The Issue Whether there is a need for a new Pediatric Heart Transplant (PHT) program in Organ Transplant Service Area (OTSA) 3, and, if so, whether Certificate of Need (CON) Application No. 10518, filed by Orlando Health, Inc., d/b/a Arnold Palmer Medical Center (APMC), to establish a PHT program, satisfies the applicable statutory and rule review criteria for award of a CON to establish a PHT program at the Arnold Palmer Hospital for Children (APH).
Findings Of Fact Based upon the credibility of the witnesses and evidence presented at the final hearing and on the entire record of this proceeding, the following Findings of Fact are made: The Parties Orlando Health, Inc., d/b/a Arnold Palmer Medical Center OH was originally formed by two community physicians 100 years ago as a 20-bed hospital in downtown Orlando. Today, OH is a large not-for-profit healthcare system with more than 3,300 beds serving Central Florida and beyond. Comprised of nine wholly-owned or affiliated hospitals and rehabilitation centers, OH serves as the region’s only Level One Trauma Center and Pediatric Trauma Center, and is a statutory teaching hospital system offering graduate medical education and clinical research in both specialty and community hospitals. OH has been actively involved in clinical research since the beginning of its graduate medical education and residency programs in the 1950s. OH’s primary service area includes approximately 2.2 million people, with a greater service area of Central Florida, which encompasses more than three million people today and is rapidly growing. OH experiences about 100,000 inpatient admissions and 1.5 million ambulatory visits each year. OH has 24,000 employees, including 2,000 physicians and 8,000 nurses. OH has long been recognized as the safety net provider for the Central Florida region. APMC is comprised of two hospitals, APH and Winnie Palmer Hospital for Women and Babies (WPH). APMC was founded on the premise that the close integration of specialty inpatient pediatrics and obstetrics services improves quality and outcomes. APMC is the single largest acute care facility in the nation dedicated to women and children. APH has achieved national ranking as a Top 50 Children’s Hospital by U.S. News and World Report, based on quality data metrics that focus on process, structure, and outcomes, for the past eight consecutive years for key programs, including pediatric cardiology. Since 2015, APH has been the only pediatric hospital in Florida to receive the Top Hospital award from Leapfrog, an achievement based on evaluation of numerous quality metrics, including outcomes data over time. APH has been a Magnet-designated facility since 2013. APH’s primary service area covers 25 counties. APH’s pediatric trauma center and dedicated pediatric emergency department receive approximately 55,000 visits per year. The Heart Center at APH (the Heart Center) is nationally ranked among the top pediatric cardiac programs in the country for its outcomes in complex congenital heart surgery. Dr. William DeCampli, APH’s chief of Pediatric Cardiac Surgery, and Dr. David Nykanen, APH’s chief of Cardiology, serve as the medical directors of the Heart Center. Dr. DeCampli and Dr. Nykanen will continue to serve as the medical directors of the Heart Center following implementation of APH’s proposed PHT program. The Heart Center is on the third floor of APH in the “corner pocket” of the hospital. It is intentionally designed so that the pediatric cardiovascular intensive care unit (CVICU), cardiovascular operating suite, and cardiac catheterization suite are in close proximity to each other, to promote the integration of care between the units and to ensure the safe transition of pediatric patients. APH’s 20-bed CVICU is more advanced than the intensive care units of most pediatric cardiac programs across the country. APH established a freestanding dedicated CVICU in January 2005, and was one of the first in the nation to do so. APH CVICU clinical staff are dedicated to the CVICU and specifically trained to care for the special needs of pediatric cardiac patients. Unlike many other pediatric cardiac programs in the country, APH’s CVICU has 24/7/365 attending physician in- house coverage which leads to better access for patients and better outcomes. APH’s commitment to this continuous on-site physician presence reflects a standard that all pediatric cardiac programs aspire to, but few have achieved. APH has three employed pediatric cardiac anesthesiologists providing 24/7/365 in-house coverage, rare among pediatric cardiac programs. The specialty of pediatric cardiac anesthesia is distinct from the specialty of general pediatric anesthesia. Pediatric cardiac anesthesiologists specialize in the complex defects and anatomy of the cardiovascular system in patients with congenital heart disease (CHD) for whom anesthesia and sedation poses heightened risk. Pediatric cardiac anesthesiologists provide anesthesia for cardiac procedures as well as for any non-cardiac procedures the CHD patient may require. APH is the highest ranked program in Florida in outcomes for the most complex category of congenital heart surgery. In 2007, the Heart Center’s surgical team published more than three times the number of investigational papers than the state’s leading academic pediatric cardiac surgery program. Nationally, APH has the highest neonate population with the lowest mortality rate. APH has a state-of-the-art echocardiography (echo) program with the entire infrastructure necessary for PHT. Echo is essential at every stage of diagnosing, treating, and evaluating the response to therapies and interventions in pediatric cardiac care, including PHT. Dr. Riddle, an echocardiologist at APH, has extensive experience in diagnosing and evaluating complex congenital heart anomalies, including patients requiring PHT. APH’s echo program is comprised of multiple components: the facility, the equipment, the physicians, the sonographers, the protocols, and the quality. APH’s echo lab is the “mission control center” for the program, with four large screens that enable clinicians to watch and discuss echos as they are being performed, and to review echos in meticulous detail, sometimes spending hours looking at complex echos. APH’s culture is the tremendous differentiator among pediatric cardiac programs. APH’s goal is to know every aspect of a patient’s care and anatomy, and APH clinicians, with the full support of administration, spend significant time doing that. All APH sonographers are certified and APH has weekly didactic sessions for sonographers, along with quality improvement and quality review sessions. All APH echo readers are dedicated echo physicians, with extensive training, who also are involved in constant didactic lectures and immersion in quality improvement measures. APH’s director of echo, Dr. Craig Fleishman, is nationally recognized and serves as the chair of the Scientific Sessions of the American Society of Echocardiography, the national governing and education body for echo. APH is the only pediatric heart program in Central Florida to achieve accreditation from the American Society of Echocardiography in transthoracic, transesophageal, and fetal echo. APH is highly skilled at diagnosing complex congenital heart anomalies, including those in fetuses when the patient’s heart may be no larger than a grape. APH’s echo surgical correlations, in which the echo gradients are compared to actual measurements during surgery, are “phenomenal.” Similar correlations occur in coordination with the APH cardiac catheterization lab. APH has used printed 3D heart modeling, but printed 3D modeling includes only data obtained from a computerized tomography (CT) scan or magnetic resonance imaging (MRI) , and does not show all of the finer complex structures of the heart and valves; thus, it has limited utility in evaluating treatment options for complex CHD. However, APH is implementing a virtual reality 3D modeling system that combines data from echo, CT, and MRI data, and even surgical images, to create a complete virtual 3D model of the heart that includes the fine details, including valve attachments. Unlike a printed 3D model, which once cut open, no longer represents the heart and cannot be put back together for further evaluation, virtual 3D modeling enables clinicians to evaluate multiple potential interventions and observe responses and to repeat as many times as may be necessary, using the same model. APMC has a large maternal fetal medicine program staffed by seven employed perinatologists specializing in high- risk pregnancies. The program is expected to have 10 employed perinatologists by the end of 2018. Agency for Health Care Administration AHCA is the state health-planning agency charged with administration of the CON program as set forth in sections 408.31-408.0455, Florida Statutes. Context of the Arnold Palmer Application Approximately one in 100 babies are born with CHD. The majority of these disorders can be treated, at least initially, with reconstructive surgery. The earlier a congenital heart defect can be repaired, the better the chances the patient has to not only survive but to grow normally in infancy and thrive. However, some children with CHD have a severity level such that current methods of reconstructive surgery are not adequate to produce what might be called a cure. Treatment of such cases is called “palliation.” As a result of medical and surgical advances in palliation, children are now surviving complex CHD in numbers that previously were not thought possible. However, in the most severe cases, the palliation is fairly short-term. Many children who receive palliative surgery ultimately will progress to end-stage heart failure despite having had multiple operations and extensive medical management, as their heart will eventually begin to have decreased function due to the underlying anomaly. Prior to the advances in palliative care, many children born with complex CHD simply did not survive long enough to receive a PHT. Today, the number of children who face heart failure later in life, rather than earlier, is increasing. Successful palliation has resulted in significantly more CHD patients requiring PHT at age 10, 15, or 20, rather than as infants or young children. Another category of children requiring PHT are those who do not have CHD, but who have an acquired problem known as cardiomyopathy. Children with cardiomyopathy may present in heart failure at any time and at any age, having gone from a state of completely normal function--exercising, growing, doing well in school--to within two or three days having end stage heart failure. About half of these children recover with medication and intensive care--which APH does extremely well on a regular basis. But those who do not recover will require a PHT. Patients with CHD tend to be more medically and surgically complex and higher risk than patients with cardiomyopathy with respect to PHT. On a percentage basis, and because of advancements in palliation, there are more CHD patients and fewer cardiomyopathies in the teenage cohort requiring PHT today than there were 10 years ago. 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 is defined by rule 59C-1.002(41) as a “tertiary health service,” 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). If approved, the proposed program at issue in this proceeding would 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 OSTA 3. However, that does not mean that OTSA 3 residents lack access to these transplant services. In fact, the unrefuted evidence demonstrated that pediatric residents of OTSA 3 have received transplants at Shands, by way of example. At hearing, APMC agreed that OTSA 3 residents are accessing these services at existing providers in Florida, with APH referring a few of these patients on average to Shands every year for these services. 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 (aged 0-14) heart transplant discharges by year for the four existing Florida PHT programs during the reporting period from June 30, 2013, to June 30, 2017: HOSPITAL HEART TRANSPLANT FY 12/13 FY 13/14 FY 14/15 FY 15/16 FY 16/17 UF Health Shands Hospital 13 4 17 12 9 John Hopkins All Children’s Hospital 6 13 10 9 7 Memorial Regional Hospital 5 3 4 11 4 Jackson Memorial Hospital 1 2 1 3 1 TOTAL 25 22 32 35 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 seen above, only 21 PHTs were performed statewide during the 12-month period July 1, 2016, to June 30, 2017, for an average program volume of only 5.25 cases for the four existing programs. There are four existing and one CON-approved PHT programs in Florida. This is more than every state in the country except California, which also has five programs but more than double the pediatric population of Florida. And three of the California programs have a volume of five per year or less. Texas, another geographically large state with over 1.4 million more children than Florida, has only two centers. The number of PHTs is also impacted by a national shortage in donor hearts. Unfortunately, there are not enough donor hearts to meet the demand for pediatric heart patients in the United States. While the total number of PHTs in the United States increased between 2012 and 2015, it has more recently declined from 2015 to 2017. Based on population, the number of PHTs in Florida is higher than the national average. Thus, while fortunately its incidence is rare, Florida residents in need of PHT are currently able to access this life-saving procedure. Arnold Palmer’s “Readiness” to Implement a PHT Program APH has over 14 years of experience performing complex congenital heart surgery and has met the majority of the demand for complex pediatric cardiac surgery in Central Florida for the past 25 years. In that time, APH has performed thousands of heart operations and achieved extraordinary outcomes, which are most dramatically apparent in the highest acuity levels. APH is the largest pediatric cardiac surgical program in Central Florida. Because WPH and APH are regional centers of excellence for neonatal and pediatric cardiac care, APH has a large proportion of complex, single-ventricle patients in its existing pediatric cardiac program. In turn, approximately 70 percent of the patients who ultimately require PHT have complex, single-ventricle physiologies. In addition, APH is a regional referral center for patients presenting with cardiomyopathies that may require PHT services. APH voluntarily participates in the Society for Thoracic Surgeons (STS) National Congenital Heart Surgery Database (the “STS database”). The STS is the official organ for the collegial development of the field of thoracic and cardiac surgery, both adult and pediatric. There are over 75,000 physician and institutional members of the STS. The STS maintains the largest worldwide data collection of multiple variables and data points pertaining to every cardiac surgery performed by its members. The data is rigorously analyzed to measure the actual and risk-adjusted expected performance and quality of each member facility, and to support quality improvement projects, as well as original research in the field. The STS is a national organization, and its publishing arm, the Annals of Thoracic Surgery, is one of the top-ranked journals in the world. Once a year, the STS updates a running, four-year cumulative tally of outcomes for each participating institution in the country and publishes a one-page report summarizing the facility’s performance.1/ The STS stratifies cardiac surgical cases by “STAT” level, which is a measure of acuity, complexity and risk.2/ STAT 1 is the simplest kind of congenital heart defect that generally requires a straightforward surgical repair, while STAT 5 reflects complex, high-acuity, and high- risk conditions and surgeries. The STS public report contains four columns. The first lists the STAT levels. The second column lists the facility’s number of deaths divided by the number of patients operated on at that facility within the given STAT category. The third column, “Expected” reflects the STS’ expectation of mortality within the reporting institution’s program based on the relative acuity of the cases performed at that institution and if the reporting hospital performs consistent with the national average for that STAT level. The data in the third column reflects the very high acuity level of APH’s CHD patient population, i.e., the risk factors for the patient not surviving their congenital heart defect and surgery. The fourth column, “Observed/Expected” (the “O/E ratio”), divides the program’s actual mortality by its expected mortality. The O/E ratio is widely accepted as the standard metric for evaluating performance in pediatric cardiac programs because in contrast to reporting raw mortality, the STS O/E ratio is risk-adjusted using multivariable regression models which enable the STS to risk adjust each institution’s mortality and compare it against the national norm; i.e., to produce a model containing every case that every program did within the four-year time period measured. An O/E ratio of less than one means the facility is doing better than the overall STS database. For STAT 2 cases, APH’s O/E ratio is 0.58, meaning that APH has achieved close to one-half the mortality that STS expects APH to have for APH’s STAT 2 cases. Even more impressive, however, is APH’s STAT 5 O/E ratio of 0.24. The analysis conducted by the STS shows that, statistically speaking, a patient in the highest risk STAT 5 category has a four-fold less risk of dying after an operation at APH than at an average pediatric cardiac surgery program in the country. APH has consistently achieved outstanding outcomes in its pediatric cardiac program, on a national basis, for more than a decade. AHCA has recognized APH as first in the state for overall pediatric heart surgery mortality. Mechanical cardiopulmonary support or cardiac extracorporeal membrane oxygenation (ECMO) (referred to as “CPS” within the APH pediatric cardiac program) is a very short-term method of sustaining life when a patient has rapid onset end- stage heart failure.3/ To place a patient on CPS, the cardiac surgeon makes an incision in the base of the neck to expose the main artery to the brain and the main vein draining from the brain. The vessels are controlled by the surgeon and opened, and cannulas are inserted into the vessels and advanced into the heart, or if the chest is open, may be placed directly into the heart, then sutured into place and connected to a heart-lung machine. Often the procedure is done while a baby is sustaining a cardiac arrest. CPS is not the preferred intervention for patients in heart failure who require PHT. Complications from CPS develop exponentially with each 24 hours on the circuit. Thus, CPS can be a contraindication for PHT. Complications from CPS include bleeding from fresh suture lines in the heart, arteries, pericardium, or chest wall; bleeding in the brain, or at IV line locations; and clotting caused by the CPS lines, which can be devastating if the clot travels to the brain, kidneys, bowel, or heart. There also is significant risk in moving a patient on CPS. Particularly in neonates, the movement of a cannula by even a few millimeters can obstruct circulation, or cause thrombus or ventilator issues. CPS thus is not a sustainable method for bridging a patient to PHT, when the majority of patients face long periods on a waitlist. The proper method for bridging to PHT is the use of ventricular assist device (VAD) therapy, relatively recently approved for use in pediatric patients. A VAD is a device that does not mechanically process or oxygenate the blood, and does not require transfusion, and, thus, provides far more stable and longer-term maintenance of life while a patient waits for PHT. In contrast to CPS, which cannot safely be used more than a few days to, at most, two weeks, a heart failure patient may safely remain on a VAD for months in the hospital while they await a donor heart. The ability to implement VAD therapy enhances quality of care for patients and increases a patient’s eligibility for PHT. Currently, the standard of care is that hospitals that do not provide PHT should not provide VAD therapy. Consequently, patients at APH with rapid onset heart failure do not have access to VAD therapy and must be placed on CPS. There is no question that OH has built a mature, high quality pediatric cardiac program at APH over the past 14 years. The organization has the demonstrated experience and success in complex reconstructive heart surgery and medical management of patients with heart disease. With the additional staffing described below, APH would be able to successfully implement a PHT program, assuming need for such a program is demonstrated. The Arnold Palmer Application APMC is proposing to establish a PHT program in Orlando, which is located in OTSA 3. The application was conditioned on APMC promoting and fostering outreach activities for pediatric cardiology services, which will include the provision of pediatric general cardiology outpatient services at satellite locations within OTSA 3. This condition is not intended to include any outreach activities beyond establishing outpatient clinics in OTSA 3. There is currently no PHT provider in OTSA 3. There are, however, three providers of pediatric open-heart surgery and pediatric cardiac catheterization within the OTSA. APMC proposes that Dr. William DeCampli and Dr. David Nykanen, who currently staff its pediatric cardiac program, would also staff the proposed transplant program. However, neither has worked in a transplant program in over 14 years. APMC acknowledges its need to recruit additional nurses to staff the program. It also concedes that it might recruit nurses without transplant experience, who may need to obtain necessary training at a different facility. Additionally, APMC has not yet recruited a physician specializing in pediatric heart failure, which the applicant agrees is necessary to implement the program. At hearing, much of APMC’s case focused on its readiness and desire to offer a full spectrum of services to cardiac patients at its hospital. This is reflected in the testimony of Sharon Mawa, a nurse operations manager in APMC’s CVICU: And I feel Arnold Palmer is ready. We—it’s all encompassed. When you have a heart program, you—you want to do it all . . . . And the only piece that we are unable to provide, that we’re—that we haven’t been ready for, and I feel like we’re ready for now, is heart transplant. And I think to do a heart program well, you should be able to do all of it for that patient. However, as detailed further below, such arguments do not demonstrate community need for the proposed service, but instead represent an institutional desire to expand the facility’s service lines. A public hearing was held in Orlando on January 8, 2018, pertaining to APMC’s PHT application. APMC participated in support of the application at this hearing. About one year earlier, on January 10, 2017, a public hearing was held in Orlando pertaining to a CON application to establish a PHT program submitted by Nemours Children’s Hospital (Nemours), which is also located in Orlando. OH/APMC participated at that hearing in opposition to the Nemours application. OH/APMC submitted written opposition to the Nemours PHT program at that time, urging the Agency to deny Nemours’ proposal. OH/APMC’s 2017 opposition to the Nemours PHT application included argument related to access and need for the service in OTSA 3. OH/APMC’s written opposition to the proposed Nemours program included letters of opposition authored by Dr. DeCampli and Dr. Nykanen. In urging the denial of the Nemours’ PHT application, Dr. Nykanen told AHCA: For the past 14 years at Arnold Palmer Hospital for Children we have referred our patients requiring advanced heart failure management, including cardiac transplantation, predominantly to Shands Children’s Hospital. We have been the largest referral source of these patients in the region over the past decade. Many of our patients have had the opportunity to be evaluated as outpatients, which is always preferable. The management of this patient population is medically intense but surgery is rarely an emergency. The geographic proximity of Gainesville to our region is not a significant barrier with respect to transport from one facility to the other. The availability of organs for transplantation mandates the time from assessment to surgery which is measured in weeks to months. The Shands team has been readily accessible to us day or night and I am aware of no financial or programmatic barriers to providing this specialized care to our patients. We have been pleased with the outcomes achieved. (emphasis added). In December 2017, several months after opposing Nemours’ PHT proposal, APMC submitted its own PHT application to AHCA. UF Health Shands UF Health-Shands Hospital (Shands), as an existing provider of PHT in OTSA 1, participated extensively in this proceeding notwithstanding its acknowledged lack of standing to formally intervene.4/ Shands is located in Gainesville, Florida and is the sole provider of PHT in OTSA 1. OTSA 1 extends from Pensacola to Jacksonville, south to Gainesville and west to Hernando County. 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 June 18, 2018 (ruling on APMC’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). Shands is located in Gainesville, Florida. Shands Children’s Hospital (SCH) is an embedded hospital within a larger academic health center. SCH has 202 beds and is held out to the public as a children’s hospital. SCH occupies multiple floors of the building in which it is located, and the children’s services are separated from the adult services. SCH has its own separate entrance and emergency department. SCH is nationally recognized by the U.S. News and World Report as one of the nation’s best children’s hospitals. SCH has its own leadership, including Dr. Shelley Collins, an associate professor of Pediatrics and the associate chief medical officer of SCH who was called as a witness by the Agency. As a comprehensive teaching and research institution, SCH has between 140 to 150 pediatric specialists who are credentialed. It has every pediatric subspecialty that exists and is also a pediatric trauma center. In the area of academics and training, SCH has over 180 faculty members and approximately 50 residents, and 25 to 30 fellows in addition to medical students. SCH has 72 Level II and III Neonatal Intensive Care Unit (NICU) beds. It also has a dedicated 24-bed pediatric intensive care unit, as well as a dedicated 23-bed pediatric cardiac intensive care unit, both of which are staffed 24/7 by pediatric intensive care physicians, pediatric intensive care nurses, and respiratory therapists. As a tertiary teaching hospital located in Gainesville, 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 the Agency. Ms. Osbrach oversees the transplant social workers that provide services to the families of patients at SCH. 