Findings Of Fact On February 1, 1982, Petitioner Tallahassee Community Hospital (TCH) filed an application for a Certificate of Need with Respondent Department of Health and Rehabilitative Services (HRS), Office of Community Medical Facilities, to establish an obstetrical service at its hospital located in Tallahassee, Florida. The application reflected that Petitioner proposed to make a capital expenditure of $2,130,000.00 to construct a new obstetrical wing to the hospital as an extension to the existing south wing of the facility. It plans to use twenty existing licensed medical/surgical beds in the south wing as postpartum beds. The new wing will include five family labor/delivery (birthing) rooms, two other delivery rooms, a recovery room, a twenty bassinet nursery, and ancillary facilities. According to the applicant, the estimated cost of construction has increased to $2,250,000.00. TCH is a private for- profit hospital that is wholly owned by Hospital Corporation of America. The hospital was established in 1979 and currently has 180 state-licensed beds. (Testimony of Fleming, Petitioner's Exhibits 1, 8; Respondent's Exhibit 1) TCH based its application on the perceived need for some twenty to thirty additional obstetrical beds in Leon and surrounding counties by 1984 based upon the capacity of existing facilities and a projected increase in births. It had also received expressions of concern from physicians and local citizens concerning a shortage of obstetrical services in Tallahassee and a desire for alternative services. (Testimony of Fleming, Respondent's Exhibit 1) The application was reviewed by the then existing Florida Panhandle Health Systems Agency, Inc. and by Respondent's Office of Community Medical Facilities, in accordance with criteria contained in the agency's Health System Plan, and pursuant to Section 381.494, Florida Statutes. However, 1982 statutory revisions to Chapter 381 eliminated the concept of health systems agencies and they are no longer in existence. Although the present law establishes local health councils to develop district plans based on goals and criteria concerning unique local health needs, no applicable district plan has been established. By letter of June 1, 1982, Respondent's administrator of Community Medical Facilities provisionally denied the application on the grounds that the proposed project was not consistent with the Florida Panhandle Health Systems Agency, Inc.'s Health Systems Plan in that obstetrical services are well supplied in the service area and additional beds and services are not needed. He further stated that the project was not justified based on a sufficient number of obstetrical beds in the area for projected needs, and that continuation of obstetrical services at the existing facility is a less costly and more effective alternative to the establishment of a new unit in the community. Finally, the letter based the proposed denial on the ground that establishment of additional obstetrical services could result in a decreased level of utilization at the existing Level II service facility (TMRMC) which might adversely impact the quality of care, and that Level I obstetrical services should not be developed in urban areas where existing Level II facilities have the capability to meet the community's obstetrical needs in that such could lead to lack of quality care in both institutions. TCH thereafter requested an administrative hearing. (Testimony of Straughn, Konrad, Respondent's Exhibit 2) The recognized health service area of TCH is called the "capital sub- area" which includes Leon County and the seven surrounding counties of Franklin, Gadsden, Jefferson, Liberty, Madison, Taylor, and Wakulla. According to the 1981-82 state hospital licensure application file, only two hospitals in the service area have obstetrical beds. One is Intervenor Tallahassee Memorial Regional Medical Center (TMRMC), with 34 beds, and Gadsden Memorial Hospital with nine beds. Two hospitals within the sub-area are shown in the license file to have licensed bassinets only (Madison - 7 and Taylor - 8). However, testimony at the hearing showed that currently Gadsden has 10 beds, Madison has 7 beds and Taylor has 3 beds. The Gadsden, Madison and Taylor facilities, together, serve only approximately 15 to 20 percent of the sub-area population births. Approximately 80 percent of all births in the sub-area occur at TMRMC. (Testimony of Straughn, Petitioner's Exhibit 8, Respondent's Exhibit 1-2) It is recognized in the 1981 Florida State Health Plan, and generally throughout the medical community, that hospitals providing obstetrical services fall into three types or "levels" of care. Level I is a facility that provides services primarily for uncomplicated maternity and newborn patients. Level II is a perinatal unit which should be available in large urban and suburban hospitals where the majority of deliveries occur. These units should provide a full range of maternal and neonatal services for uncomplicated patients and for the majority of complicated obstetrical problems and certain neonatal illnesses. Institutions operating such units should have the physical capacity to accommodate annually. Level III is a regional perinatal center that can provide care for all serious types of maternal, fetal and neonatal illnesses and abnormalities. Although the majority of hospitals with obstetric units are classified as Level I facilities, the quality and sophistication of care provided varies considerably depending upon the location, size and staffing of the hospital. TCH intends to establish a Level I obstetric facility. (Testimony of Courtney, Bucciarelli, Plessala, Petitioner's Exhibits 6-7, Respondent's Exhibit 1) Intervenor Tallahassee Memorial Regional Medical Center (TMRMC) is owned by the City of Tallahassee, but the hospital is leased and operated by Tallahassee Memorial Regional Medical Center, Inc., a non-profit corporation. TMRMC's 1981-82 renewal application for state licensure reflected 771 total beds, including 34 obstetrical beds. Although the same number of obstetrical beds had been listed on prior license applications for several years, hospital officials testified at the hearing that its 1982-83 license application reflected 54 such beds, including 20 beds that had been used in past years for overflow purposes, but had not been registered with the state because they were not ordinarily staffed. The HRS Director of Licensure and Certification has expressed the view that hospitals are licensed to operate a specific total number of beds, but that allocation of licensed beds to various services can be determined by a hospital based on the "patient Mix." (Testimony of Mustian, Honaman, Rogers, Petitioner's Exhibit 8, Respondent's Exhibit 2) In August 1980, TMRMC advised Joseph N. Clemons, a local architect, that it was developing a master plan for the fourth floor of the hospital, including the obstetrical unit, and requested him to conduct a study and develop ideas of how best to combine areas and consolidate clinical spaces, due to an increasing obstetrical load over the past several years. In February 1982, Clemons submitted to HRS plans for renovation of the labor and delivery facilities at TMRMC which were designed to handle a planned delivery rate of 3,000 annual births. The renovations were undertaken and completed in September, 1982. Further renovations to the nursery area were completed in December, 1982. As a result of the renovations, the obstetrical unit presently consists of four delivery rooms, eight labor rooms, one birthing room, one five- bed recovery room, and 46 post-partum beds, together with nursery and service facilities. Eight of the pre-existing 54 post-partum beds on the fourth floor were eliminated as a result of the renovations, but the hospital officials claim that these beds were merely "relocated" to the second floor and are available for use when necessary. They further state that although they have not had to inform local obstetricians of the eight additional beds, the nurses were aware of their existence. The estimated cost of the renovations has been approximately $300,000.00. An HRS architect who reviewed the renovation plans found that the 46-bed obstetrical unit should be adequate until 1985 under obstetrical planning guidelines. Long-range plans of TMRMC call for a three- year project to enlarge and move the obstetrical unit to the second floor of the hospital. (Testimony of Clemons, Meadows, Rogers, Mann, Mustian, Honaman, Petitioner's Exhibit 3, Respondent's Exhibit 2, Intervenor's Exhibit 5) Prior to and since the TMRMC renovations, several obstetricians have found the facilities at the hospital to be overcrowded to the extent that the quality of care available to patients has been adversely affected. Under such circumstances, the nurses and physicians are "spread too thin" and it is difficult to find the necessary personnel during crises. The facilities were characterized as "bursting at the seams now," and considered inadequate to handle the present number of deliveries. Although the hospital normally has a peak demand during the months July through September, there have been a number of occasions since last September when all post-partum beds and labor beds have been full. In a number of instances, as recently as during the course of the hearing, insufficient space in labor rooms has resulted in patients laboring in the hallway with consequent lack of privacy. In one instance, there was insufficient space in the delivery room for a patient and the obstetrician was obliged to delay the delivery. In another recent case, a patient undergoing a high-risk pregnancy had to labor in the recovery room due to lack of labor room space. Recovery rooms lack the necessary equipment for patients undergoing labor and thus increase the element of risk. Semiprivate post-partum rooms at TMRMC have been found too small for two beds and present problems of access during emergencies. At times, cribs have had to be placed in the hallway unattended due to the lack of adequate space for the physician when in the room. Although the recovery room was supposedly expanded from four to five beds as a result of renovations, it is crowded with only four beds in place. (Testimony of Curry, Griner, Ashmore, Hayward, Rogers, Meadows, Petitioner's Exhibits 3-4) The state requires that labor rooms be provided on the basis of the estimated annual birth rate. Although expert testimony indicates that the appropriate number of deliveries per year per labor room could vary from 250 to 450, and from 700 to 750 births for a delivery room, it is found that the figures of 300 and 750 respectively, together with 365 deliveries annually for a birthing room are reasonable in this regard. Therefore, the eight labor rooms at TMRMC, together with the one birthing room, could accommodate 2,765 births a year. The four delivery rooms, together with the one birthing room, would have a maximum capacity of 3,365 annual deliveries. There were 2,987 births at TMRMC during the year 1980-81 and approximately 3,200 during the year 1981-82. Thus, labor room capacity has already exceeded and delivery room facilities are close to capacity at the present time. Although there are two existing locker rooms that could be converted to labor rooms in the obstetrical unit, they are not presently being utilized for such purposes. (Meadows, Richardson, Hayward, Rond, Rogers, Honaman, Petitioner's Exhibits 3-4, Respondent's Exhibit 2) An accepted method of further determining the additional need for health care facilities in a particular health service area is to examine the adequacy of like and existing health care services as to the number of presently available post-partum beds in the light of projected bed needs for the ensuing five-year period. Experts in the field of health planning are in general agreement that the most accurate estimate of projected obstetric bed needs is first to arrive at future numbers of births by projecting the number of females of child-bearing age, i.e., ages 15 to 44, in the service area, and the projected fertility rate of that age group. Based upon projected fertility rates of female childbearing population for the area, it is estimated that there will be 4,358 births annually in Leon County by 1988. This figure is then multiplied by the average length of stay in the hospital (which was 3.9 days per patient at TMRMC in 1980-81) to arrive at the total projected number of patient days per year, and when this figure is divided by 365 days, an average daily census figure is determined. The average daily number of beds represented by the daily census is then used to determine bed need at 75 percent occupancy, subtracted by the current number of beds in Leon County to arrive at projected 1988 needs. In view of previous findings as to the results of renovations of TMRMC's obstetrical unit, it is further found that the most realistic figure of present obstetrical beds in that unit at the present time is 46 beds rather than 54 as claimed by TMRMC. Accordingly, the estimated bed need for Leon County in 1988 is calculated as follows: Projected Births: 4,358 per year Average Length of Stay: 3.9 days Projected Patient Days: 16,996 days per year Average Daily Census: 47 Total Bed Need at 75 Percent Occupancy: 63 Current Beds in Leon County 46 Additional Beds Needed in 1988: 17 (Testimony of Schmeling, Richardson, Straughn, Petitioner's Exhibit 2, Respondent's Exhibits 1-2, Intervenor's Exhibit 7) The establishment of a 17-bed obstetrical unit at TCH would represent 27 percent of the 63 beds needed in Leon County, and therefore reasonably would be expected to handle at least 1,176 of the projected 4,358 anticipated annual births by 1988. TMRMC's 46-bed unit would constitute 73 percent of the available Leon County beds and therefore the annual number of births at its hospital in 1988 would be 3,182. The latter figure is comparable to the present annual rate of births at TMRMC and is its present approximate capacity. Accordingly, the establishment of a TCH unit would not appreciably impact adversely upon the financial resources of TMRMC, nor reduce its ability to render Level II obstetrical services because it would still be experiencing more than 3,000 births per year. Additionally, as heretofore found, TMRMC does not have adequate facilities to accommodate a greater number of patients on an annual basis than is presently the case. TMRMC presented data in an attempt to establish a loss of income that would result if the TCH unit were to be established. However, such evidence was insufficient upon which to base accurate findings. (Testimony of Richardson, Intervenor's Exhibit 7) The obstetrical unit proposed by TCH is designed to provide a "family centered" approach to obstetrics whereby the mother and spouse, together with other family members, may participate in the birth experience to the maximum extent desired. This is a relatively new concept which involves such considerations as provision for family labor and delivery (birthing) rooms, birthing chairs, and proximity of the newborn baby to the mother and family to a much greater extent than has been the case in the past, if such procedures are medically safe and permitted by the attending physician. This approach is designed to enhance "bonding" of the family members and the child to strengthen the family unit. This concept also encourages the prospective mother and her family to participate in prenatal instruction and instruction during hospitalization concerning proper methods of care for the mother and child, and special needs of the other family members. The proposed TCH unit will provide facilities designed to emphasize the family-centered approach. In the past year, TMRMC has placed more emphasis on such a program by the establishment of the employee position of patient educator who coordinates courses for prospective parents, and by permitting such innovations as "rooming in" of the infant in the mother's room, demand feedings, and permission for husbands to attend the birth. However, its facilities are not presently ideally designed for accommodation of family members. (Testimony of Fleming, Novak, Brickler, Fortson, Sheehan, Rogers, Mustian, Intervenor's Exhibit 3) The maternal and infant health portion of the 1981 Florida State Health Plan embodies the "regionalization" concept in obstetrical services which is designed to develop a geographically based service network which integrates resources in order to achieve appropriate, efficient utilization. The concept is recognized as a "broad aim" and involves use of the "levels of care" concept, and development of mechanisms for early identification of high-risk cases, proper referral of such cases, and transfer of patients between care levels as their risk status changes. Although consolidation of resources is considered in the concept in determining if larger obstetrical units result in economies of scale and improvements in quality of care, those considerations are minimized in situations where the area physicians can be expected to admit patients to alternate facilities. Selection of a hospital can be the decision of either the patient or physician, or both. Accordingly, in the event an obstetrical unit is established at TCH, it reasonably may be anticipated that patients will be admitted by physicians to both hospitals, dependent upon the preferences of the patient, physician, or both. An undesirable feature of the existence of two units in one city is that obstetricians are sometimes faced with the prospect of simultaneous births at different hospitals. It may then become necessary to have another physician attend one of the births. However, this problem also occurs when physicians are on vacations or otherwise absent from the geographical area. (Testimony of Plessala, Curry, Ashmore, Brickler, Winchester, Petitioner's Exhibit 7) The State Plan has a goal for the provision of obstetric and neonatal services on a regional basis by 1985. Objectives to achieve this goal include availability of Level I facilities to 90 percent of the population within thirty minutes driving time in urban areas, agreements among hospitals in the area as to patient transfer, an available supply of obstetrical services at all levels consistent with population needs, provision of obstetrical services at the least intensive and least costly level consistent with patient-risk status and care preferences, encouragement of institutions to establish policies allowing staff privileges for all qualified professional practitioners, design and operation of intrapartum care units at economically efficient sizes, operation of short-stay intrapartum care units at an annual occupancy of at least 75 percent area-wide, and provision for equal access to services regardless of the patient's ability to pay. TCH either meets or plans to meet all of these guidelines if a unit is established at its hospital. (Testimony of Fleming, Unger, Petitioner's Exhibit 7) An additional goal of the State Plan is to reduce infant mortality below current levels. This includes the expansion of the Regional Perinatal Intensive Care Program (RPICP) in the state at Level III centers, and the development of "stepdown" units whereby recuperating infants at Level III hospitals may be transferred to a Level II facility for completion of treatment and observation. TMRMC is currently approved as a "stepdown" facility but cannot commence operation until it secures a qualified neonatologist. Although there is apprehension that the establishment of another obstetrical unit will impair the Hospital's ability to obtain a neonatologist, the fact that patients found to be of the high-risk category after screening at TCH undoubtedly would be transferred to the TMRMC Level II facility should reduce any such concern to a great extent. (Testimony of Bucciarelli, Unger, Courtney, Curran, Petitioner's Exhibits 6-7) A primary concern of various segments of the local medical community to the establishment of a Level I Unit at TCH is the perceived added risk of infant mortality due to the lack of specialized care that can be given to high- risk patients at the Level II TMRMC facility. One of the major questions in this regard is the ability of the medical staff at a Level I hospital to provide sufficient advance screening of potential problems, and also the potential additional risk that would be encountered in the transport of such patients to a higher level facility. The most common problem encountered in this regard is respiratory failure in infants and the necessity of certain skill levels in managing the crisis within a short period of time. Although the staff of smaller hospitals sometimes will lack the expertise to deal with such problems as well as the more sophisticated medical centers, sufficient expertise can be obtained by frequency of experience. Additionally, the fact that the same local physicians ordinarily would be expected to practice at both hospitals would assist in alleviating this problem. TCH plans to have sufficient available equipment to provide for emergencies and will assemble a trained staff with experience in dealing with such cases. A further way to reduce inherent risk is by screening of patients during pregnancy to identify the risk factors and make timely referral to an appropriate level facility. It is estimated that adequate screening procedures can detect high-risk patients in 60 percent of the cases prior to delivery. About 7 to 10 percent of the patients are found to require more than Level I services, although with proper equipment and personnel, some of these could be treated at a Level I facility. Out of the approximately 8 percent high-risk babies, some 3 percent need complex care at a Level III facility and the remainder at a Level II facility. An interchange of information and assistance from a Level II to a Level I facility in an "outreach" program whereby staff is sent from the Level II facility to instruct in the assessment and transfer of sick babies is beneficial in reducing the element of risk. Although there is some risk in the transport of infants with respiratory disease, cooperation between the hospitals is essential. It is necessary that there be a qualified transport unit or team in accomplishing the move from one hospital to another. An isolette, which is a one-bed intensive- care unit, must be used in the transport vehicle. TCH plans to have such staff and equipment to effect the transfer of patients as necessary. Currently, TCH has an agreement with the Level III Shands Teaching Hospital and Clinic at Gainesville for the transport of patients, as does TMRMC. It is found from the foregoing that the necessity of transporting infants from TCH to TMRMC will be within normal limits experienced within