Findings Of Fact At all times relevant hereto Respondent was licensed as a physician in the State of Florida having been issued license number ME0040318. Respondent completed a residency in internal medicine and later was a nephrology fellow at Mayo Clinic. He was recruited to Florida in 1952 by Humana. In 1984 he became associated with a Health Maintenance Organization (HMO) in an administrative position but took over treating patients when the owner became ill. This HMO was affiliated with IMC who assimilated it when the HMO had financial difficulties. At all times relevant hereto Respondent was a salaried employee of IMC and served as Assistant Medical DIRECTOR in charge of the South Pasadena Clinic. On October 17, 1985, Alexander Stroganow, an 84 year old Russian immigrant and former cossack, who spoke and understood only what English he wanted to, suffered a fall and was taken to the emergency Room at a nearby hospital. He was examined and released without being admitted for inpatient treatment. Later that evening his landlady thought Stroganow needed medical attention and again called the Emergency Medical Service. When the ambulance with EMS personnel arrived they examined Stroganow, and concluded Stroganow was no worse than earlier when he was transported to the emergency Room, and refused to again take Stroganow to the emergency Room. The landlady then called the HRS hotline to report abuse of the elderly. The following morning, October 18, 1985, an HRS case worker was dispatched to check on Stroganow. Upon arrival, she was admitted by the landlady and found an 84 year old man who was incontinent, incoherent, and apparently paralyzed from the waist down, with whom she could not engage in conversation to determine his condition. She called for a Cares Unit team to come and evaluate Stroganow. An HRS Cares Unit is a two person team consisting of a social worker and nurse whose primary function is to screen clients for admission to nursing homes and adult congregate living facilities (ACLF). The nurse on the team carries no medical equipment such as stethoscope, blood pressure cuff, or thermometer, but makes her evaluation on visual examination. Upon arrival of the Cares Unit, and, after examining Stroganow, both members of the team agreed he needed to be placed where he could be attended. A review of his personal effects produced by his landlady revealed his income to be above that for which he could qualify for medicaid placement in a nursing home; that he was a member of IMC's Gold-Plus HMO; his social security card; and several medications, some of which had been prescribed by Dr. Dayton, Respondent, a physician employed by IMC at the South Pasadena Clinic. The Cares team ruled out ACLF placement because Stroganow was not ambulatory, but felt he needed to be placed in a hospital or nursing home and not left alone with the weekend approaching. To accomplish this, they proceeded to the South Pasadena HMO clinic of IMC to lay the problem on Dr. Dayton, who was in charge of the South Pasadena Clinic, and, they thought, was Stroganow's doctor. Stroganow had been a client of the South Pasadena HMO for some time and was well known at the clinic as well as by EMS personnel. There were always two, and occasionally three, doctors on duty at South Pasadena Clinic between 8:00 and 5:00 daily and, unless the patient requested a specific doctor he was treated by the first available doctor. Stroganow had not specifically requested to be treated by Respondent. When the Cares unit met with Respondent they advised him that Stroganow had been taken to Metropolitan General Hospital Emergency Room the previous evening but did not advise Respondent that the EMS squad had refused to return Stroganow to the emergency Room when they were recalled for Stroganow the same evening. Respondent telephoned the Metropolitan General Emergency Room and had the emergency Room medical report on Stroganow read to him. With the information provided by the Cares unit and the hospital report, Respondent concluded that Stroganow needed emergency medical treatment and the quickest way to obtain such treatment would be to call the EMS and have Stroganow taken to an emergency Room for evaluation. When the Cares unit arrived, Respondent was treating patients at the clinic. A clinic, or doctors office, is not a desirable or practical place to have an incontinent, incoherent, and non-ambulatory patient brought to wait with other patients until a doctor is free to see him. Nor is the clinic equipped to perform certain procedures that may be required for emergency evaluation of an ill patient. At a hospital emergency Room such equipment is available. EMS squads usually arrive within minutes of a call being placed to 911 for emergency medical treatment and it was necessary that someone be with Stroganow when the EMS squad arrived. Accordingly, Respondent suggested that the Cares team return to Stroganow and call 911 to transport Stroganow to an emergency Room for an evaluation. Upon leaving the South Pasadena clinic the Cares team returned to Stroganow. Enroute they stopped to call a supervisor at HRS to report that the HMO had not solved their problem with Stroganow. The supervisor then called the Administrator at IMC Tampa Office to tell them that one of their Gold-Plus HMO patients had an emergency situation which was not being property handled. Respondent left the South Pasadena Clinic around noon and went to IMC's Tampa Office where he was available for the balance of the afternoon. There he spoke with Dr. Sanchez, the INC Regional Medical Director, but Stroganow was not deemed to be a continuing problem. By 2:00 p.m. when no ambulance had arrived the Cares Unit called 911 for EMS to take Stroganow to an emergency Room. Upon arrival shortly thereafter the EMS squad again refused to transport Stroganow. The Cares team communicated this to their supervisor who contacted IMC Regional Office to so advise. At this time Dr. Sanchez authorized the transportation of Stroganow to Lake Seminole Hospital for admission. Although neither Respondent nor Sanchez had privileges at Lake Seminole Hospital, IMC had contracted with Lake Seminole Hospital to have IMC patients admitted by a staff doctor at Lake Seminole Hospital. Subsequent to his meeting with the Cares team Respondent received no further information regarding Stroganow until well after Stroganow was admitted to Lake Seminole Hospital. No entry was made on Stroganow's medical record at IMC of the meeting between Respondent and the Cares Unit. Respondent was a salaried employee whose compensation was not affected by whether or not he admitted an IMC Gold-Plus patient to a hospital.
The Issue Whether the certificate of need (CON) applications filed by New Port Richey Hospital, Inc., d/b/a Community Hospital of New Port Richey (Community Hospital) (CON No. 9539), and Morton Plant Hospital Association, Inc., d/b/a North Bay Hospital (North Bay) (CON No. 9538), each seeking to replace and relocate their respective general acute care hospital, satisfy, on balance, the applicable statutory and rule criteria.
Findings Of Fact The Parties AHCA AHCA is the single state agency responsible for the administration of the CON program in Florida pursuant to Chapter 408, Florida Statutes (2000). The agency separately reviewed and preliminarily approved both applications. Community Hospital Community Hospital is a 300,000 square feet, accredited hospital with 345 licensed acute care beds and 56 licensed adult psychiatric beds, located in southern New Port Richey, Florida, within Sub-District 5-1. Community Hospital is seeking to construct a replacement facility approximately five miles to the southeast within a rapidly developing suburb known as "Trinity." Community Hospital currently provides a wide array of comprehensive inpatient and outpatient services and is the only provider of obstetrical and adult psychiatric services in Sub-District 5-1. It is the largest provider of emergency services in Pasco County with approximately 35,000 visits annually. It is also the largest provider of Medicaid and indigent patient days in Sub-District 5-1. Community Hospital was originally built in 1969 and is an aging facility. Although it has been renovated over time, the hospital is in poor condition. Community Hospital's average daily census is below 50 percent. North Bay North Bay is a 122-bed facility containing 102 licensed acute care beds and 20 licensed comprehensive medical rehabilitation beds, located approximately one mile north of Community Hospital in Sub-District 5-1. It serves a large elderly population and does not provide pediatric or obstetrical care. North Bay is also an aging facility and proposes to construct a replacement facility in the Trinity area. Notably, however, North Bay has spent approximately 12 million dollars over the past three years for physical improvements and is in reasonable physical condition. Helen Ellis Helen Ellis is an accredited hospital with 150 licensed acute care beds and 18 licensed skilled nursing unit beds. It is located in northern Pinellas County, approximately eight miles south of Community Hospital and nine miles south of North Bay. Helen Ellis provides a full array of acute care services including obstetrics and cardiac catheterization. Its daily census average has fluctuated over the years but is approximately 45 percent. Mease Mease operates two acute care hospitals in Pinellas County including Mease Dunedin Hospital, located approximately 18 to 20 miles south of the applicants and Mease Countryside Hospital, located approximately 16 to 18 miles south of Community and North Bay. Each hospital operates 189 licensed beds. The Mease hospitals are located in the adjacent acute care sub-district but compete with the applicants. The Health Planning District AHCA's Health Planning District 5 consists of Pinellas and Pasco Counties. U.S. Highway 41 runs north and south through the District and splits Pasco County into Sub- District 5-1 and Sub-District 5-2. Sub-District 5-1, where Community Hospital and North Bay are located, extends from U.S. 41 west to the Gulf Coast. Sub-District 5-2 extends from U.S. 41 to the eastern edge of Pasco County. Pinellas County is the most densely populated county in Florida and steadily grows at 5.52 percent per year. On the other hand, its neighbor to the north, Pasco County, has been experiencing over 15 percent annual growth in population. The evidence demonstrates that the area known as Trinity, located four to five miles southeast of New Port Richey, is largely responsible for the growth. With its large, single- owner land tracts, Trinity has become the area's fuel for growth, while New Port Richey, the older coastal anchor which houses the applicants' facilities, remains static. In addition to the available land in Trinity, roadway development in the southwest section of Pasco County is further fueling growth. For example, the Suncoast Highway, a major highway, was recently extended north from Hillsborough County through Sub-District 5-1, west of U.S. 41. It intersects with several large east-west thoroughfares including State Road 54, providing easy highway access to the Tampa area. The General Proposals Community Hospital's Proposal Community Hospital's CON application proposes to replace its existing, 401-bed hospital with a 376-bed state- of-the-art facility and relocate it approximately five miles to the southeast in the Trinity area. Community Hospital intends to construct a large medical office adjacent to its new facility and provide all of its current services including obstetrical care. It does not intend to change its primary service area. North Bay's Proposal North Bay's CON application proposes to replace its existing hospital with a 122-bed state-of-the-art facility and also plans to relocate it approximately eight miles to the southeast in the Trinity area of southwestern Pasco County. North Bay intends to provide the same array of services it currently offers its patients and will not provide pediatric and obstetrical care in the proposed facility. The proposed relocation site is adjacent to the Trinity Outpatient Center which is owned by North Bay's parent company, Morton Plant. The Outpatient Center offers a full range of diagnostic imaging services including nuclear medicine, cardiac nuclear stress testing, bone density scanning, CAT scanning, mammography, ultrasound, as well as many others. It also offers general and specialty ambulatory surgical services including urology; ear, nose and throat; ophthalmology; gastroenterology; endoscopy; and pain management. Approximately 14 physician offices are currently located at the Trinity Outpatient Center. The Condition of Community Hospital Facility Community Hospital's core facilities were constructed between 1969 and 1971. Additions to the hospital were made in 1973, 1975, 1976, 1977, 1979, 1981, 1992, and 1999. With an area of approximately 294,000 square feet and 401 licensed beds, or 733 square feet per bed, Community Hospital's gross area-to-bed ratio is approximately half of current hospital planning standards of 1,600 square feet per bed. With the exception of the "E" wing which was completed in 1999, all of the clinical and support departments are undersized. Medical-Surgical Beds And Intensive Care Units Community Hospital's "D" wing, constructed in 1975, is made up of two general medical-surgical unit floors which are grossly undersized. Each floor operates 47 general medical-surgical beds, 24 of which are in three-bed wards and 23 in semi-private rooms. None of the patient rooms in the "D" wing have showers or tubs so the patients bathe in a single facility located at the center of the wing on each floor. Community Hospital's "A" wing, added in 1973, is situated at the west end of the second floor and is also undersized. It too has a combination of semi-private rooms and three-bed wards without showers or tubs. Community Hospital's "F" wing, added in 1979, includes a medical-surgical unit on the second and third floor, each with semi-private and private rooms. The second floor unit is centrally located between a 56-bed adult psychiatric unit and the Surgical Intensive Care Unit (SICU) which creates security and privacy issues. The third floor unit is adjacent to the Medical Intensive Care Unit (MICU) which must be accessed through the medical-surgical unit. Neither intensive care unit (ICU) possesses an isolation area. Although the three-bed wards are generally restricted to in-season use, and not always full, they pose significant privacy, security, safety, and health concerns. They fail to meet minimum space requirements and are a serious health risk. The evidence demonstrates that reconfiguring the wards would be extremely costly and impractical due to code compliance issues. The wards hinder the hospital's acute care utilization, and impair its ability to effectively compete with other hospitals. Surgical Department and Recovery Community Hospital's surgical department is separated into two locations including the main surgical suite on the second floor and the Endoscopy/Pain Management unit located on the first floor of "C" wing. Consequently, the department cannot share support staff and space such as preparation and recovery. The main surgical suite, adjacent recovery room, and central sterile processing are 25 years old. This unit's operating rooms, cystoscopy rooms, storage areas, work- stations, central sterile, and recovery rooms are undersized and antiquated. The 12-bay Recovery Room has no patient toilet and is lacking storage. The soiled utility room is deficient. In addition, the patient bays are extremely narrow and separated by curtains. There is no direct connection to the sterile corridor, and staff must break the sterile field to transport patients from surgery to recovery. Moreover, surgery outpatients must pass through a major public lobby going to and returning from surgery. The Emergency Department Community Hospital's existing emergency department was constructed in 1992 and is the largest provider of hospital emergency services in Pasco County, handling approximately 35,000 visits per year. The hospital is also designated a "Baker Act" receiving facility under Chapter 394, Florida Statutes, and utilizes two secure examination rooms for emergent psychiatric patients. At less than 8,000 total square feet, the emergency department is severely undersized to meet the needs of its patients. The emergency department is currently undergoing renovation which will connect the triage area to the main emergency department. The renovation will not enlarge the entrance, waiting area, storage, nursing station, nor add privacy to the patient care areas in the emergency department. The renovation will not increase the total size of the emergency department, but in fact, the department's total bed availability will decrease by five beds. Similar to other departments, a more meaningful renovation cannot occur within the emergency department without triggering costly building code compliance measures. In addition to its space limitations, the emergency department is awkwardly located. In 1992, the emergency department was relocated to the front of the hospital and is completely separated from the diagnostic imaging department which remained in the original 1971 building. Consequently, emergency patients are routinely transported across the hospital for imaging and CT scans. Issues Relating to Replacement of Community Hospital Although physically possible, renovating and expanding Community Hospital's existing facility is unreasonable. First, it is cost prohibitive. Any significant renovation to the 1971, 1975, 1977, and 1979 structures would require asbestos abatement prior to construction, at an estimated cost of $1,000,000. In addition, as previously noted, the hospital will be saddled with the major expense of complying with all current building code requirements in the 40-year-old facility. Merely installing showers in patient rooms would immediately trigger a host of expensive, albeit necessary, code requirements involving access, wiring, square footage, fireproofing columns and beams, as well as floor/ceiling and roof/ceiling assemblies. Concurrent with the significant demolition and construction costs, the hospital will experience the incalculable expense and loss of revenue related to closing major portions, if not all, of the hospital. Second, renovation and expansion to the existing facility is an unreasonable option due to its physical restrictions. The 12'4" height of the hospital's first floor limits its ability to accommodate HVAC ductwork large enough to meet current ventilation requirements. In addition, there is inadequate space to expand any department within the confines of the existing hospital without cannibalizing adjacent areas, and vertical expansion is not an option. Community Hospital's application includes a lengthy Facility Condition Assessment which factually details the architectural, mechanical, and electrical deficiencies of the hospital's existing physical plant. The assessment is accurate and reasonable. Community Hospital's Proposed Replacement Community Hospital proposes to construct a six- story, 320 licensed beds, acute care replacement facility. The hospital will consist of 548,995 gross square feet and include a 56-bed adult psychiatric unit connected by a hallway to the first floor of the main hospital building. The proposal also includes the construction of an adjacent medical office building to centralize the outpatient offices and staff physicians. The evidence establishes that the deficiencies inherent in Community Hospital's existing hospital will be cured by its replacement hospital. All patients will be provided large private rooms. The emergency department will double in size, and contain private examination rooms. All building code requirements will be met or exceeded. Patients and staff will have separate elevators from the public. In addition, the surgical department will have large operating rooms, and adequate storage. The MICU and SICU will be adjacent to each other on the second floor to avoid unnecessary traffic within the hospital. Surgical patients will be transported to the ICU via a private elevator dedicated to that purpose. Medical-surgical patient rooms will be efficiently located on the third through sixth floors, in "double-T" configuration. Community Hospital's Existing and Proposed Sites Community Hospital is currently located on a 23-acre site inside the southern boundary of New Port Richey. Single- family homes and offices occupy the two-lane residential streets that surround the site on all sides. The hospital buildings are situated on the northern half of the site, with the main parking lot located to the south, in front of the main entrance to the hospital. Marine Parkway cuts through the southern half of the site from the west, and enters the main parking lot. A private medical mall sits immediately to the west of the main parking lot and a one-acre storm-water retention pond sits to the west of the mall. A private medical office building occupies the south end of the main parking lot and a four-acre drainage easement is located in the southwest corner of the site. Community Hospital's administration has actively analyzed its existing site, aging facility, and adjacent areas. It has commissioned studies by civil engineers, health care consultants, and architects. The collective evidence demonstrates that, although on-site relocation is potentially an option, on balance, it is not a reasonable option. Replacing Community Hospital on its existing site is not practical for several reasons. First, the hospital will experience significant disruption and may be required to completely close down for a period of time. Second, the site's southwestern large four-acre parcel is necessary for storm-water retention and is unavailable for expansion. Third, a reliable cost differential is unknown given Community Hospital's inability to successfully negotiate with the city and owners of the adjacent medical office complexes to acquire additional parcels. Fourth, acquiring other adjacent properties is not a viable option since they consist of individually owned residential lots. In addition to the site's physical restrictions, the site is hindered by its location. The hospital is situated in a neighborhood between small streets and a local school. From the north and south, motorists utilize either U.S. 19, a congested corridor that accommodates approximately 50,000 vehicles per day, or Grand and Madison Streets, two-lane streets within a school zone. From the east and west, motorists utilize similar two-lane neighborhood streets including Marine Parkway, which often floods in heavy rains. Community Hospital's proposed site, on the other hand, is a 53-acre tract positioned five miles from its current facility, at the intersection of two major thoroughfares in southwestern Pasco County. The proposed site offers ample space for all facilities, parking, outpatient care, and future expansion. In addition, Community Hospital's proposed site provides reasonable access to all patients within its existing primary service area made up of zip codes 34652, 34653, 34668, 34655, 34690, and 34691. For example, the average drive times from the population centers of each zip code to the existing site of the hospital and the proposed site are as follows: Zip code Difference Existing site Proposed site 34652 3 minutes 14 minutes 11 minutes 34653 8 minutes 11 minutes 3 minutes 34668 15 minutes 21 minutes 6 minutes 34655 11 minutes 4 minutes -7 minutes 34690 11 minutes 13 minutes 2 minutes 34691 11 minutes 17 minutes 6 minutes While the average drive time from the population centroids of zip codes 34653, 34668, 34690, and 34691 to the proposed site slightly increases, it decreases from the Trinity area, where population growth has been most significant in southwestern Pasco County. In addition, a motorist's average drive time from Community Hospital's existing location to its proposed site is only 10 to 11 minutes, and patients utilizing public transportation will be able to access the new hospital via a bus stop located adjacent to the proposed site. The Condition of North Bay Facility North Bay Hospital is also an aging facility. Its original structure and portions of its physical plant are approximately 30 years old. Portions of its major mechanical systems will soon require replacement including its boilers, air handlers, and chillers. In addition, the hospital is undersized and awkwardly configured. Despite its shortcomings, however, North Bay is generally in good condition. The hospital has been consistently renovated and updated over time and is aesthetically pleasing. Moreover, its second and third floors were added in 1986, are in good shape, and structurally capable of vertical expansion. Medical Surgical Beds and ICU Units By-in-large, North Bay is comprised of undersized, semi-private rooms containing toilet and shower facilities. The hospital does not have any three-bed wards. North Bay's first floor houses all ancillary and support services including lab, radiology, pharmacy, surgery, pre-op, post-anesthesia recovery, central sterile processing and supply, kitchen and cafeteria, housekeeping and administration, as well as the mechanical, electrical, and facilities maintenance and engineering. The first floor also contains a 20-bed CMR unit and a 15-bed acute care unit. North Bay's second and third floors are mostly comprised of semi-private rooms and supporting nursing stations. Although the rooms and stations are not ideally sized, they are in relatively good shape. North Bay utilizes a single ICU with ten critical care beds. The ICU rooms and nursing stations are also undersized. A four-bed ICU ward and former nursery are routinely used to serve overflow patients. Surgery Department and Recovery North Bay utilizes a single pre-operative surgical room for all of its surgery patients. The room accommodates up to five patient beds, but has limited space for storage and pre-operative procedures. Its operating rooms are sufficiently sized. While carts and large equipment are routinely stored in hallways throughout the surgical suite, North Bay has converted the former obstetrics recovery room to surgical storage and has made efficient use of other available space. North Bay operates a small six-bed Post Anesthesia Care Unit. Nurses routinely prepare patient medications in the unit which is often crowded with staff and patients. The Emergency Department North Bay has recently expanded its emergency department. The evidence demonstrates that this department is sufficient and meets current and future expected patient volumes. Replacement Issues Relating to North Bay While it is clear that areas of North Bay's physical plant are aging, the facility is in relatively good condition. It is apparent that North Bay must soon replace significant equipment, including cast-iron sewer pipes, plumbing, boilers, and chillers which will cause some interruption to hospital operations. However, North Bay's four-page written assessment of the facility and its argument citing the need for total replacement is, on balance, not persuasive. North Bay's Proposed Replacement North Bay proposes to construct a new, state-of-the- art, hospital approximately eight miles southeast of its existing facility and intends to offer the identical array of services the hospital currently provides. North Bay's Existing and Proposed Sites North Bay's existing hospital is located on an eight-acre site with limited storm-water drainage capacity. Consequently, much of its parking area is covered by deep, porous, gravel instead of asphalt. North Bay's existing site is generally surrounded by residential properties. While the city has committed, in writing, it willingness to assist both applicants with on-site expansion, it is unknown whether North Bay can acquire additional adjacent property. North Bay's proposed site is located at the intersection of Trinity Oaks Boulevard and Mitchell Boulevard, south of Community Hospital's proposed site, and is quite spacious. It contains sufficient land for the facilities, parking, and future growth, and has all necessary infrastructure in place, including utility systems, storm- water structures, and roadways. Currently however, there is no public transportation service available to North Bay's proposed site. Projected Utilization by Applicants The evidence presented at hearing indicates that, statewide, replacement hospitals often increase a provider's acute care bed utilization. For example, Bartow Memorial Hospital, Heart of Florida Regional Medical Center, Lake City Medical Center, Florida Hospital Heartland Medical Center, South Lake Hospital, and Florida Hospital-Fish Memorial each experienced significant increases in utilization following the opening of their new hospital. The applicants in this case each project an increase in utilization following the construction of their new facility. Specifically, Community Hospital's application projects 82,685 total hospital patient days (64,427 acute care patient days) in year one (2006) of the operation of its proposed replacement facility, and 86,201 total hospital patient days (67,648 acute care patient days) in year two (2007). Using projected 2006 and 2007 population estimates, applying 2002 acute care hospital use rates which are below 50 percent, and keeping Community Hospital's acute care market share constant at its 2002 level, it is reasonably estimated that Community Hospital's existing hospital will experience 52,623 acute care patient days in 2006, and 53,451 acute care patient days in 2007. Consequently, Community Hospital's proposed facility must attain 11,804 additional acute care patient days in 2006, and 14,197 more acute care patient days in 2007, in order to achieve its projected acute care utilization. Although Community Hospital lost eight percent of the acute care market in its service area between 1995 and 2002, two-thirds of that loss was due to residents of Sub- District 5-1 acquiring services in another area. While Community Hospital experienced 78,444 acute care patient days in 1995, it projects only 64,427 acute care patient days in year one. Given the new facility and population factors, it is reasonable that the hospital will recapture half of its lost acute care market share and achieve its projections. With respect to its psychiatric unit, Community Hospital projects 16,615 adult psychiatric inpatient days in year one (2006) and 17,069 adult inpatient days in year two (2007) of the proposed replacement hospital. The evidence indicates that these projections are reasonable. Similarly, North Bay's acute care utilization rate has been consistently below 50 percent. Since 1999, the hospital has experienced declining utilization. In its application, North Bay states that it achieved total actual acute care patient days of 21,925 in 2000 and 19,824 in 2001 and the evidence at hearing indicates that North Bay experienced 17,693 total acute care patient days in 2002. North Bay projects 25,909 acute care patient days in the first year of operation of its proposed replacement hospital, and 27,334 acute care patient days in the second year of operation. Despite each applicant's current facility utilization rate, Community Hospital must increase its current acute care patient days by 20 percent to reach its projected utilization, and North Bay must increase its patient days by at least 50 percent. Given the population trends, service mix and existing competition, the evidence demonstrates that it is not possible for both applicants to simultaneously achieve their projections. In fact, it is strongly noted that the applicants' own projections are predicated upon only one applicant being approved and cannot be supported with the approval of two facilities. Local Health Plan Preferences In its local health plan for District 5, the Suncoast Health Council, Inc., adopted acute care preferences in October, 2000. The replacement of an existing hospital is not specifically addressed by any of the preferences. However, certain acute care preferences and specialty care preferences are applicable. The first applicable preference provides that preference "shall be given to an applicant who proposes to locate a new facility in an area that will improve access for Medicaid and indigent patients." It is clear that the majority of Medicaid and indigent patients live closer to the existing hospitals. However, Community Hospital proposes to move 5.5 miles from its current location, whereas North Bay proposes to move eight miles from its current location. While the short distances alone are less than significant, North Bay's proposed location is further removed from New Port Richey, is not located on a major highway or bus-route, and would therefore be less accessible to the medically indigent residents. Community Hospital's proposed site will be accessible using public transportation. Furthermore, Community Hospital has consistently provided excellent service to the medically indigent and its proposal would better serve that population. In 2000, Community Hospital provided 7.4 percent of its total patient days to Medicaid patients and 0.8 percent of its total patient days to charity patients. Community Hospital provided the highest percentage and greatest number of Medicaid patient days in Sub-District 5-1. By comparison, North Bay provided 5.8 percent of its total patient days to Medicaid patients and 0.9 percent of its total patient days to charity patients. In 2002, North Bay's Medicaid patients days declined to 3.56 percent. Finally, given the closeness and available bed space of the existing providers and the increasing population in the Trinity area, access will be improved by Community Hospital's relocation. The second local health plan preference provides that "[i]n cases where an applicant is a corporation with previously awarded certificates of need, preference shall be given to those which follow through in a timely manner to construct and operate the additional facilities or beds and do not use them for later negotiations with other organizations seeking to enter or expand the number of beds they own or control." Both applicants meet this preference. The third local health plan preference recognizes "Certificate of Need applications that provide AHCA with documentation that they provide, or propose to provide, the largest percentage of Medicaid and charity care patient days in relation to other hospitals in the sub-district." Community Hospital provides the largest percentage of Medicaid and charity care patient days in relation to other hospitals in Sub-District 5-1, and therefore meets this preference. The fourth local health plan preference applies to "Certificate of Need applications that demonstrate intent to serve HIV/AIDS infected persons." Both applicants accept and treat HIV/AIDS infected persons, and would continue to do so in their proposed replacement hospitals. The fifth local health plan preference recognizes "Certificate of Need applications that commit to provide a full array of acute care services including medical-surgical, intensive care, pediatric, and obstetrical services within the sub-district for which they are applying." Community Hospital qualifies since it will continue to provide its current services, including obstetrical care and psychiatric care, in its proposed replacement hospital. North Bay discontinued its pediatric and obstetrical programs in 2001, does not intend to provide them in its proposed replacement hospital, and will not provide psychiatric care. Agency Rule Preferences Florida Administrative Code Rule 59C-1.038(6) provides an applicable preference to a facility proposing "new acute care services and capital expenditures" that has "a documented history of providing services to medically indigent patients or a commitment to do so." As the largest Medicaid provider in Sub-District 5-1, Community Hospital meets this preference better than does North Bay. North Bay's history demonstrates a declining rate of service to the medically indigent. Statutory Review Criteria Section 408.035(1), Florida Statutes: The need for the health care facilities and health services being proposed in relation to the applicable district health plan District 5 includes Pasco and Pinellas County. Pasco County is rapidly developing, whereas Pinellas County is the most densely populated county in Florida. Given the population trends, service mix, and utilization rates of the existing providers, on balance, there is a need for a replacement hospital in the Trinity area. Section 408.035(2), Florida Statutes: The availability, quality of care, accessibility, and extent of utilization of existing health care facilities and health services in the service district of the applicant Community Hospital and North Bay are both located in Sub-District 5-1. Each proposes to relocate to an area of southwestern Pasco County which is experiencing explosive population growth. The other general acute care hospital located in Sub-District 5-1 is Regional Medical Center Bayonet Point, which is located further north, in the Hudson area of western Pasco County. The only other acute care hospitals in Pasco County are East Pasco Medical Center, in Zephyrhills, and Pasco Community Hospital, in Dade City. Those hospitals are located in Sub-District 5-2, east Pasco County, far from the area proposed to be served by either Community Hospital or North Bay. District 5 includes Pinellas County as well as Pasco County. Helen Ellis and Mease are existing hospital providers located in Pinellas County. Helen Ellis has 168 licensed beds, consisting of 150 acute care beds and an 18-bed skilled nursing unit, and is located 7.9 miles from Community Hospital's existing location and 10.8 miles from Community Hospital's proposed location. Access to Helen Ellis for patients originating from southwestern Pasco County requires those patients to travel congested U.S. 19 south to Tarpon Springs. As a result, the average drive time from Community Hospital's existing and proposed site to Helen Ellis is approximately 22 minutes. Helen Ellis is not a reasonable alternative to Community Hospital's proposal. The applicants' proposals are specifically designed for the current and future health care needs of southwestern Pasco County. Given its financial history, it is unknown whether Helen Ellis will be financially capable of providing the necessary care to the residents of southwestern Pasco. Mease Countryside Hospital has 189 licensed acute care beds. It is located 16.0 miles from Community Hospital's existing location and 13.8 miles from Community Hospital's proposed location. The average drive time to Mease Countryside is 32 minutes from Community Hospital's existing site and 24 minutes from its proposed site. In addition, Mease Countryside Hospital has experienced extremely high utilization over the past several years, in excess of 90 percent for calendar years 2000 and 2001. Utilization at Mease Countryside Hospital has remained over 80 percent despite the addition of 45 acute care beds in April 2002. Given the growth and demand, it is unknown whether Mease can accommodate the residents in southwest Pasco County. Mease Dunedin Hospital has 189 licensed beds, consisting of 149 acute care beds, a 30-bed skilled nursing unit, five Level 2 neonatal intensive care beds, and five Level 3 neonatal intensive care beds. Its former 15-bed adult psychiatric unit has been converted into acute care beds. It is transferring its entire obstetrics program at Mease Dunedin Hospital to Mease Countryside Hospital. Mease Dunedin Hospital is located approximately 18 to 20 miles from the applicants' existing and proposed locations with an average drive time of 35-38 minutes. With their remote location, and the exceedingly high utilization at Mease Countryside Hospital, neither of the two Mease hospitals is a viable alternative to the applicants' proposals. In addition, the construction of a replacement hospital would positively impact economic development and further attract medical professionals to Sub-District 5-1. On balance, given the proximity, utilization, service array, and accessibility of the existing providers, including the applicants, the relocation of Community Hospital will enhance access to health care to the residents. Section 408.035(3), Florida Statutes: The ability of the applicant to provide quality of care and the applicant's record of providing quality of care As stipulated, both applicants provide excellent quality of care. However, Community Hospital's proposal will better enhance its ability to provide quality care. Community is currently undersized, non-compliant with today's standards, and located on a site that does not allow for reasonable expansion. Its emergency department is inadequate for patient volume, and the configuration of the first floor leads to inefficiencies in the diagnosis and treatment of emergency patients. Again, most inpatients are placed in semi-private rooms and three-bed wards, with no showers or tubs, little privacy, and an increased risk of infection. The hospital's waiting areas for families of patients are antiquated and undersized, its nursing stations are small and cramped and the operating rooms and storage facilities are undersized. Community Hospital's deficiencies will be effectively eliminated by its proposed replacement hospital. As a result, patients will experience qualitatively better care by the staff who serve them. Conversely, North Bay is in better physical condition and not in need of replacement. It has more reasonable options to expand or relocate its facility on site. Quality of care at North Bay will not be markedly enhanced by the construction of a new hospital. Sections 408.035(4)and(5), Florida Statutes, have been stipulated as not applicable in this case. Section 408.035(6), Florida Statutes: The availability of resources, including health personnel, management personnel, and funds available for capital and operating expenditures, for project accomplishment and operation The parties stipulated that both Community Hospital and North Bay have available health personnel and management personnel for project accomplishment and operation. In addition, the evidence proves that both applicants have sufficient funds for capital and operating expenditures. Community Hospital proposes to rely on its parent company to finance the project. Keith Giger, Vice-President of Finance for HCA, Inc., Community Hospital's parent organization, provided credible deposition testimony that HCA, Inc., will finance 100 percent of the total project cost by an inter-company loan at eight percent interest. Moreover, it is noted that the amount to be financed is actually $20 million less than the $196,849,328 stated in the CON Application, since Community Hospital previously purchased the proposed site in June 2003 with existing funds and does not need to finance the land acquisition. Community Hospital has sufficient working capital for operating expenditures of the proposed replacement hospital. North Bay, on the other hand, proposes to acquire financing from BayCare Obligated Group which includes Morton Plant Hospital Association, Inc.; Mease; and several other hospital entities. Its proposal, while feasible, is less certain since member hospitals must approve the indebtedness, thereby providing Mease with the ability to derail North Bay's proposed bond financing. Section 408.035(7), Florida Statutes: The extent to which the proposed services will enhance access to health care for residents of the service district The evidence proves that either proposal will enhance geographical access to the growing population in the service district. However, with its provision of obstetrical services, Community Hospital is better suited to address the needs of the younger community. With respect to financial access, both proposed relocation sites are slightly farther away from the higher elderly and indigent population centers. Since the evidence demonstrates that it is unreasonable to relocate both facilities away from the down-town area, Community Hospital's proposal, on balance, provides better access to poor patients. First, public transportation will be available to Community Hospital's site. Second, Community Hospital has an excellent record of providing care to the poor and indigent and has accepted the agency's condition to provide ten percent of its total annual patient days to Medicaid recipients To the contrary, North Bay's site will not be accessible by public transportation. In addition, North Bay has a less impressive record of providing care to the poor and indigent. Although AHCA conditioned North Bay's approval upon it providing 9.7 percent of total annual patient days to Medicaid and charity patients, instead of the 9.7 percent of gross annual revenue proposed in its application, North Bay has consistently provided Medicaid and charity patients less than seven percent of its total annual patient days. Section 408.035(8), Florida Statutes: The immediate and long-term financial feasibility of the proposal Immediate financial feasibility refers to the availability of funds to capitalize and operate the proposal. See Memorial Healthcare Group, Ltd. d/b/a Memorial Hospital Jacksonville vs. AHCA et al., Case No. 02-0447 et seq. Community Hospital has acquired reliable financing for the project and has sufficiently demonstrated that its project is immediately financially feasible. North Bay's short-term financial proposal is less secure. As noted, North Bay intends to acquire financing from BayCare Obligated Group. As a member of the group, Mease, the parent company of two hospitals that oppose North Bay's application, must approve the plan. Long-term financial feasibility is the ability of the project to reach a break-even point within a reasonable period of time and at a reasonable achievable point in the future. Big Bend Hospice, Inc. vs. AHCA and Covenant Hospice, Inc., Case No. 02-0455. Although CON pro forma financial schedules typically show profitability within two to three years of operation, it is not a requirement. In fact, in some circumstances, such as the case of a replacement hospital, it may be unrealistic for the proposal to project profitability before the third or fourth year of operation. In this case, Community Hospital's utilization projections, gross and net revenues, and expense figures are reasonable. The evidence reliably demonstrates that its replacement hospital will be profitable by the fourth year of operation. The hospital's financial projections are further supported by credible evidence, including the fact that the hospital experienced financial improvement in 2002 despite its poor physical condition, declining utilization, and lost market share to providers outside of its district. In addition, the development and population trends in the Trinity area support the need for a replacement hospital in the area. Also, Community Hospital has benefited from increases in its Medicaid per diem and renegotiated managed care contracts. North Bay's long-term financial feasibility of its proposal is less certain. In calendar year 2001, North Bay incurred an operating loss of $306,000. In calendar year 2002, it incurred a loss of $1,160,000. In its CON application, however, North Bay projects operating income of $1,538,827 in 2007, yet omitted the ongoing expenses of interest ($1,600,000) and depreciation ($3,000,000) from its existing facility that North Bay intends to continue operating. Since North Bay's proposal does not project beyond year two, it is less certain whether it is financially feasible in the third or fourth year. In addition to the interest and depreciation issues, North Bay's utilization projections are less reasonable than Community Hospital's proposal. While possible, North Bay will have a difficult task achieving its projected 55 percent increase in acute care patient days in its second year of operation given its declining utilization, loss of obstetric/pediatric services and termination of two exclusive managed care contracts. Section 408.035(9), Florida Statutes: The extent to which the proposal will foster competition that promotes quality and cost-effectiveness Both applicants have substantial unused capacity. However, Community Hospital's existing facility is at a distinct competitive disadvantage in the market place. In fact, from 1994 to 1998, Community Hospital's overall market share in its service area declined from 40.3 percent to 35.3 percent. During that same period, Helen Ellis' overall market share in Community Hospital's service area increased from 7.2 percent to 9.2 percent. From 1995 to the 12-month period ending June 30, 2002, Community Hospital's acute care market share in its service area declined from 34.0 percent to 25.9 percent. During that same period, Helen Ellis' acute care market share in Community Hospital's service area increased from 11.7 percent to 12.0 percent. In addition, acute care average occupancy rates at Mease Dunedin Hospital increased each year from 1999 through 2002. Acute care average occupancy at Mease Countryside Hospital exceeded 90 percent in 2000 and 2001, and was approximately 85 percent for the period ending June 30, 2002. Some of the loss in Community Hospital's market share is due to an out-migration of patients from its service area to hospitals in northern Pinellas and Hillsborough Counties. Market share in Community's service area by out-of- market providers increased from 33 percent in 1995 to 40 percent in 2002. Community Hospital's outdated hospital has hampered its ability to compete for patients in its service area. Mease is increasing its efforts to attract patients and currently completing a $92 million expansion of Mease Countryside Hospital. The project includes the development of 1,134 parking spaces on 30 acres of raw land north of the Mease Countryside Hospital campus and the addition of two floors to the hospital. It also involves the relocation of 51 acute care beds, the obstetrics program and the Neonatal Intensive Care Units from Mease Dunedin Hosptial to Mease Countryside Hospital. Mease is also seeking to more than double the size of the Countryside emergency department to handle its 62,000 emergency visits. With the transfer of licensed beds from Mease Dunedin Hospital to Mease Countryside Hospital, Mease will also convert formerly semi-private patient rooms to private rooms at Mease Dunedin Hospital. The approval of Community Hospital's relocated facility will enable it to better compete with the hospitals in the area and promote quality and cost- effectiveness. North Bay, on the other hand, is not operating at a distinct disadvantage, yet is still experiencing declining utilization. North Bay is the only community-owned, not-for- profit provider in western Pasco County and is a valuable asset to the city. Section 408.035(10), Florida Statutes: The costs and methods of the proposed construction, including the costs and methods or energy provision and the availability of alternative, less costly, or more effective methods of construction The parties stipulated that the project costs in both applications are reasonable to construct the replacement hospitals. Community Hospital's proposed construction cost per square foot is $175, and slightly less than North Bay's $178 proposal. The costs and methods of proposed construction for each proposal is reasonable. Given Community Hospital's severe site and facility problems, the evidence demonstrates that there is no reasonable, less costly, or more effective methods of construction available for its proposed replacement hospital. Additional "band-aide" approaches are not financially reasonable and will not enable Community Hospital to effectively compete. The facility is currently licensed for 401 beds, operates approximately 311 beds and is still undersized. The proposed replacement hospital will meet the standards in Florida Administrative Code Rule 59A-3.081, and will meet current building codes, including the Americans with Disabilities Act and the Guidelines for Design and Construction of Hospitals and Health Care Facilities, developed by the American Institute of Architects. The opponents' argue that Community Hospital will not utilize the 320 acute care beds proposed in its CON application, and therefore, a smaller facility is a less- costly alternative. In addition, Helen Ellis' architectural expert witness provided schematic design alternatives for Community Hospital to be expanded and replaced on-site, without providing a detailed and credible cost accounting of the alternatives. Given the evidence and the law, their arguments are not persuasive. While North Bay's replacement cost figures are reasonable, given the aforementioned reasons, including the fact that the facility is in reasonably good condition and can expand vertically, on balance, it is unreasonable for North Bay to construct a replacement facility in the Trinity area. Section 408.035(11), Florida Statutes: The applicant's past and proposed provision of health care services to Medicaid patients and the medically indigent Community Hospital has consistently provided the most health care services to Medicaid patients and the medically indigent in Sub-District 5-1. Community Hospital agreed to provide at least ten percent of its patient days to Medicaid recipients. Similarly, North Bay agreed to provide 9.7 percent of its total annual patient days to Medicaid and charity patients combined. North Bay, by contrast, provided only 3.56 percent of its total patient days to Medicaid patients in 2002, and would have to significantly reverse a declining trend in its Medicaid provision to comply with the imposed condition. Community Hospital better satisfies the criterion. Section 408.035(12) has been stipulated as not applicable in this case. Adverse Impact on Existing Providers Historical figures demonstrate that hospital market shares are not static, but fluctuate with competition. No hospital is entitled to a specific or historic market share free from competition. While the applicants are located in health planning Sub-District 5-1 and Helen Ellis and the two Mease hospitals are located in health planning Sub-District 5- 2, they compete for business. None of the opponents is a disproportionate share, safety net, Medicaid provider. As a result, AHCA gives less consideration to any potential adverse financial impact upon them resulting from the approval of either application as a low priority. The opponents, however, argue that the approval of either replacement hospital would severely affect each of them. While the precise distance from the existing facilities to the relocation sites is relevant, it is clear that neither applicants' proposed site is unreasonably close to any of the existing providers. In fact, Community Hospital intends to locate its replacement facility three miles farther away from Helen Ellis and 1.5 miles farther away from Mease Dunedin Hospital. While Helen Ellis' primary service area is seemingly fluid, as noted by its chief operating officer's hearing and deposition testimony, and the Mease hospitals are located 15 to 20 miles south, they overlap parts of the applicants' primary service areas. Accordingly, each applicant concedes that the proposed increase in their patient volume would be derived from the growing population as well as existing providers. Although it is clear that the existing providers may be more affected by the approval of Community Hosptial's proposal, the exact degree to which they will be adversely impacted by either applicant is unknown. All parties agree, however, that the existing providers will experience less adverse affects by the approval of only one applicant, as opposed to two. Furthermore, Mease concedes that its hospitals will continue to aggressively compete and will remain profitable. In fact, Mease's adverse impact analysis does not show any credible reduction in loss of acute care admissions at Mease Countryside Hospital or Mease Dunedin Hospital until 2010. Even then, the reliable evidence demonstrates that the impact is negligible. Helen Ellis, on the other hand, will likely experience a greater loss of patient volume. To achieve its utilization projections, Community Hospital will aggressively compete for and increase market share in Pinellas County zip code 34689, which borders Pasco County. While that increase does not facially prove that Helen Ellis will be materially affected by Community Hospital's replacement hospital, Helen Ellis will confront targeted competition. To minimize the potential adverse affect, Helen Ellis will aggressively compete to expand its market share in the Pinellas County zip codes south of 34689, which is experiencing population growth. In addition, Helen Ellis is targeting broader service markets, and has filed an application to establish an open- heart surgery program. While Helen Ellis will experience greater competition and financial loss, there is insufficient evidence to conclude that it will experience material financial adverse impact as a result of Community Hospital's proposed relocation. In fact, Helen Ellis' impact analysis is less than reliable. In its contribution-margin analysis, Helen Ellis utilized its actual hospital financial data as filed with AHCA for the fiscal year October 1, 2001, to September 30, 2002. The analysis included total inpatient and total outpatient service revenues found in the filed financial data, including ambulatory services and ancillary services, yet it did not include the expenses incurred in generating ambulatory or ancillary services revenue. As a result, the overstated net revenue per patient day was applied to its speculative lost number of patient days which resulted in an inflated loss of net patient service revenue. Moreover, the evidence indicates that Helen Ellis' analysis incorrectly included operational revenue and excluded expenses related to its 18-bed skilled nursing unit since neither applicant intends to operate a skilled nursing unit. While including the skilled nursing unit revenues, the analysis failed to include the sub-acute inpatient days that produced those revenues, and thereby over inflated the projected total lost net patient service revenue by over one million dollars.
Recommendation Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED that: Community Hospital's CON Application No. 9539, to establish a 376-bed replacement hospital in Pasco County, Sub- District 5-1, be granted; and North Bay's CON Application No. 9538, to establish a 122-bed replacement hospital in Pasco County, Sub-District 5- 1, be denied. DONE AND ENTERED this 19th day of March, 2004, in Tallahassee, Leon County, Florida. S WILLIAM R. PFEIFFER Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 19th day of March, 2004. COPIES FURNISHED: James C. Hauser, Esquire R. Terry Rigsby, Esquire Metz, Hauser & Husband, P.A. 215 South Monroe Street, Suite 505 Post Office Box 10909 Tallahassee, Florida 32302 Stephen A. Ecenia, Esquire R. David Prescott, Esquire Richard M. Ellis, Esquire Rutledge, Ecenia, Purnell & Hoffman, P.A. 215 South Monroe Street, Suite 420 Post Office Box 551 Tallahassee, Florida 32302-0551 Richard J. Saliba, Esquire Agency for Health Care Administration Fort Knox Building III, Mail Station 3 2727 Mahan Drive Tallahassee, Florida 32308 Robert A. Weiss, Esquire Karen A. Putnal, Esquire Parker, Hudson, Rainer & Dobbs, LLP The Perkins House, Suite 200 118 North Gadsden Street Tallahassee, Florida 32301 Darrell White, Esquire William B. Wiley, Esquire McFarlain & Cassedy, P.A. 305 South Gadsden Street, Suite 600 Tallahassee, Florida 32301 Lealand McCharen, Agency Clerk Agency for Health Care Administration 2727 Mahan Drive, Mail Station 3 Tallahassee, Florida 32308 Valda Clark Christian, General Counsel Agency for Health Care Administration 2727 Mahan Drive, Mail Station 3 Tallahassee, Florida 32308 Rhonda M. Medows, M.D., Secretary Agency for Health Care Administration 2727 Mahan Drive, Mail Station 3 Tallahassee, Florida 32308
The Issue The issue is whether BayCare Long Term Acute Care Hospital, Inc.'s Certificate of Need Application No. 9753 and University Community Hospital's Certificate of Need Application No. 9754, both submitted to the Agency for Health Care Administration, should be approved.