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 help the families by serving as navigators through the system. These social workers are part of the multi-disciplinary team of care, and they stay involved with these families for years. Shands is adept at helping families with the issues associated with receiving care away from their home cities. Shands has relationships with organizations that can help families that need financial support for items such as lodging, transportation, and gas. Shands has 20 to 25 apartments in close proximity to the hospital that are specifically available for families of transplant patients. Shands also coordinates with the nearby Ronald McDonald House to secure lodging for the families of out-of-town patients. Ms. Osbrach’s ability to empathize with these families is further amplified because her own daughter was seriously ill when she was younger. As Ms. Osbrach testified, while she was living in Gainesville, she searched out the best option for her child and decided that that was actually in Orlando. She did not hesitate to make those trips in order to get the highest level of care and expertise her child needed at that time. SCH accepts all patients, including pediatric heart transplant patients, regardless of their financial status or ability to pay. At final hearing, both Ms. Osbrach and Dr. Pietra testified at length about the different funding sources and other resources and assistance that are available to families from lower social economic circumstances that have a child who may need a transplant. SCH is affiliated with the Children’s Hospital Association, the Children’s Miracle Network, the March of Dimes, and the Ronald McDonald House Charities. Both Shands and APMC witnesses agreed that the quality of care rendered by SCH is excellent. ShandsCair Shands operates ShandsCair, a comprehensive emergency transport system. ShandsCair operates nine ground ambulances of different sizes, five helicopters, and one fixed wing jet aircraft. It owns all of the helicopters and ambulances so it never has to wait on a third-party vendor. ShandsCair performs approximately 7,000 ground and air transports a year. ShandsCair selects the “best of the best” to serve on its flight teams. ShandsCair has been a leader in innovation, implementing a number of state-of-the-art therapies during transport, such as inhaled nitrous oxide and hypothermic for neonates that are at high risk for brain injury. ShandsCair is one of just three programs in the country that owns an EC-155 helicopter, which is the largest helicopter used as an air ambulance. This helicopter is quite large, fast, and has a range of approximately 530 miles one way. This makes it easier to transport patients that require a significant amount of equipment, including those on ECMO. The EC-155 has room for multiple patients and the ability to transport patients on ventricular assist devices, ventilators, and other larger medical equipment. The Orlando area is well within the operational range of both ShandsCair’s ground and air transport assets. Transporting Pediatric Patients on ECMO In its CON application, one of the reasons APMC contended that its application should be approved is that it is too dangerous to transport patients on ECMO. Timothy Bantle, a certified respiratory therapist and the manager of the ECMO program at Shands, was called as a witness by the Agency. The ECMO program at Shands was established in 1991, and Shands has supported over 500 patients on ECMO. When Mr. Bantle began working in the Shands ECMO program in 2008, all ECMO patients at Shands were supported by an ECMO machine that utilized a roller head pump. In addition to the machine’s bulky size and weight, there was an inherent risk of the occlusion pressure causing a rupture. In 2014, Shands began using a newer, much smaller CARDIOHELP ECMO machine. In addition to weighing at most 20 pounds, the CARDIOHELP ECMO machine utilizes a centrifugal pump, instead of a roller head pump, which eliminates the risk of circuit ruptures. The technology in the CARDIOHELP ECMO machines is outstanding, and it is much easier to manage patients on the newer machines than the older machines. Shands now has nine of the newer and far more compact CARDIOHELP ECMO machines. Shands uses the CARDIOHELP ECMO machine for both veno-arterial (VA) and veno-venous (VV) ECMO and for every patient population, including infants. In the current fiscal year, Shands has had 67 patients on the CARDIOHELP ECMO machine. Shands has safely transported both adult and pediatric patients on ECMO. When transporting a patient on ECMO, the transport team includes a physician, an ECMO primer, a nurse, and a respiratory therapist. In addition to being highly trained, the transport team discusses the specifics of each patient en route, including discussing the situation with the referring doctor so they arrive fully prepared. Mr. Bantle persuasively testified that a properly trained team, using the newer CARDIOHELP ECMO machine, can transport these patients safely. ShandsCair has safely transported numerous pediatric patients on VA- and VV-ECMO by both ground and air, including pediatric heart transplant candidates. The newer CARDIOHELP ECMO equipment makes transport of ECMO patients much easier. ShandsCair has flown simultaneous, same day ECMO transports to the Grand Cayman Islands and to Miami. Transporting ECMO patients on the CARDIOHELP ECMO machine has become so routine that Dr. Weiss does not go on those flights. ShandsCair has also safely transported small infants on VA-ECMO, including a three-kilogram infant who was recently transported from Nemours on VA-ECMO, and after arrival at Shands was transitioned to a VAD and is now awaiting a heart transplant. The testimony of Dr. Weiss and Mr. Bantle regarding Shands’ ability to safely transport pediatric patients on ECMO was substantiated by the testimony of Drs. Fricker, Pietra, and Collins. The overwhelming evidence established that ShandsCair can safely transfer pediatric patients, including infants, on ECMO by both ground and by air. Shands’ Pediatric Heart Program The congenital heart program at Shands includes two pediatric heart surgeons, and a number of pediatric cardiologists, including Dr. Jay Fricker and Dr. Bill Pietra, both of whom testified for the Agency. 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. 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 then went to Denver, specifically to do transplant training under Dr. Mach Boucek, who was one of the pioneers in pediatric infant transplant. He came to the University of Florida and Shands in August 2014, and he is now the medical director for the UF Health Congenital Heart Center. Shands performed its first PHT in 1986. Shands provides transplants to pediatric patients with both complex congenital conditions and cardiomyopathy patients. Shands takes the most difficult PHT cases, including those that other transplant centers will not take. PHT patients are referred to Shands from throughout the state, with many patients coming from central and north Florida. Every patient that is referred for transplant evaluation is seen and evaluated by Shands. While transplantation is not an elective service, it also is very rarely done on an emergent basis. Some conditions are diagnosed well in advance of the need for a transplant. It is not uncommon for a patient to be seen by a Shands physician for a number of years before needing a transplant. Pediatric transplant patients now survive much longer, and frequently well into adulthood. Unlike APH, Shands has the ability to continue to care for those patients as they transition from childhood to becoming adults. The Congenital Heart Center at Shands has a good relationship with APH. Physicians at APH have not only referred patients to Shands for transplant evaluation, they have also specifically recommended Shands to parents of children in need of a heart transplant. Shands operates a transplant clinic at Wolfson Children’s Hospital in Jacksonville. Approximately once a month a Shands transplant physician, a transplant coordinator, and nurses will go to Wolfson to evaluate patients with PHT issues. Wolfson personnel, such as ECHO techs and nurses, are also involved. Before APH filed its CON application, Dr. Pietra twice asked Dr. Nykanen about the possibility of Shands establishing a similar joint clinic at APH. Dr. Nykanen replied by stating he would need to confer with his colleagues, but never otherwise responded to these inquiries. Dr. Pietra testified that he would not be opposed to a joint venture clinic with APMC. Managed care companies are now a significant driver of where patients go for transplantation services. Managed care companies identify “centers of excellence” as their preferred providers for services such as pediatric heart transplantation. Shands is recognized by a majority of the major managed care companies that identify pediatric transplant programs as a center of excellence. In addition, the congenital heart surgery program at Shands has a three-star rating, which is the highest rating possible, and one that only 10 percent of such programs achieve. The quality of care provided by the PHT program at Shands is superb. The most recent Scientific Registry of Transplant Recipients data for Shands, for pediatric transplants performed between February 1, 2014, and December 31, 2016, is excellent. There is no credible evidence of record that any pediatric patient in OTSA 3 was denied access or unable to access an existing transplant program. To the contrary, the evidence established that UF Health Shands and ShandsCair are currently serving the needs of OTSA 3 residents who need a PHT. The APMC CON application was not predicated on any argument that a new program is needed because of poor quality care at any of the existing pediatric transplant programs in Florida. Rather, Dr. Nykanen, the co-director of The Heart Center at APH, testified that Shands provides outstanding medical care, and that he has been “happy with the care” received by the patients he has referred to Shands for PHT. At hearing, APMC witnesses suggested that the Shands program is unduly conservative in accepting donor hearts from beyond 500 miles, and may have some “capacity” issues in its pediatric cardiac intensive care unit (CICU). These statements, made by persons with no first-hand knowledge of the operations of the Shands program, are not persuasive. APMC called Cassandra Smith-Fields as an expert witness. Ms. Smith-Fields is the administrative director for the transplant program and dialysis services at Phoenix Children’s Hospital. Phoenix Children’s Hospital is the only PHT center in Arizona. Notably, two states bordering Arizona, Nevada and New Mexico, do not have PHT centers. Ms. Smith- Fields noted that the volume of transplants at Shands had recently declined from 18 to 11. However, in 2016, by volume, Phoenix Children’s Hospital was the second largest pediatric heart transplant center in the country with 24 transplants, but in 2017, its volume had dropped to 14. Ms. Smith-Fields agreed that “you have to always be careful drawing inferences from numbers that are low in any matter.” Ms. Smith-Fields testified that based upon her review of Scientific Registry of Transplant Recipients data for Shands, Shands did not appear to be aggressive in terms of accepting donor hearts beyond 500 miles. However, that criticism was based upon a one-year period when Shands’ PHT volume was lower than normal, and during which Shands was able to obtain donor hearts from within a 500-mile radius. Stephan Moore, director of the solid organ transplant and VAD programs at Shands, prepared an exhibit, which showed the location (by state and distance) of Shands donor hearts and lungs recovered from March 2, 2014, through March 18, 2018. This exhibit showed numerous trips by Shands beyond 500 miles to retrieve a donor organ, including trips to Texas, New Jersey, Illinois, and Ohio. During this four-year period, 27.6 percent of the organs recovered by Shands came from within Florida, and the remaining 72.3 percent were obtained from out of state. This data not only refutes Ms. Smith-Fields’ testimony on this issue, it also again illustrates why, due to the variability of PHT heart program volumes and availability of donor hearts, one should be extremely cautious in drawing conclusions based upon a single year of data. In addition, Dr. Pietra testified about the complexity of these cases and how an organ that might be acceptable for one patient would not be acceptable for another, for a host of reasons. Consequently, being conservative and cautious in choosing the right heart for each patient are good and important traits for a pediatric heart transplant program, particularly for one that wants the organ to work well for the patient long- term. Dr. Elise Riddle, a cardiologist practicing at APMC, testified that she was aware of instances when there had been a delay in obtaining a bed at Shands for a patient being referred for transplant services. However, Dr. Pietra testified that Shands has never refused a patient because a bed was not available, and that any delay would have been at most a matter of hours. In addition, Dr. Collins, who regularly reviews the throughput numbers of Shands CICU, testified that there was no need to expand the size of the unit. APMC did not question Dr. Collins about the unit’s occupancy rate, nor did it make any attempt to otherwise obtain that information. Dr. Riddle also testified that she had not been informed when a former patient had returned to the Orlando area following a successful PHT at Shands. However, Dr. Pietra testified at length about how Shands coordinates care with the patient’s primary care doctor and referring cardiologist post discharge, and works to develop a team to assist with follow care. Dr. Pietra testified: But we try to, again, develop a team and the team has to include like a local physician and usually a family practice or a pediatrician as the captain. If the patient’s got that, you feel a lot better about having a patient leave the local area and return to their hometown, as you say, so that they can be seen kind of in conjunction or collaboration with us in their hometown. If they have a referring cardiologist, that makes it that much easier sometimes to have a more sophisticated follow up done if needed. But again, the patient belongs to the transplant program in the long run, and so you are going to continue to offer them follow-up care basically for life. Since coming to Shands in August 2014, Dr. Pietra has updated many of the program’s protocols, including the protocols for immunosuppression, frequency of follow-up visits, and what is included in follow-up visits. Dr. Pietra has also initiated more written contracts between a prospective patient’s parents and the program, which make it very clear what the expectations are for the family. Two parents, one of whom lives in Clermont (one hour and 40 minute drive from Gainesville) and one of whom lives in Cocoa Beach (two hours and 35 minute drive from Gainesville) testified that their child had received a PHT at Shands in Gainesville, and that there were no issues with follow-up care for their children post-transplant. Volume/Outcome Relationship in Pediatric Heart Transplantation At the final hearing, experts for both sides agreed that there is a positive relationship between PHT volume and outcomes. In complex, highly specialized areas involving patients with rare diseases or conditions, volume provides experience not only for the surgeons but for the entire team. This is particularly true for pediatric heart transplantation, where higher volume keeps the entire team and ancillary staff functioning at a very high level. Both Dr. Pietra and Ms. Smith-Fields agreed that a minimum of 10 or more PHTs annually is a good standard for maintaining the proficiency of the entire transplant team. In Calendar Year 2017, there were only 32 PHTs in Florida. Both Dr. Pietra and Dr. Fricker testified about how the statewide volume made it very difficult to justify approving a sixth program in the State, and that the proliferation of programs would result in most of the programs not able to achieve the 10 or more transplants per year goal. Indeed, during the 12-month period of July 1, 2016, through June 30, 2017, none of Florida’s four existing PHT programs met the minimum volume standard of 10 PHTs. In addition, PHT programs are measured based on outcomes, and a single fatality in a small program can be devastating to that hospital’s quality metrics. As such, small programs are often less willing to take more complicated patients. Ironically, 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. Johns Hopkins All Children’s Hospital Johns Hopkins All Children’s Hospital (JHACH) is located in St. Petersburg, OTSA 2, AHCA District 5. According to reported AHCA data, JHACH performed seven PHTs during the 12 months ending June 2017. Several APMC witnesses made references to possible issues with the PHT program at JHACH based upon newspaper articles they had read. Such articles are hearsay, were not specifically identified or discussed by any witness, and accordingly, cannot form the basis of any finding of fact. Only one of APMC’s witnesses, Dr. Riddle, had any personal knowledge about JHACH, and she has not worked there or been involved in the care of any patients there since February 2016. The only APMC witness who actually looked at any data for JHACH, Ms. Smith-Fields, testified that JHACH had no deaths on its waiting list, that it was aggressive in retrieving donor hearts beyond 500 miles, and that had transplanted two patients during the first four months of this calendar year. When the Centers for Medicare and Medicaid Services (CMS) identifies a program as having deficient outcomes, it will send a peer review team to thoroughly assess the program. If necessary, CMS will enter a systems improvement agreement, which may include the appointment of a quality administrator to help the program improve its operations. There was no evidence presented that CMS had taken any such steps with JHACH. As discussed above, it was uncontroverted that there is a positive correlation between volumes and outcomes, and that a minimum of 10 transplants a year is an important volume threshold in order to maintain a high-quality program. With Florida already having five existing and approved programs, it is currently not possible for all five programs to achieve 10 transplants a year. Approving a new program in the State based upon rumors about the status of an existing program would in all likelihood only reduce the average volume even further below the 10 transplants per year standard, and lead to poorer outcomes. AHCA’s Preliminary Decision Following AHCA’s review of APMC’s application, as well as consideration of comments made at the public hearing held on January 8, 2018, and written statements in support of and in opposition to the proposals, AHCA determined to preliminarily deny CON application 10518. AHCA’s decision was memorialized in a SAAR dated February 16, 2018. 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. In addition to need methodologies presented by an applicant, AHCA also looks at availability and accessibility of services in the area to determine whether there is an access problem. Additionally, an applicant may attempt to demonstrate that “not normal” circumstances exist in the proposed service area sufficient to justify approval. Statutory Review Criteria Section 408.035(1), Florida Statutes, establishes the statutory review criteria applicable to CON Application No. 10518. The parties have stipulated that APMC’s CON application satisfies the criteria found in section 408.035(1)(f) and (h). The Agency believes that there is no need for the PHT program that APMC seeks to develop, because the needs of the children in the APMC service area are being met by other providers in the State, principally Shands and JHACH. 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)5/ 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 programs. Thus, it is up to the applicant to demonstrate need in accordance with section 408.035 and rule 59C-1.044. There are four OTSAs in Florida, numbered OTSA 1 through OTSA 4. APMC is located in OSTA 3, which includes the following counties: Seminole, Orange, Osceola, Brevard, Indian River, Okeechobee, St. Lucie, Martin, Lake, and Volusia Counties. (See § 408.032(5), Fla. Stat; Fla. Admin. Code R. 59C-1.044(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: APH, Florida Hospital for Children, and Nemours. There are four existing providers and one approved provider of PHT services in Florida: Shands in OTSA 1; JHACH in OTSA 2; Jackson Memorial Hospital in OTSA 4; and Memorial Regional Hospital, d/b/a Joe DiMaggio’s Hospital in OTSA 4; and an approved program in OTSA 4, Nicklaus Children’s Hospital, which received final approval from AHCA in August 2017. APMC’s Need Methodology 1: Ratio of Pediatric Cardiac Surgery Volume to PHT Case Volume To quantify need for a new PHT program in AHCA District 7, OTSA 3, APMC presented two “need methodologies.” According to the applicant, there is an observed correlation between a PHT center’s volume of congenital heart surgery and its PHT case volume. It should be noted that consistent with the rest of the application--which was focused on APH’s capabilities rather than community need for the service--both methodologies were designed to support the assertion that APMC could potentially attain a volume of 12 transplants by year two of operation. While APMC’s ability to generate 12 transplant cases is pertinent under rule 59C-1.044(6)(b), it is not indicative of unmet community need for this service. For example, if APMC retains or diverts patients who would otherwise have had access to these services through an existing provider, then they may be improving convenience whilst failing to satisfy any unmet community need. The first numeric methodology advanced by APMC in support of its proposal relied on an assumed correlation or a ratio between open-heart surgery cases and PHTs performed by the four existing PHT programs in Florida for calendar year 2016. The applicant then assumed that it would perform the mean rate experienced by the existing programs, in its second year of operation. When applied to APMC’s forecasted cardiac surgeries during the second year of operation (167), it arrived at a projected PHT volume of 11.7 by year two of operation. There are several issues with this methodology. The 11.7 projection is still below the threshold 12 transplants required under rule 59C-1.044(6)(b). The methodology also relied on figures for the 0-17 age cohort. APMC did not apply either methodology considering only 0-14 age data.6/ Additionally, APMC failed to demonstrate that there is any statistically predictive link between the two variables. The data presented in APMC’s application suggests that the correlation is weak, at best. For example, Bates page 0053 of the application reports Shands as having performed 140 pediatric cardiac surgeries and 15 pediatric heart transplants in 2016, while Memorial Regional Hospital performed more surgeries at 170, but less than half the transplants at seven for the same year. While APMC attempts to control for this variability by utilizing averages, such variability itself calls the causal relationship into question. Indeed, APMC’s own cardiac surgeon did not believe cardiac surgery volume and PHT volume to be directly related. An additional problem with APMC’s first methodology is that many of the numbers relied upon to reach its calculated forecast of 11.7 appear to be inflated. The 7 percent average, which APMC applies to its own facility, is not an accurate reflection of the true average rate among the four existing centers for 2016. While the 2016 transplant volume used represented the statewide total, APMC considered only the cardiac surgery volume reported by these four centers. Stated differently, APMC calculated a ratio considering the entire universe of one variable but not the other. The actual total number of cardiac surgeries performed statewide for 2016 for aged 0-14 was 1,216, not 491, as utilized as the denominator in calculating the ratio. As Ms. Fitch testified, when one uses the 1,216 surgeries in the formula, the ratio would be roughly 2.8 percent, not the 6.9 percent used by APMC. Then, applying APMC’s proffered number of 167 cardiac surgeries as representing its facility, the forecast would be about five PHTs, not 11.7. APMC only considered the open-heart surgeries performed at the four PHT hospitals, but certainly, the PHT patients, if they had open-heart surgery at all, may have had such surgeries at other facilities. As a pediatric OHS provider, APH is itself a good example of this, having provided 99 pediatric open-heart surgeries in 2016 that were not considered in the denominator of the formula. APMC’s Need Methodology 2: Ratio of PHT Volume to Common Indicators for PHT. APMC’s second need methodology is based on the identification of the International Classification of Disease (ICD) ICD-10 codes that are the most common indicators for PHT, taking into account acuity and based on APH’s actual experience. Starting with an analysis of ICD-9 codes and updating to ICD-10 codes as the most currently available model, APMC attempted to correlate the ICD-10 codes with the incidence of PHT in Florida hospitals using data from the AHCA inpatient database. This analysis produced an average ratio of the “most frequent indicators” to PHT cases, of 0.187. APMC then identified the volume of patients within OTSA 3 discharged under the top “most frequent” ICD-10 code indicators for PHT. Applying a conversion rate of 0.100 to this potential pool of PHT patients results in a forecast of 8.2 potential PHT cases in year 1 of APH’s PHT program. Holding constant the baseline potential patient volume in OTSA 3 and applying a conversion rate of 0.180 to years two and three resulted in a forecast of 14.8 PHT cases in OTSA 3 in years two and three. As with the previous methodology, this methodology is rejected, both as being an unreasonable basis for forecasting 12 PHTs by year 2, and as not being indicative of community need in OTSA 3 for this service. APMC presented no evidence that a link between the identified diagnosis codes and an eventual PHT exists or is predictive for any individual or group of individuals. Indeed, its health planner admitted that no statistical analysis was undertaken to test the validity of a causal relationship between these variables. Further, it is unconvincing that the average performance of the four existing long-established transplant programs over three recent calendar years is a reliable predictor of the prospective future performance of a new program by its second year of operation. This methodology, similar to the first, examined the age-range 0-17, even though rule 59C- 1.044 defines a pediatric patient as one aged 0-14. In considering the numbers of patients who presented at the four hospitals with one of the selected ICD-10 codes compared to the number of transplants, APMC acknowledged the variability in the ratios among the years and between the providers. This is evident from a review of the figures in the chart on Bates page 0055 of the APMC application. For example, according to the table, from 2014 to 2015, the number of inpatients with one of the ICD-10 codes decreased by one at Shands, but the number of PHTs performed over this same period doubled from 10 to 20. Such variability in the ratios suggests that there is no predictive link, and that it is instead other variables that affect PHT volume. Additionally, while this methodology considers diagnoses of patients actually treated in the four transplant hospitals to come up with a ratio, it then relies on average ICD volume of three Orlando hospitals instead of its own volume, without explanation. If APMC applied the ratio to its own ICD-10 volume of 138, as appears on Bates page 0056, without adding the other hospitals, its projected transplant volume would be 24.8 by year two, which is higher than any existing provider in the state. Or, if APMC applied only its own average ICD-10 volume over 2014-2016 of 46, it would result in a projected volume of 8.3 transplants at year two. While APMC’s approach is the one that gets it closest to a projected case volume of 12, it appears arbitrary and lacks credibility. Pediatric Population Growth in OTSA 3. In its application, and at hearing, APMC repeatedly referenced the growing pediatric population in central Florida as a factor supporting approval of its application. For example, APMC pointed out that OTSA 3 experienced the fastest growth rate for the 0-17 age cohort among all of the OTSAs for 2014, 2015, and 2016, and has a very robust projected annual growth rate of 2.7 percent through 2022. Moreover, each of the 10 counties in OTSA 3 is projected to experience rapid growth in the pediatric population, with the most dramatic growth rates in Orange, Osceola, and St. Lucie counties, at 10.3 percent, 12.4 percent, and 9.0 percent respectively. While the projected growth of the pediatric population in OTSA 3 is significant, such growth does not, in itself, demonstrate unmet demand or need for the project. Any increased demand for PHT due to population growth was not quantified by APMC in its application or at hearing, as APMC elected not to utilize a population and use rate analysis as a need methodology. No evidence of population demographics was presented to substantiate APMC’s transplant volume projections. On this issue, the following exchange from Dr. Nykanen’s deposition is informative: Q. When you referred to population information, is it your position that population demographics or population changes are in part a reason for the need for this project? A. As the population of Central Florida and as the population of this district increases the demand for cardiac services increases. So to the extent that you are serving more people, then I would agree, yes, that’s part of the – that’s part of the equation. Is it the tipping point? No. We don’t – we didn’t – nowhere in my discussions with Dr. DeCampli or administration was there the thought that, hey, the population is growing here so we need to provide this service. I think that the – it was more a question of, our program has grown to such a position that we need to provide this service in order to be able to be a quality program offering what we believe to be quality care for our patients. The fact that there are more people here is really not driving the need for it. That doesn’t drive the need, but it just – it does state that there may be more demand. That’s kind of the way that I feel about that. The above exchange, besides downplaying population growth as a significant argument for a PHT program, also reiterates the theme of APMC’s application and entire case, which is a focus on APMC and its institutional desire to expand the services it can provide to its patients. Another argument made by APMC in its application and at hearing is that approval of its program could reduce outmigration of PHT patients. By definition, because there is no existing PHT program in OTSA 3, all patients leave OTSA 3 for this service. However, that alone does not establish need for a new program. As discussed herein, APMC has not demonstrated a sufficient need or an access problem that justifies approval of its application. Outmigration of Donor Hearts There are four Organ Procurement Organizations (OPOs) in Florida, geographically distributed so that there is one OPO centrally located in each of the four OTSAs. The OPO in OTSA 3 has done well in procuring donor hearts notwithstanding the lack of a PHT program in its region. The establishment of a PHT program within an OPO region is known to positively correlate with an increase in the number of donor hearts that the OPO is able to procure. The number of hearts procured in Florida varies annually. In 2016, Florida OPOs procured 30 donor organs. Over 50 percent of the hearts procured in Florida leave the state. However, donor hearts also migrate into the state. With regard to the outmigration of organs from Florida, APMC has suggested that since Florida is a net exporter of organs, this is an additional reason for approval. However, organs harvested in one state are commonly used in another. There is nothing unusual or negative about that fact. There is a national allocation system through the United Network for Organ Sharing (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 APMC application would result in the reduction of organs leaving Florida, or even that such would be a desirable result. APMC also argues that approving its application would increase the number of donor organs that are both procured and transplanted within Florida. Specifically, the applicant suggested that its proposed program would increase public awareness of the need for donor hearts; and, by doing so, increase the supply of donor hearts. However, no record evidence was produced in an effort to demonstrate that the proposed program would increase the supply of organs in Florida. In fact, an APH pediatric cardiologist testified that it is unlikely that adding the proposed PHT program would impact the availability or supply of organs. Rule 59C-1.044(6)(b) Volume Standards Rule 59C-1.044(6)(b) includes additional criteria that must be demonstrated by an applicant. Subsection (6)(b)4. provides that an application for PHT include documentation that the annual duplicated cardiac catheterization patient caseload was at or exceeded 200, and that the duplicated cardiac open heart surgery caseload was at or exceeded 125 for the calendar year preceding the CON application deadline. Cardiac programs in Florida report their open-heart surgery volumes quarterly to a local health council, and the Agency publishes the calendar year totals. In the applicable baseline calendar year of 2016, APH’s duplicated OHS case volume for patients aged 0-14 was 139 OHS cases, satisfying the minimum OHS volume requirement.7/8/ APH also met the catheterization volume threshold by performing 227 cardiac catheterizations for patients aged 0-14 in the baseline 2016 calendar year. 