke's have contracts to provide services to a number of other HMOs. Subsection 408.035(1)(k) - substantial services to non-resident of the district or adjacent districts Currently, St. Luke's attracts 51% of its patients from Duval County, another 21% from the other counties in District 4, 16% from the rest of Florida, and the remaining 12% from outside of Florida. The patient origin for Mayo-Jacksonville is even more geographically dispersed than that of St. Luke's, with 22% of from outside of Florida. By comparison, nearly 99% of Methodist's patients come from North Florida. St. Luke's patient origin data indicates the reasonableness of its expectation that 15% of kidney transplant patients will come from outside Florida. St. Luke's, therefore, meets the criterion for substantial service to non-residents. Subsection 408.035(1)(l) - impact on costs, effects of competition on improvements or innovations in financing and delivering services with quality assurance and cost-effectiveness St. Luke's expects expanded transplant services to reduce its overall fixed cost per transplant. The introduction of a Mayo-affiliated medical program is reasonably expected to introduce beneficial competition to the market which currently has no competition. The fact that competition will come from a nationally-known, very successful program is expected to have a positive impact on existing programs. Subsection 408.035(1)(m) - costs and methods of construction Methodist contends that St. Luke's omission of architectural drawings or floor plans in the CON makes it impossible to consider the statutory criteria related to construction. While St. Luke's failed to include any architectural drawings, it did include descriptions of the existing spaces and in-house services which will support the program. Schedule 1 and 9 of the application show that no costs are associated with construction, expansion, remodeling or demolition. Architectural drawings were not submitted and not required by AHCA for CONs filed by the Cleveland Clinic (kidney transplant), Tampa General (lung transplant), and University Medical Center (heart transplant). In each instance, the facility proposed using existing spaces for the new programs. Based on AHCA's past practices in comparable circumstances, St. Luke's application is not flawed due to the absence of architectural plans. Subsection 408.035(1)(n) - history of and proposed services to Medicaid and medically indigent patients St. Luke's has historically provided limited Medicaid and charity care. See Findings of Fact 39 and 40. St. Luke's proposal to perform 3% Medicaid and 3% charity kidney transplants in the second year of operation is the equivalent of one Medicaid and one charity case. That commitment, however, exceeds the Florida average and the commitment AHCA required of Bert Fish program. The commitment made by St. Luke's is adequate for kidney transplant services. Subsection 408.035(1)(o) - past and proposed continuum of care in multi-level system St. Luke's affiliation with Mayo physicians' practices and the Mayo-Jacksonville clinic allow it to incorporate kidney transplant services into a multi-level system which includes home health and outpatient care. Subsection 408.035(2)(a) - capital expenditures proposals (a) less costly alternatives; (b) utilization of similar services; (c) alternatives to new construction; and (d) serious access problems Subsection 408.032(2), Florida Statutes, defines capital expenditures as follows: "Capital expenditure" means an expenditure including an expenditure for a construction project undertaken by a health care facility as its own contractor, which, under generally accepted accounting principles, is not properly chargeable as an expense of operation and maintenance, which is made to change the bed capacity of the facility, or substantially change the services or service area of the health care facility, health service provider, or hospice, and which includes the cost of the studies, surveys, designs, plans, working drawings, specifications, initial financing costs, and other activities essential to acquisition, improvement, expansion, or replacement of the plant and equipment. In this project, St. Luke's proposes to incur the cost for kidney transplant equipment to establish the new service. The least costly alternative is enhanced Mayo participation in the program at Methodist. Methodist is, however, sufficiently utilized, well in excess of the rule minimum. No new construction is required at St. Luke's to implement the kidney transplant service. Patients will not, however, experience serious problems with access to kidney transplant services if St. Luke's is not approved. There are no physical constraints on the expansion of services at Shands or Methodist. In the absence of physical constraints at existing providers, but in consideration of their volumes which are well in excess of that required, the introduction of competition of the Mayo quality at such low cost is, on balance, desirable for the health care system.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED That a final order be entered issuing CON 9078 to establish a new adult kidney transplant program at St. Luke's Hospital in Jacksonville. DONE AND ENTERED this 17th day of February, 2000, in Tallahassee, Leon County, Florida. ELEANOR M. HUNTER Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 17th day of February, 2000. COPIES FURNISHED: Sam Power, Agency Clerk Agency for Health Care Administration Fort Knox Building 3, Suite 3431 2727 Mahan Drive Tallahassee, Florida 32308 Julie Gallagher, General Counsel Agency for Health Care Administration Fort Knox Building 3, Suite 3431 2727 Mahan Drive Tallahassee, Florida 32308 Richard A. Patterson, Esquire Agency for Health Care Administration Fort Knox Building 3 2727 Mahan Drive, Suite 3431 Tallahassee, Florida 32308 F. Philip Blank, Esquire R. Terry Rigsby, Esquire Geoffrey D. Smith, Esquire Blank, Rigsby & Meenan, P.A. 204 South Monroe Street Tallahassee, Florida 32301 Michael J. Cherniga, Esquire Seann M. Frazier, Esquire Greenberg Traurig, P.A. Post Office Drawer 1838 Tallahassee, Florida 32302
Findings Of Fact On September 28, 1977, Petitioner filed its application for a Certificate of Need and for Section 1122 Project Review with Respondent. The Applicati6n is for a 12-station chronic dialysis unit to serve the needs of End Stage Renal Disease (ESRD) patients in Jacksonville, Florida. Petitioner further submitted documentation that it has entered into an agreement with Shands Teaching Hospital in Gainesville, Florida, whereby the hospital agrees to serve as a dialysis back-up unit and as a transplantation center for Petitioner's patients. The proposed service area for Petitioner's facility includes Duval, Nassau, Baker, St. Johns, and Clay counties. The total project cost, including leasehold expenditures, is $708,422.00. Petitioner's application was reviewed by the Health Systems Agency of Northeast Florida, Inc. (the "HSA"). The HSA's governing body met on January 26, 1978, and adopted a motion which recommended denial of Petitioner's application. The rationale for this action was that sufficient dialysis stations would be available to meet the projected future patient load if the existing facilities at University Hospital were utilized on a 3-shift per day basis. The HSA also anticipated the availability of a limited number of new stations at the Veteran's Administration Hospital at some unknown point in the future. By letter dated February 23, 1978, Respondent denied Petitioner's application. The reasons given for denial were those set forth by the Health Systems Agency. On March 22, 1978, Petitioner filed a Petition For Formal Hearing pursuant to Sections 381.494(6)e and 120.57(1), Florida Statutes, and Section 10-5.10(8), Florida Administrative Code. The proper formula for projecting the number of patients who will need dialysis services at the end of a given 12-month period is as follows: Patients presently served (a) +New patients per year (x/l,000,000) +(b) =Total patients in 12 months (c) -Successful transplants -(d) -Mortality (y percent p/year) -(e) Net patients needing services: 12 months (f) The appropriate figures to be utilized in applying this formula to the case at hand are as follows: Patients Presently Served. - A telephone survey conducted by Respondent on April 18, 1978, determined that 90 chronic ESRD patients are presently being dialyzed at University Hospital, the sole chronic dialysis facility in the service area. New Patients Needing Services. - The Health Systems Agency projects population figures for the service area at 732,700 as of the end of 1978 and 748,800 by the end of 1979. These figures were obtained from the Florida Statistical Abstract, 1977. The yearly incidence of ESRD in the service area is conservatively projected to be 80 new patients per 1,000,000 population per year. By applying this incidence rate to the 1978 population projections but without taking into account subsequent population growth during the first three months of 1979, it can be determined that a minimum of 59 persons will enter the ESRD patient pool over the next 12 months. Successful Transplants. - The number of successful transplants is a function of the number of available kidneys minus an estimated percentage of rejections. The HSA projects that there will be six successful transplantations in the year ahead. Mortality. - The HSA projects a patient mortality rate of 15 percent per annum. This figure approximates the most recent statewide average and would result in a determination that 22 of the persons presently in the patient pool will die over the course of the next 12 months. The projections for each variable as cited above result in the following findings when manipulated in accordance with the accepted formula: 4/18/78 - 4/18/79 Patients presently served 90 +New patients per year (80/1,000,000) +59 Total patient pool: 4/18/78 149 -Successful transplants -6 143 -Mortality (15 percent per year) -22 Net patients needing services: 4/18/79 121 The determination of the number of dialysis stations needed to serve the 121 patients who will need services over the next 12 months is a function of dividing this number by the number of patients that each machine will dialyze in a given week (the so-called "utilization factor"). This utilization factor is determined by multiplying the number of patient shifts per day times the number of days per week that the stations are in operation. The sum is then divided by the number of times that the average patient must be dialyzed per week. The product of this division results in the maximum potential utilization of a station in a given week. However, a station should only be utilized at 90 percent of its maximum capacity in order to provide sufficient flexibility for changing patient needs, equipment failure, and other essential variables which reflect the life-sustaining nature of chronic renal dialysis. The parties agree that the proper utilization factor for planning purposes should be based on two shifts per day. Applying this variable to the formula described above results in a finding that 3.6 patients per station per week is the proper utilization factor. Respondent has been utilizing this 3.6 factor in prior applications and it is contained in Respondent's internal working document as being the standard for review. Dividing the projected patient pool at the end of the upcoming 12 months (121 patients) by 3.6 results in a finding that 34 stations will be necessary as of mid-April, 1979. University Hospital in Jacksonville, the sole ESRD chronic dialysis facility in the service area, presently operates 22 stations. By subtracting the number of existing stations (22) from the number of stations needed by this time next year (34), it can be determined that an additional 12 stations will be needed by mid-April, 1979. Petitioner meets all other relevant criteria for Certificate of Need and Section 1122 approval as set forth in the appropriate provisions of Statute and Rule. The stipulation Agreement entered into by the Parties and attached hereto as Exhibit "A" reflects a phasing in of new stations by Petitioner over the course of the next 12 months. This schedule will insure the availability of an adequate number of stations to meet the needs of a growing patient pool but will minimize the impact on the patient pool at University Hospital and thus is in the best interests of everyone involved.
The Issue Whether Respondent Cleveland Clinic Florida Hospital's Motion to Dismiss the Petition in this case, for lack of standing, should be granted.
Findings Of Fact The facts necessary for disposition of the Motion to Dismiss are not in dispute. The Public Health Trust of Miami-Dade County operates Jackson Memorial Hospital ("JMH") in Dade County (AHCA District 11). In its Petition for Formal Administrative Hearing, certified to have been served on August 19, 1998, the Trust alleged that JMH is the only provider of adult kidney transplantation services within Florida Transplant Service Planning Area 4, which includes AHCA Districts 8, 9, 10 and 11. The Trust described itself in both the Petition and an amended Petition which followed as: [A]n agency and instrumentality of Miami-Dade County, which is organized and operated pursuant to Chapter 154, Part II, Florida Statutes, and Chapter 25A of the Code of Miami-Dade County. It governs and operates Jackson Memorial Hospital and other designated health care facilities. Its address is 1611 N.W. 12th Avenue, Miami, Florida 33136. Amended Petition, paragraph 2, p. 2. The Trust and Jackson Memorial Hospital are both in Dade County, AHCA District 11. With regard to CCFH, the Petition alleged the following. CCFH is located in Fort Lauderdale, Broward County (AHCA District 10). CCFH has CON approval to construct a new facility in Weston, also in Broward County. It submitted an application for an adult kidney transplantation program at the new Broward County facility which was awarded preliminary CON approval as noticed in the Florida Administrative Weekly on July 31, 1998. It is the application for the adult kidney transplantation program at the Weston facility in AHCA District 10 which the petition seeks to have denied contrary to AHCA's preliminary approval. The Petition's allegations with regard to standing are contained in paragraphs seven and eight: As the sole provider of adult transplantation services in Transplant Area 4, Petitioner has standing to file this petition because its substantial interests will be directly affected by the Agency action for which this petition seeks review. The adverse affects to the PHT if the preliminary approval of CON No. 9026 is upheld include but are not limited to: A decrease in the number of procedures performed at JMH, which may impair research objectives and medical proficiency; A loss of needed revenue to JMH, the largest provider of indigent hospital care in Florida; An increase in the competition for professional staffing, thereby driving up the costs of performing these hospital services; and An increase in the cost to the health care system for performing transplant services through he unnecessary duplication of services. Petition for Formal Administrative Hearing, p. 3 and 4. CCFH moved to dismiss the Petition on the basis that the Trust had not alleged facts sufficient to meet the standing requirement in CON proceedings found in Section 408.039(5), Florida Statutes. In essence, CCFH asserted that the Trust had failed to allege that its adult kidney transplantation program in District 11 was within the same district as the challenged kidney transplant program of CCFH approved by AHCA for District 10. In response, the Trust informed the Agency that it had on the same date filed an Amended Petition which, differs substantively from the original petition only in paragraphs 4 and 8, concerning the issue of standing. By filing its Amended Petition, the Trust adds an additional basis for standing, and does not in any manner retreat from the basis for standing asserted in its original Petition. Public Health Trust's Response to Cleveland Clinic Florida Hospital's Motion to Dismiss, p. 2, paragraph 2. The new paragraphs four and eight in the Amended Petition, state: PHT's medical staff (including its transplantation physicians) is provided by the university of Miami School of Medicine, doing business as the University of Miami Medical Group (UMMG), under an affiliation agreement between the PHT and the University of Miami. Through the UMMG, JMH conducts various activities in Broward County as part of its adult kidney transplantation program, including but not limited to the following: UMMG sees approximately one third of all its post transplant patients at two satellite clinics in Fort Lauderdale; and UMMG through the University of Miami's Organ Procurement Organization maintains agreements with various Broward donor hospitals and provides in-service training to hospital personnel involved in organ procurement, including kidney procurement. * * * As the sole provider of adult transplantation services in Transplant Area 4, as an existing health care facility with an established adult kidney transplant program operating in both Districts 10 and 11, Petitioner has standing to file this petition because its substantial interests will be directly affected by the Agency action for which this petition seeks review. Amended Petition, pages 2 and 3. The Amended Petition was filed with the Department Clerk for AHCA on September 4, 1998, prior to the case's referral by AHCA to DOAH. Argument on the Motion to Dismiss was heard on September 28, 1998. Ruling was reserved until entry of this order.
