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.
The Issue At issue in this proceeding is whether Respondent’s denial of Petitioner’s Level II appeal should be upheld or whether the inpatient residential mental health services provided to R.H. by McLean Hospital’s 3 East Dialectical Behavior Therapy (“DBT”) program from September 9, 2015, through September 22, 2015, and again from October 15, 2015, through December 11, 2015, were “medically necessary” and therefore covered under the terms of the State Employees’ PPO Group Health Insurance Plan.
Findings Of Fact DSGI is the state agency responsible for administration of the state group insurance program, pursuant to section 110.123, Florida Statutes. Petitioner, A.H., is a State of Florida employee and was insured through the State Employees’ PPO Group Health Insurance Plan (the “Plan”). R.H., the child of A.H., was eligible for coverage under A.H.’s health insurance policy as of September 1, 2015. Pursuant to contract, Florida Blue acts as DSGI’s third-party medical claims administrator for employee health insurance benefits. New Directions is Florida Blue’s subcontractor and third-party administrator for mental health and substance abuse reviews and authorizations. “Utilization management” is the process of reviewing a service claim to determine whether the service is a covered benefit under the Plan and whether the service is “medically necessary” as that term is defined in the Plan. In cases involving mental health or substance abuse services, the service must also satisfy the more detailed and specific coverage guidelines, titled “Medical Necessity Criteria,” established by New Directions.1/ Consistent with general practice in the field, the “medical necessity” criteria of the New Directions document observe the following levels of care, in increasing order of intensity: psychiatric outpatient; psychiatric intensive outpatient; psychiatric partial hospitalization; psychiatric residential; and psychiatric acute residential. In the interests of conserving medical resources and preserving patient liberty, safety, and dignity, every effort is made to place patients in the least intensive level of care consistent with effective treatment of their presenting condition. R.H., a female who was 15 years old during the period relevant to this proceeding, has been diagnosed with borderline personality disorder and has a history of eating disorders. Her treating psychologist in Florida, Nicolle Arbelaez Lopez, noted that R.H. was also being treated for generalized anxiety disorder. R.H. had an inpatient admission to the Renfrew Center in Florida for eating disorder treatment in May 2015. R.H. transitioned to partial hospitalization over the summer, followed by a step down to the Renfrew Center's intensive outpatient program, then by a step up back to partial hospitalization when her eating disorder behaviors worsened. Though less intensive than a full residential admission, intensive outpatient treatment and partial hospitalization allow patients to receive comparatively intensive treatment while remaining in their home environment.2/ R.H.’s final discharge from the Renfrew Center was on August 21, 2015. At the time she was admitted to McLean Hospital’s 3 East DBT program, R.H. had a recent history of engaging in superficial cutting of her arm. On August 30, 2015, R.H. intentionally hit herself in the hand with a hammer. R.H.’s mother took her to the emergency room for treatment and told the treating personnel that R.H. had fallen down some stairs. The hammer blow caused swelling and bruising but no broken bones. R.H. was also continuing to purge and restrict her food intake. R.H.’s treating psychiatrist, Dr. Thania V. Quesdada, and her psychologist, Ms. Lopez, both urged that she be admitted to one of three nationally-recognized immersion DBT programs. Her family chose the program at McLean Hospital. DBT is a cognitive behavioral treatment that was originally developed to treat chronically suicidal individuals diagnosed with borderline personality disorder, though it is now employed for treatment of other conditions, including eating disorders. DBT teaches behavioral coping skills such as mindfulness, distress tolerance, interpersonal effectiveness, and emotional regulation. At the hearing, DSGI did not dispute the general efficacy of DBT treatment. However, DSGI did dispute whether R.H.’s presentation merited “immersion” DBT, i.e., a residential inpatient admission. McLean Hospital’s 3 East DBT program is self-pay and requires a minimum stay of 28 days. The program does not accept insurance and does not assist patients with insurance reimbursement efforts. Because of its stance on insurance, the 3 East DBT program is obviously not an in-network provider under the Plan. Prior to admission, Petitioner was aware that the 3 East DBT program did not accept insurance. R.H. was in residential treatment at McLean Hospital from September 9, 2015, through September 22, 2015. While at McLean Hospital, R.H. engaged in restricting and purging behaviors that led to medical instability. She was discharged to Cambridge Eating Disorder Center on September 23, 2015. She remained at the Cambridge Center until October 15, 2015. R.H.’s stay at the Cambridge Center was pre-certified by New Directions and is not at issue in this proceeding. On October 15, 2015, R.H. returned to McLean Hospital, again as a residential inpatient admission. She remained at McLean Hospital until her discharge on December 11, 2015. The total billed amount for R.H.’s two stays at McLean Hospital was $96,950, which was paid by the family out-of- pocket. Section 3-5 of the Plan sets forth the following under the heading “Mental Health and Substance Dependency Services”: “Physician office visits, Intensive Outpatient Treatment, Inpatient and Partial Hospitalization and Residential Treatment Services are covered based on medical necessity.” The general definition of “Medically Necessary” is set forth at section 15-4 of the Plan: [s]ervices required to identify or treat the Illness, injury, Condition, or Mental and Nervous Disorder a Doctor has diagnosed or reasonably suspects. The service must be: consistent with the symptom, diagnosis and treatment of the patient’s Condition; in accordance with standards of good medical practice; required for reasons other than convenience of the patient or the Doctor; approved by the appropriate medical body or board for the illness or injury in question; and at the most appropriate level of medical supply, service, or care that can be safely provided. The fact that a service, prescription drug, or supply is prescribed by a Doctor does not necessarily mean that the service is Medically Necessary. Florida Blue, CVS/Caremark, and DSGI determine whether a service, prescription drug, or supply is Medically Necessary. New Directions’ Medical Necessity Criteria guidelines provided the following admission criteria for psychiatric residential admissions: Must meet all of the following: A DSM diagnosis is the primary focus of active, daily treatment. There is a reasonable expectation of reduction in behaviors/symptoms with treatment at this level of care. The treatment is not primarily social, custodial, interpersonal, or respite care. The member has documented symptoms and/or behaviors that are a significant deterioration from baseline functioning and create a significant functional impairment in at least three (3) of the following areas: primary support social/interpersonal occupational/educational health/medical compliance ability to maintain safety for either self or others Must have one of the following: The member’s family members and/or support system demonstrate behaviors that are likely to undermine goals of treatment, such that treatment at a lower level of care is unlikely to be successful. This lack must be situational in nature and amenable to change as a result of the treatment process and resources identified during a residential confinement. The member has a documented history of an inability to be managed at an intensive lower level of care. There is a recent (in the last six months) history of multiple brief acute inpatient stays without a successful transition to a lower level of care, and at risk of admission to inpatient acute care. New Directions’ Medical Necessity Criteria guidelines provided the following admission criteria for eating disorder residential admissions: Must meet 1-4 and either 5, 6, or 7 A DSM diagnosis found in the Feeding and Eating Disorder section is the primary focus of active, daily treatment. There is a reasonable expectation of reduction in behaviors/symptoms with treatment at this level of care. The treatment is not primarily social, custodial, interpersonal, or respite care. The member has documented symptoms and/or behaviors that are a significant deterioration from baseline functioning and create a significant functional impairment in at least three (3) of the following areas: primary support social/interpersonal occupational/educational health/medical compliance ability to maintain safety for either