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. 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, Gainesville, or OTSA 4 for transplant services rather than let their child die because the travel distance is too far. To the contrary, the evidence in this record, 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 instance of an OTSA 3 patient being turned down or unable to access a PHT) is without support in this record. The parents of two pediatric patients that received PHT at Shands testified on behalf of the Agency at the final hearing.9/ Their testimony substantiated AHCA’s position that residents of the greater Orlando area have reasonable access to PHT services. One of the testifying parents lives in Brevard County, which is directly east of Orlando. Her daughter likely had a 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. When she was first seen at Shands, her condition was not emergent and 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. Their goal was to find a program that did a good volume of transplants with above average survival rates. After doing this research, they chose Shands. Their daughter received her heart transplant at Shands, is doing well, and is now considering where to go to college. This family did not find the distance to be a problem. This parent also persuasively spoke of her concerns about further diluting the volumes of the existing programs that could result from approval of a sixth PHT program in Florida. This parent also observed that because of the shortage of donors, adding more transplant centers does not necessarily mean there will be more PHTs performed. The other lay witness is the parent of a very young boy who went from appearing to be perfectly healthy to almost dying, and being placed on life support within a 24-hour period. This family lives in Clermont, which is near Orlando. Shortly after her son’s two-month old check-up, the witness took her son to the local hospital thinking he had a urinary tract infection. The hospital sent him to APH for evaluation. As soon as he arrived there, he went into respiratory distress. An echocardiogram was done and showed he had a severely enlarged heart. APH recommended that he be transferred to Shands. Before being transferred, the mother spoke with her sister who coincidentally is a nurse in Chicago who works on the transplant floor. She also highly recommended Shands. Her son was safely transported to Shands by ShandsCair just over 24 hours after being first admitted to APH. When they arrived at Shands, both Dr. Bleiweiss and Dr. Fricker gave the parents their cell numbers and were always there to answer any questions. The infant was placed on a Berlin heart machine until an appropriate donor heart became available. This patient was able to undergo a transplant approximately three weeks after admission, and also had an excellent outcome. This mother testified that the distance to Shands was not a problem, that the social workers and nurses were always available to help, and that follow-up care at Shands has not been an issue. In fact, the patient is now able to have his labs done in Orlando. It is also notable that this patient’s transfer was uneventful and that the patient had no difficulties in being immediately admitted to Shands’ CICU. It is clear from the testimony of these parents that nothing about having a gravely ill child is “convenient.” But it was also clear that for both of these families, having an experienced provider care for their child was much more important to them than geographic proximity. The following exchange summarizes how the young boy’s mother felt about the inconvenience of having to travel from Clermont to Gainesville: Q If you want to hypothetically encounter a family who expressed to you a concern that their child needed a transplant, they resided in Orlando or the Orlando area, but they were concerned about having to travel to Gainesville to receive that service, what would you say to them? A That’s where they need to be and that everything will fall in place, but the most important thing is the care that your child needs. 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 the APMC 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 issues. The testimony of the two parents supports the Agency’s position that obtaining the best possible outcome for the child is the parents’ primary motivation in choosing a PHT program. Financial Access APMC asserts that approval of its proposed program will enhance financial access to care. APMC currently serves patients without regard to ability to pay and will extend these same policies to PHT recipients. APMC’s application indicates that Medicaid/Medicaid HMO will account for 26.8 percent of total patient days in years one and two of the proposal. Self- pay is expected to account for 9.0 percent of patient days in years one and two. However, there was no competent evidence of record that access to PHT services was being denied by any of the existing transplant providers because of a patient’s inability to pay. Not Normal Circumstances APMC alleged the existence of “not normal circumstances” in support of its application. They are categorized as “‘not normal’ circumstances relating to access to PHT for residents of OTSA 3,” and can be summarized as follows: APMC has the one of the largest NICUs under one roof in the country, resulting in a disproportionate volume of newborns at [APH] with complex forms of congenital heart disease; There are patients at APMC who are placed on ECMO or other heart-assist devices after surgery who are too sick to be transferred from APMC to another facility to receive transplant; Forcing patients to accept the high and potentially fatal risks of transport on ECMO presents a major access issue; Post-transplant follow-up care for patients is life-long and can be time- critical, and the ability to provide 24/7 rapid access to specialized transplant urgent care is medically optimal. The first argument related to the size of APMC’s NICU, does not speak to community need. Regardless of how many newborns APH sees, if the needs of these newborns are currently being met by existing programs, then it is difficult to see how this circumstance bears upon need or accessibility to this service. Additionally, to the extent that APMC suggests that the size of its NICU will correlate with a similarly large number of PHT patients, the proposition is unsupported by the record evidence. In fact, APMC admits that its pediatric cardiac surgery program is at the border of the lowest tercile of STS programs by volume. If APH’s NICU yields only a modest to medium cardiac surgery volume, there is no reason to conclude that this NICU will, by virtue of its size alone, yield a high PHT volume. Next, APMC argued that it has had patients who could have potentially benefitted from transplant but who did not receive such services due to their being too sick or otherwise unable to transfer. It is noteworthy that APMC did not identify these patients or provide data in any fashion to bolster this claim. The application referenced 33 NICU patients on ECMO in four years, but APMC conceded that most of these are babies on respiratory or “VV ECMO,” who eventually wean off. The application also references 11 CVICU patients placed on bypass at APMC in the last four years, but no testimony was presented as to the actual number of patients alleged to be unable to transfer. APMC did not maintain at hearing that any of its pediatric patients have died as a result of being unable to transfer to a transplant facility. In fact, any incidence of children being too sick or acute to transfer outside the OH system to a transplant facility appears to be a product of APH clinical decision-making about appropriateness for transplant referral, rather than that such patients were refused at a transplant center or could not have been transferred at an earlier time. At his deposition, Dr. Nykanen discussed the issue: I think that I do agree that patients— pediatric patients in Central Florida can get a heart transplant. And I have sent patients—my patients to Gainesville for a transplant because I felt at least in the patient’s [sic] that they’ve transplanted I can support that I’m doing the right thing for my patient. In answering that question, there are patients that I do not refer for transplant because I just feel that they are not a candidate for traveling for a transplant, medically a candidate for traveling without— for a transplant. So the term reasonable is—is it reasonably accessible. It is accessible, indeed, for the majority of the patients that I feel need a heart transplant. They can travel and get a transplant. However, for some patients it’s not an option for them. Either due to their medical complexity, risks that I consider with transport, and rarely family situation. APMC emphasized the risks of moving pediatric cardiac patients while on ECMO. However, as noted earlier, the credible testimony of witnesses presented by the Agency was that while there are always risks inherent with the treatment of critically ill children, with modern advancements in technology, these transports are done routinely and safely. It is also significant that while APMC cited various risks associated with ECMO transports and underscored the danger to the patient, no APMC witness could point to a single example of a patient that died due to complications with ECMO during a transport. The Agency in its preliminary decision noted that the application lacked any data illustrating mortality or negative outcomes related to pediatric ECMO transports, and no such evidence was forthcoming at hearing. APMC presented no evidence demonstrating that children of OTSA 3 who are transplanted at an existing provider are denied or otherwise unable to access follow-up care. The two mothers that testified for the Agency both stated that they have not had issues accessing follow-up care at Shands. APMC relies instead in its application on theoretical claims about emergent complications that could arise and the challenges of accessing a center. However, these arguments are unconvincing. Both parties agreed that transplant centers can and do work with a patient’s local providers so that patients can receive urgent medical care closer to home and then return to their transplant center as necessary. Dr. Pietra testified that Shands works with primary physicians and providers post- transplant. Shands has developed a thorough protocol for all of its patients, which includes frequent follow-ups. Additionally, Ms. Smith-Fields agreed that at her facility in Arizona (the only PHT provider in that state) the program coordinates with providers local to patients to ensure rapid acute care is accessible, if needed. APMC’s cardiologist, Dr. Riddle, testified that APH does provide acute care and other necessary care to children post-PHT, and that it competently does so. APMC maintained at hearing that post-transplant care is life-long, and that in the event of an emergent situation, immediate access is critical. However, the evidence indicates that existing transplant centers plan for these events. There are more frequent follow-up visits to a transplant center during the period immediately following the transplant. Both Dr. DeCampli and Dr. Riddle testified that organ rejection is more likely to occur during the first year after transplant. Additionally, diagnostic testing can often detect signs of rejection in advance, to allow a transplant center to respond before an acute episode occurs. Indeed, one of the functions of echocardiograms is to scan the heart and detect abnormalities or episodes of rejection. The record reflects that transplant centers, such as Shands, are capable of properly and safely monitoring these patients and dealing with issues of rejection. The evidence in this record does not support the proposition that geographic distance to existing centers is a barrier to patients receiving necessary follow-up care. Orlando Health’s Prior Position APMC’s claim that there is an accessibility issue or a need for PHT services in OTSA 3 is further undermined by its own contrary position on these issues just a few months prior to the submission of its application. In January 2017, OH and APH presented written opposition to Nemours Children’s Hospital’s attempt to establish a PHT program in Orlando. APH also presented oral argument from Drs. Nykanen and DeCampli in opposition to the proposed Nemours PHT program being approved by the Agency. The written statement of opposition, identified on its face to be on behalf of OH and APH for Children, unequivocally advanced the position that PHT services are not needed in OTSA 3, and that they are reasonably available to residents of the service area: Nothing supports the theory in the [Nemours] applications that the proposed services are unique or not otherwise available, or that there is a need for them among the population. * * * Specifically, CON application no. 10471 [Nemours’ PHT application] does not provide any facts that would lead the Agency to conclude that existing pediatric heart transplant services are not reasonably available to residents of the service area. For example, the data shown in CON application no. 10471, Exhibit 15, p. 75, does not reflect time travel distances; existing providers are within the typical two hour drive time standard accepted by health planning experts and the Agency for tertiary services. The personal letter authored by Dr. Nykanen and included as part of the APH opposition was unequivocal and specific in its conclusion that access to these services for residents of OTSA 3 is not a problem. Dr. Nykanen stood by his statement in this proceeding, testifying in his deposition: So we would—we would do anything for our child. I’d travel around the world, you know, halfway around the world if I thought that something would benefit my child. So geographic proximity in that sense probably doesn’t matter. And it doesn’t matter. If I’m an outpatient and I can get in my car and I can go to Gainesville. * * * And I don’t think that it—I honestly don’t think that a two-hour drive is that much of a barrier. It’s a pain and it’s inconvenient. * * * So I think what I intended with that statement and believe it to be true today is that if my child needed a transplant and I could travel to Gainesville and I could get there, I’ll do it, as a family. Is that an inconvenience, yes. Is it a huge barrier, probably not. Because if it, in the balance of things, meant that my child would survive or not, then I would do it. I’d go to London, England if I had to. APMC attempted to justify its prior position as mere concern about the inexperience of the Nemours cardiac program. However, this is contradicted by the record evidence in this case. Dr. Nykanen testified that, at the time of the Nemours public hearing, his expressed position was that there was not a need for PHT services in central Florida. The unambiguous statements by APMC opposing a local competitor’s attempt to establish the same health service that it now claims the children of central Florida need, further undermines the credibility of APMC’s current position, and underscores APMC’s focus on its own interests. The prior position taken by APMC with respect to need and accessibility in OTSA 3 was made with the intent that it be received and considered by the Agency in its decision on the Nemours application. AHCA witness, Marisol Fitch, found this clinical and health planning testimony to be persuasive, and APMC’s prior position that need and accessibility do not support approval of a new PHT program are in line with the record evidence. The glaring inconsistency in APMC’s past and current assertions calls into serious question the credibility of the general, theoretical, and unsubstantiated access problems that are alleged in APMC’s application. 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; Section 408.035(1)(d): The availability of resources, including health personnel, management personnel, and funds for capital and operating expenditures, for project accomplishment and operation; and Rule 59C-1.044(3-4). Quality in the delivery of health care is APMC’s first and foremost strategic imperative. APMC defines “quality” as the simultaneous achievement of excellence in three areas: patient outcomes, patient experience, and patient access. APMC is very deliberate in its approach to metric- driven performance in quality and safety. APMC is the highest- rated system in all of Central Florida within the CMS rating system, which analyzes data for 66 quality improvement metrics. Similarly, APMC is the highest ranked Truven-rated health care system in Central Florida, and is ranked first among the over 30 hospitals analyzed and ranked by Vizient Southeast. The metrics analyzed by these rating organizations include, but are not limited to, mortality rates, readmission rates, cost containment, patient experience scores, emergency department wait times, and infection rates. Through deliberate focus and a compulsive commitment to quality, the APH Heart Center has performed at the highest levels with respect to quality of care and patient outcomes for well over a decade. For its part, the Agency does not dispute that the applicant is a quality provider. However, AHCA does maintain that approval of an unneeded sixth provider of PHT services in Florida could lead to or correlate with negative patient outcomes. Given the relatively low PHT volumes statewide, and agreement that volume is positively correlated with quality and outcome in transplantation, splitting state volume among six providers could negatively impact the quality of this service, as it concerns the residents of OTSA 3 and Florida more broadly. This service is defined by Florida law as a tertiary service of limited concentration. Indeed, APMC agrees that there should not be a PHT program in every hospital, particularly since organs are a limited resource. APMC failed to credibly demonstrate that it would achieve the PHT volumes it projected unless it diverts significant volumes from other Florida providers. Approval of a new program will not create transplant patients that do not exist or are not currently able to reasonably access services. The applicant has not demonstrated that it will achieve volume sufficient to reasonably assure quality care. Rule 59C-1.044(4) requires that applicants meet certain staffing requirements, including: “The program shall employ a transplant physician, and a transplant surgeon, if applicable, as defined by the United Network for Organ Sharing (UNOS) June 1994.” The applicant concedes that it still needs to hire a transplant surgeon and a cardiologist specializing in heart failure, to staff the proposed program. While APH has had difficulty recruiting and retaining a bone marrow transplant physician to implement the bone marrow program approved in 2014, given its outstanding reputation for quality it is likely that APMC would ultimately be successful in recruiting a PHT surgeon and an advanced heart failure cardiologist. 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 APMC’s proposed program would likely improve physical access to PHT services for the very few residents of OTSA 3 that need them. Generally speaking, adding an access point for a service will make that service more convenient and geographically proximate for some. However, given the rarity of PHTs, approval of the APMC program would not result in enhanced access for a significant number of patients. Moreover, there was no credible evidence presented at hearing that any resident of OTSA 3 that needed PHT services was unable to access those services at one of the existing PHT programs in Florida. Based upon persuasive record evidence, there is also clearly a positive relationship between PHT 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, maintaining a volume of no fewer than 10 PHTs per year is critical, “because your relative risk for the next patient that you do is at its lowest” if you stay above that volume. 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 the 12 months ending in June 2016, there were only 35 PHT’s performed in Florida. By the end of June 2017, that number had dropped to 21, with none of the four operational PHT programs meeting the 10-case minimum volume. And when the approved PHT program at Nicklaus Children’s Hospital becomes operational, the per-program volume of PHTs is likely to drop even further. Given the lack of demonstrated need for a sixth program, and low volume of PHT’s statewide, the undersigned is unable to recommend approval of the APMC program knowing that it would further dilute the pool of PHT patients, potentially adversely affecting the quality of care available at the existing programs. 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. There was no persuasive evidence of record that approval of APMC’s application 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 program is not significant enough to justify approval in the absence of demonstrated need. There is no evidence that approval of the APMC application will enhance financial access, or that patients are not currently able to access PHT 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 and entails a significant investment of resources. Given the limited pool of patients, the added expense of yet a sixth Florida program is not a cost- effective use of resources. Section 408.035(1)(i): The applicant’s past and proposed provision of health care services to Medicaid patients and the medically indigent. OH is the designated safety net provider for the Central Florida region. In 2016, OH provided approximately $437 million in unreimbursed charity care. OH’s commitment to provide health care services to its entire community without regard to ability to pay continues today. Fifty-five percent of the patients served by APH are Medicaid beneficiaries, and 5-7 percent are self-pay or uninsured. If approved, OH’s mission and role as a safety net provider would extend to its proposed PHT program.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a final order be entered denying CON Application No. 10518 filed by Orlando Health, Inc., d/b/a Arnold Palmer Medical Center. DONE AND ENTERED this 26th day of December, 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 26th day of December, 2018.
The Issue Whether there is need for a new 60-bed general acute care hospital in Seminole County? If so, to which of two applicants should a CON be awarded to construct and operate the hospital: Orlando Regional Healthcare System, Inc. (CON 9496), or Adventist Health System/Sunbelt, Inc., d/b/a Florida Hospital (CON 9497)?