Recommendation Based on the foregoing findings of fact and conclusions of law, it is recommended that the Agency for Health Care Administration enter a final order dismissing the amended petition in this case of the Public Health Trust of Miami-Dade County, Florida. DONE AND ENTERED this 14th day of October, 1998, in Tallahassee, Leon County, Florida. DAVID M. MALONEY Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 Filed with the Clerk of the Division of Administrative Hearings this 14th day of October, 1998. COPIES FURNISHED: Jack P. Hartog, Esquire Assistant County Attorney Jackson Memorial Hospital West Wing 109 1611 Northwest 12th Avenue Miami, Florida 33136 Robert A. Weiss, Esquire Karen A. Putnal, Esquire Parker, Hudson, Rainer & Dobbs LLP 118 North Gadsden Street, 2nd Floor Tallahassee, Florida 32301 Richard A. Patterson, Esquire Agency for Health Care Administration 2727 Mahan Drive, Building 3 Tallahassee, Florida 32308 Sam Power, Agency Clerk Agency for Health Care Administration 2727 Mahan Drive Fort Knox Building 3 Suite 3431 Tallahassee, Florida 32308
Findings Of Fact New findings of fact have only been made in accord with the limited mandate/remand jurisdiction of the appellate court. Otherwise, findings of fact contained in the recommended order of Hearing Officer R. T. Carpenter entered September 18, 1985, have been adopted and incorporated by reference. To the extent the adopted original findings impact on the new findings, they have been adopted, following review of the record and the parties' submissions, for content. Any language from the original recommended order which has not been adopted is rejected in accord with the court's limited remand. Paragraph 1 (including footnote 1) of the original recommended order entered in this cause, copy attached as Exhibit "A", is adopted and incorporated by reference. The "service area" at issue was disputed by the parties. HRS District 9 encompasses Palm Beach, Indian River, Okeechobee, Martin and St. Lucie counties. Paragraph 3 of the original recommended order entered in this cause, copy attached as Exhibit "A", is adopted and incorporated by reference. Only the second and third sentences of paragraph 4 of the original recommended order entered in this cause, copy attached as Exhibit "A", are adopted and incorporated by reference. Paragraph 5 including (footnote 3) of the original recommended order entered in this cause, copy attached as Exhibit "A", is adopted and incorporated by reference. See also new finding of fact 8 infra. The Network 19 representative, who was similarly qualified, calculated a need for five additional stations but his methodology, calculations, and ultimate result is rejected for reasons clear from the remand opinion dealing with application by Mr. Moutsatos of the wrong population data and for use of an incorrect "service area" as set forth in new finding of fact 7 infra. As noted, the geographic location wherein the applicant, West Boca, seeks to locate, is Boca Raton, Palm Beach County, Florida, a county within HRS District 9. Rule 10-5.11(18), Florida Administrative Code, does not define "service area." District 9 has not been subdivided by either the local health council or HRS. The original application filed by West Boca indicated the proposed service area would be Palm Beach County. At the administrative hearing, West Boca, over Boca Raton AKC's and Delray AKC's objections, was permitted to introduce an amended application which designated a sub-area of Palm Beach County as its "service area", and the original recommended order entered herein recognized such an abbreviated area. Contrariwise, the HRS final order ruled that Palm Beach County was the appropriate service area to be used in applying the need methodology contained in the rule. Because this aspect of the final order was affirmed by the First District Court of Appeal, it becomes "law of the case" and Palm Beach County must be used as the service area for applying the methodology to this applicant. State v. Stebile, 443 So.2d 398 (Fla. 4th DCA 1984), Marine Midland Central v. Cote, 384 So.2d 658, (Fla. 5th DCA 1980). However, because the parties' submissions have insinuated this element of "service area" into the remand consideration of this cause, it may be noted that the record is clear that at all times relevant (including but not limited to the date West Boca's application was deemed complete, the date the application was preliminarily reviewed by HRS, and the date of hearing) HRS used Palm Beach County as the appropriate "service area" as contemplated by Rule 10- 5.11(18). West Boca has failed to demonstrate within the evidence received at the prior hearing that a smaller area should be defined for purposes of these proceedings. This determination is made notwithstanding evidence of desirable driving times for end stage renal dialysis (ESRD) patients and superfluous language employed by HRS' expert witness, Ms. Dudek, to the effect that although HRS policy and procedure always utilized Palm Beach County, a sub-area need determination is not an inappropriate measure of need for health planning purposes. These latter elements have been considered but are not persuasive that a smaller sub-area is appropriate in the face of sound health planning reasons for not using smaller than county sub-areas. The present submissions of West Boca on remand also fail to demonstrate any compelling reason to depart from normal HRS policy and procedure. In evaluating an application for a CON for a proposed chronic renal dialysis facility, HRS utilizes the methodology contained in Rule 10-5.11(18), Florida Administrative Code. The First District Court of Appeal has ruled that the need for the West Boca facility must be determined utilizing the "1983-84 population data as received into evidence at the prior hearing" and determining need for the proposed dialysis center one year from the date that the application is deemed complete by HRS. West Boca's application was deemed complete in February of 1983. The 1984 population of the service area (Palm Beach County) was 689,325. The 1984 new patient acquisition rate was 197.29 per million. The 1984 service area mortality rate was 23.8 percent. This data was gathered by the District 9 Health Council and the HRS Office of Community Medical Facilities from ESRD providers for the calendar year 1984. In calculating the need under the ESRD methodology the first variable is "current ESRD patients by census for service area." At the administrative hearing in this case, Elizabeth Dudek, Community Medical Facilities Consultant for HRS concluded that 4 stations were needed. (See original Finding of Fact 5, adopted in new Finding of Fact 5 supra.) However, Ms. Dudek also testified that this "patient census" number was 260. Ms. Dudek obtained this "260" figure from the Florida ESRD Network 19 First Quarter Report 1985. She totaled the in-patient census figures for the Palm Beach County facilities to obtain this figure. However, since that figure represents only in-center patients, from which the second variable ("ESRD patients on home dialysis") is to be subtracted, the patient census number of 260 as given by Ms. Dudek and as contained in HRS exhibit 1 is in error. The correct number for the first variable in the ESRD methodology can only be determined by adding in-center patients and home dialysis patients (260 + 24 284). HRS is required to correct any factual errors within its knowledge. Balsam v. HRS, 486 So.2d 1341 (Fla. 1st DCA 1986). Since the patient census in HRS exhibit 1 is in error, the correct figure should be substituted. Once this is done, the correct procedure for calculating the need for a proposed ESRD facility in Palm Beach County, which application was deemed complete in 1983, is as follows: Current ESRD patients by census for service area (Palm Beach County) 284 Less ESRD patients on home dialysis 24 Plus new ESRD patients per 1 million population for one year [computed using 1984 new patient acquisition rate multiplied by 1984 projected population] 136 Less projected number of ESRD patients to receive home dialysis training 12 Less number of ESRD patients receiving transplant operations for one year 7 Less number of unsuccessful transplants for one year 0 Less ESRD patient mortality for one year [In calculating need under the ESRD methodology, if the "patient census" number is changed, then the variable "ESRD patient mortality for one year" will also change. Therefore, the patient mortality is determined by the following procedure: mortality rate based on experience for service area applied to the subtotal of previous calculations (284-24+136-12-7-0--377; 377 x 23.8 percent 90). See Rule 10-5.11(18)(b)1. Florida Administrative Code and HRS exhibit 1.] 90 Plus 10 percent of current and projected ESRD patients on home dialysis 4 Equals number of patients requiring chronic dialysis services for one year in the service area 291 The Rule also provides that 80 percent of the capacity of four patients per station per week is to be utilized, yielding a factor of 3.2. This is divided into the number of patients requiring chronic dialysis services for one year in the service area (291). The dividend, 91, is the number of stations needed in the service area, less the 84 existing stations, for a net need of seven stations in Palm Beach County in 1984. (Note that where permitted all figures have been "rounded" to the nearest whole number). Petitioners identified some relatively minor errors in input data and calculations. These errors would not, however, significantly change the so- called "hard numbers" stated above in new Finding of Fact 8. The more significant error of Ms. Dudek described therein is purely one of arithmetic and its required correction, in no way does violence to that witness' correct application of the rule methodology. Both the Applicant and Petitioners presented additional expert testimony of health care consultants. Not surprisingly, their conclusions tended to reduce the need on one hand (Petitioners) and increase it on the other (Applicant). Although their testimony is incorporated in those considerations discussed in new Finding of Fact 11 (adopting original recommended order paragraphs 11-24 inclusive), it is rejected as to modification of the data utilized and generated by the HRS witness. 11. Paragraphs 11, 12, 13, 14, 15, 16, 17, 18, 19, 20, 21, 22 (see also new findings of fact 5-8,) 23, and 24 of the previous recommended order entered in this cause, copy attached as Exhibit "A", are adopted and incorporated by reference.
Findings Of Fact Upon consideration of the oral and documentary evidence adduced at the hearing, the following relevant facts are found: On September 14, 1977, respondent received petitioner's (BMA) application for approval of a capital expenditure proposal to establish a new twenty-station chronic renal dialysis facility in Clearwater, Florida. Petitioner is a subsidiary of National Medical Care, Inc., which is the largest provider of chronic dialysis services, operating some sixty facilities nationwide. BMA currently operates two facilities in the Florida Gulf Health Systems Agency (FGHSA) region -- a twenty-five station facility in Tampa and a twenty station facility in St. Petersburg. BMA also operates facilities in Sarasota, Gainesville and Orlando, Florida. The present application proposes to spend $470,000.00 for leasehold improvements and $140,000.00 for equipment for a total capital expenditure of $610,000.00. The proposed facility is designed to provide outpatient hemodialysis treatments to medically stable, ambulatory patients suffering from end state renal disease (ESRD). Such patients suffer negligible kidney functions and require either regular chronic dialysis treatment or transplantation. Those patients who undergo hemodialysis generally have three treatments per week, each treatment lasting from four to six hours. By letter dated December 12, 1977, the respondent's administrator notified petitioner that its capital expenditure proposal was not favorably considered for two reasons, both relating to the need for such services within the applicable service area. The first reason cited by the respondent was the finding by the FGHSA that only five additional stations would be needed in the year 1978. Due to the fact that the FGHSA failed to provide respondent with its recommendation within sixty days, respondent was required, pursuant to F.S. Section 381.494(5)(e), to deem that the proposal was recommended for approval by the FGHSA. The second reason for disapproval listed by the respondent was its own determination that a surplus of eleven stations would exist in the service area of 1978. This figure of eleven was amended at the hearing to four. Subsequent to the time that petitioner's application was considered at the local and state levels, respondent approved the application of Kidneycare of Florida, Inc. for the establishment of a ten station chronic renal dialysis facility in Clearwater, Florida. This action occurred on February 15, 1978, after an administrative hearing was held in which petitioner BMA was an intervenor. That case (Case No. 77-2203) is presently on appeal in the District Court of Appeal, Second District. Apparently, the BMA and the Kidneycare applications were submitted to and considered by the local and state reviewing authorities during the same period of time. The generally accepted formula for arriving at a projected need for additional dialysis stations is not in dispute. The starting point is the actual number of persons who are ESRD patients within the service area. To this number is added the number of patients expected to develop ESRD during the planning period. This sum is then reduced by the number of successful kidney transplants expected to occur and by the number of patients expected to die within the planning period. For planning purposes, veteran administration patients and dialysis machines are not to be included in the projections. In order to arrive at a valid project patient population figure for the planning period, it should be appropriate to add the number of transient patients or winter visitors to the area and subtract the number of patients trained for home dialysis. To arrive at the number of stations (machines) required to serve the project patient population at the end of the planning period, the projected patient pool is divided by the station utilization factor (a ratio of number of patients per station). The number of existing stations in the area is then subtracted from this figure, thus yielding the number of additional stations needed. Thus the ideal formula reads as follows: current patient pool + new patients successful transplants mortality factor home trainees + winter visitors V.A. patients = projected patient pool divided by station utilization factor number of existing non V.A. stations + additional stations needed This formula necessarily employs certain conjectural components and the dispute in this proceeding concerns the derivation and propriety of the statistics used to supply these conjectural components. It appears from the testimony and documentary evidence that the respondent relied exclusively on the data supplied by the FGHSA, with the exception of the station utilization factor. Therefore, it is presumed that the figures utilized by the FGHSA in its analysis were also utilized by respondent. In arriving at the projected patient pool, the petitioner and the HSA were in agreement with the number of new patients and the number of successful transplants. They were not in agreement with the projected morality figure or with the projected number of veterans administration patients. The HSA utilized the actual morality figure (21.8 percent) for the 1975-76 year. The petitioner utilized the figure of 15 percent. The actual morality rate for the 1976-77 year was 14.1 percent. Had the HSA had this more recent statistic available to it at the time, it would have utilized it. A more appropriate method would have been to average the two figures. This would have increased the number of deaths projected by the petitioner and decreased the number projected by the HSA. The evidence with respect to the patient cap at the V.A. hospital was based upon hearsay and thus is not sufficient to refute the HSA's projections in that area. Neither the HSA nor the petitioner took into account the number of transient patients or the number of existing patients who would undergo home dialysis training within the planning period. Each of these factors was deemed too speculative or conjectural for a meaningful computation of projected needs. Testimony was adduced to the effect that the intervenor Kidneycare had received a nine-year grant to establish home dialysis training in the subject service area, and that once this program was underway, it was expected that from 30 to 50 patients would be trained in home dialysis. The utilization factor per station or machine was also in dispute. In making their projections, both the petitioner and the HSA used a factor of 3.2. This result is obtained by assuming that each machine has a capacity for dialyzing two patients per day, and that each patient must be dialyzed three times per week. Assuming a capacity rate of 80 percent, the utilization factor is 3.2 patients per station. Using a capacity rate of 90 percent, the utilization factor is 3.6 patients per station. The respondent utilized the 3.6 factor in projecting future need. This 3.6 utilization standard has consistently been used by respondent in its review of other free-standing chronic renal dialysis facilities, and petitioner has failed to demonstrate that such a standard is unreasonable. The remaining area of the formula in dispute is the number of existing non-V.A. stations in the area to be served. The parties agreed that as of the end of 1977, there were 73 chronic renal dialysis stations in existence or authorized in the four county are covered by the FGHSA. The dispute arose over the actual utilization by Tampa General Hospital of its existing 14 stations. The assistant hospital administrator at Tampa General Hospital testified that it is the future intent of said hospital to reduce the number of stations available for stable chronic patients in order to make room for more unstable chronic and acute patients. This "future intent" is still in the recommendation stage and the testimony regarding this intent was not specific as to the actual number of stations to be withdrawn. The testimony established that a reasonable planning period for chronic renal dialysis equipment is one year. If one considers the one year period to commence at the time that the proposed facility can be operational, the testimony indicates that the one year period would run from the end of 1978 through the end of 1979. In applying the facts discussed above to the acceptable formula, it is found that the patient pool projected by the HSA must be increased by utilizing a lower mortality rate (18 percent in lieu of 21.8 percent) and that the petitioner's projected patient pool must be decreased by utilizing a higher number of deaths and a higher number of V.A. patients. The resulting figures must also be offset by applying a station utilization factor of 3.6 in lieu of 3.2 and by adding to the number of existing stations the ten stations for which the intervenor Kidneycare recently received approval from respondent. Applying these adjustments to the figures projected by the respondent, the projected patient pool for non-V.A. patients for the end of 1978 approximates 294, and the figure for the end of 1979 is somewhere close to 326. A utilization factor of 3.6 patients per station indicates an approximate need for 82 stations by the end of 1978 and 90 stations by the end of 1979.
Recommendation Based upon the findings of fact and conclusions of law recited above, it is recommended that respondent's denial based upon the ground of lack of demonstrated need for additional dialysis stations in the service area be reversed. It is further recommended that, a need having been shown for an additional seven stations in the planning period, petitioner be permitted to submit a revised or amended application within twenty days for approval of a seven station facility. Respondent should then act upon said revised application within fifteen days from receipt of the same. Respectfully submitted and entered this 9th day of May, 1978, in Tallahassee, Florida. DIANE D. TREMOR Hearing Officer Division of Administrative Hearings 530 Carlton Building Tallahassee, Florida 32304 904/488-9675 COPIES FURNISHED: Art Forehand, Administrator Office of Community Medical Facilities 1323 Winewood Boulevard Tallahassee, Florida 32301 Harold W. Mullis, Jr. Trenam, Simmons, Kemker, Scharf, Barkin, Frye and O'Neill Post Office Box 1102 Tampa, Florida 33601 Eric J. Haugdahl Assistant General Counsel 1323 Winewood Boulevard Building 1, Room 406 Tallahassee, Florida 32304 John H. French, Jr. 630 Lewis State Bank Building Tallahassee, Florida 32304
The Issue Whether the Petitioner University Community Hospital's certificate of need application to establish a cardiac catheterization laboratory and open heart program in Tampa, Florida, should be approved.