self or others Must have one of the following: The member’s family members and/or support system demonstrate behaviors that are likely to undermine goals of treatment, such that treatment at a lower level of care is unlikely to be successful. This lack must be situational in nature and amenable to change as a result of the treatment process and resources identified during a residential confinement. The member has a documented history of an inability to be managed at an intensive lower level of care. There is a recent (in the last six months) history of multiple brief acute inpatient stays without a successful transition to a lower level of care, and at risk of admission to inpatient acute care. There are active biomedical complications that require 24-hour care, including, but not limited to: Adults Children/Adolescents Pulse <40 <50 Blood Pressure <90/60 <80/50 Orthostatic changes in BP Systolic: >20 point drop Systolic: > 20 point drop (Supine to standing) Diastolic: > 10 point drop Diastolic: > 10 point drop Potassium < 3 meq/l Hypokalemia Body temperature < 97 F Abnormal core temperature Electrolytes/ serum chemistry Significant deviation from normal Significant deviation from normal Must have either a. or b.: A low body weight that can reasonably lead to instability in the absence of intervention as evidenced by one of the following: Less than 85% of IBW or a BMI less than 16.5. Greater than 10% decrease in body weight within the last 30 days. In children and adolescents, greater than 10% decrease in body weight during a rapid growth cycle. Persistence or worsening of eating disorder behavior despite recent (with [sic] the last three months), appropriate therapeutic intervention in a structured eating disorder treatment setting. If PHP or IOP is contraindicated, documentation of the rationale supporting the contraindication is required. One of the following must be present: Compensatory behaviors (binging, purging, laxative abuse, excessive exercise, etc.) have caused significant physiological complications. Compensatory behaviors occur multiple times daily and have failed to respond to treatment at a lower level of care and acute physiologic imbalance can reasonably be expected. New Directions’ contact notes for this case indicate that it was called by someone named “Rachelle” on behalf of A.H.’s family on September 3, 2015. This person asked about the authorization process for McLean Hospital. No witness was presented who had direct knowledge of the contents of this conversation. The note indicates that “Rachelle” was advised that any authorization process must be initiated with New Directions by McLean Hospital. On September 9, 2015, the day R.H. was admitted to McLean Hospital, Florida Blue received what its notes reference as a “critical inquiry” message regarding this admission. A Florida Blue employee phoned the number attached to the message but discovered it was not for A.H. but for “someone at AllState Insurance who is out of the office.” (This person turned out to be Pearl Harrison, R.H.’s grandmother and qualified representative in this proceeding, who had not yet obtained a release to receive confidential medical information concerning R.H.). No number for A.H. could be found. Florida Blue contacted New Directions, which confirmed that no request for pre-authorization3/ had been received from McLean Hospital or the member. R.H.’s stays at McLean Hospital were not emergency admissions. The term “medical emergency” was not specifically defined in the 2015 Plan, but expert testimony at the hearing established that it is a term of common meaning and usage in the medical community. An emergency situation is one in which there is an immediate risk of death, serious bodily harm, or creation of an irreversible condition. If care is not administered immediately, the person will harm herself or someone else. Michael Shaw, the utilization management team leader for New Directions, explained that emergency care is not provided at the residential level of care, but in an inpatient setting under lock and key. The medical records indicated that R.H.’s last incident of self-harming behavior occurred about a week prior to her admission to McLean Hospital. Her injuries were superficial and she was in no immediate danger or risk of irreversible damage. Section 7-1 of the Plan provides for hospital admissions, including the following pertinent language as to non-emergency admissions to non-network hospitals and pre- certification for stays at non-network hospitals: Non-Network Hospital: Non-emergency Admission Every non-emergency admission to a non- network Hospital must be pre-certified. This means that before services are provided Florida Blue must certify the Hospital admission and provide the number of days for which certification is given. Precertification of non-network Hospital stays is your responsibility, even if the Doctor admitting you or your dependent to the Hospital is a Network Provider. Failure to obtain pre-certification will result in penalties (higher out-of-pocket costs). For more information on penalties, see “If You Do Not Pre-Certify Your Stay” within this section below. To pre-certify your stay in a non-network Hospital, ask your Doctor to call Florida Blue at (800) 955-5692 before your Hospital admission and provide the reason for hospitalization, the proposed treatment or surgery, testing, and the number of Hospital days anticipated. Florida Blue will review your Doctor’s request for admission certification and immediately notify your Doctor or the Hospital if your admission has been certified and the number of days for which certification has been given. If the admission is not certified, your Doctor may submit additional information for a second review. If your Hospital stay is certified and you need to stay longer than the number of days for which certification was given, your Doctor must call Florida Blue to request certification for the additional days. Your Doctor should make this call as soon as possible. * * * If You Do Not Pre-Certify Your Stay: Non- Network Hospital Benefits for covered services will be reduced by 25 percent of the covered charges, not to exceed a maximum benefit reduction of $500 IF you are admitted to a participating Hospital (Payment for Hospital Services or PHS Provider)[4/] that is not part of the Preferred Patient Care (PPC) Network and admission certification has not been requested on your behalf or the request is denied. This Plan will not pay room and board benefits for your first two days of hospitalization IF your non-network Hospital admission is denied, but you are admitted to a non-network Hospital anyway. This Plan will not pay room and board benefits for your entire Hospital stay IF you are admitted to a non-network Hospital without having your Doctor call prior to the admission. This Plan will not pay room and board benefits for the additional days that were not certified IF your non-network Hospital admission is certified but your stay is longer than the number of days for which the admission was certified. The Plan’s pre-certification requirement was not met. Neither A.H. nor McLean Hospital requested pre-certification. Mr. Shaw testified that he spoke to three different people at McLean Hospital, all of whom stated that the 3 East DBT program does not accept or work with insurance. Mr. Shaw was unable to generate the paperwork needed to begin the pre-certification process because McLean Hospital declined to share with him the necessary clinical information about R.H.5/ Although pre-certification was not obtained for R.H.’s stays at McLean Hospital, Florida Blue conducted a post-service review to determine whether the claim was eligible for reimbursement. Petitioner submitted a request for a Level I appeal pursuant to Section 12 of the Plan, under which a person denied benefits or payment of a claim for medical services may obtain a review by Florida Blue. Petitioner submitted a package of R.H.’s medical records for review. Prest & Associates, Inc., a URAC-approved independent review organization,6/ was retained to conduct an independent review of Petitioner’s claim. Dr. Barbara Center, a staff psychiatrist with Prest & Associates, performed a review designed to determine the medical necessity of R.H.’s stays at McLean Hospital. Dr. Center is board-certified in General Psychiatry, Child and Adolescent Psychiatry, and Addiction Medicine. Dr. Center reviewed the claim in terms of the New Directions criteria for psychiatric residential admissions and for eating disorder residential admissions. She performed two reviews, one for the admission starting on September 9, 2015, and another for the admission starting on October 15, 2015. Dr. Center stated that the McLean Hospital medical records provided by Petitioner gave a detailed description of R.H.’s history of present illness, past psychiatric history, and other elements of her history that were adequate for making a medical necessity determination. As to the September 9 admission, Dr. Center concluded that medical necessity criteria were not met for either