Findings Of Fact The Battleground: District 7 At the heart of the conflict in this proceeding is that the two corporate combatants are the dominant providers of hospital services in major metropolitan Orlando and both are providers of very high quality acute care hospital services. Each seeks authority to construct and operate a 60-bed general acute care hospital in the fast-growing community of Oviedo, Florida. The Agency for Health Care Administration, arbiter of the conflict, has introduced a quarrel of its own by its determination that there is no need for the hospital in Oviedo, a determination with which the hospitals decidedly take issue. Oviedo is an incorporated area in east Seminole County. Seminole County, in turn, is a county that with two other counties makes a contribution by suburb or city center to the conurbation in and around Orlando, Florida's largest non-coastal city. Seminole County is also one of four counties that comprise District 7, one of eleven health service planning districts into which the Legislature has partitioned the state. See Section 408.032(5), Florida Statutes. The other three counties in the District are Orange, Osceola and, removed from the controversy in this case, Brevard. The four counties are each considered by rule of AHCA to constitute a sub-district of District 7. Brevard is Sub-district 1; Orange, sub-district 2; Seminole, sub-district 3; and, Osceola, sub-district 4. The parties consider parts of Seminole and Osceola Counties to constitute the major metropolitan area of the City of Orlando together with, of course, parts of Orange County, the county that contains incorporated Orlando. As indicated above and by its irrelevance to this proceeding, no part of Brevard County is considered by the parties to make up any of metropolitan Orlando. There is also one county outside District 7 about which the parties introduced evidence, Lake County in District 3. Nonetheless, District 7 remains the primary battleground with a focus on sub-district 3 as the site of the CON sought by the parties. The Parties AHCA The Agency for Health Care Administration is the state agency responsible for the administration of the CON program in Florida pursuant to the Health Facility and Services Development Act, Sections 408.031-408.045, Florida Statutes. ORHS One of the two dominant health care providers in the Orlando area, Orlando Regional Healthcare System, Inc., is a Florida not-for-profit corporation that owns and operates eight facilities in the four-county area of Orange, Seminole, Osceola and Lake Counties, "the only market" (tr. 22) that it serves. Half of ORHS's facilities are in Orange County. These four facilities are: Orlando Regional Medical Center, a 517-bed general acute care hospital that provides tertiary services in addition to routine acute care hospital services and that is the site of a trauma center; Arnold Palmer Hospital for Children and Women, a 281-bed specialty hospital that provides women's and children's services including neonatal services; Orlando Regional Sand Lake Hospital, a 153-bed general acute care facility that provides comprehensive medical rehabilitation services; and Orlando Regional Lucerne Hospital, a 267-bed general acute care hospital that provides comprehensive medical rehabilitation and skilled nursing unit services. In Seminole County, ORHS wholly owns and operates Orlando Regional South Seminole Hospital ("South Seminole"), a 206-bed general acute care facility that provides adult/child psychiatric and adult substance abuse services as well as general acute care services. In Osceola County, ORHS owns Orlando Regional St. Cloud Hospital, an 84-bed general acute care facility. In Lake County, ORHS jointly owns and operates two health care facilities under joint venture business arrangements: South Lake Hospital, a 68-bed general acute care facility and Leesburg Regional Medical Center, a 294-bed general acute care facility. The wholly owned facilities operate under a single license and are accredited by the Joint Commission on Accreditation of Health Care Organizations ("JCAHO"). One of six statutory teaching hospitals in the state, ORHS has been in continuous existence since 1918. Its mission is to be a local, unaffiliated health care provider, providing health care services to the citizens of Central Florida. Recognized as one of the top 100 hospitals in the United States by US News and World Report, ORHS has been the recipient of numerous awards and recognitions. As but one example, it was the winner of a Consumer Choice Award from the National Research Corporation for the years 1999 through 2001. Orlando Regional Healthcare System provides outstanding health care of the highest quality to patients at its eight facilities in three of the four counties in AHCA's Health Care Planning District 7. Florida Hospital The other dominant health care provider in the Orlando area is Florida Hospital. Founded as a sanitarium, Florida Hospital has been in existence and a presence in the Orlando medical community since 1908. Florida Hospital is part of the Adventist Health System, a not-for-profit hospital organization that operates hospitals throughout the country. In the Orlando area, Florida Hospital has seven acute care campus systems operated under a single license in a three- county area: Orange, Seminole and Osceola Counties. The original and main campus is located in downtown Orlando. A second campus is in East Orlando. The five other facilities are in Altamonte Springs, to the northwest of Orlando; Apopka, further northwest; Winter Park, just north of Orlando; and Celebration and Kissimmee, both southwest of the city. Florida Hospital also operates Florida Hospital Waterman under a separate license in Lake County in District 3. The seven campuses in District 7 are unified by more than just licensure. Consistent with their operation under a single license, all seven operate under a single provider number with Medicare/Medicaid. They have a single medical staff and a single accreditation with JCAHO. The seven Florida Hospital campuses operate under a single leadership structure; all policies, procedures and matters that pertain to the operation of the hospital are part of the single body of operational guidelines and procedures that are provided by the organization. The seven campuses also operate under a single price structure, a single charge master that runs across the entire organization. The goal of operating the seven campuses in a unified manner is to maintain continuity and promote one standard of care so that when a patient enters any of the facilities, the patient can rely on receiving the same high standard of care as would be received at any other Florida Hospital facility. Operation under a single structure also provides a patient with the coverage of physicians and staff throughout the system to cover any and all needs of the patient. From its inception, the mission of Florida Hospital has been to extend a religious ministry of healing to the community consistent with Adventist principles. Among these principles are awareness of the eternal nature of the moment at which care is extended to the patient as well as recognition of each patient as a child of God, entitled to the highest possible quality of care embodied in "whole person health" (tr. 876) composed of physical, mental and spiritual well-being. Florida Hospital carries out its mission with "a strong sense of stewardship for providing care in the communities that [the hospital] serve[s] . . . ." (Tr. 875). The success of Florida Hospital's philosophy of care is evident in recognition bestowed by others. For example, Florida Hospital was recognized as being among the top 50 hospitals in the country for nine specialties in the July 2002 edition of U.S. News & World Report's "America's Best Hospitals." To take but one of the nine, "Heart & Heart Surgery," Florida Hospital is ranked 12th in the nation in the company of those ranked just above: Cleveland Clinic, Mayo Clinic (Rochester), Massachusetts General, Brigham and Women's Hospital, Duke University Medical Center, Johns Hopkins, Texas Heart Institute-St. Luke's in Houston, Emory University Hospital, Stanford University Hospital, Barnes-Jewish Hospital in St. Louis and the UCLA Medical Center. Well-Matched Applicants In its state agency action report ("SAAR"), AHCA noted that ORHS and Florida Hospital are two large, well-matched hospital systems. Both operate over 1,500 beds in the Orlando area. Both generate approximately two billion dollars of gross charges annually. Both deliver over 300,000 patient days of patient care. Together, they are the overwhelmingly dominant providers of health care in the major metropolitan Orlando area. In the SAAR, the Agency discussed distinctions between the two applicants. Had AHCA determined that there was need for the facility, it would have had a difficult time deciding which corporation should be awarded the CON. None of the distinctions between the two were found by AHCA to be substantial enough to serve as a basis for choosing either applicant over the other. Other District 7 Hospitals Besides the two applicants, the dominant providers of hospital services in District 7 by virtue of number of facilities (13 hospitals in the District and three hospitals in Lake County immediately adjacent to the District), among other reasons, there are three other hospitals in the District. Health Central is a hospital operated by a statutorily created tax district in the City of Ocoee, in Orange County. Central Florida Regional Hospital is owned and operated by Hospital Corporation of America ("HCA") located in the City of Sanford in Seminole County. It is approximately 14 miles from the proposed locations of the applicant's facilities. Osceola Regional Medical Center, another HCA facility, is located in Kissimmee in Osceola County, not far from Florida Hospital's Kissimmee and Celebration facilities. Stipulation The parties stipulated to the following: The applicable fixed-need is zero. Both applications complied with the requirements of Sections 408.037, 408.038 and Subsections (1), (2) and (3) of Section 408.039, Florida Statutes, and the requirements of Rules 59C-1.008 and 59C-1.010, Florida Administrative Code. Both applications meet the review criteria contained in Subsections 408.035 (3),(6),(8),(10) and (11), Florida Statutes and the review criteria in Subsections 408.035(4),(5) and (12), Florida Statutes, are not applicable in this case. The statutory review criteria at issue in this case are Subsections 408.035(1), (2), (7) and (9), Florida Statutes. Numeric Need Numeric need for general acute care beds is determined pursuant to Agency rule, Rule 59C-1.038, Florida Administrative Code. The rule's methodology for the calculation of numeric need for general acute care beds is by sub-district. Since "there really is no longer a future projection methodology in the rule . . . it was stricken out two or three years ago," Gene Nelson, one of ORHS' experts in health planning, refers to the rule as containing a "retrospective occupancy model." (Tr. 619). Under the methodology, additional beds are not normally approved in any sub-district where historic occupancy is less than 75%. If occupancy exceeds 75%, beds will be awarded to bring occupancy down to 75%. In other words, instead of projecting forward as it once did to determine need, the rule looks back to occupancy. If occupancy in the sub- district has met the threshold, then positive numeric need is established. Criticism has been leveled at the methodology. Not taking into account future population growth or occupancy rates at times other than midnight, are but two examples. Criticism, however, of the rule is of little moment in this case since the case is a challenge to agency action not to the rule that contains the methodology. Whatever the appropriateness or validity of the criticism, the calculations pursuant to the methodology have not yielded a fixed-need pool above zero for any of the many sub- districts in the eleven districts of the state for some years now. Nor is numeric need for general acute care beds expected by the Agency to exceed zero anywhere in the state for the foreseeable future. During this time of numeric need "drought," AHCA, nonetheless has awarded CONs for new general acute care beds and even new hospitals on a number of occasions. For example, "[d]espite the fact that there was an applicant proposing to relocate beds within the subdistrict, which wouldn't have affected the bed inventory at all, the state elected to approve [another] applicant . . . that applied for a brand-new 60 bed hospital" (tr. 635) in the community of Lady Lake in District 3. The application in that instance had been filed in the fall of 1998. In a second example, in the fall of 2001, a few years later, Osceola Regional and Florida Hospital Celebration were each approved to add beds to existing facilities despite the fact that there was no numeric need and the hospitals did not meet the statutory occupancy levels for additional beds. Mr. Nelson also testified about a third recent example where a new hospital was built when the subdistrict occupancy was low, the facts of which compare favorably, in his view, with the facts in this case. As he tells it, these three cases, compared to this case, produce inconsistency: In the fall of 1999, Sacred Heart Hospital applied to build a new 60-bed hospital in the southern portion of Walton County. That particular subdistrict is actually a two-county subdistrict consisting of Okaloosa and Walton counties, has some existing hospitals, current subdistrict occupancy in that area is 56.3 percent. Despite . . . the low occupancy . . . the state recognized the validity of the arguments about a growing population, about accessibility, many of the same issues that you have here and approved Sacred Heart to build a new 60-bed hospital in that location. * * * I am not criticizing any of these approvals. I . . . am criticizing [that the state was] presented with a similar set of circumstances in this case [and] the applications were all denied. And I think there is an inconsistency here. (Tr. 637-8). During the same period, moreover, beds have been added to existing hospitals without CON review, accomplished by way of Section 408.036(n), Florida Statutes. The statute allows 10 beds or 10% of licensed bed capacity to be added to a hospital's acute bed inventory upon certification "that the prior 12-month average occupancy rate for the category of licensed beds being expanded at the facility meets or exceeds 80% . . . ." Section 408.036(n)(1)a., Florida Statutes. See also Rule 59C-1.038(5), Florida Administrative Code. The bed additions made with and without CON review contribute to current numeric need determinations of "zero" and the continued reasonable expectation that AHCA's methodology for determining acute care bed numeric need will not yield numeric need in excess of zero for years to come. Most pertinently to this case, these additions erode AHCA's position advanced in hearing in this case for a preference to keep open the option for a future competitor, a competitor other than one of the two dominant providers, presumably when numeric need has been determined to exist, a condition not likely to come into play for the foreseeable future. However the future plays itself out and the effect on AHCA's current methodology, there remains one point central to consideration in this case. In light of a numeric need of "zero" for the applicable batching cycle, for a CON to be awarded as a result of this proceeding, as a first step, the applicants must demonstrate the existence of "not normal" circumstances that support an award. The two applicants attempt that step in tandem. Both ORHS and Florida Hospital contend that rapid population growth, problems of access to acute care and emergency services in the Oveido area, and mal-distribution of beds in the sub-district and district constitute circumstances that justify need for their proposed facilities. In other words, they are "not normal" circumstances. Not Normal Circumstances - Population Growth A rural farm community not long ago with a population of about 7,500, the City of Oviedo, in the last 15 years, has grown into an Orlando bedroom community. The population increase within the city limits is proof of the city's metamorphosis from countryside to suburb. During this period of time, the municipal population has nearly quadrupled to 28,000 with no end in sight to continued growth in the area as explained by ORHS' expert, Dr. Rond: The special circumstances . . . that drive this application are, first, the unprecedented population growth. As we have seen, we are experiencing population growth in excess of a hundred percent in the east Seminole area. In the adjacent Winter Springs area, we are experiencing a rate in excess of 51 percent. We are talking about a population that is going to reach almost 200,000 people by the year 2006. (Tr. 377-8). The area is projected for an additional 18.2% growth by 2006, when as testified to by Dr. Rond, the population will reach nearly 200,000. The municipal population is not the only population of a political entity in the area to quadruple in modern memory. Over the past three decades Seminole County has grown fourfold - from 83,692 in 1970 to 365,196 in 2000. As a result, the county is the third most densely populated of the state's 67 counties. Until the mid-1990's, population growth was concentrated in the western half of the county as Orlando area development spread north into Seminole County along the I-4 and U.S. Highway 17/92 corridors. Since then the rate of population growth has been dramatic in east Seminole County in part because of the opening of another major transportation corridor, the "Greenway," Highway 417. Between 1990 and 2001, east Seminole County more than doubled in size (24,840 to 51,287; a 107% increase) while West Seminole grew by only 22%. East Seminole County is expected to remain the fastest growing portion of the county into the foreseeable future. With approximately 43% of the total land area of the county but only about 16% of the population, it remains much less densely populated than the remainder of the county, affording greater opportunities for future growth. Seminole County is unique in the state from the perspective of bed-to-population ratios. The three hospitals in Seminole County with a combined total of 575 licensed beds, yield a ratio of 1.55 beds per 1,000 population; tied for lowest bed to population ratio of the sub-districts in the state. The only area with a comparable ratio is Sub-district 8-4, comprised of Glades and Hendry Counties, located southwest of Lake Okeechobee, "a very rural area." (Tr. 625). While these two sub-districts are similar in bed to population ratio, they are at opposite extremes in terms of population density. The population of Seminole County, at 371,000 is nearly nine times the combined populations of Glades and Hendry Counties at slightly more than 42,000. Sub-district 8-4 is "totally unlike Seminole County from the standpoint of population demographics; and yet in terms of resource availability, . . . it has a comparable amount of resources per thousand population." (Id.) Thus, Seminole County occupies a unique place in the state for its low bed-to- population ratio considering its overall population. Population forecasts for the next five-year period support the expectation of continued strong growth in east Seminole County. For example, the downtown area of Oviedo plans a residential area with a density up to 50 dwellings per acre, at least one of the highest in the County. In the City of Oviedo vicinity, median densities are increasing from 4 homes per acre to 10, to allow for townhouses. East Seminole County is reasonably expected to have 60,597 residents by the year 2006, an 18.2% increase over 2001. By comparison, West Seminole County is expected to experience only a 6.3% rate of growth. Projected growth in the City of Oviedo, moreover, is in all likelihood understated due to significant residential developments currently underway that alone are expected to add up to 6,238 new residents to the city's population. One need only look to actual growth in the area for support for such a prediction. Actual growth has consistently outpaced projected growth governed by methodologies that have repeatedly failed to reflect the reality of population growth in Oviedo. Related to population growth are utilization projections by the applicants' health planning experts for an Oviedo hospital. Judy Horowitz, Florida Hospital's expert health care planner, explained Florida Hospital's: [W]e looked at historically what had come out of the service area as we defined it. We projected that that volume would grow in proportion to population growth. We looked at a subset of services, those that were likely to be provided at a community hospital as was being proposed by Florida Hospital Oviedo. We looked at what we thought a reasonable market share would be; and our overall forecast is that within two years of opening this facility, that we would reach 77 percent occupancy at a 60-bed facility. So our year two, which is the 12 months ending June of 2007, . . . . we would already be at 77 percent occupancy. Then our first year we would be at approximately 68 percent occupancy. * * * [T]here is clearly sufficient demand to support the hospital as proposed; and the fact that we are projecting a relatively high utilization very quickly shows the magnitude of that demand. (Tr. 1352, 1353). With the high level of population growth and the demand for hospital services that such growth generates, the citizens of Oviedo expect access to hospital care within the community. In keeping with citizen expectation, the City of Oviedo has adopted a resolution that urges AHCA to approve a new hospital in the Oviedo community. It has been joined in its resolve by the Board of County Commissioners for Seminole County through a resolution of its own. To underscore the force of the two resolutions, the corporate parties presented the testimony of representatives of both the City Council and the County Commission. Grant Malloy, the County Commissioner for County District I who grew up in the area with fond childhood memories of "being overcome by the orange blossom smells, they were so intense," (tr. 802) described the growth observed first-hand by him during his lifetime as "phenomenal." (Tr. 806). In answer to the question whether his constituents would benefit by a new 60-bed hospital, Commissioner Malloy testified I do believe so. There is . . . the growth that's occurring there. And I heard . . . discussion about getting to some of the other hospitals. And once you get out of Seminole County . . . the roads are very, very difficult to travel on especially getting into Orlando. Especially rush hour . . . . . . . [T]he growth . . . would support such a facility. I know our board passed a resolution, along with the City of Oviedo[.] [O]ur board, and all the commissioners are unanimously supportive of a hospital in the area. I haven't heard from any residents or constituents that have said it was a bad idea. . . . [P]eople are pretty excited about it. (Tr. 807-8). Tom O'Hanlon, Chairman of the City Council, in the company of three other members of the council, unequivocally backed up Commissioner Malloy's appeal for a new hospital. The changes he has seen in Oviedo, he described as: Dramatic changes. When I moved there, [Oviedo] was a very rural area, and it is no longer . . .; it’s a highly compacted urban area. [W]e are working on a new master plan for downtown, which will have higher densities than we have in our city today. (Tr. 812). Chairman O'Hanlon went on to describe how the pace of the growth continuously outstrips population projections that are the product of the City's best efforts to follow appropriate methodologies for making such projections: [T]he city continually makes population projections. I have always been involved with them[.] [T]here are guidelines . . .; and everytime we make them, the city grows far in excess of th[e] projections. The area is such a dynamic area because we have got the University of Central Florida there, which is just growing as fast as the city is, maybe even faster. You have the Research Park there and you have got excellent schools. And for that combination . . . everybody wants to move there. (Tr. 812-3). The university is just south of the city limits. It has minimal dormitory facilities on campus. The result is that "a vast majority [of students] live off campus in housing and apartments [and they are impacting all the services that must be provided in Oviedo.]" (Tr. 814). Following this testimony of Chairman O'Hanlon, the following colloquy ensued between him and counsel for ORHS: Q Is it fair to say, Councilman O'Hanlon, that the City of Oviedo and surrounding area is in growing urban area that has everything but a hospital? A That is a true statement. Q Are you familiar, Councilman O'Hanlon, with the proposals of Orlando Regional Healthcare System and Florida Hospital to locate a 60-bed hospital in the City of Oviedo? A Yes. Q Do you support that effort? A A hundred percent. Q Do you believe, Councilman O'Hanlon, it would be of benefit to your constituents to have that [hospital] in the city of Oviedo? A Absolutely. People approach me every week wanting to know where our hospital is. Q Can't understand why it's not there already?A Well what they understand is that there is a tremendous need for a hospital and they don't understand why it's not in the process. (Tr 816-7). Residents of Oviedo also do not understand why they have to drive for such a long time to reach a hospital particularly when their goal is the emergency department. This concern about which Councilman O'Hanlon hears from a constituent "at least once a month" (tr. 819) also made its way into the resolutions of the two political bodies in the form of an identical introductory clause, as follows: "WHEREAS, there are increasing problems with timely access to care especially for emergencies," (Joint ORHS/Florida Hospital Nos. 8 and 10). It is, moreover, a concern that takes up the second prong of the applicants' case for "not normal" circumstances: issues of access. - Access The Oviedo Service Area Although similarities exist between the two, the Oviedo Service Areas defined by the two applicants are somewhat different. The service area selected by ORHS is larger than the service area selected by Florida Hospital. The Primary Service Area ("PSA") for ORHS' proposed hospital is composed of four zip codes: 32765, 32732, 32766, and 32708. Of the four, the first three are in eastern Seminole County, that is, east of Highway 417, the Greenway, and south of Lake Jessup. The fourth, 32708 in the Winter Springs area, is just west of the Greenway. The Winter Springs zip code was included in ORHS' PSA in part because it is adjacent to the Greenway. It has also experienced tremendous population growth and is very close to the proposed site for ORHS' hospital. A secondary service area proposed by ORHS is composed of a zip code in Seminole County north of Lake Jessup, 32773, and three zip codes in Orange County, 32817, 32820, and 32826. Located in the midst of the three Orange County zip codes is zip code 32816. It appears on ORHS exhibits as part of the secondary service area. As the zip code for the University of Central Florida, it has a very low residential population so that there are only a few students who might live in a dorm that would list it as their residence when receiving hospital services. There are actually "very few" (tr. 302) discharges from zip code 32816. If one does not include zip code 32816 then ORHS' service area is a comprised of eight zip codes. The April 1, 2001, population for the primary and secondary service areas or the service area designated by ORHS is 170,774. This service area has more than doubled in population over the last decade. Over the next five years, the service area is expected to reach 193,408 residents, of which 45% will be of prime child bearing age (15-44), "a dominant position for that age cohort within the population." (Tr. 315). The Oviedo service area is defined by Florida Hospital as four zip codes in Seminole County, 32708, 32732, 32765, and 32766 and one in Orange County: 32826 (all zip codes in ORHS' service area) with a population of more than 100,000. Florida Hospital's service area does not include Zip Code 32773 (the zip code north of Lake Jessup) that is in ORHS' service area nor, with the exception of 32826, does it include any of the Orange County zip codes that are in ORHS' service area. Thus, there are five zip codes in what Florida Hospital regards as the Oviedo Service Area and eight in what ORHS regards as the Oviedo Service Area if zip code 32816 is excluded. Although somewhat different, for purposes of examining travel distance and time between Oviedo and area hospitals, the Oviedo Service Areas of the two applicants are similar enough to be considered to be the same. Or, as William E. Tipton, an expert in traffic transportation and civil engineering, testified at hearing, the results of his study entitled "Travel Time Analysis Proposed ORHS Oviedo Campus, Oviedo, Florida" (ORHS Ex. 14) would not be substantially different if he had focused on the Florida Hospital site instead of the ORHS site. Travel Time Analysis Mr. Tipton prepared a travel time analysis to evaluate the differences in travel time that could be anticipated with the development of a hospital campus in Oviedo. Mr. Tipton's study concluded that there would be a reduction of average daily travel time from the ORHS PSA to a hospital by 64% or 18 minutes. The maximum reduction will be 75% of the time or 21 minutes. In the critical peak afternoon hour, there will be a maximum reduction of 79% or 22 minutes in time from that which exists today. The reductions in drive distance for Oviedo area residents if a hospital were in Oviedo would be significant especially in the arena of emergency services. Emergency Services Access to emergency services at a hospital emergency department ("ED") is one of the most important factors in making sure people have reasonable access to community hospitals. "[Y]ou really need . . . immediate care for emergencies, and so it's important to be able to get to the emergency department quickly and to receive care rapidly once you get there." (Tr. 336). Between 1997 and 2001, the hospitals experiencing the highest percentage of ED visit increase, other than Health Central, were Florida Hospital East in Orange County and South Seminole Hospital in Seminole County. During the period between 1997 and 2001, although the population of Seminole County grew less than Orange County, Seminole County had a larger percentage of ED visits. Specifically, the population of Seminole County grew 12% but its ED visits increased 23%, twice its population growth. During the same period, the population of Orange County grew by 15% but its ED visits only increased by 17%. Closer examination of these statistics reveals that ED visits in the downtown area of Orlando, to include Orlando Regional Medical Center and Florida Hospital, were below the county average. However, suburban hospitals, or those in outlying areas, particularly near Oviedo, had much greater ED visit growth: ED visits grew 27% at Florida Hospital Apopka and 37% at Florida Hospital East. Florida Hospital East is the closest hospital in Orange County to the Oviedo area. Of the hospitals in Seminole County, South Seminole was the most severely affected by ED visit increase with a 38% increase of ED visits between 1997 and 2001. (ED visits in excess of 27,000 by area residents are projected in 2006.) In the Oviedo area there are unfortunate but not uncommon delays in emergency transport. More than 20% of emergency transports involve delays of in excess of 45 minutes after arrival at the hospital. These delays are serious because patient outcomes decline dramatically if definitive care is not delivered within the "golden hour," a concept that: reflects the fact that patient outcomes decline [dra]matically in terms of . . . mortality rates if definitive care is not delivered within one hour of the traumatic injury that has been sustained. In cardiology, they tend to . . . say "time is muscle," * * * the longer it takes for a patient to get definitive care following a major cardiovascular