Findings Of Fact On August 11, 1982, the Petitioner University Community Hospital, a non-profit hospital, (hereafter Petitioner or UCH) filed an application for a certificate of need (hereafter CON) to expend some $934,000 to establish cardiac catheterization and open heart surgical services at its 404 bed facility located at 3100 East Fletcher Avenue, on the north side of Tampa, approximately 9 miles from the Intervenor Tampa General Hospital (hereafter TGH or Tampa General). Petitioner's CON application was reviewed by the Respondent Department of Health and Rehabilitative Services (hereafter Respondent or Department) under Rule 10-5.11, Florida Administrative Code, and compared with other facilities in the Health Systems Agency, Region IV, which consisted of Pasco, Pinellas, Manatee and Hillsborough Counties. On November 30, 1982, the Department denied the Petitioner's application. The basis for the Department's denial as reflected in the State Agency Action Report, was that two hospitals in Health Services Area IV, Medical Center and Morton Plant, were below the 350 open heart procedures threshold required by Rule 10-5.11(16), Florida Administrative Code. Since Petitioner was not entitled to a CON for open heart surgery, it was not entitled to a CON for cardiac catheterization because Rule 10-5.11(15), Florida Administrative Code, which was in existence when Petitioner's application was reviewed, required that an applicant for cardiac catheterization must be able to offer open heart surgery. Following the Department's denial of Petitioner's application and prior to the final hearing, the Legislature abolished the Health Systems Agency Regions and provided instead that health planning be based on HRS Districts. Intervenor TGH, a 611 bed public hospital located on Davis Island in downtown Tampa, in the same service area as the Petitioner, and presently offering cardiac catheterization and open heart surgical services, intervened in this proceeding on the side of the Department. The Need for Cardiac Catheterization Services In the Service District Prior to the final hearing, the Department admitted to the need for an additional cardiac catheterization laboratory in Hillsborough and Manatee counties. See Petitioner's Exhibit 17. There are presently three adult cardiac catheterization labs in Hillsborough-Manatee, two at TGH and one at St. Joseph's Hospital. In the five- county area, Lakeland Regional has an approved and existing program for a total of four programs. Applying the methodology set forth in Rule 10-5.11(15), Florida Administrative Code, the Petitioner has established that a need exists for at least one additional cardiac catheterization lab regardless of whether the service district is defined to include two or five counties. As projected and calculated by Thomas Porter, a Department witness who utilized the rule methodology, five catheterization labs are need in the five-county area by the year 1985. However, based on historical data, the need formulated pursuant to the rule is probably understated. Porter's testimony was confirmed by Dr. Warren Dacus, a hospital planning consultant, who after obtaining population and projection figures from the Department and the University of Florida, Bureau of Business and Economic Research, concluded that a need existed for one additional catheterization lab in 1985 in Hillsborough and Manatee Counties. On June 16, 1983, the Department approved a CON application filed by Tampa Heart Institute (hereafter THI) which authorized the establishment of three cardiac catheterization labs. The Department's proposed agency action to award a CON to THI was challenged by the Intervenor Tampa General and St. Joseph's Hospital and is presently the subject of a pending administrative proceeding. The CON granted to THI was based on the Department's assumption that most, if not all, of its patients would come from Latin America. THI's CON application presented a unique set of circumstances which fell outside the methodology normally considered during CON reviews. Since the CON proposed to be granted to THI was administratively challenged and was based on the assumption that patients would be drawn from outside any defined service district, it is logically inconsistent and legally inappropriate to consider THI's three cardiac catheterization labs in the instant proceeding. If the CON is granted to the Petitioner, there will be sufficient utilization of the cardiac catheterization laboratory to insure quality of services as required by Rule 10-5.11(15)(i), Florida Administrative Code. Based on previous referrals to other hospitals and historical data obtained from other hospitals in the district, the Petitioner can expect to perform in excess of 300 cardiac catheterization procedures annually for the next three years following initiation of the service. The Need for an Open Heart Surgical Program in the Service District In the Hillsborough-Manatee Service District, two open heart programs presently exist, one program is located at St. Joseph's Hospital, the other is at Tampa General. The formula found at Rule 10-5.11(16), Florida Administrative Code, provides that the number of open heart procedures projected to be done in a future year is determined by multiplying the number of procedures per 100,000 population performed in the service area in 1981 by the projected population in the service area in the future year. No additional programs will normally be approved if such program will reduce the volume of an existing program below 350 surgery cases. In the service distract represented by the two-county area, there is a need for four open heart surgical programs by 1985. Using the methodology found at Rule 10-5.11(16), Florida Administrative Code, the two-county area requires the capacity to perform 1,433 open heart surgeries in 1985, which establishes a need for four programs. Although the addition of an open heart program at UCH would draw certain patients from both St. Joseph's and Tampa General, the number of open heart surgeries performed at St. Joseph's and Tampa General would not fall below 350 per year if UCH were granted a CON. In the five-county area which includes Hillsborough, Manatee, Polk, Highlands and Hardee counties, 1,587 open heart surgical procedures are projected for 1984 and 1,623 for 1985. Applying the rule methodology a need exists for five open heart programs in 1984 and 1985. Three programs, Tampa General, St. Joseph's and Lakeland Memorial Medical Center, presently exist or are approved in the five-county area. The petitioner has demonstrated a sufficient projected volume of open heart surgeries to assure quality of service under Rule 10-5.11(16)(e)(4), Florida Administrative Code. UCH can expect to perform in excess of 200 adult open heart surgical procedures during its first year of operation and within three years after initiation of the service. Moreover, UCH's surgery program will be capable of providing 500 open heart operations per year. In 1981, Lakeland Memorial performed 81 open heart surgical procedures which is significantly below the 350 procedures required by the rule. UCH's proposed program would have little if any effect on the open heart program at Lakeland Memorial, or its ability to meet minimum service levels now or in the foreseeable future. The 350 procedures per year threshold is required to ensure that cardiac surgery teams and staff remain proficient so that patient care is not jeopardized. If, due to the low number of procedures performed at Lakeland Memorial, patient care is being jeopardized, the purpose of the rule is not served by denying a CON to the Petitioner on such a basis since the grant or denial of the instant CON would have no effect on Lakeland Memorial's ability to meet the threshold. UCH's non-invasive coronary procedures including echocardiograms, stress testing and halter monitoring have been utilized by patients to a noteworthy degree. The levels of utilization for these non-invasive tests at UGH in comparison to Tampa General and St. Joseph's are as follows for the period July, 1980 to June, 1981: echocardiogram, UCH 1021, Tampa General 1,175, St. Joseph's 539; stress testing, UCH 598, Tampa General 490, St. Joseph's 371; halter monitoring, UCH 618, Tampa General 328, and St. Joseph's 290. A direct relationship exists between the volume of non-invasive coronary procedures and invasive catheterization procedures that can be expected to be performed at UCH. Approximately 30 percent of the patients at UCH are referred to other hospitals for invasive procedures following non-invasive testing. Transferring patients between hospitals for invasive procedures after non-invasive testing lessens the quality of patient care and increases the probability of duplication of testing, thus increasing health care costs. The Adequacy of she Petitioner's Proposed Facility UCH's proposed facilities for open heart and cardiac catheterization services are adequate for their intended purposes. The proposed plans and equipment lists for the cardiac catheterization lab and open heart surgical program are acceptable from a medical and planning perspective, and are similar to other facilities offering such services. UCH has or if the CON is approved will have, the necessary staff and equipment to meet the requirements of Rules 10-5.11(15)(g) and 10-5.11(16)(c), Florida Administrative Code. The Petitioner will provide the training programs set forth at Rule 10-5.11 (15)(i)(3), Florida Administrative Code. The catheterization lab will maintain the hours of operation specified in Rule 10-5 11 (15)(h)(2), Florida Administrative Code, and the open heart surgery program will operate in accordance with the requirements of Rule 10- 5.11(16)(d)(2) and (3), Florida Administrative Code. The Petitioner is accredited by the Joint Commission on Accreditation of Hospitals as required by Rules 10-5.11 (15)(i)(1) and 10-5.11 (16)(e)(1), Florida Administrative Code. The Petitioner has a written plan projecting case loads, and projecting space, support, equipment and supply needs as required by Rule 10- 5.11(16)(e)(5), Florida Administrative Code. The Financial Feasibility of the Petitioner's Proposed Cardiac Program UCH's proposed open heart surgery program and cardiac catheterization lab are financially feasible. Funds for the project are available and no long term debt exists since the projects are to be funded out of cash. Projected net income from the service is in the 5 percent range which is conservative for a not-for-profit hospital which requires a degree of profitability to ensure that sufficient revenue is generated to meet expenses. The projected costs for the proposed cardiac catheterization lab are reasonable. The proposed renovation of the lab is part of a general large scale renovation for which UCH has secured a binding contract for the amount specified in the application. The equipment and personnel budget for the lab is also reasonable. Based upon a comparison of the proposed charges at UCH with the projected 1984 charges at Tampa General, UCH offers the least costly alternative for providing cardiac catheterization and open heart surgery services. For example, at Tampa General, the projected charge for cardiac surgery, exclusive of charges for room and ancillary services, is $1,711 compared to $1,244.81 at UCH. For cardiac catheterization, the projected 1984 charge at Tampa General is $1,338 as compared to $1,093.75 at UCH. The Petitioner's charges and proposed charges for cardiac catheterization, open heart surgery and other hospital services are comparable to other similar hospitals in the service district, and accordingly, the Petitioner has established that the requirements of Rules 10-5.11(15)(j) and 10- 5.11(16)(f)(2), Florida Administrative Code have been met. Petitioner's Proposed Cardiac Program and its Effect on Tampa General The Hillsborough County Hospital Authority, a public agency which was created by special act of the Legislature, see Chapters 67-1498 and 80-510, Laws of Florida, is required by law to treat indigent patients who are in need of immediate or emergency medical treatment. Hillsborough County is required to reimburse the Hospital Board of Trustees for the full cost 2/ of any hospital or related services provided patients properly certified as indigent. Tampa General has experienced severe monetary problems as a result of its role as provider of free medical care to indigent residents of Hillsborough County. Unfunded patients have averaged 80-100 admissions per week at a cost of $280,000-$350,000 per week to the hospital. Approximately 30 percent of the claims that the hospital files with Hillsborough County for reimbursement of indigent expenses are rejected. As a result, Tampa General has been forced to subsidize its cost of providing indigent care through added charges passed on to paying patients. Since the Hospital Authority has no taxing power, Tampa General is dependent upon funds provided by the County. Among public hospitals in Florida's major urban areas, Tampa General receives the least amount of financial assistance from local government. Tampa General has budgeted $24 million worth of free care for 1984 and this amount is projected to increase through 1988. The amount of free care provided to indigents at Tampa General is approximately 16 percent of gross revenues. Tampa General utilizes the profits it derives from the operation of its cardiac programs to subsidize the considerable amount of free care that it provides to indigent residents of Hillsborough County. In 1981, Tampa General embarked on an ambitious expansion program in order to attract additional paying patients and to remain competitive with other private hospitals in the community. In order to finance this project, the Authority issued bonds in the amount of $160,260,000. In deciding to issue these bonds, the Authority considered the revenues generated by the hospital's cardiac programs which constitute 17-18 percent of total net revenues and the relative lack of competition from other coronary programs in the Hillsborough area. In the absence of adequate funding by the State and/or County, Tampa General's cardiac program is an essential element in the hospital's plan to continue to provide free care to indigents. The subsidization or contribution margin of the cardiac program helps offset the bad debt of indigent costs which are not being reimbursed by local government. The amount of subsidization or contribution margin for each cardiac procedure performed at Tampa General in 1984 was $3,721 and is projected to increase to nearly $5,700 in 1988. However, notwithstanding the monies projected by Tampa General which it expects to be contributed by its cardiac program, it is likely that third- party payers will follow the federal government in adopting a prospective payment system based on diagnosis related groups of illnesses which will limit the amount of revenues which can be collected from private pay patients. Assuming that this occurs, the amount of subsidization derived from cardiac programs at Tampa General will be significantly decreased regardless of the outcome of the instant proceeding. The evidence regarding the effect of UCH's proposed cardiac program on Tampa General's existing program is unclear. Unquestionably, some of the patients which would have gone to Tampa General for cardiac care will go to UCH if its program is established. However, since cardiac catheterizations are increasing in volume and a direct relationship exists between cardiac catheterizations and open heart surgery, it can be concluded that while Tampa General's rate of growth would decrease, it is unclear whether its present volume would decrease significantly below existing levels. No evidence was presented that Tampa General's cardiac catheterization and open heart programs would decline below the thresholds established by rule if UCH's application were granted. The financial problems facing Tampa General are clearly serious. The hospital has taken drastic steps to attempt to control costs including eliminating staff positions and severely restricting indigent access to health care. Tampa General's problems existed prior to UCH's application for a CON and will likely continue regardless of whether the Petitioner's CON is approved. The long-term solution of Tampa General's financial problems should not be dependent upon whether UCH prevails in this proceeding. If Tampa General is to fulfill its mission as a public hospital, it must be assured of reliable and consistent course of funding for all of its operations. In enacting Chapter 80-510, Laws of Florida, the Legislature intended that the cost of indigent hospital care in Hillsborough County be borne by all of the citizens of the County, and not primarily by paying patients who by circumstance or otherwise, find themselves at Tampa General. Tampa General's reliance on its cardiac programs to finance its long- term debt and offset its indigent care losses is dependent on the existence of two factors: first, Tampa General must maintain what is essentially a monopoly on the services to be guaranteed a supply of paying cardiac patients and second, it must have the ability to pass on to its paying cardiac patients the amount needed to subsidize its other operations. Tampa General, however, no longer maintains a monopoly on cardiac programs in the Hillsborough area as evidenced by the certificate of need awarded to St. Joseph's. Moreover, the Department has stated its intention to authorize another open heart program and three catheterization labs at Tampa Heart Institute. The prospective reimbursement system implemented by the federal government which is expected to be followed by private insurers will further limit Tampa General's ability to generate excess revenues from private-pay coronary patients. The result of the inability of Tampa General to secure a long-term solution to its problems of unreimbursed indigent care is reflected in the institution of a policy limiting indigent admissions to the most serious cases. Due to this new policy limiting admissions at Tampa General to emergencies, Tampa General's and UCH's policies regarding coronary care for indigents are essentially the same. The Petitioner's Compliance with Section 381.494(6)(c), Florida Statutes It was uncontroverted that UCH's proposed cardiac services are consistent with the state health plan. Since the Department has not yet promulgated as a rule the health systems' plan for the District, the parties agree that the question of the Petitioner's compliance with the local plan is not an issue in this case. See Section 381.494(6)(c)(1), Florida Statutes. The proposed cardiac program has been approved by UCH's Board of Directors, and is an appropriate progression considering the size of UCH and the mix of cardiologists and patients at the facility. See Rule 10-5.11(2), Florida Administrative Code. The Petitioner has carried its burden by demonstrating a need for cardiac catheterization and open heart surgical services regardless of whether the service district is defined as a two or five-county area. See Section 381.494 (6)(c)(2), Florida Statutes. Utilizing a two-county area including Hillsborough and Manatee counties, the projected population in 1985 is 890,000. The 1981 use rate was 276.4 cardiac catheterization procedures per 100,000 population. Multiplying the 1981 use rate by the projected population, 2,640 catheterization procedures are projected for 1985. Dividing 2,460 by the threshold number 600, results in a need for 4.1 catheterization labs in Hillsborough and Manatee counties in 1985. Presently, three existing and approved catheterization laboratories exist in Hillsborough and Manatee counties, one at St. Joseph's and two at Tampa General. A need, therefore, exists for an additional catheterization laboratory in the two-county area. 3/ In the five-county area which includes Hillsborough, Manatee, Polk, Hardee and Highlands counties, the projected population for 1985 is 1,330,400. The 1981 use rate was 207 procedures per 100,000 population. A total of 2,693 and 2,754 procedures are projected for 1984 and 1985, respectively. Dividing 2,754 by 600 demonstrates a need in 1985 for five laboratories while four presently exist or are approved in the five-county area, one at St. Joseph's, two at Tampa General and one at Lakeland Memorial. Petitioner has therefore demonstrated a need for an additional cardiac catheterization services in the five-county area. In considering the need for open heart surgery services in the two- county area and utilizing the projected population of 890,000 and a use rate of 160.99, the projected number of open heart procedures in 1985 is 1,433. When 1,433 is divided by 350, a need exists for four open heart surgery programs in Hillsborough and Manatee counties in 1985. Since there are only two existing and approved programs in the two-county area, the Petitioner has demonstrated a need for two additional open heart surgical programs by 1985. In the five-county area, the projected 1985 population is 1,330,400. The 1981 use rate was 122 procedures per 100,000 population. Multiplying the projected population by the use rate results in 1,623 open heart procedures projected in 1985. When 1,623 is divided by 350, a need is established for five open heart surgical programs by 1985. Since only three existing or approved programs are in place, the Petitioner has demonstrated a need for two additional open heart programs in the five-county area by 1985. The Petitioner presently performs a significant number of non-invasive cardiac procedures. It was uncontroverted that UCH provides quality of care to its patients. If the Petitioner's application is approved, it can be assumed that present acceptable quality of care standards will be met in the operation of the program. See Section 381.494(6)(c)(3), Florida Statutes. The proposed project is financially feasible, and UCH has the ability to attract sufficient nurses and support staff to operate both programs. See Section 381.494(6)(c)(8) and (9), Florida Statutes. The Petitioner has argued throughout this proceeding that the initiation of cardiac service at its facility will foster competition thereby reducing health care costs in Hillsborough County. If price competition in fact existed under the present system of health care delivery, lower costs would be expected. However, with rare exception, health care consumers do not select hospitals nor do they pay their own hospital bills. Rather, third-party payers, including the federal government and private insurance companies, are responsible for reimbursing hospitals for patient costs and physicians generally determine which hospital is utilized by a patient. In an understandable effort to control health care costs, the federal government and the state have enacted a complex regulatory scheme for health care providers which limits competition and places the burden on providers of establishing that a need exists in a given area for a proposed service. To a significant extent, this scheme protects the financial interests of existing providers. This process can have an unfortunate side-effect of limiting the choices available to health care consumers and eventually could result in a diminished quality of health care. 4/ While the presence of additional hospitals in an area does not necessarily result in lower health care costs, it does create potential competition for patients through physician referrals. Hospitals have an incentive to provide quality care including state of the art equipment and competent staff, to ensure that they attract their share of patients. As a result, the preferences of physicians and health care consumers should have a greater impact in an area where health care services exist at more than one facility. The difficulty encountered in CON proceedings is attempting to balance the legitimate needs of health care consumers with the state's efforts to control costs by discouraging the duplication of unnecessary services. The Petitioner has demonstrated that its proposal is cost-effective, and should foster innovation and improvement in the delivery of health services in the service area as required by Section 381.494(6)(c)(12), Florida Statutes. The assertion by Tampa General that the expansion of its facility represents a less costly alternative is too speculative to be considered in this proceeding. While TGH is in the process of a $300,000 conversion of a pediatric catheterization lab to an adult lab, this fact was apparently either unknown or not considered by the Department at the time of the final hearing since HRS witnesses stated that Tampa General has only two adult labs.