a psychiatric residential or an eating disorder residential admission. As to the psychiatric residential criteria, Dr. Center concluded that R.H.’s admission failed to satisfy criteria 3, 4, and 5. Dr. Center testified that criterion 4 looks at symptoms and behaviors that represent a significant deterioration from the patient’s baseline functioning in several areas. R.H.’s primary support structures were stable. Her mother was clearly involved in her care and had the support of other family members. Dr. Center stated that the medical records showed no sign of substantial social or interpersonal deterioration, aside from some typical difficulty in starting high school. R.H. was having no medical instability at the time of admission. She was not at a dangerously low body weight. She had a recent onset of self-harming behaviors, but there was no documentation of acute risk issues that warranted placement in 24-hour care. As to criterion 5, Dr. Center testified that the records showed no indication that R.H.’s family and support system was unsupportive or unable to take her to treatment and participate in her care. There was no documentation that R.H. could not progress in a less intensive level of care. Dr. Center noted that R.H.’s prior treatment for eating disorders had been at varying levels of care and that R.H. had not had multiple brief acute inpatient stays. Criterion 3 is a diagnosis of exclusion, meaning that if there is no apparent medical necessity for the residential placement, then the reason must be “primarily social, custodial, interpersonal or respite care.” Dr. Center found in the records no support for a 24-hour residential placement. She noted that R.H.’s self-injury was of a recent onset and that McLean Hospital had ruled out any immediate prospect of self-injury or serious threat to other people. Cutting is not uncommon among adolescents and does not rise to the level of requiring residential care. Mental health providers distinguish between self-injurious behaviors and suicidal ideation, and McLean Hospital did not describe R.H. as suicidal. Dr. Center testified that, at the request of Mr. Shaw, she also reviewed R.H.’s admission in terms of the New Directions eating disorder residential criteria. Dr. Center noted that R.H. was not at a dangerous body weight (122 pounds, with a BMI of 22.2) at the time of her admission on September 9. There was no indication of medical instability or of out-of- control eating disorders requiring 24-hour care. Dr. Center testified that DBT is routinely taught on an outpatient basis and that she recommended outpatient treatment for the stay beginning on September 9. She opined that R.H. did not meet numbers 3 through 7 of the New Directions eating disorder residential criteria. As to the McLean Hospital admission beginning on October 15, 2015, Dr. Center recommended intensive outpatient treatment. Dr. Center knew that R.H. had been transitioned from McLean Hospital to the Cambridge Center to address the eating disorder as her primary symptom. Dr. Center felt that continuing R.H. in an intensive outpatient setting would help her stabilize and maintain the progress she had made at the Cambridge Center. Dr. Center stated that a basic tenet of medical care, and especially psychiatric care, is that the patient be treated in the least restrictive setting possible under the circumstances. She stated that it is always best to treat people in the environment they live in. Treatment in the 24- hour residential setting removes the patient from the stressors she will have to deal with when she goes home. Upon her readmission to the McLean Hospital from Cambridge Center, R.H. denied suicidal ideation and homicidal ideation, and the record disclosed nothing to indicate suicidal thoughts. R.H. denied auditory or visual hallucinations and her mood was described as “euthymic,” i.e., essentially normal. Dr. Center acknowledged that the medical record showed that R.H. had been in intensive outpatient treatment for her eating disorder at the Renfrew Center in Florida from July 23 through August 21, 2015, with limited success. Dr. Center stated that the issue for R.H. had recently changed from her eating disorder to her self-harming behavior and believed that an intensive outpatient program focusing on skills to deal with self-injurious behaviors would be the appropriate placement under the circumstances. Dr. Center also acknowledged that her review did not include the records of R.H.’s treating psychiatrist and therapist during her stay at Renfrew, and that their notes indicated that R.H.’s condition had regressed while in intensive outpatient care. Dr. Center testified that these records might have persuaded her to recommend a higher level of care, such as a partial hospital program, but that she still would not have recommended residential placement. After Dr. Center rendered her opinion that R.H.’s residential stays at McLean Hospital were not medically necessary, the claim was reviewed by Dr. Frank Santamaria, Florida Blue’s care management medical director. In rendering his opinion, Dr. Santamaria reviewed the medical records sent by Petitioner and McLean Hospital, the log of contact notes kept by New Directions, and Dr. Center’s report.7/ He testified that the available records were adequate to allow him to render an opinion as to medical necessity. Dr. Santamaria concluded that, as to the New Directions criteria for psychiatric residential admissions, R.H. failed to meet criteria 3, 4, and 5. He opined generally that when assessing the need for a residential stay, he is looking for someone who is at risk of self-harm or harming others or who has an acute severe psychiatric condition such as a psychotic disorder that requires confinement. Dr. Santamaria noted that R.H.’s eating disorder was not the primary concern at the time of her admissions to McLean Hospital; however, because the eating disorder was occurring at the same time as the psychiatric problem, he was also looking for medical manifestations of the eating disorder, such as severe weight loss affecting blood chemistry. Criterion 4 requires documented symptoms and/or behaviors that are a significant deterioration from baseline functioning and create a significant functional impairment in at least three of five listed areas. Under area 4a, “primary support,” Dr. Santamaria noted that R.H. had good support from her mother and grandmother. He did not believe that primary support was a problem.8/ As to area 4b, “social/interpersonal,” the notes indicated that R.H. recently had an altercation with a friend. Dr. Santamaria did not find such an altercation out of the ordinary for a 15-year-old and thus found no functional impairment under 4b. Area 4c, “occupational/educational,” appeared to pose no problem because the records indicated that R.H. was an A-B student, despite her rocky first week of high school. As to area 4d, “health/medical compliance,” Dr. Santamaria noted that R.H. had been compliant with medical instructions and her family had been good about seeking care for her. As to area 4e, “ability to maintain safety for either self or others,” Dr. Santamaria acknowledged that R.H. had hit her hand with a hammer and acted in other self-injurious ways, chiefly superficial cutting. He testified that such behaviors are not uncommon in younger populations and do not necessarily make the person a candidate for residential care. Self-injury alone does not satisfy the criterion, unless there is a concern for suicide or homicide. The hammer incident occurred in August, at least one week before R.H.’s admission to McLean Hospital. The McLean Hospital admission note of September 9, 2015, indicates no reported history of suicidal thinking. Dr. Santamaria found no documentation to indicate R.H. was aggressive against herself or others. She had no acute conditions such as psychotic disorders. Dr. Santamaria noted that even if area 4e were deemed to have been met, criterion 4 requires significant functional impairment and degradation from baseline functioning in at least three of the listed areas, and that R.H. at most satisfied one area of the criterion. Criterion 5 of the New Directions psychiatric residential criteria requires that one of three conditions relating to the patient’s support system or treatment history be met. Dr. Santamaria concluded that none of the three conditions were met. Condition 5c requires a recent history of multiple brief acute inpatient stays without a successful transition to a lower level of care. Dr. Santamaria conceded that the record he examined disclosed little information about prior therapies that had been tried with R.H., but he concluded that the record was sufficient to confirm that R.H. did not have multiple brief inpatient stays. He was reasonably confident that McLean Hospital would have documented such stays had they occurred because they would be a very significant part of her history. Dr. Santamaria also noted that R.H. had been able to transition to an intensive outpatient program from her inpatient admission to the Renfrew Center in May 