event, the more muscle mass is likely to be damaged. . . . [Y]ou can go on and talk about stroke victims, cerebral vascular patients and just a whole array of patients who [fare] much better in terms of morbidity and mortality if they receive definitive care within an hour of the episode. (Tr. 336). Part of the delay for patients in need of prompt emergency services is due to ambulance standing time. Standing time is the time a patient waits in the ambulance or hallway of the emergency department before the patient is seen by medical staff. This standing time does not include the time it takes the ambulance to respond to the call or the time the EMS personnel spend at the scene to stabilize the patient. Nor does it include the travel time to the hospital from the scene. Ambulance standing time for patients from the Oviedo area on average is between 42 and 47 minutes. When average travel times established in Mr. Tipton's study are combined with the standing times, there is not one existing provider of emergency services that can provide a patient from Florida Hospital's Oviedo Service Area or ORHS' PSA with emergency care within the "golden hour." This combination, moreover, as stated above, does not take into account the dispatch time and time of the ambulance at the scene. The typical types of emergency calls EMS personnel see in Oviedo include difficulty breathing, auto accidents, kids falling off bicycles, heart attacks, and drug overdoses. The largest majority of calls would go to a local community hospital as opposed to trauma center in downtown Orlando. Jeffrey M. Gregg, Chief of the Bureau of Health Facility Regulation, which includes the Certificate of Need Program for the Agency for Health Care Administration, testified that emergency room access is a problem that has gotten worse over time. Mr. Gregg also stated that a new hospital in the area will improve emergency access for people in the immediate area. A new hospital in Oviedo service area would also benefit and improve emergency access for patients in Orange County emergency rooms by lessening the emergency patient loads they experience. Wayne Martin, Fire Chief, Emergency Management Director, City of Oviedo, testified that the standing times and delays at the area hospital emergency rooms tie up Oviedo area ambulance services for an extended period of time. Emergency Medical Service ("EMS") staff must stay with their patient until the patient is taken into the emergency room and given medical care by emergency department staff. Because of these delays, EMS staff are out of their service area for extended periods of time. This decreases the level of service for the residents of the Oviedo area. One aspect of the problem influences another so as to create a compounding effect. Dr. Robert A. Schamberger, a family practitioner in Oviedo, testified that recently a patient went to the emergency room at an area hospital and it took 16 hours from the times she arrived until she was seen by the emergency room personnel. Dr. Schamberger tried to admit another patient of his in an area hospital on a recent Friday and was informed there were no beds. The hospital said they would call when they had an available bed. The patient was finally admitted on Monday. Emergency room waiting times across the entire community are several hours, which is an unacceptable care standard. Dr. Zulma Cintron practices internal medicine in Oviedo. Dr. Cintron testified that there is a "huge need" for a hospital in the Oviedo area. "We definitely need the beds." Dr. Cintron has had patients with chest pains who ended up waiting in the emergency room for four, five, and six hours before receiving care. Patients with less imminent needs have waited 12, 16 even 24 hours. Dr. Cintron's testimony for Florida Hospital was confirmed by the testimony produced by ORHS of Scott Greenwood, M.D., a cardiologist who heads a cardiology group. The evidence provided by Drs. Schamberger, Cintron And Greenwood, anecdotal though it may be, supports the existence of a problem with emergency services access in the Oviedo area that is shown by the analysis provided by the combination of Mr. Tipton's traffic study and ambulance standing time. So does projected volume for ED visits. Projected volume at Florida Hospital Oviedo in year two would be in excess of 27,000 visits. The Oviedo area has a population that "is adequate to support a hospital at high utilization levels within [a] short period of time and also will generate a significant number of emergency visits." (Tr. 1355). A new hospital facility in the Oviedo service area would help to alleviate the delays currently being experienced in the area hospital emergency departments. The Agency is not unaware of the problem and the solution that an Oviedo hospital would provide. The issue for AHCA is "[w]ould the improvement that would result for some people justify the construction of an new hospital?" (Tr. 726). The applicants claim that the three existing Seminole County hospitals are not appropriately located to provide emergency services required by the growing population of Oviedo. Put another way, within the sub-district and District 7, ORHS and Florida Hospital assert there is a mal-distribution of beds. Mal-distribution of Beds While population growth has increased dramatically in east Seminole the opening of health care facilities in the east part of the county has lagged behind; the area has more than 100,000 people but no hospital. The three acute care hospitals in Subdistrict 7-4 are all located in the western portion of Seminole County. People tend to use hospitals closest to them especially for emergency services. Because of the north/south nature of the road corridors in Seminole County and the congestion and distances involved in east/west travel in the county, the Oviedo area population's access to existing hospital service in the district is problematic. The population has better access to resources in Orange County, a different subdistrict, and, in fact, 66% of the Oviedo population take advantage of that better access. Consistent with the pattern of transportation development in Seminole County, all three hospitals in Seminole County are located between I-4 and U.S. Highway 17-92. Florida Hospital Altamonte is situated along the 436 corridor, whereas South Seminole Hospital is located further to the north on State Road 434, while Central Florida Regional Hospital is situated at the northern border of the county along the U.S. Highway 17-92 corridor. Dr. Rond had this to say about the locations of the three Seminole County hospitals in relation to the population in east Seminole County: The resources in the western part of the county are not situated in such a way that they are being utilized effectively by residents of [ORHS'] service area. Instead, they seek to move along the north/south corridor, primarily the Greenway, to utilize the services located in Orange County or … they take other routes of access to reach Winter Park Hospital, which is . . . in Orange County. (Tr. 319). The problem of distribution of hospitals is not restricted simply to inside the county. There is a mal- distribution in District 7 as well. Overall in the district, there are 2.3 beds per thousand. Orange County enjoys a ratio that is very high when compared to Seminole County's. Orange County's bed to population ratio is 2.7 beds per thousand, whereas Seminole County's is only 1.55 beds per thousand. The average bed ratio in Florida is 2.85 per thousand. Whether measured against the state ratio or the Orange County ratio, general acute care hospital beds per thousand population in Seminole County is low. The ratio comparison between Orange County and Seminole County will improve with an Oviedo Hospital although it makes the overall ratio only "a little closer; so that Orange County has beds per thousand and Seminole County would have 1.6 beds per thousand." (Tr. 316). The applicants intend to make that improvement with their proposed projects. The Proposed Projects ORHS' Orlando Regional proposes to construct a new 60-bed acute care hospital in the City of Oviedo. The location was described at hearing by Karl W. Hodges, ORHS vice president of Business Development: [T]he hospital [will be built] within a two- mile radius of . . . Highway 426, also called Loma and Mitchell Hammock Road which is also called Red Bug Road. [The CON Application] further stipulates we'll be east of 417. (Tr. 20). Within that area, ORHS proposes to build a three-story 155,000 square foot facility on approximately 35 acres of land. Although a site has not yet been purchased, there is at least one parcel of 35 acres of land available in the area that can be acquired by ORHS at a price of $7,000,000 or less, as indicated in its application. The bed complement of the proposed facility will be eight ICU beds, ten labor-delivery-recovery and post-partum ("LDRP") beds serving the obstetrics department, 15 telemetry monitored beds, and 27 medical/surgical acute care beds. The proposal will add 30 beds to the inventory of beds in the sub-district but it will not add beds to the inventory of District 7. The 60 beds will be transferred by ORHS from two facilities. Thirty of the beds will come from South Seminole Hospital (in Seminole County). By itself, moving the 30 beds within the sub-district "for the stated goal of enhancing access . . . is a non-controversial project" (tr. 627) that is not subject to a certificate of need methodology but that still requires CON review and approval. The other thirty beds will come from Orlando Regional Lucerne Hospital in Orange County. However attractive for its minimization of controversy, all 60 beds could not have been transferred from South Seminole because to do so would have raised its occupancy above 80%, "an untenable result." (Tr. 630). For the additional 30 beds, "Lucerne seemed like a logical choice, given its bed size and its utilization." (Tr. 628). The design of the proposed hospital is based on another ORHS facility: South Lake Hospital, a replacement facility that opened in January of 2000. Florida Hospital's Florida Hospital also proposes to construct a 60-bed acute care hospital in the City of Oviedo. Unlike ORHS, Florida Hospital owns the site, 15 acres at 8000 Red Bug Lake Road near an intersection with the Greenway. The site currently includes a two-story, 41,000 square foot medical office building and a one- story, 6,000 square foot urgent care center. A two-story, 161,000 square foot facility is proposed to be constructed on the remaining vacant space at the site that has been approved under the Development of Regional Impact process for a 120-bed hospital. Ownership of a DRI-approved site will save Florida Hospital time and expense entailed by permitting requirements. All 60 beds will be part of an innovative design referred to as a "universal room and universal care delivery model." For the present, Florida Hospital does not intend to provide obstetrics at the Oviedo facility but "all of the universal patient rooms are capable of being LDRP rooms" (tr. 1181) should Florida Hospital decide in the future to provide obstetric services at the hospital. Florida Hospital will transfer 60 beds from Orange County facilities so that Florida Hospital's proposal will increase the sub-district's bed inventory by 60 beds, 30 more than the increase that will be affected by ORHS' proposal. Just as with ORHS, Florida Hospital's proposal will not increase the bed inventory in District 7. Fifty beds will be transferred from Florida Hospital's Winter Park facility and 10 beds will transferred from Florida Hospital's Apopka facility. AHCA's View of the Proposals The Agency's conclusion that the applications did not demonstrate "not normal" circumstances was reached with difficulty. Review of the applications taxed the agency's decision-making process because of the challenging circumstances presented by the applicants. As Jeffrey Gregg testified for the Agency, when there is "no fixed-need pool," AHCA look[s] at applicants in terms of a unique set of circumstances that they present . . . and in this instance, The circumstances . . . in this case challenge the system, make it more difficult for [the Agency] to make a sound decision in the tradition of the CON program. (Tr. 723). However much in keeping or not with the tradition of the CON program, the determination that there were no "not normal" circumstances to justify need afforded a benefit to the Agency; it would not have to make the difficult choice between the applications. While it could have granted both applications, an option considered by the Agency (see tr. 729), no party contended in this proceeding that circumstances justify two new 60-bed hospitals in Oviedo. If need is proven for but one hospital, then a selection must be made. Yet, at every turn, AHCA has found one advantage held by an applicant to be defeated by another held by its opponent or one set of circumstances that would normally be an advantage neutralized by other considerations. For example, in view of the nature of the Orlando market, AHCA reasonably did not give much weight to ORHS' proposal to add fewer beds than Florida Hospital to the sub- district despite the fact that usually there would be advantage to a mere intra-sub-district move. In the absence of fixed need, for example, such a move would not have to be supported by "not normal" circumstances. To the contrary, however, from the point of view of practicality, it makes more sense "to take beds from a more urban setting [in Orange County, a different sub-district] where they are not being used [as proposed by Florida Hospital] and move them to a new rapidly growing area where there are not hospital beds." (Tr. 739). A sense of practicality guided AHCA throughout its CON review in this case. The Agency, in fact, approached the applications by "trying to be as practical as possible." (Id.) As explained by Mr. Gregg, again on behalf of AHCA: [The Agency] do[es] not give much weight to the fact that [the applicants] would be crossing subdistrict lines here and that one of them [ORHS] is in a position to . . . add fewer beds to the planning area. That's noted in the SAAR, but practically speaking, we are talking about a metropolitan area here. We are talking about in both cases large systems wanting to move beds from one part of their system to another part. So in many ways, . . . once again, [ORHS and Florida Hospital] are really well-matched and difficult to distinguish. (Tr. 724, emphasis supplied). The difficulty inherent in distinguishing between the applicants was repeatedly emphasized by the Agency. The point was brought home once more in questioning of Mr. Gregg by counsel at hearing: Q [W]ith regard to the minute distinctions between the applicants, at your deposition, some of the statements you made in that regard included [that ORHS and Florida Hospital] are both good citizens. All of these things in this case, coming up so close and so equal, that . . . in terms of CON analysis, it becomes very difficult . . . to make a distinction between the two of them. They are both just that good. And then also [the Agency] think[s] they compare very favorably, and very evenly, noting again and again and again that they are very, very close, very, very comparable. Is that still your position here today? A Yes. (Tr. 766-7). However close the Agency regards the two, there are differences in the applications. While some may not be of great benefit to a decision, others may serve to sustain a principled choice. Differences in the Applications Obstetrics The leading reason for hospitalization among area residents is the need for obstetrical services with births running at more than 2,000 per year. During the 12-month period ending June 2000, for example, childbirths accounted for 2,041 discharges. Of the top ten DRGs for discharges among area residents, uncomplicated vaginal delivery accounts for the most discharges, cesarean section ranks third and vaginal delivery with complications is seventh. In keeping with the demand for obstetrical services, the utilization patterns of the population in the Oviedo Service Area and the area's age composition, upon the opening of its facility, ORHS proposes to provide obstetrical services. The proposal is also due, in part, in response to the closing of the obstetric program at Florida Hospital East in May of 2001. There is physician support for ORHS' proposed obstetric services. Robert Bowles, M.D., testified by deposition that his group practice, Physician Associates of Florida, comprised of 14 obstetricians and gynecologists would cover obstetrics at an Oviedo hospital. While Dr. Bowles would not personally admit obstetrics patients at the new hospital, three of his partners would. Florida Hospital does not propose to provide obstetrics upon opening although it has designed its physical plant to provide an OB unit so that Florida Hospital would have the capability of initiating that service without a problem. In other words, Florida Hospital's proposed facility would be "OB- ready." (Tr. 725). Unlike ORHS, Florida Hospital does not have physician support for providing obstetric services at its proposed facility, a part of the reason for not offering OB. The basis for Florida Hospital's lack of physician support is a malpractice insurance crisis for obstetricians. Florida Hospital's proposed facility is not projected to open for another three years. If, during that time, the malpractice crisis eases and there is greater physician coverage availability, Florida Hospital could open obstetric services at the same the hospital opens since it will be OB-ready. Another reason that Florida Hospital has decided against offering obstetrics upon opening is that most maternity patients are more comfortable delivering babies in a setting that has neonatal intensive care services available. Two such settings are ORHS-Arnold Palmer and Florida Hospital's main campus. Indeed, a significant number of maternity patients from Oviedo are choosing to travel past multiple hospitals that offer obstetric services to have their babies delivered at one or the other of these two hospitals. Arnold Palmer, in fact, is the leading provider of obstetrical services to the residents of the Oviedo area's two most populous zip codes: 32708 and 32765, both more than 30 minutes driving time away from the hospital. Medicaid and Charity Care Conditions Approval of ORHS' CON is conditioned on a minimum of 7% of total annual patient days for Medicaid patients and 1% for charity care. Florida Hospital's application offers no conditions with regard to Medicaid or charity care. Like ORHS, Florida Hospital is one of the top ten providers in the State of indigent care, and a disproportionate share Medicaid provider. The Agency's view of the difference between ORHS' provision of indigent care conditions and Florida Hospital's decision to not condition its application was explained by Mr. Gregg: Conditions [such as those for indigent care] are important when it allows us to distinguish between applicants. They are less important when we have competing applicants, both of whom has such strong track records as these two do. . . . [W]e look at evidence of past performance relative to indigent care . . . . [I]n a case like this . . . both of these applicants have such good records in th[e] area [of indigent care]. They are both in the top ten statewide. . . . [A] promise of this condition or that condition [does not] give us particular concern one way or the other. They are both very good in that area [of Medicaid and charity care] and very tough to distinguish between. (Tr. 735-6). Architectural Design and Site The architectural plans of both applicants meet all codes that apply to a new hospital in the state of Florida. The ORHS design is tried and proven at ORHS' South Lake facility and will work on a 35-acre site. The size of Florida Hospital's site, 15 acres much smaller than ORHS', led to criticism of the site from ORHS experts. But the site is large enough to incorporate growth in the future. It can accommodate 320 beds and ancillary services. The design, moreover, takes these expansion capabilities into account. Related to the size of the site, the site's conservation area, comprised of wetlands and a forested upland buffer that will remain undeveloped indefinitely also produced criticism that the site is too cramped for a new hospital. But the conservation area, with its mature tree canopy, presents advantages. The hospital was designed to incorporate the view of the conservation area from hospital rooms because such a view is beneficial to the healing process. Furthermore, the conservation area can be used to satisfy water retention requirements. Florida Hospital's site is DRI-approved and part of a DRI master storm water plan that connects many ponds and wetlands. Surrounded by three roads, it has excellent access from existing roadways. Vehicular circulation is split to provide different public, service and emergency entrances. Innovation by Florida Hospital Unlike traditional hospital care models where the patient is moved from room to room depending on type and intensity of care, all care and services are provided to the patient in one "universal" room under the "universal delivery of care model." The model was developed by Florida Hospital. "The nursing leadership of the universal room design . . . was under the direction of Connie Hamilton." (Tr. 1080). Ms. Hamilton, accepted as an expert in nursing and nursing administration, explained at hearing that under the model, the room is designed to provide any type of care the patient might need. Whether the patient is admitted in acute care and then moves to intermediate care or med-surg, all care is provided within one "universal" room. Not only does the patient stay in one place, but as Ms. Hamilton testified, "[t]he nurses stay in one place in providing that care to [the patient] and the families know where the patient is and the physician knows where the patient is [at all times]." (Tr. 933). The universal care model streamlines the interactive processes of care of a patient. The care and attention of physicians, nursing staff and families devoted to moving the patient from room to room and keeping track of the patient as type and intensity of care changes is reduced to nearly zero if not eliminated entirely. The time, energy and resources formerly devoted to all that is entailed with changes in the patient's room is then free to be re-directed to care and attention paid to the patient. The result is enhancement of Florida Hospital's ability to provide "whole person" care consistent with Adventist principles of health care. The universal care delivery model is an innovative approach to the delivery of healthcare. Pioneered by Florida Hospital at Celebration Health, the universal care delivery model has been shown there to reduce medical error, reduce length of stay, reduce pharmacy costs, reduce nursing workload, reduce housekeeping work, and probably to reduce infection rates. Following the universal care model employed at Celebration Health, Florida Hospital has designed its proposed Oviedo hospital facility with universal rooms. Consistent with the universal care delivery model, the rooms are designed to improve the healing experience during hospitalization and minimize the patient's feeling of being in a hospital setting. Another benefit of the universal care model is high physician satisfaction due to continuity of nursing care and other factors. The physicians know where the patient is, that is, in the same location every day. Physicians, moreover, are not called at all hours of the day and night to effectuate patient transfers to other rooms. Kathleen Mitchell has studied the universal care model and published and submitted articles on the model to nursing journals. She has consulted with hospitals around the country interested in the model as well as the "health care arm of the Department of Defense, Air Force, Army, Navy, Veteran's Administration." (Tr. 1084). Ms. Mitchell, accepted as an expert in nursing amplified the testimony of Ms. Hamilton. With regard to the problem the universal care delivery model is designed to address, Ms. Mitchell testified: [T]ransferring patients for different levels of care . . . fractures continuum of care. It is . . . disruptive to everyone . . . involved . . . to the patient and their families . . ., to nursing, pharmacy, the physicians . . . . It creates a great deal of anxiety for patient and the families . . . even [those] who are getting better and moving to a lower acuity of care. One of the most significant things about transferring patients for different levels of care is it involves a great deal of work. Not only bundling the patient up, but the documentation and all the communication that goes along with securing a new location for the patient and expediting a transfer. And moving patients around creates a risk of medical error. The length of stay in hospitals has gotten so short and everybody is focused on reducing the length of stay that in the traditional model of care, nurses are turning over more than half their patient assignment daily . . . . [T]here is the confusion and risk that goes along with that. (Tr. 1086-1088). The benefits of the reduction and elimination of transfers produced by the universal care model were listed by Ms. Mitchell: increase in the continuity of care, reduction in nurse workload, high physician satisfaction, reduction in emergency room waiting time, family satisfaction, connectivity between patient, family and staff. Others were elaborated on by Ms. Mitchell. For example, reduction in pharmacy costs, probable reduction in infection and reduction in housekeeping costs: When you are meeting the needs of the patient in one location, you are not leaving medications behind or sending them to the wrong place, and there is work that nurses and pharmacists do with calling each other with ['] where is it, I can't find it, I sent it[',] all that goes away. We are demonstrating a low incidence of nosocomial infections because we expose our patients to one environment of organisms. This is a very difficult one to prove; even though we have a low incidence of nosocomial infections, we also have a fairly new facility [at Celebration], but it makes common sense that if you are reducing the transfer of the patient and the exposure . . . to different environments, you are reducing their exposure to organisms and will have a lower . . . infection rate. . . . [W]e don't strip linens off the beds and clean the beds where the bed was just made three hours ago, with all the patient transfers that are involved. So there is a reduction in . . . housekeeping work and . . . linen expense. (Tr. 1089-1090). Like the housekeeping efficiencies, the nursing staff benefits from the efficiencies associated with supplies. All of the supplies the nurse needs to care for the patient are close by, so the nurse saves time otherwise retrieving supplies from down the hall or in other areas of a hospital wing. Another benefit of the design is "connectivity to the outside world. The rooms have large windows . . . patients feel connected to the outside world . . . . " (Tr. 1091). This design feature will make use of the conservation area on the Florida Hospital site and the soothing vista it will provide to the patient, and assist in the healing process. Other Design Features Design drawings are a living and continually evolving process. The planning process of Florida Hospital for the design of its new Oviedo hospital involved specialty department experts and ancillary representatives discussing delivery of quality care for a patient throughout the system. The specialty experts and ancillary representative include radiology, emergency department, lab, pharmacy, and respiratory. The involvement of these people assures optimal patient flow throughout the system. In Florida Hospital's design plans, the patient flow and interaction between departments are well designed and well laid out so as to minimize the opportunity for confusion. In order to maximize efficiency, a larger number of beds in one nursing unit works better than smaller pockets. Florida Hospital's design plans have one 40-bed unit and one 38- bed unit. This design gives more flexibility and can expand or shrink more easily as needed. You don't have to open up another unit and staff it so often, when adding only one or two patients. Florida Hospital designed its facility specifically to take advantage of the economies of scale that being a satellite hospital in a larger system provide. For example, Florida Hospital's general storage, central lab, and other areas were purposely designed smaller than one would typically find because Florida Hospital operates a system-wide central warehouse, thus greatly reducing the need for central storage areas. Likewise, Florida Hospital operates a system-wide central clinical lab, thus minimizing the space necessary within a hospital like Oviedo for lab space. ORHS did not design its facility to take advantage of the economies scale of being part of a