urban areas, and should present only a minimal risk of harm. Similar risks are necessarily encountered in the transport of infants from Level II to Level III facilities over a much greater geographical distance. (Testimony of Bucciarelli, Curran, Courtney, Fleming, Derrick, Unger, L. St. Petery, Petitioner's Exhibits 6-7, 9) There is a split of opinion in the local medical community as to the desirability of establishing an obstetrical unit at TCH. The pediatricians uniformly are opposed to the new unit, primarily because they feel that the continued availability of high-quality care and adequate funding at TMRMC would be jeopardized by the reduced volume of births if a new unit were to be established. Concern has also been expressed by family practice physicians who provide newborn care in Tallahassee and believe that such care should be confined to one institution. Their concern is predicated upon potential problems concerning simultaneous coverage of two institutions and a belief that costs necessary for the construction of the TCH unit would eventually be passed on to the consuming public. On the other hand, a number of local obstetricians are dissatisfied with the physical facilities at TMRMC, and the previous perceived reluctance of its officials to take remedial action to expand facilities and address patient concerns as to family-centered type innovations until after the TCH application was filed. It is undisputed that the qualifications and dedication of the medical and nursing staff at TMRMC are excellent, but it is also clear that their efforts have been hampered in the past by inadequate facilities and, as heretofore found, will continue to be so hampered under present conditions in spite of the recent renovations. The obstetricians further point out that the recently developed innovations at TMRMC show the value of competition in improving the quality of patient care. Several practitioners fear that a separate unit at TCH will result in an excessive number of indigent patients at TMRMC. However, TCH accepts indigent patients and intends to do so in the future. A large number of sick infants are born of indigents, but those requiring Level II care would be cared for at TMRMC regardless of whether a new unit at TCH were to be established. It is found that all of the above concerns have some degree of validity and are properly taken into consideration in determining the ultimate issues in this proceeding. (Testimony of Plessala, Curry, Griner, Ashmore, Deeb, Brickler, Kohler, Winchester, Cooper, L. St. Petery, J. St. Petery, Intervenor's Exhibit 1, supplemented by Intervenor's Exhibit 4) TCH will have sufficient qualified nursing personnel for operation of its proposed obstetrical unit. Patients will be classified according to the type of care that they desire or is required, and staffing will be based upon these needs. One nurse will be responsible for both the mother and child for "rooming in" situations whereby the baby remains in the room with the mother as long as desired. The nursery will also be staffed. There are two nurses at the hospital who are trained for intensive-care unit duties. TCH has never experienced any difficulty in the past in obtaining nursing personnel. In addition, a number of nurses presently on the TCH staff are qualified in obstetrical nursing. The staff will be trained through a regular program prior to opening the proposed unit. It is anticipated that 46 full-time registered nurses and licensed practical nurses will be required to staff the proposed unit. (Testimony of Derrick, Unger, Respondent's Exhibit 1) 19 TCH does not deny access to its services to any consumer based on age, race, sex or handicap. Although it routinely screens all patients for ability to pay, no individual in need of immediate or emergency treatment is denied access to hospital services. It also permits access to its facility to patients without adequate health care financing upon recommendation by hospital physicians. In such cases, patients are assisted by the hospital social worker to arrive at payment plans. No patient has ever been denied admission at TCH for inability to pay charges. During 1981-82, TCH experienced 7.3 percent bad debt arising from charity cases which was similar to the 8 percent experienced in that year by TMRMC. It is anticipated that bad debt will rise to a figure of 15 percent of patient revenue upon operation of the requested unit, not including adjustment for reimbursement of Medicare and Medicaid funds. (Testimony of Fleming, Petitioner's Exhibit 5, Respondent's Exhibit 1) TMRMC conducts a family practice program for its resident physicians. Dr. Alex D. Brickler, who instructs the residents in the obstetric portion of the program, foresees a potential adverse impact on the program by a reduction of the middle-class group of patients if the unit at TCH is established. He feels that this would reduce the experience level of the resident physicians in addressing problems common to patients of various economic backgrounds. Although Dr. Brickler's apprehensions may be justified, no other evidence was presented upon which to evaluate the extent of the impact upon the training program in this regard, and therefore an accurate assessment cannot be made at this time. (Testimony of Brickler) The cost of construction of the proposed TCH obstetrical unit will be financed through available equity funds provided by Hospital Corporation of America. Accordingly, the immediate financial feasibility of the proposed project is assured. The projected income statement of TCH for the first three years following operation of the unit shows that the unit will be operated at a profit based on achieving 1,107 births at the hospital in 1986. It is anticipated that patient costs will be competitive in the community and that the unit will achieve 75 percent occupancy by 1988. It is found that sufficient evidence has been presented to show the long-term financial feasibility of the proposed unit. (Testimony of Wittenstaeter, Fleming, Unger, Petitioner's Exhibit 5, Respondent's Exhibits 1-2) The TCH project will use existing inpatient rooms for the new obstetrical service and thus reduce the scope of new construction with consequent saving in capital costs. The existing medical/surgical beds will require no renovation in converting to post-partum usage. The cost per patient at TCH should not increase because increased volume of overall hospital utilization will result from the offering of the new service. During calendar year 1981, TCH experienced a utilization rate of only 39.5 percent. Use of the hospital should therefore increase as a result of the added service, thus possibly lowering the present cost per patient. It is anticipated that initial additional revenue from the new service will completely offset the increase in operating costs. (Testimony of Unger, Respondent's Exhibit 1) As heretofore found, the establishment of the TCH unit reasonably can be expected to reduce the number of births at TMRMC by at least 27 percent. Reduced revenue to that hospital as a result of fewer admissions will undoubtedly have an adverse financial impact. Although this normally would be expected to result in increased costs per patient, such an effect would be diluted by the necessity of remaining competitive with TCH. In addition, the establishment of an additional obstetrical service at TCH will allow TMRMC to function at a higher degree of efficiency because of the reduction of volume presently experienced in its overcrowded facility. (Testimony of Unger, Fleming, Plessala, Curry, Ashmore, Respondent's Exhibit 1) In accordance with subsection 381.494(6)(d) Florida Statutes, the following specific findings are made: Less costly, more efficient, or more appropriate alternatives to the establishment of an obstetrical unit at TCH are not available. Although TMRMC recently filed a Letter of Intent to expand the hospital, including expansion and relocation of its obstetrical unit, such a proposal could not be considered in this proceeding as a viable alternative to the application under consideration due to its preliminary and speculative status at the time of hearing. Existing obstetrical inpatient facilities at TMRMC are presently being used in an appropriate, but sometimes inefficient manner due to overcrowded conditions at various times. Reasonable alternatives to the proposed new construction at TCH are unavailable except to the extent that existing patient rooms will be utilized for patients in the proposed obstetrical unit. Patients will undoubtedly experience progressively serious problems in obtaining adequate obstetrical care at TMRMC due to overcrowded facilities, if the proposed new service is not established. Testimony was received at the hearing from four public witnesses who expressed the view that the community would benefit from competition resulting from the establishment of the TCH unit. One couple expressed concerns about the poor attitude of TMRMC in responding to the obstetrical needs of the community and as to whether the hospital would permit husbands to be present at Cesarean section births. The other couple had twins born at TMRMC in January 1982 and were informed that it was against the policy of the hospital to permit the husband to be present during Cesarean section births. They were also upset with the infrequency in which the mother was able to have the infants with her during the first few days after birth. (Testimony of J. Doyle, P. Doyle, B. Mahdi, A. Mahdi)
Recommendation That the application of Tallahassee Community Hospital for a Certificate of Need to establish a 20-bed obstetrical unit be approved in part by issuance of said certificate for a 17-bed unit. DONE and ENTERED this 27th day of April, 1983, in Tallahassee, Florida. THOMAS C. OLDHAM Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 27th day of April, 1983. COPIES FURNISHED: David Pingree, Secretary Department of HRS 1323 Winewood Boulevard Tallahassee, Florida 32301 Jon C. Moyle, Thomas A. Sheehan, III, and Donna H. Stinson, Esquire Moyle, Jones and Flanigan, P.A. 707 North Flagler Drive Post Office Box 3888 West Palm Beach, Florida 33402 James M. Barclay, Esquire Frank Olsavsky, Legal Intern Department of HRS 1323 Winewood Boulevard Tallahassee, Florida 32301 Jean Laramore and Alfred W. Clark, Esquires Laramore and Aye, P.A. 325 South Calhoun Street Tallahassee, Florida 32301
The Issue Does Petitioner, AHF MCO of Florida, Inc., d/b/a PHC Florida HIV/AIDS Specialty Plan (Positive), have standing to contest the intended award to Simply for Regions 10 and 11 or to seek rejection of all proposals? (Case No. 18-3507 and 18-3508) Should the intended decision of Respondent, Agency for Health Care Administration (Agency), to contract with Simply Healthcare Plans, Inc. (Simply), for Medicaid managed care plans for HIV/AIDS patients in Regions 10 (Broward County) and Region 11 (Miami-Dade and Collier Counties) be invalidated and all proposals rejected? (Case Nos. 18-3507 and 18-3508) Must the Agency negotiate with Petitioner, South Florida Community Care Network, LLC, d/b/a Community Care Plan (Community), about a plan to provide HIV/AIDS Medicaid managed care services in Region 10 because it was the only responsive proposer of services that was a Provider Service Network (PSN)? (Case No. 18-3512) Must the Agency negotiate with Community to provide Medicaid managed care services in Region 10 for people with Serious Mental Illnesses because Community is a PSN? (Case No. 18-3511) Must the Agency contract with Community to provide Medicaid managed care services for Children with Special Needs in Region 10 because Community is a PSN? (Case No. 18-3513) Must the Agency negotiate with Community to provide Medicaid managed care services for Child Welfare patients in Region 10 because Community is a PSN? (Case No. 18-3514)
Findings Of Fact THE PARTIES Agency: Section 20.42, Florida Statutes, establishes the Agency as Florida’s chief health policy and planning agency. The Agency is the single state agency authorized to select eligible plans to participate in the Medicaid program. Positive: Positive is a Florida not-for-profit corporation operating a Medicaid health plan dedicated to serving people with HIV/AIDS. Positive serves about 2,000 patients in Florida. Positive’s health plan is accredited by the Accreditation Association for Ambulatory Healthcare. Its disease management program is accredited by the National Committee for Quality Assurance. Currently, the Agency contracts with Positive for a SMMC HIV/AIDS Specialty Plan serving Regions 10 and 11. Simply: Simply is a Florida for-profit corporation operating a Medicaid health plan dedicated to serving people with HIV/AIDS. Currently, the Agency contracts with Simply to provide a SMMC HIV/AIDS Specialty Plan for Regions 1 through 3 and 5 through 11. Simply has maintained the largest patient enrollment of all HIV/AIDs plans in Florida since Florida started its statewide Medicaid managed care program. Community Care: Community is a Florida limited liability company. It is a PSN as defined in sections 409.912(1)(b) and 409.962(14), Florida Statutes. Staywell: Staywell is the fictitious name for WellCare of Florida, Inc., serving Florida’s Medicaid population. Sunshine: Sunshine State Health Plan (Sunshine) is a Florida corporation. It offers managed care plans to Florida Medicaid recipients. THE INVITATION TO NEGOTIATE TIMELINE On July 14, 2017, the Agency released 11 ITNs plans for Florida’s Medicaid managed care program in 11 statutorily defined regions. Region 10, Broward County, and Region 11, Miami-Dade and Collier Counties, are the regions relevant to this proceeding. Part IV of chapter 409, creates a statewide, integrated managed care program for Medicaid services. This program called Statewide Medicaid Managed Care includes two programs, Managed Medical Assistance and Long-term Care. Section 409.966(2), directs the Agency to conduct separate and simultaneous procurements to select eligible plans for each region using the ITN procurement process created by section 287.057(1)(c). The ITNs released July 14, 2017, fulfilled that command. The Agency issued 11 identical ITNs of 624 pages, one for each region, in omnibus form. They provided elements for four types of plans. Some elements were common to all types. Others were restricted to a specific plan type defined by intended patient population. The plan types are comprehensive plans, long-term care plus plans, managed medical assistance plans, and specialty plans. Section 409.962(16) defines “Specialty Plan” as a “managed care plan that serves Medicaid recipients who meet specified criteria based on age, medical condition, or diagnosis.” Responding vendors identified the plan type or types that they were proposing. The Agency issued Addendum No. 1 to the ITNs on September 14, 2017. On October 2, 2017, the Agency issued Addendum No. 2 to the ITNs. Addendum 2 included 628 questions about the ITNs and the Agency’s responses to the questions. Florida law permits potential responders to an ITN to challenge the specifications of an ITN, including the addendums. § 120.57(3)(b), Fla. Stat. Nobody challenged the specifications of the ITNs. As contemplated by section 287.057(c)(2), the Agency conducted “a conference or written question and answer period for purposes of assuring the vendors’ full understanding of the solicitation requirements.” Positive, Community, and Simply, along with United Healthcare of Florida, Inc., HIV/AIDS Specialty Plan (United), submitted responses to the ITN in Region 10 proposing HIV/AIDS Specialty Plans. Community was the only PSN to propose an HIV/AIDS plan for Region 10. Positive, Simply, and United submitted replies to the ITN for Region 11, proposing HIV/AIDS Specialty Plans. Community, United, Staywell, and one other provider submitted proposals to provide SMI Specialty Plan services in Region 10. Community was the only responding PSN. Community, Sunshine, and Staywell submitted proposals to provide Child Welfare Specialty Plans (CW) in Region 10. Community was the only PSN. Community, Staywell, and two others submitted proposals to offer Specialty Plans for Children with Special Needs (CSN) in Region 10. Community was one of two responding PSNs. Proposal scoring began November 6, 2017, and ended January 16, 2018. The Agency announced its intended awards on April 24, 2018. On April 24, 2018, the Agency issued its notices of intent to award specialty contracts in Regions 10 and 11. The following charts summarize the Agency’s ranking of the proposals and its intended awards. The two highest ranked plans, which the Agency selected for negotiations, are identified in bold. Region 10 – Children with Special Needs Respondent Intended Award Ranking Staywell No 1 Community No 2 Miami Children’s Health Plan, LLC No 3 Our Children PSN of Florida, LLC No 4 Region 10 – Child Welfare Respondent Intended Award Ranking Staywell No 1 Sunshine Yes 2 Molina Healthcare of Florida, Inc. No 3 Community No 4 Region 10 – HIV/AIDS Respondent Intended Award Ranking Simply Yes 1 United No 2 Community No 3 Positive No 4 Region 10 – Serious Mental Illness Respondent Intended Award Ranking Staywell Yes 1 United No 2 Florida MHS, Inc. No 3 Community No 4 Region 11 – HIV/AIDS Respondent Intended Award Ranking Simply Yes 1 United No 2 Positive No 3 All of the Specialty Plan awards noticed by the Agency went to bidders who also proposed, and received, comprehensive plan awards. The protests, referrals, and proceedings before the Division summarized in the Preliminary Statement followed the Agency’s announcement of its intended awards. TERMS The voluminous ITN consisted of a two-page transmittal letter and three Attachments (A, B, and C), with a total of 34 exhibits to them. They are: Attachment A, Exhibits A-1 through A-8, Attachment B, Exhibits B-1 through B-3, and Attachment C, Exhibits C-1 through C-8. The ITN establishes a two-step process for selecting: an evaluation phase and a negotiation phase. In the evaluation phase, each respondent was required to submit a proposal responding to criteria of the ITN. Proposals were to be evaluated, scored, and ranked. The goal of the evaluation phase was to determine which respondents would move to negotiations, not which would be awarded a contract. The top two ranking Specialty Plans per specialty population would be invited to negotiations. In the negotiation phase, the Agency would negotiate with each invited respondent. After that, the Agency would announce its intended award of a contract to the plan or plans that the Agency determined would provide the best value. Together, the attachments and exhibits combined instructions, criteria, forms, certifications, and data into a “one size fits all” document that described the information required for four categories of managed care plans to serve Medicaid patients. The ITN also provided data to consider in preparing responses. The transmittal letter emphasized, “Your response must comply fully with the instructions that stipulate what is to be included in the response.” The ITNs identified Jennifer Barrett as the procurement officer and sole point of contact with the Agency for vendors. The transmittal letter is reproduced here. This solicitation is being issued by the State of Florida, Agency for Health Care Administration, hereinafter referred to as “AHCA” or “Agency”, to select a vendor to provide Statewide Medicaid Managed Care Program services. The solicitation package consists of this transmittal letter and the following attachments and exhibits: Attachment A Instructions and Special ConditionsExhibit A-1 Questions TemplateExhibit A-2-a Qualification of Plan Eligibility Exhibit A-2-b Provider Service Network Certification of Ownership and Controlling InterestExhibit A-2-c Additional Required Certifications and StatementsExhibit A-3-a Milliman Organizational Conflict of Interest Mitigation Plan Exhibit A-3-b Milliman Employee Organizational Conflict of Interest AffidavitExhibit A-4 Submission Requirements and Evaluation Criteria InstructionsExhibit A-4-a General Submission Requirements and Evaluation Criteria Exhibit A-4-a-1 SRC# 6 - General Performance Measurement ToolExhibit A-4-a-2 SRC# 9 - Expanded Benefits Tool (Regional) Exhibit A-4-a-3 SRC# 10 - Additional Expanded Benefits Template (Regional)Exhibit A-4-a-4 SRC# 14 - Standard CAHPS Measurement Tool Exhibit A-4-b MMA Submission Requirements and Evaluation Criteria Exhibit A-4-b-1 MMA SRC# 6 - Provider Network Agreements/Contracts (Regional)Exhibit A-4-b-2 MMA SRC# 14 - MMA Performance Measurement Tool Exhibit A-4-b-3 MMA SRC# 21 - Provider Network Agreements/Contracts Statewide Essential Providers Exhibit A-4-c LTC Submission Requirements and Evaluation CriteriaExhibit A-4-c-1 LTC SRC# 4 - Provider Network Agreements/Contracts (Regional) Exhibit A-4-d Specialty Submission Requirements and Evaluation CriteriaExhibit A-5 Summary of Respondent CommitmentsExhibit A-6 Summary of Managed Care Savings Exhibit A-7 Certification of Drug-Free Workplace ProgramExhibit A-8 Standard Contract Attachment B Scope of Service - Core Provisions Exhibit B-1 Managed Medical Assistance (MMA) ProgramExhibit B-2 Long-Term Care (LTC) ProgramExhibit B-3 Specialty Plan Attachment C Cost Proposal Instructions and Rate Methodology NarrativeExhibit C-1 Capitated Plan Cost Proposal TemplateExhibit C-2 FFS PSN Cost Proposal Template Exhibit C-3 Preliminary Managed Medical Assistance (MMA) Program Rate Cell Factors Exhibit C-4 Managed Medical Assistance (MMA) Program Expanded Benefit Adjustment Factors Exhibit C-5 Managed Medical Assistance (MMA) Program IBNR Adjustment Factors Exhibit C-6 Managed Medical Assistance (MMA) Program Historical Capitated Plan Provider Contracting Levels During SFY 15/16 Time Period Exhibit C-7 Statewide Medicaid Managed Care Data BookExhibit C-8 Statewide Medicaid Managed Care Data Book Questions and Answers Your response must comply fully with the instructions that stipulate what is to be included in the response. Respondents submitting a response to this solicitation shall identify the solicitation number, date and time of opening on the envelope transmitting their response. This information is used only to put the Agency mailroom on notice that the package received is a response to an Agency solicitation and therefore should not be opened, but delivered directly to the Procurement Officer. The ITN describes the plans as follows: Comprehensive Long-term Care Plan (herein referred to as a “Comprehensive Plan”) – A Managed Care Plan that is eligible to provide Managed Medical Assistance services and Long-term Care services to eligible recipients. Long-term Care Plus Plan – A Managed Care Plan that is eligible to provide Managed Medical Assistance services and Long-term Care services