Recommendation Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED: That the Department of Health and Rehabilitative Services enter a Final Order granting a CON to Petitioner University Community Hospital to establish a cardiac catheterization laboratory and open heart surgical program in Tampa, Florida. DONE and ENTERED this 5th day of March, 1984, in Tallahassee, Florida. SHARYN L. SMITH Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32301 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 5th day of March, 1984.
The Issue Whether the Certificate of Need (“CON”) Application No. 10490 submitted by Baptist Hospital of Miami, Inc. (“Baptist Hospital” or “Baptist”), to establish a new adult autologous and allogeneic bone marrow transplant program in Florida’s Organ Transplant Service Area 4 (“TSA 4”) should be approved.
Findings Of Fact Bone Marrow Transplants Bone marrow transplantation is performed after a patient has received very high doses of chemotherapy in order to eradicate cancer. High doses of chemotherapy can cure cancerous cells or cause remission, but chemotherapy can also damage healthy cells. Damage may be done to progenitor cells that create the components for blood, including white blood cells. If progenitor cells are damaged by chemotherapy, the patient may succumb to infection and bleeding. To avoid this problem, physicians remove blood-producing progenitor cells from the patient's blood and bone marrow, and store them while the patient receives chemotherapy. The patient is then reinfused with progenitor blood cells, allowing the patient to make normal blood and recover. This infusion of progenitor cells is commonly referred to as bone marrow transplantation ("BMT"). BMT has become an essential method of fighting blood cancers. BMT is offered in hospital settings, and most transplants are performed on an inpatient basis. However, certain types of BMT services are more frequently being offered on an outpatient basis. BMTs are categorized as either autologous or allogeneic. In autologous BMTs, the patient's own blood and bone marrow cells are removed and then reinfused after chemotherapy. The process begins with apheresis to collect the patient's bone marrow and blood cells. The patient's blood is processed through a machine that separates progenitor cells and stores them. The process of apheresis may take up to five hours. The cells are frozen for later use. The process of freezing blood product is referred to as cryopreservation. The patient then receives chemotherapy and is then reinfused with the patient's own blood and bone marrow cells. Some cancer patients, such as acute leukemia patients, have malignant or compromised blood progenitor cells. In those cases, autologous transplantation is not an option. Instead, progenitor cells must be obtained from an alternative donor, such as a family member or a compatible nonrelative. Allogeneic transplants carry a higher risk of complications, primarily because the introduction of another person's progenitor cells may cause "graft vs. host" disease, which involves the patient’s rejection of the infused cells. Histocompatibility tests help determine whether donated progenitor cells will successfully match with the patient and reduce the chances of graft vs. host disease. BMT is a relatively rare procedure. In 2014, there were 17,303 BMT procedures in the United States involving patients over the age of 21. In 2016, there were 1,026 cases in Florida involving patients over the age of 15. The Regulatory Framework Section 408.032(17), Florida Statutes (2018),1/ defines a “tertiary health service” as a health service which, due to its high level of intensity, complexity, specialized or limited applicability, and cost, should be limited to, and concentrated in, a limited number of hospitals to ensure the quality, availability, and cost-effectiveness of such service. Examples of such service include, but are not limited to, pediatric cardiac catheterization, pediatric open-heart surgery, organ transplantation, neonatal intensive care units, comprehensive rehabilitation, and medical or surgical services which are experimental or developmental in nature to the extent that the provision of such services is not yet contemplated within the commonly accepted course of diagnosis or treatment for the condition addressed by a given service. As a tertiary health service, inpatient BMT may only be offered once a hospital has obtained a CON. See §§ 408.032(17), 408.036(1)(f), Fla. Stat.; Fla. Admin. Code R. 59C-1.044. The statutory review criteria for CONs are set forth in section 408.035. The criteria include factors such as: (a) the need for the health service proposed; (b) the applicant’s ability to provide quality care; (c) the extent to which the proposed service will enhance access to healthcare for residents in the applicable service district; and (d) the immediate and long-term financial feasibility of the proposal. AHCA has published Florida Administrative Code Rule 59C-1.044 governing CON review for transplantation services. Subsections (3), (4), (5) set forth criteria that applicants for several different types of transplant programs must satisfy. Subsections (9) and (10) set forth criteria that BMT applicants must "normally" meet before a new transplant program will be approved. AHCA may approve a CON for BMT services when an applicant demonstrates that not-normal circumstances are present. For many CON-regulated services, AHCA predicts the future need for additional beds or services by announcing a "fixed need pool," establishing a numerical need for new programs around the state. See, e.g., Fla. Admin. Code R. 59C-1.0355 (establishing fixed need pool methodology for hospices); 59C-1.036 (pertaining to nursing facility beds), 59C-1.039 (pertaining to comprehensive medical rehabilitation beds). The establishment of a fixed need pool creates a rebuttable presumption that a new service is or is not needed. Balsam v. Dep’t. of HRS, 486 So. 2d 1341 (Fla. 1st DCA 1986); Humhosco, Inc. v. Dep’t. of HRS, 476 So. 2d 258 (Fla. 1st DCA 1985). However, there is no fixed need pool for organ transplantation services such as BMT. With regard to need, a BMT CON applicant must reliably project that it will annually perform 10 autologous and 10 allogeneic transplants. See Fla. Admin. Code R. 59C-1.044(9)(b)1. (pertaining to adult allogeneic BMT programs and stating such applicants “shall be able to project that at least 10 adult allogeneic transplants will be performed each year. New units shall be able to project the minimum volume for the third year of operation.”); Fla. Admin. Code R. 59C-1.044(9)(c)1. (pertaining to adult autologous BMT programs and stating that such applicants “shall be able to project that at least 10 adult autologous transplants will be performed each year. New units shall be able to project the minimum volume for the third year of operation.”). Rule 59C-1.044(2)(f) provides that “[p]lanning for organ transplantation programs shall be done on a regionalized basis.” Accordingly, the rule establishes four transplant service areas (“TSA”), and each one corresponds to an area containing approximately 25 percent of Florida’s population. The TSA relevant to the instant case is TSA 4, which consists of Broward, Miami-Dade, Monroe, Collier, and Palm Beach Counties. The Parties Baptist Hospital Baptist Health South Florida (“BHSF”) is a not-for- profit, faith-based community healthcare organization that operates nine hospitals, approximately 50 outpatient centers, and a medical group serving South Florida, from the Keys to the Palm Beaches. Though each is separately incorporated, all of BHSF's hospitals report to BHSF leadership and represent an integrated hospital system. BHSF has traditionally offered cancer treatment throughout its hospitals. BHSF sought to create a comprehensive cancer institute to serve South Florida, the Caribbean, and Latin America. The cancer institute would offer complete cancer care, from screening and diagnosis, to treatment, and psychosocial support, all the way to palliative care. BHSF created the Miami Cancer Institute (“MCI”) to consolidate the cancer services it offered at many of its hospitals into a single location at Baptist Hospital. The goal was to offer integrated care, so that everything a cancer patient might need could be offered at one location. Though separately incorporated, MCI is an outpatient department of Baptist Hospital in Miami-Dade County, Florida.2/ All of MCI's services are billed through Baptist Hospital, and MCI’s management reports to Baptist Hospital’s administration.3/ MCI sees between 800 and 1,000 cancer patients a day. Because BMT is required to cure most hematological malignancies, including leukemia, myelodysplastic syndrome, pyelolymphatic disorders, myeloma, and lymphoma, BMT services are essential to MCI becoming a comprehensive cancer care center. Consultants and leaders at MCI also concluded that MCI must offer inpatient BMT in order for MCI to offer the full range of care needed by cancer patients. Therefore, Baptist applied to obtain the CON at issue in this proceeding. Baptist recently completed the process of becoming an affiliate of the Memorial Sloan Kettering (“MSK”) Cancer Center in New York. That alliance has now been formed and is operational. MSK is the United States’ leading center for cancer treatment and BMT. The alliance between Baptist and MSK is a strong, integrated linkage between the clinical and research efforts of both organizations. The alliance provides Baptist’s patients with the latest BMT protocols and techniques. MSK and its cancer research will now be able to add a genomic database of Hispanic cancer patients that may result in improved treatment for patients not of European descent. The University of Miami The University of Miami (“UM”) was established in 1925 and is one of Florida’s preeminent universities. The University of Miami Hospital and Clinics (“UMHC”), the Sylvester Comprehensive Cancer Center (“Sylvester”), and the Miller School of Medicine are all part of UM and are all located in Miami-Dade County, Florida. UM’s medical facilities (the Miller School of Medicine, the University of Miami Hospital, Sylvester, and Anne Bates Leach Eye Center) are located on a medical campus shared with Jackson Memorial Hospital in Miami. Sylvester is a 40-bed specialty care center hospital, and the care offered to the residents of South Florida has achieved significant statewide and national prominence. UM is recognized as a Prospective Payment System (“PPS”) exempt institute, which allows it special reimbursement treatment from Medicare for purposes of reimbursement for cancer care provided at Sylvester. There are only 11 such centers in the country. According to AHCA’s discharge database, 147 residents of TSA 4 received BMT treatment in calendar year 2016 at UM.4/ In 2016, UM performed the second highest number of BMTs in Florida.5/ AHCA AHCA is the state agency charged with administering Florida’s CON program. A CON is required before a hospital may offer inpatient BMT. A CON is not required to establish and operate an outpatient BMT program because outpatient services are exempt from CON review. The Non-Parties H. Lee Moffitt Cancer Center (“Moffitt”) is located in Hillsborough County, Florida. Moffitt is the largest BMT program in Florida, performing more than 400 BMT procedures annually. Moffitt is a recognized cancer hospital, and its physicians are recognized cancer researchers. Fifty to 60 residents of TSA 4 travel outside of South Florida each year in order to receive BMT, and the majority receive that treatment at Moffitt. Because the distance from Miami to Moffitt is 250 to 280 miles and a course of treatment can take two to three months, it is a substantial burden for patients in TSA 4 with limited resources to receive BMT treatment at Moffitt. Memorial Hospital West (“Memorial West”) is located in Broward County. Memorial West and UM are the only operational CON-approved adult service providers of BMT services in TSA 4. Memorial West has been a low volume provider of BMT. According to AHCA’s State Agency Action Report(“SAAR”), Memorial West performed nine inpatient BMT procedures in 2012, 15 in 2013, 20 in 2014, 15 in 2015, and four in 2016. Shortly before the final hearing in this matter, Memorial West affiliated with Moffitt in hopes of reinvigorating its largely inactive program. Moffitt has fully staffed and assumed all clinical operations in the Memorial West program. Under Moffitt leadership and clinical management, the Memorial West program performed eight allogeneic and 19 autologous BMTs between July 1, 2017, and January 26, 2018. Good Samaritan Hospital (“Good Samaritan”) is located in Palm Beach County. For many years, Good Samaritan reported to AHCA that it provided a moderately large volume of inpatient BMT. For instance, Good Samaritan reported doing 42 BMTs in 2016. However, it was recently discovered that Good Samaritan had been incorrectly reporting bone marrow biopsies as bone marrow transplants. All parties now acknowledge that Good Samaritan does not have a BMT program. The Prior Proceeding During the October 2015 Other Beds and Programs CON Batching Cycle, Baptist Hospital filed an application to establish a new adult inpatient autologous and allogeneic BMT program in TSA 4. On February 19, 2016, AHCA issued a SAAR preliminarily approving the application. On March 11, 2016, UM filed a petition challenging AHCA’s preliminary decision, and the petition was assigned DOAH Case No. 16-1698CON. After a nine-day hearing in September 2016, Administrative Law Judge (“ALJ”) James H. Peterson, III, issued a Recommended Order on March 30, 2017, recommending that AHCA deny Baptist’s CON application. AHCA rendered a Final Order on June 13, 2017, adopting ALJ Peterson’s recommendation.6/ The Current CON Application Baptist’s current application seeks to establish an adult inpatient autologous and allogeneic bone marrow transplant program located in TSA 4. On August 18, 2017, AHCA issued a SAAR preliminarily approving Baptist's CON application. Baptist has self-imposed three conditions on its application. The first condition is that the proposed BMT program will be located at Baptist Hospital. The second condition is that 12 acute-care beds will be delicensed so as to convert an 18-bed unit to a 6-bed inpatient BMT unit. The third condition is that Baptist will provide at least 10 percent of its inpatient BMT case volume on an annual basis to Medicaid (including managed Medicaid), charity, or self-pay payments. AHCA is requiring that Baptist establish an on-site cryopreservation lab as a condition of approval for its CON. Outpatient BMT has already begun at Baptist because a CON is not required for outpatient services. It is assumed that Baptist will achieve accreditation from the Foundation for the Accreditation of Cellular Therapy (“FACT”) for autologous BMT before the first inpatient procedures are performed. FACT accreditation is the key to receiving reimbursement from federal payors and private insurers. Baptist does not plan to perform any inpatient BMTs until it has completed a year of outpatient autologous procedures. AHCA received letters from several Florida state legislators and local government officials expressing support for Baptist’s application. The Statutory Review Criteria Section 408.035(1)(a) – The Need for BMT in TSA 4 Because the rule governing applicants for autologous and allogeneic BMT programs requires applicants to demonstrate the ability to perform 10 autologous and 10 allogeneic BMTs a year, a forecast of the future need for BMT by TSA 4 residents is necessary in order to evaluate whether Baptist can satisfy that requirement. AHCA’s discharge database includes inpatient treatments and excludes outpatient treatments because outpatients are not admitted. That database indicates that 215 TSA 4 residents received BMTs at a CON-approved hospital in Florida for the 12 months ending September 2016. Sixty-two TSA 4 residents received their treatment at a facility outside TSA 4 during the 12 months ending in December 2016. The number of outmigration cases has remained relatively constant over the last 10 years despite the fact that UM has entered the BMT market and steadily increased the number of BMTs it performs. Baptist’s current application projects the increase in TSA 4's adult inpatient BMT case volume for 2019 (year one of operation) and 2020 (year two of operation) using three different annual growth rates (five percent, seven percent, and nine percent). This analysis forecasts increases of 34 to 63 BMT cases in 2019 and 46 to 88 cases in 2020, depending on the growth rate applied. In other words, Baptist projects that inpatient BMT need in 2019 for TSA 4 will be between 249 and 278 cases, and Baptist projects that inpatient BMT need for TSA 4 in 2020 will be between 261 and 303 cases. UM predicts that the need for adult inpatient BMT in TSA 4 in 2020 will be 277 cases. Both parties’ need projections are reasonable. Even if the demand for BMT by TSA 4 residents only grows by five percent a year, the resulting number of BMT cases will be higher than Baptist's projected volumes of 22 cases in year one and 30 cases in year two. This indicates that there will be adequate growth to support Baptist's BMT program and the existing providers. With regard to the need for BMT in TSA 4, Baptist’s health planning expert testified that: the number of adult inpatient bone marrow transplant cases that will be performed on residents of TSA 4 will grow by more than the 22 and 30 cases that are forecasted for Baptist Hospital. In other words, the market is growing enough that Baptist can achieve its volume and existing providers can maintain at least their current level of service. There are circumstances indicating that a five percent annual growth rate for inpatient BMT is conservative and likely to underestimate the actual need among TSA 4 residents. For instance, national volume data for BMT from the Center for International Blood and Marrow Transplant Research (“the CIBMTR”) shows