system. Presence in Oviedo Florida Hospital has had a presence in the Oviedo community since the 1970's, when it purchased land in the Red Bug corridor area. In the 1980's, Florida Hospital built a medical office facility in Oviedo and began to recruit and encourage physicians to practice in the area. When Florida Hospital acquired Winter Park Hospital, its commitment to the community of Oviedo increased by virtue of the fact that the Winter Park Hospital organization already had property and outpatient facilities in Oviedo. The result of Florida Hospital's early presence in Oviedo is that it has a high degree of physician support in place in the Oviedo community. Many of the primary care physicians in Oviedo refer their surgical cases to Florida Hospital. Florida Hospital purchased Winter Park Hospital on or about July 1, 2000. With that purchase, Florida Hospital acquired the hospital site in Oviedo. With the purchase of Winter Park Hospital, Florida Hospital also "purchased" Winter Park's plan to build a hospital in Oviedo. The Florida Hospital site has long been recognized as the "Hospital Site" in Oviedo. Immediately after purchasing Winter Park Hospital, Florida Hospital went to work on developing a plan to build a hospital in Oviedo. Florida Hospital began meeting with Oviedo city leaders in the fall of 2000 and early 2001; Florida Hospital also assembled a team of people from all areas of Florida Hospital including radiology, clinical services, marketing, finance, facilities, and engineering to work toward the development of a Certificate of Need application for a hospital on its site in Oviedo. Florida Hospital's two existing medical office buildings in Oviedo contain over 60,000 square feet of medical office space, in which are housed physicians practicing in a wide range of areas including Family Practice, Internal Medicine, General Surgery, Orthopedic Surgery, Urology, Radiology, Gastroenterology, Ear, Nose and Throat, OB/GYN, and Dental and Psychological Practitioners as well. These physicians are all currently on the staff of Florida Hospital. Also included in these facilities are a Florida Hospital owned and operated radiology center, outpatient rehabilitation center, and outpatient lab. The radiology center offers general radiology services, including CT scanning and ultrasound. The larger of the two medical facilities that Florida Hospital owns in Oviedo is located on the site where the new hospital will be located. This is the facility that includes the outpatient radiology, rehabilitation and laboratory services. An urgent care center is also located on the site. As a result, residents of Oviedo are used to coming to Florida Hospital's site for medical services and already recognize it as a medical facility site. The fact that Florida Hospital has such a significant presence in the Oviedo Community, and that a large number of staff physicians are already in place in Oviedo, is a great benefit because of the existing referral patterns in place between the physicians at the existing Florida Hospital facilities in Oviedo and specialists and sub-specialists on Florida Hospital's staff. In contrast, ORHS had an outpatient surgery center in Oviedo; however, it has been closed due to lack of physician support. Likewise, ORHS originally offered radiology diagnostics at its Oviedo office building, but has since sold that business to the radiologists. Finally, ORHS does not own the medical office building in Oviedo anymore, having sold it two weeks before this final hearing commenced. Dr. Joseph Portoghese, a Board Certified Surgeon, practicing in the Orlando area for over 13 years and president- elect of the Florida Hospital medical staff, testified that his group, Surgical Associates, which is made up of six surgeons, derives approximately 20% of their patients from the Oviedo area. In his opinion, Florida Hospital knows the Oviedo population best as evidenced by its "major presence" in Oviedo with its two facilities. Dr. Portoghese also testified that his group knows most of the primary care physicians in the Oviedo area and that a good many of them send their surgical cases to his group. Dr. Portoghese is on the staff of Florida Hospital, but not on the staff of Orlando Regional. Dr. Schamberger, a family practitioner who has practiced in Oviedo for 16 years and whose patients come primarily from the Oviedo, Chuluota, Winter Springs and East Orlando area testified that Florida Hospital has the best infrastructure for the provision of medical care in the Oviedo area. "The physicians who provide a great bulk of the care for that Oviedo, Chuluota, Winter Springs area practice at Florida Hospital. Their referral patterns are to Florida Hospital. Florida Hospital provides us with all the specialty and sub- specialty care we need for our patients." Dr. Schamberger is on the staff of Florida Hospital, but he is not on the staff of Orlando Regional. Dr. Schamberger further testified to the disruption in continuity of care that would occur for many Oviedo area patients whose physicians are on the staff at Florida Hospital if Orlando Regional were to be the only applicant approved to build a hospital in Oviedo: "[I]ts a negative impact for continuity of care. If I have been attending a patient for many years, the first thing that happens to a patient when they get in the hospital is that they have a history and physical examination done to establish what their underlying medical conditions are. I know a lot more about that from my patients than someone who doesn't see them and doesn't know them." (Tr. 1318) Dr. Cintron, a physician practicing in the area of Internal Medicine, whose main office is in Oviedo at the Florida Hospital site, testified that she has approximately 3,000 active files and 75% to 80% of those are in the Oviedo area. She has been practicing in Oviedo since 1994. Dr. Cintron testified that approximately 85% of her patients that get admitted to a hospital are admitted to one of Florida Hospital's facilities. Also, when she makes a referral to a specialist or a sub-specialist, approximately 85% of those patients go to a Florida Hospital facility. Competition "[T]he U.S. health care system is a competitively driven market . . . with some regulatory components and based on a managed care model." (Tr. 485). Rather than every insurance plan having a contract with every provider, the managed care model uses selective contracting. Competing health insurance plans select providers with which to contract for the provision of health care services to their subscribers. The ability of the competing insurance plans to engage in selective contracting requires providers such as the two hospitals in this case to compete along a number of dimensions including price. When successful, this competitive price model holds down price and maintains quality. The State of Florida has a "fairly well developed and active managed care sector." (Tr. 507). "[M]anaged care in and of itself [however] is not really able to save much money for consumers. . . . [T]he key ingredient in the ability of managed care plans to control health care cost increases is the competitiveness of the hospital market, the structure of the market in which they are negotiating on behalf of their health plan subscribers." (Tr. 500). The parties define the "market" differently. Florida Hospital uses the Elzinga-Hogarty ("EH") Test. The test, along with appropriate supplemental information, indicates that the market is all of Orange and Seminole Counties or the tri-county area that also includes Osceola County. Whether a two county or tri-county market, Florida Hospital refers to its market as the metropolitan Orlando market or the "overall Orlando market." Orlando Regional identified a smaller area as the relevant market, one that is more local to Oviedo. The reason for this more local market was explained by Glenn Alan Melnick, Ph.D., and an expert in health care economics who testified for ORHS: [I]n order for [managed care plans] to attract subscribers, they have to have a health plan that's attractive to people. And one of the features that people look for in their health plans is the availability of local hospital services. . . . [I]n order to make their products marketable, they have to include reasonably accessible hospitals . . . [I]f there is limited local competition, then the opportunities for them to generate price competition by leveraging competitive conditions . . . are very limited and [the managed care] model will not be successful. (Tr. 489). Dr. Melnick used the five and eight zip code Oviedo Service Areas as defined by the applicants as the market. He calculated Herfandahl-Hershman Index ("HHI") valuations for each zip code in the two Oviedo Service Areas. He also calculated HHI valuations for another seven zip codes in Orange County "to provide background to [his] understanding of the allocations in [the] area . . . . ." (Tr. 516). Dr. Melnick's calculations showed that Florida Hospital has a market share between 60 and 69% for the five zip codes in Florida Hospital's Oviedo Service Area and it showed a market share of between 25% and 59% for the three zip codes in ORHS' Oviedo Service Area that were not included in Florida Hospital's Oviedo Service Area. In each of the seven zip codes in the area outside the Oviedo Service Area, Florida Hospital's market share was higher: in excess of 70%. The analysis led Dr. Melnick to conclude that the market is highly concentrated in favor of Florida Hospital. Using the zip codes in the Oviedo Service (and it appears from the record the seven not in either applicant's Oviedo Service Area that Dr. Melnick had analyzed for background purposes), Dr. Melnick concluded that if the CON is awarded to Florida Hospital "[i]t would make an already concentrated market much more concentrated." (Tr. 524). Florida Hospital's relative market share would rise from 65.8% to 85.7%. Orlando Regional's would drop from 27.4% to 11.5%. The award of the CON to Florida Hospital would, moreover, "seal its already existing market power into the future." (Id.) Conversely, awarding the CON to ORHS led Dr. Melnick to conclude that the market as he defined it would be more competitive; Florida Hospital relative market share would drop to 51% and ORHS' would rise to 44%. What Dr. Melnick's relative market shares would have been had he not used the seven zip codes he selected outside the Oviedo Service Areas of the two applicants does not appear to have been shown by ORHS. Including the seven zip codes outside the Oviedo Service Areas for determining the relative market share that led to Dr. Melnick's conclusions runs counter to his premise that the market should be a local one, that is, an Oviedo market. It is not clear what relevance these seven zip codes had to his analysis since their inclusion runs counter to the underpinnings of his approach to the issue. If the overall Orlando market used by Florida Hospital is considered the market, the conclusion is that, whether a CON for an Oviedo hospital is awarded to ORHS or Florida Hospital, the impact on relative market share is minimal. As for pricing, there has been no significant pricing difference between Florida Hospital and ORHS for Oviedo residents. Furthermore, both Florida Hospital and ORHS contract with managed care companies on a system-wide basis; Florida Hospital, moreover, uses a single master charge structure for all of its Orlando area campuses. It is not likely that the presence of a hospital in Oviedo would enable either Florida Hospital or ORHS to control pricing.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Agency enter a final order on the basis of the facts found in this order concluding that "not normal" circumstances exist for the construction and operation of a new 60-bed hospital in Oviedo and that Florida Hospital's CON application be approved and ORHS' be denied. DONE AND ENTERED this 18th day of November, 2002, 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 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 18th day of November, 2002. COPIES FURNISHED: Lealand McCharen, Agency Clerk Agency for Health Care Administration Fort Knox Building 3, Suite 3431 2727 Mahan Drive Tallahassee, Florida 32308-5403 Valda Clark Christian, General Counsel Agency for Health Care Administration Fort Knox Building 3, Suite 3431 2727 Mahan Drive Tallahassee, Florida 32308-5403 James M. Barclay, Esquire Ruden, McClosky, Smith, Schuster & Russell, P.A. 215 South Monroe Street, Suite 815 Tallahassee, Florida 32301 Steven R. Bechtel, Esquire Mateer & Harbert, P.A. Post Office Box 2854 225 East Robinson Street, Suite 600 Orlando, Florida 32802 Stephen K. Boone, Esquire Boone, Boone, Boone, Hines & Koda, P.A. 1001 Avenida del Circo Post Office Box 1596 Venice, Florida 34284 Michael P. Sasso, Esquire Agency for Health Care Administration 525 Mirror Lake Drive, North Suite 310G St. Petersburg, Florida 33701
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 Procedural background: Petitioner, COMMUNITY DIALYSIS CENTERS, INC., d/b/a COMMUNITY DIALYSIS SERVICES OF LAKELAND (CDC), owns and operates a 16- station outpatient kidney dialysis facility in Lakeland, Florida. On February 14, 1984, Respondent, WATSON CLINIC (WATSON), received a certificate of need to operate a four-station outpatient kidney dialysis center in Lakeland, Florida, CON No. 2916, from the DEPARTMENT OF HEALTH AND REHABILITATIVE SERVICES (HRS). Petitioner contests the grant of this certificate of need as an existing provider. Timely notice of the final hearing was issued June 26, 1984, and the final hearing was held as stated above. WATSON presented the testimony of Spero Moutsatos, Dudley Towne, Franklin L. Smith, Carter Fitzgerald, Joy Harrison, Nell Boutwell, Eugene DeBerry (by deposition), Sandra Biller, Dr. James Whitfield, John Dowless, Robert L. Mayer, Don Morris, Marilyn Neff, and Dr. Henry M. Haire. HRS presented the testimony of Ed Carter. CDC presented the testimony of Elaine Feegel, Jan Graff, and Michael Sullivan. CDC presented seven exhibits which were received into evidence, HRS had one exhibit, and WATSON presented into evidence 27 exhibits. The parties stipulated that subparagraphs 6, 7, 10, and 11 of Section 381.494(6)(c), Fla.Stat., are not applicable to this case, but that subparagraphs 1 through 5, 8, 9, 12, and 13 are in dispute in this proceeding. WATSON seeks a certificate of need to provide kidney dialysis for end- state renal disease (ESRD) patients in the western portion of Polk County, District 8, and particularly in the vicinity of Lakeland, Florida. WATSON's proposal would also include training for home hemodialysis and chronic ambulatory peritoneal dialysis (CAPD). WATSON originally applied for ten dialysis stations, HRS Exhibit 1, but amended its application at the hearing to four stations. WATSON Exhibit 14, hereinafter W. Exhibit 14. The area in which WATSON seeks to provide services is now served primarily by the 16 dialysis stations operated by CDC. ESRD patients must either successfully dialyze, obtain a successful kidney transplant, or they will die. Evidence as to need was provided by Spero Moutsatos, Executive Director of the Florida End-Stage Renal Disease Network 19. Network 19 was established in August 1977 as a part of a national network established by Congress, administered by the Health Care Financing Administration. Network 19 gathers data in Florida regarding End-Stage Renal Disease (ESRD) patients, provides data and projections of ESRD dialysis need to the Department of Health and Rehabilitative Services (HRS), assists patients and professionals with information, serves as an ombudsman for patient complaints, and monitors and evaluates the quality of care delivered in dialysis facilities. Network 19 did two evaluations of need with respect to the WATSON proposal, WATSON Exhibits 1 and 2. In the last three years, following the growth in availability generally of renal dialysis facilities in Florida, Network 19 has considered need on the basis of sub-areas within a District in about 75 percent of the cases considered. As of September 1, 1984, most of the ESRD patients residing in Polk County were dialyzing at CDC in Lakeland. CDC Lakeland provided services for 51 patients and one home patient, while the remainder (10 in-clinic patients and 16 home dialysis patients) were treated at Lakeland Regional Medical Center, CDC Winter Haven, CDC Tampa, and BMA of Orlando (one patient). WATSON Exhibit 2. Dialysis often leaves a patient feeling very weak at the end of the dialysis session. Dialysis in-clinic is required at least three times each week and takes about four hours. Emergency services are needed nearby since on occasion a dialysis patient will become unconscious and need immediate attention and hospitalization. Patients needing dialysis frequently are not employed or underemployed and do not have money for extensive travel for dialysis. Based upon the zip code analysis in WATSON Exhibit 2 and the testimony of patients, the appropriate service area for consideration of the need for dialysis facilities in this case is at a minimum in Polk County, and more appropriately, the vicinity of Lakeland. While some Lakeland area patients in the past drove all the way to Tampa for in-center dialysis, this is not a suitable alternative. Only CDC Lakeland and CDC Winter Haven adequately provide in-center dialysis to persons living in the Polk County and Lakeland areas. Lakeland Regional Memorial Center does not provide in-center dialysis, but only provides services for chronic ambulatory peritoneal dialysis (CAPD) Rule 10-5.11(18), F.A.C., establishes the methodology applicable in this case for determining need for chronic renal dialysis facilities. This rule sets forth the method to project the number of patients who will need dialysis one year from the date the application is deemed complete. The number of dialysis stations needed is then computed by using an 80 percent use rate for each station. The rule provides that each station at 100 percent use can dialyze four patients, assuming two shifts, six days each week. (Each patient dialyzes three times during the week.) Evening or third shifts are not counted as a part of capacity. The 80 percent use rate results in a capacity of 3.2 patients per station. The record evidence reflects that 80 percent is a reasonable level of use to set as a maximum justifying additional stations. The 20 percent additional capacity is needed for transient patient dialysis during the winter season, to account for repairs and maintenance on machines, and to provide some leeway when there are staffing problems. The net number of new stations needed is then computed by dividing the number of projected patients by 3.2 stations and subtracting from this the number of existing stations. The use rates for the two in-center dialysis facilities in the Lakeland area for the most recent quarter prior to the hearing show that facilities in the area are over the threshold for expansion: Utilization Month Rate (percent) CDC Lakeland July 1984 78 August 1984 81 September 1984 81 CDC Winter Haven July 1984 85 August 1984 87 September 1984 88 The evidence indicates that the above rates are not unusual, but reflect an upward trend in the area. In 1983, CDC Lakeland operated at an average of 76.5 percent, and CDC Winter Haven operated at 77 percent of its capacity. Network 19 projects a need by September 1, 1985, for six additional in-center dialysis stations for Polk County, and seven additional stations for the Lakeland sub-area. These calculations are explained in WATSON Exhibit 2 and the testimony of Mr. Moutsatos, transcript pages 68-72. The methodology for these projections is to take the ESRD patient census from Net work 19 records as of September 1, 1984, for the particular area, subtract the number of actual home dialysis patients on that date, add the number of patients projected for the area as new patients by September 1, 1985, calculated using 116 new patients per one million of projected population, subtract the number of these new patients expected to go on home dialysis, subtract the projected number of kidney transplants for the coming year, add back 25 percent of these transplant patients as transplant failures, subtract projected deaths of patients, and add back the number of patients on home dialysis which must return for in center dialysis. The final number is the number of patients expected to need in-center dialysis by September 1, 1985. Then, using 3.2 patients as the optimum per station, the number of stations projected as needed by that date, less the existing number, yields the projected net need. These projections of need followed the formula set forth in the rule. Moreover, there was no evidence that the assumptions or data underlying the above methodology was unreasonable, inaccurate, and for any other reason unreliable. Based upon the evidence, there is in fact a need for six in-center kidney dialysis stations for Polk County by September 1, 1985, and a need for seven stations by the same time for the Lakeland sub-area. Polk County is the only county in Florida where all in center dialysis facilities are owned by one owner. That owner is Community Dialysis Centers, Inc., CDC. CDC also owns the only other somewhat near facility in Plant City. Of the 97 patients using in-center dialysis in Polk County on September 1, 1984, 54 percent of these (52 patients) were using CDC in Lakeland. Home dialysis and CAPD are two alternatives to dialysis in-center. These alternatives for certain patients are more desirable due to the greater freedom afforded by these methods. Training and continued assistance, however, is needed to allow use of these methods. CDC Lakeland has not in the last few years provided adequately in this area. CDC's current home training nurse, unit administrator Elaine Feegel, lives in Tampa and must commute to Lakeland each day, thus making it more difficult for her to provide home training. Ms. Feegel further has not been able to provide home training because she has been so busy trying to correct problems at the CDC Lakeland facility. In addition to the lack of home training, the evidence showed that for significant periods of time in the past few years the ESRD patients who have had to use the CDC Lakeland facility as their only reasonable source of dialysis have been subjected to seriously inadequate, and at times, dangerous health care. Several patients who now dialyze at CDC Lakeland, and who have used that facility for several years, testified to the quality of care received. The facility was initially named Kidneycare, and was not opened or operated by CDC. In late 1980 or sometime in 1981, CDC bought Kidneycare and took over the management of the facility. (The precise date was not established by competent non-hearsay evidence, but is irrelevant.) At some time after patients became aware that CDC was managing the Lakeland unit, the quality of care began to decline. The quality of care when the unit was operated as Kidneycare was adequate. Joy Harrison is a resident of Lakeland, Florida, and has depended upon kidney dialysis since 1978 to stay alive. She moved to Lakeland, Florida, in 1981. She is 41 years old and has two children, 12 and 8 years of age. Ms. Harrison dialyzed at CDC from March 29, 1981, until June 1984 when she went on CAPD. Dr. Haire has been her physician since 1981. Her testimony concerned the quality of health care at CDC from 1981 until June 1984. Ms. Harrison testified to the following regarding the quality of care at CDC, all of which were unrebutted and is found to be true: Another patient was dialyzing at the station immediately next to Ms. Harrison. Ms. Harrison, who was then being disconnected from her dialyzer at the end of her session, noticed that the other patient was getting sick. She told the CDC employee on duty. Ms. Harrison had to tell the employee three times, and still the employee failed to respond, continuing to work on disconnecting Ms. Harrison from her dialyzer. By this time, the adjacent patient had passed out and began vomiting. When CDC staff finally responded, it took 20 minutes to revive her. CDC staff failed to turn on the air bubble detector on another occasion when Mrs. Harrison as dialyzing. Air got into the lines. The air bubble came within three inches of entering Ms. Harrison's body when CDC staff stopped it. (The distance is the estimate of the Hearing Officer observing the witness indicate the distance.) Had the air bubble entered her blood stream, it may have killed her. CDC staff failed to observe or record the correct number of bags of saline solution that is normally to be given to a patient at the end of the dialyzing session to restore the correct balance of fluid and weight, and ended up giving her two bags too many. Ms. Harrison got very sick as a result. On another occasion, there was only one nurse on the floor. Ms. Harrison was dialyzing, and her feet began to cramp. Saline solution at times must be injected when cramps occur to prevent cramping. Ms. Harrison called out to the nurse, who was talking on the telephone, to tell her she was cramping and needed saline solution. The nurse continued to talk. A few minutes went by and the pain of the cramps got worse. Again, Ms. Harrison called to the nurse for help. The nurse continued to talk on the telephone. The cramps worsened, and Ms. Harrison's hands started to cramp, and she was in much pain. She then told the nurse that if she did not get off the phone and help, she (Ms. Harrison) was going to pull the dialyzing lines out by herself. The dialyzing lines are inserted into Ms. Harrison's arms with two 16-gauge needles. The nurse finally came to assist her. Ms. Harrison could hear the nurse's conversation on the telephone as she was cramping, and the nurse was "laughing and joking on the phone to somebody." (This testimony is not hearsay, but is admissible as proof of what Ms. Harrison heard, not for the truth of what the nurse said on the phone.) During the dialyzing process, nurses each hour are supposed to take blood pressure, weight, and temperature to insure that the patient's system remains stabilized during the otherwise rather intrusive and disruptive process of having all of their blood circulating outside their body to be cleansed. Nurses at CDC frequently failed to check these vital signs when Ms. Harrison was dialyzing for two and three hours at a stretch. Ms. Harrison later checked her medical record and discovered that weights and blood pressures would be recorded at hourly intervals when in fact no one at CDC had actually observed and taken these readings at these times. On other occasions she was given 5 percent extra saline solution, but CDC staff failed to record this in the record. Someone else came along and read the chart and tried to give her another dose of 5 percent saline solution. Ms. Harrison stopped her. When Ms. Harrison first dialyzed at the Lakeland facility, it was in good location near the hospital. Shortly thereafter, while under the ownership of CDC, it was moved to a small shopping center. The location, as will be discussed in additional findings ahead, was undesirable for two reasons: the outside was trashy, and alcoholics and transients hung around the parking lot and rear of the facility. ESRD patients who must dialyze to remain alive depend upon the continued health of special grafts that are placed in their arms or legs which provide access for the dialyzing needles three times each week. Ms. Harrison lost her arm graft apparently due to the negligence of CDC staff in the insertion of the needle or use of a needle with a burr on it. (Additional findings have been made ahead as to the substantial likelihood that the injury was caused by a needle with a burr on it.) On the day of the injury, Ms. Harrison felt unusual pain during the entire dialyzing process. When CDC staff took the needle out at the end of the dialyzing session, an aneurysm (a sac formed by enlargement of the wall of an artery, caused by disease or injury, Webster's New World Dictionary) had formed in her arm. That night the aneurysm broke and a blood clot came out. Ms. Harrison had to go to the hospital. Her graft was destroyed, and surgeons next created a Bentley button for further dialyzing. A Bentley button is another method of allowing access to the blood stream of an ESRD patient. Ms. Harrison still had some infection in her system from the failed arm graft. It was very important that the Bentley button be kept antiseptic and clean because it is a direct open hole providing access to the patient's blood steam. Ms. Harrison's infection was doing well, responding to antibiotics given to her by her physician. But as she was dialyzing at the CDC facility, the attending nurse failed to use the antiseptic procedure of wearing a mask and using gloves. At the end of the session, the button must be carefully cleaned and Betadine placed in the two holes. The nurse said she was in a hurry and did not carefully clean the Bentley button or put any Betadine in the button. She simply replaced the cap and wrapped gauze around it. By the next treatment several days