2015. Condition 5a requires that family members or the patient’s support system demonstrate behaviors that are likely to undermine the goals of treatment, such that treatment at a lower level of care is unlikely to be successful. The record disclosed that R.H.’s mother, who was her custodial guardian, had a history of substance abuse but had gone through a rehabilitation program, attended Narcotics Anonymous regularly, and had been sober for one year at the time of R.H.’s October 15, 2015, admission to McLean Hospital. Dr. Santamaria testified that if R.H.’s mother were currently using drugs and R.H. had nowhere else to go, then condition 5a might be met. However, the actual situation presented by the medical record did not establish that R.H. was living in an unsafe environment that could undermine her treatment. As to condition 5b, a documented history of an inability to be managed at an intensive lower level of care, Dr. Santamaria concluded that R.H. had responded to various therapies in the past. As noted above, criterion 3 of the New Directions psychiatric residential criteria is exclusionary, i.e., if the placement appears not to be medically necessary, then one begins to seek another motivation, such as the desire for a change of pace or a respite for the family. Dr. Santamaria noted that DBT does not require placement at the residential level. It can be done at an intensive outpatient or partial hospitalization level, both of which are lower levels of care than residential.9/ This fact made Dr. Santamaria suspect that the prime motive for R.H.’s placement may have been custodial. Dr. Santamaria testified that he also analyzed R.H.’s admission under the New Directions eating disorder residential criteria. He stated that he could not be certain from the record whether McLean Hospital was treating R.H.’s eating disorder, as well as providing DBT, but he knew that McLean Hospital was mindful of the eating disorder. He also knew that R.H.’s transfer to the Cambridge Center was partly because her eating disorder was becoming worse. Dr. Santamaria concluded that R.H. did not satisfy criteria 3 through 7 for an eating disorder residential admission. Dr. Santamaria testified that R.H. did not meet eating disorder residential criteria 3 through 5 for the same reasons she did not meet the identical criteria 3 through 5 of the psychiatric residential criteria. Criterion 6 concerns biomedical complications of an eating disorder. Dr. Santamaria reviewed the medical records and concluded that R.H. presented none of the complications that would require 24-hour care at the time of her admission on September 9, 2015. Dr. Santamaria likewise found that R.H. satisfied neither factor 7a nor 7b of Criterion 7. As to 7a, R.H. did not present with a low body weight and there was no documentation that she had lost 10 percent of her body weight in the last 30 days. As to 7b, there was no evidence that R.H.’s “compensatory behaviors,” i.e., binging and purging, had caused “significant physiological complications” or that such behaviors occurred multiple times daily and did not respond to treatment “at an intensive lower level of care.” Dr. Santamaria testified that his analysis as to the October 15, 2015, admission was identical to that for the September 9, 2015, admission. As to both admissions, he believed that intensive outpatient was the appropriate level of care. Dr. Santamaria defined “intensive outpatient” as three hours of intensive therapy for at least three days per week. He believed that this level of care could address all of R.H.’s issues, including her self-injurious behavior. Dr. Santamaria concluded that if R.H. tried the intensive outpatient level of care and failed, then a higher level could be considered. Like Dr. Center, he stated that he might have recommended a partial hospitalization setting had he known that intensive outpatient had been tried and failed, but he still would not have recommended a 24-hour residential admission. Petitioner’s presentation implied that Florida Blue and/or Prest & Associates base their coverage decisions on financial considerations rather than strictly on the merits of the claims. Dr. Center and Dr. Santamaria both testified that they had no incentive, financial or otherwise, to deny a claim for reimbursement. Their testimony on this point is credible. Petitioner offered no direct evidence that Florida Blue or Prest & Associates directly pressure their physician employees to reject meritorious claims, and there is no evidence that Dr. Santamaria or Dr. Center based their recommendations on anything other than their assessment of R.H.’s medical records in light of the relevant medical necessity criteria. Petitioner raised questions about the completeness of the records examined by Dr. Santamaria and Dr. Center and sounded a skeptical note as to the diligence of the physicians’ efforts to obtain additional documentation. As found above, both Dr. Santamaria and Dr. Center testified that they had adequate documentation to render an opinion as to medical necessity in this case. Both physicians stated that in other cases they have taken additional steps to obtain missing information, including making peer-to-peer calls to the treating physicians or reaching out to the case managers, but that no such steps were necessary in this case. Both physicians conceded that not all of the medical records were available to them at the time of their reviews. They did not have records from R.H.’s stays at the Renfrew Center and the Cambridge Center or the notes of R.H.’s treating physicians in Florida. Both Dr. Center and Dr. Santamaria credibly testified that nothing in these additional records would have changed their opinion as to the medical necessity of residential treatment for R.H. Section 12 of the Plan, which sets forth the appeal process for a denied claim, expressly states: “Your appeal may include any additional documentation, information, evidence or testimony that you would like reviewed and considered during the appeal process.” This language is included in the explanations for both the Level I and Level II appeals. Nothing prevents the member from providing any documentation whatsoever during the appeal process. Dr. Center and Dr. Santamaria are physician reviewers, not medical investigators. If something Petitioner asserted to be relevant to the decision was missing from the files, it was not the fault of the reviewing physicians. It is ultimately the member’s responsibility to provide appropriate documentation for review. By letter dated April 5, 2016, Florida Blue notified Petitioner that it “remains unable to approve additional coverage and/or payment for the Residential Treatment.” The letter set forth the following rationale for the denial: Per the State Employees’ PPO Plan Booklet and Benefits Document page 5-5: “Services or supplies that are not Medically Necessary, as determined by Florida Blue and/or CVS Caremark clinical staff and Division of State Group Insurance, are non- covered.” Specifically, coverage for the Mental Health (Eating Disorder) Residential stays is denied as it does not meet the definition of medical necessity. This is for hospital stay on and after 09/09/2015 and 10/15/2015. The final decision to proceed with the requested services is between the provider and the member. Records show that the member was not deemed to be a present risk to self or to others. Though the member had a preoccupation with weight sand [sic] eating, there was no evidence of inability to adequately care for self with functioning in multiple sphere areas, including stabilization of the eating disorder issues. There was no report of medical instability or psychosis. The member was in a body weight range. The member was described as having her eating disorder symptoms under control. From the clinical evidence, this member could have been safely treated at each occasion at a lesser level of care such as in an eating disorder intensive outpatient setting. This review was done using New Directions Clinical Care criteria and is based on the opinion of a board certified psychiatrist. Services that are not medically necessary are not covered under your health benefit plan. The denial letter provided Petitioner with information regarding the Level II appeal process to DSGI, including a reference to the pertinent section of the Plan. The denial letter reiterated that Petitioner could submit any information or documentation that Petitioner believed could assist in DSGI’s review of the appeal. Petitioner submitted a request for a Level II appeal to DSGI on May 23, 2016. The Level II appeal was reviewed by DSGI’s legal nurse coordinator, Kathy Flippo. Ms. Flippo reviewed all of the documents reviewed by Dr. Center and Dr. Santamaria, plus additional records submitted by Petitioner with the Level II appeal request. Ms. Flippo determined that the stays at issue were non-emergency admissions that required pre-certification and that the pre-certification requirements of the Plan were not met. Ms. Flippo reached the same conclusions as Dr. Center and Dr. Santamaria