Findings Of Fact LTCHs defined An LTCH is a medical facility which provides extended medical and rehabilitation care to patients with multiple, chronic, or clinically complex acute medical conditions. These conditions include, but are not limited to, ventilator dependency, tracheotomy care, total parenteral nutrition, long- term intravenous anti-biotic treatment, complex wound care, dialysis at bedside, and multiple systems failure. LTCHs provide an interdisciplinary team approach to the complex medical needs of the patient. LTCHs provide a continuum of care between short-term acute care hospitals and nursing homes, skilled nursing facilities (SNFs), or comprehensive medical rehabilitation facilities. Patients who have been treated in an intensive acute care unit at a short-term acute care hospital and who continue to require intensive care once stabilized, are excellent candidates for care at an LTCH. Included in the interdisciplinary approach is the desired involvement of the patient's family. A substantial number of the patients suitable for treatment in an LTCH are in excess of 65 years of age, and are eligible for Medicare. Licensure and Medicare requirements dictate that an LTCH have an average length of stay (ALOS) of 25 days. The Center for Medicare and Medicaid Services (CMS) reimburses for care received through the prospective payment system (PPS). Through this system, CMS reimburses the services of LTCHs separately from short-term acute care providers and other post acute care providers. The reimbursement rate for an LTCH under PPS exceeds that of other providers. The reimbursement rate for an LTCH is about twice that of a rehabilitation facility. The increased reimbursement rate indicates the increased cost due to the more intensive care required in an LTCH. The Agency The Agency is a state agency created pursuant to Section 20.42. It is the chief health policy and planning entity for the State of Florida. The Agency administers the Health Facility and Services Development Act found at Sections 408.031-408.045. Pursuant to Section 408.034, the Agency is designated as the single state Agency to issue, revoke, or deny certificates of need. The Agency has established 11 health service planning districts. The applications in this case are for facilities in District 5, which comprises Pinellas and Pasco counties. UCH UCH is a not-for-profit organization that owns and operates a 431-bed tertiary level general acute care hospital and a 120-bed acute care general hospital. Both are located in Hillsborough County. UCH also has management responsibilities and affiliations to operate Helen Ellis Hospital, a 300-bed hospital located in Tarpon Springs, and manages the 300-bed Suncoast Hospital. Both of these facilities are in Pinellas County. UCH also has an affiliation to manage the open heart surgery program at East Pasco Medical Center, a general acute care hospital located in Pasco County. As a not-for-profit organization, the mission of UCH is to provide quality health care services to meet the needs of the communities where it operates regardless of their patients' ability to pay. Baycare BayCare is a wholly-owned subsidiary of BayCare Healthsystems, Inc. (BayCare Systems). BayCare Systems is a not-for-profit entity comprising three members that operate Catholic Health East, Morton Plant Mease Healthcare, and South Florida Baptist. The facilities owned by these organizations are operated pursuant to a Joint Operating Agreement (JOA) entered into by each of the participants. BayCare Systems hospitals include Morton Plant Hospital, a 687-bed tertiary level facility located in Clearwater, Pinellas County; St. Joseph's Hospital, an 887-bed tertiary level general acute care hospital located in Tampa, Hillsborough County; St. Anthony's Hospital, a 407-bed general acute care hospital located in St. Petersburg, Pinellas County; and Morton Plant North Bay, a 120-bed hospital located in New Port Richey, Pasco County. Morton Plant Mease Health Care is a partnership between Morton Plant Hospital and Mease Hospital. Although Morton Plant Mease Healthcare is a part of the BayCare System, the hospitals that are owned by the Trustees of Mease Hospital, Mease Hospital Dunedin, and Mease Hospital Countryside, are not directly members of the BayCare System and are not signatories to the JOA. HealthSouth HealthSouth is a national company with the largest market share in inpatient rehabilitation. It is also a large provider of ambulatory services. HealthSouth has about 1,380 facilities across the nation. HealthSouth operates nine LTCHs. The facility that is the Intervenor in this case is a CMR located in Largo, Pinellas County. Kindred Kindred, through its parent company, operates LTCH facilities throughout Florida and is the predominant provider of LTCH services in the state. In the Tampa Bay area, Kindred operates three LTCHs. Two are located in Tampa and one is located in St. Petersburg, Pinellas County. The currently operating LTCH in District 5 that may be affected by the CON applications at issue is Kindred-St. Petersburg. Kindred-St. Petersburg is a licensed 82-bed LTCH with 52 private beds, 22 semi-private beds, and an 8-bed intensive care unit. It operates the array of services normally offered by an LTCH. It is important to note that Kindred-St. Petersburg is located in the far south of heavily populated District 5. The Applications UCH proposes a new freestanding LTCH which will consist of 50 private rooms and which will be located in Connerton, a new town being developed in Pasco County. UCH's proposal will cost approximately $16,982,715. By agreement of the parties, this cost is deemed reasonable. BayCare proposes a "hospital within a hospital" LTCH that will be located within Mease Hospital-Dunedin. The LTCH will be located in an area of the hospital currently used for obstetrics and women's services. The services currently provided in this area will be relocated to Mease Hospital- Countryside. BayCare proposes the establishment of 48 beds in private and semi-private rooms. Review criteria which was stipulated as satisfied by all parties Section 408.035(1)-(9) sets forth the standards for granting certificates of need. The parties stipulated to satisfying the requirements of subsections (3) through (9) as follows. With regard to subsection (3), 'The ability of the applicant to provide quality of care and the applicant's record of providing quality of care,' all parties stipulated that this statutory criterion is not in dispute and that both applicants may be deemed to have satisfied such criteria. With regard to subsection (4), 'The availability of resources, including health personnel, management personnel, and funds for capital and operating expenditures, for project accomplishment and operation,' it was stipulated that both applicants have all resources necessary in terms of both capital and staff to accomplish the proposed projects, and therefore, both applicants satisfy this requirement. With regard to subsection (5), 'The extent to which the proposed services will enhance access to health care for residents of the service district,' it was stipulated that both proposals will increase access. Currently there are geographic, financial and programmatic barriers to access in District 5. The only extant LTCH is located in the southernmost part of District 5. With regard to subsection (6), 'The immediate and long-term financial feasibility of the proposal,' the parties stipulated that UCH satisfied the criterion. With regard to BayCare, it was stipulated that its proposal satisfied the criterion so long as BayCare can achieve its utilization projections and obtain Medicare certification as an LTCH and thus demonstrate short-term and long-term feasibility. This issue will be addressed below. With regard to subsection (7), 'The extent to which the proposal will foster competition that promotes quality and cost- effectiveness,' the parties stipulated that approval of both applications will foster competition that will promote quality and cost effectiveness. The only currently available LTCH in District 5, unlike BayCare and UCH, is a for-profit establishment. With regard to subsection (8), 'The costs and methods of the proposed construction, including the costs and methods of energy provision and the availability of alternative, less costly, or more effective methods of construction,' the parties stipulated that the costs and methods of construction for both proposals are reasonable. With regard to subsection (9), 'the applicant's past and proposed provision of health care services to Medicaid patients and the medically indigent,' it was stipulated that both UCH and BayCare have a demonstrated history and a commitment to providing services to Medicaid, Medicaid HMO, self-pay, and underinsured payments. Technically, of course, BayCare has no history at all. However, its sponsors do, and it is they that will shape the mission for BayCare. BayCare's Medicare certification as an LTCH The evidence of record demonstrates that BayCare can comply with Medicare reimbursement regulations and therefore can achieve its utilization projections and obtain Medicare certification as an LTCH. Thus short-term and long-term feasibility is proven. Because BayCare will be situated as a hospital within a hospital, in Mease Hospital Dunedin, and because there is a relationship between that hospital and BayCare Systems, Medicare reimbursement regulations limit to 25 percent the number of patients that may be acquired from Mease Hospital Dunedin or from an organization that controls directly or indirectly the Mease Hospital Dunedin. Because of this limitation, it is, therefore, theoretically possible that the regulator of Medicare payments, CMS, would not allow payment where more than 25 percent of admissions were from the entire BayCare System. Should that occur it would present a serious but not insurmountable problem to BayCare. BayCare projects that 21 percent of its admissions will come from Mease Hospital Dunedin and the rest will come from other sources. BayCare is structured as an independent entity with an independent board of directors and has its own chief executive officer. The medical director and the medical staff will be employed by the independent board of directors. Upon the greater weight of the evidence, under this structure, BayCare is a separate corporate entity that neither controls, nor is controlled by, BayCare Systems or any of its entities or affiliates. One must bear in mind that because of the shifting paradigms of federal medical regulation, predictability in this regard is less than perfect. However, the evidence indicates that CMS will apply the 25 percent rule only in the case of patients transferring to BayCare from Mease Hospital Dunedin. Most of the Medicare-certified LTCHs in the United States operate as hospitals within hospitals. It is apparent, therefore, that adjusting to the CMS limitations is something that is typically accomplished. BayCare will lease space in Mease Hospital Dunedin which will be vacated by it current program. BayCare will contract with Mease Hospital Dunedin for services such as laboratory analysis and radiology. This arrangement will result in lower costs, both in the short term and in the long term, than would be experienced in a free-standing facility, and contributes to the likelihood that BayCare is feasible in the short term and long term. Criteria related to need The contested subsections of Section 408.035 not heretofore addressed, are (1) and (2). These subsections are illuminated by Florida Administrative Code Rule 59C- 1.008(2)(e)2., which provides standards when, as in this case, there is no fixed-need pool. Florida Administrative Code Rule 59C-1.008(2)(e)2., provides as follows: 2. If no agency policy exists, the applicant will be responsible for demonstrating need through a needs assessment methodology which must include, at a minimum, consideration of the following topics, except where they are inconsistent with the applicable statutory or rule criteria: Population demographics and dynamics; Availability, utilization and quality of like services in the district, sub district or both; Medical treatment trends; and Market conditions. Population Demographics and Dynamics The applicants presented an analysis of the population demographics and dynamics in support of their applications in District 5. The evidence demonstrated that the population of District 5 was 1,335,021 in 2004. It is anticipated that it will grow to 1,406,990 by 2009. The projected growth rate is 5.4 percent. The elderly population in the district, which is defined as persons over the age of 65, is expected to grow from 314,623 in 2004, to 340,676, in 2009, which represents an 8.3 percent increase. BayCare BayCare's service area is defined generally by the geographic locations of Morton Plant Hospital, Morton Plant North Bay Hospital, St. Anthony's Hospital, Mease Hospital Dunedin, and Mease Hospital Countryside. These hospitals are geographically distributed throughout Pinellas County and southwest Pasco County and are expected to provide a base for referrals to BayCare. There is only one extant LTCH in Pinellas County, Kindred, and it is located in the very southernmost part of this densely populated county. Persons who become patients in an LTCH are almost always moved to the LTCH by ambulance, so their movement over a long distance through heavy traffic generates little or no problem for the patient. Accordingly, if patient transportation were the only consideration, movement from the north end of the county to Kindred in the far south, would present no problem. However, family involvement is a substantial factor in an interdisciplinary approach to addressing the needs of LTCH patients. The requirement of frequent movement of family members from northern Pinellas to Kindred through congested traffic will often result in the denial of LTCH services to patients residing in northern Pinellas County or, in the alternative, deny family involvement in the interdisciplinary treatment of LTCH patients. Approximately 70 letters requesting the establishment of an LTCH in northern Pinellas County were provided in BayCare's application. These letters were written by medical personnel, case managers and social workers, business persons, and government officials. The thread common to these letters was, with regard to LTCH services, that the population in northern Pinellas County is underserved. UCH Pasco County has experienced a rapid population growth. It is anticipated that the population will swell to 426,273, in 2009, which represents a 10.1 percent increase over the population in 2004. The elderly population accounts for 28 percent of the population. This is about 50 percent higher than Florida as a whole. Rapid population growth in Pasco County, and expected future growth, has resulted in numerous new housing developments including Developments of Regional Impact (DRI). Among the approved DRI's is the planned community of Connerton, which has been designated a "new town" in Pasco County's Comprehensive Plan. Connerton is a planned community of 8,600 residential units. The plan includes space for a hospital and UCH has negotiated for the purchase of a parcel for that purpose within Connerton. The rate of growth, and the elderly population percentages, will support the proposed UCH LTCH and this is so even if BayCare establishes an LTCH in northern Pinellas County. Availability, utilization, and quality of like services in the district, sub-district, or both The Agency has not established sub-districts for LTCHs. As previously noted, Kindred is the only LTCH extant in District 5. It is a for-profit facility. Kindred was well utilized when it had its pediatric unit and added 22 additional beds. Subsequently, in October 2002, some changes in Medicare reimbursement rules resulted in a reduction of the reimbursement rate. This affected Kindred's income because over 70 percent of its patients are Medicare recipients. Kindred now uses admission criteria that have resulted in a decline in patient admissions. From 1998, the year after Kindred was established, until 2002, annual utilization was in excess of 90 percent. Thereafter, utilization has declined, the 22-bed addition has been shut down, and Kindred projects an occupancy of 55 percent in 2005. Kindred must make a profit. Therefore, it denies access to a significant number of patients in District 5. It denies the admission of patients who have too few "Medicare- reimbursable days" or "Medicaid-reimbursable days" remaining. The record indicates that Kindred only incurs charity care or Medicaid patient days when a patient admitted to Kindred with seemingly adequate funding unexpectedly exhausts his or her funding prior to discharge. Because of the constraints of PPS, Kindred has established admission criteria that excludes certain patients with conditions whose prognosis is so uncertain that it cannot adequately predict how long they will require treatment. Kindred's availability to potential patients is thus constrained. HealthSouth, a licensed CMR, is not a substitute for an LTCH. Although it is clear that there is some overlap between a CMR and an LTCH, HealthSouth, for instance, does not provide inpatient dialysis, will not accept ventilator patients, and does not treat complex wound patients. The nurse staffing level at HealthSouth is inadequate to provide for the type of patient that is eligible for treatment in an LTCH. The fact that LTCHs are reimbursed by Medicare at approximately twice the rate that a CMR is reimbursed, demonstrates the higher acuity level of LTCH services when compared to a CMR. HealthSouth is a facility which consistently operates at high occupancy levels and even if it were capable of providing the services typical of an LTCH, it would not have sufficient capacity to provide for the need. A CMR is a facility to which persons who make progress in an LTCH might repair so that they can return to the activities of daily living. SNFs are not substitutes for LTCHs although there could be some limited overlap. SNFs are generally not appropriate for patients otherwise eligible for the type of care provided by an LTCH. They do not provide the range of services typically provided by an LTCH and do not maintain the registered nurse staffing levels required for delivering the types of services needed for patients appropriate for an LTCH. LTCHs are a stage in the continuum of care. Short- term acute care hospitals take in very sick or injured patients and treat them. Thereafter, the survivors are discharged to home, or to a CMR, or to a SNF, or, if the patients are still acutely ill but stable, and if an LTCH is available, to an LTCH. As noted above, currently in northern Pinellas County and in Pasco County, there is no reasonable access to an LTCH. An intensive care unit (ICU) is, ideally, a treatment phase that is short. If treatment has been provided in an ICU and the patient remains acutely ill but stable, and is required to remain in the ICU because there is no alternative, greater than necessary costs are incurred. Staff in an ICU are not trained or disposed to provide the extensive therapy and nursing required by patients suitable for an LTCH and are not trained to provide support and training to members of the patient's family in preparation for the patient's return home. The majority of patients suitable for an LTCH have some potential for recovery. This potential is not realized in an ICU, which is often counterproductive for patients who are stabilized but who require specialized long-term acute care. Patients who remain in an ICU beyond five to seven days have an increased morbidity/mortality rate. Maintaining patients suitable for an LTCH in an ICU also results in over-utilization of ICU services and can cause congestion when ICU beds are fully occupied. UCH in Pasco County, and to a lesser extent BayCare in northern Pinellas County, will bring to the northern part of District 5 services which heretofore have not been available in the district, or, at least, have not been readily available. Persons in Pasco County and northern Pinellas County, who would benefit from a stay in an LTCH, have often had to settle for some less appropriate care situation. Medical Treatment Trends LTCHs are relatively new cogs in the continuum of care and the evidence indicates that they will play an important role in that continuum in the future. The evidence of record demonstrates that the current trend in medical treatment is to find appropriate post acute placements in an LTCH setting for those patients in need of long-term acute care beyond the stay normally experienced in a short-term acute care hospital. Market conditions The federal government's development of the distinctive PPS for LTCHs has created a market condition which is favorable for the development of LTCH facilities. Although the Agency has not formally adopted by rule a need methodology specifically for LTCHs, by final order it has recently relied upon the "geometric mean length of stay + 7" (GMLOS +7) need methodology. The GMLOS +7 is a statistical calculation used by CMS in administering the PPS reimbursement system in determining an appropriate reimbursement for a particular "diagnostic related group" (DRG). Other need methodologies have been found to be unsatisfactory because they do not accurately reflect the need for LTCH services in areas where LTCH services are not available, or where the market for LTCH services is not competitive. GMLOS +7 is the best analysis the Agency has at this point. Because the population for whom an LTCH might be appropriate is unique, and because it overlaps with other populations, finding an algebraic need expression is difficult. An acuity measure would be the best marker of patient appropriateness, but insufficient data are available to calculate that. BayCare's proposal will provide beneficial competition for LTCH services in District 5 for the first time and will promote geographic, financial, and programmatic access to LTCH services. BayCare, in conducting its need calculations used a data pool from Morton Plant Hospital, Mease Dunedin Hospital, Mease Countryside Hospital, Morton Plant North Bay Hospital, and St. Anthony's Hospital for the 12 months ending September 2003. The hospitals included in the establishment of the pool are hospitals that would be important referral sources for BayCare. BayCare then identified 160 specific DRGs historically served by existing Florida LTCHs, or which could have been served by Florida LTCHs, and lengths of stay greater than the GMLOS for acute care patients, and compared them to the data pool. This resulted in a pool of 871 potential patients. The calculation did not factor in the certain growth in the population of the geographic area, and therefore the growth of potential LTCH patients. BayCare then applied assumptions based on the proximity of the referring hospitals to the proposed LTCH to project how many of the patients eligible for LTCH services would actually be referred and admitted to the proposed LTCH. That exercise resulted in a projected potential volume of 20,265 LTCH patient days originating just from the three District 5 BayCare hospitals and the two Mease hospitals. BayCare assumes, and the assumption is found to be reasonable, that 25 percent of their LTCH volume will originate from facilities other than BayCare or Mease hospitals. Adding this factor resulted in a total of 27,020 patient days for a total net need of 82 beds at 90 percent occupancy. BayCare's GMLOS +7 bed need methodology reasonably projects a bed need of 82 beds based on BayCare's analysis of the demand arising from the three District 5 BayCare hospitals and the two Mease hospitals. UCH provided both a GMLOS +7 and a use rate analysis. The use rate analysis is suspect in a noncompetitive environment and, obviously, in an environment where LTCHs do not exist. UCH's GMLOS +7 analyses resulted in the identification of a need for 159 additional LTCH beds in District 5. This was broken down into a need of 60 beds in Pasco County and 99 additional beds in Pinellas County. There is no not-for-profit LTCH provider in District The addition of BayCare and UCH LTCHs to the district will meet a need in the case of Medicaid, indigent, and underinsured patients. Both BayCare and UCH have agreed in their applications to address the needs of patients who depend on Medicaid, or who are indigent, or who have private insurance that is inadequate to cover the cost of their treatment. The statistical analyses provided by both applicants support the proposed projects of both applicants. Testimony from doctors who treat patients of the type who might benefit from an LTCH testified that those types of facilities would be utilized. Numerous letters from physicians, nurses, and case managers support the need for these facilities. Adverse impacts HealthSouth and Kindred failed to persuade that BayCare's proposal will adversely impact them. HealthSouth provides little of the type of care normally provided at an LTCH. Moreover, HealthSouth is currently operating near capacity. Kindred is geographically remote from BayCare's proposed facility, and, more importantly, remote in terms of travel time, which is a major consideration for the families of patients. Kindred did not demonstrate that it was currently receiving a large number of patients from the geographic vicinity of the proposed BayCare facility, although it did receive some patients from BayCare Systems facilities and would likely lose some admissions if BayCare's application is approved. The evidence did not establish that Kindred would suffer a material adverse impact should BayCare establish an LTCH in Mease Dunedin Hospital. HealthSouth and Kindred conceded that UCH's program would not adversely impact them. The Agency's Position The Agency denied the applications of BayCare and UCH in the SAARs. At the time of the hearing the Agency continued to maintain that granting the proposals was inappropriate. The Agency's basic concern with these proposals, and in fact, the establishments of LTCHs throughout the state, according to the Agency's representative Jeffrey N. Gregg, is the oversupply of beds. The Agency believes it will be a long time before it can see any measure of clinical efficiency and whether the LTCH route is the appropriate way to go. The Agency has approved a number of LTCHs in recent years and is studying them in order to get a better understanding of what the future might hold. The Agency noted that the establishment of an LTCH by ongoing providers, BayCare Systems and UCH, where there are extant built-in referring facilities, were more likely to be successful than an out-of-state provider having no prior relationships with short-term acute care hospitals in the geographic vicinity of the LTCH. The Agency noted that both a referring hospital and an LTCH could benefit financially by decompressing its intensive care unit, and thus maximizing their efficiency. The Agency did not explain how, if these LTCHs are established, a subsequent failure would negatively affect the delivery of health services in District 5. The Agency, when it issued its SAAR, did not have the additional information which became available during the hearing process.
Recommendation Based upon the Findings of Fact and Conclusions of Law, it is RECOMMENDED that UCH Certificate of Need Application No. 9754 and BayCare Certificate of Need Application No. 9753 satisfy the applicable criteria and both applications should be approved. DONE AND ENTERED this 29th day of November, 2005, in Tallahassee, Leon County, Florida. S HARRY L. HOOPER Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 29th day of November, 2005. COPIES FURNISHED: Robert A. Weiss, Esquire Parker, Hudson, Rainer & Dobbs, LLP The Perkins House, Suite 200 118 North Gadsden Street Tallahassee, Florida 32301 J. Robert Griffin, Esquire J. Robert Griffin, P.A. 1342 Timberlane Road, Suite 102-A Tallahassee, Florida 32312-1762 Patricia A. Renovitch, Esquire Oertel, Hoffman, Fernandez, Cole, & Bryant P.A. Post Office Box 1110 Tallahassee, Florida 32302-1110 Geoffrey D. Smith, Esquire Blank, Meenan & Smith, P.A. 204 South Monroe Street Tallahassee, Florida 32301 Timothy Elliott, Esquire Agency for Health Care Administration 2727 Mahan Drive Building Three, Mail Station 3 Tallahassee, Florida 32308 Alan Levine, Secretary Agency for Health Care Administration Fort Knox Building, Suite 3116 2727 Mahan Drive Tallahassee, Florida 32308 Christa Calamas, General Counsel Agency for Health Care Administration Fort Knox Building, Suite 3431 2727 Mahan Drive Tallahassee, Florida 32308 Richard Shoop, Agency Clerk Agency for Health Care Administration Fort Knox Building, Mail Station 3 2727 Mahan Drive Tallahassee, Florida 32308
The Issue Assuming a need for additional hospital beds in Broward County by 1987, the agreed "planning horizon," the question becomes which, if any, of the six or seven proposals advanced in these proceedings would be the best means of meeting the need. Central to the bed need issue in this case is the parties' enigmatic stipulation: 2/ that there is a need for acute care beds in Broward County in 1987, and this need should be determined on a regionalized basis. Pembroke Pines joins in this stipulation only to the extent that a need does not exist in the proposed service area of SBHD. Prehearing Stipulation C.8. The parties were unable to agree on where these regional boundaries should be drawn, among other things.
Findings Of Fact There is a glut of hospital beds in Broward County. Twenty hospitals have some 6,000 licensed or authorized beds in the county exclusive of free- standing psychiatric hospitals and their beds. In 1980, when Broward County's population numbered 1,018,200, six thousand beds would have been at least a quarter again too many by accepted standards. In 1987, Broward County's population has been projected to be between 1,137,160 and 1,276,911 by the University of Florida's Bureau of Economic and Business Research (BEBR). Other population projections for the year 1987 range all the way to 2,260,700, but it is highly unlikely that so many people will ever live in Broward County, much less by the year 1987. There is no assurance that even BEBR's high projection of 1,276,911 will be reached by 1987. If it should be, the ratio of beds to population in Broward County as a whole would only then fall within the upper reaches of arguably appropriate levels, assuming no additional beds in the interim. CENTROID MOVES WEST Whatever its magnitude, there is no reason to expect population growth to cluster around existing hospitals. Contrary trends have, indeed, already emerged. Population growth in western Broward County is expected to continue at a rate in excess of the rate for the county as a whole. From 1970 to 1980, the population in Broward County's western and central planning subregions (see Appendix) combined went from 140,581 to 417,461 while the population in eastern Broward County went from 479,518 to 600,736. Broward County is most densely populated in its eastern portion, but, increasingly, people have been moving into housing further west in the county. The result has been rapidly growing occupancy at Bennett, the county's westernmost hospital; and high occupancy, often to capacity, at University, which is further north than Bennett but almost as far west. Occupancy rates at Pembroke Pines, the southwestern most hospital in the county, have also increased. If additional hospital beds could be added in the west without affecting the efficiency of operations at other hospitals in the west, their addition would still have the effect of depressing demand for hospital beds in eastern Broward County or, at least, of slowing the rate of increase in demand. The four public hospitals along the Atlantic seaboard are operating at efficient occupancy levels and, in the case of SBHD's Memorial Hospital (Memorial), at capacity, but many hospitals in eastern Broward County are operating extremely inefficiently, including HCA's North Beach Medical Center (North Beach) with 1981 average occupancy of 37.1 percent, and Humana's Community Hospital of South Broward (Community), with 1981 average occupancy of 42.7 percent. THE PROPOSALS HCA, NBHD and Humana, the three organizations which together already own and operate half of the short-term hospitals in Broward County are vying for the right to build a new hospital in the northwest part of the county. In addition to its contention that a new hospital should be built in the northwest to open in 1987, HCA argues that present conditions justify expansion of University long before then, and Humana put on evidence tending to show a need for expansion at Bennett by 1987. SBHD has proposed a new hospital for southwest Broward to open at 84 beds in 1987 and go to 128 beds in 1988. Bennett's expansion is the only other proposal to meet (at least in part) the bed need alleged to exist in southwest Broward. THE NORTHWEST By anybody's reckoning, HCA's Margate is located in northwest Broward already. Depending on how far south the boundary of a northwest region is drawn, HCA's University can also be said to be located in northwest Broward. Humana's Cypress Community Hospital (Cypress), the closest hospital to the east, lies north of University and south of Margate; and Bennett is almost due south of University. NBHD's North Broward Hospital lies further east and considerably north of Cypress. HCA acquired Margate by acquiring or merging with Hospital Affiliates International (HAI) the for-profit hospital chain that formerly owned Margate. Even before the acquisition, planning had begun (by HAI) to replace the facility. Licensed at 150 beds, its effective capacity is significantly lower. Situated on 3.7 acres that do not provide adequate parking, Margate is, in numerous respects, an example of how hospitals should not be built. Hospital ancillary departments were added to a physical plant originally designed as a nursing home and the result has been narrow, dead end corridors and a pathetic 400 gross square feet per bed. There was uncontroverted testimony that the corridors amounted to "life and safety code" violations. No other such violations were specified, however, nor was any statute or regulation cited with respect to the corridors. The testimony was, in fact, that HRS has granted a variance for the corridors based on a similar variance by the Joint Commission on Accreditation. The evidence revealed no request by any licensing or other authority to renovate or to replace Margate, nor any threat to delicense so much as a single bed at Margate. HCA proposes nevertheless to close Margate down when it opens a new 250-bed hospital on 15-acres of a 21-acre site two miles to the north, at a total project cost of $33,750,577. Alternatively, HCA argues it is statutorily entitled to build a 150- bed replacement hospital, and uncontroverted testimony put the project cost at $25,696,403, rather than three-fifths of the 250-bed hospital cost used by HRS. Replacing Margate on its existing site, like renovating it, would not be economical, and for many of the same reasons. Whether at 150 or 250 beds, the HCA proposals include 24 intermediate care, 20 obstetric, 14 pediatric and 12 critical care beds. The proposed hospital would have Margate's medicare and medicaid provider numbers, so that it would not be a "new hospital" under TEFRA regulations. At 150 beds, 929 square feet per bed are contemplated at a cost of $171,309 per bed. At 250 beds, 766 square feet per bed are contemplated at a cost of $135,002 per bed. Humana proposes to build a new 150 bed hospital on a site yet to be acquired in northwest Broward at a project cost of $27,772,500. As proposed, 3/ Coral Ridge General Hospital would have 20 obstetrical beds, 20 pediatric beds, 10 critical care beds and 100 medical-surgical beds. There would be 972 square feet per bed at a cost per bed of $185,150. Larger by a third but in many other ways comparable to Humana's proposed Coral Ridge is NBHD's proposal for a new hospital. At 200 beds, the total project cost would be $37,203,658 or $186,018 per bed and there would be some 950 square feet per bed. Twenty-four obstetric, 20 pediatric, 16 critical care and 140 medical-surgical beds are proposed. A site of approximately 20 acres has been donated, subject to CON approval of the project. University seeks immediate authority to house 73 additional medical- surgical beds in shelled-in space now available on site. University's 209 beds had 83.2 percent average occupancy in 1981, and, at the time of hearing, when it was full to overflowing, University had experienced 87 percent average occupancy for 1982. The uncontroverted evidence was that University can add 73 beds at a total project cost in the neighborhood of $310,000, or $4,227 per bed, resulting in 576 square feet per bed at University. These figures do not reflect associated ancillary costs already or to be incurred. SOUTH AND CENTRAL Although Bennett has not yet reached efficient occupancy levels, a strong trend in that direction has been demonstrated. Average occupancy in 1981 was 63.5 percent, up from 58.5 percent in 1980. By CON number 1996, dated March 15, 1982, Bennett was authorized to spend $8,780,100 to build a parking garage, establish a separate day surgery and expand ancillaries. In these proceedings it seeks authority to add 64 beds in existing shelled-in space. Of these beds 30 would be "minimal care" beds and the remainder would be medical-surgical beds. Exclusive of ancillary costs already authorized, the project cost would be $1,600,000 or $25,000 per bed. Finally SBHD's proposed WBH would have 128 beds at a total project cost of $38,386,000 or $299,891 per bed. WBH would have 852 square feet per bed, 8 critical care beds and 120 medical-surgical beds, and would be built with a view toward expansion. It would operate as a "satellite" of Memorial. DRAWING LINES In order to analyze the County by regions, boundaries must be drawn. Each applicant for a certificate of need (CON) to add hospital beds in northwest Broward county defined "northwest" differently. Both Humana and NBHD saw the hospitals they proposed as serving the 1987 need each identified in its particular northwest planning area. For its purposes, Bennett defined a west central region of Broward County; and SBHD defined its proposed service area for WBH to include the southwest and part of the south central Broward County planning regions. Objections to the WBH proposal focused on southern Broward County, an aggregate of planning subregions extending east to the ocean. SBHD, HCA and Bennett all analyzed bed need on the basis of regions coterminous with the service areas of specific institutions: that of the proposed WBH, in the case of the SBHD; the combined service areas of University and Margate, in the case of HCA; and Bennett's own service area. Defining the service area of an existing institution is a different problem than forecasting the perimeters of a hospital's service area, before the hospital is built. The key to defining historical service areas is information about where patients served by a hospital lived. Hospitals keep data on patient origin by zip code, and the South Florida Hospital Association compiled some of this information for 1979, in its Hospitalization Utilization and Patient Origin Project (HUPOP). Studies like HUPOP provide a basis for judgments about whether a particular zip code furnishes a hospital a great enough fraction of its total patients (or patient days) to be considered part of the hospital's primary or secondary service area. A lightly populated zip code might be included in a hospital's service area on the basis of the size of the share of all patients it sends to hospitals who go to that particular institution, even if the number is a small fraction of the total for the hospital. As the parties demonstrated at great length, it is possible to attach undue significance to regional or other boundaries. They are not, after all, magical barriers through which persons seeking hospital care cannot pass. Beds available to people living within a region do not cease to exist just because they are located on the other side of some arbitrary line. No hospital in Broward County meets the need of the whole population within its service area, or serves nobody outside its service area. There are substantial overlaps in hospital service areas. Any calculation of need must take beds already available into account. The parties' stipulation that there is a need for an unspecified number 3/ of additional beds in an unspecified northwest region does not address the question of what beds outside any such area are nevertheless available to residents of the area. DEMOGRAPHIC PROJECTIONS Once an area is defined, the next step is forecasting its population for the year 1987. Such forecasts begin with census counts or population estimates, which require judgment and extrapolation themselves, unless an actual count in a census block or other census division is relied on. Taking points at either end of a time interval, future projections are made using linear extrapolation, proportional growth, shift-share and other methodologies. Forecasts represent a weighted average of these projections, informed by a judgment on such things as "ultimate build out," and the likely effects of anticipated transportation improvements. Forecasts of population cohorts or components are also pertinent because child bearing women and children have special needs, and because older people are more likely to use hospital beds than younger people. John Short and Associates, Inc., forecast a total population of 256,800 in the northwest area defined by HCA (NW-HCA) in 1987, based on medium projections by the Bureau of Economic and Business Research at the University of Florida. Urban Decision Systems, Inc. forecast a total population of 110,053 for the northwest Broward County planning subregion used by NBHD (NW-NBHD), and Dr. Ladner projected a population increase in the northwest area as defined by Humana (NW-HU) of 76,812 between 1982 and 1987. In making his only population projection for NW-HU, Dr. Ladner assumed an 8.6 percent compound annual growth rate, which the weight of the evidence showed to be unrealistically high. For that and other reasons, Dr. Ladner's population forecast has not been deemed reliable. The John Short and Urban Decisions forecasts are theoretically compatible, pertaining, as they do, to two different areas, They represent compound annual growth rates of 6.69 and 5.86 percent, respectively, and together indicate the likely order of magnitude of the growth of population in northwest Broward County by 1987. The population in western Broward generally, and northwest Broward in particular, is younger on average than the population of the county as a whole. In the northwest planning subregion, 21.7 percent of the population was under 15, 59 percent was 15 to 64, and 19.3 percent was 65 or older in 1980. Also in 1980, women aged 15 to 44 comprised 20.1 percent of the population. Assuming the population of the northwest planning subregion ages slightly in line with the projections for the county as a whole, 19.4 percent of the population in 1987 should be under 15, 80.2 percent should be under 65 and 19.8 percent should be 65 or over. The proportion of women 15 to 44 should grow to 20.8 percent. Dr. Ladner's 1987 projection for Bennett's service area, zip codes 33313, 33314, 33317, 33322, 33323, 33324, 33325, 33326, 33327, 33328, 33330, 33331 and 33332, reflects the same methodology he used for the northwest. Even though the part of Bennett's service area to the south and west of the hospital is not as well developed as northwest Broward, so that there is more justification for Dr. Ladner's growth rate assumption there, his projections for Bennett's service area of 252,644 5/ in 1985 and 368,050 in 1990 are probably too high. Thousands of acres of residential and other development are planned or under construction in these zip codes, however. If Arvida sells 2,680 housing units between now and 1987 in its Indian Trace development in zip code 33327 (whether it can depends on interest rates and other factors) and if household size there averages 2.7, as projected, that development alone would house 7,236 additional persons in 1987. Some time between 1984 and 1988, construction of I-75 will be completed, and southwest Broward will become a 30-minute commute from Miami. When 1-95 was completed in south Palm Beach County, annual population growth jumped from 5,000 to 33,000. The land in Palm Beach County cost less to develop and is closer to the ocean, although further from Miami, than land in southwest Broward County. Population forecasts for the southwest and south central Broward planning regions have been made by Dr. Stanley Smith and by Urban Decisions Systems, Inc. For the two regions combined, their projections for 1987 are 183,700 and 173,800, respectively. For the WBH proposed service area, as revised, zip codes 33025, 33026, 33027, 33028, 33029, 33326, 33327, 33328, 33330, 33331 and 33332, Dr. Smith forecast a 1987 population of 69,128. This number was arrived at without reference to the projected opening of Interstate Highway 75, but Dr. Smith did not think that prospect called for an adjustment in the forecast. For south Broward County, as a whole, i.e., the southwest, southeast and south central planning subregions combined, Dr. Smith projected a population of 380,711 in 1986, and 388,795 in 1987. Gateway's Exhibit No. 16. In 1980, 10.6 percent of the population in the revised WBH proposed service area was 65 or over, as compared to 21.7 percent in the three south regions as a whole. NBHD FORMULAE If facilities in an area serve only that area and nobody enters or leaves the area for hospitalization, the use rate of the population will be the sum of draw rates of the hospitals in the area. In analyzing the need for a specific institution, or assessing the likely draw of a new institution, it is necessary to assign some fraction of the whole population in its service area as its market share. Existing institutions have historical market shares which can be used where historical conditions are not predicted to change, while, for new institutions, other assumptions have to be made. Demand-based need formulae express utilization rates as patient days per 1,000 population. Translating patient days per thousand persons per year to beds needed per thousand persons requires dividing by 365 to get an average daily census per thousand persons then multiplying by the inverse of the optimal average occupancy rate assumed. One hundred percent occupancy of hospital beds on a regular basis would be undesirable, if achievable, because of the lack of reserve capacity to meet fluctuating demand. As a practical matter the problems of matching patients in hospital rooms with more than one bed on the basis of gender, service, smoking habits, and diagnosis prevent 100 percent utilization. For acute care medical-surgical beds, an average occupancy of 80 percent is a desideratum with which no health care planner who testified disagreed, although Dr. Schoeman spoke in terms of 80 to 85 percent average occupancy. Even lower average occupancies are recommended for certain specialty beds, including obstetric (75 percent), pediatric (65 percent) and cardiac intensive care (75 percent) beds. Eighty percent average occupancy as a health planning goal for all short-term beds taken together is supported by the weight of the evidence. (The Florida Task Force on Institutional Needs calls for a 79.4 percent weighted average occupancy). The goal of 80 percent occupancy underlies the national standard of 4 beds per 1,000 persons. This average also reflects the age distribution of the national population and other nationally average conditions. In 1980, 11.3 percent of the population in the United States was 65 or over, while the 65 and older age group made up 22 percent of Broward County's population. In Broward County, where the population is older on average than the population of the country as a whole and where there is significant seasonal variation in population (so that greater reserve capacity is desirable), the consensus is that 4.5 beds per 1,000 persons is a more appropriate rule of thumb. Based on historical demand in Broward County, Mr. Baehr of Amherst Associates, Inc. made an "area specific" analysis. In 1981, 752.1 patient days in Broward County hospitals were attributed on average to every 1,000 persons in Broward County under 65, while 3,442.8 patient days were attributed on average to every 1,000 Broward County residents 65 and older. Mr. Baehr also calculated service specific use rates and, on that basis, the need for, obstetric and pediatric beds. These specialized use rates are reflected in the aggregate use rates for the under 65 age cohort, but breaking them out separately permits the use of service specific occupancy rates. Mr. Baehr's 1981 Broward County use rates correspond to 2.58 beds per 1,000 persons under 65 (at 80 percent occupancy for all services) and 11.79 beds per 1,000 persons 65 and older. Free-standing psychiatric facilities were excluded from the calculations. To the extent the number of people leaving Broward County for hospitalization exceeds the number entering Broward County for that purpose, these utilization rates understate demand. A net outflow of this kind can be inferred from Medpar data reflecting such movement by medicare patients. Dr. Schoeman adjusted Broward County use rates for out-migration and concluded that county-wide use rates were 810.2 patient days per 1,000 population under age 65 and 3623.8 patient days per 1,000 population 65 and over. Dr. Schoeman's 1981 Broward County use rates correspond to 2.7747 beds per 1,000 under 65 (at 80 percent occupancy for all services) and 12.41 beds per 1,000 persons 65 and older (at 80 percent occupancy). The Health Systems Plan, which lacks any legal significance, but purportedly reflects local conditions, uses 861.8 patient days per 1,000 population under 65 and 3204.6 patient days per 1,000 population 65 and over. These numbers correspond to 2.95 and 10.97 beds per 1,000, respectively. At least in the absence of area-specific utilization rates, other utilization rates are used by health care planners. Dr. Kennedy calculated use rates specific to five zip codes in South Broward County for the year 1979 for each of four age cohorts, but testified that the most reasonable utilization rates to use in South Broward were those developed by the Florida Task Force on Institutional Need (TFIN), viz.: Medical-Surgical Patient Days per 1,000 Persons 0-64 565.9 65 and over 2982.2 ICC and CCU 0-64 43.1 65 and over 321.1 Psychiatric 0-64 44.9 65 and over 44.6 Obstetrics Females 15-44 186.3 Pediatrics 0-14 149.2 Gateway's Exhibit No. 12, Table 2, page 4. These figures supposedly represent the experience in Florida statewide. Finally, in the southern United States in 1980, utilization rates calculated from the National Hospital Discharge Survey (NHDS) were 348.2 patient days per 1,000 population under 15, 796.5 patient days per 1,000 population aged 15 to 44, 1,554.9 patient days per 1,000 population aged 45 to 64 and 3,994.2 patient days per 1,000 population 65 or over. The choice of appropriate utilization rates is complicated by the fact that there is no guarantee that historic rates will persist. Advances in medical science may make hospitalization for some conditions obsolete. Aging of the population over 65 on account of continued disproportionately elderly in- migration may result in greater utilization rates. Aging of the 15 to 64 age cohort would presumably result in greater utilization of certain services but might result in less utilization of obstetric beds, and so forth. The 1981 Broward County use rates adjusted for out-migration may prove an unreliable guide to future hospital utilization rates but no other use rates were shown by the evidence to be more reliable. Assuming these rates and applying the average occupancy rate of 80 percent, bed need in Broward County can appropriately be predicted by a weighted average of 2.7747 beds per 1,000 population under age 65, and 12.41 beds per 1,000 population 65 and older. FINANCIAL FEASIBILITY The two-tined "immediate and long-term" financial feasibility criterion was described by HRS' Mr. Konrad as a "go-no go gauge." With respect to each application, the questions are 1) whether financing for start-up costs is available and 2) whether the facility will have enough revenue to support operations, on a long-term basis. GO It is clear from the evidence that HCA and Humana each have access to massive amounts of capital, much more than needed to accomplish any or all of their respective expansion and construction proposals in Broward County. HCA proposes to use 100 percent equity for each of its projects. Humana plans 22.3 percent equity and 77.7 percent debt for the new hospital; and 86 percent equity and 14 percent debt for its expansion project at Bennett. Issue was not joined as to their contentions, amply supported by expert opinion, that operations at proposed facilities would quickly become profitable. Although HCA's showing in this regard as to the proposed 150-bed version of NWBRMC was fairly broad brush, nothing in the evidence raised any doubt but that, with substantial occupancy assured (by Margate's closing) almost from the start, NWBRMC would be profitable at 150 beds. NBHD is a legislatively created tax district charged with serving the hospital needs of residents of the district. NBHD has ad valorem taxing authority and also has a healthy operating margin, partly because it charges indigent care against tax revenues, not at cost, but at full charges. In addition, it has accumulated, in a funded depreciation account, all the equity it plans to use to build a new 200-bed hospital in northwest Broward. NBHD had originally planned to issue bonds for the total project cost but changed its plans for fear medicare and medicaid reimbursement for the additional interest expense might be jeopardized, because the additional borrowing might be deemed unnecessary. In the past, NBHD has expended five or six million dollars annually for routine equipment and other capital costs. At the time of the hearing, NBHD had CONs authorizing work (to be done over periods of time not specified in the record) at a cost of at least $58,000,000, including expenditures for revenue- generating extra beds at its North Broward Hospital. NBHD's debt capacity is on the order of $100,000,000, in the event it becomes necessary to issue bonds in an amount greater than the $16,815,000 now contemplated. NBHD also has a line of bank credit ($35,000,000 at half of prime) that should give it some flexibility in timing going to market for its permanent financing, even though, under its charter, NBHD's short-term borrowing is limited to no more than 15 percent of its assets for no more than one year. HCA sought to show that NBHD's proposal was not financially feasible by trying to show that NBHD could not muster the capital necessary to build a new 200 bed hospital, sustain the loss anticipated during the initial year of operations, and meet its other commitments, but these efforts fell short of the mark. There was no attempt to discredit the revenue projections for the 200-bed hospital or to prove that it would not become profitable in the second year of operations, if built. NO GO The evidence showed that WBH is not financially feasible as far as financing construction, unless planned renovations at SBHD's Memorial are scaled down to levels significantly below those contemplated in an outstanding CON, or delayed past completion times contemplated when the outstanding renovation CON was applied for. At the time of the hearing, no amendment of the renovation CON had been obtained, nor, as far as the evidence showed, had any been applied for. SBHD filed its application for a CON for the modernization of Memorial at or about the time (in the same batching cycle) as it filed its application for a CON for WBH. In the Memorial modernization application it sought, and it has since received, authorization to make capital improvements to Memorial costing $95,419,000 to be completed in November of 1985. Gateway's Exhibit No. In order to accomplish this, it planned to borrow $75,245,000 by issuing tax-exempt bonds. In order to build WBH, which it planned to open (at 84 beds) in January of 1987, SBHD planned to issue tax-exempt bonds in the amount of $31,930,000. Arthur R. Guastella, a municipal investment banker retained by SBHD, testified that SBHD was not in a position to incur additional indebtedness of more that $80,000,000, in May of 1981. (Vol. 36, 37) Because of tax revenues, SBHD's revenues have exceeded expenses in the last few years despite operating losses at Memorial and the walk-in center SBHD operates near Pembroke Pines. SBHD has nevertheless been able to put aside only $1,000,000 for WBH. Management conceded that building WBH was incompatible with renovating Memorial on schedule. In short, SBHD is in the posture of seeking authority for projects which, taken together, it lacks the financial wherewithal to accomplish. SBHD failed to demonstrate financial feasibility in another important respect, counsel's heroic efforts notwithstanding. The basic assumptions of average annual occupancy at WBH in the beginning years, which underlie the Price, Waterhouse projections, were not established as reasonable by competent evidence. These assumptions were first predicated on an analysis, prepared by Herman Smith Associates, of demand in the service area originally proposed by WBH; but faulty population projections came to light and the work of Herman Smith Associates was not relied on at hearing. Instead, a much larger service area was drawn, including some zip codes closer to other hospitals than to the site proposed for WBH, and various problematic assumptions were made (e.g., a 100 percent draw rate from several zip codes). This work was done by a certified public accountant with an admitted lack of expertise in projecting bed need, and no health care planner or other qualified expert testified that the utilization or occupancy rates projected for WBH were reasonable. Detailed information about the population of south Broward County and its likely growth was put on by SBHD and other parties. The record is replete with competent evidence of various methods of projecting a population's bed need, based on the number, age and sex of the population. It is thus possible to calculate bed need for southern Broward County, each of the three planning subregions there, and the service areas proposed for WBH. Even when reduced by the number of beds already available in an area, bed need does not automatically translate into demand for beds at a particular institution, however; and SBHD failed to prove the reasonableness of its demand or utilization assumptions for WBH. SBHD has argued that Gateway's expert, Dr. Kennedy, supplied this omission with his Newtonian "spatial interaction model," but the record does not support this contention. For one thing, the model was shown to be a highly unreliable predictor of real world phenomena. For another, time unrelated to population change is not a variable in the model, nor is a lag in utilization at a new hospital otherwise taken into account, so that the 46 percent occupancy figure for WBH in 1987 on which SBHD seeks to rely is, according to Dr. Kennedy, unrealistically high for an initial operating year. Even if WBH opened in 1986, Dr. Kennedy predicted something like 33 percent average occupancy for 1987. Gateway's Exhibit No. 12, p. 28. For 1989, the Price, Waterhouse compilation that SBHD offered in an effort to prove WBH's financial feasibility, SBHD Exhibit No. 184, assumes 39,274 patient days at WBH, which represents an average daily census of 107.6 or average occupancy for 1989 of 84 percent. Without the "start-up curve" adjustment, Dr. Kennedy's model predicts less than 50 percent occupancy on average for 1989 at WBH. With the adjustment, the figure is lower. SBHD has also argued that evidence of record of utilization projections at other proposed hospitals should be looked to in order to show the reasonableness of its utilization assumptions for WBH. For the first two years, occupancy levels projected at WBH do closely parallel similar projections for, e.g., the new 200 bed hospital proposed by NBHD, but this in no way shows the reliability of the utilization assumptions used for the projections at WBH. Assuming some bed need arguendo, WBH's draw rate and so its utilization and occupancy levels would depend on, among other things, its location vis-a-vis physicians' offices, other hospitals, patients' residences and so forth, factors that differ in south Broward from conditions in northwest Broward. As proposed, WBH would be smaller, have fewer services and a different medical staff than the hospital proposed by NBHD. Among the consequences of the opening of Interstate 75 may be a dramatic shift to utilization of Dade County hospitals by the population of southwest Broward County. Lifemark, who owns and operates Palmetto General located in North Dade County on I-75, did not prove, however, that any such shift can be counted on to occur. Palmetto is currently operating at efficient levels and management is contemplating expansion based on the prospect of population growth in Dade County alone, although no letter of intent to apply for a CON has yet been filed. While Palmetto serves about four percent of the need for patient days attributable to southwest Broward's population, this represents something under one percent of Palmetto's total patient days. EXPANSION PROPOSALS COMPARED University hospital, at the time of the hearing, had occupancy rates which interfered with its efficient operation and required frequent emergency room to emergency room and other transfers. The parties stipulated: that University has experienced an occupancy level for the past year of approximately 87 percent including an occupancy level in excess of 90 percent during certain winter months. The parties further stipulate that in the case of University such occupancy levels have resulted in an adverse impact on certain aspects of patient care. Specifically, there have been problems in treating emergency room patients because of the emergency room being used as a holding area for patients that are waiting for beds to be available. There is difficulty in assuring continuity of care as patients have had to receive hospital care at facilities for which their regular physician does not have staff privileges, and a new physician had to be involved. There have been significant problems and inconveniences to patients as a result of the unavailability of beds. Furthermore, there have been difficulties encountered in spouses, relatives, and friends being able to visit patients when such patients have had to receive their care at other hospitals because of transportation difficulties (which is particularly a problem for the elderly). The demand for University's services has been convincingly demonstrated by real people seeking hospital care there. Beginning with a 1987 population forecast (extrapolated linearly from Dr. Ladner's 1985 and 1990 projections) that was probably too high for the area within zip codes 33313, 33314, 33317, 33322, 33323, 33324, 33325, 33326, 33327, 33328, 33330, 33331, and 33332 (Bennett's service area), Mr. Richardson multiplied by a use rate that was probably too low and assumed an 80 percent occupancy rate to calculate a 1987 bed need for the area of 1,291 beds. The understated use rate tends to compensate for the overstated population projection, and the end result is not unreasonable. From 1,291, beds already available at Bennett (204), Florida Medical Center (400), Plantation General (262) and Doctors General (202) were subtracted and a net bed need of 221 was forecast for Bennett's service area. Proceeding in the same manner with reference to Bennett's primary service area only (the same area except for zip codes 33317, 33330, 33331 and 33332), a net bed need of 145 was forecast there for 1987. Finally, applying the same utilization rate to the increment by which the population of Bennett's service area is projected (extrapolation from Ladner) to increase between 1982 and 1987 yields a prediction that the incremental population alone will use 323 beds a day on average. Allotting 177 of these full beds (average daily census) among Bennett and the other hospitals in the service area would bring each of them to 80 percent average occupancy and still leave an average daily census of 146, which, again assuming 80 percent occupancy, is a prediction of bed need in Bennett's service area of 183 for 1987. These predictions assume that the hospitals in Bennett's service area will draw no more patient days from outside the service area in 1987 than they do in 1982, but also unrealistically assume that the hospitals in the service area will have a combined 100 percent draw of patients in the service area. Bennett's primary service area overlaps University's secondary service area. No allowance has been made for any increase in University's draw that might result from expansion at University, nor has the historical draw of hospitals outside the service area been taken into account. Due east of Bennett is the largest aggregation of underutilized hospital beds in the county. In the east central planning subregion, the ratio of beds to population is 7.1 per 1,000. Among the 64 beds Bennett proposes to add are 30 "minimal care" beds. At least by that name, there are no such hospital beds in Florida, and only 52 in the United States. The room charge for a "minimal care" bed is expected to be 25 or 30 percent less than the comparable charge for a medical-surgical bed, reflecting lower nurse to bed ratios for "minimal care" beds than for ordinary medical-surgical beds. A condominium medical office complex adjacent to Bennett is expected to be finished by the fall of this year. The complex' 55,000 square feet are expected to provide office space for 41 physicians who together already account for 34 percent of Bennett's admissions. These condominium offices are already sold even though construction has not been completed. NEW HOSPITAL PROPOSALS FOR NORTHWEST COMPARED HCA contends that 73 new beds are needed in NW-HCA now and an additional 100 by 1987, for a total of 173; HRS and NBHD contend that 200 new beds are needed in NW-NBHD in 1987; and Humana contends that 223 beds are needed in NW-HU, plus 64 beds at Bennett, for a total of 287 by 1987. In making its case for the low number, HCA unilaterally assumed it should have the same market share it now enjoys in NW-HCA in 1987, and ignoring the increased attractiveness of a new 250 bed facility, as compared to Margate, put on evidence tending to show that, if all 173 beds were allotted to HCA, population increase in NW-HCA would assure their efficient utilization in 1987 without increasing the proportion of patient days from NW-HCA at University and the proposed 250-bed NWBRMC combined over the proportion now received by Margate and University combined. The evidence showed that adding 173 beds in NW-HCA would still leave a bed NBHD of 76 assuming 80 percent average occupancy, to be met by hospital beds outside of NW-HCA. NBHD put on evidence tending to show that the 1987 population in NW- NBHD could efficiently use 471 hospital beds. Assuming Margate or a hospital replacing Margate supplied 150 beds, 321 beds would still be needed in 1987 to serve the residents of NW-NBHD, NBHD contends. These forecasts ate based on the most conservative population and utilization predictions for northwest Broward County. Humana tried to prove that 254 additional beds will be needed in NW-HU by 1987, of which an expansion at University would supply 73, leaving 181. The 181 figure should be reduced by 34, Humana contends, because "since Margate experienced an average occupancy of 57.5 percent in 1981, it must be allocated an additional 34 patients per bed [sic] to raise it to the 80 percent occupancy level," Proposed Findings of Fact, Conclusions of Law and Recommended Order of Petitioners, Humedicenter, Inc. d/b/a Coral Ridge General Hospital and Humana of Florida, Inc. d/b/a Bennett County Hospital, p. 72, leaving 147 beds needed which Humana's proposed 150 bed hospital would supply. This argument is difficult to follow, but Humana's incremental analysis (with low use rates tending to compensate for exaggerated population projections) does suggest that opening 250 or so beds in NW-HU in 1987 would not depress patient flows to hospitals outside NW-HU below current levels. Unlike HCA, neither Humana nor NBHD has a hospital in northwest Broward County (NW-NBHD, NW-HU or NW-HCA). Competition would be enhanced there by building a new non-HCA hospital in the area, although it is true that most people presently leave the area to go to non-HCA hospitals. It is possible to overstate the advantage of competition in this context, moreover, inasmuch as people generally go to the hospital a physician recommends or, in emergencies, to the closest hospital. Competition may only foster better amenities for the medical staff rather than lower charges to the patients, but efforts by physicians or others to improve quality of care for patients would presumably have more chance of success in a competitive environment. Miami-Dade puts on continuing education programs for nurses at Humana's five south Florida hospitals and a new Humana hospital in northwest Broward would presumably also make space available for them. HCA and NBHD also have various training programs at their Broward County facilities. There was no showing that facilities for training in Broward County were limited. Humana publishes pamphlets about new medical technology for physicians on staff at its hospitals. With respect to expansion and new hospital proposals alike, the parties stipulated: The applicants and HRS agree that each applicant can adequately staff its project with all necessary personnel, including technical, nursing, and-medical personnel, and that this is not a comparative issue in this proceeding. Pembroke Pines does not join in this stipulation. The applicants and HRS agree that each applicant has adequate community support for its proposed project, and that this is not a comparative issue in this proceeding. Pembroke Pines does not join in this stipulation. 11. The parties agree that a new hospital in the northwest Broward area would attract a large number of physicians presently practicing in that area to join the medical staff of the new hospital. The need to cover this hospital, in addition to hospitals currently being covered, will result in physician inconvenience and more travel time. The most important comparative issues joined by the parties involved financial projections. FINANCIAL COMPARISONS The parties' proposed construction costs are not strictly comparable. The incremental costs per bed stated by Bennett, University and for the "additional" 100 beds at the proposed 250 bed version of NWBRMC do not reflect all of the costs that are properly associated with making a hospital bed available for occupancy. But it is true that construction costs for expansion are less than those for new construction when there is excess ancillary capacity and ordinarily even where there is not. Even among the non-incremental projections for new hospitals, there have been different assumptions about, among other things, inflation rates for different items and the dates operations would begin. Under one view, the site donated to NBHD, and any other gifts to NBHD for a new hospital, should be counted as costs of the new hospital. The parties have stipulated that projected construction costs are reasonable, and the costs of constructing a hospital are only the beginning, in any event. Once occupancies projected for the second or third year of operations are reached, any of the three new hospitals proposed for the northwest will have gross revenues every year well in excess of the "total project costs" expected to be incurred to build the hospital in the first place. CHARGE COMPARISONS Since people are hospitalized for a whole range of maladies, and receive different kinds and combinations of diagnostic and therapeutic services while in hospital, it is difficult to compare the charges for or cost of care at one hospital with the charges for or cost of care at another. It will not do to look at room charges only as a sort of gauge, because the medicare program has created pressure to keep room charges down, and hospitals have responded to the pressure by increasing charges for ancillary services. To take the most recent increases into account, therefore, ancillaries have to be included, even though they vary from patient to patient. NBHD's Exhibit 55 reflects one approach to comparing hospital charges. There charges for the 30 services most frequently "sold" by hospitals are listed for three of the four HCA Broward County hospitals, two of Humana's three Broward County hospitals and all three of NBHD's hospitals, for fiscal years ended in 1982. One difficulty with this approach is that at least one service listed on this exhibit (as "chemical profile"), evidently means one thing to one hospital laboratory and something else to another. Affecting all the comparisons on the chart is the difference among fiscal year ends for NBHD (June 30), Humana (August 31), and HCA (December 31). With hospital charges in Broward County escalating at annual rates on the order of 14 or 15 percent, a half year's difference in fiscal year ends can make essentially identical charge structures appear to differ significantly. HCA complains, in addition, that there is no justification for including one (Margate) but not the other (North Beach) of the Broward County hospitals it acquired from HAI. Humana's Community Hospital of South Broward was also omitted. Both Community and North Beach have extremely low occupancy rates, however, well below what anybody is projecting for a new hospital in northwest Broward County. Even making a rough adjustment for inflation, NBHD's charges were lower, on average, in more categories than the two Broward Humana Hospitals' average charges, than vice versa; and the same is true as between NBHD's average charges and the three Broward HCA hospitals' average charges. Invoking formulas developed by the Health Care Cost Containment Board, the parties made various comparisons using "gross revenue per adjusted patient day, gross revenue per admission," "total net revenue per adjusted patient day," and "total net revenue per adjusted admission." See NBHD Exhibit No. 71. The for-profit hospitals, but not NBHD's hospitals, subtract income taxes in arriving at "total net revenue." Using the same HCA and Humana Broward County hospitals whose charges were compared to all of NBHD's hospitals in NBHD Exhibit No. 55, average gross revenues were computed for fiscal years ended 1981 and stated per adjusted patient day ($340.60 for NBHD, $475.72 for HCA and $476.38 for Humana) and per adjusted admission ($2,870.70 for NBHD $3,154.67 for HCA, and $3,365.70 for Humana). NBHD Exhibit No. 56. On average, HCA's Florida hospitals' total net revenue per adjusted patient day is about five percent lower than the average for Humana's hospitals in Florida in 1980. HCA Exhibit No. 20. In 1980, the average total net revenue per adjusted patient day for HCA's Plantation General and University Community was $291.50 as compared to the $252.80 average for the two smaller of the three NBHD hospitals. HCA Exhibit No. 18. On the other hand, the 1980 average total net revenue per adjusted admission for the same two HCA hospitals was $1,842.60, as opposed to $2,363.60 for the same two NBHD hospitals. HCA Exhibit No. 18. Since indigent patients have longer average stays than other hospital patients, and NBHD treats significantly more indigent patients than HCA's University, Margate and Plantation, or Humana's Bennett and Cypress, the NBHD "adjusted admission" in charge or cost per adjusted admission comparisons represents more patient days. COST COMPARISONS In Broward County historically, average net operating expense per adjusted patient day and per adjusted admission at HCA's Plantation and University exceeded the NBHD averages in 1981. HCA Exhibit No. 25. For fiscal years ended 1981, HCA (Margate, University and Plantation) Humana (Cypress and Bennett) and NBHD incurred average costs per adjusted patient day of, respectively, $311.29, $289.79 and $262.27. NBHD Exhibit No. 56. NBHD's average cost per adjusted admission was higher than the others, on account of longer average stays. Because of the differing assumptions underlying the various pro forma financial statements, expenses stated there are not strictly comparable, although HCA produced a witness who made arithmetic adjustments purportedly simulating uniform inflation assumptions for comparative purposes, with reference to the proposed 250 bed NWBRMC. Hospitals have variable operating costs, fixed operating costs and fixed capital costs (which are related to construction costs and reflect financing costs). It is because fixed costs are so high (60 percent on average in the industry) that occupancy levels are crucial to a hospital's financial viability. In general, hospitals with 200 to 400 beds are more efficient than larger or smaller hospitals. Satellite hospitals like the proposed WBH enjoy certain economies by sharing administration, purchasing and the like with another established hospital. Both HCA and Humana buy hospital equipment and supplies at substantial discounts, comparable to those available through shared purchasing organizations to which NBHD (which has 1,304 approved beds itself as well as the possibility of discounts on account of governmental status) belongs. Private patients and insurers pay charges but hospitals are reimbursed through the medicare and medicaid programs in amounts fixed by a cost-based formula. (This amount comes to less than charges, and the difference is known as the medicaid or medicare "contractual.") Changes in the reimbursement formula have been dictated by the Tax Equity and Fiscal Responsibility Act of 1981 (TEFRA), but not yet fully implemented. The consensus is that new TEFRA regulations will slow the rate of growth in reimbursement rates. These new regulations designate a base year for existing institutions by which to measure cost increases, but exempt new hospitals from certain reimbursement caps. HCA showed that it makes better economic sense to start over and build a new hospital than to renovate Margate, but did not show it was under legal compulsion to do either. Taking replacement of Margate as a given, HCA argues that the cost of adding 100 beds in northwest Broward County should be viewed as the difference between the cost of building NWBRMC at 250 beds and the cost of building it at 150 beds. In projecting both of these costs, HCA ignored the cost of closing Margate, 6/ but the cost of closing Margate would be the same whether it was replaced by a 150-bed or a 250-bed hospital, so the difference between the replacement costs would be unaffected. The incremental cost per bed is less meaningful than the relative per-bed costs for the whole institution at 150 as opposed to 250 beds. Any savings in construction costs inures first to the benefit of HCA. Such savings benefit the public directly only to the extent they may affect costs for medicaid or medicare reimbursement purposes. With respect to the proposed Margate replacement, the question of medicare and medicaid reimbursement is complicated by the change proposed in the ratio of debt to equity. Assuming optimal occupancies, however, operating a hospital with 200 to 400 beds would be less costly per bed than operating a 150-bed hospital, and these economies should be reflected in lower medicaid and medicare reimbursement. INDIGENT CARE Not all hospitals seek to serve the poor. Those that do receive medicaid reimbursement for services rendered to some, but not all, of their patients who are otherwise uninsured and unable to pay. Humana's Cypress did not have a medicaid provider number at the time of hearing. HCA's University had no medicaid contract until September of 1982 and has had less than one percent medicaid utilization since then. At its three hospitals, on average, NBHD has six to eight percent medicaid utilization. While NBHD hospitals are reimbursed for services to indigent persons ineligible for medicaid benefits at full charges, paid from NBHD's ad valorem tax revenues, HCA and Humana's hospitals in Broward County receive nothing for services rendered to medically indigent persons who are medicaid-ineligible. 7/ In addition, some patients with the ability to pay for hospital services fail to do so. Their charges are cumulated under the heading "bad debts." For want of complete information, some charges for indigent care may end up in this category. In the fiscal year ending August 31, 1982, Cypress' bad debts amounted to 3.3 percent of total revenues as compared to NBHD's 11 or 12 percent in recent years. NBHD has deposit requirements, but does not enforce them in every case at its hospitals. Some 27 to 30 percent of NBHD's hospitals' services are provided to persons unable to make full payment. Nobody is denied medical care for inability to pay at NBHD's existing hospitals. This policy would apply at the proposed 200 bed hospital in the northwest, as well. The sole exception to this policy has been NBHD's refusal to accept "economic transfers." Attempts by for-profit hospitals to transfer patients whose resources have been exhausted or whose inability to pay has become clear, in order to free beds for paying patients, have been resisted by NBHD, although medically indigent patients are accepted for transfer to NBHD hospitals whenever they need services that are unavailable at the transferring hospital. The HCA and Humana hospitals in Broward County do not turn emergencies away for inability of patients to pay, but do not, as a general rule, accept non-emergent cases when there is no assurance they will be paid. There are exceptions: On occasion medical staff admit non-emergent, indigent patients. Northwest Broward County is attractive to HCA, Humana and NBHD just because of the low numbers of indigent persons there, perhaps three or four percent of the population. In its second year of operation, a new hospital in northwest Broward County can expect less than one admission of an indigent patient per day. Medicare utilization should also be significantly lower than elsewhere in the county, where 56.4 percent of total patient days are attributable to medicare patients on average. TAXES AND SUBSIDIES Under current regulations, for-profit hospitals like HCA's and Humana's, but not nonprofit hospitals like NBHD's receive a return on equity component in medicare and medicaid reimbursement. (The rate is a healthy 150 percent of an average interest rate on certain government securities.) All other things being equal, an HCA or Humana hospital in northwest Broward would, if financed even in part by equity, receive more governmental reimbursement for rendering the same medicare or medicaid services than a hospital owned and run by NBHD, how much more depending on the debt-equity mix. HCA proposes to use 100 percent equity, in replacing Margate. On the other hand, HCA and Humana pay federal income and other taxes which NBHD does not pay. For comparative purposes, it is appropriate to assess the net fiscal impact of each proposal on government, but, with consolidated tax accounting and the number and diverse financial circumstances of HCA and Humana hospitals, setting medicare and medicaid payments off against federal income taxes can be viewed in more than one way. Federal tax liability that would otherwise arise from profits from operations at one HCA or Humana hospital can be offset by losses from operations at another hospital. NBHD not only pays no taxes, it also levies a tax, on real property within District boundaries. About four fifths of these revenues, on the order of $28,000,000 or $29,000,000 annually, are allocated to charges for "indigent care." There would be no NBHD for a tax increase to finance a new hospital, however. The "funded depreciation" account from which the equity contribution is to come does not, moreover, contain past tax receipts, except to the extent the fraction of NBHD's operating margin attributable to indigent care made its way into "funded depreciation." Similarly, tax revenues would not be used to operate the proposed hospital, except to the extent tax revenues were used to pay charges for the care of indigent patients. The terms "cost-shifting" or "charge shifting" describe the fact that some payers subsidize other payers. In the case of for-profit hospitals, private pay patients and third party payors other than the government pay rates that are set high enough to cover expenses incurred in treating patients whose bills go unpaid and to make up for the medicaid and medicare contractuals. With respect to NBHD hospitals, tax revenues are looked to to pay the full cost of the care of medically indigent persons, but bad debts are still reflected in the NBHD charge structures. To the extent for-profit hospitals provide services to medically indigent persons, the cost of those services is shifted to uninsured private pay patients, persons who pay premiums for hospital insurance, and the medicare and medicaid programs. On the other hand, all owners of taxable real property within the North Broward Hospital District bear the expense of the treatment of medically indigent persons at NBHD hospitals. Aside from expanding by building new hospitals, a course on which HCA, Humana, and NBHD alike seem to have embarked, these organizations have different uses for profits or any positive operating margin which a new hospital in the northwest might generate. Humana uses such money for corporate overhead, including shareholders' dividends, and to finance things like the work of Dr. Rollo who, in conjunction with researchers at Vanderbilt University and elsewhere, evaluates new medical technology as it becomes available. Humana also designates some of its hospitals "centers of excellence" in certain fields, encouraging research and specialized treatment of particular afflictions. HCA uses money from operations of its hospitals for overhead and other corporate purposes. Money from the NBHD hospitals' operations is used to finance specialized services in Broward County, principally at Broward General, which has, among other costly and unprofitable services, a substantial neonatology unit. LESS EXPENSIVE FOR WHOM For people who pay no taxes, have no hospitalization insurance, and are unable to pay hospital bills, the cost of each of the proposals for the northwest would be the same: nothing. (These people might not have access to services at a for-profit institution, however.) Private insurers, those that pay their premiums, federal taxpayers who finance the medicaid and medicare programs, taxpayers in the North Broward Hospital District and patients themselves all will bear part of the cost of any new hospital in northwest Broward. Private pay patients and their insurers will supply almost half of the total patient revenue. Historically, charges, which are the basis for these patients' payment, have been lower at NBHD hospitals than at HCA's or Humana's Broward County hospitals, on average, as reflected most clearly by the gross revenue per adjusted patient day comparisons. It is little consolation to private payers that Humana and HCA pay taxes while NBHD does not. But, in forecasting the relative costs to cost-based payors, projected federal income taxes should be subtracted from reimbursement for equity projected to be received by Humana and HCA through the medicare and medicaid programs. Even after income taxes are netted, HCA or Humana would receive compensation for equity that NBHD would not receive. Especially in light of evidence that shows that NBHD's expenses per patient day have been lower in the past than such expenses at the for-profit hospitals, the weight of the evidence established that cost-based reimbursement at a new northwest Broward hospital would, in all probability, be less if the hospital were operated by NBHD than if it were operated by HCA or Humana. Because of the medicare and medicaid rules allowing a return on equity component in reimbursement of providers, an NBHD hospital would receive less medicare and medicaid reimbursement even if the NBHD hospital had the same operating costs. The taxpayers of the District pay for the care of the medically indigent at NBHD hospitals, but not for the care of these persons at Broward County's Humana and HCA hospitals. There is no provision, presently, for using NBHD tax revenues to pay for the care at HCA or Humane hospitals in Broward County of medically indigent persons who are not eligible for medicare or medicaid. On the other hand, to the extent medically indigent persons are cared for by HCA and Humana, the costs of that care are "shifted" to, among others, private pay patients which, if persons paying for hospital insurance are included, constitute a group within the North Broward Hospital District that presumably overlaps substantially with taxpayers in the District. OBSTETRICS AND PEDIATRICS The parties stipulated that 20 to 24 obstetric beds were needed in northwest Broward County. Each proposal for a new hospital in northwest Broward County contemplates an obstetric service of this magnitude. Eighteen obstetric beds and 24 pediatric beds will be needed in 1987 to serve the population of NW- NBHD alone. There is presently a shortage of obstetric beds in Broward County as a whole. The site proposed for the new NBHD hospital in northwest Broward County is considerably further from other obstetric beds in the county than the site proposed for NWBRMC, although NWBRMC is mere central to the northern part of the county where there is a dearth of obstetric beds. In general, traffic in Broward County moves better north and south than east and west. Humana is not so committed to any particular site, that it could not build a hospital even further away. 8/ At NBHD's Broward General a training program for physicians wishing to specialize in obstetrics is already in place. Broward General has an intensity of pediatric and obstetric services that make it a desirable location for such a program for residents. A community hospital serving a population with a significant child bearing cohort, like that proposed for the northwest, would be an appropriate complement to the existing program.