later, Ms. Harrison's infection was worse, and she had to start again on antibiotics. For the next two months Ms. Harrison could not use the Bentley button. Finally, it failed entirely as a method of dialysis, and it was removed. Ms. Harrison now is on CAPD, but testified it is not working very well, and she does not know what alternative for dialysis she may have if it too fails. CAPD (chronic ambulatory peritoneal dialysis) is a method of dialysis that involves the implantation of a tube into the interior of the peritoneum. A bag of fluid is placed above the point of insertion so that the fluid will slowly drain into the peritoneal area. Blood slowly exchanges its impurities with this fluid. After a few hours, when the bag has drained fully, the process is reversed. The bag is lowered, and the fluid drains out. When the bag is again full, it is discarded, a new bag is attached, and the process begins again. On another occasion, the dialyzing machine was not working properly. A line collapsed, the red light was flashing, and when the line collapses, it hurts the patient. The nurses failed to respond. A technician, who is not supposed to do any work in connection with treatment of a patient, tried to come over and get the machine working again. During the time CDC owned the facility at Lakeland, there was a significant continuing turnover of nurses, thus subjecting patients to new nurses who were not very experienced in dialysis. Some stayed only a few months; others, longer. Ms. Harrison dreaded getting a new nurse because an untrained nurse often took three or four attempts to implant the needle and it hurt. Also, as described above, ESRD patients depend upon the life of their access point for their own life. An untrained nurse who is likely to cause injury to an ESRD patient's access is particularly hazardous to the health of that patient. Ms. Harrison served for a time as a patient representative for patients on her shift. Of the complaints made by patients, CDC only responded to the request that curtains be installed on the back windows to prevent vagrants from looking in at the patients. (A man was seen at the window on one occasion.) Another request, that a particular nurse not pump the blood pressure cuff up so high as to be painful, was not corrected. Nell Boutwell is an ESRD patient who has dialyzed for about seven years. She began her dialysis at Tampa General Hospital, then dialyzed at Tampa BMA. In about August 1978, she began to dialyze at Kidneycare in Lakeland. She had no complaints about the quality of care at the Kidneycare unit. There then came a time, which the witness was unable to establish precisely, when it became generally known among patients and staff that Kidneycare had been purchased by Community Dialysis Centers, Inc. The purchase by CDC occurred before Ms. Boutwell wrote a certain letter dated August 25, 1981. Ms. Boutwell testified to a number of matters concerning the quality of health care at the CDC Lakeland facility. Her testimony was unrebutted and is found to be true: Under Kidneycare, the Lakeland facility was typically staffed at about two nurses for four patients, or six nurses for a shift of 12 patients. When CDC took over, the number of nurses declined until there were only two or three nurses for 11 or 12 patients, about one nurse for four patients, which is approximately 50 percent fewer nurses. One result of having fewer nurses was that patients had to stay on the dialyzer machine longer because a nurse is needed to disconnect that patient, thus causing patient discomfort. The replacement nurses were not well trained. On one occasion, air got into the lines of Ms. Boutwell's machine. The available nurses were busy and failed to respond to her calls for help. A technician came over, and he finally was directed by another patient to turn off the machine. Then a nurse appeared and fixed the machine. Air in the machine is a life-threatening condition, as described above. CDC was short on tape and frequently had no Band Aids to cover the place where the needles are removed at the end of the session. When Kidneycare ran the Lakeland facility, it was clean. When CDC took over, the new location was dirty on the outside: there were bottles, dirt, and Pampers in the parking lot. A streak of blood was on the wall of the reception room a week before the hearing. Blood is sometimes left on the dialysis chairs from the last patient to dialyze, including the arm rest. Ms. Boutwell was concerned about cleanliness due to the risk of infection. A patient with a heart monitor attached during dialysis was left unattended as all nurses left the floor, and the monitor began to "act up", although Ms. Boutwell is not trained in reading such a monitor and could not say what it meant. The needle came out of the arm of one patient and he became unconscious as his blood drained onto the floor. This accident was not discovered by CDC staff, but was first discovered by another patient. The restrooms had no paper towels so that patients who wished to wash their hands had nothing sanitary to dry them on. A CDC nurse by mistake put Clorox into Ms. Boutwell's machine as she was dialyzing. The Clorox was intended for another machine which was being cleaned. Ms. Boutwell caught the error before it harmed her. Ms. Boutwell dialyzes early in the morning now, and in the winter it is dark when she arrives. Having vagrants hanging around the shopping center causes her fear. As will be discussed ahead, the artificial kidney in a dialysis machine is a relatively small tubular filter. After appropriate cleaning, an artificial kidney under some circumstances can be reused. Ms. Boutwell did not want to dialyze with an artificial kidney that had been used before. She had had experience with reused kidneys, and they did not clear her blood as well as new kidneys. Ms. Boutwell's insurance pays for a new kidney for each dialysis. CDC staff brought a consent form for Ms. Boutwell to sign agreeing to reuse. She refused to sign. CDC told her she either had to sign or she would not be allowed to dialyze at CDC Lakeland. Her only other choices involved unreasonable travel (Tampa, Orlando) or facilities owned by CDC (Winter Haven, Plant City) After continuing to refuse to sign the consent form, CDC allowed her to have a new artificial kidney for each dialysis. CDC Lakeland periodically was inspected by outside agencies. For the week or so prior to inspections, Ms. Boutwell observed CDC staff making unusual efforts to clean the facility and bring patient records up-to-date. For four years, Ms. Boutwell worked during the day, and thus had to dialyze at night. The administrator of CDC Lakeland told Ms. Boutwell that CDC was going to discontinue the evening shift. She told Ms. Boutwell that she could come early in the morning to dialyze, drive to Tampa in the evenings after work, or quit work. There were four patients using the evening shift. As a result of the proposal to stop the evening shift, Ms. Boutwell wrote a letter dated August 25, 1981, to Dr. Michael Pickering. Dr. Pickering had been one of the physicians associated with the clinic when it was Kidneycare and knew of the needs of those patients. In the letter, Ms. Boutwell asked for his help to prevent the cessation of the evening shift. She explained that dialysis left her in a weak condition, and that travel home from Tampa at 10:00 p.m. would not be safe, that dialysis at 6:00 a.m. at CDC Lakeland would require too many hours away from her job, that she did not have help for home dialysis, and that CAPD was not suited for her due to her work. Her letter is WATSON Exhibit 17. CDC sent a representative to investigate as a result of her letter. The representative told Ms. Boutwell that CDC was only "talking" about discontinuing the evening shift, but that they were not actually going to do it. This contradicted what the administrator had told Ms. Boutwell initially, leading to the conclusion that either on the first occasion or the second occasion, and more probably the second occasion, the CDC administrative staff was untruthful to one of their patients. On each occasion mentioned above when CDC staff told Ms. Boutwell that she could go somewhere else to dialyze if she did not like the new CDC policy, there was no adequate alternative for Ms. Boutwell to turn to. The suggestion that she could go somewhere else when no reasonable alternative existed was evidence of a callous indifference to her needs as a patient, and was harmful to the trust needed for a healthy clinical patient relationship. Ms. Boutwell had experienced dialysis at CDC since January 1984 when Elaine Feegel became unit administrator. Ms. Boutwell was of the opinion that Ms. Feegel was doing a good job as the new administrator, trying to clean the place up, trying to hire good nurses, and personally on the floor more often than her predecessor checking on the operation of the unit. She felt that she was personally getting good treatment at CDC Lakeland at the time of the hearing, November 6, 1984. The deposition of Eugene DeBerry, another patient who dialyzes at CDC Lakeland, was received into evidence as WATSON Exhibit 18. Petitioner's objections to certain portions of that deposition have been ruled upon in the conclusions of law. Mr. DeBerry began dialysis in January 1977 at Tampa General Hospital. Mr. DeBerry has dialyzed at seven other clinics and CDC Lakeland since he began at Tampa General Hospital. Mr. DeBerry's testimony has not been rebutted and is found to be true with respect to the following matters concerning the quality of care at CDC Lakeland: Of all of the units in which Mr. DeBerry dialyzed, the Lakeland unit operated by Kidneycare was the best, in his opinion. Mr. DeBerry was one of the six initial patients at Kidneycare when it opened on June 22, 1977. Kidneycare operated the clinic for two or three years before CDC purchased it. The original locations of the Kidneycare facilities (there were two) were about a block from the Lakeland General Hospital. The second facility that was used by Kidneycare had a central nurses station that permitted observation of all kidney dialysis stations at one time. About a year after CDC bought the Kidneycare facility, CDC moved it to its present shopping center location. Mr. DeBerry described the same problem with vagrants and trash on the outside of the CDC facility as described by other witnesses. There have been occasions when these vagrants have entered the clinic to use the restrooms, sit in patient chairs, or steal. Mr. DeBerry requires a wheelchair for movement. The restroom at the CDC unit is too small to allow him to use the toilet, that is, it is not accessible to a wheelchairbound person. Similarly, the waiting room for patients is not suitable for wheelchair patients, and Mr. DeBerry has to wait in his wheelchair in the hall. Kidney dialysis patients are restricted on intake of fluids, so being able to have coffee or a soft drink is a special treat. At the beginning of dialysis in the first hour there is an opportunity to drink a liquid. Kidneycare used to provide this treat; CDC cut it out, stating that it was expensive. When CDC took over the unit, the attitude of the nurses changed. The nurses said that CDC was very cost-conscious, and were cutting back on expenses, including nursing staff, that CDC wanted to get rid of four nurses. (This hearsay evidence was corroborative of direct testimony that the staffing under CDC was decreased by about 50 percent compared to Kidneycare staffing.) When CDC took over the unit, it attempted to require all patients to use only one type of artificial kidney, or to stock only a few. ESRD patients, however, have different needs. Some still have a portion of their natural kidneys intact and operative, and need less dialysis, and especially cannot tolerate large losses of fluid during dialysis because this causes painful cramps. Others, like Dr. DeBerry, have no kidneys, and need an artificial kidney that dialyzes more completely. The CDC effort to cut this cost ultimately was blocked by the orders of individual physicians requiring specific artificial kidneys for their patients. Within six months of the CDC takeover, CDC circulated a consent to reuse form among all patients. The form relieved CDC from responsibility for harm that might be caused by reuse of artificial kidneys. Darlene, the CDC unit administrator told Mr. DeBerry that he could either reuse the artificial kidneys or he could dialyze someplace else. Mr. DeBerry did not want to reuse due to the possibility of infection. He had already lost not only his kidneys, but his bladder, prostate, and both legs due to infection. But Mr. DeBerry could not go on home dialysis because it caused him severe hypertension, and travel to Tampa was unacceptable, so he signed the consent form. After about a year of reuse, Mr. DeBerry again discussed his options with the unit administrator, then Pat Segien. Ms. Segien said that the CDC units at Plant City and Winter Haven also required reuse. The CDC unit was often short on important supplies. Mr. DeBerry had to dialyze with the wrong needle and the wrong kidney on occasion. The unit was out of Band Aids, tape, blood lines, and saline solution on a regular basis, and Mr. DeBerry complained about this several times. The CDC facility was not clean inside. Blood would remain on dialysis chairs, the floor, and on walls for a week or more. As a result of these problems with the quality of care at the CDC unit, Mr. DeBerry complained to Senator Lawton Chiles' office. Thereafter, Network 19 came in to inspect and the unit was cleaned up. When CDC took over Kidneycare, they began using a cheaper grade dialysis needle, and Mr. DeBerry began to experience a tearing of the place where the needle was inserted, resulting in bleeding around the needle throughout the four hours of dialysis. Mr. DeBerry complained to his physician. His physician then ordered CDC to provide him with the needle he had formerly used. CDC complied. Mr. DeBerry encouraged other patients who were experiencing the same bleeding to contact their own physicians. Now CDC seems to use the good needles generally throughout the unit. Pat Segien, the unit administrator, told Mr. DeBerry that CDC used the new, inferior, needles because they were cheaper. CDC cut the nurse/patient ratio to 1:4. It had been 1:3 or less under Kidneycare. The problem with having only one nurse for four patients is that nurses routinely during dialysis have to respond to special needs, including sick patients. Mr. DeBerry described the following example of why three nurses cannot adequately handle 12 patients: one patient passed out; two nurses responded. Another patient started vomiting, Mr. DeBarry's line got air in it, and another patient was nearly unconscious due to low blood pressure. The nurses were unable to handle all of this and continue to do the routine work of checking blood pressure of other patients. Mr. Deberry was home trained, and therefore knew to clamp off the incoming air bubble and turn off his blood pump, which he did himself. Mr. DeBerry had seen air enter the lines of other patients on a number of other occasions because CDC staff allowed saline or blood bags to be pumped dry without properly attending to them. Many of the patients sleep during the four hours of dialysis, and thus the attentiveness of CDC staff is very important to their health. Since CDC took over, there has been so much turnover of nurses that many of the nurses are not experienced. Under CDC management, technicians who were not trained as nurses were allowed to do blood pressures, put heparin in the dialysis machine, and mix the formula for the bicarbonate bath. These practices have now been discontinued by CDC. CDC suffered from a frequent lack of soap, towels, and toilet paper in the restrooms, and a lack of soap at the sink at the exit to the isolation room. Nurses had no soap to wash their hands after leaving the isolation room when that room was in use dialyzing a patient that required isolation from the other patients. It took six to eight months for CDC to buy curtains to stop vagrants from looking into the back windows at the patients at night. In May 1984, Mr. DeBerry was mistakenly given a double dose of Desferal, and went into such shock that he could not talk so as to tell the nurses the mistake they had made. CDC has been constantly out of blankets, and once recently was out of sheets. Mr. DeBerry's wife had to buy a sheet to enable him to dialyze on schedule that day. CDC nurses are supposed to keep patient medical records current. On several occasions, Mr. DeBerry was asked to go over and sign his records for as many as four months earlier, which had-not been kept up-to-date. This happened before inspections in particular. Prior to inspections, CDC staff makes a number of improvements, including updating records and cleaning the facility. The front door of the CDC facility is not adequately constructed to allow a wheelchair to enter unless the patient has one person to push him up the ramp and another person to hold the door. Since Elaine Feegel became unit administrator at CDC, the quality of care has improved, but the nurses still need to improve in implementation of sterile procedures. Mr. DeBerry felt that he had received good quality care in the last few months. Sandra Biller is a registered nurse specializing in hemodialysis. She is currently employed by the Lakeland Regional Medical Center. She has specialized in hemodialysis for six and one-half years. She was accepted as an expert witness in ESRD nursing. She has worked in hemodialysis nursing at the Kidneycare facility beginning in 1979 and remained employed there under CDC until October 1982. During the time that the facility was managed as Kidneycare, the quality of care was good. Then CDC purchased the facility and began management thereof. Ms. Biller testified to the following aspects of health care at CDC when she was employed by CDC. The testimony was not rebutted, and is found to be true: When CDC took over the facility, it changed the type of needle used. The new needles had burrs on them that tore the access points in the patients' bodies and prolonged bleeding. Trauma to the access ultimately decreases the life of the access. As was seen by the medical history of Joy Harrison, an ESRD patient depends upon the life of the access for her own continued life. When all accesses and dialysis methods have been exhausted, and dialysis becomes impossible, the patient dies. Moreover, burrs on the needles caused unnecessary pain to the patients. Kidneycare did not have these problems because they used Terumo needles. CDC "frowned" upon use of these needles, and required a special order by the physician to use these needles. The new needles used by CDC were cheaper and were used to save money. Patients and nurses complains about the use of the cheaper needles, but nothing was done about it. A policy was instituted by CDC requiring reuse of artificial kidneys by all patients. Patients were told to dialyze elsewhere if they refused to reuse. Some patients who objected to reuse long enough were allowed not to reuse, but CDC told nurses to keep that fact quiet among other patients, and did not tell other patients about the exceptions. Jerry Bryant, the area administrator for CDC, told Ms. Biller that the reuse policy was premised upon the size of the facility and a goal of having a certain percentage of patients reusing. CDC's reuse policy was initially limited by a standard that the reused kidney function at 80 percent of its initial capacity. This was then changed to 75 percent of initial capacity. At one point reuse was also limited to 12 reuses, but later some artificial kidneys were reused 25 or 30 times. Patients and nurses complained about reuse without success. The primary harm to patients caused by reuse was that Ms. Biller's patients did not feel well at the end of dialysis on a reused kidney. Reused artificial kidneys frequently still had dark brown clots of fibrin in them. CDC reused the parallel plate type of dialyzer, and this type of dialyzer was inappropriate for reuse because it was impossible to inspect between the parallel plates to see if the dialyzer was clean. One patient became septic reusing a parallel plate kidney. Reuse caused an additional health problem or potential health problem for CDC patients because a reused kidney is cleaned with formaldehyde which is toxic to humans and must not be ingested in excessive quantities. Cleaning the dialyzers with formaldehyde released fumes into the air. Although CDC had an instrument to measure the quantities of formaldehyde fumes in the air to insure safety to patients, it did not use it to test the air as required on a regular basis. There are several types of artificial kidneys, and some are more suitable than others for the needs of specific patients. CDC would not provide the type of dialyzers specifically needed by individual patients. Dialyzing machines were not maintained according to the 100- and 500- hour schedules for maintenance that they were supposed to have. Staffing at Kidneycare was two patients per nurse. Under CDC, the staffing ratio ultimately became four patients per nurse, a loss of 50 percent of the nursing staff. It was a dangerous condition for the patients sometimes. Many of the patients were unstable. The nurses did not have enough time to care for sick patients and monitor the equipment properly due to the staffing shortages. When CDC took over, the pay and benefits for nurses was regulated more strictly. All nurses were paid on an hourly basis. Sick leave went from an informal system to a strict accounting policy. CDC refused to carry over certain forms of sick leave earned as employees of Kidneycare. New nurses were placed in charge of direct care of patients without sufficient training. Nurses require four to six weeks not only to learn how to operate the machines, but more importantly, to learn what to look for as trouble signs in a dialyzing patient. Jerry Bryant stated it should not take more than two weeks to train a CDC nurse, and CDC nurses were put onto the floor with less than four weeks' training. One nurse was found to be doing dangerous things, and when Ms. Biller reported this, she was ignored and told to "watch her closely." The nurse was failing to turn on the air bubble detector and failed to close the saline line to prevent an overdose of saline solution. On one occasion a patient was negligently given three liters of saline solution, and this mistake was never documented on the patient's record. This sort of mistake happened more than once. One liter was the normal amount, and probably was not proper for this patient, who usually needed fluid taken off during dialysis. CDC staff generally did not show a professional attitude toward their work. They came in late without correction by the administrator. One nurse, who did the reuse job, wore dirty clothes, and she was handling the dialyzers. Sometimes a nurse would see that a patient was sick and vomiting and would walk right by, failing to stop and care for the patient. All of the nurses who originally worked for Kidneycare have left CDC and most work for Lakeland Regional Medical Center now. Typically, within a period of four years nurses do not leave a good dialysis center. Ms. Biller left CDC due to her dissatisfaction with the quality of health care provided at CDC. Patient charts were supposed to be done at least every two weeks. Sometimes the CDC staff would fail to complete these records for six or eight months, but would do so for an inspection. Charts were not kept current due to the shortage of nursing staff. Dr. de Quesada was the Medical Director of CDC when Ms. Biller was a nurse employed by CDC. He lived in Tampa where he had his practice, and she saw him at the CDC Lakeland facility about once a month. During emergencies, it was sometimes difficult to reach the Tampa physicians until two or three hours later. The Watson Clinic physicians were always available. Watson Clinic nephrologists were seen at the CDC clinic at least every week or so. James Whitfield is a physician specializing in internal medicine and kidney diseases. He practices nephrology with Dr. Haire and has treated ESRD patients who dialyze at the CDC Lakeland facility since July 1983. Dr. Whitfield observed the following matters with respect to the quality of medical care at CDC Lakeland which were not adequately rebutted and are found to be true: The most frequent problem at CDC was failure to achieve the proper weight at the end of the dialysis session. CDC staff is supposed to monitor the process so as to achieve the correct weight at the end. Leaving a patient with either too much fluid or too little fluid is hazardous to the patient. One patient on two successive occasions had too much fluid taken off, causing the patient to go into shock and necessitating emergency procedures to revive the patient. The problem was that the CDC dialysis machine had a part stuck in an open position, thus operating to remove excessive amounts of fluid. Patient records were not maintained in a current condition. Orders were given to CDC to take a blood count at the end of each dialysis because the patient had recurrent internal bleeding. CDC failed to take the blood count. The patient suffered a substantial drop in blood count, and had to be hospitalized for anemia. On another occasion, an order to use a particular type of artificial kidney was not followed by CDC. CDC delayed a long time in providing a bicarbonate dialysis machine, which was needed for several patients. Four or five weeks before the hearing, Dr. Whitfield had a patient that for a two-week period needed to be dialyzed daily. CDC refused to do this, stating that they would only get recompensed for routine dialysis and would not be paid for the extra dialysis. Medicare will pay for non-routine dialysis in certain cases, but in this case, CDC did not apply. In the summer of 1983, Dr. Whitfield performed a rectal examination of a patient, taking a small amount of fecal matter to test for blood. A week later he used the same examination room at CDC Lake land. He found the feces and towel he had used the week before in the same place he left it. CDC had not cleaned it up for a week. CDC has a goal of requiring all patients to reuse artificial kidneys. Formaldehyde is used to clean the kidney for reuse. The long-range toxic effects of formaldehyde are unknown. Many of the leaders in the field of dialysis feel it is inappropriate for ESRD patients to constantly be exposed to formaldehyde. Formaldehyde use also creates a heard of fumes in the air. Moreover, a reused dialyzer is not as efficient as a new one, and results in fluid not being removed properly from the patient, causing the patient to come back the next day for dialysis. On one occasion, a dialyzer that had been reused 15 times was supposed to have removed 10 pounds from a patient, but removed only two pounds, resulting in the discomfort of another dialysis session the next day. Reuse can, for some patients, be beneficial because the reused kidney does not cause a mild allergic reaction suffered by some patients. But the safe level of reuse cannot be established administratively at a single standard or level because the medical needs of patients vary greatly. Supervision of nursing staff at CDC has improved considerably since Elaine Feegel became unit administrator. John Dowless is a hospital consultant/supervisor, Office of Licensure and Certification, Department of Health and Rehabilitative Services. He is a team leader on an interdisciplinary survey of health care team. The team determines if health care facilities in Florida meet federal and state requirements. He has 40 years of experience in health care, and has worked in the above capacity for eight years. He was accepted as an expert in health care surveying. In late March 1983 his office received a request from the Health Care Financing Administration that Mr. Dowless' office conduct an investigation of the CDC Lakeland facility with respect to complaints received about the quality of health care at that facility. Mr. Dowless and Maryanne Judkins, R.N., constituted the survey team that conducted the investigation on or about April 8, 1983. The investigation was an unannounced visit. (Annual routine surveys conducted by HRS are announced in advance.) The purpose of the April investigation was to determine if the CDC Lakeland clinic was in compliance with Medicare regulations. WATSON Exhibit 4 contains the HCFA forms used by Mr. Dowless in conducting this survey. Mr. Dowless found more patient care deficiencies at the CDC Lakeland facility than he had previously found at any other renal dialysis facility. The survey team found three Medicare "conditions" not met by CDC Lakeland. Failure to meet a condition results in disqualification for Medicare participation by the facility. Mr. Dowless at that time was considering decertifying the CDC Lakeland facility as a Medicare provider. CDC then sent a representative from its Atlanta office, and CDC promised to make corrections. On June 20, 1983, a reinspection