regarding the New Directions psychiatric residential criteria. Ms. Flippo concluded that R.H. did not meet criteria 3, 4, or 5. Ms. Flippo testified that she did not review the case pursuant to the New Directions eating disorder residential criteria because Petitioner’s Level II appeal addressed only the psychiatric issues and because R.H.’s eating disorder stay at the Cambridge Center was covered by Florida Blue. By letter dated July 29, 2016, signed by Tami Fillyaw, director of DSGI, Petitioner was informed that the Level II appeal had been denied. The letter informed Petitioner of his rights under the Plan to file a petition for a formal or an informal hearing contesting the denial of the appeal and/or to request a binding external review from an Independent Review Organization (“IRO”).10/ Petitioner requested both an administrative hearing and an external review.11/ The external review was conducted under the auspices of the Medical Review Institute of America, Inc. (“MRIoA”), a URAC-accredited external review network. The MRIoA assigned a physician whom it stated is board-certified by the American Board of Psychiatry and Neurology in the specialties of General Psychiatry and Child & Adolescent Psychiatry.12/ The external review upheld the adverse determinations regarding coverage for the McLean Hospital stays. In its decision letter dated November 11, 2016, the MRIoA provided the following relevant clinical summary and findings: At the time in question, the patient was a 15 year old female with a variety of difficulties related to depression, anxiety, eating disorder symptoms, and symptoms of obsessive compulsive disorder (OCD) with self-harming behaviors. This review has to do with a question of whether residential treatment center (RTC) level of care (LOC) for two episodes of service 9/9/15-9/22/15 and 10/15/15-12/11/15 met the plan criteria for medical necessity. It is noted that the patient was treated in a special eating disorders program on the dates between these two episodes. * * * The patient’s presentation did not meet the plan criteria for medical necessity for the dates in question. Specifically, the patient did not meet criteria #5 of the Admission Criteria. The patient is noted to have a caring and effective support system that would have supported a less intensive level of care. There was no recent history of inability to be effectively treated at an intensive level of service below residential treatment center (RTC) level of care (LOC), and there was no recent history of inability to transition from inpatient treatment into a less intensive level of care. At the time of admission to residential treatment, it is clear that the patient struggled with mood dysregulation along with episodes of food restriction and self- harming behaviors. She was not responding to attempts at outpatient treatment. The residential program in question was sought out specifically due to its approach to the utilization of DBT (dialectical behavior therapy). However, there is no indication that the patient could not have responded to attempts to escalate her treatment in the outpatient setting through the use of either intensive outpatient or partial hospitalization services. In particular, the patient could have been involved in a formal DBT program without utilization of residential treatment. Her symptom severity for the dates in question was not of a severity to require the use of round the clock observation and treatment. As a result, there was no medical necessity for residential treatment center (RTC) level of care (LOC). * * * The appeal letters from the patient’s family, outpatient providers, and residential facility discuss the need for residential treatment due to the patient’s symptoms severity, particularly the patient’s episodes of self-harming behavior and the need for her to participate in the immersive DBT program utilized at the residential program in question. The patient’s need for more intensive treatment is acknowledged. However, the patient’s recent treatment history was one of outpatient treatment with a previous history of residential treatment for eating disorder symptoms. For the DOS in question, the patient could have obtained appropriate and effective DBT in a less restrictive setting, such as either a partial hospitalization program (PHP) or an intensive outpatient program (IOP). Based on the above, the previous determination has been upheld. At the hearing, Petitioner complained that, prior to receiving the letter denying the Level II appeal, he had no inkling that medical necessity determinations were based on criteria produced by New Directions. The Plan’s definition of “medically necessary” does not reference the fact that Florida Blue relies on the New Directions criteria for medical necessity determinations in psychiatric and eating disorder admissions. Petitioner basically argues that not having the precise language of the New Directions medical necessity criteria deprived him and the medical providers of the ability to frame the coverage requests in such a way as to satisfy the criteria. The record evidence shows Florida Blue does not make the New Directions medical necessity criteria directly available to its members. In fact, New Directions is nowhere mentioned in the Plan. Witnesses for DSGI correctly stated that anyone can download the criteria from the New Directions website, but Petitioner pointed out that one must be aware the criteria exist before one can download them. If this case is typical, it appears that a Florida Blue member must be denied coverage and go through the appeal process before Florida Blue makes him aware of precisely how the determination of medical necessity is made. Dr. Santamaria testified that Florida Blue does not expect its members to have any knowledge of the New Directions criteria or to “understand all the medical jargon.” The member is expected to present Florida Blue with the best and most accurate medical information available (preferably before the services are rendered) and rely on Florida Blue to make the decision. Dr. Santamaria stated, “Your role is not to do the utilization management. That’s my role. Your role is, if you disagree with a coverage determination, to appeal it and to even have your doctor speak on your behalf or write a letter or do whatever. It’s not your role to access the documents and to use them on your own. That--that’s not what they were created for.” Dr. Santamaria emphasized that the member’s “role” is not to “meet criteria” but to provide Florida Blue with information sufficient to allow its experts to apply the criteria. While his phrasing may be condescending, Dr. Santamaria’s statement is basically accurate: the medical records determine whether the criteria have been met. Petitioner’s awareness of the particulars of the criteria would not change the substance of the medical record. The undersigned tends to agree with Petitioner that Florida Blue’s process could be more transparent. However, Petitioner failed to show how the outcome would have been different if the New Directions medical necessity criteria had been available to him or McLean Hospital. Every expert who examined the medical records agreed that R.H. did not meet the criteria for medical necessity. Their opinions are credited. Ms. Flippo emphasized that Florida Blue did not deny coverage merely because McLean Hospital’s 3 East DBT program was self-pay. If the member had been able to obtain pre- certification for hospitalization and a proper bill had been presented to Florida Blue, it would have been covered at the allowable non-network coverage amount. Ms. Flippo also stated that even if pre-certification had been obtained, Florida Blue would certainly not have covered the 70 days that R.H. spent in McLean Hospital. Ms. Flippo had never seen more than 15 days at a time approved, even for members who were floridly psychotic and admitted under the Baker Act. With modern treatments and medications, it is seldom necessary to keep patients at a residential level of care for months at a time. All of the experts agreed that DBT is more commonly provided on an outpatient basis. Additionally, Mr. Shaw pointed out that the ability of the insurer to pay the non-contracted, non-network rate to the hospital is contingent on the hospital’s willingness to accept insurance payments. McLean Hospital’s 3 East DBT program did not accept insurance. Mr. Shaw succinctly stated, “We’re not obligated to pay you back because you made the choice to go to a facility that takes your money but not ours.”
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department of Management Services, Division of State Group Insurance, issue a final order denying Petitioner’s claim for coverage under the State Employees’ PPO Plan for R.H.’s residential treatment at McLean Hospital from September 9, 2015, to September 30, 2015, and October 15, 2015, to December 11, 2015. DONE AND ENTERED this 17th day of May, 2017, in Tallahassee, Leon County, Florida. S LAWRENCE P. STEVENSON 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 17th day of May, 2017.