Recommendation It is accordingly, RECOMMENDED: That HRS dismiss Lifemark as a party to these proceedings. That HRS grant NBHD's application for a CON to build a 200-bed hospital, in its entirety. That HRS grant HCA's application to build NWBRMC but only at 150 beds and without an obstetric service; and that HCA be authorized to expend to that end $25,969,403.00, less an appropriate adjustment for the lack of an obstetric service. That HRS deny the application for a CON to build a new hospital filed by South Broward Hospital District in its entirety. That HRS deny the application for a CON to build a new hospital filed by Humedicenter, Inc. d/b/a Coral Ridge General Hospital in its entirety. That HRS deny University Community Hospital's application for a CON to add beds there in its entirety. That HRS deny the application for a CON to add beds filed by Humana of Florida, Inc. d/b/a Bennett Community Hospital, in its entirety. DONE and RECOMMENDED this 12th day of April, 1983, in Tallahassee, Florida. ROBERT T. BENTON II Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32301 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 12th day of April, 1983.
The Issue The Petitioner, St. Joseph's Hospital, Inc., d/b/a St. Joseph's Hospital (Petitioner, Applicant, or St. Joseph's) filed Certificate of Need (CON) Application No. 9833 with the Agency for Health Care Administration (Agency or AHCA). The application seeks authority to establish a 90-bed acute care satellite hospital in southeastern Hillsborough County, Florida. St. Joseph's intends to transfer 90 acute care beds from its existing location in Tampa to the new facility. The issue in this case is whether the Agency should approve the CON application.
Findings Of Fact The Parties AHCA is the state agency charged with the responsibility of administering the CON program for the state of Florida. The Agency serves as the state heath planning entity. See § 408.034, Fla. Stat. (2007). As such, it was charged to review the CON application at issue in this proceeding. AHCA has preliminarily denied St. Joseph's CON application No. 9833. The Petitioner is the applicant for the CON in this case. The Petitioner is a not-for-profit organization licensed to operate St. Joseph's Hospital, a general acute care facility located in the urban center of Tampa, Florida. It was originally founded by a religious order and has grown from approximately 40 beds to a licensed bed capacity of 883 beds. St. Joseph's provides quality care in a comprehensive range of services. Those services include tertiary and Level II trauma services. St. Joseph's provides services to all patients regardless of their ability to pay. To meet its perception of the growing healthcare needs of the greater Hillsborough County residents, St. Joseph's has proposed to construct a satellite hospital on a site it purchased in the mid-1980s. According to St. Joseph's, the satellite hospital, together with its main campus, would better address the growing community needs for acute care hospital services. To that end, St. Joseph's filed CON application No. 9833 and seeks approval of its satellite facility. It proposes to transfer 90 of its acute care beds from its current hospital site to the new satellite facility. The main hospital will offer support services as may be necessary to the satellite facility. Tampa General is an 877-bed acute care hospital located on Davis Island in urban Tampa, Florida. Prior to 1997, it was a public hospital operated by the Hillsborough County Hospital Authority but has since been operated and managed by a non- profit corporation, Florida Health Sciences, Inc. Tampa General provides quality care in a wide range of services that include tertiary and Level I trauma. Tampa General addresses the medical needs of its patients without consideration of their ability to pay. It is a "safety net" provider and is the largest provider of services to Medicaid and charity patients in the AHCA District 6/Subdistrict 1. Medicaid has designated Tampa General a "disproportionate share" provider. Tampa General is also a teaching hospital affiliated with the University of South Florida's College of Medicine. Recently, Tampa General has undergone a major construction project that brings on line a new emergency trauma center as well as additional acute care beds, a women's center, a cardiovascular center and a digestive diagnostic and treatment center. Tampa General opposes the CON request at issue. South Bay and Brandon also oppose St. Joseph's CON application. South Bay is a 112-bed community acute care hospital located in Sun City Center, Florida. South Bay has served the community for about 25 years and offers quality care but does not provide obstetrical services primarily because its closest population and patient base is a retirement community restricted to persons over 55 years of age. In contrast, Brandon is an acute care hospital with 367 beds located to South Bay's north in Brandon, Florida. Brandon provides quality care with a full range of hospital services including obstetrics, angioplasty, and open-heart surgery. Brandon also has neonatal intensive care (NICU) beds to serve Level II and Level III needs. It is expected that Brandon could easily add beds to its facility as it has empty "shelled-in" floors that could readily be converted to add 80 more acute care beds. Both Brandon and South Bay are owned or controlled by Hospital Corporation of America (HCA) and are part of its West Florida Division. The Proposal St. Joseph's has a wide variety of physicians on its medical staff. Those physicians currently offer an array of general acute care services as well as medical and surgical specialties. St. Joseph's provides Levels II and III NICU, open heart surgery, interventional radiology, primary stroke services, oncology, orthopedic, gynecological oncology, and pediatric surgical. Based upon its size, reputation for quality care, and ability to offer this wide array of services, St. Joseph's has enjoyed a well-deserved respect in its community. To expand its ties within AHCA's District 6/Subdistrict 1 healthcare community, St. Joseph's affiliated with South Florida Baptist Hospital a 147-bed community hospital located in Plant City, Florida. This location is east of the main St. Joseph Hospital site. Further, recognizing that the growth of greater Hillsborough County, Florida, has significantly increased the population of areas previously limited to agricultural or mining ventures, St. Joseph's now seeks to construct a community satellite hospital located in the unincorporated area of southeastern Hillsborough County known as Riverview. The Petitioner owns approximately 50 acres of land at the intersection of Big Bend Road and Simmons Loop Road. This parcel is approximately one mile east of the I-75 corridor that runs north-south through the county. In relation to the other parties, the proposed site is north and east of South Bay, south of Brandon, and east and south of Tampa General. South Florida Baptist Hospital, not a party, is located to the north and farther east of the proposed site. The size of the parcel is adequate to construct the proposed satellite as well as other ancillary structures that might compliment the hospital (such as medical offices). If approved, the Petitioner's proposal will provide 66 medical-surgical beds, 14 beds within an intensive care unit, and 10 labor and delivery beds. All 90 beds will be "state-of- the-art" private rooms along with a full-service emergency department. The hospital will be fully digital, use an electronic medical record and picture archiving system, and specialists at the main St. Joseph's hospital will be able to access images and data at the satellite site in real time. A consultation would be, theoretically, as close as a computer. In reaching its decision to seek the satellite hospital, St. Joseph's considered input from many sources; among them: HealthPoint Medical Group (HealthPoint) and BayCare Health System, Inc. (BayCare). HealthPoint is a physician group owned by an affiliate of St. Joseph's. HealthPoint has approximately 80 physicians who operate 21 offices throughout Hillsborough County. All of the HealthPoint physicians are board certified. At least five of the HealthPoint offices would have quicker access to the proposed satellite hospital than to the main St. Joseph's Hospital site. The HealthPoint physicians support the proposal so that their patients will have access to, and the option of choosing, a St. Joseph facility in the southeastern part of the county. BayCare is an organization governed by a cooperative agreement among nonprofit hospitals. Its purpose is to assist its member hospitals to centralize and coordinate hospital functions such as purchasing, staffing, managed care contracting, billing, and information technology. By cooperatively working together, its members are able to enjoy a cost efficiency that individually they did not enjoy. The "synergy" of their effort results in enhanced quality of care, efficient practices, and a financial savings to their operations. The proposed St. Joseph's satellite would also share in this economy of efforts. Understandably, BayCare supports the proposal. Review Criteria Every new hospital project in Florida must be reviewed pursuant to the statutory criteria set forth in Section 408.035, Florida Statutes (2007). Accordingly, the ten subparts of that provision must be weighed to determine whether or not a proposal meets the requisite criteria. Section 408.035(1), Florida Statutes (2007) requires that the need for the health care facilities and health services being proposed be considered. In the context of this case, "need" will not be addressed in terms of its historical meaning. The Agency no longer calculates "need" pursuant to a need methodology. Therefore, looking to Florida Administrative Code Rule 59C-1.008, requires consideration of the following pertinent provisions: ...If an agency need methodology does not exist for the proposed project: The agency will provide to the applicant, if one exists, any policy upon which to determine need for the proposed beds or service. The applicant is not precluded from using other methodologies to compare and contrast with the agency policy. If no agency policy exists, the applicant will be responsible for demonstrating need through a needs assessment methodology which must include, at a minimum, consideration of the following topics, except where they are inconsistent with the applicable statutory or rule criteria: Population demographics and dynamics; Availability, utilization and quality of like services in the district, subdistrict or both; Medical treatment trends; and, Market conditions. The existence of unmet need will not be based solely on the absence of a health service, health care facility, or beds in the district, subdistrict, region or proposed service area. According to St. Joseph's, "need" is evidenced by a large and growing population in the proposed service area (PSA), sustained population growth that exceeds the District and state average, highly occupied and seasonally over capacity acute care beds at the existing providers, highly occupied and sustained increases in demand for hospital services, a scarcity of emergency medical service resources within the PSA compounded by budget cuts, increases in traffic congestion and travel times to the existing hospitals, the lack of a nonprofit community hospital near the proposed site, and the lack of local obstetrical services. In this case the Petitioner has identified the PSA as a 10 zip code area with 7 being designated the "primary" area of service (PSA) and 3 zip codes to the north being identified as the "secondary" area of service (SSA). The population of this PSA is projected to reach 322,913 by the year 2011 (from its current 274,696). All parties used Claritas data to estimate population, the PSA growth, and various projections. Claritas is a conservative estimator in the sense that it relies on the most recent U. S. census reports that may or may not track the most recent growth indicators such as building starts or new home sales. Nevertheless, if accurate, the estimated 17.5 percent population growth expected in the new satellite hospital's PSA exceeds the rate of growth estimated for AHCA District 6 as well as the projected State of Florida growth rate. From the 7 primary zip codes within the PSA alone the area immediately adjacent to the subject site is estimated to grow by 14,900 residents between 2006 and 2011. Over the last 20 years the PSA has developed from rural farming and mining expanses with scattered housing and trailer parks to an area characterized by modern shopping centers, apartment complexes, housing subdivisions, churches, libraries, and new schools. Physicians in the area now see as many as 60 patients per day and during the winter peak months may admit up to 20 patients per week to hospitals. Travel times from the southern portion of the PSA to St. Joseph's Hospital, Tampa General, or Brandon, can easily exceed 30 minutes. Travel times to the same providers during "rush" or high traffic times can be longer. All of the opponent providers have high occupancy rates and experience seasonal over capacity. During the winter months visitors from the north and seasonal residents add significant numbers to the population in Hillsborough County. These "snow birds" drive the utilization of all District 6/Subdistrict 1 hospitals up. Further, increased population tends to slow and congest traffic adding to travel times within AHCA District 6/Subdistrict 1. Both Brandon and Tampa General have recently added beds to address the concerns of increased utilization. Additionally, Tampa General has expanded its emergency department to provide more beds. South Bay has elected to not increase its bed size or emergency department. South Bay has experienced difficulty staffing its emergency department. When faced with capacity problems, South Bay "diverts" admissions to other hospitals. When the emergency rooms of the Opponent providers are unable to accommodate additional patients, the county emergency transport is diverted to other facilities so that patients have access to emergency services. During the winter season and peak flu periods this diversion is more likely to occur. Another hospital in the southeastern portion of the county, within St. Joseph's satellite PSA, would alleviate some of the crowding. More specifically, South Bay's annual occupancy rate in 2006 was 80.1 percent. For the first seven months of 2007, South Bay's average occupancy rate was 88.4 percent. These rates indicate that South Bay is operating at a high occupancy. Operating at or near capacity is not recommended for any hospital facility. Long term operation at or near occupancy proves to be detrimental to hospital efficiencies. Similarly, Brandon operates at 70 percent of its bed capacity. Even though it has recently added beds it intends to add more beds to address continuing increases in admissions. Brandon's emergency room is also experiencing overcrowded conditions. When Brandon's emergency room diverts patients their best option may be to leave District 6/Subdistrict 1 for care. Tampa General is a large complex and its emergency department has been expanded to attempt to address an obvious need for more services. It is unknown whether the new emergency department will adequately cure the high rates of diversion Tampa General experienced in 2007. New beds were added and an improved emergency department was designed and constructed with the expectation that Tampa General's patients would be better served. Based upon Tampa General's expansion and its projected growth, Tampa General could experience an occupancy rate over 75 percent by 2011. If so, Tampa General could easily return to the utilization problems previously experienced. There are no obstetrical services offered south of Brandon in AHCA District 6/Subdistrict 1. The proposed St. Joseph's satellite hospital would offer obstetrics and has designated a 10-bed unit to accommodate those patients. There are no nonprofit hospitals south of Brandon in AHCA District 6/Subdistrict 1. The proposed St. Joseph's satellite hospital would offer patients in the PSA with the option of using such a hospital. Section 408.035(2), Florida Statutes (2007), requires the consideration of the availability, quality of care, accessibility, and extent of utilization of existing health care facilities and health services in the service district of the applicant. As previously stated, all of the parties provide quality care to their patients. Although delays in emergency departments may inconvenience patients, the quality of the medical care they receive is excellent. Similarly, hospital services are available and can be accessed in AHCA District 6/Subdistrict 1. The parties provide a full range of healthcare service options that address the medical and surgical needs of the residents of AHCA District 6 Subdistrict 1. An additional hospital would afford patients with another choice of provider in the southeastern portion of the county. The St. Joseph satellite hospital would afford such patients with a hospital option within 30 minutes of the areas within the PSA. This access would promote shorter wait times and less crowded facilities. Section 408.035(3), Florida Statutes (2007), mandates review of CON applications in light of the ability of the applicant to provide quality of care and the applicant's record of providing quality of care. As previously stated St. Joseph's has a well-deserved reputation for providing quality care within a wide range of hospital services to its patients. It is reasonable to expect the satellite hospital would continue in the provision of such care. The management team and affiliations established by St. Joseph's will continue to pursue quality care to all its patients regardless of their ability to pay. Section 408.035(4), Florida Statutes (2007), considers the availability of resources for project accomplishment and operation. Resources that must be considered include healthcare personnel, management personnel, and funds for capital and operating expenditures. St. Joseph's has the resources to accomplish and operate the satellite hospital proposed. St. Joseph's has a successful history of recruiting and retaining healthcare personnel and management personnel. The estimates set forth in its CON application for these persons were reasonable and conservative. Salaries and benefits for healthcare personnel and management personnel should be within the estimated provisions set forth in the application. Although there is a nationwide shortage of nursing personnel and physicians in certain specialties, St. Joseph's has demonstrated it has a track record of staffing its facility to meet appropriate standards and provide quality care. There is no reason to presume it will not be similarly successful at the satellite facility. St. Joseph's has also demonstrated it has the financial ability to construct and operate the proposed satellite hospital. The occupancy rates projected for the new hospital will produce a revenue adequate to make the hospital financially feasible. Further, if patients who reside closer to the satellite facility use it instead of the main St. Joseph Hospital, a lower census at the main hospital will not adversely impact the financial strength of the organization. There will be adequate growth in the healthcare market for this PSA to support the new facility as well as the existing providers. It must be noted, however, that construction costs for the satellite hospital will exceed the amounts disclosed by the CON application. Some of the increases in cost are significant. For example, the estimate for the earthwork necessary for site preparation has risen from $417,440 to $1,159,296. Additionally, most of the unit prices for construction have gone up dramatically in the past couple of years. Hurricanes and the resulting increased standards for building codes have also driven construction costs higher. More stringent storm water provisions have resulted in higher construction costs. For this project it is estimated the storm water expense will be $500,000 instead of the original $287,000 proposed by the CON application. In total these increases are remarkable. They may also signal why development in AHCA's District 6/Subdistrict 1 has slowed since the CON application was filed. Regardless, St. Joseph's should have the financial strength to construct and operate the project. Section 408.035(5), Florida Statutes (2007), specifies that the Agency must evaluate the extent to which the proposed services will enhance access to health care for residents of the service district. In the findings reached in this regard, the criteria set forth in Administrative Code Rule 59C-1.030(2) have been fully considered. Those provisions are: (2) Health Care Access Criteria. The need that the population served or to be served has for the health or hospice services proposed to be offered or changed, and the extent to which all residents of the district, and in particular low income persons, racial and ethnic minorities, women, handicapped persons, other underserved groups and the elderly, are likely to have access to those services. The extent to which that need will be met adequately under a proposed reduction, elimination or relocation of a service, under a proposed substantial change in admissions policies or practices, or by alternative arrangements, and the effect of the proposed change on the ability of members of medically underserved groups which have traditionally experienced difficulties in obtaining equal access to health services to obtain needed health care. The contribution of the proposed service in meeting the health needs of members of such medically underserved groups, particularly those needs identified in the applicable local health plan and State health plan as deserving of priority. In determining the extent to which a proposed service will be accessible, the following will be considered: The extent to which medically underserved individuals currently use the applicant’s services, as a proportion of the medically underserved population in the applicant’s proposed service area(s), and the extent to which medically underserved individuals are expected to use the proposed services, if approved; The performance of the applicant in meeting any applicable Federal regulations requiring uncompensated care, community service, or access by minorities and handicapped persons to programs receiving Federal financial assistance, including the existence of any civil rights access complaints against the applicant; The extent to which Medicare, Medicaid and medically indigent patients are served by the applicant; and The extent to which the applicant offers a range of means by which a person will have access to its services. In any case where it is determined that an approved project does not satisfy the criteria specified in paragraphs (a) through (d), the agency may, if it approves the application, impose the condition that the applicant must take affirmative steps to meet those criteria. In evaluating the accessibility of a proposed project, the accessibility of the current facility as a whole must be taken into consideration. If the proposed project is disapproved because it fails to meet the need and access criteria specified herein, the Department will so state in its written findings. AHCA does not require a CON applicant to demonstrate that the existing acute care providers within the PSA are failing in order to approve a satellite hospital. Also, AHCA does not have a travel time standard with respect to the provision of acute care hospital services. In other words, there is no set geographical distance or travel time that dictates when a satellite hospital would be appropriate or inappropriate. In fact, AHCA has approved satellite hospitals when residents of the PSA live within 20 minutes of an existing hospital. As a practical matter this means that travel time or distance do not dictate whether a satellite should be approved based upon access. With regard to access to emergency services, however, AHCA does consider patient convenience. In this case the proposed satellite hospital will provide a convenience to residents of southeastern Hillsborough County in terms of access to an additional emergency department. Further, physicians serving the growing population will have the convenience of admitting patients closer to their residences. Medical and surgical opportunities at closer locations is also a convenience to the families of patients because they do not have to travel farther distances to visit the patient. Patients and the families of patients seeking obstetrical services will also have the convenience of the satellite hospital. Patients who would not benefit from the convenience of the proposed satellite hospital would be those requiring tertiary health services. Florida Administrative Code Rule 59C- 1.002(41) defines such services as: (41) Tertiary health service means 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, organ transplantation, specialty burn units, 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. In terms of tertiary health services, residents of AHCA District 6/Subdistrict 1 will continue to use the existing providers who offer those services. The approval of the St. Joseph satellite will not adversely affect the tertiary providers in AHCA District 6/Subdistrict 1 in terms of their ability to continue to provide those services. The new satellite will not compete for those services. Tampa General has a unique opportunity to provide tertiary services and will continue to be a strong candidate for any patient in the PSA requiring such services. As a teaching hospital and major NICU and trauma center, Tampa General offers specialties that will not be available at the satellite hospital. If non-tertiary patients elect to use the satellite hospital, Tampa General should not be adversely affected. Tampa General has performed well financially of late and its revenues have exceeded its past projections. With the added conveniences of its expanded and improved facilities it will continue to play a significant roll in the delivery of quality health care to the residents of the greater Tampa area. Section 408.035(6), Florida Statutes (2007) provides that the financial feasibility of the proposal both in the immediate and long-term be assessed in order to approve a CON application. In this case, as previously indicated, the utilizations expected for the new satellite hospital should adequately assure the financial feasibility of the project both in the immediate and long-term time frames. Population growth, a growing older population, and technologies that improve the delivery of healthcare will contribute to make the project successful. The satellite hospital will afford PSA residents a meaningful option in choosing healthcare and will not give any one provider an unreasonable or dominant position in the market. Section 408.035(7), Florida Statutes (2007) specifies that the extent to which the proposal will foster competition that promotes quality and cost-effectiveness must be addressed. AHCA's District 6/Subdistrict 1 enjoys a varied range of healthcare providers. From the teaching hospital at Tampa General to the community hospital at South Bay, all demonstrate strong financial stability and utilization. A new satellite hospital will promote continued quality and cost-effectiveness. As a member of the BayCare group the satellite will benefit from the economies of its group and provide the residents of its PSA with quality care. Physicians will have another option for admissions and convenience. Section 408.035(8), Florida Statutes (2007), notes that the costs and methods of the proposed construction, including the costs and methods of energy provision and the availability of alternative, less costly, or more effective methods of construction should be reviewed. The methodology used to compute the construction costs associated with this project were reasonable and accurate at the time prepared. The costs, however, are not accurate in that most have gone up appreciably since the filing of the CON application. No more effective method of construction has been proposed but the financial soundness of the proposal should cover the increased costs associated with the construction of the project. The delays in resolving this case have worked to disadvantage the Applicant in this regard. Unforeseeable acts of nature, limitations of building supplies, and increases inherent with the passage of time will make this project more costly than St. Joseph's envisioned when it filed the CON application. Further, it would be imprudent to disregard the common knowledge that oil prices have escalated while interest rates have dropped. These factors may also impact the project's cost. Section 408.035(9), Florida Statutes (2007), provides that the applicant's past and proposed provision of health care services to Medicaid patients and the medically indigent should be weighed in consideration of the proposal. St. Joseph's has a track record of providing health care services to Medicaid patients and the medically indigent without consideration of any patient's ability to pay. The satellite hospital would be expected to continue this tradition. Moreover, as a provision of its CON application, St. Joseph's has represented it will provide 12.5 percent of its patient days to Medicaid/Medicaid HMO/Charity/Indigent patients. 57 Section 408.035(10), Florida Statutes, relates to nursing home beds and is not at issue in this proceeding. The Opposition The SAAR set forth the Agency's rationale for the proposed denial of the CON application. The SAAR acknowledged that the proposal had received 633 letters of support (80 from physicians, 365 from St. Joseph employees, and 191 from members of the community); that funding for the project would be available; that the short-term position, long-term position, capital requirements, and staffing for the proposal were adequate; that the project was financially feasible if the Applicant meets its projected occupancy levels; that the project would have a marginally positive effect on competition to promote quality and cost-effectiveness; and that the construction schedule "seems to be reasonable" for the project. Notably in opposition to the CON application, the SAAR represented that: It is not clear that projected population growth for this area will outpace the ability of subdistrict facilities to add beds to accommodate population growth. The subdistrict's most recent average utilization rate was 63.40 percent, and an additional facility has already been approved for this applicant in this county for the purpose of handling forecasted growth. Growth projected for females aged 15-44 is not significantly higher for the county than for the district or state, and it is not demonstrated that need exists for obstetric services in the subdistrict. The foregoing analysis did not credit the projected population growth for the PSA applicable to this proposal heavily. The population growth expected for the PSA will support the utilization necessary for the proposed project. Applying the Agency's assessment, all existing hospital providers could add beds to meet "need" for a Subdistrict and thereby eliminate the approval of any satellite community facility that would address local concerns. Also, South Bay has conceded it will not add beds at its location. Additionally, the SAAR stated: While both South Bay Hospital and Brandon Regional Hospital have occupancy rates such that the introduction of a competing facility would not likely inhibit their abilities to maintain operations, the same cannot be stated for Tampa General Hospital, the only designated Disproportionate Share Hospital in this subdistrict. Any impact on Tampa General Hospital as a result of the proposed project would likely be negative, limiting Tampa General's ability to offset its Medicaid and charity care services. The applicant facility does not currently have a significant presence in the proposed market, and would have to gain market share in this PSA in order to meet its projected occupancy levels. Much of the market share gained by the applicant with the proposed facility would likely be at the expense of existing facilities in this area, most notably Tampa General due to its lower occupancy level and higher Medicaid and charity care provisions. In reaching its decision, the Agency has elected to protect Tampa General from any negative impact that the proposed satellite hospital might inflict. Tampa General has invested $300 million in improvements. It is a stand-alone, single venue hospital that has not joined any group or integrated system. It relies on its utilization levels, management skill and economies of practice to remain solvent. Tampa General considers itself a unique provider that should be protected from the financial risks inherent in increased competition. It is the largest provider of services to indigent patients in AHCA District 6/Subdistrict. Brandon opposes the proposed satellite hospital in part because it, too, has expanded its facility and does not believe additional beds are needed in AHCA District 6/Subdistrict 1. Nevertheless when a related facility sought to establish a satellite near the St. Joseph's site, Brandon supported the project. Brandon provides excellent quality of care and has a strong physician supported system. It will not be adversely affected in the long run by the addition of a satellite hospital in St. Joseph's PSA. Similarly, South Bay opposes the project. South Bay will not expand and does not provide obstetric services. It has had difficulty staffing its facility and believes the addition of another competitor will exacerbate the problem. Nevertheless, South Bay has a strong utilization level, a track record of financial strength, and will not likely be adversely impacted by the St. Joseph satellite. The opponents maintain that enhanced access for residents of the PSA does not justify the establishment of a new satellite hospital since the residents there already have good access to acute care services.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a Final Order be entered by the Agency for Health Care Administration that approves CON Application No. 9833 with the conditions noted. DONE AND ENTERED this 13th day of May, 2008, in Tallahassee, Leon County, Florida. J. D. PARRISH Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 13th day of May, 2008. COPIES FURNISHED: Richard J. Shoop, Agency Clerk Agency for Health Care Administration 2727 Mahan Drive, Mail Station 3 Tallahassee, Florida 32308 Craig H. Smith, General Counsel Agency for Health Care Administration Fort Knox Building, Suite 3431 Tallahassee, Florida 32308 Holly Benson, Secretary Agency for Health Care Administration Fort Knox Building, Suite 3116 2727 Mahan Drive Tallahassee, Florida 32308 Stephen A. Ecenia, Esquire Richard M. Ellis, Esquire Rutledge, Ecenia, Purnell & Hoffman, P. A. 215 South Monroe Street, Suite 420 Post Office Box 551 Tallahassee, Florida 32304-0551 Robert A. Weiss, Esquire Karen A. Putnal, Esquire Parker, Hudson, Rainer & Dobbs, LLP The Perkins House, Suite 200 118 North Gadsden Street Tallahassee, Florida 32301 Elizabeth McArthur, Esquire Jeffrey L. Frehn, Esquire Radey, Thomas, Yon & Clark, P.A. 301 South Bronough Street, Suite 200 Post Office Box 10967 Tallahassee, Florida 32301 Karin M. Byrne, Esquire Agency for Health Care Administration 2727 Mahan Drive, Building 3 Mail Station 3 Tallahassee, Florida 32308
The Issue Bethesda Healthcare Systems, Inc., filed Certificate of Need Application No. 9838 with the Agency for Health Care Administration. The application seeks authority to establish an 80-bed acute care satellite hospital in the West Boynton area of south Palm Beach County. The issue in this case is whether the Agency should approve the application.