to eligible recipients enrolled in the Long-term Care program. This plan type is not eligible to provide services to recipients who are only eligible for MMA services. Managed Medical Assistance (MMA) Plan – A Managed Care Plan that is eligible to provide Managed Medical Assistance services to eligible recipients. This plan type is not eligible to provide services to recipients who are eligible for Long-term Care services. Specialty Plan – A Managed Care Plan that is eligible to provide Managed Medical Assistance services to eligible recipients who are defined as a specialty population in the resulting Contract. Specialty Plans are at issue. The ITN did not define, describe, or specify specialty populations to be served. It left that to the responding vendors. Beyond that, the ITN left the ultimate definition of the specialty population for negotiation, saying in Section II(B)(1)(a) of Attachment B, Exhibit B-3, “[t]he Agency shall identify the specialty population eligible for enrollment in the Specialty Plan based on eligibility criteria based upon negotiations.” Some respondents directly identified the specialty population. Simply’s transmittal letter stated that it proposed “a Specialty plan for individuals with HIV/AIDS.” Positive’s response to Exhibit A-4-d Specialty SRC 4, eligibility and enrollment, stated, “the specialty population for the PHC [Positive] plan will be Medicaid eligible, male and female individuals from all age groups who are HIV positive with or without symptoms and those individuals who have progressed in their HIV disease to meet the CDC definition of AIDS.” Some others left definition of the specialty population to be inferred from the ITN response. The result is that the ITN left definition of the specialty populations initially to the respondents and ultimately to negotiations between the Agency and successful respondents. Petitioners and Intervenors describe the populations that they propose serving as HIV/AIDS patients, patients with SMI, CSN, and child welfare populations. ITN respondents could have proposed serving only cancer patients, serving only obstetric patients, or serving only patients with hemophilia. The part of the ITN requiring a respondent to identify the plan type for which it was responding offered only four alternative blocks to check. They were: “Comprehensive Plan,” Long-Term Care Plus Plan,” “Managed Medical Assistance Plan,” or “Specialty Plan.” Attachment A to the ITN, labeled “Instructions and Special Conditions,” provides an overview of the solicitation process; instructions for response preparation and content; information regarding response submission requirements; information regarding response evaluation, negotiations, and contract awards; and information regarding contract implementation. Exhibits A-1 to A-3 and A-5 to A-7 of the ITN contain various certifications and attestations that respondents had to prepare and verify. Exhibit A-4 contains submission requirement components (SRCs) to which respondents had to prepare written responses. Exhibit A-8 contains the state’s standard SMMC contract. ITN Exhibit A-4-a contains 36 general submission requirements and evaluation criteria (General SRCs). ITN Exhibit A-4-b contains 21 MMA submission requirements and evaluation criteria (MMA SRCs). ITN Exhibit A-4-c contains 13 LTC submission requirements and evaluation criteria (LTC SRCs). ITN Exhibit A-4-d contains five specialty submission requirements and evaluation criteria (Specialty SRCs). The responses that the 36 SRCs require vary greatly. Some are as simple as providing documents or listing items. Others require completing tables or spreadsheets with data. Consequently, responses to some SRCS apparently could be reviewed in very little time, even a minute or less. Others requiring narrative responses might take longer. Examples follow. General SRC 1 required a list of the respondent’s contracts for managed care services and 12 information items about them including things such as whether they were capitated, a narrative describing the scope of work; the number of enrollees; and accomplishments and achievement. General SRC 2 asked for documentation of experience operating a Medicaid health plan in Florida. General SRC 3 asked for information confirming the location of facilities and employees in Florida. General SRC 12 requested a flowchart and written description of how the respondent would execute its grievance and appeal system. It listed six evaluation criteria. MMA SRC 2 asks for a description of the respondent’s organizational commitment to quality improvement “as it relates to pregnancy and birth outcomes.” It lists seven evaluation criteria. MMA SRC 10 asks for a description of the respondent’s plan for transition of care between service settings. It lists six evaluation criteria including the respondent’s process for collaboration with providers. Specialty SRC 1 asks for detailed information about respondent’s managed care experience with the specialty population. Specialty SRC 5 asks for detailed information about the respondent’s provider network standards and provides five evaluation criteria for evaluating the answers. Exhibit A-8 of the ITN contains the standard SMMC contract. Attachment B and Exhibits B-1 to B-3 of the ITN contain information about the scope of service and core provisions for plans under the SMMC program. Attachment C and Exhibits C-1 to C-8 of the ITN contain information related to the cost proposals and rate methodologies for plans under the SMMC program. The ITN permitted potential respondents to submit written questions about the solicitation to the Agency by August 14, 2017. Some did. On September 14, 2017, the Agency issued Addendum No. 1 to the ITN. Among other things, Addendum No. 1 changed the anticipated date for the Agency’s responses to respondents’ written questions from September 15 to October 2, 2017. The Agency issued Addendum No. 2 to the ITN on October 2, 2017. Addendum No. 2 included a chart with 628 written questions from potential respondents and the Agency’s answers. Attachment A at A 10-(d) makes it clear that the answers are part of the addendum. Both Addendums to the ITN cautioned that any protest of the terms, conditions, or specifications of the Addendums to the ITN had to be filed with the Agency within 72 hours of their posting. No respondent protested. Instructions for the A-4 Exhibits included these requirements: Each SRC contains form fields. Population of the form fields with text will allow the form field to expand and cross pages. There is no character limit. All SRCs, marked as “(Statewide)” must be identical for each region in which the respondent submits a reply. For timeliness of response evaluation, the Agency will evaluate each “(Statewide)” SRC once and transfer the score to each applicable region’s evaluation score sheet(s). The SRCs marked as “(Regional)” will be specific and only apply to the region identified in the solicitation and the evaluation score will not be transferred to any other region. The instructions continue: Agency evaluators will be instructed to evaluate the responses based on the narrative contained in the SRC form fields and the associated attachment(s), if applicable. Each response will be independently evaluated and awarded points based on the criteria and points scale using the Standard Evaluation Criteria Scale below unless otherwise identified in each SRC contained within Exhibit A-4. This is the scale: STANDARD EVALUATION CRITERIA SCALE Point Score Evaluation 0 The component was not addressed. 1 The component contained significant deficiencies. 2 The component is below average. 3 The component is average. 4 The component is above average. 5 The component is excellent. The ITN further explained that different SRCs would be worth different “weights,” based on the subject matter of the SRC and on whether they were General, MMA, LTC, or Specialty SRCs. It assigned weights by establishing different “weight factors” applied as multipliers to the score a respondent received on a criteria. For example, “Respondent Background/Experience” could generate a raw score of 90. Application of a weight factor of three made 270 the maximum possible score for this criteria. “Oversight and Accountability” could generate a raw score of 275. A weight factor of one, however, made the maximum score available 275. General SRC 6 solicits HEDIS data. HEDIS is a tool that consists of 92 measures across six domains of care that make it possible to compare the performance of health plans on an “apples-to-apples” basis. SRC 6 states: The respondent shall describe its experience in achieving quality standards with populations similar to the target population described in this solicitation. The respondent shall include, in table format, the target population (TANF, ABD, dual eligible), the respondent’s results for the HEDIS measures specified below for each of the last two (2) years (CY 2015/ HEDIS 2016 and CY 2016/ HEDIS 2017) for the respondent’s three (3) largest Medicaid Contracts (measured by number of enrollees). If the respondent does not have HEDIS results for at least three (3) Medicaid Contracts, the respondent shall provide commercial HEDIS measures for the respondent’s largest Contracts. If the Respondent has Florida Medicaid HEDIS results, it shall include the Florida Medicaid experience as one (1) of three (3) states for the last two (2) years. The respondent shall provide the data requested in Exhibit A-4-a-1, General Performance Measurement Tool[.] x x x Score: This section is worth a maximum of 160 raw points x x x For each of the measure rates, a total of 10 points is available per state reported (for a total of 360 points available). The respondent will be awarded 2 points if their reported plan rate exceeded the national Medicaid mean and 2 points if their reported plan rate exceeded the applicable regional Medicaid mean, for each available year, for each available state. The respondent will be awarded an additional 2 points for each measure rate where the second year’s rate is an improvement over the first year’s rate, for each available state. An aggregate score will be calculated and respondents will receive a final score of 0 through 150 corresponding to the number and percentage of points received out of the total available points. For example, if a respondent receives 100% of the available 360 points, the final score will be 150 points (100%). If a respondent receives 324 (90%) of the available 360 points, the final score will be 135 points (90%). If a respondent receives 36 (10%) of the available 360 points, the final score will be 15 points (10%). The SRC is plainly referring to the broad Medicaid- eligible population when it says “the target population (TANF, ABD, dual eligible).” “Dual eligible” populations are persons eligible for Medicaid and Medicare. There, as throughout the ITN, the ITN delineates between a target population of all Medicaid-eligible patients and a specialty population as described in a respondent’s ITN proposal. The clear instructions for SRC 6 require, “Use the drop-down box to select the state for which you are reporting and enter the performance measure rates (to the hundredths place, or XX.XX) for that state's Medicaid population for the appropriate calendar year.” Community did not comply. General SRC 14 solicits similar data, in similar form using a similar tool, about a respondent’s Consumer Assessment of Healthcare Providers and Systems (CAHPS). CAHPS data is basically a satisfaction survey. It asks respondents to provide “in table format the target population (TANF, ABD, dual eligible) and the respondent’s results for the Consumer Assessment of Healthcare Providers and Systems (CAHPS) items/composites specified below for the 2017 survey for its adult and child populations for the respondent’s three (3) largest Medicaid Contracts (as measured by number of enrollees).” Just like General SRC 6 did with HEDIS data, General SRC 14 ITN instructed bidders to put their CAHPS data for the “target population (TANF, ABD, dual eligible)” “for the respondent’s three (3) largest Medicaid Contracts (measured by number of enrollees)” for multiple states into an excel spreadsheet “to the hundredths place[.]” Also, like General SRC 6, General SRC 14 includes an objective formula described in the ITN for scoring bidders’ CAHPS data. RANKING PROVISIONS Attachment A at (D)(4)(c)(2) stated: Each response will be individually scored by at least three (3) evaluators, who collectively have experience and knowledge in the program areas and service requirements for which contractual services are sought by this solicitation. The Agency reserves the right to have specific sections of the response evaluated by less than three (3) individuals. The ITN’s example of how total point scores would be calculated, discussed below, also indicated that some sections may be scored by less than three evaluators. The explanatory chart had a column for “[o]ther Sections evaluated by less than three (3) evaluators. ” The Agency’s policy, however, has been to assign at least three evaluators to score program specific SRCs. Attachment A at (D)(4)(e)(2) advised respondents how the agency will rank the competing responses. It was clear and specific, even providing an example of the process showing how the scores “will” be calculated. Step one of the explanatory chart stated that the Agency would calculate a total point score for each response. Step two stated that “[t]he total point scores will be used to rank the responses by an evaluator. . . .” Next, the rankings by the evaluator are averaged to determine the average rank for each respondent. This average ranking is critical because ranking is how the ITN said the Agency would select respondents for negotiation and how the Agency did select respondents for negotiation. The step two and step three charts, reproduced below, demonstrate that the ITN contemplated an evaluation process in which each response was to be evaluated in its entirety by three different evaluators, or maybe less than three, but indisputably in its entirety by those who evaluated it. This did not happen. Step 2 The total point scores will be used to rank the responses by evaluator (Response with the highest number of points = 1, second highest = 2, etc.). POINTS SUMMARY Evaluator A Evaluator B Evaluator C Evaluator D Respondent 446 Respondent 396 Respondent 311 Respondent 413 Respondent 425 Respondent 390 Respondent 443 Respondent 449 Respondent 397 Respondent 419 Respondent 389 Respondent 435 Respondent 410 Respondent 388 Respondent 459 Respondent 325 RANKING SUMMARY Evaluator A Evaluator B Evaluator C Evaluator D Respondent 1 1 Respondent 1 2 Respondent 1 4 Respondent 3 Respondent 2 2 Respondent 2 3 Respondent 2 2 Respondent 1 Respondent 3 4 Respondent 3 1 Respondent 3 3 Respondent 2 Respondent 4 3 Respondent 4 4 Respondent 4 1 Respondent 4 c) Step 3 An average rank will be calculated for each response for all the evaluators. Respondent 1 1+2+4+3=10÷4=2.5 Respondent 2 2+3+2+1=8÷4=2.0 Respondent 3 4+1+3+2=10÷4=2.5 Respondent 4 3+4+1+4=12÷4=3.0 PROVIDER SERVICE NETWORK PROVISIONS Florida law permits a PSN to limit services provided to a target population “based on age, chronic disease state, or medical condition of the enrollee.” This allows a PSN to offer a specialty plan. For each region, the eligible plan requirements of section 409.974(1) state, “At least one plan must be a provider service network if any provider service networks submit a responsive bid.” Section 409.974(3) says: “Participation by specialty plans shall be subject to the procurement requirements of this section. The aggregate enrollment of all specialty plans in a region may not exceed 10 percent of the total enrollees of that region.” The ITN addressed those requirements. The Negotiation Process section of Attachment A, Instructions and Special Conditions, says: The Agency intends to invite the following number of respondents to negotiation: Comprehensive Plans The top four (4) ranking Comprehensive Plans. Long-term Care Plus Plans The top two (2) ranking Long-term Care Plus Plans Managed Medical Assistance Plans The top two (2) ranking Managed Medical Assistance Plans Specialty Managed Medical Assistance Plans The top two (2) ranking Specialty Managed Medical Assistance Plans per specialty population. If there are no provider service networks included in the top ranked respondents listed above, the Agency will invite the highest ranked PSN(s) to negotiations in order to fulfill the requirements of Section 409.974(1), Florida Statutes and Section 409.981(1), Florida Statutes. Emphasis supplied. The ITN specifications in Section D.7, titled Number of Awards, state as follows about Specialty Plan awards: 7. Number of Awards In accordance with Sections 409.966, 409.974, and 409.981, Florida Statutes, the Agency intends to select a limited number of eligible Managed Care Plans to provide services under the SMMC program in Region 10. The Agency anticipates issuing the number of Contract awards for Region 10 as described in Table 5, SMMC Region, below, excluding awards to Specialty MMA Plans. Table 5 SMMC Region Region Total Anticipated Contract Awards Region 10 4 If a respondent is awarded a Contract for multiple regions, the Agency will issue one (1) Contract to include all awarded regions. The Agency will award at least one (1) Contract to a PSN provided a PSN submits a responsive reply and negotiates a rate acceptable to the Agency. The Agency, at its sole discretion, shall make this determination. A respondent that is awarded a Contract as a Comprehensive Plan is determined to satisfy the requirements in Section 409.974, Florida Statutes and Section 409.981, Florida Statutes and shall be considered an awardee of an MMA Contract and a LTC Contract. The Agency will issue one (1) Contract to reflect all awarded populations in all awarded regions. In addition to the number of Contracts awarded in this region, additional Contracts may be awarded to Specialty Plans that negotiate terms and conditions determined to be the best value to the State and negotiate a rate acceptable to the Agency. The Agency, at its sole discretion, shall make this determination. The Agency reserves the right to make adjustments to the enrollee eligibility and identification criteria proposed by a Specialty Plan prior to Contract award in order to ensure that the aggregate enrollment of all awarded Specialty Plans in a region will not exceed ten percent (10%) of the total enrollees in that region, in compliance with Section 409.974(3), Florida Statutes. If a respondent is awarded a Contract as a Specialty Plan and another plan type, the Agency will issue one (1) Contract to include all awarded populations in all awarded regions. A prospective vendor asked about the interplay of Specialty Plan options and the PSN requirements. The question and the answer provided in Addendum 2 follow: Q. Please clarify the number of PSN awards per region and how PSN awards will be determined based on the PSN's plan type (e.g., Comprehensive, LTC Plus, MMA, Specialty). As you know, Sections 409.974 and 409.981, Florida Statutes require one MMA PSN and one LTC PSN award per region (assuming a PSN is responsive) and the Agency has stated that an award to a Comprehensive Plan PSN will meet the requirements of both statutes. However, can the Agency further clarify whether other types of PSNs would meet the statutory requirements? Specifically, would a PSN LTC Plus award meet the requirements of Section 409.981, Florida Statutes? Similarly, would an award to a Specialty Plan PSN meet the requirements of Section 409.974, Florida Statutes? A. See Attachment A Instructions and Special Conditions, Section D Response Evaluations, and Contract Award, Sub-Section 7 Number of Awards. Yes, a PSN LTC Plus award would meet the requirements of Section 409.981(2). A Specialty Plan PSN would not meet the requirements of Section 409.974(1). The only reasonable interpretation of this answer is that Specialty Plan PSNs do not satisfy the requirement to contract with a responsive PSN imposed by section 409.974. None of the prospective vendors, including Community, challenged this clarification. EVALUATION PROCESS THE EVALUATORS The Agency selected 11 people to evaluate the proposals. The Agency assigned each person a number used to identify who was assigned to which task and to track performance of evaluation tasks. The procurement officer sent the evaluators a brief memo of instructions. It provided dates; described logistics of evaluation; emphasized the importance of independent evaluation; and prohibited communicating about the ITN and the proposals with anyone other than the procurement office. The Agency also conducted an instructional session for evaluators. Evaluator 1, Marie Donnelly: During the procurement, Ms. Donnelly was the Agency’s Chief of the Bureau of Medicaid Quality. She held this position for five years before resigning. This bureau bore responsibility for ensuring that the current SMMC plans met their contract requirements for quality and quality improvement measures. Her role specifically included oversight of Specialty Plans. Evaluator 2, Erica Floyd Thomas: Ms. Thomas is the chief of the Bureau of Medicaid Policy. She has worked for the Agency since 2001. Her Medicaid experience includes developing policies for hospitals, community behavioral health, residential treatment, and contract oversight. Before serving as bureau chief, she served as an Agency administrator from 2014 through 2017. Ms. Thomas oversaw the policy research and development process for all Medicaid medical, behavioral, dental, facility, and clinic coverage policies to ensure they were consistent with the state Plan and federal Medicaid requirements. Evaluator 3, Rachel LaCroix, Ph.D.: Dr. LaCroix is an administrator in the Agency’s Performance Evaluation and Research Unit. She has worked for the Agency since 2003. All her positions have been in the Medicaid program. Dr. LaCroix has served in her current position since 2011. She works with the performance measures and surveys that the current SMMC providers report to the Agency. Dr. LaCroix is a nationally recognized expert on healthcare quality metrics like HEDIS. She is also an appointee on the National Association of Medicaid Directors’ task force for national performance measures. Evaluator 4, Damon Rich: Mr. Rich has worked for the Agency since April 2009. He is the chief of the Agency’s Bureau of Recipient and Provider Assistance. This bureau interacts directly with AHCA’s current SMMC care providers about any issues they have, and with Medicaid recipients, usually about their eligibility or plan enrollment. Before Mr. Rich was a bureau chief, he worked as a field office manager for the Agency. Mr. Rich’s