Findings Of Fact Orlando Regional Healthcare System, Inc. ("ORHS") filed a letter of intent to apply for certificate of need ("CON") 8039 for the approval of a bone marrow transplantation program. ORHS also submitted a Notice of Filing the letter of intent for publication in The Orlando Sentinel newspaper. The notice, which is as follows, did not include the capital expenditure cost of the project. PUBLIC NOTIFICATION NOTICE OF FILING The applicant, Orlando Regional Healthcare System, Inc., which is authorized to operate Orlando Regional Medical Center, announces its intent to file a certificate of need application on March 22, 1995 with the Agency for Health Care Administration to establish Bone Marrow Transplantation Services at Orlando Regional Medical Center, located in Orlando, FL, the Agency's District 7, Orange County Subdistrict, which is designated as Organ Transplant Planning Area 3 by the Agency's Certificate of Need Program Office. The project, if granted is expected to become operational in 1996. Signed: /s/ Garry J. Singleton Garry J. Singleton Vice President of Acute Care Operations Orlando Regional Healthcare System, Inc. 1414 Kuhl Avenue Orlando, Fl. 32806 The Agency For Health Care Administration ("AHCA") is the state agency that administers the CON program. AHCA published notice of receiving ORHS' letter of intent in Vol. 21, Number 10 of Florida Administrative Weekly on March 10, 1995. AHCA's notices do not contain cost estimates. AHCA deemed ORHS' application incomplete and withdrew it from consideration due to omission of capital costs from the published notice in the newspaper. AHCA relied on the requirements on Rule 59C-1.008(1)(i) and (j), Florida Administrative Code. See, Conclusion of Law 11, infra. There is no evidence that The Orlando Sentinel made an error in the publication of the Notice of Filing. Capital expenditure costs, when estimated in letters of intent and in notices of filing letters of intent, are often inflated. That is done because CON applications, filed subsequently with higher capital expenditure costs than those stated in the letter of intent, are rejected. Rule 59C-1.008(1)(k)3, Florida Administrative Code. Because the capital costs are often inflated in letters of intent, ORHS' expert concluded that notices of capital expenditure costs are meaningless, and that the omission of such costs from the newspaper notice is insignificant. Therefore, he asserts that the ORHS' notice of filing its letter of intent substantially complied with the requirements of the rule. ORHS' expert also notes that the publication rule requires the notice to include eleven different items, and that ORHS' notice omitted only one of the eleven. AHCA does not always require letters of intent or newspaper notices. They are not required for expedited applications, and errors in notices are excused if made by the newspaper and not the applicant. However, there are no batching cycles or comparative review of expedited CON applications.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that AHCA enter a final order withdrawing from consideration CON application 8039 filed by ORHS. DONE AND ENTERED this 11th day of August, 1995, in Tallahassee, Leon County, Florida. ELEANOR M. HUNTER Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 11th day of August, 1995. APPENDIX TO RECOMMENDED ORDER, CASE NO. 95-3059 To comply with the requirements of Section 120.59(2), Florida Statutes (1993), the following rulings are made on the parties' proposed findings of fact: ORHS' Proposed Findings of Fact. Accepted in Findings of Fact 1. Accepted in Findings of Fact 3. Subordinate to Findings of Fact 3. Accepted in Findings of Fact 3. Accepted in or subordinate to Findings of Fact 5 (as $5,000,000 each in proposed project costs in Exhibit 3 and approximately $5,000 total actual costs in Exhibit 4). Accepted in or subordinate to Findings of Fact 7. Accepted in Findings of Fact 5. Accepted in or subordinate to Findings of Fact 2 and conclusions of law 11. Accepted in Findings of Fact 5. Rejected in conclusions of law 13. 11-13. Accepted in Findings of Fact 5. Accepted in or subordinate to Findings of Fact 5 (as $5,000,000 each in proposed project costs in Exhibit 3 and approximately $5,000 total actual costs in Exhibit 4). Accepted in Findings of Fact 5 and Conclusions of Law 13. 16-17. Accepted in Findings of Fact 8. Accepted. Conclusion rejected in conclusions of law 11. See, 5 supra. AHCA's Proposed Findings of Fact. Accepted in Findings of Fact 2. Accepted in Findings of Fact 3 and 4. 3-5. Accepted in Findings of Fact 5-8. COPIES FURNISHED: John Gilroy, Esquire Senior Attorney Agency for Health Care Administration 2727 Mahan Drive Fort Knox Building 3, Suite 3431 Tallahassee, Florida 32308-5403 James M. Barclay, Esquire Cobb, Cole & Bell 131 North Gadsden Street Tallahassee, Florida 32301 R. S. Power, Agency Clerk Agency for Health Care Administration 2727 Mahan Drive Fort Knox Building 3, Suite 3431 Tallahassee, Florida 32308-5403 Tom Wallace Assistant Director Agency For Health Care Administration 2727 Mahan Drive Fort Knox Building 3, Suite 3431 Tallahassee, Florida 32308-5403
Conclusions Having reviewed the Administrative Complaint, and all other matters of record, the Agency for Health Care Administration finds and concludes as follows: 1. The Agency has jurisdiction over the above-named Respondents pursuant to Chapter 408, Part II, Florida Statutes, and the applicable authorizing statutes and administrative code provisions. 2. The Agency issued the attached Administrative Complaint and Election of Rights form to the Respondents. (Ex. 1) The Election of Rights form advised of the right to an administrative hearing. 3. The parties have since entered into the attached Settlement Agreement. (Ex. 2) Based upon the foregoing, it is ORDERED: 1. The Settlement Agreement is adopted and incorporated by reference into this Final Order. The parties shall comply with the terms of the Settlement Agreement. Filed May 8, 2013 11:27 AM Division of Administrative Hearings 2. The Respondents shall pay the Agency $600.00. If full payment has been made, the cancelled check acts as receipt of payment and no further payment is required. If full payment has not been made, payment is due within 30 days of the Final Order. Overdue amounts are subject to statutory interest and may be referred to collections. A check made payable to the “Agency for Health Care Administration” and containing the AHCA ten-digit case number should be sent to: Office of Finance and Accounting Revenue Management Unit Agency for Health Care Administration 2727 Mahan Drive, MS 14 Tallahassee, Florida 32308 ORDERED at Tallahassee, Florida, on this 3 day of AM , 2013. De A a Elizabgth Dudek, Zegretary Agency for Health Care Administration
Other Judicial Opinions A party who is adversely affected by this Final Order is entitled to judicial review, which shall be instituted by filing one copy of a notice of appeal with the Agency Clerk of AHCA, and a second copy, along with filing fee as prescribed by law, with the District Court of Appeal in the appellate district where the Agency maintains its headquarters or where a party resides. Review of proceedings shall be conducted in accordance with the Florida appellate rules. The Notice of Appeal must be filed within 30 days of rendition of the order to be reviewed. CERTIFICATE OF SERVICE 1 CERTIFY that a true and correct_capy of this Final Order,was served on the below-named persons by the method designated on thos Oday of Hay , 2013. Agency for Health Care Administration 2727 Mahan Drive, Bldg. #3, Mail Stop #3 Tallahassee, Florida 32308-5403 Telephone: (850) 412-3630 Jan Mills Finance & Accounting Facilities Intake Unit Revenue Management Unit (Electronic Mail) (Electronic Mail) Andrea M. Lang, Senior Attorney Karl D. Acuff Office of the General Counsel Agency for Health Care Administration (Electronic Mail) Attorney for the Respondent Karl D. Acuff, P.A. 1615 Village Square Boulevard, Suite 2 Tallahassee, Florida 32309 (U.S. Mail) R. Bruce McKibben Administrative Law Judge Division of Administrative Hearings (Electronic Mail)
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.
The Issue Whether the Health Care Cost Containment Board correctly determined the amount of the Public Medical Assistance Trust Fund assessments for the period April 1, 1986, through March 31, 1987, and the period April 1, 1987, through December 31, 1987, attributable to the operation of the Petitioner?