Findings Of Fact District, Subdistrict, Locations The site for WBCH (or the "Proposed Hospital") is on the northeast corner of the intersection of Boynton Beach Boulevard and S.R. 7 (a/k/a "U.S. Highway 441"), approximately two miles west of the Florida Turnpike in an unincorporated area of Palm Beach County referred to by Bethesda as the West Boynton area. District 9, composed of Indian River, Okeechobee, St. Lucie, Martin, and Palm Beach Counties, is one of 11 health service planning districts in Florida. See § 408.032(5), Fla. Stat. Subdistrict 9-5 (the "Subdistrict") consists of the southern portion of Palm Beach County as more particularly described by Florida Administrative Code Rule 59C-2.100(3)(i)5. The Subdistrict includes the West Boynton Beach area. The inhabitable geographic area of the Subdistrict is bordered by Highway 98 on the North, the Atlantic Ocean on the East, the Palm Beach/Broward County Line on the South, and the Loxahatchee National Wildlife Refuge (the "Wildlife Refuge") on the West. It has three major and more or less parallel north- south transportation arteries: 1-95, the easternmost of the three, close to the state's east coast; Florida's Turnpike, the most central artery; and U.S. Highway 441 (a/k/a State Road 7 or "SR 7"), the westernmost of the three arteries, not far from the Everglades. The Subdistrict is divided roughly in half by Boynton Beach Boulevard, which runs east-west from Route 1 on the east to SR 7 on the west. The Subdistrict contains six hospitals: West Boca Medical Center, Boca Raton Community Hospital, Delray Medical Center, BMH, JFK Medical Center, and WRMC. Four of the 6 hospitals, JFK, BMH, Delray Medical Center, and Boca Raton Community Hospital, are arrayed north to south in proximity to the I-95 corridor. Two sit east of the corridor, Boca Raton and BMH; the other two are west of the corridor, JFK and Delray. The remaining two hospitals in the Subdistrict, WRMC and West Boca Medical Center are each located along or close to SR 7. The most northerly-situated of the six hospitals, WRMC, is 8.47 miles north of Boynton Beach Boulevard; West Boca Medical Center, the most southerly and at about the same latitude as Boca Raton Community Hospital, is located 12 miles south of the Boulevard. Of the six Subdistrict hospitals two, Boca Raton Community Hospital and West Boca Medical Center, are not participants in the proceeding. The two are well south of Proposed Hospital's site, at a distance 25% or so farther from the proposed site than any of the four Subdistrict hospitals that are participating in this proceeding. If connected on a map by lines drawn from Delray to BMH, then from BMH to JFK, then from JFK to Wellington, the four participant hospitals (the applicant and the three intervenors), are arrayed in a crescent stretching from south to north. The crescent just about parallels the bend along the eastern boundary of the Wildlife Refuge. The southern tip of the crescent is at Delray Medical Center; heading north, BMH, east of the interstate is next. From BMH, the crescent curves westward as it extends north toward JFK. Its northern tip is at WRMC, well west of JFK. The site of the proposed project is not much east of the Wildlife Refuge, and at a point almost centered in relation to the four determinant locations of the crescent. Put another way, as the crow flies, the proposed site is generally equidistant from Delray, BMH, and JFK (11 to 12 miles) and slightly closer to WRMC (roughly 9 miles). Parties The Bethesda Healthcare System and its Facilities Bethesda Bethesda, a Florida nonprofit corporation, operates a local health care system in an area of south Palm Beach County it refers to as the "Boynton Area" because of its proximity to incorporated Boynton Beach. Its long-standing mission as a community-based organization is to provide quality health care services to all the patients it serves, regardless of ability to pay. Bethesda commits its earnings to operations and to reinvestment into new and expanded health care services and facilities for the Boynton area community. The Bethesda System includes BMH, Bethesda Health City, Inc., Bethesda Hospital Foundation, Inc., and other affiliated local entities that help advance Bethesda's mission. Bethesda is governed by local board members who are residents of its service area and are actively involved in the community. Bethesda Memorial Hospital BMH is a general acute care hospital located in Boynton Beach near the Atlantic coast, east of Interstate 95. Opened in 1959 as the first hospital in south Palm Beach County, BMH was originally established as a public hospital under the ownership and taxpayer support of the Southeastern Palm Beach County Hospital District, a public taxing district entity. In 1984, BMH was re-organized as a private nonprofit hospital under section 501(c)(3) of the Internal Revenue Code. In 1989, a county referendum replaced the hospital tax district with a county-wide healthcare district. BMH, therefore, no longer has any power to levy taxes; it doesn't receive any "tax revenues that aren't eligible to every other hospital in Palm Beach County from the existing healthcare district." Tr. 77. BMH currently has 390 licensed beds, including 347 acute care medical-surgical (“med-surg”) beds; a 15-bed Level II and Level III neonatal intensive care unit (“NICU”); and a 28- bed comprehensive medical rehabilitation ("CMR") unit, which opened in October 2005. BMH offers a wide variety of general inpatient med-surg services, an obstetrics ("OB") and perinatal program, and pediatric services. BMH offers numerous specialized adult services such as a comprehensive cancer program; a stroke center; a CMR unit; a comprehensive array of cardiology services, including diagnostic cardiac catheterization; a vascular institute; a full range of orthopedic services; and interventional radiology services, including neuroradiology. BMH also provides a host of hospital outpatient services, and it operates an active emergency department ("ED"). Bethesda has obtained CON approval to establish an interventional cardiology program (e.g., open heart surgery ["OHS"], angioplasty, and stents) at BMH, which is scheduled to open in late 2007. BHS also has CON exemptions to add eight cardiovascular ICU beds in connection with the interventional cardiology program and three NICU Level III beds, which will increase its total licensed capacity to 401 beds. Bethesda Health City In mid-1995, Bethesda opened Bethesda Health City, an ambulatory care facility in the West Boynton area, located south of the intersection of Hagen Ranch Road and Boynton Beach Boulevard, just east of the Florida Turnpike (the "Turnpike"). Population growth had begun to expand westward in Palm Beach County. The opening of Bethesda Health City followed Bethesda's perception of a need for health care services in the western unincorporated Boynton area. At the time Bethesda Health City opened, the surrounding West Boynton area was primarily agricultural. A nearby elementary school that served the children of migrant farmworkers was the only development in the area. Today, the area surrounding Bethesda Health City east of the Turnpike, like much of West Boynton, is undergoing significant commercial and residential development. At the time of hearing, a Super Target Store had just opened on the corner of Boynton Beach Boulevard and Hagen Ranch Road. A medical office building in the vicinity of Bethesda Health City was constructed in the last two or three years which is true of much of the nearby construction. The area is expected to continue to grow at a rapid pace as evidenced by new, large, project approvals that have taken place over the last two to three years, as well. Bethesda Health City offers certain outpatient services, such as outpatient imaging, radiation therapy, wound care, and physical therapy. Bethesda Health City also is the site of around 20 physicians' offices. All 135,000 square feet of existing space at Bethesda Health City currently is being utilized by Bethesda or is under lease to other health care providers, and Bethesda plans to open an additional 40,000 square feet of space on the remaining available land over the next year. Bethesda has about a 10% ownership interest in a limited liability company ("LLC") that operates an ambulatory surgery center at Bethesda Health City. The Proposed West Boynton Community Hospital With the orientation of the West Boynton Area of south Palm Beach County in mind, Bethesda purchased a site for the Proposed Hospital. The site is large enough to allow for the development of medical offices and ancillary facilities on the campus of WBCH. If approved and built, WBCH will include 68 med-surg beds and 12 critical care beds, all in private rooms, and an emergency department ("ED") with 12 treatment bays and an additional 6 observation beds. It will have an integrated operating room ("OR") suite for both inpatient and outpatient surgery services. WBCH will provide the same scope of general medical/surgical inpatient, outpatient, and emergency acute care services that are currently offered at BMH, including stroke, oncology, and related clinical research programs, with the exception of OB and NICU services, diagnostic cardiac catheterization, and radiation therapy. Bethesda plans to transfer 80 beds from BMH to WBCH. The transfer will enable BMH to convert its semi-private rooms to private rooms. It will not solve BMH's problem with overcrowding in its Emergency Department ("ED") but it will aid in relieving some of the pressure on the Emergency Room ("ER") and staff. The decompression will result from choice exercised by Bethesda emergency patients in the WBCH service area. It is reasonable to assume that those who reside closer to the WBCH ED than other Subdistrict EDs will typically choose WBCH over other facilities for the sake of convenience and in hope of receiving necessary treatment more quickly. AHCA The Agency is responsible for the administration of the CON program in Florida, including the evaluation of CON applications. See § 408.034, Fla. Stat. The Agency issued the SAAR in this case. Signed by AHCA's CON Bureau Chief, the SAAR contains the Agency's preliminary decision to approve the application, a decision AHCA has supported throughout the proceeding. WRMC Wellington Regional Medical Center is a full service 143-bed acute care hospital (133 acute care and 10 NICU level II beds) located at the intersection of State Road 7 and Forest Hill Boulevard. The Hospital was established in 1986. WRMC has over 470 physicians on its medical staff. WRMC provides all medical surgical services, including emergency medicine, required of and traditionally associated with a full service acute care hospital. WRMC offers additional specialized programs including obstetrics, NICU level II (with approval for NICU level III), specialized wound care, outpatient diagnostics and a Cancer Center. The full service Cancer Center at WRMC was established 15 years ago and has evolved to be the technological equivalent of some of the major cancer centers in Florida and nationally. The Center has advanced IRMT linear accelerators that pinpoint different types of cancers and equipment to provide high dose radiation (HDR). The Center provides 3D conformal configuration for tumors and is also installing Brian LAB, an advanced cancer therapy treatment. The Center is available and accessible to patients requiring cancer treatment in all its forms. The Outpatient Diagnostic Center at WRMC is user friendly. Opened in 2001 at a cost of $4.5 million, the Diagnostic Center is on the hospital campus but physically separate from the hospital. State of the art diagnostic equipment is tied to a PACS, which lets a patient's physician anywhere in the world view digital images of the patient via the internet. In the filmless environment of PACS, the patient receives a convenient CD ROM of their images. WRMC has a dedicated wound care program. The medical component consists of physicians and nurses who specialize in the debridement and treatment of difficult to heal wounds. The second component utilizes three hyperbaric chambers, which create atmospheres of 100% pressurized oxygen to expedite the wound healing. WRMC has a bariatric program for the management of morbid obesity. A specialized component of the program is gastric bypass surgery. The program targets complications that result from morbid obesity, high blood pressure and diabetes. JFK JFK Medical Center is an acute care hospital located on Congress Avenue in Palm Beach County. JFK operated as a not- for-profit hospital for almost 30 years before it was acquired by HCA in 1996 for approximately $251 million. The purchase price paid by HCA for JFK was used to pay off the hospital's debt and the remaining approximately $121 million was used to create the Quantum Foundation which funds a variety of health related projects in the area. In the wake of the acquisition, HCA has invested substantial amounts of money to upgrade JFK. The upgrades include a 40,000 square foot cancer facility, major plant and equipment improvements and significant expansions of the cardiac center. JFK has built three new cardiac catheterization labs, a new recovery area, an electro-physiology lab and two parking garages. JFK added 36 beds in early 2000 through a two story expansion and then completed a $76 million, five-story expansion in 2003 that tripled the size of the emergency room, added new ICUs and added 36 ICU beds. Since the acquisition by HCA, the exterior of the hospital has been upgraded and new equipment, including new chillers and boilers, has been added. The community image of the hospital and the morale of its employees have significantly improved since its acquisition by HCA. JFK currently has 424 adult acute care beds. JFK is the planning process to add 36 additional beds by building out shelled in space on the fifth floor of the recently constructed patient tower. This build-out will bring JFK's bed compliment up to 460. JFK has the ability to expand further by adding another 36 beds by constructing two floors to the northwest tower which was engineered and built to hold the additional two floors. In sum, JFK has the ability to add 72 beds to its existing campus. After that, JFK could also expand by purchasing property contiguous to its existing parking garage and moving certain administrative services from the existing hospital space and converting that space to hospital beds. JFK has received accreditation with commendation by JCAHO. In order to be a member of the JFK medical staff, a physician must achieve and maintain Board certification in his or her specialty area. JFK is in the top ten hospitals in the nation for working mothers. JFK accepts all patients without regard to their ability to pay. In 2005, JFK provided approximately $90 million in uncompensated care. JFK's focus is primarily on orthopedics, cancer, cardiac services, neurosciences and internal medicine. JFK, as a complex facility committed to offering high quality services, has kept up with rapid advances in medical technology, particularly in the areas of cardiac and bariatric services. JFK is also a center of medical excellence with high quality services in neurosurgery and multiple areas of general vascular surgery. In order to keep up with the rapid changes in cardiology JFK has made significant investments and commitments. Since 1987, it has installed three cardiovascular laboratories and replaced the equipment in them once. It has developed an electrophysiological program with two electrophysiological suites. An active participant in some of the recent, major innovations in cardiac care, JFK's cardiac program has been the busiest in Palm Beach County for many years. It is unique in that all the doctors associated with the cardiac program are hospital-based; none have a private practice. There are three open-heart surgical suites with seven or so cardiovascular surgeons on staff. There are five interventional cardiologists among 30-board certified clinical cardiologists and 5 electrophysiologists. Each has a volume of work that exceeds the average volume of physicians in Palm Beach County. The success of the cardiac program has enabled JFK to develop a number of other programs that have enhanced the level of sophistication of medical services in South Palm Beach County. JFK was recently certified as a chest pain center by a national accrediting organization that employs rigorous criteria for certification. In the certification process, emergency management services in Palm Beach County were praised by the organization for bypassing local hospitals to go to JFK as a primary angioplasty site, a practice that is gaining hold in Florida, in general. JFK has also established a vascular institute which utilizes a team approach with three different disciplines coming together: interventional radiology, cardiology, and vascular surgery. The ability to put together an effective team for this type of sophisticated approach is dependent upon the size of the hospital. JFK is investing in advanced technology in order to enhance its vascular service line. It is building two vascular suites "to do the same kind of stenting and intervention to . . . patients, but not necessarily in their heart, in the rest of the blood vessels in their body." Tr. 3750. In addition, at the time of hearing, JFK was in the process of implementing procedures that employ a gamma knife, a highly sophisticated radio-surgical tool for the treatment of brain and spine lesions. The use of a gamma knife under the direction of a neurosurgeons with the assistance of a radiologist or radiation oncologist minimizes the amount of tissue to be removed in lesion surgery. The procedure has multiple benefits including minimization of strokes. Most hospitals do not have access to gamma knives which cost in excess of $4 million. JFK has made other commitments that will enhance the level of services that are being delivered to residents of Palm Beach County. For example, JFK has made commitments to buy state-of-the-art equipment for performing more complex neuro- interventional procedures to be conducted by James Jaffe, M.D., an interventional neuro-radiologist who practices at JFK and who is one of the few interventional neuro-radiologists practicing in all of Florida. JFK is a JCAHO-certified stroke center, having met the rigid qualifications that only a limited number of hospitals nationwide and few hospitals in the Palm Beach area have met. Accredited by JCAHO in January 2006 as a primary stroke center, JFK hopes to become a comprehensive stroke center so designated by the state. To do so will require meeting criteria that JFK does not yet meet. But its intention to meet them is serious. At the time of hearing, JFK had plans to meet with its stroke team to work through the steps required to achieve certification to ensure the critical components necessary for the certification are in place prior to seeking it. Most clearly indicative of the seriousness of its intentions is the presence of Dr. Jaffe in the radiology group on staff to JFK. The full- time presence at a facility of an interventional neuro- radiologist is among the requirements for designation as a comprehensive stroke center by the state. Delray The ultimate parent company of Delray is Tenet Healthcare, which owns other hospitals throughout the country. Tr. at 4743. Tenet owns four acute-care hospitals in Palm Beach County in addition to Delray: West Boca Medical Center, Good Samaritan, St. Mary’s, and Palm Beach Gardens hospitals. Each hospital is its own corporation and has its own local governing board that, among other things, is responsible for ensuring the quality of care in the hospital, credentialing of all health professionals, and approving appointments to the medical staff, as well as clinical policies, procedures, and protocols for patient care. Delray is a 403-bed, for-profit hospital in Delray Beach in southern Palm Beach County. Located in zip code 33484, near the eastern boundary of zip code 33446, one of the six zip codes designated as the service area of the proposed WBCH, Delray is around 2.5 miles south of Atlantic Boulevard. Delray opened in 1982. It is accredited by JCAHO and recently received accreditation as a stroke center. Delray provides tertiary-level care. It is also one of the two state and county designated trauma centers in Palm Beach County. St. Mary's (another Tenet hospital), located in West Palm Beach, serves the northern part of the county, and Delray the southern part, from the Broward County line south of Delray to Southern Boulevard north of the hospital. As a Level II Trauma Center, Delray must meet certain requirements that relate to the efficiency and speed with which advanced trauma care can be delivered to trauma victims. Among these are the ability to have neurosurgeons and orthopedic surgeons available to assist the trauma surgeon within 15 minutes of receiving a call for assistance. The trauma service offered by Delray significantly raises the intensity of the services offered at the hospital. Delray is located on a “campus” that includes the hospital building, a large outpatient diagnostic center, a wound care center, a trauma aftercare center, a 53-bed inpatient psychiatric facility known as Fair Oaks Pavilion, a CMR facility known as Pinecrest Rehabilitation Hospital, and a nursing home known as Lakeview Care Center. Delray’s 403 licensed beds include the 53 inpatient psychiatric beds at its in-patient psychiatric facility known as Fair Oaks Pavilion ("Fair Oaks"). The remaining 350 acute care beds consist of 298 medical-surgical beds and 52 critical care beds that are located throughout the hospital in various departments. Specifically, there is a 14-bed trauma ICU, 8-bed neurosurgical ICU, 8-bed coronary care unit (“CCU”), 15-bed surgical ICU, and a 7-bed medical ICU. All of the ICU beds are private, and Delray has 102 private beds in total. The rest of its beds are semi-private. Delray recognizes that "[p]atient preferences seem to be moving more toward private rooms," tr. 4760, but the hospital's semi- private rooms have not caused substantial operational difficulties for Delray. Delray is a highly-utilized facility, as it was at the time of Bethesda I. It recently converted a 42-bed unit to telemetry beds because of the heightened demand for such beds during the peak “season” in South Florida (winter months), and to lessen the instances where patients are held in the ER waiting for a bed. These beds reduce the time between when patients are admitted to the hospital and when they are actually placed in an inpatient bed. Delray also added 31 acute care med-surg beds (also referred to as "surge ortho," beds at hearing, see tr. 4808), in December 2005 in anticipation of that season’s activity. With the addition of the 31 beds, occupancy rates did not rise during the 2005-2006 winter season. Although it has the ability to add more beds, Delray has no current plans to do so. It is observing a number of market forces that could reduce the need for Delray beds in the near term, such as the opening of the interventional cardiology and open heart surgery programs at BMH and Boca Raton Community Hospital. Delray also anticipates, similar to JFK, that its census could be affected should Boca Raton Community Hospital follow through on its announcement that it will build a 500-bed teaching hospital on the campus of Florida Atlantic University. The hospital would add 100 beds to Boca Raton's inventory. Whatever the effect of these market forces, Delray has the ability to expand further and add more beds. It has a site plan approved by local government for 616 beds on its campus as it did at the time of Bethesda I. The campus includes the hospital building with 350 beds, Fair Oaks and its 53 psychiatric beds and a 90-bed comprehensive medical rehabilitation hospital known as Pinecrest Rehabilitation Hospital for a total of 502 beds. Some beds that did not exist at the time of Bethesda I (although recognized as likely at the time to be added soon) have since been added, such as the 31 med surg beds added in December 2005. Delray is also completing construction on a new central energy plant, and construction is beginning on a new emergency department that should be completed in a year and a half. The new emergency department will increase the number of ER treatment rooms at Delray from 24 to 36, and will have 3 distinct trauma rooms in it. In addition, Delray has recently added two major imaging instruments in its radiology department and a new 64- slice CT scanner, and is planning to add a new MRI unit in an expanded area constructed in conjunction with the new ER. The radiology department is in the process of implementing the “PACS” system. Instead of film, it uses digital images that can be emailed, remotely accessed and viewed, and electronically stored. This technology allows for more prompt diagnoses by doctors and efficient use of time and space. Delray has plans for renovations in its pharmacy, remodeling its regency unit, adding electrophysiology to its cardiac services, and some disaster preparedness upgrades such as hurricane windows. The services provided at Delray include general medical and surgical services, trauma, interventional cardiology, open-heart surgery, in-patient psychiatric services, orthopedics, gastroenterology, urology, neurology and neurosurgery. These services reflect the chronic illnesses and co-morbidities of its predominantly elderly patient population. Because of this patient demographic, Delray does not provide OB services. Delray has been the only provider of inpatient psychiatric services in south Palm Beach County since October 2001 when Bethesda Memorial discontinued its program. Since 1991, Delray has been one of two state- designated Level II trauma centers in Palm Beach County. This designation requires that Delray have a neurosurgeon, trauma surgeon, orthopedic surgeon, anesthesiologist, and other specialists and specialized equipment and facilities available at all times. Being a trauma center also means that Delray has a higher acuity and intensity of patient conditions that often include the most severe injuries that require long recovery times. Delray receives funding from the Palm Beach County Healthcare District to help offset a portion of the costs associated with providing trauma services. There is a cap to this funding. The cap is generally reached "at about month 9," tr. 4785, so that three months of the year are uncovered by public funding. Approximately $1-million in trauma care provided by Delray, therefore, is not covered by funding from the Healthcare District. Delray accepts all patients without regard for ability to pay. Bethesda I: The 2003 Bethesda/JFK CON Applications In the early part of 2003, Bethesda filed CON Application No. 9659. In the same batching cycle, JFK filed CON Application No. 9660. Each application sought approval to establish a satellite hospital in the West Boynton area. AHCA issued a SAAR in June of 2003. It preliminarily approved Bethesda's application and denied JFK's. An administrative hearing on the applications commenced on February 5, 2004. By Recommended Order dated September 29, 2004, the Administrative Law Judge ("ALJ") recommended denial of both the Bethesda and the JFK applications. A final order denying both applications was issued by AHCA on March 7, 2005 (the "Bethesda I Final Order"). Since the close of final hearing in this case, the final order has been affirmed by the Fourth District Court of Appeal. See Bethesda Healthcare System, Inc. v. Agency for Health Care Administration, 4th DCA Case No. 4D05-1430. Unlike Bethesda, JFK decided not to re-apply for a CON to authorize a satellite hospital in the West Boynton Area. JFK's Decision Not to Re-apply The decision not to re-apply was made by JFK's CEO despite the import of the West Boynton area "market" to JFK. This import is demonstrated, inter alia, by JFK's construction of an office building in the West Boynton area that includes a wound care center and diabetes center. The decision of JFK's CEO was supported by several factors. First, JFK accepted the decision in Bethesda I. Second, JFK's CEO concluded that a small community hospital was not the best way to meet the health care needs in the West Boynton area for a number of reasons, among them changes in the CON regulatory arena and advances in the delivery of health care services. Third, JFK established both a hospitalist program and an intensivist program to better ensure prompt and effective care for its patients, strategies that will enhance the quality of health care services in the Subdistrict. These programs are expensive. They represent a direction taken by JFK in the use of its resources for meeting the healthcare needs of its patients different from the direction it pursued in Bethesda I. With regard to changes in the CON regulatory arena, the ability of existing hospitals to add beds has been deregulated. Furthermore, opening soon in District 9 are three new open heart programs that will significantly affect other existing providers in the district, including JFK and Delray. As for advances in the delivery of health care services, programs such as the intensivist program provide great benefits to patient care and outcomes. Because there is a specially trained physician present in the ICU 24 hours a day, delay in evaluation and management of the patient is greatly reduced. Moreover, patients and their families' satisfaction levels improve. Since starting the intensivist program, the number of cardiac arrests at JFK has been cut in half and the survival rate is up to 70% from 50%. More generally, studies have shown that if a hospital has an intensivist working 24 hours a day, seven days a week, the mortality rate for intensive care unit patients goes down 40%. The cost to a hospital to implement an intensivist program is very high, but patients get better care and get out of the ICU more quickly. For an intensivist program to be effectively implemented, a hospital needs a significant volume of ICU admissions. Bethesda II Bethesda filed CON application 9838 in the first "hospital beds and facilities" batching cycle of 2005. The acute care bed need rule, Florida Administrative Code Rule 59C-1.038, was repealed effective April 21, 2005. The repeal of the rule took effect subsequent to the filing of Bethesda's application but prior to the issuance of the SAAR by AHCA and initiation of this formal administrative proceeding. The parties stipulated that the letter of intent, CON application, and omissions response were timely filed by Bethesda and processed by AHCA in compliance with the statutory technical submittal requirements. The Omissions Response was filed on April 20, 2005. Dated and received by the Agency that same day is a letter from counsel for Delray (the "Delray Letter"). Its opening paragraph states, in part, the following: Even though Bethesda Healthcare System (Bethesda) filed an incomplete "shell" application, it is clear there is no need for a new acute care hospital in Palm Beach County, including the west Boynton Beach area. It is also clear there are no historical or projected access problems in the west Boynton Beach area that have affected or are projected to affect outcomes or quality of life. Moreover, a significant number of additional acute care beds have been approved by your Agency in the past two to three years to serve current and future residents of the proposed service area. These statements are based on the Final Order by AHCA in Bethesda's March 2003 CON application (#9659) for a similar project (Case No. 03-2701). This Final Order was recently entered on March 7, 2005 and there have been no significant changes of any kind that should change AHCA's position on new hospital construction in the west Boynton area. We therefore urge AHCA to deny Bethesda's application. Delray Ex. 9, (emphasis supplied). On June 17, 2005, the Agency issued its State Agency Action Report (the "Bethesda II SAAR"). The Bethesda II SAAR recommended approval of Bethesda's application. The Bethesda II SAAR on its first page makes reference to the Delray Letter. In doing so, it summarizes the letter's content and specifically refers to the Delray Letter's synopsis of the highlights in the Bethesda I Final Order to support Delray's call for the denial of the application in Bethesda II: This letter [the Delray letter] references Bethesda's previous attempt to establish a satellite facility in West Boynton (CON #9659) and provides highlights of the Final Order [footnoted reference to DOAH Case No. 03-2701] signed by the Agency Secretary on March 7th, 2005, which details the Agency's ultimate reasoning for denying a Certificate of Need (CON) to construct a Bethesda West facility. Ex. B-1F, at 1. The Bethesda II SAAR goes on to detail the arguments advanced by Delray for denial of the application as presented in what the Bethesda II SAAR denominates "this opposition letter." See id., at 1-2. Thus the SAAR makes several thing clear about Bethesda I: 1) the drafter of the Bethesda II SAAR was aware of the Bethesda I Final Order, and; 2) Delray's view of the Bethesda I Final Order was considered by AHCA. The SAAR in Bethesda II does not make any reference to changes in material circumstances that would justify a different outcome from Bethesda I. Nor did staff have a recommendation with regard to the application. At a meeting to review the SAAR, attended by Mr. Gregg, with the Secretary of the Agency, Alan Levine, the decision was made to approve the application. Whatever findings with regard to the intra-agency workings of AHCA that could be drawn from the circumstance of the application's approval, Bethesda is provided the opportunity in this formal administrative proceedings to demonstrate that substantial changes in material circumstances have occurred since Bethesda I. Bethesda has taken advantage of the opportunity. It has shown or proven substantial changes in material circumstances to have occurred between Bethesda I and this case. Not the least of these is that Florida Administrative Code Rule 59C-1.008(2)(e), applies to this case. It did not apply in Bethesda I. In light of the changes between Bethesda I and this case, the ultimate question remains: what action should be taken on the basis of findings related to CON statutory and rule criteria applicable in the case. Need under the CON Law In General Every new hospital project in Florida must be evaluated under the statutory criteria that requires consideration of the need for the proposed project. These criteria are found in ten subsections in Section 408.035, Florida Statutes. There are rule criteria as well that must be met or factored into the balancing process that will lead to a decision in this case. In the wake of the filing of the Bethesda I application, however, there have been significant changes to the CON Law. They will be referred to in this order as they were in Bethesda I: "the 2004 CON Amendments." It was concluded in Bethesda I that the 2004 CON Amendments had no impact on either the Bethesda or JFK applications in that case. Following issuance of the Bethesda I Final Order, however, changes were made to AHCA rules as a result of the 2004 CON Amendments. As concluded in the "Conclusions of Law" section of this order, these changes have an impact on the legal framework in which CON 9838, Bethesda's current application, is to be considered. The 2004 CON Amendments: the Impact in Bethesda I, Analysis in Bethesda I and the Impact on Bethesda's Current Application On June 28, 2004, Governor Jeb Bush signed into law House Bill 329 (the "2004 CON Amendments). The bill made significant changes to the CON law by way of amendments and revisions. The 2004 CON Amendments and their effects on the Bethesda I application were specifically addressed in Bethesda I. See Wellington Regional Medical Center, Inc., d/b/a Wellington Regional Medical Center v. AHCA, Case No. 03-2701 (DOAH September 29, 2004) at 91-94; (AHCA March 11, 2005). Beginning with paragraph 340 of the Recommended Order, the ALJ conducted a legal analysis that reached the following conclusions: 1.) the 2004 CON Amendments applied to the applications of Bethesda and JFK in Bethesda I; 2.) the 2004 CON Amendment's deregulation of acute care bed additions at existing hospitals had no direct impact on either application in Bethesda I; 3.) until the Agency amends its need methodology rules to account for the statutory changes made by the 2004 CON Amendments (rule changes not undertaken or effective at the time of the issuance of the Bethesda I recommended order), the rules in existence, whether consistent with the 2004 CON Amendments or not, remained effective and, therefore, applied in Bethesda I; 4.) likewise, the legal impacts of transfers of beds from facilities within the same subdistrict or from a facility in one subdistrict to a facility in another subdistrict continued to have significance; 5.) JFK, therefore, was required to establish "not normal" circumstances to win approval of its application because it proposed the transfer of beds from one subdistrict to another (Subdistrict 9-4 to Subdistrict 9-5); 6.) In contrast, Bethesda was not required to establish "not normal" circumstances to win approval of its application because its proposed transfer of beds was intra-subdistrict, that is, within Subdistrict 9-5. The Recommended Order in Bethesda I concluded that JFK had failed to show "not normal" circumstances and therefore its application should be denied. (It was also concluded that JFK otherwise failed to satisfy the statutory and rule criteria for a CON.) With regard to Bethesda, it was concluded that it failed on balance to satisfy the statutory and rule criteria. Should AHCA or an appellate court disagree and conclude that need for a satellite hospital in the West Boynton area had been proven, the ALJ recommended that Bethesda be approved. The most significant factors in favor of the Bethesda application's superiority over JFK's were "its more reasonable utilization projections, its financial feasibility, its lower costs of construction, its greater integration of administrative services between the satellite and main hospitals, and its more realistic and attainable Medicaid and charity care commitment." The Recommended Order listed the factors in the balancing process that led to the recommendation that Bethesda's application be denied for failure to satisfy the applicable statutory and rule criteria. Weighing against marginal improvement in access for residents of the West Boynton area so that the balance was struck in favor of denial of Bethesda's application were "exacerbation of the shortage of specialty physicians for ER call coverage (§408.035(6), Fla. Stat.), the negative impact . . . of Bethesda West on the competitive balance in the West Boynton market (§408.035(9), Fla. Stat.), and the costs associated with the construction of the facility (§408.035(10), Fla. Stat.)." In its final order, AHCA accepted the recommendation that the applications of both Bethesda and JFK be denied. In doing so, AHCA rejected all of the exceptions filed by the parties, save one. The granted exception was filed by the Agency, itself. The Agency had taken exception to giving weight to the finding that "Bethesda [had] failed to demonstrate that access to acute care services will be materially approved based upon the approval of the [proposed hospital,]" Id., AHCA Final Order at 11. The Agency ruled that "[w]hile a CON applicant is required to demonstrate the extent to which the proposed services will enhance access to health care for the residents of the service district [citation omitted], the CON applicant is not required to show that the granting of its application will materially improve access to health care services." Id., at 12. In follow-up to the lone granted exception, the Agency substituted a new Conclusion of Law in Bethesda I. It includes the following language: "Bethesda failed to demonstrate . . . the extent to which the proposed services will enhance access to health care for the residents of the subdistrict." Id. The Agency's Final Order in Bethesda I, therefore, clarifies that a material improvement in access is not necessary for an applicant to receive credit under "access" criteria. An applicant need only show enhancement of access provided it demonstrates the extent to which the proposed services will enhance access to health care for the residents of the subdistrict as called for by Section 408.035(5), Florida Statutes. As concluded in the section of this order devoted to Conclusions of Law, the legal framework in which this case is decided is different from the Bethesda I legal framework. (This conclusion is enough, on its own, to defeat the applicability of the doctrine of administrative finality urged by Delray.) Florida Administrative Code Rule 59C-1.038(4)(b), in effect at the time of the Bethesda I decision, has been repealed. It provided the formula for calculating acute care bed need based on existing bed inventory and other factors in the Subdistrict as well as subsection (a) of the same rule which provided for approval under "not normal" circumstances. Since there is no methodology by rule for calculating bed need applicable to this case, this case is subject to Florida Administrative Code Rule 59C-1.008(2)(e) (the "No AHCA Need Methodology Rule"). The No AHCA Need Methodology Rule was not at issue in Bethesda I. AHCA's Position as to Need/Access Criteria The Agency recognizes that the repeal of AHCA's acute care bed need rule in the wake of the 2004 CON Amendments altered the legal framework for acute care hospital projects. Under the 2004 CON Amendments, it is no longer possible to try to predict acute care bed need based on market conditions, utilization, or looking at known and proposed bed additions. The deregulation accomplished by the 2004 CON Amendments makes the situation of hospital acute care bed need in health planning districts in Florida or their subdistricts too fluid. Acute care bed need is outside the scope of reasonable predictability. With respect to acute care services, the only reviewable projects remaining are new hospital projects. A CON advisory group was established by the Legislature in 2004 to consider whether AHCA should adopt a "decision algorithim," or a new rule for acute care projects. After a year of study, the advisory group recommended that AHCA continue with its case-by-case adjudication in the absence of a rule. In evaluating a proposed site for a new hospital, therefore, AHCA looks at the criteria in the No AHCA Bed Need Methodology Rule starting with local population data, preferably at the zip code level. AHCA also considers access to emergency services and to basic hospital services. The trend in new hospital projects has been satellite hospitals and small basic hospitals located either in suburban parts of major urban centers, or what Mr. Gregg refers to as "small towns," which are areas of very rapid growth that are more remote from urban centers. AHCA continues to look at occupancy levels of existing hospitals when evaluating a proposed site for a new hospital. However, AHCA allows applicants to define "need" as provided in rule. There is no Agency need methodology nor is there any Agency policy upon which to determine need for the hospital services proposed by Bethesda's application. Beginning with its third sentence, Florida Administrative Code Rule 59C-1.008(2)(e), therefore, governs AHCA in evaluating the arguments for "need" presented by CON applicants for satellite hospital projects since there is no agency need methodology for determining need. The pertinent part of the rule reads: If an agency need methodology does not exist for the proposed project: The agency will provide to the applicant, if one exists, any policy upon which to determine need for the proposed beds or service. The applicant is not precluded from using other methodologies to compare and contrast with the agency policy. If no agency policy exists, the applicant will be responsible for demonstrating need through a needs assessment methodology which must include, at a minimum, consideration of the following topics, except where they are inconsistent with the applicable statutory or rule criteria: Population demographics and dynamics; Availability, utilization and quality of like services in the district, subdistrict or both; Medical treatment trends; and, Market conditions. The existence of unmet need will not be based solely on the absence of a health service, health care facility, or beds in the district, subdistrict, region or proposed service area. Fla. Admin. Code R. 59C-1.008. In considering applications for satellite hospitals, AHCA weighs and balances the criteria in Florida Administrative Code Rule 59C-1.008(2), along with other applicable criteria. With respect to "Medical Treatment Trends," AHCA has identified improved access to emergency services and to basic hospital services as a "medical treatment trend." AHCA does not require a CON applicant for a satellite hospital to demonstrate that the existing acute care delivery system in the proposed service area is failing in order to obtain approval of the satellite proposal; nor does AHCA currently have a travel time standard with respect to access to acute care services. On numbers of occasions, AHCA has approved satellite hospital CON applications even when residents of the proposed satellite hospital's proposed service area live within 20 minutes of existing hospitals. In view of the recent legislative and regulatory changes, AHCA characterizes all arguments for need for new acute care hospitals as "special circumstances." There are no defined "special circumstances" that an applicant must demonstrate for approval. By "special circumstances," AHCA means whatever the information is supplied by the applicant. Typically, an applicant for a new hospital project will emphasize population growth, access to emergency services, and access improvement due to population growth as "special circumstances." See Tr. 3428- With regard to emergency services in particular, "convenience" is considered a part of access. AHCA recognizes the significant population growth in West Boynton as a fundamental change that supports Bethesda's newly proposed WBCH. As Mr. Gregg explained, with each passing batch, every passing six months, there is going to be a significant number of people entering south Palm Beach County, and more of these people will reside in the West Boynton area as opposed to the established eastern/coastal areas. The need for hospital services for this growing population becomes more significant with the passing of time. A large and rapidly growing number of people will derive various benefits from the placement of WBHC in the West Boynton area. For example, for more and more people over time it will be more convenient to access emergency room and certain basic hospital services. In its SAAR, AHCA recognized that the WBCH service area has a growing population, and, in future years, "access to existing facilities will get slower for more people." In approving this application, AHCA's focus is on planning for the future. By looking ahead of current need to need in the future AHCA's preliminary approval of WBCH is intended to respond to reasonably projected growth in the West Boynton area and in the Subdistrict. The proposed location for WBCH is a favorable one in AHCA's view because it is remote enough from existing facilities yet surrounded by a high-growth area. The ultimate judgment made by AHCA is that WBCH will do greater benefit for the people that will receive enhanced access than it will do harm to the existing providers. This judgment is founded on the WBCH's proposed location. Location, location, location Under Bethesda's application, bed inventory in the Subdistrict remains unaffected by WBCH. Bethesda's opponents make the point that Bethesda can de-license beds at BMH, transfer them to WBCH and then, at will, increase the inventory at BMH to make up for the transferred beds. With the exception of physical constraints or local regulation constraints to an increase in beds at WBCH, the point of Bethesda's opponents is correct. There is no impediment in CON law at present to an increase at will in BMH's bed inventory. Bed inventory in Bethesda I with regard to Bethesda's application was not a relevant concern because the proposed project would not increase the inventory of the Subdistrict. The same is true in Bethesda II. In addition, bed inventory in the Subdistrict is not relevant under Bethesda II for another reason. As JFK argued in Bethesda I, "the practical effect of the 'deregulation' of acute care bed additions by the 2004 CON Amendments is that the Agency's subdistrict bed inventories ... become irrelevant." Columbia/JFK Medical Center Limited Partnership, d/b/a JFK Medical Center v. Agency for Health Care Administration, (DOAH September 29, 2004) at 93. The issue in this CON proceeding then, whether by virtue of the current CON Law or Bethesda's application for intra-subdistrict action, is not how many beds should there be in the Subdistrict. Rather, the issue with regard to beds is where, in the context of need analysis, should the beds be located. This is an issue that is fundamental to all manner of planning, not just healthcare planning. As one expert health care planner put it at hearing: [G]eographic access is a foundation of planning, health planning, regional, urban planning, all the same . . . [T]he accent for example in real estate is location, location, location. It's no different here. Tr. 5132. That bed location rather than bed inventory is a concern in this proceeding does not relieve Bethesda of demonstrating need and otherwise meeting the statutory and rule criteria for its Proposed Hospital. Notwithstanding the de-regulation of the addition of new beds at existing acute care hospitals, therefore, the opening of a new acute care hospital, whether a satellite hospital or a hospital that adds beds to the health services planning area's inventory, remains subject to CON review under statutory and rule criteria. The approval of a satellite hospital (the re-location of beds in a new hospital facility) must be evaluated under designated CON statutory and rule criteria. In Bethesda I, the criteria in Florida Administrative Code Rule 59C-1.030(2) were found to be "subsumed in the statutory criteria discussed [in the order] related to the accessibility (or not) of existing acute care services in Subdistrict 9-5 and the need (or not) for new acute care beds in the West Boynton area." Bethesda I Recommended Order, at 88. The criteria of Florida Code Rule 59C-1.030(2), therefore, will be discussed together with the statutory criteria found in Sections (1), (2) and (5) of Section 408.035, Florida Statutes (the "CON Review Criteria Statute" or the "Statutory Review Criteria.") Florida Administrative Code Rule 59C-1.030(2)(a) and The Statutory Review Criteria: Subsections (1), (2) and (5). Florida Administrative Code Rule 59C-1.030 reads in part: * * * (2) Health Care Access Criteria The need that the population served or to be served has for the health . . . services proposed to be offered or changed, and the extent to which all residents of the district, and in particular low income persons, . . . ethnic minorities, . . . other underserved groups and elderly are likely to have access to those services. The extent to which that need will be met adequately under a proposed . . . relocation of a service . . . and the effect of the proposed change on the ability of members of medically underserved groups which have traditionally experienced difficulties in obtaining equal access to health services to obtain needed health care. The contribution of the proposed service in meeting the health needs of members of such medically underserved groups, particularly those needs identified in the applicable local health plan and State health plan as deserving of priority. In determining the extent to which a proposed service will be accessible, the following will be considered: The extent to which medically underserved individuals currently use the applicant's services, as a proportion of the medically underserved population in the applicant's proposed service area(s), and the extent to which medically underserved individuals are expected to use the proposed services, if approved; The performance of the applicant in meeting any applicable Federal regulations requiring uncompensated care, community service, or access by minorities and handicapped persons to programs receiving Federal financial assistance, including the existence of any civil rights access complaints against the applicant; The extent to which Medicare, Medicaid and medically indigent patients are served by the applicant; and The extent to which the applicant offers a range of means by which a person will have access to its services. In any case where it is determined that an approved project does not satisfy the criteria specified in paragraphs (a) through (d) the agency may, if it approves the application, impose the condition that the applicant must take affirmative steps to meet those criteria. (f) In evaluating the accessibility of a proposed project, the accessibility of the current facility as a whole must be taken into consideration. If the proposed project is disapproved because it fails to meet the need and access criteria specified herein, the Department will so state in its written findings. The CON Review Criteria Statute provides, in pertinent part: Review Criteria.--The agency shall determine the reviewability of applications and shall review applications for certificate-of-need determinations for health care facilities and health services in context with the following criteria: The need for the health care facilities and health services being proposed. The availability, quality of care, accessibility, and extent of utilization of existing health care facilities and health services in the service district of the applicant. * * * (5) The extent to which the proposed services will enhance access to health care for residents of the service district. Application of the statutory and rule criteria in this case requires findings of fact to be made with regard to certain health care planning concepts. Among these are "Proposed Service Areas," typically composed of a "Primary Service Area" and a "Secondary Service Area." The Proposed Service Area Primary Service Area, in General There are a number of different ways that health care planners can define a hospital's primary service area. One common way is by zip code. Frequently, health care planners include in a hospital's primary service area zip codes that account for 75% or 80% or so of the origins of patients discharged from the hospital after receiving in-patient acute care. The primary service areas selected by each of the participants in this proceeding are reasonable. WBCH'S Primary Service Area Bethesda proposes to establish WBCH in a rapidly developing unincorporated area of south Palm Beach County known as West Boynton, an area due west of the City of Boynton Beach. The site for the proposed WBCH is on the corner of SR 7 and Boynton Beach Boulevard. Boynton Beach Boulevard runs from US Highway 1 on the east at a stone's throw from the intracoastal waterway westward to the levee on the eastern boundary of the Wildlife Refuge. It is the main east/west thoroughfare serving the West Boynton area. The West Boynton area is now generally recognized in the South Palm Beach County community as roughly bounded by Lantana Road on the north; the L-30 canal on the south; the City of Boynton Beach on the east, whose western boundary is between Congress Avenue and Military Trail; and the Wildlife Refuge on the west. Lantana Road is about 4 miles north of Boynton Beach Boulevard; the L-30 canal is 2 1/2 miles south of Boynton Beach Boulevard. Military Trail is about 5 miles east of the WBCH site. The primary service area (the "PSA") for the proposed project comprises four zip codes: zip codes 33437 (the home- site zip code), 33436, 33463, and 33467. These four generally equate with the West Boynton Area. Secondary Service Area The entire proposed service area consists of six zip codes. WBCH's secondary service area ("SSA") includes zip code 33414 to the north, in the Wellington area, and zip code 33446 to the south, in unincorporated West Delray. Overlapping PSAs The four zip codes in the PSA chosen by Bethesda for WBCH are each a part of one or more primary service areas of the four hospitals that are participants in this proceeding. For example, all four zip codes that make-up the WBCH PSA could be considered as zip codes within BMH's primary service area. Two of the proposed zip codes (33426 and 33427), in fact, are among the top three zip codes (as measured by BMH discharges per zip code in 2004) from which BMH's patient's originate. The overlapping of the PSA with a BMH primary service area is not of much concern since the beds that will be housed in WBCH originate in BMH. In contrast to any overlapping between the PSAs of BMH and WBCH, the overlapping of the WBCH PSA with the primary service areas of Bethesda's competitors deserve more detailed discussion. All four zip codes in the WBCH's PSA and one of the zip codes in the proposed Secondary Service Area are part of WRMC's primary service area. Three of WRMC's top five zip codes (measured by WRMC discharges per zip code in 2004) overlap with two of the primary and one secondary service area zip codes proposed by Bethesda for the new hospital. These three overlapping zip codes alone accounted for over 33% of WRMC's acute care discharges in 2004. JFK's primary service area overlaps with WBCH's PSA to a significant extent. All four zip codes that make-up WBCH's PSA and one zip code in its secondary service area are in JFK's primary service area. These five zip codes accounted for over 33% of JFK's acute care admissions in 2004. Zip code 33467 is the zip code from which the largest number of JFK's patients originate. Delray's primary service area significantly overlaps with WBCH's PSA, as well. Three zip codes in the proposed new hospital's PSA (33463, 33436, and 33437) are in Delray's primary service area. These three were the zip codes of origin for over 32% of all acute discharges at Delray in 2004. Two of the zip codes (33436 and 33437) are among the top three zip codes from which Delray's acute care patients originate. That residents in the proposed PSA and the secondary service area of WBCH are in the primary service areas of one or more of four existing hospitals is a factor which demonstrates that West Boynton area residents, just as was found in Bethesda I, are not denied access to basic hospital services including emergency services. But there have been material changes since the Bethesda I proceeding. One set of data points that has changed is population. Current and Projected Population As found in Bethesda I, WBCH's Primary Service Area (PSA) has a significant and rapidly growing population. Development and population growth in the western portions of south Palm Beach County have been so rapid in recent years that population forecasts have failed to keep pace with the growth. Not surprisingly, therefore, recent population growth has exceeded the population projections in Bethesda I. For example, based on Claritas population estimates presented at the February 2004 hearing, the Bethesda I Recommended Order found that the 4 zip codes that make-up the WBCH PSA would have a population of 181,000 in 2007. Those projections underestimated the population growth in these four zip codes that roughly comprise the West Boynton area. The most recent Claritas release projects that the 2005 population in the PSA was 183,395. The PSA's population is projected to be 188,877 in 2006. If approved and constructed, WBCH will probably not open until 2010 or 2011, when the PSA's population is expected to grow to 216,407 residents according to Claritas projections. Further, projections of Claritas and the University of Florida's Bureau of Economic and Business Research (BEBR) show continued growth to 242,652 residents in 2015, a timing horizon that is reasonable to examine for planning purposes, given the date by when WBCH would be expected to open. Zip code 33437 in which the WBCH proposed site is located is the largest and fastest-growing area in West Boynton, with 52,455 residents in 2006, and projected populations of 61,146 in 2011, and 69,588 in 2015. The 2005 Claritas release shows a population of 50,717 in home-site zip code 33437 in 2005, whereas the 2002 Claritas projections presented at the February 2004 Hearing projected a population of less than 50,000 in 2007. The population projections for the PSA and home-site zip code 33437 for the current planning horizon (2011) far exceed the projections for the planning horizon (2007) set forth in Bethesda's 2003 Application. In that prior application, the 2007 PSA population was projected to be 180,619, and the 2007 population of 33437 was projected to be 41,147. The population of the PSA is now projected to be 216,407 in 2011, and the 2011 population of zip code 33437 is projected to be 61,146. Wellington is within the proposed service area (the PSA and the Secondary Service Area combined) selected by Bethesda for WBCH. But it is in zip code 33414, part of WBCH's Secondary Service Area. There are no hospitals in the four-zip code PSA selected by Bethesda. Few areas in Florida without a hospital have a population in excess of 60,000 residents, as projected for home-site zip Code 33437 in 2011, much less a population in excess of 200,000, as projected for the WBCH's four zip code PSA. It is not unusual for areas with populations much smaller than those projected for the WBCH PSA to support a substantially larger number of acute care hospital beds in one or more hospitals. The resident population for WBCH's entire proposed six zip code service area is projected to grow from 258,659 in 2006, to 299,712 in 2011, to 338,569 in 2015, representing a 30.9% growth in population from 2006-2015. The projected rates of population growth to 2010, and also to 2015, in both the PSA and the entire service area surpass the projected population growth rates of Palm Beach County, District 9, and the State of Florida. For the period 2006 to 2015, the expected growth rate is 30.9% for WBCH's proposed service area, while the growth rate for the same time period for Palm Beach County is expected to be 18.4% and for the State of Florida, 16.0%. Wellington Regional's home zip code, 33414, a zip code in WBCH's secondary service area, has experienced considerable growth in recent years. The trend is reasonably projected to continue. The population of zip code 33414 is projected to grow from 50,186 in 2005 to 61,828 in 2010, representing a 23.2% growth in population for that five-year period. Indeed, Wellington has been described for the period 2000 to 2010 as "the engine of growth in the western communities." Tr. 5130. While Wellington's growth is dramatic, the two zip codes in the total service area with the highest number of non- tertiary med-surg discharges are the two western-most zip codes in WBCH's PSA, i.e., 33437 and 33467. The population in each of those PSA zip codes is about the same as the population in zip code 33414, and they are also growing rapidly - - well in excess of the County average. Furthermore, the projected population of the PSA in 2011 (216,407) far exceeds the projected population of zip code 33414 in 2011 (64,156). Unlike zip code 33414, however, the PSA zip codes have no existing hospital. The health care planners for all parties in this case primarily relied upon population projections from Claritas, Inc., a national demographic data service, for projections at the zip code level. Claritas is generally viewed as the best source for zip code level analyses, and zip codes are the smallest area from which patient origin and destination data is collected by hospitals and AHCA, therefore making such data useful to health planners. Nonetheless, Claritas projections are based on the most recent decennial U.S. Census, i.e., 2000, and do not take into account data of impending population growth, such as new housing starts. Therefore, Claritas tends to understate population projections in areas such as West Boynton with recent, rapid growth. Moreover, Claritas resident population projections do not account for the many part-time residents, or "snow birds," who relocate to Palm Beach County during the winter "peak season" months. Nor do they account for undocumented immigrants who work in Palm Beach County. Residential, Commercial and School Construction and Planned Projects New Construction and Planned Projects There has been a great deal of construction activity in the last two or three years in terms of new homes, commercial projects, and schools throughout both the West Boynton PSA to be served by Bethesda's proposed WBCH facility and the Wellington area to the north surrounding Wellington Regional. Moreover, there have also been many additional large new residential projects approved and planned in the last two years for development in both West Boynton and in the West Delray area to the south. Evidence of the recent construction activity and project plans was presented through the testimony, aerial photos, and charts of Bethesda's land planning expert, Mr. Kilday; the testimony and exhibits of Bethesda's traffic engineer, Mr. Rennebaum, and of COBWRA's President, Ms. Greenberg; and the testimony of numerous community residents and physicians who live and work throughout those areas. For planning purposes, Palm Beach County uses a persons-per-household average of 2.34 persons per unit. During the February 2004 Hearing in the Bethesda I, Mr. Kilday presented general testimony that there had been many residential project approvals obtained by developers for the West Boynton area west of the Turnpike specifically in an area known as the Agricultural ("Ag") Reserve. Mr. Kilday presented only one exhibit at that prior hearing, which was a high aerial map dated January 5, 2004, prepared by the Palm Beach County Planning, Zoning & Building Division, showing an area west of Jog Road and south of Lantana Road, including the Ag Reserve (the "Ag Reserve Map"). The Ag Reserve Map was prepared on an aerial photo taken in January 2002. The Ag Reserve is an area west of the Turnpike, bounded by Clint Moore Road on the south and the Loxahatchee Conservation Area on the west, and with a northern boundary about one mile north of Boynton Beach Boulevard. Jog Road is about 1 1/2 miles east of the Turnpike, and 3 1/2 miles east of the WBCH site. Some residential projects south of Boynton Beach Boulevard had been recently approved by the County for development in the Ag Reserve as of the February 2004 hearing. For example, three of the G.L. Homes Canyon projects had "approval" dates of August 27, 2003. At the time Mr. Kilday testified in the February 2004 hearing, however, no homes had been constructed, and the Ag Reserve portion of West Boynton still "looked like an orange grove." Mr. Kilday did not present testimony in the February 2004 hearing regarding any specific development in the Wellington or West Delray areas. His focus then was on the Ag Reserve portion of West Boynton. The Ag Reserve Map used in Bethesda I did not go as far north as Wellington. In this proceeding, (Bethesda II), Mr. Kilday presented three Project Lists for West Boynton, West Delray, and Wellington, which include a count of the number of houses constructed between January 2002, and February 2005, and the number of approved or planned units remaining to be constructed for numerous large residential communities. Mr. Kilday chose January 2002 as the start of the study period because the Ag Reserve Map was the focal point for the February 2004 hearing, and it could be used to count housetops west of Jog Road, at least in West Boynton and West Delray, as of January 2002. Mr. Kilday's office already had high-altitude February 2005 aerials of the West Boynton, West Delray, and Wellington areas west of Jog Road available. Thus, he used February 2005 aerials of that entire area for a more recent count of housetops as of that date in order to demonstrate the fast pace of residential construction that had been occurring since the Bethesda I Ag Reserve Map photo was taken. The Project Lists are just a "sample" of projects with which Mr. Kilday had had personal involvement. Many more projects have been approved by the County. The Project Lists also include numerous large residential projects that were approved by, or planned and presented to, the County subsequent to the February 2004 hearing. As part of the County zoning process, developers must apply for "concurrency," meaning that, "at the time the project is built," there are adequate facilities and infrastructure to support it, as the biggest issue is traffic and roads. Applicants must state the date when their project will be built out. The County will hold an applicant to that date and will include a condition of approval that no building permits will be issued thereafter for the project. The current "assumption" is that "these roads are all going over capacity," so developers "try to get the longest build out date" they can, which is the "outside date" that "the road is scheduled to fail," meaning it has exceeded the acceptable level of service. For Mr. Kilday's most recent project (Ravello), in process at the time of final hearing, the build out date was February 2009. Mr. Kilday also presented two composite exhibits (12 photos each) of low altitude "oblique" aerial photos of several of the large residential and commercial projects that are being constructed in the West Boynton area and in Wellington which were taken on October 8, 2005. The number for each project on Mr. Kilday's Project Lists for West Boynton, West Delray, and Wellington (i.e., Exhibits B-32, B-33, B-34) corresponds to project numbers on the February 2005 high altitude aerials for those three areas (i.e., Exs. B-30E.3, B-30F.3, and B-30G.2), and to the project numbers on the low altitude aerials for West Boynton and Wellington (i.e., Exs. B-30H and B-30I). The Project Lists demonstrate that there was a substantial amount of construction activity in the West Boynton and Wellington areas between January 2002 and February 2005, and also that many large new residential projects have been approved and planned in the last two years in the West Boynton and West Delray areas. Furthermore, as Mr. Kilday pointed out, the February 2005 count of recent new home construction in the West Boynton and Wellington areas was already out of date. That was supported not only by his testimony regarding the more recent October 2005 aerials, but also by his testimony and the testimony of numerous other witnesses as to additional construction that had occurred as of the April-May 2006 final hearing. That testimony, and evidence regarding some of the newly planned residential and commercial projects and schools in the West Boynton, West Delray, and Wellington areas, are discussed further below. West Boynton Area Those familiar with the recent construction activity in the West Boynton area over the last two years describe it as "explosive" and "phenomenal," with large residential and commercial projects being constructed along every major roadway. All of the many West Boynton projects taken by Mr. Kilday's firm through the approval process in the last few years have begun construction as soon as they can pull permits. The only issue