was made. Mr. Dowless found that the facility had made quite a bit of improvement. The facility did not lose its Medicare certification, and sufficient progress was made toward correcting the deficiencies. The April 1983 survey of CDC Lakeland by HRS found the following substantial deficiencies: One member of the nursing staff did not have a current Florida license. This was a violation of a condition to obtain Medicare participation. The governing body failed to effectively manage. It has no written policy on reuse of dialyzers. Patients were scheduled without an adequate time between treatments. The facility failed to adequately insure that physicians made rounds when the patients were in the facility. Records did not have physician signatures for orders. Patient copies of the grievance procedure did not inform them they could complaint to Network 19. The above cumulatively was a violation of a Medicare condition. There were no written policies regarding patients' rights available to relatives. This was a violation of a Medicare condition. The patient environment was found to be unsafe and unsanitary. A bloody reused kidney was placed on top of a disinfected dialysis machine. Two chairs used by patients for dialysis were soiled with blood. The nursing station had 21 items marked sterile with an expiration date 12 months earlier. Other dusty, dirty, and cluttered items were noted. The floor of the dialyzing area had soiled gauze, cotton, rubber gloves, and paper. A soiled mop and dirty water were stored in the supply room, and the floor of the supply room was dirty and cluttered. The acetate hemodialysis concentrate solution was contaminated. The emergency tray was not fully stocked. The facility had been directed by a written memorandum to discharge patients who refused to reuse dialyzers, in violation of the written discharge policy. CDC failed to recognize individual needs concerning reuse, forcing patients to choose between reuse and traveling 60 miles to Orlando to dialyze, and refusing to allow one patient to reuse who offered to pay for the new kidney. A year later, on April 5, 1984, HRS conducted its annual survey for Medicare certification. Annual surveys are announced beforehand, and as prior testimony indicated, CDC would make a special effort to clean up and correct deficiencies before such surveys. This annual survey found no discernible deficiencies. As a result of complaints about the quality of care at CDC Lakeland, Network 19 also conducted an investigation of the facility on May 2, 1983. The report of that investigation is contained in WATSON Exhibit 4. The report was acted upon by the executive committee of Network 19 and transmitted to HCFA for its information and action. The site visit was announced ahead of time to CDC. Network 19 concludes in the report that the problems existed at CDC due to lack of leadership at all management levels and poor communication. It also concluded that the physician director appeared to have no direct or deciding input into unit operations, and the new unit administrator was following corporate policy changes. It was reported to Network 19 that CDC had instituted changes to correct these deficiencies. Finally, after recommending that the physician director become more involved in directing the unit, the report concluded with the finding that there was no direct evidence that the health and safety of the patients were then being compromised. It is evident from the findings above that between the unannounced inspection by HRS on April 8, 1983, and the announced inspection by Network 19 on May 2, 1983, CDC made improvements. Dr. Alejandro de Quesada is the Medical Director of CDC Lakeland and CDC Winter Haven. He originally became involved with the Lakeland unit as an owner and investor, as well as a physician having ESRD patients treated three. He is responsible for delivery of medical care, but is not directly responsible for machine maintenance, purchasing of supplies, or personnel matters, including hiring and firing. In these areas, he becomes only involved to the extent that the Lakeland staff tells him about problems they have identified. Dr. de Quesada lives and works in Tampa and is an Associate Professor of Medicine at the University of South Florida as well. Dr. Tapia is Associate Director of the unit and he is located in Lakeland. Dr. de Quesada has been Medical Director at the Lakeland facility either in the fall of 1983 or 1982; he could not state precisely when. Neither Dr. de Quesada or Dr. Tapia attended the hearing, and Dr. de Quesada's testimony was made a part of the record by deposition. Dr. de Quesada admitted in general terms many of the problems found above (loss of experienced nurses, reuse of dialyzers, problems with needles) but did not have any detailed knowledge of these problems, did not state whether he felt the problems were serious or minor, did not elaborate on the cause of the problems, and asserted that each one had been corrected. He admitted that at about the time he became Medical director, there was a large turnover of nurses and medical care was not "optimum." The location and external condition of the CDC facility in Lakeland is very unpleasant. WATSON Exhibits 19, 20, and 21 are photographs taken during the work week (October 19, 22, and 26, 1984) and very close to the date of the hearing. The CDC facility is located in a small strip shopping center. Immediately next door is a grocery store. Drunks and vagrants hang around the shopping center. Thus, CDC dialysis patients must come three times every week to a place not associated with health care, but with vagrants and groceries. For two years CDC has received complaints about unsightly trash outside the CDC facility. Yet, one week before the final hearing these photographs show a dishearteningly filthy collection of debris in the gutter immediately in front of the door into the CDC facility. For patients who are so critically vulnerable to infection, this array of trash at the entrance to the place they depend upon for cleansing of their blood directly erodes their confidence in the CDC facility and is demeaning to them. Dr. Henry M. Haire lives in Lakeland and is a nephrologist. Since early in 1980, he has both been on the staff of Watson Clinic and a member of the treating staff at Kidneycare and CDC. He was accepted as an expert in nephrology. Dr. Haire wrote the original certificate of need application for WATSON. The original application for a certificate of need was the result of Dr. Haire's assessment in January or February of 1983 that it was unsafe for his patients to dialyze at CDC Lakeland due to the quality of care at that facility. Dr. Haire testified to the following matters concerning the quality of health care at the CDC Lakeland clinic. These matters were not adequately rebutted by the Petitioner and are found to be true: The quality of health care at CDC Lakeland has been like a roller coaster for the last four years, with poor care followed by improvement and then another decline in care. Care improved after the HRS and Network 19 investigation in April-May 1983, and then declined again. Since July 1984 the quality of care has again improved. There have been occasions when the Tampa treating physicians could not be located in emergencies, and Dr. Haire had to respond for their patients at CDC. Some patients need a bicarbonate dialysis machine to reduce acid levels. Dr. Haire waited 18 months after he requested CDC to obtain one of these machines before they did so. CDC on two occasions transferred patients of Dr. Haire without prior notification to him. One patient was transferred to Tampa when the night shift was discontinued. Two other patients were transferred to Winter Haven one month before the hearing. One of these patients was very unstable and needed to be dialyzed near Dr. Haire. Dr. Haire had her transferred to a physician in Winter Haven. As recently as July 1984, Dr. Haire had found that CDC staff had failed to take weights and record other data in the charts. On one occasion, Dr. Tapia, the Associate Medical Director at CDC who lives in Lakeland, was not available to handle an emergency involving evacuation of patients due to formaldehyde fumes in the room, and Dr. Haire had to fill in for him. Based upon the foregoing findings, the following additional findings are made: End-State Renal Disease (ESRD) patients are captive consumers. Without continuing adequate renal dialysis they will die. ESRD patients are particularly vulnerable in a variety of ways. Loss of the use of one's kidneys demands a major psychological readjustment for the patient. Confidence in the quality of health care is critical to the readjustment. Some ESRD patients are frail, confused, disabled in other ways, elderly, and cannot adequately protect themselves from inadequate health care during dialysis. Further, ESRD patients have a well justified fear of infection, since loss of dialysis access may mean loss of ability to dialyze and death. Dialysis is uncomfortable and painful under the best circumstances, and is easily made more uncomfortable and more painful if treating staff is overworked, untrained, or indifferent. The quality of health care at the Lakeland facility since 1980 when CDC purchased it and began to manage it has been inadequate in a number of ways. From 1980 until 1984, despite repeated complaints from patients, physicians, and nursing staff, the quality of care at CDC for substantial periods of time was inadequate. Improvements have been made in 1984. The current administrator, who took that job in July 1904, is doing an excellent job. She is well- qualified for the job and has shown a genuine interest in improving CDC Lakeland. The current regional administrator is equally well-qualified, and has also demonstrated a sincere desire to improve the Lakeland facility. But problems persist. A few instances of questionable care occurred within a few months of the November 1984 hearing. The outside of the facility remains trashy as of ten days before the hearing and the location of the facility continues to suffer from proximity to vagrants. From 1980 to 1984, the health care at CDC Lakeland has been erratic and unstable, improving only in response to an investigation under threat of loss of Medicare money, annual inspections, or the potential of competition that may occur as a result of this certificate of need proceeding. Health care which is erratic and unstable is unreliable and, for that reason, inadequate, and the health care provided by CDC Lakeland for this additional reason has not been adequate. The Watson Clinic was started in 1926. Today, it is a large specialty hospital providing a wide range of services, from primary care to open-heart surgery. It has 22 departments and specialty services. The Clinic has 75 affiliated physicians, all of whom, with the exception of two, are specialists. Of these, 67 physicians are partners in the partnership which owns and manages the Clinic. The organization of the Clinic as a multispecialty group practice was derived from the Mayo Clinic example. Major decisions are made by the full partnership. Day to-day management is committed to an Executive Committee and to the Clinic Manager, Dudley Towne. The Clinic is located in Lakeland, Florida, in Polk County. The Watson Clinic currently has approximately 265,000 outpatient visits annually. As of January 31, 1984, Watson Clinic had current assets of $3,084,200.36, of which more than 50 percent was in cash deposits. For the year ended January 31, 1984, the Watson Clinic collected over $27 million in fees and distributed more than $12 million to its 67 partners. The Watson Clinic partnership, through its Executive Committee and by vote of the partnership, approved the plan to seek a certificate of need for a kidney dialysis center. Watson Clinic's amended application for a certificate of need seeks a four-station unit. The Watson Clinic partnership will pay for the purchase of equipment of the proposed dialysis center, will pay all start-up costs, and will continue to absorb all losses until the dialysis center becomes profitable. The dialysis center would be managed as another one of the entities of the Watson Clinic. Watson Clinic does not necessarily plan to do more than break even in its operation of the dialysis center. From a fiscal perspective, the Watson Clinic frequently undertakes to provide a new service to its patients that itself may only be marginally profitable but that furthers the goal of the Clinic to be a full-service multi-specialty clinic. WATSON Exhibit 14 is WATSON's amended certificate of need application. The amendments were primarily to conform the application to the number of dialysis stations initially approved by HRS. WATSON originally requested ten stations, but HRS approved only four. The projected staffing for the dialysis center is one head nurse who would administer the unit, two staff registered nurses, one licensed practical nurse, and part-time assistance from a dietician, a social worker, and a secretary/receptionist. Watson Clinic is currently aware of six registered nurses with some background in nephrology who might fill one of the three nursing positions, and four licensed practical nurses. Of these, only one (one LPN) is currently on the staff of CDC Lakeland. There was no rebuttal evidence on these facts, and it thus appears that the new center could be staffed reasonably soon, and without causing a loss of staff to CDC. The projected salaries for staff were reasonable and sufficiently high to attract reasonably qualified staff. The total cost of the project is projected to be $81,500, and the underlying costs which make up this figure are reasonable. Two additional costs not included in the above figure were identified. Legal fees have been incurred in the amount of about $25,000, and this is paid by the Watson Clinic partnership, and future fees will be paid in a like manner. Most renovation costs will be of minimal expense. The dialysis center will be in a building owned by the Watson Clinic partnership directly across the street from the Clinic. The only cost not identified in the application that may be substantial is the cost of putting in plumbing. This, however, does not affect the financial feasibility of the project since the Watson Clinic clearly has sufficient assets to absorb the costs of plumbing renovation. The projected utilization of the new dialysis center is reasonable based upon the projected need data discussed above. It is projected that the new center will have ten patients the first month and will grow to a maximum of 16 patients by the seventh month, October 1985. Thereafter, the center is projected to operate at full capacity of 16 patients. WATSON Exhibit 2, page 3, shows a predicted 75 ESRD patients needing dialysis in the Lakeland sub-area by September 1, 1905. If 16 of these dialyzed at the WATSON dialysis unit, the remaining 59 would dialyze at CDC Lakeland, which would be seven or eight more patients at CDC than are currently using that facility. The data of projected ESRD patients from Network 19 were corroborated by evidence provided by Dr. Haire. Dr. Haire and his partners are currently following 12 patients with renal problems and expect six of these will need dialysis in the next four or five months. Dr. Haire estimated that initially four of his 22 patients now using CDC would immediately transfer to the new unit, and that later in the year another one or two would transfer. Dr. Haire finally estimated that the remaining six patients of the 12 mentioned above as having renal problems would need dialysis by the end of the year. Thus, the majority of the projected patients were in fact known to Dr. Haire by name and their projected needs currently identified. The projected operating revenues were based upon reasonable assumptions from experience in reimbursement and payment in dialysis centers in the industry and actual reimbursement experience at Watson Clinic. The operating expenses were likewise based upon experience in the industry and are found to be reasonable projections. Attached to WATSON Exhibit 14 are computer-generated pro forma financial statements. These statements project net income and operating profit for the new facility for a two-year period, and are premised upon the patient utilization rates discussed above, as well as projected revenues and expenses, including the expense of amortizing the initial project cost. The first year operating profit is projected to be $19,809, with a pretax profit of $428. The second year has a projected operating profit of $20,790 and a pretax profit of $13,126. The financial statements erroneously show a corporate income tax, which does not exist since the Clinic is a partnership, so the pretax profit is the same as the net income. The financial statements are conservative in that they presume that all patient revenue will come from patients who dialyze in the unit. Medicare pays for home dialysis as well, to encourage that form of dialysis, but since operating expenses are less for home dialysis, the new center will enjoy greater net revenue (approximately $6,000 more per patient per year) for each patient on home dialysis. Dr. Haire and his partners in their practice have historically placed great emphasis on home dialysis, and it is reasonably certain that the center will have greater net revenue as a result of their efforts to train new patients on home dialysis. The projected revenues are conservative for another reason: they are based on patient visits at a 90 percent rate during the year, rather than 100 percent of the available dialysis days. The 10 percent shortfall was used to account for missed appointments or hospitalization. For example, there are three dialysis days per week, or 156 dialysis days per year for 52 weeks. Thus, at 100 percent 16 patients would generate 2,496 revenue visits. WATSON's second year projection of revenue, however, is based upon 2,254 visits, or 90 percent of 2,496. Elaine Feegel, CDC's current administrator, however, testified that "very few" patients ever miss a dialysis visit. The willingness of the Watson Clinic, with its clearly ample resources, to absorb all losses from the new dialysis unit in order to provide a full range of services, means that the unit will always have a resource to turn to during the start-up phase and during lean periods. The evidence in the record also shows that the facility will be self-supporting in a reasonable period of time and therefore is financially feasible. The facility will break even in the first year based upon an average of 14.25 patients per month. While this utilization rate is somewhat high, it is supported by the evidence. First, Network 19 projects 75 patients needing dialysis in the Lakeland area by September 1, 1985. If 14 of these patients use the Watson unit, the remaining 61 can use the CDC unit, putting CDC at 95 percent of its capacity of 64 patients. Given the record of inadequate care at CDC and the fact that the Watson unit will be brand new, coupled with the association of the Watson unit with the adjacent Watson Clinic, it is very likely that the Watson unit will have from 14 to 16 patients regularly using the facility by the end of the first year. CDC's expert on accounting, Michael Sullivan, sought to discredit the financial feasibility of the proposed four station dialysis center, but his testimony was not persuasive. The portion of his testimony based upon the original CON application data was not relevant because the data was altered by the amended application. Mr. Sullivan also excluded pharmacy and EKG revenue from his calculations of revenue. The main Watson Clinic has both a pharmacy and EKG that will be used by the dialysis center. It is unclear on this record whether the revenues from these activities will, for accounting purposes, be treated as separate revenues of the dialysis center, or revenue of the Watson Clinic. The point is irrelevant, however, since the Watson Clinic will cover all losses that may occur at the dialysis center, and can use these center generated revenues to do so. Moreover, the amounts in question are relatively small. The annual projected EKG revenue is only about $600, and the annual projected pharmacy revenue is only about $7,000. If Watson Clinic successfully has three patients on home dialysis, it will enjoy $18,000 in additional revenue annually, which will more than cover any overstatement of pharmacy or EKG revenue. Mr. Sullivan's criticism that there was no expense indicated for fees of the medical director was not relevant since Dr. Haire will provide those services without charge until the center becomes financially self-sustaining. Mr. Sullivan's further criticism that administrative costs were not accounted for was similarly not correct. A portion of the rental fee will cover administrative services to be provided by the Watson Clinic. Further, the current plan is to computerize much of the billing, and the cost of the computer equipment is included in the financial statements. In summary, the evidence shows that the proposed dialysis center will be financially feasible. The quality of care that will be delivered by the proposed four- station center will with a reasonable probability be adequate. There was a substantial amount of evidence as to the qualifications of persons who will be involved in delivery of that health care, and no rebuttal of any consequence from CDC. WATSON intends to offer complete dialysis services consistent with the current state of the art, with new equipment, properly trained staff, professional operating and management procedures. a patients' bill of rights, adequate professional supervision, and adequate staffing. Dr. Haire, who will be the Medical Director, is well-qualified for the job. Initial planning and consultation will be provided by a professional consulting firm. The medical staff will be open staff. The proposed center will place great emphasis on self care and home dialysis since Dr. Haire and other nephrologists at the Watson Clinic actively encourage these techniques. Additionally, the Watson Clinic plans to offer a full range of support services, including dietary counseling, rehabilitation services, social services, and the like. When the new Watson facility opens, CDC Lakeland should experience some loss of patients, but will not suffer harm in the long run. Dr. Haire will continue to use CDC Lakeland for some of his 24 patients, since the new facility can only handle 16 patients at its maximum capacity. By September 1, 1985, there will be enough new patients in the Lakeland area that even if WATSON served 16 of these, CDC Lakeland still would be needed to serve the remaining 51 patients and would at that time be operating at 92 percent of its capacity. The new clinic will, over the long run, compete with CDC Lakeland for staff, but as discussed ahead, competition will be beneficial to patients and should result in better health care in dialysis in the area. Initially, however, as found above, the Watson facility could be staffed without "raiding" the staff at CDC since there is an adequate, identified pool of potential staff other than current CDC staff. Since CDC Lakeland has enjoyed a virtual monopoly over dialysis services in the Lakeland area for the last few years, and the quality of health care provided by CDC has been so unreliable, there is a great need for the Watson Clinic facility to provide CDC Lakeland with competition. Patients at CDC tried to persuade the management of CDC to improve, but when these patients objected to CDC policies and sought change, they were told to dialyze elsewhere if they were dissatisfied. Having the Watson Clinic facility available will enable CDC patients to make that choice, which should then result in sustained and real improvement at CDC. In sum, the need is such that the new facility will not really be duplicative of services provided by CDC, but to the extent it may be duplicative, the competition that will result will be beneficial, not detrimental, to ESRD patients. The parties may have proposed other findings of fact which have not been considered in the paragraphs above. Many of these are subordinate to findings stated above, are cumulative, or are irrelevant to the above findings and this case. Those of marginal relevance are considered in the following paragraphs: WATSON proposes that a finding be made as to the accidental infusion of formaldehyde and bleach into two patients on two separate occasions. This proposed finding was based solely upon hearsay, and therefore cannot be made on this record. WATSON proposes that a finding be made that formaldehyde causes cancer. There is no evidence in the record to support this finding. CDC Lakeland proposes a finding that the fluctuations in health care occurred as a natural consequence of change in management. This finding is contrary to the evidence and has no evidence to support it. CDC Lakeland proposes a finding that the absence of any projected cost for accounting or legal fees shows the project to be financially not feasible. The evidence does show that Watson Clinic has incurred about $25,000 to date in legal fees, and that it intends to pay these costs without attribution to the dialysis center. The issue, however, is basically irrelevant, since the Watson Clinic, which has sufficient funds to underwrite this project, intends to fund all costs until the project is self-sustaining. CDC Lakeland proposes a finding that Watson Clinic might expand to three shifts. There is no evidence to support this finding, and the only evidence on the evidence on the point is to the contrary.
Recommendation Having considered the foregoing Findings of Fact, Conclusions of Law, the evidence of record, the candor and demeanor of the witnesses and the pleadings and arguments of the parties, it is, therefore RECOMMENDED that the application of Cape Coral Dialysis Clinic, Inc. to establish a 6-station freestanding kidney dialysis clinic in Cape Coral, Lee County, Florida, be APPROVED and that the application of Gold Coast Dialysis, Inc. d/b/a Cape Coral Artificial Kidney Center be DENIED. DONE and ENTERED this 15th day of October, 1984, in Tallahassee, Florida. P. MICHAEL RUFF 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 15th day of October, 1984.
Findings Of Fact Galencare, Inc., d/b/a Northside Hospital ("Northside") and NME Hospitals, Inc., d/b/a Palms of Pasadena Hospital ("Palms") were litigants in administrative proceedings concerning the Agency For Health Care Administration's ("AHCA's") preliminary action on certificate of need applications. Northside moved to dismiss Palms' application based on defects in the corporate resolution. The resolution is as follows: RESOLVED, that the Corporation be and hereby is authorized to file a Letter of Intent and Certificate of Need Application for an adult open heart surgery program and the designation of three medical/surgical beds as a Coronary Intensive Care Unit as more specifically described by the proposed Letter of Intent attached hereto. RESOLVED, that the Corporation is hereby authorized to incur the expenditures necessary to accomplish the aforesaid proposed project. RESOLVED, that if the aforedescribed Certificate of Need is issued to the Corporation by the Agency for Health Care Administration, the Corporation shall accomplish the proposed project within the time allowed by law, and at or below the costs contained in the aforesaid Certificate of Need Application. RESOLVED, that the Corporation certifies that it shall appropriately license and immediately there- after operate the open heart surgery program. In its Motion, Northside claimed that the third and fourth clauses in the Resolution are defective, the third clause because it does not "certify" that the time and cost conditions will be met and the fourth for omitting "adult" to describe the proposed open heart surgery program. Northside relies on the language of the statute requiring that a resolution shall contain statements . . .authorizing the filing of the application described in the letter of intent; authorizing the applicant to incur the expenditures necessary to accomplish the proposed project; certifying that if issued a certificate, the applicant shall accomplish the proposed project within the time allowed by law and at or below the costs contained in the application; and certifying that the applicant shall license and operate the facility. Subsection 408.039(2)(c), Florida Statutes. Northside also relies on Rule 59C-1.008(1)(d), which is as follows: The resolution shall contain, verbatim, the requirements specified in paragraph 408.039 (2)(c), F.S., . . . Palms' filed the Motion For Sanctions against Northside on November 15, 1993, pursuant to Subsection 120.57(1)(b)5 for filing a frivolous motion for an improper purpose, needlessly increasing the cost of the litigation, with no legal basis. Northside's claims that the Resolution was defective were rejected in the Recommended Order of Dismissal of January 11, 1994, amended and corrected on January 26, 1994, and not discussed in AHCA's Final Order of March 15, 1994.