that there has been strong and continuous growth in autologous and allogeneic BMT over the last 10 years in the United States. In 2010, there were 16,668 BMTs in the United States. By 2014, that number had grown to 19,862, which represents a five percent average annual growth rate. More recent data from the CIBMTR indicates that there were 21,292 BMTs performed in the United States during 2015, which represents a seven percent growth rate from 2014 to 2015. The number of BMT procedures is reliably growing every year, and that is partially due to slight increases in population. This increase is also due to the fact that additional types of patients might benefit from BMT. There has also been an increase in the number of BMTs performed in Florida. Total adult inpatient BMT cases performed in all Florida hospitals have grown from 671 procedures for the 12 months ending September 2012, to 917 procedures for the 12 months ending September 2016. That amounts to an increase of 246 inpatient cases over a four-year period, or an average annual increase of 62 cases each year. In percentage terms, that is a 37 percent increase from 2012 to 2016 and an annual average percentage growth of nine percent per year. A review of the most recent yearly increase, from 2015 to 2016, demonstrates there were 68 new cases and a percentage growth of eight percent. As for circumstances specific to TSA 4, the total population in South Florida is increasing at a rate of approximately one percent per year. The segment of the population over the age of 15 is growing at a slightly higher rate than the total population. People over the age of 61 are receiving more BMTs than in the past. Because the elderly (65+) show the highest percentage population growth in TSA 4, the increased volume for this population will impact the overall volume growth forecasted for TSA 4. There is additional room for BMT use to increase in TSA 4 because that area’s utilization of BMT is low in comparison to other geographic areas. AHCA discharge data shows an overall adult BMT use rate for TSA 4 residents of 4.12 cases per 100,000 people, and the use rate for all of Florida is 5.07 cases per 100,000 people. The greater weight of the evidence demonstrates that the number of inpatient BMT cases in TSA 4 will increase to at least 249 cases in 2019 and to at least 261 cases in 2020. The greater weight of the evidence also demonstrates that the aforementioned forecasts are conservative and that the actual increases are likely to be higher. Section 408.035(1)(b) – The Existing Health Services in the Service District of the Applicant Section 408.035(1)(b) requires AHCA to evaluate “[t]he availability, quality of care, accessibility, and extent of utilization of existing health care facilities and health services in the service district of the applicant.” (emphasis added). Section 408.032(5) divides Florida into 11 health service planning districts. District 11 consists of Miami-Dade and Monroe Counties. UM is the only BMT provider in District 11. Memorial West is located in District 10, which encompasses Broward County. Therefore, section 408.032(5) excludes Memorial West from this analysis. Good Samaritan does not have a BMT program. While UM is the only authorized and operational provider of inpatient BMT services in Miami-Dade County, UM did not provide BMT to a single charity care patient between 2014 and 2016, despite committing to do so. UM's lack of service to charity BMT patients is consistent with its financial reports to the state. UM has the ability to provide charity care. In 2016, UMHC reported a net income of approximately $175 million. As the only existing local BMT provider in the community, UM's failure to provide any charity care presents an access limitation for charity patients. The lack of outpatient BMT presents another access issue. UM does not plan to perform any outpatient BMT procedures even though the medical trend is that more and more of the less complicated autologous BMT procedures are being performed on an outpatient basis. Some countries in Europe are even experimenting with autologous transplantation performed in the patient's home. For some patients that live in the Miami area, outpatient BMT presents a more convenient alternative than a long hospital stay. The inability to access a BMT provider willing to perform outpatient BMT is an access issue. Another access issue involves the utilization of UM’s BMT capacity. The number of BMT procedures performed at UM has steadily increased over time and jumped by more than 70 procedures in 2017 alone. UM's physicians predicted that the number of BMT procedures would grow by 65 in the current year, allowing UM to reach volumes it has never achieved before. Those volumes have allowed UM to conduct research and educational activities. As a result of increasing volumes, UM's BMT program has used a progressively higher number of beds within the hospital. UM's BMT program is on track to treat 240 patients and will have to utilize other beds in addition to the 12 beds originally set aside for BMT. Another access issue pertains to the types of cases that outmigrate from TSA 4. Baptist’s application contained data indicating that a disproportionate amount of the outmigration cases are complex in nature, and the SAAR states the following: the applicant notes that the highest level of outmigration was observed in allogeneic BMT patients which accounted for 41 percent of outmigration cases. [Baptist] states that these patients require the longest post-discharge treatment regimen and for this reason high levels of outmigration are evidence of a significant problem. Autologous cases with complications account for 23 percent of outmigration cases and autologous patients without complications account for four percent of outmigration cases. The applicant reiterates that the proposed project is expected to target these patients as a local alternative to care outside of OTSA 4. The fact that Good Samaritan does not have a BMT program may be the most significant access issue in this particular service district, and that amounts to a substantial change in circumstances since the prior proceeding. ALJ Peterson’s Recommended Order indicates that he evaluated the existing provision of BMT in District 11 based on the premise that Good Samaritan had an operational BMT program. The greater weight of the evidence demonstrates that access to BMT in District 11 is less than optimal, especially given that all parties now accept that Good Samaritan does not have a BMT program. Section 408.035(1)(c) – The Applicant’s Ability and History Regarding Quality of Care Baptist offers high quality healthcare. Evidence of past quality is demonstrated by Baptist's numerous accreditations and quality awards. U.S. News and World Report studied patient safety and mortality rates in U.S. hospitals and surveyed 30,000 physicians in 5,000 hospitals across the country. The publication ranked BHSF as the highest performing healthcare organization in South Florida, and eighth best in Florida. Since the CON application was filed, BHSF has risen to sixth best in the state. Baptist is one of only eight hospitals in the world, and the first hospital in Florida, to receive the Magnet Award, an award for nursing practice from the American Nursing Association. The American Nursing Association reviews quality metrics and nursing performance in all departments of the hospital to determine merit for the Magnet Award. Baptist has achieved high marks for patient satisfaction. Consumer Reports ranked Baptist highly for patient safety and quality. Consumer Reports rated Baptist Hospital the safest hospital in Miami-Dade County. Baptist assures that a high quality of care is maintained by implementing robust performance improvement plans. Baptist has a board-level quality committee that reviews outcome data on a bi-monthly basis. Baptist also has a medical executive committee where performance improvement peer review results are presented on a monthly basis. Baptist also has a number of collaborative teams over particular areas such as surgery, stroke, and tumors. These teams review outcomes in their particular areas and present them to the performance improvement steering council. Baptist's performance improvement plan will be applied to a BMT program. There will be a BMT group to monitor outcomes in the same way as other groups. Baptist has already developed extensive policies and procedures for its BMT program. These policies and procedures were developed by the recruited staff and will be reviewed for final approval by the BMT program’s new director, Dr. Gunther Koehne. Baptist expects Dr. Koehne to implement standards of care consistent with MSK's in order for Baptist's patients to participate in MSK's clinical trials. Baptist’s outpatient BMT unit is brand new and is equipped for patient needs. The outpatient and apheresis BMT units had already been constructed, equipped, and staffed by the time of the final hearing in this matter. Dr. Koehne testified that the facilities are both attractive and highly functional. Baptist has provided the space and equipment necessary to operate a BMT program. Baptist's CON application included plans for the renovation of a portion of the hospital where inpatient BMT patients will be served. The parties stipulated that the costs and methods of that construction were reasonable. Baptist has an age-appropriate intensive critical care unit which includes facilities for prolonged reverse isolation. Evidence was presented regarding the correlation of low volume BMT hospitals or doctors and their outcomes. The studies suggest that higher volumes and experience for physicians and their teams lead to better outcomes for patients. However, Dr. Hugo Fernandez, the Chair of the Department of Malignant Hematology and Cellular Therapies at Moffitt, testified that a volume of 10 allogeneic transplants and 10 autologous transplants is above the volume at which research shows lower volumes may affect quality. Dr. Fernandez testified that Memorial West began safely performing allogeneic transplants one year after receiving its CON. Dr. Claudio Anasetti, the Chair of the Blood and Marrow Transplantation Department at Moffitt, agreed that 20 transplants is a sufficient volume to ensure good outcomes. The aforementioned findings, and those yet to be discussed, demonstrate that Baptist will be able to offer high quality care to patients of an adult inpatient BMT program. Section 408.035(1)(d) – The Availability of Resources Section 408.035(1)(d) pertains to a review of the applicant’s resources for project accomplishment and operation. The statute expressly mentions “health personnel, management personnel, and funds for capital and operating expenditures.” Findings regarding Baptist’s current ability to provide the health and management personnel necessary for autologous and allogeneic BMT will be discussed below in relation to Baptist’s ability to satisfy the criteria of rule 59C-1.044 applicable to BMT centers. Baptist’s ability to fund the proposal will be discussed below in relation to the immediate and long-term financial feasibility of the proposal. Section 408.035(1)(e) – The Extent to Which the Proposed Services Will Enhance Access to Health Care for Residents of the Service District Baptist has a history of providing health care services to Medicaid and indigent/charity patients. Baptist Health System hospitals, including Baptist Hospital, provide 4.3 percent of its services to charity care patients, which is well above the average of 3.4 percent for hospitals in Miami- Dade County. Baptist Hospital also exceeds the county average. As noted in a previous section, the access to care in District 11 is less than optimal given: (1) UM’s lack of inpatient charity care; (2) the fact that UM performs no outpatient BMT; (3) the fact that Good Samaritan does not have a BMT program; and (4) the fact that a very high percentage of the outmigration cases are complex in nature, i.e., allogeneic and autologous with complications. The greater weight of the evidence indicates that a BMT program at Baptist is likely to alleviate issues pertaining to access to care in the service district. However, given that Baptist will likely be a relatively small program for the foreseeable future, those issues will not be resolved in their entirety in the short-term. Section 408.035(1)(f) – The Immediate and Long-Term Financial Feasibility of the Proposal Section 408.035(1)(f) refers to “financial feasibility” rather than “profitability.” The cost for Baptist's proposed BMT program is $7,624,433, and the greater weight of the evidence demonstrates that Baptist will be able to finance the completion of the BMT program along with its other planned capital projects. Baptist has a capital budget of $20,414,000 to finance routine items such as the replacement of outdated equipment and renovations of nursing units. This budget also covers additional clinical equipment that might be needed to begin a new service line. Baptist identified other capital commitments that it had planned or were underway at the time of application. Along with the BMT program, Baptist’s other significant capital projects include construction of a new medical tower at a cost of $125 million and relocation of a helipad at a cost of $5 million. In total, Baptist disclosed $195.8 million in capital projects in its application. Rather than using debt to finance the initiation of the BMT program, Baptist will use cash on hand. The application included a letter from BHSF's Chief Financial Officer committing to pay for the project’s start-up costs and to cover any operational losses that may be incurred as the BMT program ramps up: BHSF intends to make available the required funds to Baptist Hospital of Miami, Inc. for the purpose of establishment of the project described in CON Application No. 10490, through startup and project stabilization, including but not limited to the project costs identified on Schedule 1 of CON Application No. 10490. BHSF intends to fund this project from internal sources. BHSF’s ability to fund the project is documented in the attached BHSF audited financial statements. Baptist provided audited financial statements which demonstrate the wherewithal to afford this project. BHSF’s net income for 2016 was $162,640,710. BHSF had $263 million in cash flow in 2016 and possesses over $2.4 billion in cash and investments. While the audited financial statements state that the cash and other investments are “limited,” the explanatory notes to those statements state that “[a]ssets whose use is limited include assets set aside by the Board of Trustees for future capital improvements and education, over which the Board retains control and may at its discretion subsequently use for other purposes . . . .” This supports Baptist’s assertion that the unrestricted cash and investments can be used for any purpose. BHSF’s financial statements indicate that its current liabilities exceed its current assets by $100,470,725. While this is cause for concern, that is substantially ameliorated by the fact that BHSF’s total assets exceeded its total liabilities by $3,165,081,911 in 2016. Even if BHSF’s application understated (or even omitted) some expenses associated with initiating the BMT unit, those expenses are insignificant for an entity with the financial resources available to Baptist through BHSF. In short, the greater weight of the evidence demonstrates that Baptist can afford to initiate the proposed project and cover any operational losses during the first years of operation. With regard to long-term financial feasibility, Baptist expects to get little or no revenue from allogeneic transplants in year one because it plans to perform 10 cases in order to become FACT accredited. None of the managed payors such as Medicare HMO and Medicaid HMO will pay until there is FACT accreditation. Accordingly, the per case revenue is expected to be $88,000 in year one, but that amount is expected to increase to $175,000 in year two. After accounting for anticipated expenses, Baptist forecasts a $2.9 million loss in year one of the application and a $577,000 loss in year two of the application. During the final hearing, Baptist’s financial expert testified that the BMT program was projected to turn a small profit of $25,000 in year three of the application. Given how substantially the net loss from the BMT program narrowed from year one to year two by adding only eight patients, it is reasonable to infer that the program will come close to breaking even by adding an additional 10 patients at some point after year two of the application. Baptist’s projected expenses differ from its previous application because Baptist previously estimated both inpatient and outpatient revenues and expenses. The current application is for inpatient services only. Outpatient BMT services have already been established at Baptist, and the expenses for those facilities and staff are considered sunk costs when compared to the project at issue, inpatient BMT services. Those sunk costs include research facilities, staffing, nurses, and doctors, and they were appropriately excluded from the pro forma financial statements associated with this application. Existing hospital staff can absorb the additional demand for dietary and other services. Even if it were to be assumed that this project will never be a positive contributor to Baptist’s net income, that would not be a basis, by itself, for finding that the BMT program is not financially feasible over the long-term. UM’s healthcare planning expert testified that BMT programs are not profit centers, but healthcare institutions operate such programs in order to fulfill a “mission” and to help people. That testimony was convincing and is accepted. The evidence clearly and convincingly demonstrates that Baptist and BHSF are committed to having a BMT program. As noted above, Baptist considers a BMT program to be an integral component of its goal to have MCI be a full service cancer treatment center. Baptist and BHSF’s commitment