experience as bureau chief and field office manager includes oversight of the current SMMC Specialty Plans. Evaluator 5. Eunice Medina: Ms. Medina is the chief of the Agency’s Bureau of Medicaid Plan Management, which includes a staff of over 60 individuals, who manage the current SMMC contracts. Her experience and duties essentially encompass all aspects of the current SMMC plans. Ms. Medina started working with the Agency in 2014. Evaluator 6, Devona “DD” Pickle: Ms. Pickle most recently joined the Agency in 2011. She also worked for the Agency from November 2008 through November 2010. Ms. Pickle’s Agency experience all relates in some way to the Medicaid program. Since March 2013, Ms. Pickle has served as an administrator over managed care policy and contract development in the Bureau of Medicaid Policy. Her job duties include working with the current SMMC contractors. Ms. Pickle is also a Florida licensed mental health counselor. Evaluator 7, Tracy Hurd-Alvarez: Ms. Hurd-Alvarez has worked for the Agency’s Medicaid program since 1997. Since 2014, she has been a field office manager, overseeing compliance monitoring for all the current SMMC contractors. Before assuming her current position, Ms. Hurd-Alvarez implemented the LTC SMMC program. Evaluator 8, Gay Munyon: Ms. Munyon is currently the Chief of the Bureau of Medicaid Fiscal Agent Operations. Ms. Munyon began working with the Agency in April 2013. Ms. Munyon’s bureau oversees fulfillment of the Agency’s contract with the current SMMC fiscal agent. Her unit’s responsibilities include systems maintenance and modifications and overseeing the fiscal agent, which answers phone calls, processes claims, and processes applications. Ms. Munyon has 25 years of experience working with the Medicaid program. Evaluator 9, Laura Noyes: Ms. Noyes started working for the Agency in April 2011. Her years of Agency experience all relate to the Medicaid program, including overseeing six current comprehensive managed care plans by identifying trends in contractual non-compliance. Evaluator 10, Brian Meyer: Mr. Meyer is a CPA, who has worked for the Agency in the Medicaid program since 2011. He is currently chief of the Bureau of Medicaid Data Analytics. Mr. Meyer’s primary responsibility is overseeing the capitation rates for the current SMMC contractors. His experience includes Medicaid plan financial statement analysis, surplus requirement calculation analysis and, in general, all types of financial analysis necessary to understand financial performance of the state’s Medicaid plans. Evaluator 11, Ann Kaperak: Since April 2015, Ms. Kaperak has served as an administrator in the Agency’s Bureau of Medicaid Program Integrity. Ms. Kaperak’s unit oversees the fraud and abuse efforts of the current SMMC plans. She also worked for the Medicaid program from November 2012 through May 2014. Ms. Kaperak worked as a regulatory compliance manager for Anthem/Amerigroup’s Florida Medicaid program between May 2014 and April 2015. Positive and Community challenge the Agency’s plan selections by questioning the qualifications of the evaluators. The first part of their argument is that the evaluators did not have sufficient knowledge about HIV/AIDS and its treatment. The evidence does not prove the theory. For instance, Positive’s argument relies upon criticizing the amount of clinical experience evaluators had managing patients with HIV/AIDS. That approach minimizes the fact that the managed care plan characteristics involve so much more than disease- specific considerations. For instance, many of the components require determining if the respondent provided required documents, verifying conflict of interest documents, management structure, quality control measures, and the like. General SRCs asked for things like dispute resolution models (SRC 16), claims processing information (SRC 17), and fraud and abuse compliance plans (SRC 31). MMA SRCs included criteria, like telemedicine (SRC 4), demonstrated progress obtaining executed provider agreements (SRC 6), and a credentialing process (SRC 12). Specialty SRCs included criteria like copies of contracts for managed care for the proposed specialty population (SRC 1), specific and detailed criteria defining the proposed specialty population (SRC 4), and the like. The evidence does not prove that disease-specific experience is necessary to evaluate responses to these and other SRCs. SRC 6 involving HEDIS data and SRC 14 involving CAHPS data are two good examples. They required respondents to input data into a spreadsheet. All the evaluators had to do was determine what those numbers showed. Evaluation did not require any understanding of disease or how the measures were created. All the evaluator had to know was the number in the spreadsheet. The second part of the evaluator qualification criticisms is that the evaluators did not give adequate weight to some responses. Positive and Community just disagree with the measures requested and the evaluation of them. They conclude from that disagreement that the evaluators’ qualifications were deficient. The argument is not persuasive. The last sentence of paragraph 69 of Positive’s proposed recommended order exemplifies the criticisms of Positive and Community of the evaluators’ qualifications. It states, “The fact that PHC [Positive] was ranked last among competing HIV plans shows that the SRC evaluators did not understand enough about managing individuals with HIV/AIDs to score its proposal competently.” The argument is circular and “ipse dixit”. It does not carry the day. The collective knowledge and experience of the evaluators, with a total of 128 years of Medicaid experience, made them capable of reasonably evaluating the managed care plan proposals, including the Specialty plan proposals. The record certainly does not prove otherwise. EVALUATION PROCESS The Agency assigned the evaluators to the SRCs that it determined they were qualified to evaluate and score. The Agency did not assign entire responses to an evaluator for review. Instead it elected a piecemeal review process assigning various evaluators to various sections, the SRCs of each response. Paragraph 30 of the Agency’s proposed recommended order describes this decision as follows: Although the ITN had contemplated ranking each vendor by evaluator, based on an example in the ITN, such ranking presumed a process where all evaluators scored all or nearly all of the responses to the ITN, which had occurred in the procurement five years ago. In this procurement, each evaluator reviewed only a subset of SRCs based on their knowledge, and experience; therefore, ranking by evaluator was not logical because each had a different maximum point score. The initial SRC scoring assignments were: General SRCs 1 through 4, LTC SRCs 1 and 2, and Specialty SRC 1: Marie Donnelly, Laura Noyes, and Brian Meyer. General SRCs 5 through 8, MMA SRCs 1 through 7, LTC SRCs 3 and 4, and Specialty SRCs 1 and 2: Marie Donnelly, Erica Floyd- Thomas, and Rachel LaCroix. General SRCs 9 through 14, MMA SRCs 8 through 11, LTC SRCs 5 through 7, and Specialty SRC 4: Damon Rich, Eunice Medina, and DD Pickle. General SRCs 15 through 17, MMA SRCs 12 and 13, and LTC SRCs 8 through 10: Damon Rich, Tracy Hurd-Alvarez, Gay Munyon. General SRCs 18 through 25, MMA SRCs 14 through 20, LTC SRCs 11 and 12, and Specialty SRC 5: Erica Floyd-Thomas, Eunice Medina, and DD Pickle. General SRCs 26 through 33 and LTC SRC 13: Gay Munyon, Ann Kaperak, and Brian Meyer. General SRCs 34 through 36 and MMA SRC 21: Marie Donnelly, Rachel LaCroix, and Tracy Hurd-Alvarez. The ranking process presented in the ITN and described in paragraphs 62-64, contemplated ranking each respondent by evaluator. The Agency carried this process over from an earlier procurement. In this procurement, despite what the ITN said, the Agency assigned responsibilities so that each evaluator reviewed only a subset of SRCs. Therefore, the ranking of responses by evaluator presented in the ITN could not work. It was not even possible because no one evaluator reviewed a complete response and because each SRC had a different maximum point score. Instead, the Agency, contrary to the terms of the ITN, ranked proposals by averaging the “total point scores” assigned by all of the evaluators. The Agency considered issuing an addendum advising the parties of the change. The addendum would have informed the respondents and provided them an opportunity to challenge the change. The Agency elected not to issue an addendum. EVALUATION AND SCORING The evaluators began scoring on November 6, 2017, with a completion deadline of December 29, 2017. The 11 evaluators had to score approximately 230 separate responses to the ITNs. The evaluators had to score 67,175 separate items to complete the scoring for all responses for all regions for all types of plans. No one at the Agency evaluated how much time it should take to score a particular item. None of the parties to this proceeding offered persuasive evidence to support a finding that scoring any particular item would or should take a specific length of time or that scoring all of the responses would or should take a specific length of time. Evaluators scored the responses in conference room F at the Agency’s headquarters. This secure room was the exclusive location for evaluation and scoring. Each evaluator had a dedicated workspace equipped with all tools and resources necessary for the task. The workspaces included a computer terminal for each evaluator. The system allowed evaluators to review digital copies of the ITN and proposals and to enter evaluation points in spreadsheets created for the purpose of recording scores. Evaluators also had access to hard copies of the proposals and the ITN. The Agency required evaluators to sign in and to sign out. The sign-in and sign-out sheets record the significant amount of time the evaluators spent evaluating proposals. Evaluators were not permitted to communicate with each other about the responses. To minimize distractions, the Agency prohibited cell phones, tablets and other connected devices in the room. The Agency also authorized and encouraged the evaluators to delegate their usual responsibilities. Agency proctors observed the room and evaluators throughout the scoring process. They were available to answer general and procedural questions and to ensure that the evaluators signed in and signed out. A log sheet documented how much time each evaluator spent in the scoring conference room. Some evaluators took extensive notes. For example, Ms. Median took over 200 pages of notes. Similarly, Ms. Munyon took nearly 400 pages of typewritten notes. The evaluators worked hard. None, other than Dr. LaCroix, testified that they did not have enough time to do their job. The computer system also automatically tracked the evaluators’ progress. Tracking reports showed the number of items assigned to each evaluator and the number of scoring items completed. The first status report was generated on December 8, 2017, approximately halfway through the scheduled scoring. At that time, only 28 percent of the scoring items were complete. Ms. Barrett usually ran the status reports in the morning. She made them available to the evaluators to review. The pace of evaluation caused concern about timely completion and prompted discussions of ways to accelerate scoring. Because it was clear that the majority of the evaluators would not complete scoring their SRCs by December 29, 2017, the Agency extended the scoring deadline to January 12, 2018. It also extended the hours for conference room use. Most respondents filed proposals for more than one type of plan and more than one region. This fact combined with the provision in the instructions saying that all statewide SRC responses must be identical for each region and that scores would transfer to each applicable region’s score sheets, enabled evaluators to score many SRCs just once. The system would then auto-populate the scores to the same SRC for all proposals by that respondent. This time saving measure permitted scoring on many of the items to be almost instantaneous after review of the first response to an SRC. The fact that so many respondents submitted proposals for so many regions and types of plans provided the Agency another opportunity for time-saving. The Agency loaded Adobe Pro on the evaluators’ computers as a timesaving measure. This program allowed the evaluators to compare a bidder’s Comprehensive Plan Proposal to the same company’s regional and Specialty Plan proposals. If the Adobe Pro comparison feature showed that the proposal response was the same for each plan, the Agency permitted evaluators to score the response once and assign the same score for each item where the respondent provided the same proposal. This speeded scoring. It, however, meant that for SRCs where evaluators did this, that they were not reviewing the SRC response in the specific context of the specialty plan population, each of which had specific and limited characteristics that made them different from the broader General and MMA plan populations. This is significant because so many SRCs required narrative responses where context would matter. There is no Specialty SRCs A-4 instruction requirement for specialty plans analogous to the requirement that responses for statewide SRCs must be identical for each region. In other words, the instructions do not say all SRCs marked as statewide must be identical for each specialty plan proposal and that the Agency will evaluate each Statewide SRC once and transfer the score to each applicable Specialty Plan score. In fact, according to the procurement officer, the Agency expected that evaluators would separately evaluate and score the statewide SRCs for Comprehensive Plans and for Specialty Plans, even if the same bidder submitted them. Despite the Agency’s expectation and the absence of an authorizing provision in the ITN, many evaluators, relying on the Adobe Pro tool, copied the SRC scores they gave to a respondent’s comprehensive plan proposal to its specialty plan proposal if the respondent submitted the same response to an SRC for a Comprehensive Plan and a Specialty Plan. For instance, Ms. Thomas (Evaluator 2) and Ms. Munyon (Evaluator 8) did this to save time. Ms. Donnelly (Evaluator 1) did this even when the comprehensive and specialty responses were not identical. This does not amount to the independent evaluation of the responses pledged by the ITN. On separate days, Evaluator 1 scored 1,315 items, 954 items, 779 items and 727 items. On separate days, Evaluator 2 scored 613 items, 606 items, 720 items, 554 items and 738 items. Evaluator 4 scored 874 items on one day. Evaluator 5 scored 813 items in one day. Evaluator 6 scored 1,001 items in one day. Evaluator 8 scored 635 items in one day. The record does not identify the items scored. It also does not permit determining how many of the item scores resulted from auto-population or assignment of scores based upon previous scoring of an identical response. It bears repeating, however, that the record does not support any finding on how long scoring the response to one SRC or an entire response could reasonably be expected to take. Even with the extended scoring period and time-saving measures, the Agency concluded that Evaluator 3 would not be able to finish all of the SRCs assigned to her. Rather than extend the deadline for scoring a second time, the Agency decided to reassign the nine of Evaluator 3’s SRCs that she had not begun scoring to two other evaluators. The Agency did not include scores of other SRCs for which Evaluator 3 had not completed scoring. The Agency only counted Evaluator 3’s scores for an SRC if she scored the SRC for everyone. The result was that only two people scored nine of the Specialty Plan SRCs. The Agency did not reassign all of Evaluator 3’s SRCs’. It only reassigned the SRCs to evaluators who were qualified to evaluate the items, who were not already assigned those items to score, and who had already finished or substantially completed their own evaluations. The decision to reassign the SRCs was not based on any scoring that had already been completed. The Agency did not allow changes to data submitted by any of the vendors. It allowed vendors to exchange corrupted electronic files for ones which could be opened and allowed vendors to exchange electronic files to match up with the paper copies that had been submitted. The Agency allowed Community to correct its submission where it lacked a signature on its transmittal letter and allowed Community to exchange an electronic document that would not open. It did not allow Community to change its reported HEDIS scores, which were submitted in the decimal form required by the instructions. Community erred in the numbers that it reported. There is no evidence showing that other vendors received a competitive or unfair advantage over Community in the Agency’s review of the SMI Specialty Plan submission for Region 10. There was no evidence that the Agency allowed any other vendors to change any substantive information in their submittals for that proposed specialty in that region. HEIDIS ISSUES Positive asserts that Simply’s proposal is non- responsive because Simply submitted HEDIS data from the general Medicaid population in response to SRC 6 and MMA SRC 14. Positive contends that Simply obtained a competitive advantage by supplying non-HIV/AIDS HEDIS data in response to SRC 6 and MMA SRC 14 because HIV/AIDS patients are generally a sicker group and require more care and because some HEDIS measures cannot be reported for an HIV/AIDS population. HEDIS stands for Healthcare Effectiveness and Data Information Set and is a set of standardized performance measures widely used in the healthcare industry. The instructions for both SRC 6 and MMA SRC 14 provide, in relevant part: The respondent shall describe its experience in achieving quality standards with populations similar to the target population described in this solicitation. The respondent shall include in table format, the target population (TANF, ABD, dual eligible), the respondent’s results for the HEDIS measures specified below for each of the last two (2) years (CY 2015/HEDIS 2016 and CY 2016/HEDIS 2017) for the respondent’s three (3) largest Medicaid Contracts (measured by number of enrollees). If the respondent does not have HEDIS results for at least three (3) Medicaid Contracts, the respondent shall provide commercial HEDIS measures for the respondent’s largest Contracts. If the Respondent has Florida Medicaid HEDIS results, it shall include the Florida Medicaid experience as one (1) of three (3) states for the last two (2) years. (JE 1 at 75 (SRC 6); JE 1 at 158 (MMA SRC 14)). SRC 6 and MMA SRC 14 instruct respondents to provide HEDIS measures for “the target population (TANF, ABD, dual eligible).” Id.. TANF, ABD, and dual eligible are eligibility classifications for the Medicaid population. The Agency sought information regarding the target Medicaid-eligible population, even from respondents proposing a Specialty Plan, because Specialty Plans are required to serve all of the healthcare needs of their recipients, not just the needs related to the criteria making those recipients eligible for the Specialty Plan. Following the instructions in SRC 6 and MMA SRC 14, Simply provided HEDIS data from the Medicaid-eligible population for its three largest Medicaid contracts as measured by the total number of enrollees. For the requested Florida HEDIS data, Simply utilized legacy HEDIS data from Amerigroup Florida, Inc., a Comprehensive Plan. Amerigroup and Simply had merged in October of 2017. Therefore, at the time of submission of Simply’s proposal, the HEDIS data from Amerigroup Florida was the data from Simply’s largest Medicaid contract in Florida for the period requested by the SRCs. Positive asserts that the Agency impermissibly altered scoring criteria after the proposals were submitted when the Agency corrected technical issues within a HEDIS Measurement Tool spreadsheet. SRC 6 and MMA SRC 14 required the submission of numeric data for the requested HEDIS performance measures. To simplify submission of the numeric data for the requested HEDIS performance measures, the Agency required respondents to utilize a HEDIS Measurement Tool spreadsheet. The evaluation criteria for SRC 6 and MMA SRC 14 provided that respondents will be awarded points if the reported HEDIS measures exceed the national or regional mean for such performance measures. Some respondents, including Positive, entered “N/A,” “small denominator,” or other text inputs into the HEDIS Measurement Tool. During the evaluation and scoring process, the Agency discovered that if a respondent input any text into the HEDIS Measurement Tool, the tool would assign random amounts of points, even though respondents had not input measureable, numeric data. The Agency reasonably resolved the problem by removing any text and inserting a zero in place of the text. The correction of the error in the HEDIS Measurement Tool prevented random points from being awarded to respondents and did not alter scores in any way contrary to the ITN. It was reasonable and fair to all respondents.
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 rejecting all r esponses to the ITNs to provide a Medicaid Managed Care plan for patients with HIV/AIDS in Regions 10 and 11. 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 inviting Community to negotiate to provide Medicaid Managed Care plan in Region 10 for patients with serious mental illness. 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 inviting Community to negotiate to provide a Medicaid Managed Care plan in Region 10 for patients with serious mental illness. 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 inviting Community to negotiate to provide a Medicaid Managed Care plan in Region 10 for c hild w elfare specialty services. 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 awarding Wellcare of Florida, Inc., d/b/a Staywell Health Plan of Florida, a contract for a specialty Medicaid Managed Care plan for patients with Serious Mental Illness in Region 10. Based on the foregoing Findings of Fact and Conclusions of Law it is RECOMMENDED that the Agency for Health Care Administration enter a final order dismissing the Petition in Case No. 18-3513. DONE AND ENTERED this day of , , in Tallahassee, Leon County, Florida. S JOHN D. C. NEWTON, II Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this day of , .
The Issue Whether the application of Wuesthoff Memorial Hospital, Inc. d/b/a Wuesthoff Memorial Hospital ("Wuesthoff"), for the conversion of ten acute care beds to ten Level II neonatal intensive care beds meets, on balance, the applicable statutory and rule criteria for approval.