Findings Of Fact These findings of fact were stipulated to by the parties. Golden Glades Regional Medical Center, formerly known as Miami General Hospital, is a 352-bed acute-care hospital located at 17300 NW 7th Avenue, Miami, Dade County, Florida. It holds HRS license 2288 and has been assigned HCCB number 10-0222. Its fiscal year is the calendar year. It has been owned by Golden Glades Regional Medical Center, Ltd., a Florida Limited partnership, since December of 1987. As of January 1, 1986, and for sometime prior to that, the hospital was known as Miami General Hospital and operated with a fiscal year ending March 31. On August 15, 1986, the HCCB certified to HRS that 1.5 percent of the $40,101,199 net annual operating revenue of Miami General Hospital for its fiscal year ending March 31, 1986, was $601,517.98. (Hospital Exhibit 1) As of January 1, 1987, the owner of Miami General Hospital was Miami General Hospital, Inc. (The majority shareholder of Miami General Hospital, Inc., was International Medical Centers, Inc., ("IMC"). Miguel Recarey, Jr., was president of IMC). (HX 2, 3, 4, 5, 6 and 9) Under subsection (7) of Section 407.05, Fla. Stat., and HCCB Fla. Admin. Code Rule 10N-1.004(3)(a), an audited actual report for fiscal year ending March 31, 1987 (hereafter "the 1987 audited actual report") was due within 120 days of that date; i.e., on or about July 31, 1987. However, on May 14, 1987, prior to the date the foregoing report was required to be filed, IMC was placed in receivership by the Florida Department of Insurance in Leon County Circuit Court Case No. 87-1456. On June 2, 1987, HRS was notified by Miami General Hospital that the hospital was in receivership. (HX 7) On June 18, 1987, an involuntary petition for bankruptcy was filed in the United States Bankruptcy Court for the Southern District of Florida, in Case No. 87-2131, "In re: Miami General Hospital". The Bankruptcy Order (HX authorizing the sale of the hospital found as follows: The hospital has been operating with losses of about $1,000,000 per month for sometime. The hospital was without funds to operate other than monies supplied from IMC (which itself had been placed in receivership) or use of cash collateral as to which First American Bank and Trust claimed a secured lien. On June 29, 1987, the HCCB was notified by Miami General Hospital that Miami General Hospital had been placed in receivership May 14, 1987, and that it was placed in bankruptcy June 18, 1987. (HX 8) On June 29, 1987, Miami General Hospital timely requested an extension of time to complete or provide the 1987 HCCB prior year report contending that the receivership and bankruptcy placed the hospital in a position where it was not able to complete its financial statements. In addition, the HCCB was notified by Miami General Hospital that the hospital did not have authority to retain an accounting firm to provide audited financial statements. (HX 8) (On July 24, 1987, the HCCB granted that extension request and advised the hospital that the report should be filed no later than 60 days following the Bankruptcy Court's approval of the hiring of an accounting firm to perform the audit.) (HX 13) In the meantime, on July 9, 1987, the assets of Miami General Hospital were sold by the trustee, free and clear of all claims, to First American Bank and Trust Company (FABT). (HX 10, 11) On August 4, 1987, the HCCB was notified by Miami General Hospital that the Bankruptcy Court had instructed the hospital's management team to file all reports and audits and that a copy of the HCCB's letter of July 24, 1987, would be saved for the new owners to keep on file. (HX 14) The letter of August 4, 1987, was not acknowledged by the HCCB. On or about August 8, 1987, an application for change of ownership of the hospital's license was received by HRS. That application reflected a change of ownership date of July 9, 1987, and indicated G. H. Corporation of Miami, c/o First American Bank and Trust - Legal Counsel, as owner of the hospital. (HX 12) On August 25, 1987, a bill of sale and trustee's deed, was executed from the trustee to G. H. Corporation of Miami, a Florida corporation. (HX 15, 16, 17) On August 25, 1987, license 2232 was issued by HRS to G. H. Corporation of Miami, d/b/a Miami General Hospital. (HX 18) Under HRS licensure laws and HCCB rules, a change of ownership occurred. On September 1, 1987, C & S Health Corp. submitted an application to HRS for change of ownership of the hospital reflecting a date of change of ownership of October 26, 1987. (HX 19) On September 4, 1987, a 1987 prior year report for Miami General Hospital was submitted by G. H. Corporation to the HCCB. (HX 20) The report was prepared using unaudited data. Receipt of that report was acknowledged September 16, 1987, by the HCCB (HX 21), but the report was deemed incomplete by the HCCB because it lacked audited financial statements, and a complete report, including audited financial statements, was requested. On September 28, 1987 the HCCB was notified that G. H. Corporation of Miami owned the land and buildings comprising Miami General Hospital as of August 25, 1987. (HX 22) The HCCB acknowledged this change of ownership November 17, 1987. (HX 23, 24) By special warranty deed dated December 5, 1987 (HX 25), ownership of the hospital was transferred from G. H. Corporation of Miami to Golden Glades Regional Medical Center, Ltd., which is the current owner of the facility. On December 7, 1987, Golden Glades Regional Medical Center, Ltd., filed a hospital license application with HRS. (HX 26) On December 8 and 10, 1987, the HCCB was notified that Golden Glades Regional Medical Center, Ltd., purchased Miami General Hospital on December 9, 1987 and in HX 28, that it desired to change its fiscal year to that of the calendar year. (HX 27, 28) On December 10, 1987, license 2277 was issued to Golden Glades Regional Medical Center, Ltd., d/b/a Miami General Hospital. (HX 29) On December 16, 1987, Golden Glades Regional Medical Center, Ltd., through counsel, advised the HCCB that, while wishing to comply with all applicable rules and regulations, literal compliance may be difficult due to the prior bankruptcy. The hospital also delayed changing its fiscal year. (HX 30) On December 23, 1987, the HCCB was provided with further explanations regarding the 1987 audited financial statements. By correspondence dated December 23, 1987, the HCCB was notified, "by way of further explanation, on May 14, 1987 Miami General Hospital was placed under State receivership by the Department of Insurance, and the Department operated the Hospital until it was sold to First American Bank and Trust (FABT) on June 18, 1987. FABT operated the hospital until it was sold to Golden Glades Regional Medical Center, Ltd. on December 9, 1987. The deed was recorded on December 11, 197. Because of the wrongdoing of the former owners that led to the State control, subsequent bankruptcy sale and criminal convictions of several of the former owners of the Hospital, the filing of audited financial statements is impossible. The new owners of the Hospital are totally unrelated to its former owners". 1/ (HX 31) On December 10, 1987, HRS license 2285 was issued to Golden Glades Regional Medical Center, Ltd. (HX 32) On March 3, 1988, the HCCB was notified that the hospital had been the subject of bankruptcy and that several of its former owners (IMC) had been prosecuted for matters relating to the operation of care services. (HX 35) aa. On April 14, 1988, Golden Glades Regional Medical Center, Ltd., through counsel, requested a waiver of the requirement to file an audited actual report for the hospital's fiscal year 1987, which, in this case, involves the period from about December 6, 1987, to December 31, 1987. (HX 36) bb. On May 13, 1988, the hospital objected to being assessed based on data supplied by Miami General Hospital for that hospital's 1986 fiscal year and notified the HCCB of the several changes of ownership of the hospital during the calendar year 1987. (HX 37) cc. On February 13, 1989, the HCCB was again requested to address assessments on Golden Glades Regional Medical Center. (HX 38) dd. On February 14, 1989, the HCCB was notified of approval by Medicare of the change in the hospital's fiscal year and the unsuccessful negotiations to sell the hospital to Jackson Memorial. (HX 39) ee. On March 14, 1989, HCCB certified to HRS that Golden Glades Regional Medical Center (hereafter, "Golden Glades") had not submitted a prior year actual report for fiscal year ending March 31, 1988, and therefore HCCB certified that the 1987 net revenue of Golden Glades was that shown by Miami General Hospital's most recent prior year report, which was for March 31, 1986. (HX 40) ff. On October 19, 1989, HCCB certified that Golden Glades had not submitted a prior year report for the fiscal year ending December 31, 1987, but certified to HRS that for purposes of assessments, 1.5 percent of $40,101.189 (the net revenue in Miami General Hospital's March 31, 1986 report) was $601,518. (HX 50) gg. On November 17, 1989, HCCB notified HRS that Golden Glades Regional Medical Center had filed financial statements for the year ended December 31, 1988, however, the audit was not finalized. (HX 51) Net revenue in the financial statements for the year ended December 31, 1988, was $10,599,690. One and a half percent of that amount is $158,995. The notification of November 17 was not a certification by the HCCB. Golden Glades Regional Medical Center, Ltd., is a limited partnership. Its general partner is CNS. Collection and disbursement of Public Medical Assistance Trust Fund monies pursuant to Section 395.101(2), Florida Statutes, is the responsibility of the Department of Health and Rehabilitative Services and not the Respondent. The Department of Health and Rehabilitative Services was not a party to these proceedings. The Respondent is only responsible for calculating the amount of a hospital's Public Medical Assistance Trust Fund assessment and certifying the amount of the assessment to the Department of Health and Rehabilitative Services. The Respondent used the audited actual data for the fiscal year ending March 31, 1986, in calculating the Public Medical Assistance Trust Fund assessment of the Petitioner for the period of April 1, 1986, through March 31, 1987, and the period of April 1, 1987, through December 31, 1987. The Respondent is required by Section 395.101(2), Florida Statutes, to certify the Public Medical Assistance Trust Fund assessment of a hospital within six months after the end of the hospital's fiscal year. No exception is provided for changes in ownership of the hospital. A change in ownership does not affect the Respondent's responsibilities under Section 395.101(2), Florida Statutes.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a Final Order be issued dismissing, with prejudice, the Petitioner's Petitions in these cases. DONE and ENTERED this 31st day of May, 1990, in Tallahassee, Florida. LARRY J. SARTIN Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 31st day of May, 1990.