to the project is further demonstrated by the fact that MCI has already begun treating patients via an outpatient BMT program. Baptist has incurred substantial expenses (such as construction and staffing) in preparing to have a BMT program at MCI. In short, the preponderance of the evidence demonstrates that this project is financially feasible in the long-term. Even if it is not ultimately profitable, Baptist is committed to funding the program's losses, and Baptist demonstrated the ability to cover operational losses indefinitely.7/ Section 408.035(1)(g) – The Extent to Which the Proposal Will Foster Competition that Promotes Quality and Cost-Effectiveness AHCA concluded in the SAAR that “[t]his project is not likely to have a material impact on competition to promote quality and cost-effectiveness.” Nevertheless, the SAAR presented the following regarding the implications of UM’s PPS-exempt status: In addition, the reviewer notes that the applicant will not be a PPS-exempt cancer hospital, as UMHC is designated, and therefore reimbursement to the two proposed Miami-Dade providers from Medicare will be different. The reviewer notes that according to the U.S. Government Accountability Office (GAO), in 2012, Medicare payments received by the 11 PPS- exempt cancer hospitals were, on average, 42 percent more per discharge than what Medicare would have paid a local PPS teaching hospital to treat cancer beneficiaries with the same level of complexity. The GAO also found that the PPS-exempt cancer hospital’s payment methodology lacks strong incentives for cost containment and has the potential to result in substantially higher total Medicare expenditures. The GAO concludes that until Medicare pays PPS-exempt cancer hospitals to encourage efficiency, Medicare remains at risk for overspending. According to FloridaHealthFinder.gov, based on data submitted to the Agency through the inpatient database, UMHC had 160 bone marrow transplants with charges ranging from (on average) $403,740 (25th percentile) to $662,662 (75th percentile) with an ALOS of 25.0 days for CY 2016 for all adults 18+. The statewide total charges, for the same time period, ranged (on average) from $188,363 to $458,097 with an ALOS of 22.8 days. While a BMT program at Baptist is unlikely to promote competition that will increase quality and cost-effectiveness, it appears that a BMT program at Baptist serving Medicare recipients would be less costly than the same service at UM, a PPS-exempt provider. However, given the relatively small size of the program at Baptist, it would probably be many years before any substantial savings could be achieved by shifting Medicare BMT patients from UM to Baptist. Section 408.035(1)(h) – The Costs and Methods of the Proposed Construction The parties stipulated that the costs and methods of construction were reasonable. Section 408.035(1)(i) – Baptist’s Past and Proposed Provision of Health Care Services to Medicaid Patients and the Medically Indigent As found above, Baptist Hospital has a significant record of providing more than the average level of service to Medicaid recipients and the indigent. Rule Review Criteria General Requirements for Organ Transplantation Programs Rule 59C-1.044 is entitled “Organ Transplantation” and sets forth additional criteria by which AHCA reviews applications for organ transplantation programs such as a BMT program. Subsection (1) of the rule provides that “[a]pplicants for each type of transplantation program shall meet the requirements specified in subsections (3), (4) and (5).” Rule 59C-1.044(3)(a) requires applicants to have staff and other resources necessary to care for the patient’s chronic illness before, during, and after transplantation. The rule also requires that “[s]ervices and facilities for inpatient and outpatient care shall be available on a 24-hour basis.” Findings regarding Baptist’s physician staff are set forth below during the discussion of requirements pertaining specifically to allogeneic BMT programs. Nevertheless, it is found here that Baptist can provide a comprehensive range of physician specialty support services on a 24-hour basis. These include (but are not limited to) services such as intensive care physicians, cardiologists, infectious disease specialists familiar with the care of severely immune-compromised patients, and interventional radiologists. Rule 59C-1.044(3)(c) requires a transplant services applicant to have “[a]n age-appropriate (adult or pediatric) intensive care unit which includes facilities for prolonged reverse isolation when required.” Baptist’s application satisfies this requirement. Baptist proposes utilizing its existing adult critical care resources when necessary for BMT patients. Baptist plans to transfer BMT patients from the six-bed adult BMT unit to the intensive care unit (“ICU”) when the ICU team determines the patient needs additional critical care support. Examples include patients who become hemodynamically unstable or those who need mechanical ventilation. Baptist’s application notes that it is developing a “Protective Environment” room to support BMT patients who may require critical care services. Rule 59C-1.044(3)(d) requires a transplant services applicant to have “[a] clinical review committee for evaluation and decision-making regarding the suitability of a transplant candidate.” Baptist satisfies this requirement in that Baptist has specifically identified eight physicians to serve on its clinical review committee and will place subsequently recruited BMT physicians on the committee. Baptist has also identified 17 other medical professionals (including many from the BMT Team Support staff) who will be placed on its clinical review committee. Rule 59C-1.044(3)(e) requires an applicant to have: [w]ritten protocols for patient care for each type of organ transplantation program including, at a minimum, patient selection criteria for patient management and evaluation during the pre-hospital, in- hospital, and immediate post-discharge phases of the program. Rule 59C-1.044(3)(f) requires an applicant to have “[d]etailed therapeutic and evaluative procedures for the acute and long term management of each transplant program patient, including the management of commonly encountered complications.” Baptist’s application states that: [t]he protocols, policies, treatment plans and guidelines for selection, evaluation, treatment and management of the BMT patients are currently being finalized under the direction of the BMT Medical Director, Lyle Feinstein, MD. Drafts of these [] protocols, policies, treatment plans and guidelines are presented in Appendix 5. The draft documents received in evidence and other information presented in Baptist’s application are sufficient to satisfy the required patient selection criteria established by rule. As for the evaluative procedures, the application states “[w]ritten protocols/policies defining therapeutic and evaluative procedures for the acute and long term management of each BMT patient are being finalized for the Fall 2017 initiation of the outpatient BMT program and for the development of this proposed inpatient BMT program.” The application includes examples of those final drafts. The draft documents received in evidence are sufficient to meet the required therapeutic and evaluative procedures established by rule. Rules 59C-1.044(3)(h), (i), and (j) require an applicant to have: (a) an onsite tissue-typing laboratory or a contractual arrangement with an outside laboratory within Florida meeting the requirements of the American Society of Histocompatibility; (b) pathology services; and (c) blood banking facilities. In the current application, Baptist states that it has contracted with the Laboratory Corporation of America (“LabCorp”) for tissue typing services. The application includes a certificate from the American Society of Histocompatibility and Immunogenetics indicating that LabCorp is accredited in the area of “Histocompatibility Testing for Other Clinical Purposes.” The application also demonstrates that LabCorp is licensed to operate within the State of Florida. The contract with LabCorp is sufficient to meet the criteria in rule 59C-1.044(3)(h). As for pathology services, Baptist explains in its application that its laboratory department has the technical resources and expertise necessary to fully support the proposed BMT program and provide the necessary information to best manage[] each BMT patient’s care. This in-house expertise and infrastructure, combined with the OneBlood and LabCorp external resources, will ensure that all BMT patients will have the required laboratory support to optimally meet their medical needs. The application specifies that Baptist’s laboratory department can provide the following services: chemistry, coagulation, cytology, flow cytometry, hematology, histology, microbiology, phlebotomy, serology, transfusion service, and urinalysis. The aforementioned services are available 24 hours a day, seven days a week. In addition, laboratory tests can be completed in approximately one hour on a STAT basis. The application states that the laboratory department has seven pathologists who are board certified in anatomic and clinical pathology and that those pathologists: are eminently qualified and [] can diagnose the spectrum of complications that may occur in the immunocompromised bone marrow transplant patient population. They are able to diagnose the different pathogens that may effect this population. Similarly, they are able to identify and diagnose the histologic features of graft vs. host disease. The record evidence is sufficient to meet the criteria for pathology services in rule 59C-1.044(3)(i). The application also states that: [t]he existing blood banking and transfusion facilities and services currently in existence at Baptist Hospital are appropriate for supporting the blood requirements associated with the proposed new BMT program. Combining these existing Hospital capacities with the support of OneBlood, acting as the area’s centralized blood collection, storage and distribution hub, all necessary blood banking services are available and supported. Further, with OneBlood providing the specialty BMT blood/marrow processing and storage services, the blood and blood banking needs of the BMT patients will be fully met. The application contains a June 6, 2017, letter from a OneBlood representative to Marisol Fitch of AHCA describing OneBlood’s capabilities and indicating OneBlood will be servicing Baptist’s BMT program. The record evidence is sufficient to meet the criteria for blood banking facilities and services in rule 59C-1.044(3)(j). Rule 59C-1.044(3)(k) calls for an applicant to have a “program for the education and training of staff regarding the special care of transplantation patients,” and Baptist’s current application demonstrates it has such a program. Rule 59C-1.044(3)(l) refers to “[e]ducation programs for patients, their families and the patient’s primary care physician regarding after-care for transplantation patients.” UM does not challenge Baptist’s ability to satisfy this criterion. Rules 59C-1.044(4)(a) and (b) set forth general requirements for the physician staff and the program director. These topics will be addressed in the discussion pertaining to the specific rule-based requirements for an adult allogeneic BMT program. Rule 59C-1.044(4)(d) sets forth general requirements for nurses and nurse practitioners. This topic will be addressed in the discussion pertaining to the specific rule-based requirements for an adult allogeneic BMT program. Rule 59C-1.044(4)(e) calls for an applicant to have “[c]ontractual agreements with consultants who have expertise in blood banking and are capable of meeting the unique needs of transplant patients on a long term basis.” Baptist’s current application demonstrates that OneBlood, as its provider of “specialty BMT blood/marrow processing and storage services,” meets the criteria established in that rule. Rules 59C-1.044(4)(f), (g), and (h) call for an applicant to have appropriately trained nutritionists, respiratory therapists, social workers, psychologists, and psychiatrists. Baptist has “clinical registered dieticians who are Certified Specialists in Oncology Nutrition, having the expertise of meeting the needs of patients with immunocompromised patients.” As for respiratory therapists, the application states that Baptist’s respiratory therapists “are experienced in providing respiratory support to BMT patients who develop pulmonary complications post-transplant such as pulmonary edema, bronchiolitis obliterans with organizing pneumonia and other complications seen post-transplant.” The application also states that Baptist’s respiratory therapists “will receive structured education about current standards of respiratory and pulmonary care for bone marrow patients by an expert in the field.” As for the requirements pertaining to social workers, psychologists, and psychiatrists, Baptist’s application states that it has a full complement of such professionals and four social workers assigned to the inpatient oncology unit. Baptist plans to have social workers “specifically trained and assigned to support bone marrow transplant patients and families.” Those “BMT social workers will be knowledgeable in the spectrum of community services and assets available to support bone marrow transplant patients and their families throughout the full continuum of bone marrow care, including pre- and post-transplant care.” Moreover, MCI is building a “Cancer Patient Support Center” that will be staffed by multidisciplinary teams of specialists and clinicians who will provide a wide array of support services such as Psycho-Oncology, Psychosocial Services, Integrative Medicine, Exercise Physiology, and Oncology Rehabilitation. Baptist’s application and the evidence of record is sufficient to meet the criteria established in rules 59C- 1.044(4)(f), (g), and (h). Rule 59C-1.044(5) pertains to data reporting requirements for facilities with organ transplant programs and is not at issue in this proceeding. As discussed above and in subsequent findings set forth below, Baptist’s application satisfies the requirements set forth in rules 59C-1.044(3) and (4). Requirements Specific to Bone Marrow Transplant Applicants Rule 59C-1.044 sets forth requirements specific to bone marrow transplant applicants. For instance, subsection (1) states that a bone marrow transplant applicant must be a teaching or research hospital. See Fla. Admin. Code R. 59C-1.044(1) (mandating in pertinent part that “[t]he following organ transplantation programs shall be restricted to teaching or research hospitals: liver, adult allogeneic bone marrow, pediatric allogeneic and autologous bone marrow ”). See also Fla. Admin. Code R. 59C-1.044(9)(b)(mandating that “[a]dult allogeneic bone marrow transplantation programs shall be limited to teaching and research hospitals.”); Fla. Admin. Code R. 59C-1.044(9)(c)(providing that “[a]dult autologous bone marrow transplantation programs can be established at teaching hospitals or research hospitals; or at community hospitals having a research program, or who are affiliated with a research program, as defined in this rule.”). Rule 59C-1.044(9)(b)9. pertains specifically to adult allogeneic BMT programs and requires an applicant to have “[a]n ongoing research program that is integrated either within the hospital or by written agreement with a bone marrow transplantation center operated by a teaching hospital. The program must include monitoring and long-term patient follow-up.” Rule 59C-1.044(9)(b)10. requires “[a]n established research-oriented oncology program.” The Research Criteria Rule 59C-1.044(2)(d) defines a “research hospital” as “[a] hospital which devotes clearly defined space, staff, equipment, and other resources for research purposes, and has documented teaching affiliations with an accredited school of medicine in Florida or another state.” Rule 59C-1.044(2)(d) defines a “research program” as “[a]n organized program that conducts clinical trial research, collects treatment data, assesses outcome data, and publishes statistical reports showing research activity and findings.” The evidence presented at final hearing demonstrated that Baptist Hospital has a robust research program and a good research team. Dr. Miguel Villalona-Calero was recognized as an expert in medical oncology and clinical and translational research. Dr. Villalona-Calero has been involved with cancer research his entire career. Dr. Villalona-Calero has served as principal investigator on numerous clinical trials, including National Cancer Institute ("NCI") clinical trials. In 1999, Dr. Villalona-Calero moved to Ohio State University where he became a full tenured professor and conducted many clinical trials with early therapeutics. By the time Dr. Villalona-Calero left Ohio State, the research he was conducting had become nationally and internationally known. Dr. Villalona-Calero has approximately 111 original publications resulting from his research. Dr. Villalona-Calero has been involved in approximately 21 grants from NCI related to translational research work. Dr. Villalona-Calero left Ohio State to join Baptist in September of 2015. Dr. Villalona-Calero was one of the first physicians Baptist recruited toward the goal of building the research component of Baptist's comprehensive cancer center. Dr. Villalona-Calero leads Baptist's research program with Dr. Jeffrey Boyd, Dr. Minesha Mehta, and Dr. Michael Zinner. Among the other clinical trials personnel on the fourth floor of MCI are coordinators, research nurses, and data managers. Dr. Villalona-Calero has recruited infusion nurses with the experience to respond to any emergencies that may occur during the clinical trials on the fourth floor. In addition to Dr. Villalona-Calero, Dr. Zinner, Dr. Boyd and Dr. Minesh Mehta, there are other investigators at Baptist who conduct research, including a radiation oncologist and a neuro-oncologist. Baptist's application contained the biographies of 13 additional