has been the time it takes to obtain all necessary development permits. At the time of hearing, there had been a significant level of construction of new homes that had not broken ground one year earlier. Planning for more projects is continuing at an intense pace. Over the past 12 months, Mr. Kilday's firm has had at least one or two West Boynton projects before the Board of County Commissioners each month for the approval process. Any vacant land in the West Boynton area, including land on Congress Avenue to the east, as well as land west of the Turnpike, is getting serious consideration for development. The residential projects in West Boynton have tended to be age-restricted communities, although some of the more recent developments such as Canyon Lakes have not been age- restricted. Construction of major residential communities in the West Boynton area west of the Turnpike began to the north, in the area north of the Ag Reserve up to Lantana Road. Project nos. 1-14 and 30 on Mr. Kilday's West Boynton area Project List are located there, and they have a total of 6,450 approved units. The largest projects in that area, Bellaggio (a/k/a Town Park), Villages of Windsor, Valencia Shores, and Venetian Isles, were approved between 1996 and 2001, but they had had little, if any, construction activity (i.e., 713 units combined) as of the January 2002 photo in the Ag Reserve Map. By February 2005, however, 4,053 units had been constructed in those four projects alone. Furthermore, there is evidence that all of the building permits for Villages of Windsor (679) were issued between 2004 and April 1, 2006, and that 379 of the building permits for Valencia Shores were not issued until 2004 and 2005. Several community residents who moved into new homes in that northwest portion of West Boynton in 2003 and 2004, testified in depositions that there has been active construction and new development of additional new homes, commercial properties, and public facilities after they arrived. Among these were Mr. Greiner, the 78-year-old president of the Bellaggio (Town Park) Residents' Association, who described in some detail the recent construction activity and new developments in the surrounding area as of the December 19, 2005, date of his deposition. See Ex. B-54 (Greiner Depo.), at 7-10, 18, 49. In addition to the new town homes and the new residential community identified by Mr. Greiner, which are not on Mr. Kilday's Project List, there is yet another new project in the area on Lantana Road to the east, i.e., Lantana Farms PUD (Project no. 4), which was approved after the February 2004 hearing. Residential development in that area is just now being extended to the western side of State Road 7, past Lantana Road. Construction of the new Super Target center at the intersection of Lantana Road and Hwy. 441, had not commenced in October of 2005. Under construction at the time of Mr. Greiner's deposition, it opened in the two months prior to the final hearing in this case. The West Boynton residential projects north of the Ag Reserve and south of Hypoluxo Road, including Valencia Shores, Verona Lakes, Melrose Park, Venetian Isles, Savannah Estates, Equus, and Palm Meadows Estates, are within three miles of the WBCH site. There are 3,346 approved units in those projects. As of February 2005, 2,961 units had already been built in those communities. In the northern-most Ag Reserve area within one mile north of Boynton Beach Boulevard and within about a mile of the WBCH site, are three large new residential developments. Countryside Meadows, approved in December 2003 for 248 units, had no construction on February 2004, and had only two models as of February 2005. By April 21, 2006, 170 building permits had been issued for that project. Amestoy AGR-PUD (640 homes) was not approved until 2006. It recently received zoning approval and plans to break ground in October. Ravello (192 homes) is going through the approval process now. The total number of approved and planned units in this northern-most Ag Reserve area is 1,082 units. In the Ag Reserve area south of Boynton Beach Boulevard and west of the Turnpike are numerous large residential communities in several stages of development. That includes G.L. Homes' Canyon Lakes (500 homes), Canyon Isles (500 homes), and Canyon Springs (500 homes) projects, which were approved for development in August 2003. Also in that same area are several projects including Lyons West AGR-PUD (943 homes), Delray Holdings (282 homes), Canyons Town Center TMD (39 town homes), and TMD Workforce Housing (54 homes), which were just approved in 2005. Another 554 homes are planned for Fogg 5, which is in the process of seeking concurrency. Thus, there are 3,372 approved and planned residential units in the West Boynton area west of the Turnpike that lies in the Ag Reserve area south of Boynton Beach Boulevard and north of the L-30 canal. All of those projects are within three miles of the WBCH site. No homes had been constructed in these projects in the Ag Reserve at the time of the February 2004 hearing. The first project to start construction, Canyon Lakes, had no residents when Mr. Rennebaum ran his travel time study from there in April 2005. Canyon Lakes (Fogg North) has built out rapidly. There were 297 units built as of February 2005, and by April 21, 2006, a total of 454 building permits had been issued. Canyon Isles (Fogg Central) had no homes as of February 2005; a few as of October 2005; and 432 building permits issued by April 21, 2006. Thirty units remain to be sold. Farther to the south, Canyon Springs (Fogg South) was an undeveloped green field in October 2005. Today, it has its infrastructure and looks like Canyon Springs looked in October 2005; deposits have been taken on the first homes. A commercial marketplace with shopping center, grocery store, restaurants, town homes, and workforce housing; a library; and an elementary school are being built near Lyons Road between the Canyon projects and Boynton Beach Boulevard. Not all the new development is west of the Turnpike. There has been recent residential and commercial construction activity and development east of the Turnpike and south of Boynton Beach Boulevard, between the Turnpike and Jog Road. Hagen Assemblage PUD (Valencia Pointe) was approved for 690 homes in 2003. It had no earthwork or units as of February 2005, but had 60-70 units and a main recreation area when Mr. Kilday testified. It has had 190 building permits issued already. Other recent nearby projects include Briella Townhomes (230 homes), approved in October 2004, and Mini- Assemblage PUD (552 homes), approved in 2005, which will be developed next to Bethesda Health City upon relocation of the old Hagen Ranch Elementary school. Tivoli Lakes (324 homes) had no construction as of January 2002. By February 2005, 88 homes had been constructed. In addition to the burgeoning residential growth surrounding Bethesda Health City, a large Super Target center opened in late 2005, at the intersection of Boynton Beach Boulevard and Hagen Ranch Road, and a medical office building has recently been built next door. At the time of the February 2004 hearing, that Super Target and the one on Lantana Road were just seeking approval, and were completely undeveloped as of April 2005. While Mr. Kilday's testimony primarily focused on new developments in the West Boynton area west of Jog Road, there are also major new developments at the eastern edge of West Boynton, such as the huge new mixed use projects along Congress Avenue, south of JFK. Renaissance Commons (1,561 units) is being constructed on the old Motorola site. Winchester Property (1,040 units) is being developed in a former cow pasture. Finally, new schools constructed recently in West Boynton already exceed planned capacity; more are under construction; and others are now planned. For example, Park Vista High School, which opened in West Boynton in 2004, was the third largest high school in Florida when it was built. Now, it is at 122% of capacity and relies on portable classrooms. In fact, many of the schools in both West Boynton and Wellington, such as Hagen Ranch Elementary, Palm Beach Central High School, Wellington High School, and Coral Reef, are above capacity due to the rapid population growth. West Delray Area In the past two years, the West Delray area has also begun to see ground breaking on huge new residential communities in the Ag Reserve area west of the Turnpike, and active construction of previously approved projects between the Turnpike and Jog Road. Those projects had been held back because of Atlantic Avenue roadway constraints which were just resolved two weeks prior to final hearing with a builder compilation of funding that allows that road to be expanded. West Delray originally began its expansion, east of the Turnpike, as a retirement-oriented community. The newer projects are a half-and-half mix of retirement and family oriented communities. Mr. Kilday's Project list for West Delray includes projects west of Jog Road with a total of 6,568 approved units, only 704 of which had been built as of January 2002. Some of the larger projects east of the Turnpike, which had no units as of January 2002, such as Valencia Falls and Valencia VII (Fischera/Valencia Palms), have had heavy construction in the last few years. Valencia Falls (706 homes) was totally built out by February 2005. Valencia VII (Fischera/Valencia Palms), which was one of the projects singled out (along with Fogg North (Canyon Lakes)) by Delray's traffic engineer as purportedly having had no construction according to the County Traffic Performance Standards, actually had 588 building permits issued in 2004 and 2005. Its 625 approved units are about built out. East and west of the Turnpike, seven large new residential communities are planned, and six of those obtained approvals in 2004 and 2005, subsequent to the February 24 hearing. The new projects west of the Turnpike include Ascot (380 homes), Ascot East (315 homes); Hyder AGR-PUD (554 homes); Dubois AGR-PUD (554 homes); and Appolonia Farms (609 homes). The other two new projects, MI Homes (477 homes) and Ansca PUB (329 homes) are just east of the Turnpike on Atlantic Boulevard. Mr. Kilday's Project List of West Delray projects between the L-30 canal and Clint Moore Road, includes projects west of the Turnpike with a total of 4,074 approved and planned units. Areas on the west of Palm Beach County are referred to as the "western communities." Among the western communities is the Wellington Area. Wellington Area Wellington Regional is located on Hwy. 441 about 4 1/3 miles north of Lantana Road. There is abundant evidence of a "boom" in construction of commercial and residential properties in the last two years in the eastern portions of the Wellington area along the Hwy. 441 corridor between West Boynton and Southern Boulevard, starting around the Lake Worth Road area to the south, and heading north up past the Wellington Green Mall, the Forest Hill Boulevard intersection, Wellington Regional, and beyond. The newer part of Wellington is filling in easterly, from the older part in the west, to State Road 7, to the Turnpike. A JFK physician who also practices at Wellington Regional and Palms West described Wellington's growth as follows: There has been a large population expansion there and development expansion . . . . [T]hat whole 441 corridor a mile on either side I'll say, from the north/south boundary that I gave you has undergone extensive development. Ex. JFK-134 (Dr. Levin Depo), at 12. A Bellagio resident, who lives in the West Boynton area just south of Lantana Road, described the development activity northward, as follows: Going north from us on 441 going up towards Wellington there are any number of developments under construction primarily residential, but there is also some commercial areas there that have started putting up signs for what's coming. Yes. Yes. That's - - it's amazing to me how much commercial construction is going on going north. At the Lake Worth Road there's already - - on the south side there's a bank, a fast food restaurant and some stores. On the other side of Lake Worth Road there's a larger commercial area that's got a Publix, a tire store and all kinds of retail shops. On the other side of 441 and Forest Hill there's a very large commercial development with a Winn Dixie store and many, many restaurants and stores. And as you go north there seems to be no end of stores and commercial going in on both sides of the road. * * * That area, that particular intersection [at Wellington Regional] is a major intersection. There are two enormous housing developments directly across the street from it, and the commercial development around the mall is just incredible. . . . They are building, in fact, virtual mini malls right next to them, and it just keeps growing and growing and growing. Ex. B-54 (Greiner Depo), at 9-10, 25. Wellington is noted for its organized youth sports leagues and schools, and its polo programs. The real estate projects are marketed to emphasize family-oriented activities. There are many new schools along the Hwy. 441 corridor in the Wellington area. When WRMC opened in 1986, there was no development in the vicinity around it. Even in 1994, Wellington Regional was still largely surrounded by agricultural fields, commonly referred-to as a cow pasture. By February 2005, significant development had taken place around Wellington Regional. Wellington Green Mall had been constructed on the south side of Forest Hill Boulevard, west of Hwy. 441. Lake Worth Road was extended farther to the west, providing access to a whole series of new residential projects located south of Wellington Green Mall. Huge residential communities such as Olympia, Village Walk of Wellington, and Buena Vista (a/k/a Buena Vida) had begun construction on the east side of Hwy. 441, across from Wellington Regional. Olympia, Buena Vista, and Village Walk of Wellington alone are approved for 4,267 units. Only one model home was constructed in Olympia as of January 2002. By February 2005, a total of 1,329 homes had been constructed in those three projects. However, as of that date, the aerials still show considerable "white sand" and "pods" without rooftops under development in those communities. By October 2005, large portions of those three projects were built out, although there is still significant "white sand" for more homes in Olympia. Mr. Kilday's Project List includes projects with 8,888 approved units in the Wellington area near Hwy. 441. In January 2002, 1,957 of the approved units had been constructed. By February 2005, 5,747 units had been constructed. No homes had been built in Palm Beach Plantation (Diamond C Ranch), Victoria Groves, or Black Diamond as of January 2002, and only six had been built in Wellington Edge. Now, however, Palm Beach Plantation has had 536 building permits issued from 2004 through April 21, 2006, and is largely built out. Victoria Groves (610 homes), Black Diamond (444 homes), and Wellington Edge (494 homes) are now totally built out. Wellington View, which had 51 homes as of February 2005, has now had 105 building permits issued. New residential projects are now being approved south from the Wellington Green Mall toward Lake Worth Road. Lanier Property (288 units) and Oakmont Estates (202 units) were approved in 2004, subsequent to the February 2004 hearing. Three new projects with 800 units have just recently, in 2006, been planned on Lake Worth Road, east of Lyons Road, which runs between Hwy. 441 and the Turnpike. Northwest of Wellington, the Callery-Judge Groves project is being planned for development on a large piece of agricultural land to include 10,000 new homes. Westward Growth of the Palm Beach County Population The populations in the areas in the western part of Palm Beach County are growing faster than those elsewhere in the county. For instance, the two western-most zip codes in the PSA, 33437 and 33467, are projected to experience 17.1% and 16.6% population growth, respectively, from 2005 to 2010, as compared to 10.7% and 14.9% growth in the two PSA zip codes to their east, i.e., 33436 and 33463, respectively. Delray's witness, Mr. Greene, presented data from the Palm Beach County Population Allocation Model, which distributes county-wide population estimates to smaller traffic analysis zones ("TAZs"). While the TAZ projections for the western-most areas of the County are substantially understated, they still demonstrate an increasing shift in the West Boynton area population base from the more eastern areas to newly developing areas west of the Turnpike. For example, the percentage of the population of zip code 33467 residing west of the Turnpike is projected to grow from 35.4% in 2004, to 38.6% in 2005, to 44.2% in 2010, and to 44.9% in 2011. Likewise, the percentage of the population of zip code 33437 that resides west of the Turnpike is projected to grow from 10.1% in 2004, to 12.4% in 2005, to 21.5% in 2010, and to 23.2% in 2011. The population growth rate west of the Turnpike is a change from evidence presented in the February 2004 hearing, which supported the finding that 89% of the West Boynton population resided east of the Turnpike. See Columbia/JFK Medical Center vs. AHCA, (DOAH Case No. 03-2829CON), September 29, 2004, Paragraph No. 105. That finding was based upon the then 2003 TAZ projections. The more recent 2005 TAZ projections now show a much higher percentage than 11% of the population is projected to live west of the Turnpike by 2010 and beyond. The population growth in the West Boynton and West Delray areas and the shift of the population to areas west of the Turnpike have been so rapid that they substantially outpace the County's TAZ projections. For example, the County's 2003 TAZ projections, which Delray presented at the prior February 2004 hearing, projected a total 2011 population for zip code 33467 of only 43,261, with 17,384 of those residents projected to be west of the Turnpike. The more current 2005 TAZ projections project a total 2011 population for zip code 33467 of 60,160, with 26,983 of those residents living west of the Turnpike. The 2003 TAZ projections used in the prior case similarly underestimated the 2011 total population of zip code 33437, and the population residing in that zip code west of the Turnpike. The County's most recent 2005 TAZ population projections, which are stated to be based on development approvals through December 2004 only, still substantially understate the actual population and the approved residential units in the western area of West Boynton and West Delray. For example, the 2005 projections for TAZs 749 and 750, which are west of the Turnpike and cover the area from Boynton Beach Boulevard south to the L-30 canal and west to Lyons Road, show zero population in 2005, and only 2,436 residents by 2010. However, the Canyon Lakes project in TAZ 749 actually had many homes built in 2005, and JFK's Dr. Dorman was already living there. Furthermore, the three Canyon projects, the two TMD projects, and Fogg 5, which are in TAZs 749 and 750, are planned for 2,147 units, and at a County average of 2.34 persons per household, are likely to have 5,024 residents by 2010. That number more than doubles the TAZ projections. Based on Mr. Kilday's testimony, there are also more new projects being processed each month. When you add the most recent TAZ projections for all four TAZs on both sides of Lyons Road between Boynton Beach Boulevard, the Turnpike, the L-30 canal, and Hwy. 441 (i.e., TAZs 748-51), the County is projecting a total population of 3,498 in 2010. Adding the Lyons West AGR-PUD and Delray Holdings projects approved in 2005, west of Lyons Road, to the projects on the east side of Lyons Road, however, there are now 3,372 units planned for TAZs 748-51. Thus, at the County average of 2.34 persons per household, it is likely that there will be 7,890 residents in those projects alone in 2010. The TAZ projections for 2010 are likely to be substantially understated for that area west of the Turnpike. In addition to the substantial likelihood that the County's TAZ projections substantially underestimate the population in the western portions of the PSA, they do not account for any of the new projects approved since 2004. Even so, a count of the most recent population projections for the TAZs that are within the area from Lantana Road (4 miles north of the site) south to Atlantic Boulevard (5 miles south of the site), and from those TAZs bordering Jog Road (3 1/2 miles from the site) westward to the Loxahatchee Reservation Area, yields a total population projection of 97,697 residents in 2011, in an area which is well within a five-mile radius of the proposed WBCH site. If the new projects approved in 2005 and 2006, which are not considered in the 2005 County Population Allocation Model, were accounted for, the projection would likely be substantially higher. Claritas projects a population of only 82,000 in 2010 within 5 miles of the WBCH site. The TAZ population projections, project a population of 97,697 in 2011 in an area with a radius that is less than 5 miles. Claritas projects a 2010 population of only 10,721 within three miles of the site. There are already a combined total of 7,800 approved and planned residential units within a three-mile radius north and south of the WBCH site, on the west side of the Turnpike alone. At the County average of 2.34 persons per household, those projects yield a likely population of at least 18,252 residents by 2010. Moreover, as the Turnpike is only two miles from the site, a three-mile radius should also count the many thousands of additional residents who live another mile to the east of the Turnpike in the Hagen Ranch Road area. For example TAZs 450, 950, and 955, which are located along Boynton Beach Boulevard within one mile east of the Turnpike, are projected by the County to have a total population of 4,410 in 2011. Claritas projects a 2010 population of only 255 residents within one mile of the site. However, there are already 1,082 homes approved and planned within about one mile north and east of the site. At the County average (2.34), it is likely that there will be 2,532 residents in those units in 2010, and that does not account for any units that may be built in the approved projects within one mile on the south side of Boynton Beach Boulevard. Claritas census tract data projects only 2,100 people by 2010 in Census Tract 77.13, which covers the large West Boynton and West Delray area, west of the Turnpike, extending from Hypoluxo Road, three miles north of Boynton Beach Boulevard, all the way south to Clint Moore Road. There are already a total of 11,784 residential units approved for the West Boynton and West Delray portions of that large west Turnpike area, and there were already thousands more people living there in 2005 than are projected by the Claritas census tract data for 2010. At the County average (2.34), it is likely that there will be around 27,575 residents in the projects that are already planned and approved in Census Tract 77.13 by 2010. More project approvals are likely. In recognition of the population growth in the West Boynton and Wellington areas, as well as demographics of the area and excessive response times, Palm Beach County Fire Rescue ("PBC Fire Rescue") will locate three of its four planned new stations in those western areas. PBC Fire Rescue also plans to add a new station, Station #30, at the intersection of Pierson Road and Hwy. 441 due to "all the new growth in the Forest Hill Blvd./441 (Olympia development, Mall at Wellington Green, Wellington Hospital area, ect (sic) . . ." Ex. B-83, Gregory Deposition, Ex. 2 to the Deposition, 4th page from the back. PBC Fire Rescue also plans to add a new Station 48 at the intersection of Hypoluxo Road and Lyons Road due to the "new growth in the Lantana/Hypoluxo/Lyons area and because of response time problems in the Lantana Road area." Id. A new Station 44 at the intersection of Flavor Pict and Jog Roads will be added "because of current response time deficiencies which could not be corrected by [existing stations]." Id. Access Issues As found in the Bethesda I Recommended Order, "[i]n the CON context, "access" is typically evaluated from the vantage points of programmatic, financial, cultural, and geographic access." Columbia/JFK Medical Center Limited Partnership, d/b/a JFK Medical Center vs. AHCA, Case No. 03- 2829CON (DOAH September 29, 2004) at 59. Bethesda's case is one of enhancement of access which in turn will promote improved quality of care. Both Bethesda and AHCA emphasize planning to curtail future diminution in access to certain hospital-related healthcare services. As in Bethesda I, the low-income population in the Subdistrict, including the West Boynton area, which has a relatively small portion of residents who are indigent, has access to the hospital services at the hospitals in the Subdistrict. Bethesda's case that access will be enhanced concerns programmatic access for the elderly, who have special needs apart from the general population, and a blend of cultural access and geographic access. The proposed satellite hospital will enhance programmatic access in the Subdistrict, according to Bethesda, because it will offer better access to emergency care that is less than adequate for seniors and others because of emergency department over-crowding. Access by the elderly will also be enhanced, according to Bethesda, because of the growing elderly population in the Subdistrict, particularly in the West Boynton area, and their special needs that entail, among others, avoidance of driving longer distances, such as the distance they would have to drive to the existing providers versus a closer WBCH. Cultural access will be enhanced, according to Bethesda, because Spanish-speaking laborers and migrant workers, many of whom are undocumented, and who have special needs different from the rest of the population, will have better access to some hospital services if WBCH is approved. There is a geographic component to the access issues of Spanish-speaking laborers and migrants too because of their willingness and ability to receive non-hospital health care services in the West Boynton area at a clinic that specializes in providing them with health care. The SAAR recognized enhancement of access for the Spanish-speaking population and the elderly because of each population's special needs, positions maintained by the Agency at hearing. The SAAR did not recognize that there were any programmatic access problems. At hearing, however, Mr. Gregg alluded to enhanced access to emergency services as a medical treatment trend that should be considered under the criteria applicable to this proceeding through Florida Administrative Code Rule 59C-1.008(2). Availability of emergency services is an issue of programmatic access. Programmatic Access: ED Overcrowding "Programmatic access" refers to the adequacy of the programs and services provided at existing facilities in relation to the specific health care needs of the persons served by those facilities. See Bethesda I, paragraph 219, at 59. An ED includes all of the organizational and physical infrastructure of a hospital having to do with care in the emergency room. Lack of adequate ED service constitutes an issue of programmatic access. Adequate ED service is especially important to the elderly (those aged 65 and over). The elderly (those over the age of 65) seek ED services 1/3 more often than those under the age of 65. The elderly also have need for acute patient services in EDs and after admission to the hospital following ED evaluation and treatment at a much higher rate than the under age 65 population. The elderly present at EDs in need of emergent care (within 15 minutes) much more often than the younger population. Approximately 15% of all ages present at an ED in need of emergent care whereas 24.5% of those between the ages of 65 and 75 years present in need of emergent care and 25.5% of those 75 and older present in need of emergent care. In Bethesda I, the Recommended Order contains the following finding with regard to programmatic access: The evidence was not persuasive that there are any programmatic access problems in Subdistrict 9-5 and, in any event, neither of the proposed satellite hospitals would enhance programmatic access in the subdistrict because they will not offer any programs or services that are not already offered at one or more of the tertiary hospitals in the subdistrict that currently serve the West Boynton area. Bethesda I Recommended Order, paragraph 220 at 59. Overcrowding in the EDs of existing providers, however, was not an issue in Bethesda I. In contrast, Bethesda claims in this proceeding that the special needs of the elderly are not being served adequately because of ED overcrowding. The evidence supports the claim. ED or emergency room overcrowding is a serious issue in the Subdistrict and in the county. In addition to the new submission of overcrowding, a significant difference from Bethesda I, there is also new information in the literature that relates to emergency room overcrowding. Emergency health care services are of nation-wide concern. There are particular problems in the State of Florida. A January 2006 report entitled: The National Report Card on the State of Emergency Medicine: Evaluating the Environment of Emergency Care Systems State by State, begins with the observation that "[e]mergency medicine needs to be there 'where you need it, when you need it.'" The National Report Card is based upon a study by The American College of Emergency Physicians, with data and input from the U.S. Department of Health and Human Services and all 50 states' offices of emergency medicine. The Report includes a section specific to Florida. The principal "Problem" identified in Florida is that "Florida does not have enough emergency facilities for its residents." Florida's "Problem" is attributable to a large elderly population, the high percentage of hospital admissions in Florida that come through hospital EDs, increasing hospital ED visits, and the lack of an increase in accompanying acute care hospital EDs. The first "Recommendation" as to Florida is that "Florida policymakers need to increase the number of emergency departments and trauma centers." There have been no new hospital EDs added in 20 years in Palm Beach County, and, in fact, two were closed (i.e., Palm Beach Regional, near JFK, and Everglades Memorial). National statistics show that only 20.5% of all ED patients wait 4 hours or more in the ED. Moreover, national benchmarks show that 70.4% of ED patients should be seen within 2 hours. As demonstrated by ED utilization data from BMH, JFK, Delray, and Wellington Regional, there have been substantial increases in utilization of area hospitals' ED's in the last two years, and excessively long average lengths of ED patient stays. At BMH, total ED visits increased from 49,985 visits in 2002, to 52,448 visits in 2004, and to an annualized 55,700 visits in 2005, representing 11.6% growth from 2002 to 2005. At the same time, the average length of stay for patients seen in the ED is steadily increasing. For patients who were treated in the BMH ED and then admitted to the hospital, the average ED length of stay ("LOS"), from triage until transfer to an inpatient bed, was 6.27 hours in FY 2004, and increased to 6.86 hours in FY 2005. The percentage of patients meeting Bethesda's target 180 minutes ED LOS criteria was only 6.6% in FY 2004, and decreased to 5.3% in FY 2005. Moreover, ED patients experience even longer stays during peak season. The average ED LOS of BMH ED patients who were admitted to the hospital was 11.70 hours in January 2005, and 10.63 hours in February 2005. The ED average LOS during those peak months was higher than the ED average LOS during the same months in 2004. The ED overcrowding problems at BMH are not solely the result of the growing ED volumes. A growing and major cause of the problem is the bottleneck caused by the lack of available inpatient rooms on the "floors," which leads to "holds" and back-ups in the ED. "Holds" are patients who have been seen in the ED and admitted to the hospital, but who must be held in the ED for some period of time thereafter waiting for an inpatient bed to become available. One major cause of these "holds" at BMH is the frequent lack of availability of the many semi- private inpatient beds, which occurs when a two-bed, semi- private room must be used for only one patient due to infection control/patient isolation issues or gender concerns. The availability of nursing staff is not a factor that contributes to the back-ups in the BMH ED. BMH's ED has adequate staff and is one of the best staffed areas of the hospital. In FY 2005, 9,320 patients had to be "held" in the BMH ED while waiting for an inpatient bed to become available, and the average LOS in ED holds was 3.91 hours. During the peak season, both the number of ED holds and the LOS in ED hold increases. In January, February, and March 2005, over 900 patients were placed in ED hold each month, and the average LOS in ED hold was in excess of 4.25 hours. When BMH's ED Director testified in the February 2004 hearing, he testified that the number of ED holds was 1,600 in FY 2002, and fewer than 1,000 in FY 2003. There were 9,320 ED holds at BMH in FY 2005. The high number of ED holds, and resulting back-up and crowding in the BMH ED, has an adverse effect on the quality of care provided to ED patients. The overcrowding causes delays in the diagnosis of, and provision of needed care to, patients who come to the ED. Often patients are forced to wait hours in the triage area before being seen by a physician because other ED areas are filled with patients being held for inpatient beds. Another adverse consequence of the overcrowded ED is the growing number of patients who either leave the ED without being seen by a clinician or leave the ED against medical advice. In March 2004, 86 patients left the ED without being seen by a clinician, and 88 patients left the ED against medical advice. By March 2005, those numbers had risen to 218 patients who left the ED without being seen by a clinician, and 140 patients who left the ED against medical advice. In early 2006, BMH had days where as many as 30 people left the ED against medical advice because of the tremendous backlog in the ED. BMH's expansion of its ED in 2003, did not resolve its ED overcrowding problems. At the time of the February 2004 hearing, it was thought that expansion of the ED would help eliminate ED holds. It is now apparent that the ED backlogs are not due to the amount of ED bed space. Simply increasing the number of bays or beds in the ED has not prevented ED overcrowding. JFK similarly has experienced increases in ED visits, patient LOS in the ED, and ED holds. ED visits at JFK increased from 50,453 in 2002, to 61,033 in 2005, representing a 21% increase in ED volume. JFK's inpatient admissions through the ED also increased from 19,426 in 2004, to 21,011 in 2005. The average LOS for all patients seen in the JFK ED, including patients who were discharged as well as patients who were admitted, increased from 297 minutes in 2004, to 317 minutes, or approximately 5 1/4 hours, in 2005. For the peak season months of January, February, and March 2005, the average LOS for all ED patients was 335 minutes, 377 minutes, and 371 minutes, respectively. In comparison, in March 2004, the average LOS was 325 minutes. The total hours that patients were held in the JFK ED awaiting an inpatient bed has increased dramatically in the last two years. The total holding hours increased from 19,832 in 2004, to approximately 68,000 in 2005. Further, in 2005, JFK had an average of 197 patients per month leave the ED prior to medical screening. Like the experience at BMH, JFK's ED expansion in 2003, did not resolve its ED overcrowding problems. Delray also has experienced increasing ED volumes and overcrowded conditions in the last two years. Delray's ED visits increased from 30,894 in 2002, to 39,745 in 2005, representing a 28.6% increase. Delray's inpatient admissions through the ED increased from 11,412 in 2002, to 13,044 in 2004, to 13,227 in 2005. Over one-third of Delray's ED patients are admitted as inpatients to the hospital. Delray's growth in ED utilization has outpaced its consultants' projections. In October 2003, National Healthcare Consultants, Inc. ("NHC"), prepared a report assessing Delray's ED needs, which Delray used to justify its recommendation to Tenet that it needed capital funding to renovate and expand its ED. In assessing Delray's ED needs, NHC found it particularly important that Delray's service area has a large elderly population, defined as aged 65 and over, and that the ED is the "front door" to Delray, as nearly two-thirds of Delray's inpatient admissions come through the ED. Based on Delray's historic ED volumes, NHC projected that Delray's inpatient admissions through its ED would total 12,454 in 2004, and 12,823 in 2005. Those October 2003 projections underestimated the increase in demand for Delray's ED services, as reflected by Delray's actual 2004 and 2005 ED admissions in 2005, set forth previously. Patients admitted to Delray through the ED often experience lengthy stays in the ED. In 2005, the average LOS for admitted patients was 343 minutes, which surpassed Delray's and Tenet's target LOS of 300 minutes. During the peak season months of January, February, and March 2005, the average LOS was 404 minutes, 460 minutes, and 455 minutes, respectively. One component of the long LOS in the Delray ED is the time patients are held in the ED awaiting an inpatient bed. In its 2003 report, NHC estimated that Delray should anticipate a holding time of 240 minutes in the ED, or approximately 4 hours, for patients admitted to the hospital after the ED is expanded. The number of Delray ED patients who elected to leave without being seen by a clinician increased from 906 in 2004, to 1,152 in 2005. Wellington Regional also has experienced a sharp increase in ED volumes in the last two years. ED visits increased from 31,300 in 2002, to 34,960 in 2004 - - an 11.7% increase. Wellington Regional's own projections of future ED utilization predict an even more dramatic increase in the future. As part of its master facility plan, Wellington Regional projects 41,032 ED visits in 2007, and 48,164 ED visits in 2011. Wellington Regional's inpatient admissions through its ED also are steadily increasing, up from 4,483 in 2004, to 5,013 in 2005. Further, in the last two years, Wellington Regional experienced a substantial increase in the number of lengthy ED patient stays of more than 6 hours. The number of ED patient stays of 6+ hours increased from 279 in January 2003, to 389 in January 2004, to 509 in January 2005. Peak season ED patient stays of 6+ hours increased from 326 in February 2003, to 411 in February 2004, to 617 in February 2005. A similar trend was seen in March of each of those years. Thus, in addition to the new claim of ED overcrowding creating an access issue, changes have occurred with regard to emergency room overcrowding since Bethesda I: it has gotten worse. In Bethesda I, the following was found: 235. The existing hospitals in Subdistrict 9-5 have been able to meet the needs of the subdistrict by incrementally expanding their facilities when the need arises. Bethesda I Recommended Order at 63. The experiences in the past two years demonstrate that construction of expanded EDs will not prevent ED overcrowding problems at existing hospitals. The finding in paragraph 235 of Bethesda I was valid because ED overcrowding was not at issue there. But the finding cannot be made in this case because existing expanded EDs have not been able to meet the needs of the Subdistrict, particularly the elderly's need to adequate access to emergency services in the hospitals' EDs. There is other evidence of ED overcrowding in the Subdistrict. Several of the letters submitted to AHCA by residents, physicians, and community organizations in support of Bethesda's proposed WBCH complained of problems associated with long wait times in the existing hospitals' EDs. As part of its grass roots effort to demonstrate that the community needs a new hospital with hospital-based emergency services in West Boynton, COBWRA asked its resident associations' members for evidence of experiences of lengthy wait times at existing hospital emergency departments. The responses recount experiences in the past two years of excessive wait times in the EDs of all of the hospitals participating in this case. Some of the community respondents volunteered for depositions regarding their experiences with overcrowded EDs. Bethesda introduced the depositions into evidence. Of these nine depositions, one is from the head of a residents' association, which refers to the reports from members of his association with regard to long wait times in the EDs. The other eight all recount delays in treatments after they presented at the ED with various medical conditions requiring medical treatment. Prompt access to health care is key to effective treatment of any patient but particularly a patient who is elderly. The elderly have health conditions that are more often life threatening than the rest of the population. Specialty needs of the elderly, moreover, are more often emergent or urgent. And the elderly are more at risk to adverse outcomes caused by delays in receiving health care. Overcrowded EDs cause delays in diagnosis and in testing that support diagnosis and treatment. Dr. Lopez-Viego testified as to his opinion on the improvement in quality of care that would result if WBCH with its ED becomes a reality: [I]f you built a 12-room emergency room in the ground floor of an adequate hospital, that would make a big difference. That patient would be seen sooner, would be evaluated sooner, would be operated on sooner, and would probably be discharged sooner and in better condition. And for those of us who spend our lives running around taking care of the sick patient and answering that kind of a call, which after years can get somewhat tiring, that's where we see the benefit in the hospital out west. I am sure you all have statistics and numbers and all that. But there is no statistic I think that's more important than the number of pages that I get and when I get them and the number of phone calls that I get and the look of patients and families when they see me and tell me we have been here for 15 hours and nothing has been done, what's going on here. Clearly the systems are under pressure. The systems are under pressure, the nurses are under pressure, the emergency rooms are under pressure, and the community demands and probably needs better than that. Tr. 212 (emphasis supplied). Of the eight elderly emergency room patients mentioned above, however, no clinical evidence was offered of an adverse impact to outcome in any of their specific cases. But their anecdotal experiences supplement the evidence of ED overcrowding in the Subdistrict and additional lengths of stay in the EDs since the data considered in Bethesda I. Dr. Lopez- Viego's opinion based on extensive experience in the Subdistrict as well as the opinions of other clinicians (Dr. Brito and Dr. Raborn, for example) supports the finding that a significant number of elderly patients in the West Boynton area will enjoy not only enhanced access to Emergency services but better quality of care in WBCH's ED and in other basic acute care services if WBCH becomes a reality. There is more to the issue, however, as the evidence presented by Wellington, JFK and Delray points out. First, the distinction must be drawn between WBCH's providing improved quality of care for elderly patients who would be close to emergency care in the West Boynton area and the relief that WBCH would offer to overcrowded EDs in the Subdistrict or Palm Beach County. Just as expanding existing EDs will not solve the problem, WBCH and its emergency services will not solve ED overcrowding in the Subdistrict or the county. Emergency room crowding has multiple causes. A major cause, if not the primary cause, is the number of uninsured who use the emergency room for primary care. Few of the elderly population in the West Boynton area, a relatively affluent area and expected to remain so, are uninsured. The vast majority are covered by Medicare. A WBCH ED, therefore, is less likely to have the overcrowding caused by the uninsured who use ED for primary care. On the other hand, since elderly patients from the West Boynton area are not the cause of ED overcrowding, a WBCH ED is unlikely to solve ED overcrowding in the Subdistrict and the County. A WBCH ED may contribute to a marginal reduction in overcrowding in the short term but it will not stop overcrowding in existing EDs. A WBCH will, however, solve the overcrowding problem encountered by the elderly who reside in the West Boynton area when they seek health care service in an emergency room. For them, WBCH should provide an ED that is not crowded, an enhancement in access that will improve their quality of care. Another aspect of the emergency room issue is a shortage of certain on-call specialists to serve in Palm Beach County EDs: one of the factors that weighed against approval of Bethesda's application in Bethesda I. Findings of fact related to the On-Call Specialist Shortage are made below under the section devoted to Subsection (4) of the Statutory Criteria. Freestanding Clinics The argument has been made in this case that the way to solve emergency room overcrowding is to provide alternatives to emergency rooms: freestanding clinics where patients with low acuity problems can be seen. The alternative of freestanding clinics to date do not seem to have solved the problem of ED overcrowding. There are numerous freestanding urgent care centers and community clinics currently in operation in south and central Palm Beach County. Two county health clinics are located near JFK and Delray. Despite the existence of urgent care centers and county health clinics, the ED volumes at BMH, Delray, JFK, and Wellington Regional are heavy and continue to increase. Hospital-based emergency services are accessible to low income and uninsured patients because federal regulations such as EMTALA require hospitals to triage and stabilize all patients. Urgent care centers are not likely to be able to alleviate the crowding in hospital EDs because urgent care centers demand payment up front, which would be prohibitive to the high number of uninsured patients who access hospital EDs for treatment. 266 Unlike hospital EDs, moreover urgent care centers and primary care clinics are not open 24 hours a day, 7 days a week. Starting in 1995, Bethesda operated an urgent care center at Bethesda Health City for three to four years. The urgent care center did not off-load any of the patient volume from the BMH ED. The urgent care center never achieved any significant patient volume, despite Bethesda's marketing efforts and offering of extended weekday and Saturday hours. Cultural Access: Special Needs of Spanish-speaking Migrants. The "Summary" section of the SAAR, Section F., pgs. 33-36 summarizes Bethesda's application. Under the heading, "Need," in this section of the SAAR, AHCA lists six bullet points introduced by an italicized statement: "After weighing and balancing all relevant criteria, the following issues are presented." One of the six relates to needs of the Hispanic population. It states: The Hispanic population is projected by the applicant to grow 47 percent in the proposed service area from 2004 - 2009, compared to a projected 18 percent growth of the total population of this area, not including the number of undocumented immigrants, who are likely to be uninsured. The applicant expects the adjacency of the proposed location to the Caridad Health Clinic will increase access to inpatient and emergency services for these and other indigent groups in the service area. It is clear the applicant expects significant growth within this community that is disproportionately less likely to be insured than the general population. Ex. B-1F, at 34. The effect Bethesda expects WBCH to have on the Hispanic population in the District and the Subdistrict, particularly the un-insured segment of this population and its access to emergency room and basic hospital services, was a factor in AHCA's preliminary decision to approve the application. Asked to generally describe the Agency's decision, Mr. Gregg stated in part: The primary reason for approval of this application was local population growth in the immediate area compared to the surrounding area and the county in general. Included in that population growth were special considerations for the Hispanic population . . . . The Hispanic population is significant because it's the most likely population to be uninsured. And therefore, any hospital that would have an emergency department would be significantly affected by people who are more likely to be uninsured due to federal EMTALA laws and regulations. * * * Because this proposal is located for a suburban area, interior Palm Beach County, which one was undeveloped and now is very rapidly developing, it presents an opportunity for access improvement. This is specifically oriented toward emergency services and basic hospital services. And since the current market is one that was traditionally not populated and one that is for the most part gaining in population but currently divided by more than one provider basic acute care services, the impact on any one of them will not be so significant and in our view is outweighed by the chance for access improvement for the people who will live in this immediate area in the future. Tr. 3444-46, (emphasis supplied.) Mr. Gregg continued: We also think that this proposed satellite hospital which would be located in a relatively well insured suburban population would support the traditional safety net function of the Bethesda Hospital that currently exists. Tr. 3447. "Cultural access" issues refer to the extent to which certain persons cannot or do not gain access to existing healthcare facilities due to cultural factors such as race, ethnicity and national origin. There is no evidence in this case that there is a denial in the Subdistrict of access to healthcare services on the basis of Hispanic culture. Indeed, all of the hospitals in this proceeding provide access at their facilities to the Hispanic population in the Subdistrict. Bethesda's access case with regard to Hispanics, however, is not one of access denial access. Rather, it is based on enhancement of access to hospital services, particularly emergency room services, by patients that receives basic services at a health care facility close to WBCH's proposed site: the Caridad Clinic. Caridad Clinic Caridad Center is located at 8645 West Boynton Beach Boulevard, west of the Turnpike. A charitable health, education, and outreach center sponsored by the Migrant Association of South Florida, its mission is to upgrade the health, education and living standards for the children and families of agricultural workers, laborers, and the underserved. Consistent with its mission, the center's vision is to end the cycle of poverty for the migrant families and others it serves in South Florida. Its clients are mainly the children and families of Hispanic laborers and agricultural workers, most of whom are migrant workers and some of whom are undocumented immigrants. In support of its mission and vision, the center includes a clinic. The Caridad Clinic offers wide-ranging adult and pediatric medical, dental, and social services to Spanish- speaking medically indigent and migrant populations who are generally underserved in Palm Beach County, because of their status as migrants or their undocumented status. In a typical year, Caridad Clinic provides free, quality medical and dental care for about 7,000 individuals who live and work in Palm Beach County. The services include 1500 to 1800 patient visits each month to a physician or a physician's assistant for an annual total that exceeds 18,000 patient visits. Richard B. Raborn, M.D., is an expert in internal medicine and the President of the BMH Medical Staff, a position also referred to as "chief of staff." He has a long-term relationship with the Caridad Clinic. His professional relationship with the clinic began shortly after Hurricane Andrew in 1992 but his personal relationship with the clinic preceded that date. After an interruption in his professional relationship between 1999 and 2002, Dr. Raborn resumed his close professional relationship with the clinic. At the time of hearing, Dr. Raborn was the clinic's volunteer medical director. Dr. Raborn described the types of patients and services at Caridad Clinic at final hearing: We have both medical and dental . . . We treat patients, both pregnant women about to give birth . . . up to pediatric, giving full immunization schedules for children going to school and doing some of their school physicals. Also we do some of their chronic care. We have a huge problem with diabetes, hypertension, malnutrition. . . . [W]e address . . . adults and children. Tr. 146-7. Occasionally Caridad patients come from as far away as Polk County. The great bulk of the patients work or reside in Palm Beach County at the time of their visit to Caridad. Dr. Raborn postulated that 90% of them come from within a 15- mile radius of the center. For the most part, Caridad patients come from wherever inexpensive housing is available in different parts of Palm Beach County. It is unclear from the record, however, where in the County many of them originate and in what precise proportion they come from any one part of the county. Much of the evidence on the locus of Caridad patients presented by Bethesda's opponents focused on data that showed a larger portion of the Hispanic population to reside east of the Turnpike and closer to existing hospitals rather than the proposed WBCH site. But this data did not include undocumented workers, who make up a substantial part of Caridad's patients, and did not include many migrant workers even if they have appropriate work papers. As further explained by Dr. Raborn, "migrant workers . . . look for shared housing, rental housing, where three or four people can be in an apartment, or where they can put a trailer on property." Tr. 167. While there is a regular population of migrant workers in the Lake Worth area close to I-95 that frequently seek services at the Caridad Clinic, many of the migrants are housed in areas further west. Dr. Raborn observed, "especially when [the migrants] are working on crops . . . you . . . see more trailers . . . out as far as 441." Tr. 166. In short, data of where the patients originated, even if made available to Caridad, would likely be unreliable because of the nature of the patients; migrant workers are not normally in any one place for any substantial length of time. As for access by the Hispanic population in general, the evidence demonstrated that existing hospitals have programs and services in place intended to address cultural and language differences between English-speaking and Spanish-speaking populations. Many of these efforts to accommodate speakers of Spanish are required by law. The Caridad Clinic, on the other hand, does not focus so much on the Hispanic population at large in the Subdistrict, however, as it does on the segment of the Spanish-speaking population that, as the name of its sponsor suggests, consists of migrant workers. As one would expect some of these patients are undocumented. With regard to this underserved population, Caridad serves as an appealing alternative because, in the words of Dr. Raborn, "they are welcomed, there is no cast of suspicion on them." Tr. 168. In addition, Caridad will qualify a patient for treatment up to 200% of the federal poverty line. They can be working, therefore, and still receive care. At BMH inpatient admissions from Caridad Clinic are always accepted. But, however close it relationship with the clinic historically and because of present personnel configurations, Bethesda has no special contractual relationship with Caridad. In addition to Bethesda's support, Delray and JFK are chief supporters of the clinic and all of the hospitals in Palm Beach County support the clinic to some degree. Still, there are a number of factors that favor the likelihood that the proposed project will increase to access to hospital services, particularly emergency rooms services, for Spanish-speaking migrant workers and undocumented immigrant laborers. First, the medical staff at BMH have consistently supported Caridad Clinic and its patients in the past. In addition to the extensive experience with Caridad of the Chief of the Medical Staff at BMH, BMH's Medical Director, Dr. Biehl, works as a liaison between Caridad Clinic and the BMH medical staff to coordinate necessary testing and surgical procedures for Caridad Clinic patients. Two studies published since the February 2004 hearing address the special needs of the Hispanic population in terms of access to health care services, such as cultural issues and language barriers that can impede access to care. Bethesda addresses those special needs and facilitates access to care by providing interpreters for non-English speaking Hispanic patients (as do the existing providers who oppose the application in this proceeding), as well as multi-lingual instructions and educational materials as required by law. The recent studies also found that the Hispanic population is less likely to seek and receive basic health care services. Bethesda addresses that special need by providing a number of special programs for Caridad Clinic and Hispanic patients, such as adult and pediatric wellness programs, multi-lingual prenatal classes at Caridad Clinic, and a diabetes resource center at Bethesda Health City. Establishment of the proposed WBCH at its selected site, because of its proximity to the clinic, will assist in addressing the special needs of patients from Caridad Clinic for hospital and emergency services. Two of the biggest health-related issues for the population served by Caridad Clinic are transportation to Palm Beach County hospitals from the western parts of the County and overcrowded emergency rooms. Once at the Caridad Clinic, patients now must travel significant distances to access an existing hospital. And they may have to travel a significant distance from wherever they reside in the county if they do not go to the clinic first. Complicating their situation is a lack of regular public bus transportation available from the Caridad Clinic or anywhere else in West Boynton to existing hospitals. Bethesda's proposed WBCH will be approximately 1 1/2 miles from Caridad Clinic. Caridad Clinic will be much closer to WBCH than to any existing hospital, and that adjacency will increase access to emergency room and some in-patient services for those who utilize the Clinic. Bethesda intends to coordinate services at WBCH with Caridad Clinic and to specially train the WBCH staff with respect to the unique needs of Hispanic immigrant and migrant populations, which will help ensure that high quality of care is provided to Caridad Clinic and its patients. Bethesda's proposed WBCH is supported by Caridad Clinic. In addition to Dr. Raborn's testimony at final hearing, the previous Medical Director of Caridad Clinic, Michael E. Kasabian, M.D., and the CEO of Caridad Clinic, Mr. Pedro del Sol, submitted letters of support. For all the factors supporting the likelihood that access to hospital services, particularly emergency room services, will be increased for migrant workers and their families, there is a deficiency of some magnitude in the application's proposal from the perspective of access: access to certain in-patient services. When asked whether the Caridad Clinic is aimed at handling patients in need of inpatient services, Dr. Raborn candidly answered, "No. The fanciest technology we have are EKGs and a chest x-ray. That's about it." Tr. 161-2. Patients from Caridad Clinic, of course, require hospital-based testing on occasion (up to 20 times a month). Hospitalizations of Caridad Clinic patients for more serious conditions generate as many as 10 hospital admissions a month. These admissions from Caridad Clinic fall generally into two categories: surgical cases and cases of labor and delivery or obstetrics (OB). Between the two categories, surgical and labor and delivery, more Caridad patient hospital admissions are for labor and delivery. The proposed project with its emergency room, as with any emergency room, will provide emergency OB. But WBCH as presently proposed, should it be approved, will not have in- patient OB services. The lack of in-patient OB services when the majority of Caridad patients admitted to hospitals are OB patients diminishes the weight given to the increased access to hospital service that WBCH poses for the Hispanic migrant population in Palm Beach County Special Needs of the Elderly It is a common health planning practice to project the need for a new hospital based on the elderly population of the area to be served because the elderly are likely to use hospital services. For purposes of these findings, "elderly" are considered the age cohort 65 years and older. The Agency considers the "elderly population" growth in the West Boynton area compared to the elderly population growth elsewhere in the Subdistrict and Palm Beach County to be a factor favoring the application because it presents an opportunity for access improvement. Based on 2005 population estimates, 43.2% of the residents of the WBCH home-site zip code, 33437, are ages 65 or over, and 30.0% of the residents of the four zip code PSA are ages 65 or over. That compares to 22.2% of Palm Beach County residents and 17.7% of Florida residents. The large elderly population in the West Boynton area is projected to continue to grow steadily. The elderly (65+) population of the four zip code PSA is projected to grow from 58,812 in 2006, to 66,143 in 2011, to 74,165 in 2015. Home-site zip code 33437, alone, is projected to have 26,655 elderly residents in 2010. In contrast to the large elderly population in the West Boynton area, the population of the Wellington area and the "western communities" is much younger. (The "western communities" are generally three development areas in central Palm Beach County. North of the West Boynton area and west of the turnpike, they consist of Wellington and just to its north Royal Palm Beach, as well as an unincorporated area called The Acreage, further north still, consisting of 18,000 vested lots. See tr. 1493.) The 65+ population in Wellington zip code 33414 was only 4,084 in 2004. It is projected to grow to only 6,175 in 2011. That projected 2011 elderly population in Wellington is slightly more than one-half of the additional growth alone in the elderly population projected for the WBCH PSA over the period of time 2004-2011. Given the "much larger" elderly population in West Boynton as compared to Wellington, it is reasonable to expect a proportionately greater need for health care services by West Boynton residents than by Wellington residents. Numerous age-restricted community associations submitted letters of support for a West Boynton hospital to serve the needs of their elderly residents, and several elderly residents testified on Bethesda's behalf. Among the many supporters of Bethesda's application in the West Boynton area is Sonny Nguyen, M.D., a primary care physician. Dr. Nguyen has an office at Bethesda Health City. More than 50% of his patients are elderly (65+). Many have conditions such as chest pain, pneumonia, or abdominal pain, which require hospitalization. In emergencies, these patients generally prefer to be within 30 minutes driving time of a hospital. Many other physicians submitted letters of support for the proposed project. Barry M. Schultz, M.D., a Board- certified Geriatrician, wrote, "I feel that a hospital in West Boynton Beach is urgently needed by the ever growing elderly population in Palm Beach County." Ex. B-1D, Omissions Response, Tab D, "Medical Staff Resolution and Letters of Support." The aging population increases emergency room utilization, inpatient admission rates, and patient length of stay due to the complexity of the health problems of the elderly. Individuals 65+ tend to utilize acute care hospital services at a far higher rate than younger age groups. The national use rate for inpatient hospital services of the 65+ age category is more than four times greater than the use rate for those younger than 65. In Florida, the elderly account for almost 5 times more acute care inpatient days than those younger than 65. Fewer elderly residents will utilize more hospital services than will a larger number of younger residents. The number of patient days for elderly patients in the WBCH PSA increased from 61,596 in 2003 to 66,070 in 2004. In addition to the greater demand for inpatient services, the elderly utilize hospital emergency departments (ED) 33% more frequently than those younger than 65. When the elderly do present in an emergency department ("ED"), they are much more likely to be in a compromised state of conditions requiring "Emergent" care, meaning that the patient should be seen by a health care practitioner in less than 15 minutes. The Center for Disease Control (CDC) classifies ED patients as "Urgent" if the patient should be seen within 15-60 minutes, and as "Semiurgent" if the patient should be seen in 61-120 minutes. "Non-urgent" patients should be seen within two to 24 hours. A May 26, 2005 CDC report found that nationally, for all ages, 15.2% of ED patients were "Emergent." In contrast, 25% of ED patients age 65 or older were "Emergent." The 2004 version of the same CDC report shows in further detail that for patients 65-75 years old, 81.1% who presented in hospital ED's were either "Emergent," "Urgent," or Semiurgent," meaning they should all be seen within two hours or less. Only 7.2% of elderly ED patients in 2005 were classified as "nonurgent." In short, the elderly are prone to a wide variety of diseases and injuries that require emergency treatment ranging from "Semiurgent" to "Emergent" categorization, often followed by inpatient admission. Bethesda intends to establish a primary stroke program at WBCH that will be fully integrated with the existing stroke program at BMH. In stroke care, time is of the essence. A West Boynton hospital-based emergency service, with physicians and staff specially trained for the treatment of stroke, will be a benefit to West Boynton residents, and particularly the elderly, who are more susceptible to stroke. Bethesda's WBCH will offer a focused geriatric program and a full array of hospital-based services for the elderly, in an accessible West Boynton location. Bethesda will provide special staffing for elderly geriatric programs, and the WBCH facility will be specifically designed to enhance accessibility for elderly patients. Bethesda intends to work with OMEGA of Palm Beach County, an organization that studies the health care needs of the elderly, to determine precisely the geriatric and elderly programs to offer at WBCH. No comparable focused geriatric program currently exists at any Palm Beach County hospital. The focused geriatric program proposed by Bethesda was not proposed in its prior 2003 Application. Bethesda has developed the focused geriatric program, with the assistance of OMEGA, for the current application. The availability of accessible hospital services is particularly important for elderly patient populations due to the driving challenges that face the elderly, such as aversions to driving at night or in crowded conditions, confusion, eye- sight related issues, and diminished reaction/response times. It is reasonable to expect that the elderly may have increased difficulty navigating busy or congested roadways or intersections. Numerous Florida and national studies published since the February 2004 hearing increasingly highlight the driving challenges of the elderly. Those studies demonstrate that the elderly have more traffic accidents, take longer to adjust to lighting changes from day to night, tend to want to drive during limited times of the day and during ideal weather, and drive at a slower rate. The Florida Department of Elder Affairs reported in a 2004 report that 30% of elderly Florida residents reported limitations to their driving. A recent article published in Medical Risk Management Advisor (4th Qtr. 2004) sets forth the following "Medical Conditions That May Impair Driving" for the elderly: Vision: cataracts, diabetic retinopathy, glaucoma, macular degeneration Cardiovascular: arrhythmias, congestive heart failure, valvular disease Cerebrovascular: stroke, subarachnoid hemorrhage, syncope Neurologic: multiple sclerosis, Parkinson's disease Psychiatric: depression, anxiety disorders, psychotic illness Metabolic: hypothyroidism, hyperthyroidism, Type I-II diabetes mellitus Musculoskeletal: arthritis, abnormalities, spinal limitations Peripheral Vascular: deep vein thrombosis, aneurysm Respiratory: asthma, chronic obstructive pulmonary disease, sleep apnea Anesthesia and Surgery: use of general, local, or epidural anesthesia Renal: chronic renal failure, renal transplant JFK's witness, Dr. Luke, contended that the elderly do not begin to experience age-related driving problems until age 80, but that is not supported. Numerous studies report that age-related driving problems begin as early as 60. Dr. Luke's distinction between the "young" or "active" elderly, generally between the ages of 65 and 80, and the "frail" elderly, generally 80 and over, is not, of course, a bright line. Those over the age of 80 may be active and those between the ages of 65 and 80 may be frail. But his distinction between the active elderly and the frail elderly, whatever the appropriate division into cohorts by age, has merit. Housing in the West Boynton area is marketed to an active elderly population. In contrast to the active elderly, the frail elderly are more likely to live with others, in assisted living facilities or in nursing homes. They are not likely to live in the single-family housing units being developed in the West Boynton area. Nor are the frail elderly as likely to drive themselves or be driven by a spouse to the hospital or a hospital ED. The active elderly who live in the West Boynton area are much more likely than the frail elderly to be drivers and to drive themselves or an elderly spouse or family member to the hospital or a hospital ED. Distance and Travel Time to Existing Hospitals Distances to Existing Hospitals WBCH will be located at the intersection of State Road 7 and Boynton Beach Boulevard, approximately 2 miles west of the Turnpike, and 11 miles west of BMH. The closest existing hospital to the WBCH site is Wellington Regional, which is approximately 9 miles away. JFK, Delray, and West Boca are all approximately 12 miles from the WBCH site. PBC Fire Rescue Station No. 47 is located at the intersection of Boynton Beach Boulevard and the Turnpike in West Boynton. Station No. 47 is approximately 9.8 miles from JFK, 8.5 miles from Delray, 10.9 miles from Wellington Regional, and 10.9 miles from BMH. In the 1980's HCA, Tenet, and Universal, or their predecessor for-profit companies, established new hospitals in western Palm Beach County that were closer to existing or approved hospitals than the WBCH site is to existing hospitals. Wellington Regional and Palms West were constructed less than 4 miles apart in the "western communities" area. West Boca was constructed in southwest Palm Beach County at a location approximately 8 miles from Delray, and 7 miles from Boca Raton Community Hospital. Increasing Traffic Congestion Stemming from Population Growth and New Residential and Commercial Development There is growing and increasingly unpredictable traffic congestion in the West Boynton area and throughout Palm Beach County, due in large part to the rapid population growth and new development. The major roadways in West Boynton already carry a great deal of traffic. Peak traffic hours bring substantial congestion on the major arterial roadways in West Boynton, notwithstanding the expansion and widening of several roadway segments in the last year. Traffic is further slowed by a plethora of traffic signals, and many new signal installations are planned and funded to keep pace with the rapid residential and commercial development in the area. Rapid development in the West Boynton area has already placed a strain on the existing roadway system. Although certain segments of some roads in West Boynton have recently undergone expansion, the improvements overall are relatively few. Nearly all of the recently completed and currently funded roadway expansions are associated with large residential developments, with the roads at issue projected to be near capacity at or shortly after completion. It is reasonable to expect that the substantial increases in traffic volumes combined with the ongoing development and the proliferation of traffic signals on major arterial roadways throughout the area will result in increased and unpredictable congestion and travel times through and from West Boynton to outlying existing hospitals by 2010 unless roadway improvements are made or other measures are taken to counter traffic problems caused by growth. Evidence was presented regarding extensive recent and planned residential, commercial, and school development, all of which is accompanied by installation of new traffic signals and increased traffic congestion, along the major east-west and north-south roadways in West Boynton, including State Road 7, Lyons Road, Hagen Ranch Road, Jog Road, Military Trail, West Atlantic Avenue, Boynton Beach Boulevard, and Lantana Road. Signals are generally recognized as the primary cause of increased delay and lower speeds with respect to travel times. Signal cycle lengths (the length of time it takes for a signal to cycle from green through yellow, red, and back to green) at major intersections in Palm Beach County generally range from 90 seconds at minor intersections to 160 seconds at major intersections. The intersection of Forest Hill Boulevard and State Road 7, one of the busiest in the County, is a very congested intersection with triple left-turn lanes and a signal length of 160 seconds. Many of the signals on Boynton Beach Boulevard are also set at 160 seconds. Other than on the short segment of Boynton Beach Boulevard immediately approaching the Turnpike ramp at Jog Road, the County has not installed signal progression timing west of the Turnpike. There are no current plans for coordination of traffic signals in West Boynton. But it is likely that many, if not all, of the traffic signal cycle lengths in the West Boynton area will someday be coordinated by the County as traffic becomes more congested unless the County opts to give a roadway a CRALLS designation. For example, Forest Hill Boulevard has a CRALLS designation from the County. Such a designation indicates the roadway is a constrained facility. (A CRALLS designation is a third option under concurrency requirements, the first two being demonstration of capacity or an ability to increase the capacity to reach the appropriate level of service.) Consistent with the CRALLS designation, rather than widen the boulevard to six lanes west of State Road 7, the county has chosen to keep Forest Hill Boulevard at four lanes and to suffer the consequences. The consequences include "huge backups," tr. 1703, during the evening peak hour. Another hospital in the central part of the County, JFK, is also located on a very heavily congested roadway with a CRALLS designation, i.e., Congress Avenue. Several witnesses testified that the drive times from West Boynton locations, such as Bethesda Health City, Caridad Clinic, or residential communities both east and west of the Turnpike, to existing area hospitals often are around 30 minutes now, and on occasion, may be as long as 45 minutes or more, depending upon the time of day and traffic congestion. Even a major corridor like Interstate 95, east of the West Boynton area, can see drive times up to 40 minutes for trips along the adjacent surface roads from BMH to Delray. The traffic congestion is not limited to the West Boynton area. In 2004 and early 2005 every east/west artery in Palm Beach County was congested. Some of that congestion has been reduced by fly-overs. For example, fly-overs have now been constructed as part of Southern Boulevard over Military Trail, Haverhill Road, Jog Road and State Road 7. These fly-overs have greatly alleviated congestion on Southern Boulevard because the travelers on Southern no longer need to stop at the traffic signals at these intersections. Traffic congestion is a major concern of the Sheriff's Office because it affects incident response times. A new hospital at the corner of Hwy. 441 and Boynton Beach Boulevard will be easily accessible to many of the new developments in Palm Beach County because traffic flows much faster heading west than heading east. From the standpoint of the Sheriff's Office, the location of a hospital is a primary concern with regard to transporting patients. Along State Road 7, traffic flows faster south toward the WBCH site than northward for residents in the Lantana Road area because most of the commercial development is northward from there to the Wellington area where traffic is often congested. Increasing Delays in Accessing Hospital Emergency Services Traffic congestion and increases in drive times to existing hospitals adversely affects West Boynton patients who seek emergency services. Most individuals, including the elderly, access hospital emergency services in Palm Beach County by private car or some means other than ambulance transport, so traffic delays directly impact those patients' ED access. At JFK, for example, only about 26% of ED patients arrive by ambulance. PBC Fire Rescue supports the proposed WBCH because of the population growth in the West Boynton area, and the accompanying increasing traffic and congestion it expects. PBC Fire Rescue Station 47, which is located at the intersection of Boynton Beach Boulevard and the Turnpike and serves the West Boynton area, has experienced a steady increase in call volume in the last two years. Station 47's volume increased from 1,799 incidents for the year ending July 1, 2003, to 2,472 incidents for the year ending July 1, 2005, - - a 37% increase. Approximately 85% of those calls were medically related. Station 47 had almost 700 patient transports to hospitals for FY 2005, up from only 520 transports for FY 2003. Currently, there is no hospital located within Station 47's response zone. Station 47 units must travel out of zone and traverse the County to transport patients to existing hospitals, and then return to zone. Such transports not only take a unit out of service, but also increase response times, as surrounding stations must cover the Station 47 response area, all of which is exacerbated by the increasing traffic and congestion. As Chief Baker described, the time it takes to traverse the roadways is extensive in the morning, lunchtime, and during rush hour traffic. The longest PBC Fire Rescue average hospital transport times are calls originating in zip codes 33437 and 33467, the two western-most zip codes in the WBCH PSA, and those transport times increased from 2004 to 2005. Another factor that negatively impacts PBC Fire Rescue is the amount of time it takes a unit to turn a patient over to the receiving hospital, known as "turnover time." PBC Fire Rescue must turn a patient over to an ED physician, nurse, or paramedic, and the number one factor that delays such turnovers is bed availability in the ED, accounting for over 90% of extensive turnover times. The availability of on-call physician specialists does not affect turnover times. All the EDs in the Boynton and Delray areas are busy. The EDs are oftentimes backed-up. Turn-over times for PBC Fire and Rescue can take 45 minutes to an hour because of the presence at the hospital of more than one PBC Fire and Rescue ambulances, as well as ambulances from municipal ambulance units and private ambulance companies. From August 1, 2004, through July 31, 2005, 174 of 696 total transports from Station 47, or approximately 25%, had turnover times greater than PBC Fire Rescue's target of 15 minutes. At Delray, 733 transports, or 17% of the total transports, moreover, had turnover times greater than 20 minutes. Data from PBC Fire Rescue shows that the cumulative response, travel, and turnover time associated with transporting patients from the West Boynton area to existing hospitals exceeded 30 minutes in 2005, for all 4 WBCH PSA zip codes. Bethesda's proposed WBCH would be approximately 2.3 miles from Station 47, and would also be in closer proximity than existing hospitals to two new PBC Fire Rescue stations planned for the West Boynton area. For the vast majority of West Boynton area patient transports, PBC Fire Rescue would take the patients to WBCH, consistent with its policy of transporting patients to the closest hospital. As discussed infra, only in the case of trauma alert patients and patients who are coded as "cardiac alert suspected MI," would PBC Fire Rescue bypass WBCH for another facility. The only other bypass protocol is for "stroke alert," but WBCH is expected to be a primary stroke center. Patients at BMH, according to patient surveys conducted by Bethesda, show generally show satisfaction with the services and quality of care received at the hospital. But they also show "the trend that patients are dissatisfied with their wait times in the emergency room." Tr. 1160 Bethesda's Travel Study Bethesda presented a drive time analysis performed by its traffic engineering expert, Mr. Rennebaum. In support of Bethesda's 2003 Application, Mr. Rennebaum had conducted a general analysis of traffic conditions on Boynton Beach Boulevard from State Road 7 easterly to Military Trail. That analysis did not involve actual travel time runs. It was limited to the projection of traffic conditions based on 2003 Palm Beach County traffic counts on a single segment of roadway, i.e., Boynton Beach Boulevard between State Road 7 and Military Trail. For this application, Mr. Rennebaum assessed travel times based on travel time runs to the closest hospitals along several roadways, conducted under his direction in April 2005. He also prepared an analysis of future travel conditions, based on the travel time runs, Palm Beach County official traffic counts, and future growth projections, as well as County traffic signal installation reports. Mr. Rennebaum's new analysis also considered various factors that can reasonably be expected to contribute to increased travel time in West Boynton, such as the proliferation of traffic signals on major arterial roadways, burgeoning residential and commercial developments, seasonality, weather, accidents, and elderly driving issues. Mr. Rennebaum's analysis demonstrated that travel time from a central point in West Boynton to all surrounding hospitals was approaching 30 minutes in April 2005. One year later, in March 2006, the travel time to surrounding hospitals remained near or exceeded 30 minutes, notwithstanding roadway widenings, as more residential and commercial projects had been constructed. To conduct his travel time study, Mr. Rennebaum identified two alternate routes from the entrance of the Canyon Lakes project, then under development, to the front door entrance of each of the surrounding hospitals, i.e., Delray, JFK, BMH, Wellington Regional, and West Boca. Mr. Rennebaum chose Canyon Lakes because it is a central point in West Boynton. Further, Canyon Lakes was then the nearest existing residential development to the WBCH site. The entrance to Canyon Lakes is on Lyons Road, south of Boynton Beach Boulevard. Lyons Road does not extend southward into the West Delray area. Residents of the Canyon projects must head north on Lyons Road to Boynton Beach Boulevard to exit the area, even if they are heading to a hospital to the south, such as Delray or West Boca. In April 2005, at the time Mr. Rennebaum performed his travel time runs, no one lived in the homes being constructed in Canyon Lakes, and there was no traffic at that time, as compared to the present. Four runs were conducted on each route during both A.M. (7:30 or 8:30 start) and P.M. (4:00 or 5:00 start) peak periods to each of the hospitals, for a total of eight runs to each hospital, with the exception of Wellington Regional, for which only one day of data, or four travel runs, could be obtained. The County's internal traffic performance data collection protocol mandates that travel time measurements be taken during both the A.M. and P.M. peak hours, and that is the standard of practice for general travel time studies in Palm Beach County. It is also well established that travel time runs should be conducted Tuesday through Thursday, avoiding Mondays, Fridays, weekends, and holidays as not representative of normal traffic conditions. Mr. Rennebaum employed the "maximum car technique." He directed the drivers in his travel time study to drive with the average flow of traffic, without exceeding the speed limit. That is a reasonable methodology because during peak traffic hours in West Boynton, the major roadways are congested, and drivers likely are not able to exceed the posted speed limits. The Manual for Uniform Traffic Studies ("MUTS Manual") sets forth detailed requirements for a specific type of travel time study known as a "travel time and delay study." Travel time and delay studies are typically performed by the Florida Department of Transportation, and are used for specific technical purposes, such as signal retiming and to determine the "level of service" on a roadway. The MUTS Manual mandates very specific protocols for conducting "travel time and delay studies," and specifically states that the protocols are not appropriate for application to segments of roadways exceeding 2 miles in length. Mr. Rennebaum's travel time study was not a "travel time and delay study," and hence application of the MUTS Manual study specifications to Mr. Rennebaum's general travel time study would have been inappropriate. Mr. Rennebaum's travel time runs started near the entrance to the new Canyon Lakes project. However, an important aspect of many West Boynton area residents' drive times is the length of time that it may take simply to travel through and exit the many large and densely developed residential communities onto a major roadway. The large communities in the Ag Reserve are generally developed at two units per acre, and those to the north are 2 1/2 to 3 units per acre. Several community witnesses testified that it routinely adds up to 5 minutes, and can add up to 8 or 10 minutes to their drive time to exit their community. Furthermore, the influx of part-time residents during the "peak season" winter months results in heavier traffic and increased travel times. Palm Beach County calculates growth rates each year based on three years' prior actual traffic count data. Traffic volumes in West Boynton continue to grow, and many segments of the main arterial roadways are projected to continue to experience double-digit growth rates. Mr. Rennebaum's methodology in obtaining actual drive times to the surrounding hospitals was reasonably based on the standard of practice in Palm Beach County. Mr. Rennebaum reasonably relied on Palm Beach County Traffic Performance Standards, a report published by Palm Beach County reflecting an inventory of all approved, both un-built and under construction, projects that will impact the area roadways, as well as the County's official record of actual historic growth rates in traffic volumes on the major roadways in West Boynton in projecting future growth and congestion. The Palm Beach County Traffic Performance Standards, once updated annually, are now updated on a monthly basis just to keep pace with the rapid development in the area. Historic growth rates in traffic volume on major arterial roadways in West Boynton have ranged from 3.85% compounded annually to as high as 26% compounded. Taking into account the substantial number of newly constructed and planned residential and commercial developments in the West Boynton area, as well as West Delray and Wellington, and the substantial increase in new and planned traffic signal installations along major arterial roadways, it is reasonable to expect that traffic volume and congestion will substantially increase such that travel times from West Boynton to the closest surrounding hospitals will exceed 30 minutes by 2010. Moreover, increased congestion on the roadways is likely to have an even greater adverse effect on the ability of elderly drivers to negotiate the roadways. Travel Time Standards The Agency has not promulgated a travel time standard by rule. In the Recommended Order in Bethesda I, however, it was found that "[a] reasonable geographic access standard for persons living in an urban area is a drive time of 30 to 40 minutes to an acute care hospital." Id. at 61. This finding was accepted by the Agency in the Bethesda I Final Order. Despite its acceptance of this standard as a reasonable one in Bethesda I, and despite the conclusion of the traffic time studies by experts who testified in this hearing that drive times to hospitals from the West Boynton area that travel time is generally less than 40 minutes and rarely exceeds 40 minutes, AHCA contended at hearing that geographic access for the elderly remains a factor supporting approval. In explaining its position, AHCA offered that population growth had continued in the interior portion of Palm Beach County, including in the West Boynton area, since Bethesda I. AHCA, moreover, is obligated by its statutory mandate to plan ahead and not wait until drive times to acute care services exceed 30-40 minutes. Thus, it is reasonable to look five to ten years into the future, as the health planning witnesses did with their population projections in this case, to assess the likely traffic congestion and travel time issues. Given the reasonableness of projections of rapid growth in the future, AHCA believes it is important to plan ahead and get a hospital in a location where it is reasonable to expect that drive times are going to increase. AHCA has previously approved numerous CON applications for new hospitals even though residents of the proposed service area were well within 30 minutes' travel time of an existing hospital. For example, in the West Kendall cases, AHCA approved, through final order, two proposals for satellite hospitals in southwest Dade County (i.e., HCA West Kendall and Baptist Miami), even though off peak travel time to existing hospitals was only 12 1/2 minutes, increasing to 24 minutes during peak hours. In the Miramar case, discussed infra, AHCA approved by final order a new hospital in southwest Broward County even though most residents of the proposed service area were within 15 minutes or less of an existing acute care provider. In AHCA's SAAR approving Marion Community Hospital's proposal to construct a new 70-bed satellite hospital for HCA's Ocala Regional facility, AHCA found that the driving time to the closest existing hospital was 20 to 30 minutes. Densely populated areas, as is the case in much of the Subdistrict, are prone to unpredictable transportation problems, such as extraordinary traffic jams at all times of the day, having nothing to do with rush hour, and great unpredictability of travel times often associated with accidents. Travel time to a hospital is a particular concern for elderly patients. Many elderly patients have driving difficulties, and the longer they are on the road in an ill condition, the more danger they create for themselves and others. The 2004/2005 Hurricanes The September 2004 hurricanes that hit portions of Palm Beach County (i.e., Jeanne and Frances), and Hurricane Wilma in October 2005, were the first major hurricanes to hit the area in decades. They brought special pressures and unique circumstances to Palm Beach County health care providers that were not realized before those storms, and brought to light the vulnerability of the local health care system in responding to the needs of a large population at times of natural disaster, including the need for accessible emergency care services and the special needs of the elderly population. The 2004 and 2005 hurricanes that hit parts of Palm Beach County occurred after the February 2004 hearing. Those Category 2 hurricanes led to "surges" in hospital ED utilization throughout Palm Beach County, as accidents and storm-related injuries such as falls from ladders, contusions, sprains, and lacerations increased. Adding to the "patient surge" at hospital EDs, other health care providers in the County were rendered inoperable for days or weeks (e.g., dialysis clinics, walk-in centers, physicians' offices), and patients of those other providers had no alternative other than hospital EDs. The federal government assisted several hospitals like JFK and Boca Raton Community Hospital by setting up MASH-type ED units. BMH's ED was overwhelmed with patients for well over a week after the hurricanes. Several hospitals, such as Wellington Regional, JFK, and certain Tenet hospitals, suffered substantial damage. Tenet's West Boca Hospital sustained significant damage in the aftermath of Hurricane Wilma, and contemplated evacuating its patients. Tenet's Good Samaritan Hospital was evacuated. Due to power outages during Hurricane Wilma, surgeries were performed at JFK without air conditioning, which increases the likelihood of infections. Wellington Regional sustained approximately $6 million in damage from Hurricane Frances in late 2004. Palm Beach County has not yet encountered a Category 3 hurricane like Hurricane Katrina that hit New Orleans in 2005, which forced the evacuation and closure of several Tenet and Universal hospitals or a Category 5 hurricane like Andrew in Dade County in 1992. It is now recognized by Palm Beach County disaster preparedness planners and key planners around the nation that more hospital facilities are needed in heavily populated areas to provide "patient surge capacity" and to account for possible closures and evacuations of other area hospitals in the direct path of a hurricane. The Trauma Agency Director for the Palm Beach County Health Care District, Dr. Davis, testified that with respect to the County's disaster plan for hurricanes, the County needs more "surge capacity." Rather than build a new hospital with a new ED, however, the priority for increasing surge capacity adequately is to expand emergency rooms in existing hospitals and increase hospital bed capacity as part of improving through- put of patients admitted to the hospital from the ER. While the best way of improving patient surge capacity in the event of a disaster is to improve capacity at existing hospital, WBCH would improve access to ED services for the elderly in the West Boynton Area at a time of patient surges caused by county-wide disasters. There are other advantages in case of disaster to approval of WBCH. The availability of another Bethesda System hospital, located more inland, will be of great assistance if a major hurricane were to force closure of BMH, which is located close to the Atlantic coast. For example, during the recent hurricanes, patients and staff were evacuated from Tenet's Good Samaritan Hospital, a hospital located close to the Atlantic coast in West Palm Beach, to another Tenet hospital, St. Mary's, located farther inland. A new Bethesda facility in West Boynton would also facilitate Bethesda's ability to relocate patients and staff to an inland hospital, if necessary. As the newest hospitals in Palm Beach County are about 20 years old, none has been constructed to comply fully with recent Florida hurricane-resistant building codes. Bethesda's WBCH will be designed and constructed in 100% compliance with all current building codes, and in particular those related to hurricane protection and wind-borne debris protection. Community Support Bethesda's proposed WBCH has received extensive grass roots support from residents, community organizations, and public officials from the West Boynton area, as well as the unanimous support of the County Board of Commissioners for a land use change and for the addition of workforce housing near the WBCH facility. COBWRA, a not-for-profit organization of 83 residential associations representing 85,000 to 100,000 residents located in the West Boynton area, supports Bethesda's application. COBWRA members are adult, age-restricted communities, meaning that one resident per unit must be age 55 or older, and no residents may be under age 18. Approximately 62% of COBWRA's member residents are seniors. COBWRA represents the interests of all West Boynton area residents in working to improve and maintain the area's health care facilities, public safety, cultural outlets, traffic flow, educational opportunities, and parks and recreational facilities. It is COBWRA's position that the absence of an acute care hospital with hospital-based emergency services is one of the greatest challenges to the quality of life in the West Boynton community. As the West Boynton area continues to develop rapidly with the increasing traffic volumes, traffic delays are making it increasingly difficult for area residents, many of whom are elderly, to travel out of their community to access hospital and emergency services at distant existing hospitals. There are 74 COBWRA residential associations which submitted letters of support for the WBCH application. COBWRA's president, Ms. Sandra Greenberg, testified in support of Bethesda's proposed WBCH at the final hearing. Mr. Gerald Rosenberg, Chairman of the Macular Disease Association of Boynton Beach, a support group for visually impaired individuals, testified in favor of Bethesda's proposed WBCH. As expressed in its April 11, 2005 letter of support, the Macular Disease Association supports the development of a West Boynton area hospital. Bethesda's proposed WBCH also is supported by PBC Fire Rescue and the Palm Beach County Sheriff's Office. Battalion Chief Nigel Baker of PBC Fire Rescue, who was the Chief of Battalion 4, which covers the West Boynton area, from 2002 through July 2005, submitted a letter of support and testified on Bethesda's behalf at the final hearing. Palm Beach County Sheriff Ric Bradshaw submitted a letter in support, and Leslie Shriberg, the Community Relations Coordinator of the Palm Beach County Sheriff's Office, testified by deposition in support of Bethesda's application. Neither PBC Fire Rescue nor the Palm Beach County Sheriff's Office offered support for the prior West Boynton hospital applications of Bethesda and JFK. Dr. Luke, a JFK health planning witness, agreed that community support for Bethesda's proposed WBCH is a factor to be considered, testifying as follows: "The public input is a legitimate part of the [CON] process. I don't think it should ever be the sole determining factor, but I certainly would think that it ought to be weighed in the balance." Tr. 7310. While the desires of the local community should be considered, as Dr. Luke suggests, most lay persons are not in a position to evaluate how the delivery of medical services will be affected by the construction of a new hospital. Closer proximity does not necessarily equate to higher quality of medical care. For example, if a patient requires multiple sophisticated medications, ICU care, infectious disease care, cardiology or neurology care, then that patient's care is likely to be better at a larger facility like Delray, BMH or JFK. Furthermore, some patients suffering heart attacks who are not taken by ambulance to the hospital and who were close to a satellite hospital in the West Boynton Area could go the satellite hospital and then require transfer. The time delay could affect the outcome of the patient's treatment. Likewise, patients who suffer strokes and who would benefit from the JFK interventionist program may reach an outcome that is less optimal if they seek treatment at WBCH rather than at JFK. Private Rooms/Quality of Care Unlike in February 2004, private patient rooms have now become the standard in construction of new or expanded hospitals. In March 2006, the American Institute of Architects ("AIA") published new guidelines for hospital construction that require all private room construction. Those guidelines are based on recent studies, unavailable at the February 2004 hearing, finding that private patient rooms lead to improved patient quality of care and safety. The new AIA guidelines are being incorporated in Florida's building code and will be the mandate for all new construction by Fall 2006. BMH, JFK, Wellington Regional, and Palms West all have recently completed or soon will complete construction projects involving all private rooms. Each of those hospitals, however, still has numerous semi-private rooms. Delray also has numerous semi-private rooms. Only 102 out of 350 beds at Delray are in private rooms. The remaining 70% or so are in semi-private rooms. Unlike other Palm Beach County hospitals, a recent bed addition made by Delray consisted of a majority of beds in semi-private rooms. In the 31-bed addition, only 8 are in private rooms. Of course, semi-private rooms can usually be converted to private rooms if the census so warrants. But the lack of all private rooms in existing facilities has a negative effect either on quality of patient care or, if converted to private rooms temporarily, then a potential negative effect on utilization. In its CON Application No. 9558, Palms West, an HCA hospital, cited the following as a special circumstance justifying the need for more beds: The medical needs of the patients (isolation, reverse air-flow, privacy, gender, etc.) make it necessary to utilize a semi-private room as a private room thus artificially reducing the number of available beds without changing the licensed capacity or adjusting the occupancy rate to account for the unavailable bed. P. 2 of Ex. 5 to Ex. B-62 (Rohan Depo.) Also see Ex. B-62 at 22-23. Bethesda proposes that all 80 WBCH beds be in private rooms. Development of WBCH, moreover, will enable Bethesda to convert all of the remaining 67 semi-private rooms at BMH to private rooms. Utilization, BMH Expansion and Impact of WBCH Extent of utilization of existing health care facilities and health services. Each of the parties' hospitals is well utilized. Utilization is generally at its highest during the peak season months of January through March. In fact, each of the parties has experienced capacity constraints during these peak months recently. The peak season is lengthening. It has begun to stretch into April. Area hospitals are often crowded during weekdays. Need indicated by capacity constraints during peak months is balanced, however, by a decline in average acute bed occupancy decline in the Subdistrict since 2002. Preceded by an increase of 71.9% to 77.3% (2000 to 2001) and a second increase from 77.3% to 78.2% (2001 to 2002), average acute bed occupancy fell to 75% in 2003 and then fell again in 2004 to 73.8%. Given the increase in population and patient days, the decline in acute bed occupancy from 2002 to 2004 is attributable to an increase in the acute bed inventory of the Subdistrict. Over the five years of 2000, 2001, 2002, 2003, and 2004, occupancy rates in the District did not perfectly parallel the rates in the Subdistrict but were similar. They, too, indicate a decline in more recent years. Beginning with an occupancy rate of 63.9% in 2000, the District occupancy rate rose to 67% in 2001, and then fell each successive year, to 66%, 65.5%, and 64.5%. The fall in the rates in the presence of increases in population, demand for acute care hospital services and patient days, just as in the case of the Subdistrict, is due to an increase in acute care bed inventory. The increase in acute bed inventory has been accompanied by a moderation in the rate of growth in acute patient days in both the District and the Subdistrict. For example, from 2000 to 2001, acute care patient days in the Subdistrict increased by approximately 32,200 patient days. The following year, 2002, the volume of patient days increased by approximately 7,900 patient days from 2001 so that the rate of growth was down considerably. In 2003 the increase over 2002 was 2,929, another drop in the rate of growth of increase in patient days. In 2004 the increase over 2003 was down again, albeit only slightly, to 2,853, a stabilization in the rate of growth. Observation Days While occupancy rates and the rate of growth in patient days have declined recently, the activities of short- term acute care hospitals have diversified in recent years. For example, the hospitals participating in this proceeding now provide many more outpatient services than they did a few years ago. They also have increasing numbers of observation patients. A change since the February 2004 hearing is the increase in observation patients experienced by all parties. Around July 2004, the Centers for Medicare and Medicaid Services ("CMS") changed the certification and payment requirements for inpatient admissions. As a result, hospitals have seen a dramatic increase in the number of medical observation, or "23- hour," patients, whose conditions do not qualify for inpatient admission, but who are not in a condition to be discharged. For example, BMH observation patient days increased from 3,759 in FY 2003, to 4,897 in FY 2004, to 5,125 in FY 2005. In April 2005, BMH had an estimated 608 observation patient days, equating to an average of 20 observation patients each day occupying an inpatient bed. With such a high number of observation patients, BMH may have up to as many as 50 inpatient beds tied up at any one time with observation patients. None of the party hospitals has a separate observation unit, so observation patients typically must be placed in a licensed inpatient bed. However, observation patients are not counted in a hospital's annual acute care occupancy. Accordingly, recent reported trends in acute care occupancy do not present the complete picture as to the actual utilization of a hospital's licensed beds. A 75% inpatient occupancy level, therefore, which traditionally was considered optimal occupancy, now may be too high for optimal service and bed availability. Constraints to BMH Expansion Bethesda claims that it has capacity constraints at the BMH site that keep it from adding new beds. There is, in fact, no realistic possibility that Bethesda could acquire additional land bordering the existing BMH campus for expansion of that facility. Expansion of the existing boundaries of BMH's campus is not an option either. Bethesda's claim of inability to expand its facility on site at the existing BMH campus, however, is not as certain. Subsequent to the denial of its prior application, after Bethesda had argued in Bethesda I that it is not able to expand the BMH site, Bethesda obtained approval to begin a new open heart surgery program. A heart institute is now under construction that will add almost 80,000 square feet to the existing Bethesda campus. The plans for the institute involve adding a couple of stories over the existing hospital and a new four-story wing. Construction drawings for the institute were submitted in November of 2005 after the application in this case which claims inability to expand. Furthermore, at the hearing in Bethesda I, Bethesda minimized the impact of the proposed transfer of beds on occupancy at the main campus by claiming that it could terminate its existing contracts with Hospice of North Palm Beach and with respiratory services if it needed more beds. These contracts had been entered because of excess capacity at BMH. Patients in those units could be treated, moreover, at long-term acute care hospitals or free-standing hospices. Bethesda's assertions with regard to the contracts were accepted in Bethesda I. Bethesda has not initiated any efforts since to terminate the contracts. It has not asked its design team to look at design issues for conversion of the hospice or ventilator units into private acute-care beds. Nor has it done any other investigation into converting the beds to alleviate the space constraints it claims. In Bethesda I, the following finding was made: "Bethesda also presented evidence regarding its inability to add new beds at Bethesda Memorial because of physical and/or cost constraints, but that evidence was not persuasive." Bethesda I Recommended Order, p. 52. Under the circumstances of this case, that is the evidence presented and the findings of fact of this order, Bethesda's contention of inability to expand on the BMH site is not accepted. Bethesda's claim of inability to expand stands in stark contrast to the plans of other hospitals that participated in this proceeding. Each hospital opposing Bethesda's application has found it necessary to add more inpatient beds in recent years. Unlike BMH, each expects to construct even more bed capacity soon. The increases in bed capacity at WRMC, JFK, and Delray have been accompanied with other improvements dictated by health care planning. They show intent to make attempt to meet the health care needs of the Subdistrict's growing population. WRMC WRMC has developed a Facility Master Plan, based on projected hospital utilization by department, to guide construction and development of services and to ensure the capacity on its campus to meet the future needs of acute care patients in western Palm Beach County through 2011 and beyond. Within the past five years, WRMC has built a 30,000 square foot tower in front of and integrated with the main hospital for the purpose of relocating obstetrics and ICU, at a cost of $10m. The new tower contains 18 labor rooms, 10 level II NICU beds and 16 ICU beds, doubling the size of the earlier ICU and tripling the size of the labor and delivery suites. The layout of the new tower allows ample throughput capacity for patients who need ICU level services and ensures that neonatologists are available 24/7 for OB and the NICU. In 2000, WRMC purchased and placed in service a new Siemens Primus IRMT linear accelerator in the Cancer Center, at a cost of $2.5m. In 2001, the Outpatient Diagnostic Center was opened at a cost of $4.5m. In 2002, WRMC completed and opened three new operating rooms with associated recovery rooms, a short stay surgical waiting room for family, and a new admitting department, at a cost of $4.5m. In August 2004, WRMC added 22 additional acute care beds to its inventory by converting existing space in the hospital. In 2006, a parking garage was completed at a cost of $4.5m. During the next three fiscal years and as part of its five-year master plan for expanding WRMC's physical plant and acute care services for the residents of existing and future communities in west central and southern Palm Beach County, WRMC will: Double the size of the Cancer Center at a cost of $10m, of which $8.5m will be spent in 2006. Commencement of construction is imminent and will be completed in one year. The expanded Center will add a third linear accelerator, a third vault and associated exam rooms. Upgrade the central plant (equipment which provides air conditioning and emergency power) and classroom space. A third emergency power generator will be added. Classrooms are currently and the new classrooms will be, available to the public free of charge for healthcare informational seminars and support groups. The project costs of $250k will be incurred and the project will be completed in 2006. Double the size of the Emergency Department, adding 20 rooms and beds to total 40 E.D. beds. The project includes expansion of the adjacent inpatient imaging department. The total cost will be $16m, of which $6m will be spent in 2006. Construction will commence in June 2006 and take 1 year to complete. The construction will be phased to ensure continued operation of the E.D. during construction. In 2008, open a 15-bed NICU level III unit in renovated space. The initial development costs budgeted in 2006 are $100k. Construct a bed tower with 4 floors. The first floor will accommodate relocated ancillaries and remaining 3 floors will accommodate 40 acute care beds each, for a total of 120 new beds. The tower is designed to add an additional floor which would bring the capacity to 180 beds. The tower will be located to the rear of and integrated with the existing main hospital building and ancillaries, but will not need to duplicate existing ancillaries such as imaging, laboratory, admissions, cafeteria, and other service departments of the hospital. The approved budget is $22m, of which $2.5m will be spent in 2006. Construction is scheduled to commence in June of 2007. The tower is architecturally and functionally complementary to the main hospital and will be joined to the most recently completed front tower by a skybridge. WRMC, Inc., has sufficient land remaining on its campus for expansion. In September 2004, it annexed its campus into the Village of Wellington to ensure that it can expand its physical plant and services to meet the future acute care needs of the western Palm Beach communities. The main hospital, parking garage, and Cancer Center occupy only 15 of 56 acres owned by WRMC. Although some medical office buildings also occupy additional space, WRMC has ample room on its campus to expand its hospital. The County has approval authority for traffic impacts but the recent annexation of WRMC's site plan into the Village of Wellington should expedite future land use and building permitting for WRMC's projects. The Cancer Center and ED expansions have received County traffic concurrency approval. The capital budget total cost of each and all the aforementioned projects have been approved by UHS, Inc., WRMC, Inc.'s parent. Conservatively assuming the new WRMC bed tower will be 120 beds (instead of its potential 180), WRMC will be increasing its capacity overall from 153 to 278 beds, and will be opening a $22m new 120-bed acute care tower in point of time before Bethesda proposed to open an $82m new 80-bed acute care hospital less than 9 miles south of WRMC. Of the two approaches, WRMC's cost effective master planning represents the more appropriate incremental response to community growth in the west Boynton area. The additional 120 acute care beds which will be added to WRMC will also have less impact on existing nurse and physician shortages. WRMC already has, for example, an equipped and staffed cafeteria, central plant, laboratory, admissions department, emergency department and all the professional staff in those departments. A new hospital would have to hire the core staff for all those basic and ancillary services (the basic staff necessary whether there is only one or 40 patients in the hospital). The new bed tower at WRMC will not require a duplication of core staffing, but only the incremental professional and service staff for the beds. JFK JFK has the ability to expand in order to increase the services it offers and the number and types of patients it can treat. The hospital anticipates adding 36 beds in existing shelled-in space on its fifth floor in 2007. It also has room to add another 36 beds in its northwest tower. The existing hospital building can be expanded vertically in certain areas to accommodate additional beds, and JFK is exploring the possibility of purchasing land adjacent to its campus to the north, which would permit JFK to expand its physical campus further. Delray Delray is actively engaged in adding beds and services in its campus. In December 2005, 31 additional beds were added. Delray is adding a new central energy plant scheduled to be completed in July 2006, at a cost of approximately $1.1m. The energy plant is being added to accommodate expansion of the emergency department scheduled for May 2006 through May 2007; the addition of two major pieces of imaging equipment in the radiology department; a new 64-slice CT scanner; and a new 3.0 TASLA MRI. Additional building construction will also be necessary to house the new MRI, scheduled to come online in early 2007. Delray's emergency department expansion will increase the number of treatment rooms from 24 to 36, will include three distinct trauma rooms and a fast track area for efficient treatment of lower acuity patients and will have ancillary services in or proximal to the emergency department to achieve a rapid turnaround time with test results for emergency patients. The anticipated cost of the emergency department expansion is $8.4m. Other planned improvements at Delray include enhancing the radiology department to include a PACs digital imaging equipment system, which will improve the efficiency of diagnostic imaging, adding electrophysiology to its cardiac department, renovating the hospital pharmacy and installing hurricane windows. Delray typically spends approximately $12m- $15m per year on expansions and capital improvements. Delray has the ability to add beds through additional expansion or renovation on its campus. It has no plans at this time, however, to add beds at its facility. After the addition of 31 beds in December 2005, the hospital's occupancy level did not rise. The addition of 100 beds at Boca Community Hospital and the opening in approximately one year of interventional cardiology and open heart surgery programs at both Boca Raton Community Hospital and BMH, will likely reduce census levels at Delray and JFK and create additional capacity at each of those hospitals. Of Delray's 298 medical/surgical beds, 233 are equipped with telemetry equipment. Forty-two of the telemetry beds are the result of a recent conversion of 42 orthopedic surgery beds to a 42-bed telemetry unit at a cost of approximately $260,000. This conversion was done in part to improve patient flow from the emergency department into inpatient beds. All indications are that existing hospitals in South Palm Beach County are presently providing access and meeting the acute care needs of residents in the same PSA/SSA which Bethesda proposes to serve with its new hospital. Bethesda's opponents are making appropriate investments to meet the needs of the future population in those PSA/SSAs. The same conclusions apply when peak seasonal utilization patterns are examined. During peak occupancy, January 1-March 31st for each of the three years 2002-2004 inclusive, the average occupancy of acute care beds declined steadily and flattened in 2005, in both the District and Subdistrict 9-5. The rate of increase in licensed bed capacity is keeping pace and most often exceeds the increase in demand and utilization. When the new beds planned at Delray, JFK, and WRMC are added, it is reasonable to expect that peak season utilization will drop below 80%, a level that is considered manageable and not uncommon for peak season in South Florida. Impact of Proposed WBCH on Existing Hospitals Positive Impact on BMH A benefit associated with the development of WBCH will be improved efficiency and quality of care at BMH. The transfer of 80 beds from BMH to WBCH will allow Bethesda to convert BMH's large number of semi-private rooms to private rooms. Semi-private, two-bed rooms often may be used for only a single patient due to patient isolation/infection control concerns. An analysis of patient isolation days at BMH conducted in 2005, demonstrates that between 15% and 20% of the total patient days at BMH are patients who require isolation due to infection control concerns. Moreover, the number of isolation days at BMH has been increasing steadily over the last 2 to 3 years. Gender issues also limit the use of semi-private beds. In addition, BMH's many semi-private rooms have in turn led to bottlenecks in the ED, caused in large part by the inability to get patients who have been admitted through the ED to an inpatient bed. By redistributing certain patient volumes from BMH to the satellite, BMH will then be able to convert its remaining 67 semi-private rooms to private rooms, thereby eliminating the existing bottlenecks created by semi-private rooms and also improving the quality of care for all patients who otherwise would have been assigned to a semi-private room. Also, the average length of stay for ED patients should be substantially reduced. Bethesda cannot solve the ED patient backlog problems simply by adding telemetry beds. The problems have continued to escalate even after some telemetry beds were added. The large number of semi-private rooms is the problem. Impact to Opponents from Loss of Patients in the WBCH Service Area WBCH will have a minimal impact on Wellington Regional, JFK, and Delray in terms of projected lost patients per day. Delray's analysis showed that of the projected Year 1 average daily census ("ADC") of WBCH of 31.9 inpatients, 17.2 of those patients would be taken from other hospitals. (Ex. Delray-12 Tab 32). The remainder would be generated by population growth within the WBCH service area or redistributed from BMH, and thus would have no adverse impact. On rebuttal, Mr. Carroll demonstrated that Delray's analysis shows a very minimal loss by each of the opponents of patients from the WBCH service area. Of the 17.2 patients taken from all other hospitals, 10%, or 1.7 patients, are projected to come from outside of the WBCH total service area, leaving only 15.5 patients from within the WBCH service area who would be taken away from existing hospitals. Applying each opponent hospital's existing market share in the WBCH service area to those 15.5 patients, the result is a projected loss to JFK of only 3.8 patients (1.1% of JFK's ADC); a loss to Delray of only 3.1 patients (1.2% of Delray's ADC); and a loss to Wellington Regional of only 1.3 patients (1.4% of Wellington Regional's ADC). Effect of Population Growth On rebuttal, Mr. Carroll performed an analysis showing that the projected population growth in each opponent hospital's own service area will generate sufficient additional new patient volume to more than offset any potential impact resulting from the loss of patients from WBCH's service area. Wellington Regional's PSA, which Mr. Carroll defined as the area from which Wellington Regional draws 75% of its inpatients, consistent with the federal Stark law guidelines for defining a hospital's "geographic area," is projected to have a net resident population growth of 51,259 from 2005 to 2010. Applying the state-wide acute care use rate and Wellington Regional's current market share in its PSA to that additional population growth results in an additional 1,168 patients to Wellington Regional in 2010, which is approximately ten times the 135 patients that Mr. Davidson projected to be lost to WBCH. JFK's PSA, as defined by JFK's health care consultants, Healthcare Concepts, is projected to have a net resident population growth of 19,560 from 2005 to 2010. Applying the state-wide acute care use rate and JFK's current market share in its PSA to that additional population growth results in an additional 1,136 patients to JFK, which is approximately twice the lost patients calculated by JFK's witness Dr. Luke. Mr. Weiner's projection of JFK's inpatient occupancy supports Mr. Carroll's conclusion that the growing population in JFK's own service area will offset any potential loss of patients to WBCH. Mr. Weiner projects that JFK's occupancy rate for 460 beds, which includes 36 new beds projected to be opened in 2007, will be 79.32% in 2010 and 80.71% in 2011. In other words, Mr. Weiner projects that JFK, even after adding more beds, will have a higher occupancy rate after the opening of WBCH than it had in 2005. Delray's PSA, defined by Delray's own CEO as the area within a five-miles radius of the hospital, is projected to have a net resident population growth of 15,235 from 2005 to 2010. Applying the state-wide acute care use rate and Delray's current market share in its PSA to that additional population growth results in an additional 623 patients to Delray in 2010, which exceeds the number of lost patients calculated by Mr. Greene. Had Mr. Carroll utilized broader service areas for Wellington Regional, JFK, and Delray in his analysis, such as the ones defined by the opponents' health planning witnesses, the number of additional patients available to those hospitals from their own service areas would have been greater based on population growth in a larger area. Thus, Mr. Carroll's analysis is a conservative approach. While Mr. Greene projected that incremental growth in the WBCH total service area will generate a need for 71 additional non-tertiary acute care beds, neither he nor Ms. Greenberg performed an analysis of bed need that would be generated by incremental population growth over the next five years in either BMH's or the opposing parties' service areas, as was performed by Mr. Carroll. In the Recommended Order in the North Port HMA case (DOAH Case Nos. 04-2723, 04-3027, 04-3417), which was adopted by AHCA, the ALJ found it reasonable to take into account population growth in the existing hospitals' service areas in determining potential adverse impact, and to consider whether new patient volume there would offset any potential adverse impact due to patients lost from the applicant's service area. Other Issues Related to Adverse Impact Wellington Regional WBCH will have no material adverse impact on Wellington Regional. A significant change since the February 2004 hearing has been the operating and financial position of Wellington Regional. At that time, the ALJ found that Wellington Regional was one of the lowest utilized facilities in south Palm Beach County, with an occupancy rate for the year ending June 30, 2002, of 64.27% for 121 beds, and that Wellington Regional had an "accumulated deficit" of $22 million as of 2000. That finding was based upon the Audited Financial Statements of Wellington Regional, as an operating division, which are consistent with its AHCA Actual Reports, and not on the separate Audited Financial Statements of Wellington Regional Medical Center, Inc. Mr. Davidson presented evidence of rapidly improving conditions at Wellington Regional since the February 2004 hearing, with its occupancy rate increasing from 68.5% in 2002, to 74.7% in 2003, and to 75.9% in 2004. Delray's witness, Mr. Greene, testified that Wellington Regional's occupancy rate had "grown considerably," even with the addition of 22 beds in 2005. Bethesda witness William Cleverley, Ph.D., presented an analysis of the trends in the financial operating performance of Wellington Regional that shows vast improvement since the February 2004 hearing. Wellington Regional's accumulated deficit (or equity), based on the Audited Financial Statements for the operating division, improved from a negative $22 million in 2000, as reported in the February 2004 hearing, to a positive $29 million in 2003, and a positive approximately $32 million in 2004. Wellington Regional's Medicare Cost reports, filed with the federal government, likewise show that Wellington Regional reported substantial positive equity, i.e., no accumulated deficit, in 2003 and 2004. Moreover, in 2003 and 2004, Wellington Regional's return on equity, i.e., after-tax net income divided by ending equity, which is a primary measure of the financial performance of a hospital, was at a level on average with most investor- owned hospitals, and significantly higher than most not-for- profit hospitals. Wellington Regional's return on equity in 2003 (14.64%) and 2004 (16.19%) was approximately twice that of Bethesda (7.4%) for those years. In sum, Wellington Regional now has strong financial equity and operating performance. Wellington Regional has added acute care beds since the February 2004 hearing, and it has plans for another major expansion in the near future. In August 2004, a mere months after the February 2004 Hearing, where Wellington Regional opposed Bethesda's and JFK's proposals for West Boynton area hospitals asserting that no need existed, and prior to Judge Wetherell's September 2004 Recommended Order, Wellington itself sought a CON exemption from AHCA to add 22 acute care beds. On July 30, 2004, Wellington Regional filed with the Village of Wellington an application for annexation to expand its facility to support an additional 180 patient beds. Part of the justification for Wellington Regional's site plan is as follows: As illustrated by the conceptual master plan submitted with this application, both the Wellington Regional Hospital and associated medical office space will continue to expand to meet the growing needs of the residents of the Town of Wellington and west central Palm Beach County communities. Wellington Regional has definite plans to begin construction in 2007, on a new bed tower that will add 120 acute care beds. Consistent with Wellington Regional's position that it serves west central Palm Beach County, rather than southern areas such as West Boynton, the WBCH home site zip code, 33437, generates only 1.6% of Wellington Regional's adult discharges, and generates the fewest discharges of any of the zip codes included by Mr. Davidson in his expansive Wellington Regional service area. The financial adverse impact on Wellington Regional from WBCH asserted at hearing is minimal compared to Wellington Regional's 2005 and budgeted 2006 financial operating statistics. Mr. Davidson calculated that Wellington Regional would lose approximately $974,000 in net income in Year 1 due to WBCH, which is minimal compared to Wellington Regional's income from operations of $18.6 million in 2004, $23.5 million in 2005, and budgeted $30.7 million in 2006. Wellington Regional had extremely healthy operating margins of 18.4% in 2004, and 19.5% in 2005. Moreover, Wellington Regional's parent, Universal, is already committed to fund over $53 million in new projects at Wellington Regional, and has substantial financial resources available to support Wellington Regional, as necessary. Universal's net cash increased from $393 million in 2004, to $425 million in 2005, to an expected $475 to $500 million in 2006. In addition, in 2005 Universal received approximately $131 million in after-tax gains from discontinued operations, including the sales of two hospitals. JFK WBCH will have minimal adverse impact on JFK. There is no extensive overlap in the area that traditionally is served by JFK and the area that will be served by WBCH. Two of the zip codes in WBCH's PSA, zip codes 33437 (home-site) and 33436, are not included in the JFK primary service area it relies upon for its strategic planning purposes, as reflected in a recent map prepared for it by its regular strategic consultant, Healthcare Concepts. . JFK's projections of adverse impact are based on a calculation of lost cases performed by Dr. Luke, and an assessment of the financial impact of those lost cases performed by Mr. Weiner. As to the first step, Dr. Luke's calculations were not reliable due to a number of flaws in his analysis that undermine his projections. JFK's projections of financial adverse impact similarly were not reliable due to a number of flaws in Mr. Weiner's analysis that undermine his projections. Based on Mr. Weiner's projections, JFK still would have a very strong EBDITA income after the opening of WBCH and the OHS programs at BMH and Boca Raton Community Hospital. Mr. Weiner projected that JFK's 2013 EBDITA would be $78,532,538. Thus, even if Mr. Weiner's full calculation of impact materialized, JFK's 2013 EBDITA still would be in excess of $53 million. Furthermore, Mr. Weiner's financial impact analysis did not account for the significant growth in OHS procedures and other cardiovascular volumes anticipated by JFK. JFK has budgeted 828 OHS procedures in 2006, an increase of approximately 120 cases over its 2005 OHS volume. Those additional OHS cases will have a positive contribution of approximately $2.5 million in 2006, increasing each year to approximately $3.24 million in 2013. Adding in the additional contribution margin expected from growth in therapeutic caths, diagnostic caths, and other cardiovascular cases, the additional projected contribution margin based on total cardiovascular volume growth is approximately $17.5 million in 2013, which should be taken into account in determining any adverse impact. The conclusion that the approval of WBCH, in addition to recently approved OHS programs at BMH and Boca Raton, will "imperil the financial survival or viability of [JFK] going forward," tr. 6113, is not supported by the evidence. JFK's parent, HCA, is experiencing levels of profitability that are significantly above averages for investor-owned hospital companies. It is undisputed that HCA is a very strong, prosperous investor-owned hospital company. Considering the strong financial health of HCA, it cannot reasonably be concluded that JFK would be in financial peril from the approval of WBCH. In fact, JFK internally reported an operating loss in 2004 after intercompany expenses, yet HCA still charged JFK a management fee of over $21 million, signifying that at the corporate level JFK was not considered to be in financial peril. Moreover, JFK's plan to add 36 new beds in 2007, is inconsistent with any notion that it will be in financial peril in the near future, or that it truly expects to have any excess capacity as a result of the new BMH and Boca Raton services. Delray Bethesda's proposed WBCH will not have a material adverse impact on Delray. Delray's contribution margin financial adverse impact analysis projected that it would have an after-tax loss of income of approximately $1.08 million to $1.32 million attributable to WBCH. The projected impact is overstated. Even so, the projected loss pales in comparison to Delray's $77,828,436 contribution margin in 2004. If the loss of income materialized, Delray would not be imperiled. In late 2005, Delray added 31 acute care beds, with full knowledge that the Bethesda and Boca OHS programs had received approval in early 2005, and were coming on line, and also that Bethesda's WBCH has been preliminarily approved by AHCA. Delray's decision to incur the costs of construction and staffing of the new patient beds indicates that Delray does not truly expect the new projects at other hospitals to leave it with any material excess bed capacity. Subsection (3) Subsection (3) of the CON Statutory Review Criteria is: "The ability of the applicant to provide quality of care and the applicant's record of providing quality of care." Bethesda has a record of providing high quality of care to the patients it serves. BMH is fully accredited by the Joint Commission on Accreditation of Health Care Organizations ("JCAHO") and it offers a number of high-quality specialty programs at BMH for the benefit of its patients. Among the high-quality specialty programs at BMH is a stroke program. Developed as the first JCAHO-certified Primary Stroke Program in Palm Beach County, the program is directed by Mark Brody, M.D., a Board-certified neurologist. Dr. Brody arrived at BMH approximately nine years ago after serving as Medical Director of the Stroke Investigational Research Program at Scripps Memorial Hospital in San Diego, California. Upon arrival, he immediately began to develop a program at BMH to treat acute stroke. Today, BMH's Stroke Program is recognized as a "Center of Excellence." It offers treatment protocols based on standards outlined by the National Stroke Association and the Stroke Division of the American Heart Association; full-time ED stroke and neurosurgery coverage and specialized ED protocols to respond quickly to acute stroke; specialized training of nursing staff; preventive stroke education; stroke-specific discharge planning; and extensive stroke-related research and clinical trials. BMH's Stroke Program under the guidance of Dr. Brody is an excellent program for the assessment, management, and treatment of stroke with tissue plasminogen activator ("TPA"), a drug that removes blood clots from blocked arteries. With respect to the treatment of acute stroke, administration of TPA is the standard of care and almost always the treatment of choice. TPA must be administered within three hours from the onset of stroke symptoms. Accordingly, time is of the essence. Stroke care must be available around the clock. BMH recently opened a CMR program which will compliment its stroke program and benefit stroke patients by allowing rehabilitation to take place with personnel who know the original diagnosis and mechanism of the stroke. Such continuity of care has been shown to lead to better outcomes. BMH also conducts a high quality cancer program. Its Cancer Care Center, accredited by the Commission on Cancer of the American College of Surgeons and by the American College of Radiology for achievement of high practice standards in the Center for Radiation Oncology, provides a full complement of diagnostic and therapeutic services for cancer patients. Dr. Roger Brito, a Board-certified medical oncologist, hematologist, and cancer blood specialist, worked with BMH to develop its Cancer Care Center into a premier program. Closely linked to BMH's cancer program is its hematology program. Together, BMH's cancer and hematology programs treat a wide range of patients, including those suffering from solid tumors (e.g., breast cancers, colon cancers, or lung cancers), lymphomas, cancers of the blood and blood disorders, and anemias. The majority of the patients treated in the cancer and hematology programs are geriatric patients. Key components to BMH's cancer and hematology programs are its extensive research and clinical trials. BMH and its physicians continually search for new or improved treatment protocols to benefit patients in the community. The Bethesda Vascular Institute utilizes a multi- disciplinary approach to treat a wide range of vascular disorders. Dr. Miguel Lopez-Viego, a Board-certified general and vascular surgeon, serves as the Medical Director of the Vascular Institute. His group treats a wide range of patients and conditions at BMH, including a variety of cancers, aortic aneurysms, peripheral vascular disease, and basically the full range of surgical issues short of neurosurgery and cardiac surgery. Bethesda uses state-of-the-art equipment and has introduced some types of advanced equipment into the Subdistrict. For example, BMH's Radiology Department has one of the first Picture Archiving Communication Systems ("PACS") that Siemens installed in the country, and it serves as a "show site" for Siemens PACS. A PACS system captures radiology images digitally and allows those images to be viewed and interpreted at any number of remote terminals or via the internet. BMH's PACS system has dramatically improved efficiency, turnaround times, and quality of care. Further examples of Bethesda's commitment to providing state-of-the-art equipment are the various radiology and imaging modalities available at BMH and Bethesda Health City, including three 1.5T MRI systems, three multi-slice CT scanners, top-of-the-line ultrasound equipment, and a combination PET/CT scanner. Ability to Provide Quality of Care at WBCH The ALJ in Bethesda I made the following finding: [T]he proposed satellite hospitals [JFK's and Bethesda's] will offer a more narrow range of services than the existing tertiary hospitals presently serving the area. This is significant because the elderly, who make [up] a large portion of the West Boynton area and who are more likely to have co- morbidities or more complex medical needs, are generally better served in a hospital offering tertiary services and more complete care. Bethesda I Recommended Order at 35, paragraph 221. Whether elderly or not, patients with co-morbidities or more complex medical needs are generally better served in a hospital offering tertiary services and more complete care. The evidence in this case supports the finding quoted above from Bethesda I to the extent that the elderly, particularly the "frail" elderly, are more likely to have co-morbidities and complex medical needs than the general population. But the evidence in this case does not support the finding that the elderly as a group are generally better served in hospitals offering tertiary services. To the contrary, the "active" elderly (the pre-dominant demographic group in the population in the West Boynton area) in need of hospital services are not more likely to need tertiary hospital services and the complete care that community hospitals do not offer than they are to need the care available at a community hospital. Like most patients in the general population admitted to acute care hospitals, a sizeable bulk of patients among the active elderly admitted to hospitals, will not need services beyond proper diagnosis and stabilization. Proper diagnosis and stabilization are functions performed adequately in a community hospital setting. There are certainly occasions when patients admitted to community hospitals must be transferred to hospitals that provide more complete care. With regard to these patients, however, more often than not transfers take place under conditions that are not emergent, requiring immediate attention and treatment. Community hospitals or a satellite hospital like WBCH can adequately diagnose and stabilize these patients and then transfer them, if necessary, for appropriate services not available at the community hospital. On the other hand, WBCH will not have the ability to provide quality of care to the patient who presents in emergent need of tertiary services and the complete care not available at a community hospital. The ability of Bethesda to provide quality of care at WBCH must be considered in relation to prospective patients under two categories: a.) patients in need of emergent care requiring services that would not be offered at WBCH, and b.) other patients. Emergency Patients In Need of Service Not Offered at WBCH For patients with complicated problems and complex medical needs who present at WBCH and who would need to be transferred immediately because of the emergency nature of the situation, the delay in care that would be entailed would most often not be in the patient's interest. These patients will be better served where they can receive aggressive state-of-the-art advanced and tertiary treatment at one of the facilities set up to offer such treatment. In the Subdistrict, these include three hospitals operated by three of the parties to this proceeding: JFK, BMH, and Delray. The primary example of a patient in need of tertiary services and care more complete than what WBCH will offer is a patient who has a cardiac condition that requires emergency angioplasty rather than a scheduled angioplasty. There have been significant changes recently in the delivery of health care to patients with cardiac conditions. The standard of care has evolved for certain types of heart attacks to be treated with emergency angioplasty, which can only be done at a facility with an open heart program. Consistent with this evolution, Emergency Medical Services ("EMS") are instructed to bypass the closest hospital for these types of patients in order to deliver them to a cardiac center that can provide appropriate treatment. EMS patients assessed to potentially need emergency angioplasty, if instructions are followed, will not be taken to WBCH. Those served by EMS, therefore, will not be affected by delay that would be entailed with presenting at WBCH's ER. In other words, WBCH will not be a "trap," as denominated by JFK for patients in need of emergency angioplasty who are transported to the hospital by EMS. Patients for whom WBCH could be a "trap," are those who are in need of high-level care such as emergency angioplasty and who arrive at WBCH by their own means rather than by ambulance. They are very likely to suffer adverse impacts by the delay in receiving appropriate advanced treatment. The emergency room at WBCH would not have the necessary equipment, technology, experience or subspecialties to treat the patient. Transfer to a more appropriate hospital would most often entail significantly more delay than would the longer drive to that hospital in the first place. Other Patients WBCH will afford better quality of care to other patients (those not in emergent need of medical services not offered at WBCH). These patients will include the elderly in West Boynton who do not have co-morbidities or complex medical needs and the undocumented alien population served by the Caridad Clinic not in need of OB services. They will benefit from one or the other of: a new, focused geriatric program for the elderly at WBCH; from the addition of another ED in south Palm Beach County; and from the likely availability of a new, more accessible primary stroke program in the western part of Palm Beach County. In addition, there will be improvement in quality of care in the Subdistrict from Bethesda's conversion to all private rooms both at BMH and at WBCH and from the benefits to the entire Bethesda System, its patients, and the West Boynton community of the availability of an additional, newly constructed hospital providing more access and more surge capacity for the public during hurricanes. It is reasonably expected that the same high quality of patient care as currently provided at BMH will be afforded in the services to be offered at Bethesda's proposed WBCH, which will be staffed by the same medical staff as BMH. Also, a number of nurses, technicians, and therapists who currently work at BMH will be available to staff WBCH, and WBCH will be operated by the same management team, including clinical department managers. The approval of WBCH will allow Bethesda to extend to the West Boynton population the benefits of BMH's JCAHO- accredited primary stroke program in a more convenient location. BMH's existing stroke program will be integrated into the new WBCH, with Dr. Brody serving as Medical Director of the program at both locations. Most of the groundwork, such as regulatory work, training, investigational protocols, and staffing resources is in place at BMH, and will be readily transferable to the new WBCH. Bethesda intends to seek JCAHO certification, and the credible evidence shows that WBCH likely will be qualified as a Primary Stroke Center. The availability of the stroke program at WBCH will enhance access to quality care for West Boynton residents, and particularly the elderly. As previously discussed, time is of the essence in treating acute stroke. A West Boynton area stroke center will improve the chances of a rapid, accurate diagnosis of the mechanism of a West Boynton patient's stroke, and taking urgent appropriate measures, by physicians and staff with expertise in the field, to treat the patient, possibly through the administration of intravenous TPA. A stroke program closer to the center of greater population growth in the West Boynton area will facilitate shorter times for intervention and greater chances for interventional treatment. There is no such primary stroke program at any of the existing hospitals in the rapidly growing western portions of south and central Palm Beach County. It also is expected that Bethesda will extend its cancer and hematology programs to WBCH. Dr. Brito testified that 30% of his current patients are from the West Boynton area, and that the percentage is steadily increasing. Accordingly, locating Bethesda's cancer and hematology programs in the West Boynton area will benefit a significant number of patients. Cancer patients and patients with advanced blood disorders tend to be elderly. Often elderly patients are hesitant to travel what they perceive as significant distances for regular treatments, which can lead to more acute problems, such as tumor growth, and the necessity for more complex treatments. For such patients who require hospitalization, increased travel times to the hospital can correlate to prolonged hospitalizations or negative outcomes. Therefore, a more accessible WBCH would benefit the elderly who do not have co-morbidities or complex medical needs that require more complete care than will be offered at WBCH. Extension of Bethesda's cancer program to WBCH, which will be more accessible to West Boynton area cancer patients, will benefit Bethesda's cancer research and clinical trials as it will enable Bethesda to enroll more patients in those trials. The improvement in quality of care that a satellite hospital in the West Boynton area will provide the bulk of its patients was an argument JFK made in Bethesda I. JFK's Position in Bethesda I JFK itself in 2003 applied for a similar bed-size satellite hospital to be located in West Boynton west of the Turnpike, without OHS/interventional cardiology services or specialized neurological services. The HCA/JFK organization and several of its witnesses then expressed the opinion that such a community hospital was needed and would provide quality care. In terms of resources and scope of services, there is nothing about JFK's prior proposal that is different from Bethesda's current proposal. In a public hearing before the Treasure Coast Health Council, the Chief Medical Officer at JFK described the reasons he supported a satellite hospital in the West Boynton area. Among his comments were these: We're told, well, maybe we don't really need a hospital in the West Boynton Beach area because it's really no more than thirty minutes to any of the existing facilities. I am a middle-aged driver of a sports car. Trust me, when I reach Boynton Beach Boulevard and Jog Road every morning, it takes me more than thirty minutes to drive at sixty miles and [sic] hour, in and out of traffic, just to get to JFK Medical Center. * * * I'm also not a 75-year old individual having chest pain on my drive. I'm not somebody who's worried that their spouse, or somebody else they really care about, is very ill and in a hospital . . . When I moved to Florida, . . . 