Findings Of Fact Wuesthoff Memorial Hospital, Inc., d/b/a Wuesthoff Memorial Hospital ("Wuesthoff") is a 303 bed acute care hospital in Rockledge, Florida, in Brevard County, District 7. The Agency For Health Care Administration ("AHCA") is the state agency designated by statute to issue, revoke, or deny Certificates of Need ("CON") for health care beds and services. Wuesthoff is the applicant for a CON to convert ten acute care beds to a ten bed Level II neonatal intensive care unit ("NICU"), for total project costs of $1,239,330. By prehearing stipulation, the parties agreed to the following facts: the fixed need pool for Level II NICU beds for District 7 shows zero net numeric bed need; there are 41 licensed and 18 approved Level II NICU beds in District 7, 10 in Brevard County, 49 in Orange County, none in Osceola and Seminole Counties; the letter of intent and CON application were filed timely and properly deemed complete; Wuesthoff does not have any approved Level II NICU beds; the District 7 Health Plan, including the 1991 CON Allocation Factors, are applicable to the review of this application; and the 1989 State Health Plan is also applicable to the review of this application. With regard to the statutory criteria, the parties also agreed that: Wuesthoff's historic record of providing high quality care is not in dispute; Wuesthoff does not maintain that its NICU service will be intended as a research and education facility; the availability of resources, including management personnel and funds for capital and operating expenditures, for project accomplishment and operation, is not in dispute; the immediate and long term financial feasibility of the proposal as demonstrated in Wuesthoff's application are not in dispute, assuming Wuesthoff proves the accuracy of utilization assumptions; Wuesthoff does not provide a substantial portion of services or resources to individuals not residing within the district or in adjacent districts; Wuesthoff's past levels of service to Medicaid and medically indigent patients are not in dispute; the special needs and circumstances of health maintenance organizations are not applicable to this application; and the costs and methods of proposed construction are not in dispute. At issue in this case are the statutory review criteria in Subsections 408.035(1)(a), (b), (d), (e), (f), portions of (h) and (i), (j) and (l), Florida Statutes (1992 supp.). Subsections 408.035(2)(a), (b), (c) and (d) are also in dispute. NEED Subsection 408.035(1)(a) requires consideration of need in relation to state and local health plans. The 1989 State Health Plan and CON allocation factors in the 1991 District 7 Health Plan are applicable to the review of Wuesthoff's CON application. Wuesthoff is not located in Orange County and, therefore, does not meet the District 7 factor favoring Orange County providers who will serve Medicaid newborns. The second factor favors applicants proposing to provide at least 45 percent of all patient days to Medicaid patients and 6 percent to indigent patients. Wuesthoff projected that it would achieve 50.5 percent Medicaid patient days and 4.5 percent to uninsured patients. Despite these projections, Wuesthoff failed to make a commitment to have its CON conditioned on the provision of specified percentages Medicaid and indigent patient days. On this basis, AHCA concluded that Wuesthoff fails to meet the factor. Wuesthoff's position is accepted. Its projections justify favorable consideration under this factor, its historic Medicaid service supports its projections, and AHCA can condition the CON if appropriate. The third factor requires applicants to identify specific services, educational programs, and/or interventions which will provide for an unmet need. This factor is also related to Subsection 408.035(1)(b) - the availability and accessibility of existing and approved Level II NICU beds in the district; (2)(a) - the availability of less costly more efficient facilities; and (2)(c) and (d) - availability and efficiency of existing inpatients facilities, and problems in obtaining existing inpatient care in the absence of the proposed services. There is no dispute that there is zero numeric need for additional Level II NICU beds in District 7. Level II beds exist at Holmes Regional Medical Center ("Holmes") in Melbourne Brevard County, and in Orange County at Winter Park Memorial Hospital ("Winter Park"), Orlando Regional Medical Center ("ORMC") and Florida Hospital. Holmes, the only Level II NICU in Brevard County, is, however, not available because its 10 Level II NICU beds have had occupancy levels not less than 122 percent and up to 147 percent during the past three years. Holmes provided 36.8 percent of the NICU services in District 7, with ten of the 59 licensed or approved beds, or 17 percent of the District beds. There was also evidence that Holmes' physicians do not accept transfers of indigent or Medicaid obstetrics patients from the service area of Wuesthoff and from northern Brevard County. In 1992, district wide occupancy in Level II NICU beds was over 95 percent. All of the other providers, except Holmes, are located in Orange County. Winter Park's 1992 occupancy rate was only 34 percent in its 5 bed unit. Florida Hospital, with a 1992 rate of 87.8 percent in 14 beds, has been approved for 8 additional beds. ORMC, with a 1992 occupancy rate averaging 90.2 percent, has approval for an additional 10 beds. Available beds at Winter Park or Florida Hospital have not historically alleviated overcrowding at Holmes. At hearing, AHCA's expert health planner testified that Holmes reached 122 percent occupancy when Winter Park was at 30 percent and Florida Hospital was 58.2 percent. Wuesthoff has demonstrated that Winter Park, Florida Hospital, and ORMC are geographically and economically inaccessible to Medicaid and indigent patients in Wuesthoff's service area. Expert testimony linked indigency to a greater need for NICU care. Wuesthoff demonstrated that Medicaid and indigent obstetrics patients in its service area cannot and do not use the facilities in Orange County adequately and appropriately for prenatal care or delivery due to transportation and economic difficulties. Indigent patients with high risk pregnancies served by the Brevard County Public Health Unit are referred to ORMC. Experts estimated that fewer than 50 percent of those end up delivering at ORMC. For Medicaid patients who comply with referrals for prenatal care, Medicaid is charged $119 per patient per non-emergency, pre-scheduled trip to ORMC. For infants born in Brevard County in need of Level II care, emergency transportation to ORMC costs $700 by ambulance or over $2000 by helicopter. The number of Public Health medicaid or indigent obstetrics patients referred to ORMC from the Wuesthoff area was reasonably estimated to be 250 patients a year. With 50 percent of the babies needing Level II care, the estimate of 125 neonatal referrals is reasonable. The statutory criterion of need in relation to the State Health Plan also requires consideration of preferences for applicants (1) converting from acute care to NICU beds; (2) proposing to serve Children's Medical Services ("CMS"), Medicaid and charity patients; and (3) proposing to serve substance abusing pregnant and postpartum women. AHCA agreed that the Wuesthoff CON application meets all of the applicable State Health Plan preferences. Wuesthoff is proposing, as also required by AHCA rule, to convert acute care beds, currently utilized at 56.33 percent occupancy. In 1992, Medicaid obstetric patients days accounted for 50.5 percent of the total. A CMS clinic is located on the Wuesthoff campus and receives services from its staff pediatricians. See also, 59C-1.042(3)(j) and (k), F.A.C. Wuesthoff demonstrated the absence of any outpatient alternatives for Level II NICU beds, as required in Subsection 408.035(1)(d), Florida Statutes, (1992 supp.). Wuesthoff fails to comply with the criteria in Subsections 408.035(1)(e), (f), (g), (j) and (k), Florida Statutes, (1992 supp.). It does not plan to jointly operate a NICU with other providers, although it is under consideration as a satellite regional perinatal intensive care center ("RPICC"). The proposed services are available in adjoining areas, including Volusia County to the north, where Level II NICU occupancy was 85 percent in 1992. Wuesthoff does not intend to be a research or educational facility, nor will it serve substantial numbers of individuals residing outside its service district. Wuesthoff is not a health maintenance organization hospital. UTILIZATION AND OPERATIONS Pursuant to Subsections 408.035(1)(h), (i) and (l), and (2)(a), Wuesthoff must be able to staff and fund a Level II NICU that is financially feasible and does not impact negatively health services quality or costs. AHCA presented no evidence at hearing to contradict that presented by Wuesthoff to show that it has the staff and funds for its proposed project. Wuesthoff also has shown that it will profit from the conversion of underutilized acute care beds to Level II NICU beds. Rule 59C-1.042, Florida Administrative Code, includes the methodology for calculating numeric need, among other requirements for approval of Level II NICU programs. Numeric need, under the rule, is zero. In fact, the calculations show that 15 more Level II beds than needed have been approved in District 7. As required by the rule, average occupancy rates in District 7 exceeded 80 percent in the 12 months ending 6 months prior to the quarter in which numeric need was calculated. The rule also favors RPICC's. Wuesthoff is not a RPICC, although it is under consideration as a satellite of the ORMC RPICC. Wuesthoff is not an existing provider of Level II NICU services, and therefore, does not qualify for additional beds under the rule. As required by the NICU rule, Wuesthoff's application seeks the establishment of the minimum size Level II unit of ten beds. The applicant also has on staff a neonatologist, a head nurse with experience and training in neonatal intensive care, registered nurses, respiratory therapists, and social services personnel with the required training. Wuesthoff is capable of performing the blood gas analyses, clinical laboratory support services, and intervention screening. If approved, Wuesthoff would also be eligible to participate in a county grant-funded neonatal developmental disabilities program. Wuesthoff either has installed or has made appropriate plans to obtain the equipment and to make the renovations required by Subsections (9)(b) and (c) of the Rule. Wuesthoff is capable of meeting the data reporting requirements of Subsection 13 of the Rule. The two hour travel time for geographic access to Level II NICU services is met by the existing District 7 providers, and Wuesthoff's proposal is not needed to meet that standard. MINIMUM BIRTH VOLUME Rule 59C-1.042(6), provides in relevant part, as follows: Hospitals applying for Level II NICU services shall not normally be approved unless the hospital had a minimum service volume of 1,000 live births for the most recent 12- month period ending 6 months prior to the beginning date of the quarter of the publication of the fixed need pool. Wuesthoff does not meet the 1000 minimum number of births. In 1991, there were 963 live births at Wuesthoff. From 1988-1990, live birth at Wuesthoff exceeded 1000. In 1992, Wuesthoff had 998 live births. AHCA asserts that the quality of care that volume requirements assure will be adversely affected by the approval of Wuesthoff's application. Wuesthoff has presented competent, substantial evidence that this concern is not well founded, for the following reasons: A privately-owned Birthing Center located on Merritt Island in Brevard County, is staffed by a doctor who owns the facility and has hospital privileges only at Wuesthoff. At the Birthing Center, there were 124 deliveries in 1990, 156 in 1991, and 178 in 1992. The Birthing Center, Jess Parrish Memorial Hospital in Titusville, and Cape Canaveral Hospital, all are Brevard County obstetrics facilities without Level II NICU services. In fact, births at Cape Canaveral exceeded 1000 in 1992. The live births in these three Brevard County facilities, at Wuesthoff, and the overcrowding at the Level II NICU at Holmes, provide a reasonable basis to conclude that Wuesthoff can exceed the minimum birth volume necessary to meet the quality of care objectives of the rule. As required by Subsections (11) and (12) of the NICU rule, Wuesthoff has 24 hour emergency transportation in cooperation with Jess Parrish Memorial Hospital and Cape Canaveral Hospital. Wuesthoff has a transfer agreement with ORMC, which has all levels of NICU care. AHCA also questioned Wuesthoff's utilization assumption and projections. With combined live births at Brevard facilities without Level II NICUs exceeding 3,000 a year, with two of the facilities jointly operating an emergency transportation service with Wuesthoff, and the third staffed by a obstetrician with privileges only at Wuesthoff, Wuesthoff's assumptions that the majority of neonates born at these facilities needing Level II NICU care will be transferred to Wuesthoff are reasonable. As agreed in the prehearing stipulation, because utilization projections are found reasonable, Wuesthoff's proposal is financially feasible.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a Final Order be issued approving Certificate of Need 7081 to Wuesthoff Memorial Hospital to convert ten acute care beds to a ten bed Level II neonatal intensive care unit condi tioned upon Wuesthoff's providing not less than a combined total of 51 percent Medicaid and indigent patient days in the unit. DONE AND ENTERED this 10th day of November, 1993, in Tallahassee, Leon County, Florida. ELEANOR M. HUNTER Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 10th day of November, 1993. APPENDIX TO RECOMMENDED ORDER, CASE NO. 93-0963 To comply with the requirements of Section 120.59(2), Fla. Stat. (1991), the following rulings are made on the parties' proposed findings of fact: Petitioner's Proposed Findings of Fact. Accepted in Finding of Fact 1. Subordinate to Finding of Fact 33. Accepted in Finding of Fact 4. Accepted in Finding of Fact 4. Accepted in Findings of Fact 11, 12, and 13. Subordinate to Finding of Fact 16. Subordinate to Finding of Fact 16. Subordinate to Finding of Fact 16. Subordinate to Findings of Fact 16 and 17. Subordinate to Findings of Fact 15 and 17. Subordinate to Findings of Fact 12 and 13. Accepted in Finding of Facts 15 and 18. Accepted in Finding of Fact 15. Accepted in Finding of Fact 16. Subordinate to Finding of Fact 17. Accepted in Finding of Fact 17. Subordinate to Finding of Fact 16. Accepted in Finding of Fact 17. Accepted in Finding of Fact 15. Accepted in Finding of Fact 17. Subordinate to Finding of Fact 16. Subordinate to Finding of Fact 16. Subordinate to Finding of Fact 16. Subordinate to Finding of Fact 16. Subordinate to Finding of Fact 16. Subordinate to Finding of Fact 16. Subordinate to Finding of Fact 16. Accepted in Finding of Fact 16. Accepted in Finding of Fact 12. Subordinate to Finding of Fact 16. Accepted in Finding of Fact 16. Accepted in Finding of Fact 15. Accepted in Finding of Fact 15. Accepted in Conclusions of Law 40. Accepted in Finding of Fact 15. Subordinate to Finding of Fact 16. Accepted in Finding of Fact 16. Subordinate to Finding of Fact 16. Subordinate to Finding of Fact 16. Subordinate to Finding of Fact 16. Subordinate to Finding of Fact 15. Subordinate to Finding of Fact 16. Accepted in Finding of Fact 12. Subordinate to Finding of Fact 16. Accepted in Finding of Fact 21. Accepted in Finding of Fact 16 and 17. Accepted in Finding of Fact 16. Subordinate to Finding of Fact 12. Accepted in Finding of Fact 28. Subordinate to Findings of Fact 16 and 17. Subordinate to Findings of Fact 16 and 17. Subordinate to Findings of Fact 16 and 17. Subordinate to Findings of Fact 16 and 17. Accepted in Findings of Fact 21 and 26. Accepted in Findings of Fact 21 and 26. Subordinate to Findings of Fact 21 and 26. Subordinate to Findings of Fact 21 and 26. Subordinate to Findings of Fact 21 and 26. Subordinate to Findings of Fact 21 and 26. Subordinate to Findings of Fact 21 and 26. Subordinate to Findings of Fact 21 and 26. Subordinate to Findings of Fact 21 and 26. Subordinate to Findings of Fact 21 and 26. Subordinate to Findings of Fact 21 and 26. Subordinate to Findings of Fact 21 and 26. Subordinate to Findings of Fact 21 and 26. Accepted in Finding of Fact 17. Subordinate to Finding of Fact 16. Subordinate to Finding of Fact 17. Subordinate to Finding of Fact 18. Accepted in Finding of Fact 35. Subordinate to Findings of Fact 35. Subordinate to Finding of Fact 12 and 35. Accepted in Finding of Fact 19. Accepted in Finding of Fact 19. Accepted in Finding of Fact 9. Accepted in Finding of Fact 9. Accepted in Finding of Fact 78. Accepted in Conclusions of Law 39. Accepted in Finding of Fact 12-15. Accepted in Finding of Fact 12. Accepted in Finding of Fact 12. Accepted in Finding of Fact 12-13. Accepted in Finding of Fact 12. Accepted in relevant part in Finding of Fact 32. Accepted in relevant part in Finding of Fact 32. Accepted in relevant part in Finding of Fact 32. Accepted in relevant part in Finding of Fact 32. Accepted in relevant part in Finding of Fact 32. Accepted in Finding of Fact 20. Rejected Conclusion in Findings of Fact 21. Rejected Conclusion in Findings of Fact 21. Rejected Conclusion in Findings of Fact 21. Accepted in Finding of Fact 23. Accepted in Finding of Fact 23. Accepted in Finding of Fact 17. Accepted in Finding of Fact 33. Accepted in Finding of Fact 21. Accepted in Finding of Fact 21. Accepted in Finding of Fact 23. Accepted in Finding of Fact 5. Accepted in Finding of Fact 9. Accepted in Finding of Fact 9. Accepted in Finding of Fact 9. 105. Accepted in Findings of Fact 10-17. 106. Accepted in Finding of Fact 12. 107. Accepted in Finding of Fact 15. 108. Accepted in Finding of Fact 14. 109. Accepted in Finding of Fact 12. 110. Accepted in Finding of Fact 15. 111. Accepted in Findings of Fact 10-17. 112. Accepted in Findings of Fact 10-17. 113. Accepted in Finding of Fact 24. 114. Accepted in Finding of Fact 24. 115. Accepted in Finding of Fact 25. 116. Accepted in Conclusions of Law 42. 117. Accepted in Finding of Fact 19. 118. Accepted in Finding of Fact 19. 119. Accepted in Finding of Fact 28. 120. Accepted in Finding of Fact 28. 121. Accepted in Finding of Fact 33. 122. Accepted in Finding of Fact 31. 123. Accepted in Finding of Fact 28. 124. Accepted in Finding of Fact 29. 125. Accepted in Finding of Fact 34. 126. Accepted in Finding of Fact 34. 127. Accepted in Finding of Fact 30. 128. Accepted in general in Conclusions of Law 42. 129. Accepted in Finding of Fact 11. 130. Accepted in Findings of Fact 13 and 24. 131. Accepted in Finding of Fact 14. Respondent's Proposed Findings of Fact. Accepted in Findings of Fact 1 and 4. Accepted in Finding of Fact 3. Accepted in Finding of Fact 4. Accepted in Finding of Fact 4. Accepted in Finding of Fact 8. Rejected in Findings of Fact 9. Rejected in Findings of Fact 10. Accepted in Finding of Fact 19. Accepted in Finding of Fact 19. Accepted in Conclusions of Law 40. Rejected in Conclusions of Law 41. Accepted in Finding of Fact 4. Accepted in Finding of Fact 4. Accepted in Finding of Fact 24. Accepted in Finding of Fact 13. Accepted in Finding of Fact 25. Accepted in Finding of Fact 13. Accepted in Finding of Fact 4. Accepted in Findings of Fact 21 and 26. Subordinate to Finding of Fact 21. Subordinate to Finding of Fact 21. Subordinate to Finding of Fact 21. Subordinate to Finding of Fact 21. Subordinate to Finding of Fact 21. Subordinate to Finding of Fact 21. Accepted in Finding of Fact 31. Accepted in Findings of Fact 16 and 17. Subordinate to Finding of Fact 16. Accepted in Findings of Fact 15-17. Accepted in Finding of Fact 17. Accepted in Finding of Fact 17. Accepted in Finding of Fact 16. Subordinate to Finding of Fact 16. Subordinate to Finding of Fact 16. Rejected in Findings of Fact 12. Accepted in Finding of Fact 35. Accepted in Finding of Fact 12. Rejected first sentence in Finding of Fact 35. Accepted in Finding of Fact 35. Accepted in Finding of Fact 5. Accepted in Finding of Fact 28. Accepted in Finding of Fact 33. Accepted in Finding of Fact 33. Accepted in Finding of Fact 28. Accepted in Finding of Fact 34. Accepted in Finding of Fact 34. Accepted in Finding of Fact 35. Accepted in Finding of Fact 5. Accepted in Finding of Fact 20. Accepted in Finding of Fact 21. Accepted in Finding of Fact 21. Accepted in Finding of Fact 21. Accepted in Findings of Fact 5 and 22. Accepted in Findings of Fact 5 and 22. Accepted in Finding of Fact 21. Accepted in Finding of Fact 23. Accepted in Findings of Fact 5 and 36. Accepted in Finding of Fact 35. Subordinate to Finding of Fact 35. Accepted in Conclusions of Law 40. Subordinate to Finding of Fact 35. Rejected in Findings of Fact 35. Rejected in Findings of Fact 36. Accepted in Finding of Fact 21. Accepted in Finding of Fact 21. Rejected in Findings of Fact 35. Accepted in Finding of Fact 5. Accepted in Finding of Fact 5. Accepted in Finding of Fact 9. Rejected in Findings of Fact 10-17. Rejected first sentence in Findings of Fact 10-17. Rejected in Findings of Fact 10-17. COPIES FURNISHED: Kenneth F. Hoffman, Attorney Patricia A. Renovitch, Attorney OERTEL, HOFFMAN, FERNANDEZ & COLE, P.A. Post Office Box 6507 Tallahassee, Florida 32302 Lesley Mendelson, Senior Attorney Agency For Health Care Administration The Atrium Building, Suite 301 325 John Knox Road Tallahassee, Florida 32303 Sam Power, Agency Clerk Agency For Health Care Administration The Atrium Building, Suite 301 325 John Knox Road Tallahassee, Florida 32303
The Issue Whether Certificate of Need Application No. 8614, filed by Vencor Hospitals South, Inc., meets, on balance, the applicable statutory and rule criteria. Whether the Agency for Health Care Administration relied upon an unpromulgated and invalid rule in preliminarily denying CON Application No. 8614.