Findings Of Fact Petitioner, who is black, was hired by Respondent on September 28, 1987. Respondent is in the business of providing health care institutions with management personnel to supervise environmental-services employees of the institutions. The management personnel supplied by Respondent for the typical customer consist of an on-site director, assistant director, and several supervisors. Respondent hired Petitioner as a supervisor for assignment to Holmes Regional Medical Center (Holmes). At the time, Respondent had six employees working at Holmes. The responsibilities of a supervisor typically include the management of 10-25 persons. The management responsibilities require, among other things: 1) "daily informal walk-through inspections of each area"; 2) "formal written inspections of each area or the job supervised with the employee at least every month"; 3) "aggressive[ness] in becoming acquainted with all key hospital personnel"; 4) the "develop[ment of] a good professional relationship with each [key hospital employee]"; and 5) the recruitment of personnel to be hired by the customer for assignment to the supervisor's department. Petitioner had limited relevant experience before joining Respondent. Petitioner had operated his own janitorial business, but had limited experience in supervision. As was the case with all employees, Respondent provided Petitioner with a fairly extensive orientation and training process. Prior to assuming his supervisory responsibilities, Petitioner successfully completed the training program, although he showed signs of ignoring the Medi-Dyn way of doing things and adhering to the ways of his former janitorial business. On December 28, 1987, Petitioner received his three-month evaluation, which employed a five-point rating. Petitioner averaged ratings of about "3," but received "marginal" ratings of "4" in areas such as initiative, planning, development of subordinates, training effectiveness, administrative ability, organization, and personnel management. Petitioner was responsible for supervising various areas of Holmes, including certain outbuildings, primarily during the late-evening and early- morning shift. The condition of these areas did not improve following the three-month evaluation. On January 25, 1988, a Holmes representative sent Respondent's director, Jeff Wahlen, a memorandum listing several complaints concerning the cleanliness of the diagnostic services area, for which Petitioner was responsible. On February 4, 1988, a representative of a user of one of the outbuildings for which Petitioner was responsible sent Petitioner a letter expressing "deep concern and frustration over the highly unsatisfactory work by [Respondent] at our hospital." On February 8, 1988, the supervisor of the health and fitness area at the hospital sent Mr. Wahlen a memorandum complaining that the cleanliness of the health and fitness area, for which Petitioner was responsible, was "getting worse." On February 9, 1988, Mr. Wahlen sent a memorandum to Petitioner itemizing numerous ;operational concerns" and establishing deadlines for achieving corrections of the noted problems. All of these deadlines were within February. On February 10, 1988, a representative of the bloodmobile/donor center sent a memorandum to Mr. Wahlen objecting to the uncleanliness of their work areas. Mr. Wahlen met with Petitioner that day and discussed cleaning problems in the bloodmobile/donor center areas. On February 18, 1988, Mr. Wahlen sent Petitioner a follow-up memorandum. Mr. Wahlen reminded Petitioner that the February 9 memorandum required that several objectives should already have been satisfied, but Mr. Wahlen had not received confirmation that these matters had been taken care of. On February 29, 1988, the supervisor of the health and fitness center sent Petitioner a memorandum informing him that many items on checklists dating from the prior November had still not been addressed. She advised Petitioner that she was considering the termination of the center's contract with Respondent. On March 10, 1988, Petitioner received a six-month evaluation in which his performance was rated as marginal, and he was placed on probation for 45 days. Petitioner received various tasks that he was to complete during the probationary period. He subsequently completed a large number of them. From April 13-15, 1988, Alfred Tambolio, who is the national operations director for Respondent, conducted a hospital-wide audit of the Holmes facility. He found that the areas within Petitioner's responsibility were unclean and in unsatisfactory condition. A week or two later, Mr. Tambolio returned to Holmes for a follow-up inspection. While examining the operating room, for which Petitioner was responsible, a physician told Mr. Tambolio and Petitioner that the area was "filthy." Leaving the operating room, with which Petitioner had displayed insufficient familiarity, Mr. Tambolio asked Petitioner to take him to the labor and delivery area, for which Petitioner was also responsible. Petitioner was unable even to find the area, and they had to ask a hospital employee for directions. Numerous other problems surfaced and many problems previously identified by Mr. Tambolio had not been corrected. By memorandum dated May 13, 1988, Mr. Wahlen reviewed Mr. Tambolio's second visit and informed Petitioner that he was being terminated. Mr. Wahlen acknowledged that Petitioner had recently been recommended for a satisfactory evaluation, but that Mr. Wahlen had declined to approve the tentative evaluation. Mr. Wahlen explained that, in essence, Petitioner's realization of certain goals did not outweigh his failure to provide satisfactory service in many other respects. Respondent replaced Petitioner with a person of Hispanic origin. As of May 1, 1988, Respondent employed a total of five blacks, one Hispanic, and one American Indian among its 27 employees serving as supervisors, assistant directors, and directors. Two of the eight directors were black.
Recommendation Based on the foregoing, it is hereby RECOMMENDED that the Petition for Relief filed by Petitioner be dismissed. ENTERED this 26th day of June, 1989, in Tallahassee, Florida. ROBERT E. MEALE Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 26th day of June, 1989. COPIES FURNISHED: Donald A. Griffin Executive Director Florida Commission on Human Relations 325 John Knox Road Building F, Suite 240 Tallahassee, Florida 32399-1925 Dana Baird, Esquire General Counsel Florida Commission on Human Relations 325 John Knox Road Building F, Suite 240 Tallahassee, Florida 32399-1925 Margaret Agerton, Clerk Florida Commission on Human Relations 325 John Knox Road Building F, Suite 240 Tallahassee, Florida 32399-1925 Arthur Dennis, pro se 792 Cecilia Street Palm Bay, Florida 32909 Lynn Dunning Vice President, Operations Medi-Dyn, Inc. 8400 East Prentice Avenue Suite 800 Englewood, Colorado 80111