1991 . . . Boynton Beach Boulevard and Jog Road was where I used to go to buy cherries and tomatoes. I meant, that what it was. There was nothing there. The growth has been absolutely staggering. So I mean, there is no question in my mind that this is an area with just absolutely mind boggling growth. And as we all know as well, the majority of the residents who live there tend to be elderly. * * * [T]he area of medicine that we've made the most progress on [is cardiac.] We now have ... angioplasty . . . there are now new stints [sic] . . . which essentially don't clog again . . . [t]here have been advances in bypass surgery. * * * So there have been huge, huge advances. * * * [T]hese are dramatic . . . [s]o what do you want? You want a hospital that's going to be near you, that is going to have an area of excellence in the most likely area that you are going to be sick. What is that area? The area is in cardiac disease. * * * I think there's absolutely no question the need is there. The population growth is staggering. The majority of the people moving in are already elderly. Elderly people get sick, they need facilities. You've also heard arguments that these hospitals won't be full-service. But that's okay because you don't need to have every hospital in South Florida offering heart surgery. What you need is expertise and excellence in the care of these diseases. At least 90 percent of patients coming into hospital with a vascular problem do not require bypass surgery, do not require ablations of abnormal heart rhythms. What they require is proper diagnosis, stabilization, and they'll do fine in a community care setting. That's what they need. Ex. B-132, Depo. Ex. 1-ID, at 53-56 (emphasis supplied.) With regard to ER issues, the same witness then explained the importance of accessible community hospitals: It doesn't matter how many beds we add at JFK Medical Center. There is still going to be 30, 40, 50 patients in the ER. The need is there. The population is getting older. The population is getting sicker. And they require medical services. The most facilitative approach, the best way to deal with this issue, is to have a community hospital that is able to provide primary care for the majority of patients in your community, and then, if you require more expertise or you need the next level of care, an easy way to facilitate that care in a certain institution of excellence. Ex. B-132, Depo. Ex. 1 p. 58. This testimony is consistent with the testimony of Dr. Lopez-Viega and others that quality of care will improve for a significant number of elderly patients in the West Boynton area because of less delay in diagnosis and treatment, less stress for them and a reduction in the pressure on medical personnel. These include the victims of stroke. Stroke The Subdistrict facility of optimum care for stroke is JFK. Its recent development of specialty neuroradiological services and recruitment of Dr. Jaffe, an interventional neuroradiologist, who offers an extremely high level of care to stroke victims not available elsewhere in the Subdistrict, is the high point of its stroke program. One of only four interventional neuroradiologists in all of southeast Florida, Dr. Jaffe is Board-certified in radiology diagnostics. He also holds a certificate of added qualification in interventional neuroradiology, the minimally invasive treatment of vascular diseases of the central nervous system. Interventional neuroradiology employs the practice of inserting into an artery delicate tube-like structures (catheters) guided by radiological-type images. These images include ionizing radiation such as fluoroscope, "whether it be ultrasound, CAT scans, [or] MR, in order to guide catheters for therapeutic purposes." Tr. 3675. The field encompasses traditional surgical methods that used to be done via open procedures . . . now done via catheters and via image guidance." Id. Dr. Jaffe sees patients with acute stroke, bleeding in the brain or a blockage of an artery in the body, or in Dr. Jaffe's words, "a multitude of patients with different disease processes." Id. But JFK's pre-eminence in stroke care in the Subdistrict does not reduce the quality of care benefits that Bethesda's WBCH, with its accredited stroke program, will bring to the West Boynton community. Stroke is the interruption of blood flow to parts of the brain often because of blood clot. It is potentially devastating to the patient. Administration of Tissue Plasminogen Activator ("TPA"), a medication given by vein which flows through the body to the site of the stroke-causing blood clot with clot- dissolving capability, will be available at WBCH. Capable of being administered in an emergency room where stroke victims often present, it is the standard of care for treating stroke patients. While TPA has the capacity to reverse the effects of a potentially devastating stroke, it has its limitations. For example, there is usually only a three-hour window during in which administration of TPA can be effective. In contrast, the intra-arterial procedures performed by the interventional neuroradiologist is often effective beyond the three-hour window. In the case of posterior circulation occlusions, the procedure may extend the window of effective treatment up to 12 hours. There is also risk associated with the administration of TPA, mainly that its blood-thinning capability will induce bleeding in the patient that could be serious, even fatal. There are other limitations. TPA must be administered by a trained subspecialist, usually a neurologist. There are a limited number of trained neurologists practicing in the Subdistrict. But they constitute a multiple of the interventional neuroradiologists: one, in the person of Dr. Jaffe. There are, in fact, only four interventional neuroradiologists in all of Southeast Florida. The three in addition to Dr. Jaffe are one in Miami, one in Hollywood and one who "volleys through hospitals [in] Broward [County.]" Tr. 3677. There are no more than four in the rest of the state: one in Orlando, two in Gainesville and perhaps one in Naples. The implication for patients as the result of the few trained interventional neuroradiologist in the state is that the therapy of interventional neuroradiology is not available to most patients, either at all or in a timely manner. In addition to the extension of the time-duration window of treatment, the intra-arterial procedures performed by Dr. Jaffe can have tremendous benefits and greater effect than TPA. But the administration of TPA, is a safer and more simple system than the intra-arterial procedure performed by the interventional neuroradiologist. The pressures are different between the two procedures. An intravenous medication such as TPA allows for diffusion throughout the body to the clot. It is not invasive as is the insertion of catheters guided by radiology to the point of the clot employed by an interventional neuroradiologist. Like the intra-arterial procedures performed by Dr. Jaffe, the administration of TPA has a degree of morbidity. It must be administered with great care by appropriately trained personnel. But it can be routinely done in an emergency room or other part of the hospital. In contrast, the intra-arterial procedure performed by the interventional neuroradiologist is a procedure that must be conducted in an operating room by a team of specialists and medical personnel. In sum, at least at present, the administration of TPA is simpler, much more available and carries fewer risks than the intra-arterial procedures performed by Dr. Jaffe. JFK: Not a Full Service Provider While JFK has the pre-eminent program in the Subdistrict it is not a full service provider of hospital services. It routinely must transfer patients to other hospitals or facilities for services or procedures not available at JFK. It does not provide OB, NICU, or specialized pediatric services, and such patients who arrive at JFK's ED must be transferred to another facility. JFK also lacks a CMR program, so patients, such as stroke patients, who need such rehabilitation services must be transferred to another facility. JFK does not have a full range of imaging services, as it has closed its PET service and has not yet implemented a PACS system. Importantly, legislation passed in 2004 prohibiting the establishment of specialty hospitals, indicating the Legislature's preference for general med-surg hospitals over specialty hospitals. JFK's health planning witness conceded that JFK's position that specialty services should be concentrated in a limited number of high volume hospitals would support a preference for specialty hospitals, contrary to the policy inherent in the Legislature's moratorium on specialty hospitals. Subsection (4) Subsection 4 of the CON Review Criteria Statutes is "[t]he availability of resources, including health personnel, management personnel, and funds for capital and operating expenditures, for project accomplishment and operation." § 408.035(4), Fla. Stat. Health Personnel Physicians The proposed WBCH will share the same medical staff that now covers BMH. The BMH medical staff includes more than 500 physicians covering 30 to 40 different subspecialty areas. Approximately 126 physicians have joined BMH's medical staff since November 2, 2002. Of that number of relocating physicians, 2.5% were actively recruited by Bethesda. BMH's medical staff will be able to provide physician resources necessary to cover services offered at WBCH. There is a problem in Palm Beach County, however, with a shortage of specialists for ER call. The problem has existed for some time. With regard to the issue, the Bethesda I Recommended Order found the following: Because of malpractice and other concerns, it is becoming increasingly difficult for hospitals to attract physicians who are willing to take ER calls. The Palm Beach County Medical Society and the CEOs of the existing hospitals in the county met as recently as December 2003 to discuss the problems related to ER call coverage: however, as of the date of the hearing, the problem still existed and was severe. * * * The problem of ER call coverage is most significant in specialties such as neurosurgery, hand surgery, urology, OB, and ear/nose/throat. Several of the hospitals in South Palm Beach County, including Wellington and Delray, have begun to pay physicians, and particularly specialty physicians to take ER call. 263. Adding a new hospital in South Palm Beach County will exacerbate this problem in several respects. First, it will add another hospital to the ER call rotations of the physicians who chose to obtain privileges at the satellite hospital, thereby increasing the prospect of a physician being on call at more than one hospital at the same time. Second, it will make it even more difficult or costly for existing hospitals to obtain call coverage by the specialty physicians that are already in short supply. Bethesda I Recommended Order, at 69-70. The efforts of the Palm Beach County Medical Society and hospital CEOs referred-to in the Bethesda I Recommended Order have continued in the interim. In 2004, a study commissioned by the Palm Beach County Medical Society was made public. The study, entitled, "Specialist On-Call Coverage of Palm Beach County Emergency Departments" (see Dr. Butz depo #2, attached to WRMC Ex. 30), was conducted by MDContent. Among the principals of MDContent is David A. Butz, Ph.D., Co-Director of the Center for Healthcare Economics at the University of Michigan, and an expert economist. Issues examined by MDContent included "shortages in staffing of on-call schedules in Palm Beach County emergency departments." WRMC Ex. 30, p. 17. The study concluded that there is a severe and growing shortage of physician specialists to take on-call coverage of Palm Beach County emergency departments. The shortage was determined to be due to a number of factors including high malpractice insurance and exposure to lawsuits. One of the factors causing the shortage is unusual in relation to the nation and the rest of Florida: the aging of the physician population in Palm Beach County and the relatively small percentage of MDs in the county who have received medical degrees since 1990. The report also found that among physicians who responded to surveys analyzed by MDContent un-reimbursed care in the ED is problematic for physicians as malpractice liability. Three recommendations were made in the report for solving the shortage. The first was to form a management committee. A management committee has been formed. The second recommendation was to investigate clinical repercussions of the shortages in on-call specialty care. The management committee took action on this recommendation. Medical specialties were identified in which the shortages were particularly acute: hand surgery, neurosurgery (the two highest priorities) and high risk obstetrics. Orthopedics, ENTs, general surgeons and opthalmologists were added to the list, as well as some sub-specialists like pulmonologists to deal with high-risk ventilator patients. The third recommendation was for hospitals in the healthcare district to provide compensation for ED on-call coverage. Implementation of the third recommendation as begun to improve the situation particularly with regard to ED call coverage in neurosurgery. No hospital in the County had 24/7 neurosurgery call coverage at the time of the February 2004 hearing. Neurosurgery ED call coverage has improved substantially since the February 2004 hearing, mainly because Palm Beach County hospitals, like Broward hospitals, Dade hospitals, and Orlando hospitals, started to compensate neurosurgeons for providing ED call coverage, either with stipends or through employment arrangements. In at least the case of one neurosurgeon recently recruited, the physician's liability insurance is being covered under the arrangement. In addition, beginning in the spring of 2004, the Health Care District started subsidizing compensation of neurosurgery call coverage at the trauma hospitals, Delray and St. Mary's, which improved the trauma circumstances in the County. At the time of the final hearing in this matter, BMH, Delray, and JFK all had 24/7 neurosurgery ED call coverage in place. BMH, with the advice of a national consulting firm, established, effective April 1, 2006, a comprehensive compensation program for ED call coverage, much like the program at Boca Raton Community Hospital. Bethesda already had 24/7 coverage for most specialties when it implemented the program, and plans for implementation of the program enabled Bethesda immediately to secure 24/7 ED call coverage for neurosurgery. BMH has added two additional neurosurgeons to its staff, who, together with Dr. Nair, provide full 24/7 coverage for BMH's ED and will also cover the WBCH ED when it opens. The Bethesda compensation program is a "system-wide" program, so there will not be any additional costs for providing ED call coverage for the proposed WBCH. Delray started paying neurosurgeons for ED call coverage in April 2004, and has had full 24/7 neurosurgery ED coverage every day since August 2004. JFK obtained full neurosurgery ED call coverage in March/April 2005, through neurosurgeons employed by an HCA affiliate, who also now cover Jupiter Medical Center. Following the success of its compensation program for neurosurgeons, Delray has also put an ED compensation program in place for all but 2 of 17 specialties. Likewise, JFK provides compensation for ED coverage to a number of physician specialists in addition to neurosurgeons, such as neurologists, cardiac surgeons, OB/GYNs, and cardiologists, through compensation arrangements, employment arrangements, or exclusive contract arrangements. JFK's CEO testified that JFK serves the public as a good steward by providing compensation to specialists to ensure access to ED care. The other specialty in Palm Beach County that was found to be most problematic, hand surgery, is currently being addressed by a program developed cooperatively by the ED Management Group, which was formed by County hospitals, the Palm Beach County Medical Society, and the Health Care District. The MDContent study report assumed that few new physicians were being recruited to Palm Beach County. To the contrary, a substantial number of new physicians, many from outside of the State, have joined the medical staffs of all the party hospitals since the February 2004 hearing. Evidence was presented at hearing that Palm Beach County does not have significant issues recruiting physicians. Dr. Michael Lakow, a JFK cardiologist, testified that most of the candidates his group interviews are from the Northeast, so Palm Beach County offers a lower cost of living and the benefit of no state income tax. Another recruiting benefit is the Palm Beach County weather, which was a primary reason that Dr. Jaffe, who recently relocated from Pennsylvania, elected to practice at JFK as opposed to a hospital in Mississippi or Georgia. The availability of a new hospital in the growing, more affluent West Boynton area, moreover, will only improve Bethesda's ability to recruit more physicians into Palm Beach County to join Bethesda's medical staff. The new physicians will not be limited solely to practicing at a safety net hospital located in the east. The MDContent report found that Palm Beach County suffered from the lack of sufficient residency opportunities, which impacted physician recruitment. Since the report, however, a new medical school has opened in Palm Beach County, at Florida Atlantic University ("FAU"), and local hospitals such as BMH and JFK plan to offer residency positions to FAU students. The problem of the shortage of on-call specialists, therefore, is now better defined than it was in Bethesda I. Steps, such as providing improved compensation, have been taken by some hospitals, particularly with regard to neurosurgery. Recruiting of physicians has improved in Palm Beach County. These steps are helping to ease the shortage. The problem is not solved, however, nor will it be in the near term. If the recommendation of MDContent and Dr. Butz are implemented, the shortage of ED on-call physicians in certain specialties will not end in the next five years. In the long term, however, implementation of the recommendations have the potential to resolve the shortage. The shortage of on-call physicians in the specialties identified by the management committee, moreover, will not be helped by the addition of WBCH and its ED. While WBCH's ED should be adequately served by on-call specialists through arrangements with BMH, the presence of WBCH's ED will not help the shortage in the Subdistrict or Palm Beach County. As Dr. Butz opined, "the burden on physicians of staffing a 13th emergency department in Palm Beach County [WBCH's] cannot but make the shortage worse." WRMC Ex. 30, p. 45. AHCA's position with respect to such ED call coverage issues is that specialist on-call availability is not a reason to deny a satellite hospital application. AHCA believes the shortage to be a short-term issue, and expects market forces to correct it, as in the case of the nursing shortage experienced five years ago. The effect of market forces and the implementation of recommendations with potential to solve the shortage remain to be seen, of course. As AHCA maintains, the shortage, as one factor to be weighed in the CON balancing process, is not by itself a reason to deny the application. But the exacerbation of the shortage in the Subdistrict and the County caused by the addition of WBCH is a factor that weighs against approval. Nurses and Technicians Notwithstanding a general nursing shortage in past years, Florida is witnessing a downward trend in nurse vacancy rates, as reported in the January 2005 FHA report. According to the FHA report, which JFK's HR witness acknowledged as a resource for determining nursing vacancies statewide, Florida's nurse vacancy rates have decreased from 15.6% in 2001, to 8.2% in 2004. BMH's nurse vacancy rate for its med-surg, ICU, OR, and ED nursing positions is 9%. BMH's nursing turnover rate is 9.5%, while at the time of its 2003 Application, its nursing turnover rate was 12% to 13%. BMH has been able to staff adequately all of its beds and services. BMH maintains a higher nurse-to-patient ratio than the opponents' for-profit hospitals, which, in turn, contributes to a higher quality of care. Further, higher nurse- to-patient ratios limit the stress on existing staff, which reduces staff turnover. Bethesda has not experienced nurses turning down employment due to the housing costs in south Florida. At the request of Palm Beach County, Bethesda will provide affordable work force housing on the campus of WBCH. In addition, affordable work force housing, such as Winsberg Farms, and town homes, such as Briella Town Homes near Bethesda Health City, currently exist or are being developed in the West Boynton area. JFK likewise is considering a plan to provide affordable housing near the JFK campus. BMH will be able to provide adequate nursing staff and technicians at WBCH, as set forth in Schedule 6A of its application, in part by relocating some of its existing staff from BMH, thereby reducing the recruiting requirements for the new facility. The salaries projected for the WBCH as shown on Schedule 6A are reasonable. Despite voicing nurse shortage concerns, all opponents have recently added acute care beds and new or expanded services, and all have been able to add the necessary accompanying staff. Moreover, Wellington Regional and JFK plan to add more beds in the near future, which is inconsistent with their stated concerns regarding staffing difficulties. JFK claims to have faced difficulties in recruiting and retaining radiology technicians. BMH, however, has not faced any such difficulties, in part because BMH operates an on- campus school for radiology technicians. To encourage students to join its staff, BMH waives tuition for students who agree to work at BMH for one year following graduation. The success of BMH's approach is apparent, as the number of employed radiology technicians at BMH has increased from one in 2003, to 37. From the 2005 graduating class alone, 4 students took employment at BMH as X-ray technicians and 3 students joined its CT program. Further enhancing Bethesda's ability to attract and retain radiology technicians is its investment in state-of-the- art radiology equipment, including a PACS system, which JFK does not have. Additionally, Bethesda's radiology group has been much more stable than the JFK group. The new WBCH would have a positive impact on the ability of the radiology group serving Bethesda to recruit new radiologists. Bethesda also has had success in recruiting therapists, such as those recruited for BMH's new 28-bed CMR unit, which is staffed with 4 physical therapists and 7 occupational therapists, who are in addition to the 33 physical therapists and 18 occupational therapists employed to serve inpatients at BMH. Management Personnel The applicant, Bethesda, holds the license of BMH, and it will also be the license holder of WBCH. The proposed WBCH will be operated as a true satellite facility, with BMH and WBCH having a single set of bylaws, rules and regulations, a single management team, a single, unified medical staff, and a single emergency call schedule. With the corporate management infrastructure to operate the satellite hospital already in place locally, at BMH, the duplication of overhead costs for executive management, financial, planning, purchasing, and human resources expertise will be avoided. Bethesda also will be able to avoid duplication of costly IT equipment, computer services, purchasing services, and storage services, which are already available for the proposed WBCH's operations. Further, Bethesda will be able to share and build upon very expensive IT equipment; an existing PACS System; communications equipment; and the like that already exist at BMH and Bethesda Health City, thereby avoiding substantial costs that would otherwise have to be incurred for a new stand-alone hospital. Funds for Capital and Operating Expenditures Bethesda's listing of all capital projects (Schedule 2), availability of sources of funds to fund project expenditures (Schedule 3), and ability to fund capital and operating expenditures are not in dispute. In the Joint Prehearing Stipulation, the parties stipulated as follows: Bethesda can obtain sufficient financing to cover the projected total project costs, including development, construction, equipping, initial capital, and operating expenses for start up of the proposed satellite hospital. Consistent with the above stipulations, Schedules 1, 2, 3, 9, and 10 of Bethesda's CON application/Omissions Response are not in dispute, and the information and projections contained therein are adequate and reasonable. Subsection (6) Subsection (6) of the CON Review Criteria Statute is: "[t]he immediate and long-term financial feasibility of the proposal." § 408.035(6), Fla. Stat. The proposed WBCH will be financially feasible in the immediate and long term. The evidence in support of this finding includes (a) the applicant's projected utilization over a four-year "ramp-up" period, which is conservative in light of the utilization that can be expected in a service area with a large, elderly, and rapidly growing population base; (b) the existing draw of patients from the West Boynton area already being experienced by the Bethesda System coupled with established physician referral patterns among Bethesda's medical staff; and (c) reasonable financial forecasts in the application, which were prepared by Tribrook with input from Bethesda's Chief Financial Officer ("CFO"). Projected Utilization Section 5 of AHCA's CON application form calls for the "Applicant's" projected inpatient utilization in the first two years. As it is the "applicant" here, Bethesda System presented in Section 5 inpatient utilization projections, not only for the WBCH satellite but also for the System as a whole for the first two years. As shown by the projections for the WBCH satellite, there are 11,853 projected inpatient days in Year 1 and 15,936 projected inpatient days in Year 2, resulting in inpatient occupancy rates of 40.6% and 54.6%, respectively. Those are conservative projections, as AHCA observed in the SAAR, in that Bethesda is already providing more patient days of non-tertiary, non-perinatal services of the nature to be provided at WBCH to residents from the proposed PSA than WBCH is expected to provide in total in Year 2. The CON application also included utilization projections through Year 4, which are reasonable. As noted in the Schedule 5 Assumptions, details regarding the utilization projections and extending the forecast through Year 4 are set forth in Schedule B Item E of the application. In Year 4, WBCH is reasonably expected to have 21,743 inpatient days for an average daily census of 59.6 patients and an occupancy rate of 74.5. The utilization projections for WBCH are reasonably and conservatively based on the existing population in the proposed service area as well as projected population growth; the Palm Beach County acute care services use rate for selected discharges of the type to be provided at WBCH; an appropriate projected average length of stay ("ALOS") for the WBCH satellite; and a conservative market penetration for the demand assessment. A projected use rate was based on the County use rate for acute care services for non-tertiary inpatient services (i.e., DRG's) of a type appropriate for a general medical/surgical acute care hospital with the range of services expected to be offered at WBCH, as derived from AHCA data. The County use rate for the selected non-tertiary services is 102.3 discharges per thousand population. The adoption of the County use rate is conservative, as the proposed service area use rate is higher, i.e., approximately 110 discharges per thousand. The use rate adopted for the utilization projections is based upon selected non-tertiary medical/surgical acute care DRG's and excludes inpatient obstetrics (OB) and newborn services; interventional cardiology (e.g., open heart surgery, angioplasty, and stents); diagnostic cardiac catheterization; transplant programs; multi-systems trauma; and inpatient mental health services. The list of non-tertiary inpatient services that will be available at WBCH still includes more than 400 DRG's, and generally is not in dispute. While OB-related services typically represent the highest number of inpatient discharges from a given service area, they rank substantially lower in terms of actual patient days and also are not a major source of emergency visits. Multi-systems trauma and interventional cardiology services such as open heart surgery represent a small proportion of total hospital discharges. It is likely that some of the excluded types of inpatient services will be provided on an emergency basis in WBCH's ED. For example, mental health services (Baker Act) are now provided in substantial volumes in BMH's ED even though BMH does not have an inpatient psychiatric service. Further, like Delray and JFK, WBCH can be expected to provide pediatric services on both an inpatient and emergency basis, even though no dedicated pediatric unit is proposed. At the time that the 2005 CON application was filed, it was expected that the second year, or planning horizon, would be 2010. Thus, the use rate of 102.3 was applied to the projected service area population for four years of operations beginning in 2009, which yields a total of 29,687 inpatient discharges in the selected DRG's from residents of the proposed service area in 2009, increasing to 32,803 discharges in 2012. Bethesda reasonably estimated WBCH market penetrations in each of the six service area zip codes. For example, in the early ramp-up years, estimated market shares initially range from an estimate of 13% (Year 1) to 17% (Year 2) to 20% (Year 3) in WBCH's home site zip code of 33437. That is conservative as compared to Wellington Regional's 25% market share of non-tertiary discharges in its home site zip code of 33414. Lesser market shares were estimated by Bethesda for the satellite in the other four zip codes, including only 2% (33414) and 3% (33446), respectively, in Year 2 in the two secondary service area zip codes. Bethesda's medical staff has not historically developed substantial physician referral patterns from the secondary service area, and its physicians can be expected to have the same referral patterns initially with respect to WBCH. Hospital market share is a function of several factors including physician referral patterns, site, proximity, services, location of BMH and Bethesda Health City, and location of other hospitals. However, physician referral patterns is a particular key factor in the health planning analysis. As JFK's physician development director acknowledged, physician referral patterns have always been "very important" and are a "major driver" of a hospital's market share in an area. Combining the estimated market shares for the six zip codes, Bethesda's application conservatively assumed a 7.8% overall market share of the entire proposed service area for WBCH's first year, 10.2% in Year 2, and increasing to 13.0% by Year 4. The projected service area market share is applied to the total projected discharges for each year of operation to get the projected service area discharges for WBCH. Bethesda then reasonably assumed an "in-migration" factor for WBCH of approximately 10%, representing out-of-area admissions from non-permanent residents or "snowbirds"; admissions from zip codes adjacent to the proposed service area; and all other admissions from throughout the County or elsewhere. Finally, to determine the number of anticipated inpatient days, Bethesda reasonably assumed a conservative ALOS for WBCH of 4.6 days. The projected ALOS is less than the actual 4.7 ALOS for non-tertiary discharges from WBCH's proposed PSA and from its entire service area. The projected ALOS for WBCH patients is also less than the ALOS of non-tertiary inpatients from both the PSA and the entire service area who are served at BMH, whose medical staff with similar physician referral patterns will staff WBCH. Moreover, WBCH's projected ALOS is lower than the ALOS of 4.9 for non-tertiary services for all inpatients served at BMH. By applying the projected 4.6 ALOS to the projected total discharges each year, Bethesda then arrived at the projected inpatient days set forth in the CON application, which are reasonable inpatient utilization projections. WBCH's financial forecasts also are built upon projections of revenues for outpatient services such as ED visits, observation visits, outpatient surgery, and imaging services. Utilization of such hospital outpatient services by patients from the proposed service area has increased substantially in the last two years. As set forth in Bethesda's CON application and detailed at final hearing, hospital ED visits by residents of the proposed service area are projected at 107,385 in 2009, and to increase to 118,659 by 2012. WBCH's ED market shares are reasonably projected to grow from 11.6% to 18.2% during that four-year period. Hospital market shares are typically somewhat higher for ED than for inpatient services. The projections lead to a reasonable forecast of WBCH ED visits, ranging from 12,421 in Year 1 to 21,583 in Year 4. Schedule 5 of the CON application also includes projections of inpatient utilization for the System overall, after completion of the satellite project. Total inpatient days are projected for the System at 107,151 in Year 2. Not all WBCH patients are expected to be new patients for the Bethesda System. The CON application includes a table detailing the impact of redistribution, or "cannibalization," of the satellite on BMH, and the net impact of the redistribution after accounting for annual population growth. The net impact will be a redistribution of 766 patient admissions from the main campus to the satellite in Year 1, and a redistribution of 979 admissions in Year 2. Redistribution of patients from BMH is expected to end thereafter as the physicians at WBCH establish new referral patterns. Bethesda's projections of redistribution and overall System utilization, as set forth in the CON application and supported at hearing, are reasonable. Financial Forecasts Schedule 7A of the CON application sets forth revenue and payer mix assumptions and projections for the WBCH satellite and for the applicant, i.e., the Bethesda System as a whole, for the first two years of operation as called for in AHCA's CON application forms. The net operating revenue projections from Schedule 7A carry over to Schedule 8A of the CON application, which includes in the right hand column of AHCA's CON application forms revenue, expense, and net income assumptions and projections for the WBCH satellite for the first two years of operation. Furthermore, Bethesda also included in Schedule 8A a Summary Operating Statement and a Sources and Uses of Funds statement in which the applicant extended the financial assumptions to include four years of projected revenues, expenses, net income, and cash flow for the proposed satellite hospital. As shown in Schedule 8A and the Summary Operating Statement, positive net income in the amount of $2,228,882 is forecast for the WBCH satellite in Year 2, and the satellite's net income is projected to increase each year, as utilization ramps up, to $7,620,912 by Year 4. Further, a positive cash flow of $1,932,062 is forecast for the satellite in Year 2, increasing to $4,804,294 by Year 4. The financial forecasts set forth in the CON application are reasonable and indicate the financial feasibility of the satellite hospital project. Wellington Regional's financial witness, Mr. Davidson, has previously testified that a CON applicant which shows a positive net income in the second year or in the early years is financially feasible. Mr. Davidson does not dispute Bethesda's projection of positive net income for WBCH in Year 2 and each year thereafter. In light of delays occasioned by the pending appeal proceedings, Tribrook performed a sensitivity simulation to test the effect of a one-year delay in project start-up to 2010 under the same financial assumptions that were applied in the CON application, taking into account the most recent utilization data and inflating project costs another year, in order to advise Bethesda management as to the effect of the delay on financial feasibility of the project. The sensitivity analysis indicates that the satellite would still begin generating positive net income and cash flow in the new planning horizon Year 2 (i.e., 2011), and that the satellite's net income would grow each year thereafter. The sensitivity analysis supports the conclusion drawn from the projections in the CON application, i.e., that the satellite project is financially feasible in the immediate and long term. Bethesda also demonstrated in Schedule 8A of the CON application that the Bethesda System as a whole generates a net profit in each of the first two years of the satellite's operation after taking into account the full impact of the satellite and the redistribution (i.e., cannibalization) of patients from BMH on revenue, expenses, and income, and the System begins to benefit overall by Year 2. As indicated in the left-hand column (col. 7) in Schedule 8A, the entire System including the satellite project is projected to generate a net profit of $11,480,857 in Year 2, and that takes into account the impact of patients redistributed from BMH to WBCH. In the middle column (col. 9), labeled "Without This Project," the System is projected to generate only $8,536,428 in net profit in Year 2 if the satellite project is not approved. The financial forecasts were prepared by Mr. Carroll (Tribrook) with the active input of, and review by, Bethesda's CFO, Ms. Aqualina, who opined that the forecasts in Schedules 7A and 8A are reasonable and include accurate financial projections. Bethesda has "strong managers," including the CFO and financial management team. Ms. Aqualina's opinion as to the reasonableness of Schedules 7A and 8A, which contain the financial forecasts for the WBCH satellite project and for its impact on the System as a whole, adds further credibility to the financial pro formas. Subsection (7) Subsection (7) of the CON Statutory Review Criteria is "[t]he extent to which the proposal will foster competition that promotes quality of care and cost effectiveness." §408.035(7), Fla. Stat. Competition generally forces hospitals to increase quality to remain viable in a market. It should also force them to operate in a more cost-effective manner. One way of looking at competition among hospitals is through data that reveals market share. Hospital market share is a measure of hospital usage by residents of an area. It demonstrates "patient destination patterns" (tr. 5298) for hospital services. The market for acute care hospital services in the PSA and SSA proposed by Bethesda (the "Proposed Service Area") is highly competitive. The four hospitals participating in this proceeding, all separately-owned, are the primary competitors for the inpatient and outpatient markets in the Proposed Service Area. In the PSA, JFK, BMH and Delray are clear leaders over WRMC. Together the four dominate the PSA. For example, with regard to acute patient days delivered to the residents of the PSA in 2004, the market share of the four hospitals was nearly 80%. The four provide ample choice for persons seeking acute care and emergency medical services in the West Boynton Area. At the same time, none of the four competitors has a dominant market share in the four zip codes that comprise the PSA. In other words, the West Boynton area enjoys a competitive balance for hospital services. The competitive relationship of the four in the PSA was shown to be in balance in Bethesda I on the basis of three years of market share data. The years are 2000 to 2002. The percentages of the PSA discharges attributable to each of the four (their market shares) were illustrated in a table in the Recommended Order: JFK Bethesda Delray Wellington 2000 31.7% 23.2% 10.6% 6.1% 2001 30.1% 24.0% 11.2% 6.9% 2002 28.8% 23.9% 11.4% 7.7% Bethesda I, Recommended Order at 32. The annual totals of the percentages of market shares attributable to each hospital were 71.6% (2000), 72.2% (2001) and 71.8% (2002) for an average of the three years at approximately 71.87%. The Recommended Order further found, "the competitive balance that currently exists in the West Boynton market is expected to continue unless something disrupts that balance, such as the approval of a new hospital in the area." Id., at 32-33. Disruption of this competitive balance and the negative impact of a new Bethesda hospital in the West Boynton area among the factors in Bethesda I that was determined to outweigh any improvement in access to hospital services that residents of the West Boynton area would have enjoyed had Bethesda's application been granted. Health care markets are dynamic. Dynamics in health care markets make competitive balance difficult to sustain over a lengthy period of time. But data in 2004 not considered in Bethesda I showed the four hospitals to be in the same order with regard to market share in the PSA from highest to lowest (JFK, Bethesda, Delray and WRMC) that the hospitals had been in between 2000 and 2002. Furthermore, the percentages for 2004 of market share in the PSA were within or not much outside the range of market share for the period that indicated competitive balance in Bethesda I, 2000 to 2002: 33.5% for JFK (1.8% higher than its high in 2000), 24.7% for Bethesda (0.7% higher than its high in 2001), 14.1% for Delray (2.7% higher than its high in 2002) and 6.2% for WRMC (0.1% above its low in 2000). The market share for the four hospitals totals 75.8%, nearly 4% higher than the average of the 2000-2002 period but consistent with the higher market share values for JFK, Bethesda and in particular, for Delray. Thus, the competitive balance between the four hospitals in the PSA found in Bethesda I continued forward as expected at least through 2004. There are, however, other perspectives from which to examine the state of competition between the four hospitals and the impact that a successful application in this case will have on competition. Among these are market shares with regard to non-tertiary services (all that WBCH intends to offer) in the Proposed Service Area (the PSA and the SSA), a six zip code area rather than just the four zip code area of the PSA; consideration of the effect on competition in the Subdistrict of not just the four hospitals but also their affiliates; the greater leverage in bargaining with employers and managed care contractors possessed by hospitals that, unlike Bethesda, are part of national for-profit hospital chains with multiple hospitals in an area; and, the value of location -- a hospital in the West Boynton area -- that will enhance patient choice and thereby tend to sharpen competition in the Subdistrict, even if it skews the competitive balance in the PSA toward Bethesda. The dynamic nature of the West Boynton area market for hospital services is indicated by the percent change in market share of non-tertiary discharges in the Proposed Service Area from 2002 to 2004. The third page of Delray Exhibit 12, which covers five hospitals (Palms West, Boca Raton Community, Good Samaritan, St. Mary's and West Boca) shows these changes. The most dramatic changes are for WRMC, which had a 23.4% increase in non-tertiary discharges for the six zip Code area and Good Samaritan which had an 18.4% drop. The exhibit reveals changes for the other three hospital participants: a 9.7% percentage decrease for JFK, a 5.8% decrease for BMH and a 7.1% increase for Delray. In the case of WRMC, found in Bethesda I as the hospital in the Subdistrict most likely to suffer the most from adverse impacts from approval of either the JFK or Bethesda application, its increase was from 6.9% to 8.6%, a mere increase of 1.7% of the total market share. The dramatic appearance of the percentage increase with regard to WRMC was explained as due to "the effect of arithmetic on small numbers." Tr. 5300. Still, with regard to Wellington, it was conceded that its improvement in market share had to be regarded as "fairly significant." Id. JFK's market share of non-tertiary discharges in the proposed service area declined from 2002 to 2004, primarily in zip codes where WRMC gained. However, JFK's decline was more than offset by the gain at JFK's sister HCA hospital, Palms West, which enjoyed a 13.2% increase in non-tertiary market share in the same area from 2002 to 2004, ranking second only to Wellington Regional's dramatic gain. Palms West, moreover, expects its market share of its own service area to grow "quite dramatically" over the next few years. BMH was the only hospital other than JFK whose non- tertiary market share of the proposed service area declined from 2002 to 2004. BMH's market share also dropped in the proposed PSA from 2003 to 2004. JFK still had the highest non-tertiary market share (24.9%) of any hospital in the proposed service area for the 12- month period ended March 31, 2005, and the combined non-tertiary market shares of HCA-affiliated hospitals is, of course, even higher (34.2%). Also, JFK's 33.55% market share of non-tertiary patient days in the WBCH PSA in 2004 remains the highest of any individual hospital for the proposed PSA. BMH ranked second at 25.04% of PSA patient days. WRMC's percentage increase coupled with the other changes in market shares exhibited by Delray Exhibit 12 do little to disturb the competitive balance among the Subdistrict's three leading hospitals, JFK, BMH and Delray. But the market should continue to exhibit its dynamism. WRMC and Palms West, "up and comers," tr. 5302, are expected to increase their gains shown by the 2002-2004 data. Furthermore, whether Bethesda's application is approved or not, competition will increase in the area because of the addition of new open heart programs in the Subdistrict at BMH and Boca Raton Community, a new comprehensive rehab program and an improved stroke program at Bethesda. Competition is generally understood by healthcare planners to be more effective in improving quality of care than it is in holding down costs and improving cost-effectiveness. Nonetheless, improving cost-effectiveness is a goal in which competition has a role. Bethesda is the only party without a hospital in the rapidly growing western portion of Palm Beach County and therefore is unable to compete as effectively when it comes to price with the hospital systems that have a presence in the western portion of the County. All existing hospitals in western Palm Beach County, with the exception of the remote, impoverished area served by Glades General, are owned by national for-profit hospital chains, i.e., HCA (Palms West), Universal (WRMC), and Tenet (West Boca). Thus, employers and managed care companies cannot currently offer any employees and policyholders who live in western parts of the county with the choice of a geographically accessible hospital operated by the Bethesda System or any other community not-for-profit system. The HCA and Tenet systems, which own JFK and Delray, respectively, are in particularly strong positions to bargain for high prices and rates with large employers and managed care companies because of their ownership of multiple hospitals located throughout Palm Beach County and south Florida, which assures access for more employees and policyholders, wherever they reside. HCA has three Palm Beach County hospitals and 13 South Florida acute care hospitals in its Florida East Division. Tenet has five Palm Beach County acute care hospitals and 14 hospitals in the south Florida region. Those for-profit systems currently enjoy dominant market shares, both on a county-wide basis and in the proposed WBCH service area. Tenet and HCA- affiliated hospitals have market shares of 36.5% and 25.4%, respectively, of all hospital inpatient discharges reported for residents of Palm Beach County, while Bethesda's county-wide market share is only 10.7%. The concentration of multiple affiliated hospitals in the same geographic region enjoyed by Tenet and HCA is desirable for hospitals and hospital business organizations from several perspectives. It is of assistance in contracting with managed care payers. See Ex. B-73P at 5-6, where Tenet states in a recent Form 10-K filing with the Securities and Exchange Commission ("SEC") that "[s]trong concentrations of hospital beds within geographic areas help us contract more successfully with managed care payers." It reduces management, marketing and other expenses. It aids, moreover, in efficient utilization of resources. Consistent with the position of its parent organization, Delray stated in a 1998 CON application that Tenet Healthcare Corporation (Tenet) provides a broad range of support services in the areas of administration, clinical support, purchasing, data processing, and a variety of other activities. Tenet is continuously evaluating means of improving the efficiency of its facilities in a specific geographic area through the sharing of resources. For example, Broward and Palm Beach hospitals are served by a centralized business office that reduces the total overhead expenses of the participating hospitals. Tenet is also developing managed care systems that will link its hospitals together in south Florida. Ex. B-75F, at 78. The CEO's of Tenet's 14 hospitals in south Florida meet regularly at its Fort Lauderdale office to discuss issues such as managed care contracting, and a Tenet employee of the regional Tenet office is the chief negotiator on managed care contracts for all of those hospitals, including Delray. Similarly, an individual in HCA's Florida East Division supervises a team of people who negotiate all the managed care agreements for all 13 HCA hospitals in southeast Florida. When it comes to managed care contracting that affects JFK, JFK's CEO and CFO(just as the other HCA hospital CEOs and CFOs in the region) work through HCA's managed care support personnel in the HCA divisional office in Broward County. The advantageous bargaining strength of HCA and Tenet is reflected in high charge structures at JFK and Delray. Lower charges and managed care rates benefit self-pay patients, insured patients whose co-pays are based on a percentage of charges, insured patients who must pay deductibles before payment is made by the insurer, and employers and employees who pay insurance premiums. Conversely, disproportionately high charges lead to high Medicare "outlier" payments by the federal government (and taxpayers) to hospitals with high charges, such as Delray, because Medicare outliers are measured by charges. The proposed satellite hospital will give consumers in West Boynton "a new choice of location." If the proposed satellite's market share exceeds Bethesda's current share of the service area, as it should, competing hospitals will have to either increase quality and services and/or decrease prices in order to overcome the advantage gained by location. The most likely outcome will be an increase in quality of care. Subsection (8) Subsection (8) of the CON Review Criteria Statute is, "[the costs and methods of the proposed construction, including the costs and methods of energy provision and the availability of alternative, less costly, or more effective methods of construction." § 408.035(8), Fla. Stat. In the Joint Prehearing Stipulation, the parties stipulated as follows: Bethesda Healthcare System, Inc. can build the proposed satellite hospital on the land northeast of the intersection of Boynton Beach Boulevard and State Road 7 (a/k/a Hwy. 441), which it has purchased and currently owns, for the projected total project costs of approximately $82.4 million. The architectural schematics, project completion schedule, design narratives, and code compliance information set forth in Bethesda's CON application are reasonable. Consistent with the above stipulations, Schedules 1, 2, 3, 9, and 10 of Bethesda's CON application/Omissions Response are not in dispute, and the information and projections contained therein are adequate and reasonable. Subsection (9) Subsection (9) of the CON Review Criteria Statute is "[t]he applicant's past and proposed provision of health care services to Medicaid patients and the medically indigent." § 408.035(9), Fla. Stat. Bethesda has a "track record" of providing substantial services to Medicaid patients and the medically indigent. BMH's Medicaid and charity care percentages exceed the averages for both the Subdistrict and the District as a whole. About 10.9% of documented Palm Beach County residents live below the federal poverty level. In the Subdistrict, however, 13.7% of documented residents east of Military Trail have incomes below the federal poverty level, while only 6.2% of those to the west fall in that category. In Palm Beach County, 16.8% of documented residents live in households with annual incomes below $20,000, and another 17.1% of the households have incomes below $35,000. Bethesda has traditionally been the key provider of services to the Medicaid and medically indigent population of south Palm Beach County in part because of its location. The percentages of low income households in BMH's eastern core service area are substantially higher than the County averages. BMH's "core service area" is defined for this purpose to be its primary service area zip codes other than the more western zip codes of 33436, 33437, and 33463. In contrast, the percentages of low income households in WBCH's service area are substantially lower than the County averages. Individuals with annual family income levels below $35,000 are much more likely to be uninsured, and the level of uninsured population is especially high as family income levels drop to $20,000 or less. The disproportionately higher level of uninsured families in BMH's eastern core service area impacts the utilization of that hospital by the uninsured and their needs for safety net hospital services. Comparisons with the other hospitals in the Subdistrict reveals the extent of Bethesda's service to Medicaid patients and the medically indigent. Bethesda serves significantly more Medicaid patients than any other hospital in the Subdistrict, including area facilities with higher bed counts. Bethesda has clearly demonstrated a commitment toward serving lower income people including Medicaid, and AHCA looks favorably on such a demonstrated commitment. In fact, AHCA has followed a policy of giving significant weight to an applicant's historical provision of high volumes of Medicaid and indigent patients. BMH accounted for 45.4% of all Medicaid inpatient admissions in the Subdistrict from 1999 to 2004. JFK accounted for 20.1% of Subdistrict Medicaid admissions, even though it is a larger hospital than BMH. The other parties, WRMC (12.0%) and Delray (3.9%), accounted for less. Bethesda's Medicaid admissions continue to increase. During the two-year period after the filing of the 2003 Bethesda application i.e., from 2002 to 2004, Medicaid/Medicaid HMO admissions increased from 19.1% to 24.2% of Bethesda's total inpatient admissions. Further, Bethesda is the only party whose total number of Medicaid admissions was higher in 2005 than in 2002, except for Delray, and Bethesda still serves more than five times as many Medicaid inpatients as Delray, whose Medicaid utilization remains the lowest in the Subdistrict. JFK's Medicaid admissions declined substantially from 2002 to 2005, and Wellington Regional's Medicaid volume was flat. BMH's Medicaid admissions include OB patients. The applicable statutory review criterion does not distinguish between types of Medicaid patients. While "moms and babies" may be the more common type of Medicaid patient, the greater Medicaid spending is associated with the patients who are highly disabled, extremely ill, frail and elderly, and/or medically complex. Despite the fact that a majority of BMH's Medicaid inpatients are OB patients, a majority of the inpatients in beds at BMH on any given day are the more costly medical-surgical and ICU patients. The ALOS for the latter types of patients is much longer than for OB patients. BMH serves almost four times as many non-OB, non- newborn Medicaid inpatients as Wellington Regional. Excluding perinatal cases, JFK ranks second to BMH in terms of Medicaid utilization. However, BMH still provides 63% more care to non- perinatal patients than does JFK. BMH also provides a substantial and rapidly increasing amount of charity care. BMH's internal hospital guidelines for classifying and documenting indigent patients as "charity care" patients are the same guidelines that are required in AHCA's Florida Hospital Uniform Reporting System Manual ("FHURS Manual"), pursuant to Florida Administrative Code Rule 59E-5.101(5), to be used for classifying and reporting care to "medically indigent patients" as "charity care" or "uncompensated charity care." In 2002, BMH's charity care amounted to about $16.2 million, which equated to 2.9% of BMH's total patient revenues. The total amounts and relative percentages of charity care at BMH have grown each year thereafter, to about $21.5 million (3.1%) in 2003; $27.8 million (3.7%) in 2004; and $32.7 million (3.9%) in 2005. Thus, BMH's charity care has increased substantially since the 2003 Bethesda application was filed. It has increased about 100% since 2002, and about 50% in the last two years. Prior to its reorganization from tax district hospital to private not-for-profit status in 1984, Bethesda received substantial tax subsidies to support the provision of indigent care. However, since the Palm Beach County Health Care District ("Health Care District") was formed in 1988, the only compensation received by Bethesda has been relatively minimal fee-for-service reimbursement for certain qualified Health Care District patients. Health Care District payments amounted to $2.4 million in FY 2003, and declined to less than $2.0 million in FY 2004 and FY 2005. Further, Bethesda returns $1.0 million of those payments each year pursuant to a settlement agreement with the Health Care District related to litigation regarding Bethesda's ownership. On the other hand, the creation of the Health Care District allows all hospitals to be reimbursed through and indigent care subsidy for care to patients who meet the District's indigency standards. The subsidy helps to ensure that indigent patients are able to receive medical care from any hospital in the county. To that end, the Health Care District and its subsidies provide a county-wide "safety net" for indigent patients. Still, BMH provides more charity care than any other hospital in the Subdistrict. During 1999 through 2004, BMH provided 42% of the total charity care reported by the six hospitals in the Subdistrict. WRMC reported $3.3 million in charity care in 2004, 1.0% of its total patient revenues. It provided $2.5 million in 2005. JFK's charity care amount of $11.7 million in 2004 represented 0.9% of its total patient revenues of about $1.25 billion. Delray ranks second in reported charity care among Subdistrict hospitals. Charity care, moreover, is a statistic based on "charges" pursuant to the FHURS Manual. A comparison of charity care reported by one hospital whose charge structure is substantially higher than another's will not present an "apples-to-apples" comparison. When compared with a hospital with substantially lower charges, a hospital with high charges, such as Delray (relative to BMH's charges) will appear to be providing more charity care than it is in relation to the lower charge hospital. BMH is one of few Florida hospitals exempt from Medicaid inpatient cost limits because it qualifies as an "11% provider" of Medicaid and charity under a state designation. JFK does not qualify. BMH also now qualifies as a Medicare Disproportionate Share Hospital. To qualify, more than 15.0% of inpatient days must be for Medicaid patients or documented low income citizens who qualify for Supplemental Security Income (SSI). BMH's Medicare inpatient disproportionate share percentage has increased since 2003, when it was 12.85%. Bethesda included a condition in its application that it will provide a minimum of 5.0% of patient days at the WBCH satellite to Medicare/Medicaid HMO and charity care patients, although it projects that utilization of the satellite by such patients will actually be higher. Medicaid and charity care utilization is projected to be lower at the satellite than at BMH due to demographics, but BMH is expected to continue to have high Medicaid and charity care utilization. The project will provide a more favorable payor mix for SBHD that, in turn, will enhance its ability to continue to fulfill its historic commitment to provision of care to the indigent within the South Broward Hospital District. AHCA recognized such a finding to weigh in favor of approving a project proposed by an applicant. Columbia Hospital Corp. of South Broward, d/b/a Westside Regional Medical Center v. AHCA and South Broward Hospital District, d/b/a Memorial Hospital Miramar, DOAH Case Nos. 01-2891 et al., Recommended Order p. 66 (July 3, 2002), AHCA Final Order (Sept. 30, 2002) (Ex. B-74E). On the other hand, a similar argument made in Bethesda I was described as an institution-specific justification and given no weight by the ALJ or AHCA toward approval of the application. Bethesda makes the argument that it "needs" WBCH in order to remain financially viable. The evidence, however, is not persuasive that Bethesda's long-term financial viability is at risk or even that Bethesda is at risk of losing market share in the West Boynton area if its application is not approved. Bethesda's "Spin-down Analysis" makes the case for its need for WBCH to continue its service of Medicaid patients and the indigent at its present rate. It does not, however, include consideration of Bethesda's comprehensive medical rehabilitation program and the approval of its new open heart surgery program. Both these programs have low Medicaid utilization. They will alter Bethesda's payor mix significantly toward the upside. The Spin Down Analysis is flawed. There are other bases for concluding that Bethesda did not make its case with regard to the need for WBCH in order for Bethesda to change its payor mix and be able to continue its high service of Medicaid and indigent patients. The Spin Down Analysis is at odds with Schedule 8 in the application. Neither Bethesda's CEO or CFO has informed its board or financial institutions that lend to it of the bleak financial projections provided in the analysis. Bethesda made the same type of argument in Bethesda I, yet its financial performance in recent years has been solid. Subsection (10) Subsection (10) of the CON Review Criteria Statute (relating to nursing home beds) is not at issue in this proceeding.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a final order be entered by the Agency for Health Care Administration that approves CON Application No. 9838. DONE AND ENTERED this 5th day of April, 2007, in Tallahassee, Leon County, Florida. S DAVID M. MALONEY Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 5th day of April, 2007. COPIES FURNISHED: Dr. Andrew C. Agwunobi, Secretary Agency for Health Care Administration Fort Knox Building III, Suite 3116 2727 Mahan Drive Tallahassee, Florida 32308 Craig H. Smith, General Counsel Agency for Health Care Administration Fort Knox Building III, Suite 3431 2727 Mahan Drive Tallahassee, Florida 32308 Richard Shoop, Agency Clerk Agency for Health Care Administration Fort Knox Building III, Suite 3431 2727 Mahan Drive Tallahassee, Florida 32308 Michael O. Mathis, Esquire Sandra Allen, Esquire Agency for Health Care Administration Fort Knox Building III, Suite 3431 2727 Mahan Drive Tallahassee, Florida 32308 John H. Parker, Esquire David Fenstermacher, Esquire Parker, Hudson, Rainer & Dobbs, LLP 1500 Marquis Two Tower 285 Peachtree Center Avenue, Northeast Atlanta, Georgia 30303 Robert A. Weiss, Esquire Karen Putnal, Esquire Parker, Hudson, Rainer & Dobbs, LLP The Perkins House, Suite 200 118 North Gadsden Street Tallahassee, Florida 32301 Stephen A. Ecenia, Esquire J. Stephen Menton, Esquire Rutledge, Ecenia, Purnell & Hoffman, P.A. 215 South Monroe Street, Suite 420 Post Office Box 551 Tallahassee, Florida 32302-0551 C. Gary Williams, Esquire Dylan Rivers, Esquire Ausley & McMullen 227 South Calhoun Street Post Office Box 391 Tallahassee, Florida 32302 Robert D. Newell, Jr., Esquire David Terry, Esquire Newell & Terry, P.A. 817 North Gadsden Street Tallahassee, Florida 32303-6313
The Issue Whether the application of Wuesthoff Memorial Hospital, Inc. (CON 8740) for a 50-bed general acute care hospital in South Brevard County should be granted?