Findings Of Fact Vencor Hospital South, Inc. (Vencor), is the applicant for certificate of need (CON) No. 8614 to establish a 60-bed long term care hospital in Fort Myers, Lee County, Florida. The Agency for Health Care Administration (AHCA), the state agency authorized to administer the CON program in Florida, preliminarily denied Vencor's CON application. On January 10, 1997, AHCA issued its decision in the form of a State Agency Action Report (SAAR) indicating, as it also did in its Proposed Recommended Order, that the Vencor application was denied primarily due to a lack of need for a long term care hospital in District 8, which includes Lee County. Vencor is a wholly-owned subsidiary of Vencor, Inc., a publicly traded corporation, founded in 1985 by a respiratory/physical therapist to provide care to catastrophically ill, ventilator-dependent patients. Initially, the corporation served patients in acute care hospitals, but subsequently purchased and converted free-standing facilities. In 1995, Vencor merged with Hillhaven, which operated 311 nursing homes. Currently, Vencor, its parent, and related corporations operate 60 long term care hospitals, 311 nursing homes, and 40 assisted living facilities in approximately 46 states. In Florida, Vencor operates five long term care hospitals, located in Tampa, St. Petersburg, North Florida (Green Cove Springs), Coral Gables, and Fort Lauderdale. Pursuant to the Joint Prehearing Stipulation, filed on October 2, 1997, the parties agreed that: On August 26, 1996, Vencor submitted to AHCA a letter of intent to file a Certificate of Need Application seeking approval for the construction of a 60-bed long term care hospital to be located in Fort Myers, AHCA Health Planning District 8; Vencor's letter of intent and board resolution meet requirements of Sections 408.037(4) and 408.039(2)(c), Florida Statutes, and Rule 59C-1.008(1), Florida Administrative Code, and were timely filed with both AHCA and the local health council, and notice was properly published; Vencor submitted to AHCA its initial Certificate of Need Application (CON Action No. 8614) for the proposed project on September 25, 1996, and submitted its Omissions Response on November 11, 1996; Vencor's Certificate of Need Application contains all of the minimum content items required in Section 408.037, Florida Statutes; Both Vencor's initial CON Application and its Omissions Response were timely filed with AHCA and the local health council. During the hearing, the parties also stipulated that Vencor's Schedule 2 is complete and accurate. In 1994, AHCA adopted rules defining long term care and long term care hospitals. Rule 59C-1.002(29), Florida Administrative Code, provides that: "Long term care hospital" means a hospital licensed under Chapter 395, Part 1, F.S., which meets the requirements of Part 412, Subpart B, paragraph 412.23(e), [C]ode of Federal Regulations (1994), and seeks exclusion from the Medicare prospective payment system for inpatient hospital services. Other rules distinguishing long term care include those related to conversions of beds and facilities from one type of health care to another. AHCA, the parties stipulated, has no rule establishing a uniform numeric need methodology for long term care beds and, therefore, no fixed need pool applicable to the review of Vencor's CON application. Numeric Need In the absence of any AHCA methodology or need publication, Vencor is required to devise its own methodology to demonstrate need. Rule 59C-1.008(e) provides in pertinent part: 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. Vencor used a numeric need analysis which is identical to that prepared by the same health planner, in 1995, for St. Petersburg Health Care Management, Inc. (St. Petersburg). The St. Petersburg project proposed that Vencor would manage the facility. Unlike the current proposal for new construction, St. Petersburg was a conversion of an existing but closed facility. AHCA accepted that analysis and issued CON 8213 to St. Petersburg. The methodology constitutes a use rate analysis, which calculates the use rate of a health service among the general population and applies that to the projected future population of the district. The use rate analysis is the methodology adopted in most of AHCA's numeric need rules. W. Eugene Nelson, the consultant health planner for Vencor, derived a historic utilization rate from the four districts in Florida in which Vencor operates long term care hospitals. That rate, 19.7 patient days per 1000 population, when applied to the projected population of District 8 in the year 2000, yields an average daily census of 64 patients. Mr. Nelson also compared the demographics of the seven counties of District 8 to the rest of the state, noting in particular the sizable, coastal population centers and the significant concentration of elderly, the population group which is disproportionately served in long term care hospitals. The proposed service area is all of District 8. By demonstrating the numeric need for 64 beds and the absence of any existing long term care beds in District 8, Vencor established the numeric need for its proposed 60-bed long term care hospital. See Final Order in DOAH Case No. 97-4419RU. Statutory Review Criteria Additional criteria for evaluating CON applications are listed in Subsections 408.035(1) and (2), Florida Statutes, and the rules which implement that statute. (1)(a) need in relation to state and district health plans. The 1993 State Health Plan, which predates the establishment of long term care rules, contains no specific preferences for evaluating CON applications for long term care hospitals. The applicable local plan is the District 8 1996-1997 Certificate of Need Allocation Factors Report, approved on September 9, 1996. The District 8 plan, like the State Health Plan, contains no mention of long term care hospitals. In the SAAR, AHCA applied the District 8 and state health plan criteria for acute care hospital beds to the review of Vencor's application for long term care beds, although agency rules define the two as different. The acute care hospital criteria are inapplicable to the review of this application for CON 8614 and, therefore, there are no applicable state or district health plan criteria for long term care. (1)(b) availability, quality of care, efficiency, appropriateness, accessibility, extent of utilization and adequacy of like and existing services in the district; and (1)(d) availability and adequacy of alternative health care facilities in the district. Currently, there are no long term care hospitals in District 8. The closest long term care hospitals are in Tampa, St. Petersburg, and Fort Lauderdale, all over 100 miles from Fort Myers. In the SAAR, approving the St. Petersburg facility, two long term care hospitals in Tampa were discussed as alternatives. By contract, the SAAR preliminarily denying Vencor's application lists as alternatives CMR facilities, nursing homes which accept Medicare patients, and hospital based skilled nursing units. AHCA examined the quantity of beds available in other health care categories in reliance on certain findings in the publication titled Subacute Care: Policy Synthesis And Market Area Analysis, a report submitted to the Department of Health and Human Services, Office of the Assistant Secretary for Planning and Evaluation, on November 1, 1995, by Levin-VHI, Inc. ("the Lewin Report"). The Lewin Report notes the similarities between the type of care provided in long term care, CMR and acute care hospitals, and in hospital-based subacute care units, and subacute care beds in community nursing homes. The Lewin Report also acknowledges that "subacute care" is not well-defined. AHCA has not adopted the Lewin Report by rule, nor has it repealed its rules defining long term care as a separate and district health care category. For the reasons set forth in the Final Order issued simultaneously with this Recommended Order, AHCA may not rely on the Lewin Report to create a presumption that other categories are "like and existing" alternatives to long term care, or to consider services outside District 8 as available alternatives. Additionally, Vencor presented substantial evidence to distinguish its patients from those served in other types of beds. The narrow range of diagnostic related groups or DRGs served at Vencor includes patients with more medically complex multiple system failures than those in CMR beds. With an average length of stay of 60 beds, Vencor's patients are typically too sick to withstand three hours of therapy a day, which AHCA acknowledged as the federal criteria for CMR admissions. Vencor also distinguished its patients, who require 7 1/2 to 8 hours of nursing care a day, as compared to 2 1/2 to 3 hours a day in nursing homes. Similarly, the average length of stay in nursing home subacute units is less than 41 days. The DRG classifications which account for 80 percent of Vencor's admissions represent only 7 percent of admissions to hospital based skilled nursing units, and 10 to 11 percent of admissions to nursing home subacute care units. Vencor also presented the uncontroverted testimony of Katherine Nixon, a clinical case manager whose duties include discharge planning for open heart surgery for patients at Columbia-Southwest Regional Medical Center (Columbia-Southwest), an acute care hospital in Fort Myers. Ms. Nixon's experience is that 80 percent of open heart surgery patients are discharged home, while 20 percent require additional inpatient care. Although Columbia-Southwest has a twenty-bed skilled nursing unit with two beds for ventilator-dependent patients, those beds are limited to patients expected to be weaned within a week. Finally, Vencor presented results which are preliminary and subject to peer review from its APACHE (Acute Physiology, Age, and Chronic Health Evaluation) Study. Ultimately, Vencor expects the study to more clearly distinguish its patient population. In summary, Vencor demonstrated that a substantial majority of patients it proposes to serve are not served in alternative facilities, including CMR hospitals, hospital-based skilled nursing units, or subacute units in community nursing homes. Expert medical testimony established the inappropriateness of keeping patients who require long term care in intensive or other acute care beds, although that occurs in District 8 when patients refuse to agree to admissions too distant from their homes. (1)(c) ability and record of providing quality of care. The parties stipulated that Vencor's application complies with the requirement of Subsection 408.035(1)(c). (1)(e) probable economics of joint or shared resources; (1)(g) need for research and educational facilities; and (1)(j) needs of health maintenance organizations. The parties stipulated that the review criteria in Subsection 408.035(1)(e), (g) and (j) are not at issue. (f) need in the district for special equipment and services not reasonably and economically accessible in adjoining areas. Based on the experiences of Katherine Nixon, it is not reasonable for long term care patients to access services outside District 8. Ms. Nixon also testified that patients are financially at a disadvantage if placed in a hospital skilled nursing unit rather than a long term care hospital. If a patient is not weaned as quickly as expected, Medicare reimbursement after twenty days decreases to 80 percent. In addition, the days in the hospital skilled nursing unit are included in the 100 day Medicare limit for post-acute hospitalization rehabilitation. By contrast, long term care hospitalization preserves the patient's ability under Medicare to have further rehabilitation services if needed after a subsequent transfer to a nursing home. (h) resources and funds, including personnel to accomplish project. Prior to the hearing, the parties stipulated that Vencor has sufficient funds to accomplish the project, and properly documented its source of funds in Schedule 3 of the CON application. Vencor has a commitment for $10 million to fund this project of approximately $8.5 million. At the hearing, AHCA also agreed with Vencor that the staffing and salary schedule, Schedule 6, is reasonable. (i) immediate and long term financial feasibility of the proposal. Vencor has the resources to establish the project and to fund short term operating losses. Vencor also reasonably projected that revenues will exceed expenses in the second year of operation. Therefore, Vencor demonstrated the short and long term financial feasibility of its proposal. needs of entities serving residents outside the district. Vencor is not proposing that any substantial portion of it services will benefit anyone outside District 8. probable impact on costs of providing health services; effects of competition. There is no evidence of an adverse impact on health care costs. There is preliminary data from the APACHE study which tends to indicate the long term care costs are lower than acute care costs. No adverse effects of competition are shown and AHCA did not dispute the fact that Vencor's proposal is supported by acute care hospitals in District 8. costs and methods of proposed construction; and (2)((a)-(c) less costly alternatives to proposed capital expenditure. The prehearing stipulation includes agreement that the design is reasonable, and that proposed construction costs are below the median in that area. past and proposed service to Medicaid patients and the medically indigent. Vencor has a history of providing Medicaid and indigent care in the absence of any legal requirements to do so. The conditions proposed of 3 percent of total patient days Medicaid and 2 percent for indigent/charity patients proposed by Vencor are identical to those AHCA accepted in issuing CON 8213 to St. Petersburg Health Care Management, Inc. Vencor's proposed commitment is reasonable and appropriate, considering AHCA's past acceptance and the fact that the vast majority of long term care patients are older and covered by Medicare. services which promote a continuum of care in a multilevel health care system. While Vencor's services are needed due to a gap in the continuum of care which exists in the district, it has not shown that it will be a part of a multilevel system in District 8. (2)(d) that patients will experience serious problems obtaining the inpatient care proposed. Patients experience and will continue to experience serious problems in obtaining long term care in District 8 in the absence of the project proposed by Vencor. Based on the overwhelming evidence of need, and the ability of the applicant to establish and operate a high quality program with no adverse impacts on other health care providers, Vencor meets the criteria for issuance of CON 8614.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Agency for Health Care Administration issue CON 8614 to Vencor Hospitals South, Inc., to construct a 60-bed long term care hospital in Fort Myers, Lee County, District 8. DONE AND ENTERED this 3rd day of March, 1998, in Tallahassee, Leon County, Florida. ELEANOR M. HUNTER Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 Filed with the Clerk of the Division of Administrative Hearings this 3rd day of March, 1998. COPIES FURNISHED: Sam Power, Agency Clerk Agency for Health Care Administration Fort Knox Building 3 2727 Mahan Drive, Suite 3431 Tallahassee, Florida 32308-5403 Paul J. Martin, General Counsel Agency for Health Care Administration Fort Knox Building 3 2727 Mahan Drive, Suite 3431 Tallahassee, Florida 32308-5403 Kim A. Kellum, Esquire Agency for Health Care Administration Fort Knox Building 3 2727 Mahan Drive, Suite 3431 Tallahassee, Florida 32308-5403 R. Terry Rigsby, Esquire Geoffrey D. Smith, Esquire Blank, Rigsby & Meenan, P.A. 204 South Monroe Street Tallahassee, Florida 32301
The Issue Whether Trustees of Mease Hospital, Inc., d/b/a Mease Hospital Dunedin ("Mease") is entitled to be included on the Neonatal Intensive Care Unit ("NICU") inventory, as authorized to provide Level III NICU services in five (5) Level III beds in Department of Health and Rehabilitative Services ("HRS") District 5. Whether All Children's established its standing to intervene in Case No. 90-6255, as an existing provider of Level III NICU services in HRS District 5. Whether Morton Plant established is standing to intervene in the consolidated cases, as an existing provider of Level II NICU services in HRS District 5.
Findings Of Fact On September 14, 1990, Mease a 278-bed acute care hospital, located in Dunnedin, Florida, timely challenged the inventory of neonatal intensive care beds published for District 5 (Pasco and Pinellas Counties) by HRS. The preliminary inventory, published on August 24, 1990, authorized five (5) Level II and no Level III beds at Mease. All Children's is a 168-bed specialty children's hospital, which has a 24-bed Level III NICU, located in St. Petersburg, Florida, in Pinellas County. Morton Plant is a 750-bed acute care hospital with Level II NICU beds, located in Clearwater, Florida, in Pinellas County. Of the 2,670 babies delivered at Morton Plant in 1990, 598 came from the Mease area; 569 of the 2,670 were classified as not normal or in need of some NICU services, and 148 of the 569 not-normal newborns came from the Mease service area. HRS is the department with responsibility for promulgating NICU rules pursuant to legislation passed in May 1987, effective in October 1987. See, Section 381.702(20) and 381.706(1)(a), (e), (h), and (m), Florida Statutes (1989). The NICU rule became final in August 1990, and included a "grandfather" provision for providers of NICU services prior to October 1, 1987, to avoid any disruption in the availability of NICU services. The grandfather provision includes, as one of three tests for determining if NICU services were offered prior to October 1, 1987, the requirement that 50% of the neonates admitted to Level II and III units from October 1, 1986 through September 30, 1987, were classified in Diagnostic Related Groups (DRGs) 385, 386, 387 or 388. See, Florida Administrative Code, Rule 10-5.042(14)(f) (2)(b) (III). In August 1987, HRS, in preparation for the promulgation of the NICU rule, mailed surveys to various hospitals, including Mease, requesting information about the provision of NICU services at those hospitals. Using the Guidelines for Perinatal Care to distinguish the level of services it was providing, Mease responded to the August 1987 survey by reporting that it had three (3) Level II beds and no Level III beds. In response to the survey questions, Mease also reported that its NICU services began on April 1, 1987, coinciding with the time that a neonatologist, Mary Newport, M.D., joined the staff at Mease. In March 1987, Board Certified Neonatologist Mary Newport began providing 24-hour coverage at Mease, receiving final approval for active staff privileges in early May 1987, so that Mease could treat rather than transfer sick neonates. Mease resubmitted the August 1987 survey in February 1989, reporting that it had increased from three to six Level II beds, after October 1, 1987, and from one to four Level III beds beginning on October 1, 1987, although such changes required certificate of need ("CON") approval effective October 1, 1987. HRS sent out a second survey in April 1989, to which Mease responded that it currently had six Level II beds and no Level III services, under the more stringent requirements included within the proposed rule as compared to the Guidelines for Perinatal Care standards used in the first survey. In August 1989, Mease resubmitted the second survey and reported a current total of six Level II beds and four Level III beds of which three Level II beds and one Level III bed were operating on September 30, 1987. Mease, in the August resubmittal of the second survey, also reported that 37 neonates were admitted to the Level III bed for 63 patient days and that a total of 188 neonates were admitted to both Level II and Level III beds, from October 1, 1986 through September 30, 1987. Of the 188 neonates admitted to Level II and Level III beds from October 1, 1986 through September 30, 1987, Mease claimed that 87 of those had DRG's 385, 386, 387 or 388. On September 10, 1990, Mease submitted documentation to HRS showing that from October 1, 1986 through September 30, 1987, NICU admissions totaled 122 patients, of which 77 were in DRGs 385, 386, 387 or 388. Subsequently, Mease claimed to have had 18 fewer admissions. On December 18, 1990, Mease claimed to have had 107 NICU patients, of which 69 were in DRGs 385, 386, 387 or 388. At the final hearing, Mease claimed that its review of the available records of 1512 of the 1520 deliveries from October 1, 1986 through September 30, 1987, showed that, when diagnoses and codes were changed retrospectively, there were 126 NICU admissions, of which 74 were in DRGs 385, 386, 387, and 388. The number of neonates in intensive care and the number of neonates in the specified DRGs asserted by Mease are both unreliable. There is no credible evidence to support Mease's claim that it started offering NICU services upon the arrival of Dr. Newport on the courtesy staff on March 28, 1987, or upon her becoming a member of the active staff in early May, 1987. Credible expert testimony was presented that a time lag occurs between the arrival on staff of a neonatologist and the initiation of NICU services. In fact, Dr. Newport testified that after she arrived at Mease, she tried out various rented equipment and evaluated it before making purchases, and altered the locations of the nurseries. The Mease Perinatal Committee Agenda dated May 26, 1987 included an item "Task Force for Development of Level II Facility." Even assuming arguendo that Mease did establish NICU services on April 1, 1987, as reported to HRS in response to the first HRS survey, a substantial number of the neonates Mease claimed to have served in its NICU were, in fact, discharged from Mease prior to April 1, 1987. 1/ Mease has failed to submit documentation that it had neonatal intensive care services from October 1, 1986 through September 30, 1987. Mease has failed to submit documentation that it admitted 126 neonates to intensive care services from October 1, 1986 through September 30, 1987. Mease has failed to submit documentation that 74 neonates were classified into DRGs 385, 386, 387 or 388. Credible expert testimony supports the conclusion that retrospective changes in diagnoses are not reliable, in view of the fact that observation of a patient, not just the patient's record, is significant in making a diagnosis. Mease reported to the Health Care Cost Containment Board that it had no revenue from the operation of a NICU from October 1, 1986 to September 30, 1987.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a Final Order be entered: Including Mease on the final inventory as an authorized Level II neonatal intensive care unit with five beds, based on the Summary Recommended Order of April 9, 1991, entered without objection; and Excluding Mease from the final inventory as an authorized provider of Level III neonatal intensive care services. DONE and ENTERED this 1st day of November, 1991, at Tallahassee, Florida. ELEANOR M. HUNTER Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 1st day of November, 1991.