investigators conducting research at Baptist. Dr. Koehne will also conduct research at Baptist, similar to the research he conducted at MSK. Dr. Koehne is well recognized in the bone marrow transplant field, specifically in the area of T-cell immunology and T-cell immunotherapy. The clinical trials office at Baptist is almost fully staffed. The only area for which Dr. Villalona-Calero is still recruiting is in the expanding area of early therapeutics. Staffing is complete for clinical research services, regulatory quality assurance, clinical trials administration, and finance. Dr. Villalona-Calero formed the clinical scientific review committee to review the scientific merit of all the cancer clinical trials to be performed at MCI. The clinical scientific review committee works in conjunction with the Institutional Review Board ("IRB"). The IRB rules on ethical issues such as informed consent. While the clinical scientific review committee is composed of MCI faculty, the IRB is an independent higher authority that must approve clinical trials before they may commence. Since the 2015 CON application, Baptist has constructed MCI, and it includes a research wing. Baptist now has its clinical trials personnel on the fourth floor of the research wing. The new research wing also houses the Center for Genomic Medicine and a Phase One Therapeutics Unit. Dr. Villalona-Calero designed the therapeutics unit that contains advanced cardiology equipment that permits printing of EKGs directly from the equipment. The unit also contains ten infusion areas, a centralized nursing station, and a centralized investigational pharmacy. Adjacent to the unit are the facilities to house the clinical trials personnel. Near the clinical trials personnel are a protocols support lab and a biorepository. The fourth floor of the research wing also contains treatment rooms. These rooms have monitoring capabilities not available in normal hospital rooms. Because a patient's condition can change quickly and unexpectedly during clinical trials, these rooms are also designed so that emergency procedures can be activated more quickly than in a normal hospital room. The fourth floor rooms are similar to ICU rooms. The clinical treatment rooms and their equipment are fully operational and open to patients. Dr. Villalona-Calero and Dr. Boyd also have laboratories at Florida International University (“FIU”). The labs at FIU allow for trials not suitable in a hospital, such as trials involving animals. BHSF funded the labs at FIU. Baptist has outcome monitoring and long-term patient follow-up as part of its research program. Additionally, Baptist's Center for Genomic Medicine is conducting cutting edge research at Baptist. Dr. Boyd was accepted as an expert in translational research and genomic medicine. Dr. Boyd is the Vice-President for Translational Research and Genomic Medicine, as well as the Deputy Director at MCI. Dr. Boyd is also employed by FIU as a tenured professor and chair of the Department of Human and Molecular Genetics, and associate dean for basic research and graduate programs. He has held both positions since July 2015. As founding director of the Center for Genomic Medicine at MCI, Dr. Boyd has created three operation units within MCI. First is the division of clinical genetics, a group of medical professionals whose function is to counsel and advise appropriate genetic testing – and in some cases treatment – for individuals at substantially increased risk for inherited cancer susceptibility. Second is a biobanking operation consisting of two discrete entities: the biospecimen repository facility ("BRF") and the protocol support lab ("PSL"). The BRF is charged with acquiring the consent of MCI patients for permission to bank excess tissue, blood and other fluids, annotate them, store them and ultimately distribute them for generic research purposes, as they may arise in the translational cancer research universe. The PSL obtains these biospecimens, processes them, and distributes them to laboratories that may be conducting a test associated with the clinical trial. Third is the molecular diagnostics laboratory ("MDL"), which is the clinical testing facility. The MDL performs targeted therapy, precision therapy, and precision medicine by obtaining DNA from patient tumors and manipulating that DNA with the goal of finding "druggable targets." The MDL contains a research and development division that carries out translational cancer research, primarily genetic and genomic type research using existing technology, and research to develop new types of testing that may become appropriate as the field evolves. The Center for Genomic Medicine at MCI conducts significant clinical research. This clinical research is specifically focused on cancer research. Baptist and FIU share a very close and expanding relationship related to medical school research and clinical care. FIU's medical school has 480 students (120 students per class). Most of these students' clinical experience during their four-year education period takes place at Baptist. Baptist has funded research laboratories for numerous faculty on the college of medicine staff. Baptist's research program has changed substantially since the 2015 CON application. For example, Baptist has ramped up its clinical trials program through its association with MSK, and the completion of the construction of the physical plant has allowed the opening of the Center for Genomic Medicine, where the above mentioned genomic research takes place. Baptist also conducts investigator-initiated trials that were not yet begun during the last CON application. The Teaching Criteria Rule 59C-1.044(2)(g) provides that a “teaching hospital” means “[a]ny hospital which meets the conditions specified in Section 408.07(45), F.S.” The statute defines teaching hospitals as hospitals that are officially affiliated with an accredited Florida medical school with at least seven accredited, graduate medical educational programs and the presence of at least 100 full time resident physicians. Baptist does not offer seven accredited graduate medical educational programs to at least 100 residents, and therefore does not meet the definition of a teaching hospital as set forth in section 408.07. However, Baptist engages in teaching activities. BHSF coordinates all of the clinical rotations for FIU medical students across the Baptist Health system. There are approximately 500 students participating in rotations at BHSF. Approximately 3,000 physicians are credentialed at BHSF. More than 500 of those physicians have faculty appointments at FIU. They serve as precepting physicians for the medical students who participate in clinical rotations. Baptist offers training to first and second year medical school students, including rotations in emergency medicine. After moving into their third and fourth years, students move into their core elective rotations which occur across the entire BHSF system. There are approximately two dozen elective rotations available to third and fourth year medical school students at Baptist, including general surgery and internal medicine. There are approximately 500 medical students rotating in a typical year at Baptist. Baptist provides accredited graduate medical education programs in family medicine, family sports medicine, and orthopedic sports medicine. Baptist also offers fellowships in radiology and minimally invasive surgery. Baptist offers a robust clinical training program in nursing and allied health. Baptist has between 3,500 and 4,000 nursing allied health students credentialed to rotate through all of BHSF. Despite the fact that Baptist does not meet the technical requirements to be a teaching hospital, it does satisfy the standards associated with a research hospital. Therefore, Baptist satisfies rules 59C-1.044(1) and (9). Volume Requirements When considered together, rules 59C-1.044(9)(b)1. and (c)1. require that an applicant for an adult autologous and allogeneic BMT program be able to project that at least 10 autologous and 10 allogeneic transplants will be performed each year.8/ As found in a previous section, a conservative estimate indicates that the number of BMT procedures should grow by at least five percent a year in TSA 4. Given the forecasted growth in BMT and the fact that Baptist refers approximately 70 patients a year to other facilities for BMT treatment, Baptist should have no difficulty satisfying the volume requirement. It is reasonable to expect that a substantial number of patients who begin their cancer treatment at Baptist will elect to stay with Baptist if their course of treatment leads to BMT. The greater weight of the evidence demonstrates that Baptist satisfies the volume requirements. Program Director Requirements 253. Rules 59C-1.044(9)(b)2. and (c)2. have virtually identical requirements for a program director. Rule 59C-1.044(9)(b)2. requires an applicant to have program director who is a board certified hematologist or oncologist with experience in the treatment and management of adult acute oncological cases involving high dose chemotherapy or high dose radiation therapy. The program director must have formal training in bone marrow transplantation. Baptist has recruited Dr. Koehne to serve as the program director for its BMT program. After obtaining his medical degree and PhD in Germany, Dr. Koehne worked at MSK. MSK is one of the leading institutions for cancer and bone marrow transplant in the world. While at MSK, Dr. Koehne focused his research on post-transplant complications following allogeneic BMTs, including the reactivation of certain viruses. After undergoing clinical trials, a method developed by Dr. Koehne to treat such viral reactivations became the nationally recognized standard for treatment and has been licensed by biopharmaceutical companies. In addition to his appointment as a member at MSK, Dr. Koehne was a professor of medicine at Weill Cornell Medical College. Prior to coming to MCI, Dr. Koehne was the medical director of the BMT laboratory and associate attending physician at MSK. As medical director, Dr. Koehne oversaw the processing of bone marrow and gained familiarity with the equipment and processes for blood processing. Dr. Koehne has done extensive work in the field of BMT research. Before leaving MSK, Dr. Koehne served as principal investigator of three clinical research trials and co-investigator on three or four more trials. Dr. Koehne plans to continue these clinical trials at MCI, the results of some of which have already been published. Dr. Koehne has personally performed many BMTs throughout his career. MSK Cancer Center does 450 transplants a year. Approximately 250 of those cases are autologous and the rest are allogeneic. The greater weight of the evidence demonstrates that Baptist has satisfied the program director requirement. Nursing Requirements Rule 59C-1.044(4)(d) requires all transplant applicants to have a staff of nurses and nurse practitioners “with experience in the care of chronically ill patients and their families.” Rule 59C-1.044(9)(b)3., which specifically pertains to adult allogeneic BMT programs, requires an applicant to have “[c]linical nurses with experience in the care of critically ill immune-suppressed patients. Nursing staff shall be dedicated full time to the program.” UM does not contest the fact that Baptist has a nursing staff experienced in the care of chronically ill patients and their families. As for the requirements of rule 59C-1.044(9)(b)3., Baptist has approximately 130 critical care, clinical nurses experienced in the care of critically ill immunosuppressed patients within the critical care unit. Baptist has a history of effectively staffing specialty areas that require specialty education. Baptist's ICU is also appropriately staffed. This nursing expertise will be available to the BMT program. Baptist has developed a program for the education and training of staff regarding special care of BMT patients. Baptist included the 306-page plan in its CON application. This plan addresses the care requirements for providing bone marrow transplant care. The greater weight of the evidence demonstrates that Baptist satisfies the nursing requirements. Interdisciplinary Transplant Team Rule 59C-1.044(4)(a) pertains to all transplant applicants and requires them to have a “staff of physicians with expertise in caring for patients with end-stage disease requiring transplantation.” Furthermore, that staff “shall have medical specialties or sub-specialties appropriate for the type of transplantation program to be established.” Rule 59C-1.044(9)(b)4. applies specifically to adult allogeneic BMT programs and requires an applicant to have: [a]n interdisciplinary transplantation team with expertise in hematology, oncology, immunologic diseases, neoplastic diseases, including hematopoetic and lymphopoietic malignancies, and non-neoplastic disorders. The team shall direct permanent follow-up care of the bone marrow transplantation patients, including the maintenance of immunosuppressive therapy and treatment of complications. Baptist has substantially augmented its existing physician staff through the hiring of Dr. Koehne. Baptist will also rely on Dr. Feinstein to provide BMT services. Dr. Feinstein has experience starting a new BMT program and in achieving FACT accreditation. Dr. Feinstein has experience with both autologous and allogeneic transplantations. Dr. Feinstein has a strong background in BMT. MCI was also successful in recruiting Dr. Paba-Prada, who is experienced in autologous transplantation and treating patients with myeloma and lymphoma from Dana-Farber Cancer Center. Baptist’s application states the following regarding its physician staffing: Essential to the success of the proposed BMT program is the experienced team of 27 board certified hematologists and oncologists currently on staff at the Hospital, with three of these physicians currently trained and experienced to care for the adult BMT patients. With this large group of hematologists and oncologists currently on staff, providing patient care in the inpatient and outpatient settings, these physicians create a strong and experienced medical team to support the existing 9 multidisciplinary tumor site teams, including a team for Hematological Malignancies and BMT. To whatever extent that Baptist needs to recruit additional physicians in order to satisfy the rule-based requirements, it is noted that the program will not heavily taxed at the outset. There will probably never be more than two to three patients in the BMT unit at any one time during the first two years of operation. The greater weight of the evidence demonstrates that Baptist satisfies the physician staffing requirements. Laboratory Requirements Rule 59C-1.044(9)(b)7. calls for an applicant to have: [a] laboratory equipped to handle studies including the use of monoclonal antibodies, if this procedure is employed by the hospital, or T-cell depletion, separation of lymphocyte and hematological cell subpopulations and their removal for prevention of graft versus host disease. This requirement may be met through contractual arrangements. Rule 59C-1.044(9)(b)8. calls for an applicant to have “[a]n onsite laboratory equipped for the evaluation and cryopreservation of bone marrow. Baptist proposed to contract with OneBlood for laboratory services required to offer BMT. The application also indicated that Baptist would establish an onsite lab if required by AHCA. When AHCA approved Baptist's application, the approval was conditioned upon the establishment of an onsite laboratory for cryopreservation at Baptist. Since that requirement was announced, Baptist identified space, budgeted, and has now equipped a cryopreservation lab at the hospital. OneBlood offers services used in BMT at hospitals. OneBlood provides processing for allogeneic and autologous transplants. OneBlood provides blood processing services for other BMT programs in Florida. OneBlood provides services for both Miami Children's Hospital's BMT program and Memorial West's BMT program. Neither hospital has its own cryopreservation lab. OneBlood provides all processing required of – and has all the equipment needed for – an autologous BMT procedure including cryopreservation. OneBlood also provides all the processing required for an allogeneic BMT procedure. OneBlood has agreed to provide the processing required for Baptist's BMT program, as it does for Miami Children's Hospital and Memorial West. OneBlood offers cryopreservation and storage, thawing of stem cell collections, and CD 34 cell counts. OneBlood will offer T-Cell subset characterization (also referred to as "T-cell depletion") in 2018. To begin offering T-cell depletion, OneBlood only needs to acquire a cell separator. The cell separator is an automatic machine. OneBlood will have little difficulty gaining the additional accreditation to perform T-cell depletion because performing T-cell depletion only requires the acquisition of the cell separator. The OneBlood contract accommodates requests for services after hours and on weekends because OneBlood is available on call if products arrive during off hours. UM has used OneBlood for stem cell processing in the past. UM has successfully transferred blood product from OneBlood to UM for use in transplantation. UM has also successfully shipped blood products that were harvested at UM from UM to OneBlood. UM has successfully transferred blood product to OneBlood for use in a transplantation in Broward County. The greater weight of the evidence demonstrates that Baptist satisfies the laboratory requirements. Other Criteria Baptist satisfies the requirements in rules 59C- 1.044(9)(b)5. and 6. pertaining to inpatient transplantation units and a radiation therapy division. Rule 59C-1.044(9)(b)11. calls for an applicant to have a “patient convalescent facility to provide a temporary residence setting for transplant patients during the prolonged convalescence.” Baptist’s application notes that it “works cooperatively with a number of local hotels to ensure that patients and