Findings Of Fact The Parties Wuesthoff The applicant for CON 8740 is Wuesthoff Memorial Hospital, Inc., a Florida not-for-profit corporation. Wuesthoff operates a general acute care hospital (the "Hospital" or the "Rockledge campus") in Rockledge, Florida. According to the division of the county into three areas (north, central, and south) ascribed to by Wuesthoff, Rockledge is in Central Brevard County. Wuesthoff's parent corporation is a not-for-profit corporation, Wuesthoff Health Systems, Inc. (the "Wuesthoff System"). The Wuesthoff System operates health care providers across the health care spectrum. Among the entities controlled by the Wuesthoff System is Wuesthoff Health Services, Inc., which operates a home health agency, a hospice, a durable medical equipment service and a 114-bed skilled nursing facility. The Wuesthoff Foundation, responsible for fundraising activities for all components of the Wuesthoff System and Care Span, a medical services organization which owns and operates physician practices, are also under the umbrella of the Wuesthoff System. The health care system operated by the Wuesthoff System serves residents in and around Brevard County and, to a limited extent, beyond. Examples of its service throughout Brevard County are the hospice, the durable medical equipment-company, and a reference laboratory. The hospice, for example, is licensed and serves all of Brevard County. The reference laboratory, located in Viera, provides services throughout Broward County and to other counties in Florida. The Wuesthoff System also owns a mobile health unit that travels throughout the county to provide health care services. The Wuesthoff System owns two outpatient clinics or "broad based diagnostic clinics" (Tr. 98) in Brevard County. One is on Merritt Island; the other is located in Sun Tree. Home health services are provided from a base of three different offices in the county. Similar to some of the other services offered by Wuesthoff, its home health services are provided throughout the county. Although it draws patients from throughout the county, most of Wuesthoff's hospital admissions come from Central Brevard County where the Hospital is located. If one defines "Central Brevard County" to include Port St. John and Sun Tree Viera, the sites of the northernmost and southernmost physician practices owned or operated by Care Span, then all of the practices in the Wuesthoff System are within Central Brevard County. Ownership of these practices does not restrict the physicians in them from referring patients for treatment outside the Wuesthoff System. But consolidation of the various services offered by the practices (diagnostic and radiology services, for example) enables Wuesthoff to strengthen its presence in Central Brevard County. The result is "additional volume" (Tr. 164) for the Hospital. The Hospital contains 268 acute care beds, 30 psychiatric beds, and five hospice beds, for a total of 303 beds. (It also contains 10 Level II Neonatal Intensive Care Unit beds.) If the project subject to CON review in this proceeding is ultimately approved, 100 of these beds will be de-licensed, leaving a 203-bed facility. HRMC Holmes Regional Medical Center ("HRMC") is a 528-bed regional, not-for-profit hospital, headquartered in Melbourne, Florida, operating on two acute care campuses under a single hospital license. One campus is the site of a 428-bed tertiary care facility in Melbourne; the other is a 60-bed general acute care community hospital in Palm Bay. Both facilities are in the southern portion of Brevard County. In addition to the 428 general medical and pediatric beds operated at the Melbourne facility, HRMC operates there a 10-bed Level II neonatal intensive care unit. HRMC is accredited by the Joint Commission for Accreditation on Health Care Organizations ("JCAHO"). It operates the only hospice program in the county accredited with commendation by the JCAHO; the only comprehensive community cancer program that has been accredited by the American College of Surgeons; the only American Sleep Disorders Association accredited sleep lab; the only American College of Radiology accredited respiratory therapist department; the only certified pulmonary function lab; and, the only life flight helicopter in Brevard County for hospital transports. As a regional medical center, HRMC provides open heart surgery, tertiary, orthopedic and neurosurgical referrals through a seven-county area, and provides trauma support for the central and south central Atlantic Coast in the State of Florida. It is the only designated trauma center in Brevard County. HRMC was founded 60 years ago by the community and has been a not-for-profit, community-based hospital ever since. The mission of HRMC is to improve, regardless of ability to pay, the health status of every member of the community through collaborative and cooperative agreements with other organizations and agencies it its service area. To represent the community's interests, HRMC's Board is composed of community leaders, educators, and employers. HRMC plays an active role in the community. The program denominated HOPE (Health Outreach Production and Education) is a collaborative effort by the Brevard County Public Health Unit, the American Cancer Society, the School Board, the County Commission and HRMC to solve community health problems. There are currently nine HOPE sites, and three HOPE centers. Among the purposes of the HOPE sites and centers is meeting the unique needs of children with developmental disabilities. Cape Canaveral Hospital, Health First and HFHP Cape Canaveral Hospital, Inc. ("CCH") is the licenseholder for a 150-bed hospital approximately five miles east of Wuesthoff in Cocoa Beach, Florida. Like Wuesthoff, Cocoa Beach is located in Central Brevard County. In August of 1995, HRMC entered into an agreement with CCH to create Health First, Inc. The presidents/chief operating officers of HRMC and CCH are employees of Health First. Similar to the Wuesthoff System, Health First controls the operations of its hospital facilities (HRMC and CCH) and owns and operates physician practices, health clinics, a home health agency, a hospice, and a skilled nursing facility. Health First is the sole shareholder of a Florida not- for-profit corporation known as Health First Health Plans, Inc. ("HFHP"). HFHP is the largest managed care organization in Brevard County operating both a traditional health maintenance organization ("HMO") and a Medicare HMO. Other Nearby Hospitals Parrish Medical Center, operated by a statutorily created tax district, is located in Titusville. If the county is considered to contain three distinct areas (north, central, and south) as proposed by Wuesthoff, Parrish is the only hospital in North Brevard County. Sebastian River Medical Center is located in Indian River County, south of Brevard County. Located in a relatively rural area, it is a small hospital. It provides no tertiary services. It draws some patients from South Brevard County. These patients would otherwise in all probability seek hospital services from a Brevard County hospital. Second Attempt by Wuesthoff Wuesthoff's CON application seeks to establish a new 50-bed general acute care hospital in South Brevard County. This is not the first time Wuesthoff has attempted to obtain such a CON. It applied earlier in CON 8597 for a 50-bed hospital in South Brevard County. In the first attempt, the Agency preliminarily denied the application. Wuesthoff petitioned for a formal administrative hearing. Following receipt of a Recommended Order entered in DOAH Case No. 97-0389 that CON 8597 be denied, Wuesthoff withdrew its application and dismissed its petition for a formal administrative hearing. The Agency entered a "final order" closing its file and dismissing Wuesthoff's petition in light of the application's withdrawal. (Legal proceedings which followed issuance of the order are briefly described in the Preliminary Statement of this Recommended Order.) No New Beds in the Subdistrict Proposed by the Application By the application subject to this proceeding, Wuesthoff does not propose the addition of new beds to Brevard County (the acute care subdistrict at issue, designated by the Agency as Subdistrict 7-1.) In fact, because of Wuesthoff's commitment to delicense 100 beds as a condition of the approval of its application, the granting of the application will result in a net loss of 50 hospital beds in the subdistrict. "[F]ixed need pool[s] only appl[y] to the addition of new beds to a subdistrict." (Tr. 3468). That the fixed need pool resulted in a published need of zero for general acute care hospital beds for the batching cycle in which Wuesthoff's application was filed, therefore, has "no bearing" (Id.) on the issues in this proceeding. For the same reason (that granting Wuesthoff's application will not result in the addition of new general acute care beds in the district) the applicant is not required to prove the existence of "not normal circumstances" to overcome any presumption created by the calculation of the fixed need pool as zero. The Proposed Project The site of the proposed hospital, 43 acres purchased by Wuesthoff for approximately $2.5 million, is on Wickham Road in the city of Melbourne. Twenty of the 43 acres will be devoted to a medical complex of which the 50-bed hospital will be a part. The complex will be "one building that has three very definite components." (Tr. 83). The three components are "an ambulatory and diagnostic center" (Id.), a medical office building, and the 50-bed hospital. The diagnostic center is CON- exempt and the medical office building has been issued a certificate-of-need. Although committed to construct the diagnostic facility and the medical office building at least since March of 1997, at the time of hearing, no construction permits for the property had been obtained nor had any activity on the two components been commenced. Nonetheless, Wuesthoff remains committed toward construction of the diagnostic center and the office building regardless of the outcome in this proceeding. Although the proposed hospital will not provide tertiary services, it will provide all services typically provided in a community hospital. These include obstetrics, pediatrics, and emergency services in a 24-hour emergency department. The services to be offered will not be unique in the subdistrict; all are presently available in the community. In other words, the services to be offered will duplicate services presently offered by existing providers. The estimated cost of the 50-bed hospital proposed in CON 8740 is $38,512,961, a cost that, in the case of a not-for- profit hospital, will ultimately be born by the public "one way or another." (Tr. 2402.) Wuesthoff's application included projections of revenues and expenses attributable to the proposal for the proposed construction period and the first two years of operation. It also included, as required, audited financial statements for two years and a listing of all Wuesthoff's capital projects planned, pending or underway at the time of the filing of the application. A Purpose of CON Law One of the purposes of CON review of an application for a new hospital is "to limit unnecessary, costly duplication of services that are available at other hospitals . . . at least where those services are being provided at reasonable costs." (Tr. 2401-02). Preliminary Agency Action Initially, AHCA Staff intended to recommend denial of Wuesthoff's application. After a meeting with the Director of AHCA, the decision was made to approve the application. The most important factor weighing in favor or approval was one related to competition and costs of hospital services to the ultimate consumer of the services, "[n]amely that . . . large HMO providers have no access to [HRMC] . . . or have been unable to get contractual relationships with [HRMC]." HRMC No. 75, p. 20. The meeting with the Director clarified the Agency's priorities. On July 11, 1997, AHCA issued its State Agency Action Report ("SAAR") containing its determination that the application should be approved. This proceeding was initiated on August 15, 1997, when HRMC filed its Petition for Formal Administrative Hearing on August 15, 1997, in order to challenge the Agency's decision. Need in Relation to the District Health Plan: Section 408.035(1)(a), F.S. The portion of the District 7 Local Health Plan governing the transfer of existing beds includes five parts. Preference is given to applicants that provide documentation of compliance with the five parts. The first part addresses need in the service area proposed to receive the beds. In addressing specific populations, access is one of the considerations. There was no published need for beds to be provided if the application is granted. "[A]t the time the application was filed the Agency's formula showed in excess of 342 beds. [At the time of hearing], the current formula shows an excess of 333 acute care beds for Brevard County." (Tr. 3385). There are no barriers (such as geographic barriers) typically associated with access to acute care services in the subdistrict. Every resident of Brevard County has access to a general acute care hospital within a drive time of 30 minutes usually and 40 minutes at the most. In South Brevard County, Holmes Regional at its two campuses provides high quality inpatient care and excellent medical services. Wuesthoff's hospital in Central Brevard County and Sebastian Medical Center in the adjacent county to the south also serve some of the residents of South Brevard County. Wuesthoff does not receive preference under the first part of the district plan applicable to this proceeding. The second part of the local health plan applicable to this proceeding governs impact to the parent facility including projected occupancy declines, curtailing of service effect on operating cost, use of vacated space at the main campus and charge changes. "[T]here would be minimal utilization decline at the Rockledge facility tied to some redirection of patients from Rockledge to south Brevard." (Tr. 1222). The space that will be vacated will be reused. Wuesthoff receives preference under this part of the district plan. The third part calls for documentation of improvement of access by at least 25 minutes to at least 10% of the population or a minimum of at least 35,000 people. While Wuesthoff's proposal will provide a competitive alternative to substantially more than 10% of the population of South Brevard County, a number in excess of 35,000 people, access to acute care hospital services is presently satisfactory in South Brevard County. Wuesthoff does not receive any preference under this part of the plan. The fourth part relates to the commitment of the applicant to the provision of charity care and care to the medically indigent. Wuesthoff meets this preference based on its commitment that 15% of the discharges from the proposed facility will be Medicaid and charity care. The fifth part addresses the applicant's participation in indigent care programs in the county. Wuesthoff participates in a significant number of community benefit and outreach programs that meet the concerns of this part: There is the We Care Program, . . . a distributed medical access point . . . [and]. . . the United Order of True Sisters, . . .a service group which Wuesthoff supports. Wuesthoff works with a CMS program to provide baby and young children support services. Wuesthoff was involved with the development of the Children's Advocacy Center . . . a community-based program. It's a participant in the Health Start Coalition. And Wuesthoff has also sponsored its own mobile health program with a specific focus and purpose to provide care to [the indigent]. (Tr. 1225). Wuesthoff clearly meets this preference. On balance, despite the lack of an access problem for residents of the subdistrict, Wuesthoff meets the need criteria identified in the applicable portion of the district plan. The Availability, Quality of Care, Efficiency, Appropriateness, Accessibility, Extent of Utilization, and Adequacy of Like and Existing Health Care Services in the Service District: Section 408.035(1)(b),F.S. There is an excess of capacity in acute care beds in Brevard County. Despite an increase in population from 1993 to 1997 of about 2% per year overall and about 3.5% per year in the populace over 65 years of age, the use rate of hospital services declined. In 1993, the use rate was 600 acute care patient days per thousand population. In 1997, the rate was 484 acute care patients per thousand. The occupancy rates for Brevard County hospitals, despite the population increase, is also trending downward. In 1990, overall occupancy of hospital beds in Brevard County was 63%. In 1997, it was approximately 53%. This is due to a number of factors. Managed care penetration has increased; managed care exerts influence to hold down admissions and inpatient days; and there has also been a shift from inpatient surgical procedures to outpatient surgical procedures. The SunTree/Viera area, mid-way between Wuesthoff and Holmes Regional, is the most rapidly growing area of its size in Brevard County. As opposed to areas south of the SunTree/Viera area, where the overwhelming majority of patients use Holmes Regional for hospital services, the SunTree/Viera area is subject to active competition between Wuesthoff and HRMC for patients. Holmes Regional has been shown to be a consistent low charge provider operating within the expected range of outcomes. Furthermore, HRMC has performed as one of the top five hospitals in Florida in reducing overall Cesarean-Section births and increasing vaginal births after Cesarean ("VBAC"). This is important because "unnecessary Cesarean Section presents a real risk for both the mom and the baby . . . [and] the cost to the State for Cesarean Sections performed when vaginal birth would be a desirable alternative added about $3,000 per delivery to the State funded [deliveries]." (HRMC No. 77, p. 1091). Holmes Regional has had the lowest Cesarean Section rate in the county and the highest VBAC rate in the County. The construction of the proposed facility would not significantly increase access to hospital services for Brevard County patients. Holmes Regional delivers the majority of Medicaid babies in the county and is also a contract provider for Children's Medical Services. Ten years ago or so, in recognition of a substantial portion of the population in Brevard County without health insurance, Holmes Regional collaborated with the school board, the public health unit, civic organizations and others to create two school-based community health clinics. "[T]argeted at young families and children" (HRMC No. 77, p. 1063), the clinics provide pro bono health care services. The collaboration was the genesis of the HOPE program. The HOPE program's agenda was expanded to include a mobile clinic to reach those in need of pro bono services who were without transportation to the school-based clinics. The agenda was again enlarged to provide integrated services for children with developmental and cognitive disabilities and delays. Holmes Regional provides direct funding of approximately $1.5 million per year through operational costs of the HOPE program. Holmes Regional not only provides funding to HOPE but it subsidizes salaries of nurses, midwives, and obstetricians directly employed by the Public Health Unit, whose duties include the provision of medical care to the indigent. Dr. Manuel Garcia, Medical Director of the Public Health Unit in Brevard County for over 20 years until his retirement in 1998 offered the following in his testimony in the hearing before Administrative Law Judge Johnston (admitted into evidence in this proceeding as HRMC No. 65) about Holmes Regional's support of the Public Health Unit: "Holmes has always been willing to go the extra mile to help the Health Department with other programs and activities." HRMC No. 65, p. 1211. With regard to the question of which hospital "in Brevard County sets the pace in providing indigent care" (Id.) Dr. Garcia answered: ll the hospitals do a pretty good job . . . [t]here is no doubt that Holmes has been more aggressive in terms of getting into the community to kind of use all the resources available and putting together different organizations and agencies in order to provide more services to the poor in the community. They have been going the extra mile . . . (HRMC Ex. No. 65, pgs. 1211, 1212.) Holmes Regional's efforts in support of the Public Health Unit have continued following Dr. Garcia's tenure. At the same time, "it is true" (Tr. 274) that Wuesthoff, Cape Canaveral, and Parrish Medical Center all "go the extra mile in providing services to the patients that come through the health department." (Id.) Holmes Regional works with the Brevard County Public Health Unit, whose duties include provision of medical care to the poor and indigent patients in the county to develop a better system for giving prenatal care to Medicaid and indigent mothers. In 1998, HRMC provided $10 million of free charity for indigent patients not admitted through HOPE. General community donations and contributions totaled $542,000 and in-kind contributions totaled $714,000. The HOPE program, funded entirely by Holmes Regional, paid $1.1 million in clinical services for staff, pharmacy, services, and supplies to operate its clinics. In addition to these direct dollars, HRMC contributed 2.1 million in uncompensated services to the HOPE program in 1998. The HOPE program has been honored for ground-breaking work in community health improvement and for improving life in Florida through the American Hospital Association's Nova Award and the Heartland Award from the Governor of Florida. Holmes Regional supports a variety of agencies to provide care to AIDS patients. One such clinic is the Comprehensive Health Clinic. In existence since 1991, it currently treats 400 AIDS patients. Its services are mostly paid for through federal programs. Without the assistance of HRMC, the clinic would not be able to provide the quality of services it offers these AIDS patients. Holmes Regional is involved with several children's health programs, including a Healthy Families Program providing in-kind screening assessment. Health Kids Plan subscribers are provided access to managed care insurance products by Health First Health Plans, the managed care company affiliated with Holmes Regional through its parent, Health First, Inc. The company loses "hundreds of thousands of dollars" (Tr. 2108) on the Health Kids segment of its business. There was no evidence presented that persons in need of quality, general acute care services are not able to obtain those services at existing providers in Brevard County. There is no lack of availability or access to general acute care services on either geographic or financial grounds. The ability of the applicant to provide quality of care and the Applicant's Record of Providing Quality of Care: Section 408.035(1)(c), F.S. Wuesthoff is capable of providing quality inpatient health care services and has done so in the past. The Availability and Adequacy of Other Health Care Facilities in the District which may serve as Alternatives to the Health Care Facilities and Health Services to be Provided by the Applicant: Section 408.035(1)(d), F.S. There are available alternatives to the inpatient services proposed by Wuesthoff. The existing providers of acute care services have excess capacity to absorb any increase in the utilization of acute care services in the county. Utilization of the services Wuesthoff proposes, moreover, have been in decline in relation to the earlier part of the decade of the nineties. From 1993 to 1997, inpatient surgery procedures conducted in Brevard County declined approximately 18.8%, a trend consistent with the statewide trend. In 1998, "the number of inpatient procedures pretty much level[ed] off." (Tr. 3410). In contrast, the number of outpatient procedures in the county rose in 1997 from the number conducted in 1993. For each year in the same time period, the number of outpatient surgical procedures conducted in the county far exceeded the number of inpatient ones. In 1997, for example, there were more than twice as many outpatient procedures as inpatient. The move toward outpatient procedures is the result of health care providers seeking alternatives to hospitalization. Among the alternatives in the case of surgical procedures are the provision of those procedures on an outpatient basis performed in physician offices and ambulatory surgical centers. There has been a decline in Brevard County in utilization of other services Wuesthoff proposes for its 50-bed hospital. During the period of 1993-1997, while the population of Brevard County was growing at a rate in excess of 2% per year, obstetric admissions as a percentage of admissions to Brevard hospitals declined. Pediatric admissions did likewise. Not surprisingly, therefore, there is excess capacity for pediatric and obstetrical beds in Brevard County. With 66 reported available beds in Brevard County, the average daily census is about 34 beds. The average daily census for the 86 pediatric beds in the county is about 32 to 35. At the time of hearing, available data for 1998 showed a continued decline in pediatric bed demand and "[b]ased on the annualized data . . . a very slight increase" (Tr. 3402) in obstetric bed demand. The excess capacity demonstrated for the period from 1993 through 1997 remains. Although alternatives are available, they are not adequate for one reason. That reason is a competitive problem which exists in South Brevard County, discussed in Findings of Fact Nos. 91-107, below. Probable Economies and Improvements in Service that May be Derived from Operation of Joint, Cooperative, or Shared Health Care Resources: Section 408.035(1)(e), F.S. Wuesthoff does not propose its new hospital operate a joint, cooperative, or shared program with any entity except its Rockledge facility. It proposes the sharing of resources with its main facility in Rockledge. "The services that are being proposed for the South Brevard hospital [the proposed hospital] are a subset of what's there now." (Tr. 1257). The proposed services, therefore, are a duplication of existing services. There are some economies of scale and benefits enjoyed by a second campus of a hospital by virtue of the first hospital's existence, but generally, it is less efficient for a hospital to operate two campuses. The Need in the Service District for Special Equipment and Services which are not Reasonably and Economically Accessible in Adjoining Areas: Section 408.035(1)(f), F.S. Wuesthoff does not intend to provide equipment that is not available within the county or in adjacent districts. The Need for Research and Educational Facilities, Health Care Practitioners, and Doctors of Osteopathy and Medicine at the Student, Internship and Residency Training Levels: Section 408.035(1)(g), F.S. This need is met in Brevard County. The Brevard County hospitals are active in community training programs in conjunction with Brevard County Community Hospital and the University of Florida. Holmes Regional has institutional training programs with the University of Florida, All Children's Hospital, the local vo-tech, and the University of Central Florida, in addition to other community programs. Immediate and Long-term Financial Feasibility of the Proposal: Section 408.035(1)(i), F.S. a. Immediate Financial Feasibility. Immediate financial feasibility is determined by whether the applicant has adequate financial resources to fund the capital costs of the project and the financial ability to fund short-term operation losses. The project costs projected in Schedule 1 of Wuesthoff's application, taking into account inflation and other factors arising from delays associated with this proceeding, are reasonable and appropriate. Wuesthoff proposes to finance the project with $10.5 million in existing funds and $28 million in debt financing. At the time of hearing, Wuesthoff had $51 million in cash assets on its balance sheet available to cover the $10.5 million proposed to come from existing funds. The $28 million in debt financing was proposed in the application to be provided by "proceeds from a fixed rate bond issue." (Wuesthoff No. 1, Vol. I of II, Schedule 3 Assumptions.) "The interest rate for the debt is expected to be approximately 6.5%." (Id.) As part of its case for immediate financial feasibility, Wuesthoff presented a letter from The Robinson- Humphrey Company, Inc., dated April 6, 1999. In support of the opinion that Wuesthoff would qualify for tax exempt financing, the company wrote: Based on our long relationship and thorough understanding of Wuesthoff and its strategic direction, we believe that the rating agencies, bond insurers and capital markets will react positively to the Hospital's project. In addition, based on the Hospital's ability to secure a competitive insurance bid on its Series 1996 Bonds, the Hospital will be able to secure a new competitive bond insurance policy as well as credit ratings in the "A" category from the rating agencies in conjunction with the financing to help fund a portion of the proposed facility. Based on today's market conditions, the average interest rates available on a 30-year tax-exempt bond issue would be in the range of 5.25% to 5.50% based on an "A" rating category issue and "AAA/Aaa" rated issue with bond insurance, respectively. Although it is difficult to anticipate the interest rate environment throughout 1999, we would expect rates to be in the 5.50% to 5.75% range , using recent interest history as a benchmark. (Wuesthoff No. 3, pgs. 1 and 2). After testimony with regard to the letter by Wuesthoff's witness Rebecca M. Colker, qualified as an expert in health care finance, the following colloquy between Ms. Colker and Wuesthoff's counsel took place at hearing: Now, based on your assessment of the marketplace and your investigation of the marketplace, do you have an opinion as to whether Wuesthoff has the ability to finance the project that it proposed in [its] application . . .? A. Yes, sir, I feel [Wuesthoff] has the ability to finance the project. (Tr. 179). During the hearing, but after Ms. Colker's testimony, allegations surfaced publicly that Wuesthoff had violated the law with respect to its tax-exempt status as a "501(c)(3) organization" under the Internal Revenue Code by engaging in political activity and obtaining private benefit. Proof of the violations exposes Wuesthoff to revocation of its tax-exempt status. At the time of hearing, the IRS had not determined the truth of the allegations. If the IRS determines that the violations occurred, there are penalty options available to the Service short of revocation of Wuesthoff's tax exempt status. These options are referred to as intermediate sanctions. In addition, the IRS may enter a closing agreement with the offender in which an intermediate sanction is accepted in lieu of revocation. Wuesthoff, moreover, can take certain steps in mitigation of any ultimate penalty imposed by the IRS. Wuesthoff presented evidence that "upon a resolution of the allegations of wrongdoing which falls short of revocation of Wuesthoff's tax exempt status, there will be no cloud upon Wuesthoff's ability to obtain the tax exempt debt financing it has proposed." Joint Proposed Recommended Order of Wuesthoff Memorial, Inc., and the Agency for Health Care Administration, p. 39. Such a resolution, if it is the one chosen by the IRS, can reasonably be expected to occur within a single year. In the meantime, whatever the outcome of the IRS' dealing with the allegations, their very existence jeopardizes Wuesthoff's ability to obtain tax exempt debt financing. Given what he had heard and read about the allegations, Mr. Todd Holder, an investment banker who provides "basically the same services that Robinson-Humphrey would provide to a hospital client" (Tr. 3337) testified: At this time, my firm would not underwrite these bonds [proposed by Wuesthoff] and I wouldn't imagine at this time any firm would underwrite these bonds . . . (Tr. 3339). If Wuesthoff's tax exempt status were revoked, its bonds would be in jeopardy of being called to cover loss to existing bond holders. Such action would affect its bond rating. A BBB rating would involve approximately a 3% rise in interest rates. If its rating were to fall below investment grade, the interest rate could rise 5% or more. Based on a $28 million issue, the amount Wuesthoff proposes for financing the new facility, each percentage point rise in interest rate equates to an annual debt service cost of $250,000. Furthermore, a loss of its tax exempt status would make it more difficult to obtain bond insurance. It is by no means certain that the IRS will revoke Wuesthoff's tax exempt status as explained above. When a charitable organization continues to fulfill its charitable obligations, "the IRS has, in practice, not revoked [its] tax- exempt status but tried to exact some other type of penalty." (Tr. 3600). Furthermore, when an offending organization has removed from authority the individuals responsible for the violations, the IRS considers such action to mitigate the penalty it imposes. At bottom, predicting the action of the IRS is speculative. If the IRS does revoke Wuesthoff's tax exempt status, Wuesthoff has enough cash assets on hand to build the proposed facility without resort to financing. If it comes to that, however, Wuesthoff's decision to carry the costs of construction and getting the facility off the ground in the first few years of operation without debt financing has implications for the project's long-term financial feasibility. b. Long-term financial feasibility. Historically, AHCA has defined long-term financial feasibility as at least breaking even, if not making a profit, by the end of the second year of operation. Among other matters Wuesthoff must prove in order to satisfy the test employed by AHCA historically, it must demonstrate that "projected revenues can be attained in light of the projected utilization of the proposed service and average length of stay." OR-1, p. 18. The processes used by Wuesthoff's expert to conclude that the project is financially feasible were conservative. But the processes contained flaws. Wuesthoff, for example, projects that it will have a volume of 8,327 patient days at its South Brevard campus in year one of operation and 11,224 patient days in year two. For the same time periods, it projects volumes of 50,000 patient days at its Rockledge facility for both year one and year two of operation, the same volume it projects at its Rockledge facility for the 12-month period during which the new facility will be built. The projections are not reasonable. Building the new hospital will not increase the demand for hospital services in Brevard County. Rather, patients will be reallocated. The proposed facility will receive patients who otherwise would be hospitalized at Holmes Regional or the Wuesthoff Rockledge campus. It is not reasonable, therefore, for Wuesthoff to project that its patient days at the Rockledge facility will remain the same in years one and two of operation of the new facility as during the year's period of construction. The Agency concurred with Holmes Regional's expert that Wuesthoff's utilization projections were overstated but did not see the overstatement as a problem because "while the applicant may not fully attain what is projected within the application . . . [it] will attain a level which will be successful, especially for a provider that is financially stable at this point in time and has the resources to carry out this project." (Tr. 3474). There are other flaws. Wuesthoff assumed that for the Rockledge facility pro forma all payors' reimbursement increased 4% a year for years one and two of operation resulting in a net revenue increase in excess of 9% for the two-year period. Managed care companies are typically not allowing a 4% per year increase to providers. Medicare reimbursement (the largest single payor source) was not likely to increase 4% per year prior to the Balanced Budget Act of 1997 (see finding of fact no. 86, below). Medicare is the largest payor source currently at Wuesthoff, accounting for in excess of 50% of operating revenues. It is also the largest payor source projected for the proposed project. In the wake of the Balanced Budget Act of 1997, Medicare margins have declined and are expected to continue to decline. Wuesthoff's Medicare revenue in year one of operation were overstated by 4.3% and in year two by 5.7%. Wuesthoff's expert did not assess the impact of the Balanced Budget Act on the Wuesthoff projections at the time they were made since they were made before the effective date of the Act. But he had not assessed the impact of the Act on the pro forma prepared for the new facility as of March 1999, after effects of the Act's impact were observable. Presumably, no such impact analysis was undertaken because Wuesthoff is a hospital that takes action to contain costs, a method for reducing the negative impact of the Act on a hospital's revenue. Other assumptions that underlie projections by Wuesthoff in the application are also not reasonable. Wuesthoff assumed that Medicare HMO would generate higher charges than traditional Medicare, but have a length of stay almost half the time such that the net reimbursement per case would be identical. On a per day basis, Weusthoff assumed that the Medicare and Medicaid HMO patient will generate a greater per diem reimbursement than a traditional Medicare and Medicaid patient, respectively. This is not a reasonable assumption. The assumption that commercial insurance remains a significant payor at the South Brevard campus is critical to the financial viability of the project. If the pro forma had shown a more reasonable managed care percentage and less commercial insurance in the payor mix, net revenue would decrease by approximately $280,000 in year two. The projected costs of operation at the South Brevard campus are unrealistically low because the projected salary expenses have been understated. The nursing staff will comprise almost one-third of the total hospital FTEs for years one and two at the South Brevard campus. There currently exists a nursing shortage such that hospitals in Brevard County are having to pay a several thousand dollar signing bonus when hiring nursing staff. Projected nursing salaries for the first and second year of operation were only minimally higher above what Wuesthoff was paying its nursing staff three years earlier. The Needs and Circumstances of those Entities which Provide a Substantial Portion of their Services or Resources or Both, to Individuals not Residing in the District: Section 409.035(1)(k), F.S. Wuesthoff's application does not address providing a substantial portion of its services or resources to individuals not residing in the District. The Probable Impact of the Proposed Project on the Costs of Providing Health Services Proposed by the Applicants, Including the Effect on Competition: Section 408.035(1)(l), F.S. Brevard County's Unusual Shape Brevard County is relatively narrow from East to West and extremely long from North to South, stretching 72 miles from its northern border to its southern one. Because of its unusual geographic shape, the county is easily divisible into three areas, north, central and south. North Brevard County's population was approximately 68,000 in 1998. Central Brevard County's population was approximately 168,000 and South Brevard County's was approximately 234,700. Since 1970, the share of total county growth has consistently been lowest in North Brevard County, peaking at 13% in 1990, with a projected share of total county growth in 2003 at 10.4%. Next in order, Central Brevard County's share of growth since 1970 has been on the rise but has remained substantially lower than South Brevard County's. Its share of growth in 2003 is expected to be about 38.8%. The County's "growth has been predominantly in [S]outh Brevard." (Tr. 375). In 1971, its share of total county growth was 71.1%. Although "the share of growth in [S]outh Brevard has declined over time . . . it is still about 50%." (Id.) In 2003, South Brevard County's share of total growth is projected to be 51.2%. Consistent with its higher share in total county growth, more than half of Brevard County housing starts have within recent years occurred in South Brevard County and more than half of Brevard County employers and employees are located in South Brevard County. South Brevard, for some time, has been the most populated of the county's three areas. It will continue to be the most heavily populated area for a considerable time in the future. North Brevard has one hospital: Parrish Medical Center. Central Brevard has two hospitals: Wuesthoff and Cape Canaveral Hospital. The two are operated by different hospital systems; Wuesthoff by the Wuesthoff Health System and Cape Canaveral by Health First. South Brevard has two hospital facilities: Holmes Regional Medical Center and Palm Bay Community Hospital. Unlike the situation in Central Brevard the two South Brevard facilities operate under a single hospital license and are part of one system: Health First. Markets, Monopolies, and the Exercise of Monopoly Power A great deal of evidence was introduced by both Wuesthoff and Holmes about whether or not South Brevard County, by itself, constitutes a market for purposes of economic analysis and, if so, whether Health First through its operation of the two South Brevard hospitals has a monopoly on hospital services within the market. Further evidence was introduced about whether Health First, in fact, exercises monopoly power. Wuesthoff posits that South Brevard County, in and of itself, is an economic market for purposes of economic analysis. While there was evidence that indicated that South Brevard County is a market for purposes of economic analysis, none of the experts who testified could ever recall a proceeding in which they had been involved in which an area smaller than a county had ever been found to constitute a market. Wuesthoff's approach, moreover, is problematic in a Certificate of Need proceeding (as distinguished from other types of proceedings that typically employ economic analysis, such as anti-trust proceedings.) Brevard County is one part of AHCA District VII, a district established by the Legislature for health planning purposes. The district is divided into subdistricts. Subdistrict 1 is composed of Brevard County, nothing more and nothing less. But the subdistricts are not further divided for health planning purposes. There is no question (nor any argument from Wuesthoff otherwise) that Health First does not have a monopoly on hospital services over the entire subdistrict, let alone the district. Assuming for the sake of argument that South Brevard County is a market for purposes of this proceeding and that Health First has a monopoly over hospital services in that market, Health First has not exercised its monopoly power as would typically be expected on the basis of net price. First of all, while one might expect that an entity with monopoly power would exercise it, that expectation cannot be assumed in the case of not-for-profit hospitals, such as Holmes Regional. The not-for-profit hospital "can't act like a profit- maximizing organization because of the way it is structured." (Tr. 2958). More importantly, "the economic hallmark of the exercise of monopoly power is a price above the competitive level, one that permits the earning of an above-competitive profit rate." (Tr. 2946). Holmes Regional's average net prices are 90.8% of what would be expected. In contrast, Wuesthoff's are 115.1% of what would be expected. Neither of these is "extraordinarily far from what you would expect." (Tr. 2971). In the final analysis, pricing data with regard to both list prices and net prices, no matter the payor source, does not indicate "the systematic exercise of monopoly power by Holmes . . ." (Tr. 2973), in "[S]outh Brevard County." (Tr. 2975). It is clear, however, that residents of South Brevard do not have convenient access to Brevard County hospitals other than the two Health First hospitals in South Brevard, Holmes Regional and Palm Bay Medical Center. The other Brevard County hospitals are either too far away in distance or require too much travel time to reach by automobile for most of the residents of South Brevard. Consistent with this convenience factor, 82% of the South Brevard County residents discharged from hospitals in the first six months of 1998 were discharged from Holmes Regional and Palm Bay Community. Of the remaining South Brevard County residents discharged from hospitals, the highest percentage (6%) of patients were discharged from Sebastian River Medical Center. Sebastian River, while close to some South Brevard County residents, does not provide a high enough level of services in many cases to be a reasonable substitute for Holmes Regional. Even if it is convenient to use hospital services that are close by, a patient will chose a more inconvenient hospital if the nearby hospital does not provide services of reasonable quality at reasonable prices. The two Health First hospitals provide services of reasonable quality at reasonable prices. Nonetheless, the establishment of Wuesthoff's proposed hospital would substantially increase the accessibility of South Brevard County residents to a non-Health First facility. The presence of Wuesthoff's proposed hospital in South Brevard County would offer residents of South Brevard more of a meaningful choice. In essence, granting Wuesthoff's application would produce a more competitive environment for the hospital services to be offered by Wuesthoff in South Brevard County, whether South Brevard County constitutes a market or not. Wuesthoff presents a greater question for resolution in this proceeding than whether granting the application would simply provide more competition. Even though Holmes Regional's net pricing in general does not indicate that it is exercising monopoly power in South Brevard County, is there, nonetheless, a need for a more competitive environment for hospital services in South Brevard County? The answer to that question is "yes" when one considers competition from the perspective of managed care payors. Need for Competition for Hospital Services in South Brevard County. In general, competition enhances the quality of health care services even when services being provided are of high quality. Competition also provides an incentive for hospitals, including non-profit hospitals to serve patients more efficiently. Competition lowers the costs consumers pay for hospital services. When managed care payors are able to reduce their payments to hospitals, they are able to lower the premiums paid by the "end purchaser." (Tr. 609). If the end purchaser is an employer, the "employer then makes [its] business decision internally as to how much of that cost is passed along to the individual employee." (Id.) This effect of competition is the basis for a number of managed care contractors and employers' vigorous support of Wuesthoff's application, the success of which will create competition in South Brevard County. Wuesthoff's proposed hospital will spur competition which will benefit consumers by lowering Holmes Regional's prices. Managed care helps contain costs and injects price sensitivity into the market. At the same time, higher levels of hospital concentration are associated with lower levels of discounting to managed care companies. Managed care penetration has been increasing in Brevard County. In South Brevard County, managed care penetration has increased but mainly due to increase in enrollment in HFHP, Health First's managed care plan. Managed care penetration in South Brevard County achieved by HFHP "in itself is not the issue." (HRMC No. 75, p. 32.) With only one active HMO in South Brevard County, there is no incentive to achieve better rates for the ultimate consumers especially if the main HMO is part of the same organization as the hospital as in this case. "[I]f you have several large commercial plans . . . they will be able to get better rates from Holmes Regional than if you only have one." (Id., p. 32-33). Commercial HMO inability to contract with HRMC was considered by the agency as the most important factor in approving Wuesthoff's application. Health maintenance organizations, other than HFHP, do not have meaningful competitive ability to compete with HFHP in South Brevard County. In recognition of their inability to use Central Brevard County hospitals or Sebastian River Medical Center as substitutes, and to avoid losses caused by the lack of hospital competition in South Brevard County, Aetna and United, two large managed care payors in Brevard County, have embarked on an exit strategy with regard to South Brevard County. It is difficult for managed care payors to steer south Brevard residents to central Brevard hospitals. Patients are generally unwilling to change physicians when it becomes necessary to enter a hospital. Discharge data demonstrates the lack of overlap in physician privileges between South and Central Brevard. The Central Florida Health Care Coalition, an organization comprised of businesses and formed to address health care issues which includes the largest of Brevard County employers, supports Wuesthoff's application because of the competition it will create and a number of consumers expressed support for the Wuesthoff application based on the need for competition in South Brevard County. In contrast, not a single employer, large or small, testified in support of opposition to the application. Wuesthoff's new hospital would provide an alternative for managed care payors to negotiate hospital prices in South Brevard County. More favorable hospital prices in managed care contracts, in turn, would lead to managed care premiums that would be lower for managed care customers. Lower health care premiums enable larger numbers of consumers to purchase health care coverage, thereby reducing the number of persons who have no source of payments for health care services. The ability of managed care plans to negotiate hospital prices is dependent upon ability to engage in selective contracting, the ability of a managed care plan to refuse to include a hospital in its network of providers. Selective contracting induces hospitals to offer discounted prices to assure participation in a managed care plan's network of hospitals in order to avoid losing the managed care plan's business to other competitive hospitals. Selective contracting can only be an effective strategy if managed care contractors have meaningful choices among hospital providers. In Brevard County, only in the central area do managed care plans have more than one hospital system from which to choose meaningfully and only in Central Brevard County has there been any real competition among hospitals for managed care contracts. Holmes Regional does not face the threat of a loss of business if it refuses to contract with any one managed care plan because South Brevard residents for the most part will not seek hospital services outside South Brevard County. Without the threat of a loss of business, Holmes Regional has little, if any, incentive to offer reduced prices to managed care plans. The lack of incentive for Holmes Regional to reduce prices to managed care plans was demonstrated by several analyses, including one showing that from 1995 through 1998, net prices paid by all managed care contractors to Holmes Regional were on average 32% higher per year than those paid to Wuesthoff, which has competition from another hospital in Central Brevard County Apart from pricing analyses, the lack of competition in the managed care arena for Holmes Regional was demonstrated by its ability to resist entry into any per diem managed care contracts despite efforts by some managed care contractors to negotiate such agreements with Holmes Regional. Per diem contracts are a favored from of contracting by managed care payors because they tend to enable managed care payors to predict the level of hospital payment to which they will be exposed. Such contracts are commonly found where there is competition among hospitals. In contrast, as is to be expected of a hospital in a competitive environment, most of Wuesthoff's contract with managed care payors are per diem contracts. The Applicant's Past and Proposed Provision of Health Care Services to Medicaid Patients and the Medically Indigent: Section 408.035(1)(n), F.S. Wuesthoff has "a history of providing care to the medically indigent population." (Tr. 1244). Its commitment to continue to provide such care at the proposed facility has been discussed. Whether Less Costly, More Efficient, or More Appropriate Alternatives to the Proposed Inpatient Services are Available: Section 408.035(2)(a), F.S. The greater weight of the evidence establishes that denial of the application is less costly and more efficient. The new facility will cost $38 million to build. At the same time, existing providers are operating efficiently and have unused capacity. In fact, there is insufficient utilization of the inpatient acute care services in existence in Brevard County. The subdistrict occupancy rate is "about 54% . . .[with] at least [hundreds of] beds that are unoccupied at any point in time with the county." (Tr. 3385). Whether the alternative of denying the application is more appropriate in light of the cost of the project and efficiency considerations turns on the weight to be given Wuesthoff's case for the need for competition in the managed care arena in South Brevard County. Whether the Existing Facilities Providing Similar Inpatient Services are being Used in an Appropriate and Efficient Manner: Section 408.035(2)(b), F.S. Existing facilities are being used in an efficient manner. Whether the status quo is appropriate, again, turns on the weight to be given Wuesthoff's case for the need for competition. That Patients Will Experience Serious Problems in Obtaining Inpatient Care of the Type Proposed in the Absence of the Proposed New Service: Section 408.035(2)(d), F.S. There was no evidence that patients will experience serious problems in obtaining inpatient care of the type proposed by Wuesthoff for its South Brevard County if the application is not granted. Rule Criteria Rule 59C-1.030, Florida Administrative Code, sets forth "health care access criteria . . . [i]n addition to criteria set forth in Section 408.035, Florida Statutes . . .". Among the criteria are [t]he contribution of the proposed service in meeting the health needs of members of such medically underserved groups, particularly those needs identified in the . . . State Health Plan as deserving of priority." The first State Health Plan preference favors an applicant that provides a disproportionate share of Medicaid and charity care patient days in relation to other hospitals within the subdistrict. Wuesthoff has provided its fair share of Medicaid and charity care patient days in the past and proposes to continue to do so at the new facility if approved. But Wuesthoff is not a disproportionate share provider. As to the second preference which considers the current and projected indigent inpatient case load, the proposed facility size, and the case and service mix, Wuesthoff's application partially complies with preference in that it proposes to provide indigent care. But, Medicaid and indigent members of the population were not shown to have been denied access to hospital services in Brevard County. Approval of the facility, moreover, will not improve access or increase the number of beds since approval will result in a net loss of 50 beds in the county. The fourth preference favors an applicant with a record of accepting indigent patients for emergency care. Wuesthoff meets the preference. The fifth preference favors applicants for a type of hospital project if the facility is verified as a trauma center. Holmes Regional will remain the only verified trauma center in the subdistrict, even if the application is approved. The sixth preference favors applicants who document that they provide a full range of emergency services. The new facility will provide emergency services but not a full range unless the emergency services provided by Wuesthoff at its Rockledge campus are considered. Because the 50-bed hospital will not provide tertiary services nor high-level trauma services, "[t]he complicated or trauma cases will . . . go to Holmes Regional Medical Center" (Tr. 3384), the hospital campus closest to the new facility. The seventh preference favors applicants not fined by AHCA for any violation of emergency service statutes. Wuesthoff meets this preference. The eighth preference favors applicants who demonstrate that the subdistrict occupancy rate is at least 75%, or in the case of exiting facilities, where the occupancy rate for the most recent 12 months is at least 85%. Wuesthoff did not show that it meets this preference. The ninth preference of the State Health Plan favors an applicant with a history of providing a disproportionate share of the subdistrict's acute care and Medicaid patient days and is a Medicaid disproportionate share provider. Wuesthoff does not meet this preference.
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 denying Wuesthoff Memorial Hospital, Inc.'s application for CON 8740. DONE AND ENTERED this 12th day of July, 2000, in Tallahassee, Leon County, Florida. DAVID M. MALONEY Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 12th day of July, 2000. COPIES FURNISHED: Richard A. Patterson, Esquire Agency for Health Care Administration Fort Knox Building Three, Suite 3431 2727 Mahan Drive Tallahassee, Florida 32308-5403 Terry Rigsby, Esquire Blank, Rigsby & Meenan, P.A. 204 South Monroe Street Tallahassee, Florida 32301 Stephen K. Boone, Esquire Boone, Boone, Boone & Hines, P.A. Post Office Box 1596 Venice, Florida 34284-1596 David C. Ashburn, Esquire Smith & Ashburn, P.A. 1330 Thomasville Road Tallahassee, Florida 32303 Sam Power, Agency Clerk Agency for Health Care Administration Fort Knox Building Three, Suite 3431 2727 Mahan Drive Tallahassee, Florida 32308-5403 Julie Gallagher, General Counsel Agency for Health Care Administration Fort Knox Building Three, Suite 3431 2727 Mahan Drive Tallahassee, Florida 32308-5403