Findings Of Fact CON APPLICATIONS HCR-CON No.7530 HCR is a publicly owned, for-profit corporation which operates approximately 25 nursing homes in Florida. HCR filed an application, CON No. 7530, to construct a 98-bed freestanding nursing home. HCR proposes to locate the nursing home in the northwest part of Orange County, Florida. HCR proposes that the entire 98-bed facility will be dedicated to the care of patients with Alzheimer's Disease and related dementias. The total cost of the HCR project is $7,132,000 for 47,750 square feet, or $472,776 per bed. The HCR proposal is modeled after an HCR 120-bed nursing home facility in Boynton Beach, Florida. The Boynton Beach facility is entirely dedicated to the treatment of patients with Alzheimer's Disease or related dementias. The proposed HCR facility in Orange County would be identical to the Boynton Beach facility less one patient wing. HCR's Boynton Beach facility, as well as HCR's existing Orange County nursing home facility, have superior licensure ratings. HCR's Boynton Beach facility received accreditation with commendation from the Joint Commission on the Accreditation of Health Care Organizations (JCAHCO), a national accreditation body which has established standards to measure the quality of care in dementia care units. Dementia is a complex of symptoms that can be caused by many different underlying diseases. Alzheimer's disease is one cause of dementia. Alzheimer's disease is the most common cause of dementia. Significant research is being conducted into the cause and treatment of Alzheimer's disease. Dementia is defined as a decline in intellectual function; global cognitive impairment, that is memory impairment and at least one of the following: impairment of abstract thinking; impairment of judgment; impairment of other complex capabilities such as language use, ability to perform complex physical tasks, ability to recognize objects or people, or to construct objects; and, personality change. The Reisberg Cognitive Rating Scale (RCS) classifies the stages of Alzheimer's disease from 1 to 7, with a rating of 7 being most severe. The rating scale is based on 10 axes: concentration, recent memory, past memory, orientation, functioning and self-care, speech, motor functioning, mood and behavior, practice of an art or skill, and calculation ability. The Global Deterioration Scale (GDS) for Age-Associated Cognitive decline and Alzheimer's Disease also defines seven stages of deterioration ranging from no cognitive decline to very severe cognitive decline. Persons suffering from Alzheimer's disease generally cannot survive without assistance upon reaching early dementia or level five on both the RCS and GDS. Approximately 50-58 percent of persons currently residing in community nursing homes suffer from some form of dementia. There is a need for community nursing home beds for persons suffering from the latter stages (levels 5-7) of Alzheimer's disease in Orange County. It is particularly difficult to place in nursing homes in Orange County, persons suffering from the latter stages of Alzheimer's disease (levels 5-7) who also have displayed a history of disruptive behavior patterns. Persons suffering from the latter stages of Alzheimer's disease have specific needs for care and treatment in nursing homes. Alzheimer's victims tend to wander and should have areas set aside for secured walking. The movement of Alzheimer's victims should also be carefully monitored. HCR's Boynton Beach facility, which is the prototype for HCR's proposed Orange County facility, has specific design features to accommodate the needs of patients suffering from the latter stages (levels 5-7) of Alzheimer's disease. HCR proposes a pod design of five residential pod units each with a central living area, also called the atrium area. The resident rooms open to the central living area. Each pod has an enclosed courtyard. Access to the courtyards is controlled. The two nursing stations are centrally located in each wing of the facility. Each central living area, or atrium, is visible from one or the other of the nursing stations. HCR provides specific staff training in the care and treatment of Alzheimer's disease and related dementias. A unit or a facility dedicated to the treatment of dementia patients may reduce the need for psychotropic medication of the patients. On a long-term basis, there may be some staff burnout in a facility or unit dedicated solely to the care and treatment of victims of Alzheimer's disease or related dementias. HCR proposes that its CON be conditioned upon locating in northwest Orange County, providing at least 30 percent of its patient days to Medicaid eligible persons, providing respite care, and dedicating all 98 beds to the care and treatment of persons suffering from Alzheimer's disease and related dementias. HCR currently meets its Medicaid commitment in the Boynton Beach facility. LIFE CARE CON Nos. 7534 and 7534P LIFE CARE is a for-profit corporation which owns and operates two nursing homes in Florida. LIFE CARE also operates three other nursing homes in Florida. As of September 1993, LIFE CARE had a net worth of approximately $50 million. LIFE CARE proposes to construct a freestanding 98-bed nursing home (CON No. 7534) in southwest Orange County, at a total cost of $5,988,000. The LIFE CARE 98-bed facility proposal includes a 20-bed unit dedicated to the care and treatment of persons suffering from Alzheimer's disease, a 20-bed subacute unit, an adult day care center, mental health services, and services to persons suffering from AIDS/HIV. LIFE CARE also made a partial request (CON No. 7534P) for a 60-bed facility which would be constructed at the same site and would include the same features. For economic reasons, patients are being released from acute care hospital settings at earlier stages of recovery and there is a need for subacute nursing home services in Orange County. The incidence of AIDS/HIV is increasing and there is a need for nursing home services for persons suffering from AIDS/HIV in Orange County. The 20-bed unit proposed by LIFE CARE for the care and treatment of Alzheimer's patients will be a distinct part of the facility, separate from other residents. The Alzheimer's unit has its own dining area and activity area, a centrally located bathing facility, and a secured courtyard for wandering space. The 20-bed LIFE CARE subacute unit will also be separate. The subacute unit will have two ventilator areas and be contiguous to a therapy area. The LIFE CARE design includes outdoor courtyards, a library, gift shop, and ice cream parlor. Pursuant to Sections 408.037(2)(a) and (b), Florida Statutes, one of the required elements of a CON application is the listing of capital projects, which is presented in Schedule 2 of the CON application. The Schedule 2 filed by LIFE CARE in these proceedings is identical to the Schedule 2 filed by LIFE CARE in the December 1993 batching cycle for LIFE CARE'S proposed Clay County Project, CON No. 7501. It has been held that Schedule 2 of the LIFE CARE Clay County Project CON application No. 7501 met minimum CON application content requirements. Life Care Centers of America, Inc. v. State of Florida, Agency for Health Care Administration, 20 F.L.W. 1435 (Fla. 1st DCA June 12, 1995). During November of 1993, a LIFE CARE nursing home located in Altamonte Springs was downgraded from a superior to a conditional licensure rating due to a deficiency related to outdated medication. The conditional rating given to the facility was in effect for approximately fifty days. The facility was then given a standard rating, and upon the annual survey in the fall of 1994, the facility has been recommended for a superior rating. All other LIFE CARE facilities have superior ratings. LIFE CARE proposes to condition its CON application upon providing Medicaid participation of 65 percent in the 98-bed facility, and 43 percent in the 60-bed facility. ADVENTIST CON No. 7528 ADVENTIST is a not-for-profit corporation that owns and operates nursing homes, hospitals, and other health care related enterprises. ADVENTIST is a wholly owned subsidiary of Adventist Health System/Sunbelt Health Care Corporation, which owns and operates hospitals and health care facilities throughout the United States. ADVENTIST has operated health care facilities in Orange County since the early 1900s when Florida Hospital was founded. ADVENTIST is the largest hospital system in Orange County, with more than 1,400 beds located on five campuses. ADVENTIST proposes to add 38 beds to an existing freestanding 80-bed community nursing home, Sunbelt Living Center-East Orlando (SLC), which is directly adjacent to Florida Hospital's East Orlando campus. The ADVENTIST proposal would include a 20-bed subacute unit and also an 18-bed skilled nursing unit. This addition to SLC would be accomplished by constructing two new wings to the existing facility. The projected cost of the ADVENTIST addition is $1,386,500, or approximately $36,000 per bed. SLC is an 80-bed skilled nursing facility which opened in January of 1993. SLC has a superior licensure rating. SLC provides nursing home service to a variety of residents, including persons with AIDS/HIV, as well as persons with a primary diagnosis of Alzheimer's disease and related dementia. SLC does not have a distinct Alzheimer's unit, but is equipped with security features to accommodate Alzheimer's patients. SLC staff is trained in the care and treatment of all its residents, including those with dementia. SLC reached an occupancy rate of 96 percent-97 percent capacity in its first ten months of operation. The SLC design is based on a residential model. The intent of the design is to create a residential community, and to encourage the interaction among the residents, and also between the residents and staff. The residential wings contain twelve rooms with private and semiprivate accommodations. Each room has its own toilet facilities. The support facilities, food service, therapy areas, administrative offices, visitor and welcoming areas, are located in the center of the facility. The residential wings are clustered on each side of the facility. The facility also features outdoor courtyards and walkways adjacent to the residential wings. ADVENTIST proposes to condition its CON application on providing a Medicaid commitment of 65 percent of total patient days in the non-subacute wing of the 38-bed expansion. The ADVENTIST proposal also features an AIDS program and respite care. ADVENTIST currently meets it Medicaid commitment at SLC. As indicated above, there is a need for subacute nursing home beds in Orange County. There is a need for nursing home beds for persons suffering from AIDS/HIV in Orange County. In the 20-bed subacute unit ADVENTIST proposes that each room will include wall-mounted suction and gases to accommodate ventilator dependent patients, which will enable ADVENTIST to provide more intensive subacute care. RHA/PRINCETON CON No.7538 RHA is the owner and operator of Princeton Hospital, located on the west side of Orlando. Princeton Hospital is situated on 32 acres bordering Lake Lawne. Princeton Hospital has 150 beds, including 24 psychiatric beds, a multipurpose intensive care unit, a 13-bed progressive care unit, a nursery, pediatric services, women's services, an obstetrical unit and an inpatient cardiac catheterization lab. The psychiatric unit at Princeton Hospital treats a wide range of mental disorders, including those afflicting the elderly population. The hospital also operates a senior psychiatric partial hospitalization program which serves geriatric patients, including persons suffering from Alzheimer's disease and related dementias. Princeton Hospital currently provides care and treatment to persons suffering from AIDS/HIV. Princeton Hospital is accredited by the Joint Commission on Accreditation of Health Care Organizations. On August 1, 1994, subsequent to the filing of CON application No. 7538, Princeton Hospital entered into a wide-ranging affiliation agreement with the University of Florida, College of Medicine and Shands Hospital. The agreement provides for extensive reciprocal training and educational programs between Princeton Hospital and the College of Medicine, as well as Shands Hospital. The agreement also provides for priority transfer of patients between Princeton and Shands hospitals. RHA proposes to include its nursing home facility within the scope of the affiliation agreement. The nursing home staff would benefit from the training and educational opportunities, and the nursing home patients would have access to priority reciprocity with the College of Medicine and Shands Hospital as provided for in the agreement. During fiscal years 1993 and 1994 Princeton Hospital had a Medicaid patient ratio of approximately 40 percent. Princeton Hospital also provides indigent care. RHA proposes to construct a freestanding 60-bed Medicaid certified skilled nursing facility on the campus of Princeton Hospital at a cost of $4,991,961 for 43,741 square feet, or $83,199 per bed. The services that are proposed include subacute care, a 15-bed unit for persons suffering from Alzheimer's disease and related dementias, long term care, and two pediatric beds. Respite care will also be provided. RHA proposes that its subacute care unit would provide step-down care for patients referred from acute care hospital settings. RHA also proposes to provide rehabilitative therapies to serve patients suffering from fractured hips and joint replacements as well as other patients needing more intensive physical therapy. Cardiac and respiratory patients will also be served in the subacute unit. As indicated above, there is a need for subacute nursing home beds in Orange County. RHA's proposed 15-bed Alzheimer's unit will be a distinct and secured part of the facility. The unit will have its own enclosed courtyard and activities area. As indicated above, there is a need for nursing home beds for persons suffering from Alzheimer's disease and related dementias in Orange County. RHA also proposes a program dedicated to the care and treatment of persons suffering from AIDS/HIV. This program will provide long-term care, and will include psychiatric, as well as subacute services. As indicated above, there is a need for nursing home beds for persons suffering from AIDS/HIV in Orange County. The RHA proposal includes two pediatric nursing home beds. It is not uncommon to provide pediatric nursing home beds in a small unit within a nursing home facility. These beds will provide subacute care to pediatric patients referred from acute care hospital settings. It is anticipated that the pediatric unit will serve patients with respiratory problems and other multiple system failures. RHA has experienced difficulty in placing pediatric patients discharged from Princeton Hospital. The RHA facility is designed in a series of modules. There are four patient wings located around a single nursing station. The Alzheimer's wing is distinct and secured. The pediatric beds are located in a single semiprivate room close to the nursing station. The subacute unit includes six beds with wall-mounted medical gases and vacuums. Each residential room has approximately 272 net square feet, and features its own handicapped toilet and bathing facilities. The facility includes a chapel, convenience store, laundry, ice cream shop, and beauty shop, designed in a mall concept. The corridors are ten feet in width instead of the standard eight feet. The intent of the design concept is to encourage social interaction. As designed, the location of the soiled utility room in the facility does not comply with applicable Florida code regulations; however, a proposed minor change in the design will move the soiled utility room approximately twenty feet to bring the facility into compliance with Florida code regulations. ALLOCATION FACTORS Relationship to District and State Health Plans Section 408.035(1)(a), Florida Statutes District Health Plan Allocation Factor 1 of the District Health Plan provides a priority for an applicant proposing to locate in the northwest Orange County population center. This preference will continue to be given applicants until a total of 120 beds is obtained. HCR is the only applicant proposing to locate in the northwest Orange County population center; however, in January of 1993, Sunbelt Living Center, a 120-bed community nursing home opened in Apopka, Florida, which is located in the northwest Orange County population center. Accordingly, the total bed number for this preference has been obtained, and this district allocation factor is inapplicable to these proceedings. Allocation Factor 2 of the District Health Plan provides a preference for applicants developing specific services for newborn and/or pediatric patients. RHA is the only applicant proposing specific services which include a unit for the care and treatment of pediatric patients. Accordingly, RHA is the only applicant which meets this allocation factor. Allocation Factor 3 of the District Health Plan provides a preference for an applicant proposing to develop a specific specialty service (or services), such as a unit for medically complex patients, a unit dealing with psychiatric disorders as a primary diagnosis, or services for persons suffering from AIDS/HIV. This preference is also provided to an applicant which commits to working with, or in conjunction with, an existing provider of a specialty service, such as hospices, or mental health providers. RHA is the applicant which best meets this allocation factor. The RHA proposal provides for specialty services for medically complex patients, provides for services to persons suffering from AIDS/HIV, and RHA specifically commits to working with mental health providers, including working with the psychiatric unit at Princeton Hospital. ADVENTIST and LIFE CARE also propose to provide specialty services to medically complex patients in subacute units; however, the ADVENTIST facility is better equipped in this regard and is designed with piped in medical gases, vacuum, and expanded electrical capacity will have the capability to provide more extensive services. LIFE CARE also proposes to treat persons suffering from AIDS/HIV and persons with mental disorders. The LIFE CARE proposal, however, is not as specific in this regard as that of RHA. HCR proposes to provide specialty services to persons suffering from Alzheimer's disease and related dementias, and is in general compliance with this allocation factor. State Health Plan Allocation Factors Each applicant meets the first State Health Plan allocation factor which provides a preference for an applicant proposing to locate in areas within the subdistrict with occupancy rates exceeding 90 percent. The occupancy rate in Orange County exceeds 90 percent. RHA and LIFE CARE meet the second State Health Plan allocation factor which provides a preference for an applicant proposing to serve Medicaid patients in proportion to the average subdistrict-wide percentage of nursing homes. In Orange County the average is 65 percent for Medicaid service. ADVENTIST meets this preference with regard to its non-subacute unit. HCR which proposes a 30 percent Medicaid service does not meet this preference. The third State Health Plan allocation factor provides a preference to an applicant proposing specialized services to special care residents, including AIDS residents, Alzheimer's residents, and the mentally ill. Each applicant generally complies with this allocation factor and offers specialty services; however, RHA with its broader spectrum of specialty services, including services to AIDS/HIV residents, Alzheimer's residents, and its specific commitment to working with residents suffering from psychiatric disorders best meets this preference. The fourth State Health Plan allocation factor provides a preference to an applicant proposing to provide a continuum of services to community residents including, but not limited to, respite care and adult day care. RHA and ADVENTIST best meet this preference. RHA and ADVENTIST have a history of providing quality health care service to the community. RHA and ADVENTIST have extensive ongoing relationships with acute care hospitals. HCR and LIFE CARE have also established relationships which will address providing a continuum of care, but not to the extent proposed by RHA and ADVENTIST. The fifth State Health Plan allocation factor provides a preference to an applicant proposing to construct facilities which provide maximum resident comfort and quality of care. Each applicant proposes facilities designed to provide resident comfort and quality care. Each design has comfortable resident rooms, spacious activities areas, recreation areas, courtyards, landscaping, therapy rooms, and staff lounge areas. Each applicant meets this preference. The sixth State Health Plan allocation factor provides a preference for an applicant proposing innovative therapeutic programs which have proven effective in enhancing the residents' physical and mental functioning level and which emphasize restorative care. Each of the