their families have accessible housing resources during extended hospital stays or extended recuperative stays." Baptist also has several apartments that can be used by patients, caregivers and/or family members. The application states that Baptist is in the process of constructing a new hotel facility that will be located on the northwest corner of the Baptist Hospital campus. This hotel will have 184 rooms and will house BMT patients and their families during post-transplant monitoring and evaluation. Rule 59C-1.044(9)(b)12. calls for an applicant to have an “outpatient unit for close supervision of discharged patients.” The application states that Baptist anticipated completing an outpatient unit on the third floor of MCI by the Fall of 2017. The greater weight of the evidence demonstrates that Baptist satisfies standards for convalescent housing and outpatient facilities. Not Normal Circumstances A prospective provider of a tertiary health service such as BMT can apply by satisfying all of the statutory and rule requirements or by demonstrating that not-normal circumstances exist. Ms. Fitch, the CON and commercial managed care unit manager for AHCA, explained the not-normal circumstances AHCA relied on to preliminarily approve Baptist’s CON: Q: What abnormal circumstances were presented within this application? A: Well, there were a couple of them. There was the utilization of the existing programs. Essentially the – there are three programs in OTSA 4. The first one, Good Sam, is essentially defunct. We had condition compliance reports; we noted it in the SAAR, that, through condition compliance reports, we found out that what Good Sam had been reporting were biopsies, because they reported zero inpatient or outpatient bone marrow transplants in calendar year 2016. So that program is essentially defunct. We also had Memorial West, which is significantly underutilized and not producing enough bone marrow transplants to be considered much of a viable program in the latter half of 2015 and certainly in 2016. We also have the overutilization of the one program at University of Miami Hospital and Clinics. They applied for a 12-bed unit. They advertised on their website for a 12-bed unit. They’re obviously doing more than what an average daily census of 12 beds would be. So that program seemed to be overutilized. So the utilization patterns that we were seeing [were] one not-normal circumstance for the population. Another not-normal circumstance is the charity care or lack of charity care within this OTSA 4, not seeing that charity care is being provided by the existing program, and so there [are] questions as to financial accessibility to the residents of OTSA 4. In addition to that, looking at the cost- effectiveness criteria under 408.035, looking at the data that is at Florida Health Line for charges amongst the – statewide for the exact same procedure, and then looking at the charges at University of Miami Hospital and Clinics, the charges at University of Miami Hospital and Clinics are significantly higher than the charges for the statewide average. And by “significantly higher,” it’s approximately $200,000 plus, both in the charges low category, which is the 25th quartile; and in the charges high category, which is the 75 quartile. So that cost- effectiveness issue is concerning. In addition to that, on the cost- effectiveness, University of Miami pointed out in their opposition statement that they are a PPS-exempt facility. And kind of exploring what that means, they’re one of only 11 PPS-exempt facilities in the nation, and how they get reimbursed by Medicare – of course Medicare is the bar in which all rates are set – and so how that affects cost-effectiveness within the OTSA 3 – 4, sorry. Q: Were previous programs approved by the agency applying this rule under not normally approved? A: Yes. The last two bone marrow transplant programs in OTSA 4 that were approved, both the University of Miami Hospital and Clinics and Memorial West, were approved under not-normal circumstances, because they did not meet all the rule criteria; specifically, both of those facilities were not statutory teaching hospitals. The fact that Good Samaritan does not have a BMT program, despite the previous reports to AHCA that it performed 42 BMTs in 2016, by itself, is significant enough to justify Baptist not strictly complying with the requirements of rules 59C-1.044(9)(b) and (c). The greater weight of the evidence demonstrates that not-normal circumstances are present in TSA 4. Adverse Impact If the CON at issue is granted, there is no persuasive evidence demonstrating that UM’s ability to conduct research or to maintain the proficiency of its physicians will be adversely impacted. However, it is very likely that patients who would have received their BMT treatment at UM will instead receive that treatment at Baptist. While the greater weight of the evidence demonstrates that UM should not experience any meaningful decline in volume, UM is very likely to be adversely impacted by the fact that its patient volumes (and the resulting increase in revenues) will not be growing as quickly if the CON at issue were not granted. As Baptist moves to recruit additional staff with experience with BMT and/or allogeneic procedures, it is possible that Baptist may hire UM employees. In sum, the greater weight of the evidence demonstrates that UM will be adversely impacted to a minor degree if the CON at issue is granted. Changed Circumstances To the extent the outcome of DOAH Case No. 16-1698CON is determined to have any relevance in this de novo proceeding, the evidence establishes that conditions have sufficiently changed such that conclusions regarding issuance of a CON to Baptist for an adult autologous and allogeneic BMT program in TSA 4 in DOAH Case No. 16-1698CON have no applicability to the new application at issue herein. Such changed circumstances include, but are not limited to, the following. Ms. Fitch testified that it was unknown during the prior proceeding that Good Samaritan was a defunct program. Multiple findings in ALJ Peterson’s Recommended Order corroborate Ms. Fitch’s testimony. The alliance between Baptist and MSK is another changed circumstance. Mr. Richardson described the significance of that alliance as follows: The Memorial Sloan Kettering alliance linkage is just not marketing and branding and saying you are a part of us. It actually appears to be a much stronger integrated linkage between Memorial Sloan Kettering and the Baptist Hospital Miami Cancer Institute operation. Basically the last go around, Baptist was in a six- to nine-month evaluation process, where they were providing policies, procedures, outcomes, just a huge amount of information to Sloan Kettering to basically see whether they would be accepted as part of the alliance. That all went through, and now as described here, it’s a real linkage; they basically, in terms of the – you have linkage between the clinical side and you have linkage between the research sides. So you have the ability for Baptist to tap into the expertise that is available at Sloan Kettering. So it’s not just a marketing name, Baptist Hospital linked with somebody else. It’s a true integrated operational linkage. Another changed circumstance is that MCI is now operational, and Baptist is performing outpatient autologous procedures. At the time of the 2015 CON application, MCI was aspirational and was being constructed. The current Baptist application is substantially better than the prior one. Baptist has gone to great lengths to improve its research capacity, and all of the available evidence indicates that Dr. Koehne is exceptionally well-qualified to be Baptist’s program director.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Agency for Health Care Administration enter a final order approving the Certificate of Need Application No. 10490 submitted by Baptist Hospital of Miami, Inc. to establish a new adult autologous and allogeneic bone marrow transplant program in Florida’s Organ Transplant Service Area 4. DONE AND ENTERED this 15th day of August, 2018, 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 15th day of August, 2018.
Findings Of Fact University and West Broward filed applications in the same batching cycle to establish 7-station chronic renal dialysis facilities in southwest Broward County. On May 30, 1984, the Department denied their applications, and each filed a timely petition for formal administrative review. The petitions of University and West Broward were subsequently consolidated for comparative hearing. The proposals of University and West Broward are essentially the same. Each applicant proposes to establish a 7- station free-standing chronic renal dialysis facility within the southwest sector of Broward County to serve patients residing essentially west of the Florida Turnpike, south of West Broward Boulevard, and east of U.S. 27. The facilities proposed will offer a wide range of chronic dialysis services, including standard chronic hemodialysis, continuous ambulatory peritoneal dialysis (CAPD), home hemodialysis and home CAPD, bicarbonate dialysis, pediatric dialysis, and high-flux dialysis. The applicants also propose to offer comprehensive ancillary services to their patients including dietetic and social services, home dialysis training, laboratory, and blood services. The Need for the proposed facilities. Pertinent to this proceeding, Rule 10-5.11(18), Florida Administrative Code, establishes the applicable methodology for calculating numerical need for chronic renal dialysis facilities within a service area. Applying the rule methodology to the service area applicable to this case, District X - Broward County, 3/ establishes that there is an excess of nine End State Renal Dialysis (ESRD) stations in the service area, and no need for the proposed facilities. The availability, quality of care, efficiency, appropriateness, accessibility, extent of utilization, and adequacy of like and existing health care services. Access to chronic dialysis care is a fundamentally important criterion in the evaluation of applications to establish such facilities. Dialysis is a life sustaining medical procedure whereby an ESRD patient's blood is passed through an artificial kidney to remove the impurities his dysfunctional kidney can no longer remove. ESRD is normally a lifetime form of health maintenance which requires three treatments of four to five hours duration each week. In addition to the life sustaining character of ESRD care, the importance of access is made more critical by the fact that dialysis patients are typically elderly and infirm. The average patient is over 60 years of age and suffers acute multi-system disease. Because of their age and infirmity, most dialysis patients must depend on family or friends for transportation to and from the facility. Accordingly, ESRD facilities must be sited so their services are available to an ESRD patient within a reasonable period of time. While the department averred that it had not established a bench mark which it considered a reasonable drive time for ESRD patients, the proof is clear that it consistently adopted the need recommendations of Network 19 which were predicated on a maximum drive time of 30 minutes to receive treatment. The evidence establishes sound medical reasons for Network 19's bench mark, and the Department failed to offer any persuasive proof why its prior application of a 30-minute drivetime standard should not apply in this case. 4/ Network 19 has, for purposes of determining need under its 30-minute accessibility standard, divided Broward County into three catchment areas; northern, central and southern Broward County. The southern catchment area, within which the proposed facilities would be located, currently has 50 approved ESRD stations, together with a 3-station backup at Memorial Hospital, and a projected need for 48 stations. Accordingly, no need exists, under Network 19's established collegiate policy, for the proposed facilities. While neither the Department's rule methodology nor Network 19's current policy demonstrate a need for the proposed facilities, University and West Broward assert that because of accessibility problems a need exists inn the "sub-area" of southwest Broward County that they have defined. 5/ To establish this "need," each applicant employed Network 19 to do an analysis of their zip code defined "sub area" (catchment area). Using the applicants' catchment area, and applying the rule based methodology to those catchment areas, Network 19 calculated a "need" within the sub-areas for 13-16 ESRD stations. Network 19 offered no opinion, however, as to the propriety of the applicants' catchment areas. Network 19's analysis does not establish a need for the proposed facilities. All Network 19's analysis establishes is that there exists an adequate ESRD patient base within the applicants' proposed catchment areas to support 13-16 ESRD. 6/ stations. Whether existing facilities are accessible to that patient base is dispositive of the question of need. 7/ To demonstrate that ESRD patients residing in its proposed catchment area were without the 30-minute accessibility standard, University introduced evidence of a drive time study it had commissioned. Utilizing eleven different routes from each ESRD facility serving south Broward County, the study circumscribed for morning, mid-day, and afternoon peak traffic hours a 30-minute drive time from each facility. University then took the data from the drive time studies done from Florida Kidney Center and BMA-Hollywood and superimposed it on a zip code map to demonstrate a 30-minute drive time from each of these facilities to the zip codes within its proposed catchment area. (University Exhibit 17) University asserts that this evidence demonstrates 7-8 ESRD patients must drive more than 30 minutes to receive treatment during the morning peak traffic hour, 8 patients must drive more than 30 minutes during the mid-day peak, and 6-7 patients must drive more than 30 minutes driving the afternoon peak. Therefore, University concludes, the evidence establishes that ESRD patients residing in southwest Broward County suffer an accessibility problem which must be addressed. University's proof is unpersuasive. University's Exhibit 17 does not purport to locate the residence of any ESRD patient within any zip code zone but, rather, simply indicates the total number of patients residing in each zone. Accordingly, in those circumstances where the 30- minute drive time line passes through a zip code zone the evidence can be as easily interpreted to demonstrate that those patients are within a 30-minute drive time from the selected facilities, as without a 30-minute drive time. Excluding such patients, University's exhibit only demonstrates that, at the most, 2 patients are without the 30-minute drive time at morning, mid-day, and afternoon peak traffic hours. These two patients, the same in each instance, reside in zip code zone 33332 and 33330. Network 19's data for November, 1985, reveals no ESRD patients residing in zip code zones 33332 or 33330. The patients University identified are the result of 1986 data. This is significant because Rule 10-5.11(18)(a), Florida Administrative Code, provides: The base period for determining the need for a proposed facility is one year from the date that the application is deemed complete by the department. Since the parties' applications were denied by the Department on May 30, 1984, there is no evidence of any ESRD patient residing outside University's 30-minute drive time study for the applicable base period. Even assuming that utilization of 1986 data were appropriate, University's drive time studies are not credible. University's analysis is predicated upon worst case conditions; peak traffic hours. With the exception of possibly the mid-day hours, ESRD patients will not be required to travel during peak traffic hours. Further, University's drive time studies are uncorroborated hearsay. They were prepared by David Plummer and Associates, Inc., at the request of University's health planning expert Nancy Persily. Not one witness from David Plummer and Associates, Inc., appeared at hearing to authenticate University's exhibits or to offer evidence which would demonstrate the veracity of the facts those exhibits sought to depict. In the absence of such proof, the opinions of Ms. Persily, and the other experts who relied on such studies, are not credited. In sum, the applicants have failed to establish that there exists any problem with availability, quality of care, efficiency, appropriateness, accessibility, extent of utilization or adequacy of like or existing health care services for ESRD patients residing in their proposed catchment areas. 8/ The availability and adequacy of other health care facilities and services in the service district. The evidence is clear that there is an excess of 9-ESRD stations in the service district (Broward County), as well as an excess of ESRD stations in south Broward County. These facilities are adequate to serve the ESRD patients residing in southwest Broward County, and their services are readily available to such residents. Financial feasibility The applicants have demonstrated that their respective proposals are financially feasible. Such feasibility exists, however, solely because the physicians which will staff their facilities have existing ESRD patients residing in southwest Broward County. The financial feasibility of these proposals is, therefore, at the expense of existing facilities and not an indication of need. Other criteria The parties stipulated that the criteria established by Sections 381.494(6)(c)10 and 381.494(6)(d), Florida Statutes, are not applicable to this case. The need criteria established by Sections 381.494(6)(c) 6, 7, and 11, Florida Statutes, were not shown to be, and are hereby found not to be, applicable to this case. Each applicant has demonstrated that its proposal complies with the provisions of Sections 381.494 (6)(c) 3, 5, 8, 12 and 13, Florida Statutes. 9/