applicants' proposals feature specific elements of innovative therapeutic programs. HCR has received an award for its innovative design of the Boynton Beach Alzheimer's unit. RHA offers a multi-discipline approach with a psychiatric program. ADVENTIST offers an intensive subacute care unit, and LIFE CARE offer a well-balanced approach with intensive staff training. The seventh State Health Plan allocation factor provides a preference for an applicant proposing charges which do not exceed the highest Medicaid per diem rate in the subdistrict. In this respect, HCR projects Medicaid charges of $96.20 per patient day in Year 1, and $93.32 in Year 2. LIFE CARE projects Medicaid charges of $104.74 per patient day in Year 1, and $106.20 in Year 2. ADVENTIST projects Medicaid charges of $106.00 per patient day in Year 1, and $111.30 in Year 2. RHA projects Medicaid charges of $107.02 per patient day in Year 1, and $109.24 in Year 2. While HCR projects the lowest Medicaid per diem charges and appears to best meet this allocation factor, all applicants have agreed to a specified Medicaid utilization rate, and will accept the appropriate Medicaid reimbursement levels. The eighth State Health Plan allocation factor provides a preference for an applicant with a history of providing superior resident care in Florida or other states. HCR has maintained superior licensure ratings, and its prototype Boynton Beach facility currently is rated superior. LIFE CARE in 1993 experienced a conditional rating for its Altamonte Springs facility; however, the facility, upon evaluation in the fall of 1994, is now recommended for a superior licensure rating. RHA does not currently operate nursing homes; however, RHA has a history of providing quality care in its Princeton Hospital. ADVENTIST is the only applicant proposing to add nursing home beds to an existing facility that currently has a superior licensure rating, and in this respect, ADVENTIST best meets this allocation factor. The ninth State Health Plan allocation factor provides a preference to an applicant proposing staff levels which exceed minimum staffing standards contained in licensure administrative rules. Applicants proposing higher ratios of RNs- and LPNs-to-residents shall be given preference. All applicants meet this factor; however a comparison of the nursing staffing patterns of the applicants reflects that HCR (45.40 nursing FTE) and LIFE CARE (45.30 nursing FTE) have a higher than the minimum required ratio of nursing staff to residents for their proposed 98-bed facilities. RHA has proposed 35.30 nursing FTE for its 60-bed facility. ADVENTIST proposes a total 62.40 nursing FTE for its facility after the proposed 38-bed addition. The tenth State Health Plan allocation factor provides a preference for an applicant who will use professionals from a variety of disciplines to meet the residents' needs for social services, specialized therapies, nutrition, recreational activities, and spiritual guidance. These professionals shall include physical therapists, mental health nurses, and social workers. All the applicants offer a wide range of social, spiritual, nutritional, and recreational services. RHA, however, also proposes specific utilization of mental health care professionals, and a specific affiliation with the psychiatric care professionals from Princeton Hospital, and best meets this factor. The eleventh State Health Plan allocation factor provides a preference for an applicant who ensures the residents' rights and privacy, and who implements a well-designed quality assurance and discharge planning program. Each applicant has documented specific plans for quality assurance and ensuring the residents' rights and privacy are protected. Accordingly, each applicant meets this factor. The final State Health Plan allocation factor provides for a preference to an applicant proposing lower administrative costs, and higher resident care costs compared to the average nursing home in the district. HCR has the lowest projected administrative and overhead costs ($18.28 per patient day as of Year 2), and best meets this allocation factor. Statutory Review Criteria, Section 408.035(1), F.S. Section 408.035(1)(b): The availability, quality of care, efficiency, appropriateness, accessibility, extent of utilization, inadequacy of like and existing health care services and hospices in the service district of the applicant. HCR, LIFE CARE, and RHA each proposes a unit dedicated to the care and treatment of persons suffering from Alzheimer's disease and related dementias (HCR 98-bed facility, LIFE CARE 20-bed unit, and RHA 15-bed unit). ADVENTIST, while currently providing care for Alzheimer's patients at SLC, does not propose a distinct Alzheimer's unit in its 38-bed addition. There are currently at least five nursing homes in the service district, and two others in close proximity, which feature dedicated Alzheimer's units, with a total of at least 345 nursing home beds serving Alzheimer's patients. There is a high utilization rate of Alzheimer's nursing home beds in the district. While there is an established need for more beds to serve Alzheimer's patients, particularly Alzheimer's patients with a history of disruptive behavior, there are additional needs in the service district to provide care and treatment for subacute patients, and for persons suffering from AIDS/HIV. It is difficult to quantify the need for subacute nursing home beds due to the differing professional definitions of what constitutes subacute care; however, acute care hospitals in Orange County are, for cost-effective reasons, now releasing patients on an earlier basis, and there is an established need for nursing home beds to accommodate persons released from acute care hospitals. There is a high utilization rate of subacute beds in the district. There has also been an increase in the incidence of AIDS/HIV patients, and in the need for nursing home beds for persons suffering from AIDS/HIV in the service district. Section 408.035(1)(c): The ability of the applicant to provide quality of care and the applicant's record of providing quality of care. Each applicant has the ability to provide quality of care, and each applicant has a history of providing quality of care. The distinguishing factors in this regard are that LIFE CARE is the only applicant that has experienced a downgrading of a nursing home facility from a superior to a conditional licensure rating, and ADVENTIST is the only applicant that proposes to add nursing home beds to a facility that currently has a superior licensure rating. In comparison, ADVENTIST best meets this factor, and LIFE CARE least meets this factor. Section 408.035(1)(e): Probable economies and improvements in service that may be derived from operation of joint, cooperative, or shared health care resources. ADVENTIST and RHA both have specific proposals to work with, and share services with acute care hospitals. Both are in close proximity to acute care hospitals which will expedite sharing of medical resources. RHA will also share dietary services with Princeton Hospital. The freestanding facilities proposed by HCR and LIFE CARE do not have this advantage. Section 408.035(1)(f): The need in the service district for special equipment and services which are not reasonably and economically accessible in adjoining areas. This factor is inapplicable to the proposals. No specific need was established as to special services and equipment not reasonably and economically accessible in adjoining areas. There are dedicated Alzheimer's units and dementia services for persons in adjoining areas. Section 408.035(1)(g): The need for research and educational facilities, including but not limited to, institutional training programs and community training programs for health care practitioners. RHA has an extensive proposal for the participation and training of health care practitioners in conjunction with Princeton Hospital and best meets this criterion. RHA's affiliation with the University of Florida College of Medicine, Shands Hospital, and the Brain Institute at the University of Florida enhances this proposal. ADVENTIST shares a similar educational and training relationship with Florida Hospital, and with Florida Hospital's registered nurse baccalaureate degree program through Southern College. LIFE CARE proposes to establish relationships with local community colleges and education centers to sponsor nursing programs. Section 408.035(1)(h): The availability of resources, including health manpower, management personnel, and funds for capital and operating expenditures for project accomplishment As stipulated, each applicant meets this criterion. Each applicant also has substantial personnel and management resources available for project accomplishment. Section 408.035(1)(i): The immediate and long- term financial feasibility of the proposal. LIFE CARE, ADVENTIST and RHA meet this criterion, and reasonably project positive cash flows by the second year of operation. RHA a not-for- profit corporation, projects a net loss of $114,000 in Year 1 of operation, and an excess of revenues over expenses of $53,000 in Year 2 of operation. LIFE CARE projects a net loss of $440,496 in Year 1 and a net gain of $145,085 in Year 2 for the 98-bed facility, and a net loss of $259,971 in Year 1 and a net gain of $54,920 in Year 2 for the 60-bed facility. HCR projects an after-tax profit of $25,000 in Year 2; however, in order to attain a level of profitability HCR must meet its projected 65 percent private pay utilization. This is a very high private payor mix, and there is a significant question as to whether this payor mix is attainable in the subdistrict; however, as proposed, HCR meets this factor. Sections 408.035(1)(k)(l) and (m): Impact of the project on cost of health services; cost effective- ness; construction costs. ADVENTIST proposes the most cost-effective project by adding beds to an existing facility (SLC). The addition of 38 beds to SLC will promote and maximize the overall efficiency of the facility which was originally designed with core support features to accommodate 120 residents. The proposed 38-bed addition to SLC will also lower the costs per patient day of the entire facility. The ADVENTIST proposal adds nursing home beds at the lowest per bed cost ($36,000 per bed) of all applicants. Similarly, RHA is located on the campus of an existing acute care hospital owned by the applicant and, unlike HCR and LIFE CARE, projects no actual cash expenditure for land acquisition. Each applicant has proposed a reasonable design of its proposed facility and reasonable construction costs, and taken into consideration applicable costs and methods of energy provision and conservation. Each applicant meets this criterion. Each applicant has also proposed a very high quality of care facility that will foster competition and promote quality assurance and cost- effectiveness. Each applicant meets this criterion. Section 408.035(1)(n): The applicant's past and proposed provision of health care services to Medicaid patients and the medically indigent. RHA, ADVENTIST and LIFE CARE have proposed providing health care services to Medicaid patients at rates at, or in excess of, the district average. HCR proposes the lowest Medicaid service rate at 30 percent. RHA also has a strong record of providing Medicaid services and service to the medically indigent at Princeton Hospital. All applicants except HCR meet this factor. Section 408.035(1)(o): The applicant's past and proposed provision of services which promote a continuum of care in a multilevel health care system. The RHA and ADVENTIST proposals best meet this criterion. Both the RHA and the ADVENTIST proposals are closely associated with existing hospitals, and emphasize a continuum of care from the acute hospital setting to a nursing home facility. The RHA and ADVENTIST proposals promote the interaction of health care professionals in a multilevel health care system. The HCR and LIFE CARE proposals do not reflect such an extensive interconnection with other aspects of the health care system, and do not promote a continuum of care to the extent proposed by RHA and ADVENTIST. Section 408.035(2)(b): Whether existing inpatient facilities providing inpatient services similar to those being proposed are being used in an appropriate and efficient manner. The evidence reflects that the existing inpatient facilities in, or adjacent to, the district which offer subacute and AIDS services, as well as services dedicated to the care and treatment of persons suffering from Alzheimer's disease and related dementias are operating at, or near, capacity, and are being used in an appropriate and efficient manner.
Recommendation Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED that: RHA's application for CON No. 7538 be APPROVED. ADVENTIST'S application for CON No. 7528 be APPROVED. HCR's application for CON No. 7530 be DENIED. LIFE CARE'S applications for CON Nos. 7534 and 7534P be DENIED. RECOMMENDED in Tallahassee, Leon County, Florida, this 27th day of July, 1995. RICHARD HIXSON Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 27th day of July, 1995. APPENDIX HCR's Proposed Findings 1-5. Accepted in substance. 6. Rejected, insofar as quantification of need for subacute services, while not readily ascertainable, was demonstrated by other applicants.demonstrated need existed in district 7-8. Accepted in substance. 9. See Number 6. 10-14. Accepted in substance, but disposed of by ruling in Clay County case. 15-27. Accepted in substance. 28-36. Rejected insofar as quantification of need for subacute services is not readily accessible; however, need for such services was established. Accepted, except that need for 120 beds has been met. Accepted, except that RHA proposes specific pediatric services and is entitled to preference. Accepted in substance, except last sentence is rejected. Accepted. Accepted, except that ADVENTIST meets preference as to the non- subacute unit. 42-43. Accepted in substance. 44-45. Rejected. Accepted in substance. Accepted, except that ADVENTIST and RHA also meet this factor, and ADVENTIST is adding beds to an existing superior-rated facility. 48-50. Accepted in part, other applicants meet these factors. 51-65. Accepted in substance; however other services are also needed in the district. 66-67. Rejected. 68-73. Accepted in substance. 74-76. Accepted; however other services are also needed in the district. 77. Rejected. 78-86. Accepted in substance. 87-94. Accepted only to the extent that the HCR proposal meets the minimum requirements to demonstrate financial feasibility. 95-103. Accepted in substance; however each applicant's proposal also meets this factor. 104-112. Accepted in substance. 113. Rejected. 114. Accepted; however RHA proposes a minor change to correct this design. 115-116. Accepted only as to RHA design features. 117-122. Rejected. 123-127. Accepted in substance. 128-131. Rejected. LIFE CARE's Proposed Findings 1-3. Accepted in substance. 4. Accepted, except that district plan includes consideration of pediatric population. 5-7. Accepted; however other applicants also meet these factors. See Finding No. 4. Rejected to the extent that it is not uncommon for pediatric care to be provided in a nursing home setting. 10-38. Accepted in substance. 39-40. Rejected to the extent that RHA and ADVENTIST have competitive staff salaries and have experienced no difficulty in hiring qualified staff. 41-57. Accepted in substance. 58-59. Rejected. Accepted; however RHA proposes a minor change to correct this design. Rejected. 62-65. Accepted in substance. 66-69. Disposed of by Clay County case. Accepted; however ADVENTIST meets this factor in the non-subacute unit. Accepted in substance. ADVENTIST's Proposed Findings 1-4. Accepted in substance. 5. Accepted only to the extent that HCR does not propose a specific subacute care unit. 6-13. Accepted in substance. Rejected to the extent that HCR's proposal meets minimum financial feasibility requirements. Accepted. 16-17. Rejected. Accepted. Accepted to the extent that RHA and ADVENTIST best meet this criterion. 20-21. Accepted in substance. 22-26. Disposed of by Clay County case. 27-29. Accepted in substance 30-31. Rejected. 32-35. Accepted in substance. 36. Rejected; see No. 19. 37-106. Accepted in substance. 107. Accepted; see No. 19. RHA's Proposed Findings 1-21. Accepted in substance. 22. Accepted; however other applicants also meet these factors. 23-54. Accepted in substance. 55. Accepted to the extent that there are at least seven nursing homes with dedicated Alzheimer's units in or near the service area. 56-92. Accepted in substance. 93-96. Accepted; however HCR meets minimum financial feasibility requirements. 97-102. Accepted; however LIFE CARE meets minimum financial feasibility requirements. 103. Rejected. 104-122. Accepted in substance. 123. Rejected. 124-135. Accepted in substance. 136. Rejected to the extent that all applicants have met the design criterion. 137-140. Accepted in substance. 141. Rejected. 142-145. Accepted in substance. 146. Accepted to the extent that RHA and ADVENTIST best meet this criterion. COPIES FURNISHED: Stephen K. Boone, Esquire BOONE, BOONE & BOONE, P.A. Post Office Box 1596 Venice, Florida 34284 Alfred W. Clark, Esquire 117 South Gadsden, Suite 201 Tallahassee, Florida. 32301 R. Bruce McKibben, Jr., Esquire PENNINGTON & HABEN, P.A. 215 South Monroe Street, 2nd Floor Post Office Box 10095 Tallahassee, Florida 32301 Michael J. Glazer, Esquire MACFARLANE, AUSLEY, FERGUSON & MCMULLEN, P.A. Post Office Box 391 Tallahassee, Florida 32301 Samuel Dean Bunton, Esquire Senior Attorney, AHCA Atrium Building, Suite 301 325 John Knox Road Tallahassee, Florida 32303-4131 Steven R. Bechtel, Esquire MATEER, HARBERT & BATES, P.A. Post Office Box 2854 Orlando, Florida 32802 James M. Barclay, Esquire COBB, C0LE & BELL 131 North Gadsden Street Tallahassee, Florida 32301
The Issue The issue is whether the Petitioner, Wellington Regional Medical Center, Inc., meets the criteria for approval of CON application number 9253 to convert 16 substance abuse beds to a seven-bed or ten-bed Level II neonatal intensive care unit.
Findings Of Fact The Agency for Health Care Administration (AHCA) administers the certificate of need (CON) program for health care facilities and services in the state of Florida. Wellington Regional Medical Center, Inc. (Wellington or WRMC) is a 120-bed community-based hospital, with 104 acute care and 16 substance beds. In September 1999, Wellington applied for CON Number 9253 to convert the 16 substance abuse beds into a ten-bed Level II neonatal intensive care unit (NICU). Currently, Wellington transfers newborns requiring Level II care to St. Mary's Hospital, in West Palm Beach, approximately 45 minutes away. The St. Mary's transport team can arrive as quickly as 20 to 30 minutes, but has taken up to four hours to pick up the babies. AHCA reviewed and denied Wellington's application, based on an absence of need in District 9 under criteria applicable to both normal and not normal circumstances, and the absence of any demonstrated problems for patients in getting access to Level II NICU care. For the January 2002 planning horizon used for applications which were, like Wellington's, filed in September 1999, AHCA published a numerical need for zero additional Level II NICU beds in AHCA District 9. The methodology used by AHCA to calculate numeric need, factoring in the existing inventory of 70 licensed and 20 approved beds, and applying the objective for 80 percent district-wide occupancy, resulted in a numeric need for a negative 32 beds. In other words, in District 9, there is a surplus of 32 Level II NICU beds, based on the formula established in AHCA's rules. The NICU II occupancy rate for 1998 was approximately 66 percent in District 9. In the absence of numerical need, Wellington applied for CON approval based on not normal circumstances, and contends it met, on balance, the requirements of the applicable criteria. 59C-1.042(6) - birth volume In Rule 59C-1.042(6), Florida Administrative Code, a not normal circumstance based on minimum birth volume is set forth, in pertinent part, as follows: Hospitals applying for Level II neonatal intensive care services shall not normally be approved unless the hospital had a minimum service volume of 1,000 live births for the most recent 12-month period ending 6 months prior to the beginning date of the quarter of the publication of the fixed need pool. For this application cycle, the fixed need pool was published in July 1999; therefore, calendar year 1998 is the time period for determining birth volume. In 1998, there were 909 live births at Wellington. In 1999, live births at Wellington increased to 1,101, and, in the 12 months prior to the hearing, to 1,152. AHCA permits applicants to use the most recent data in cases involving not normal circumstances. Currently, approximately 100 live births a month occur at Wellington, which justifies the projection of 1,238 total live births for the year 2000. The current level of live births achieved at Wellington, over 1,000, is equaled or exceeded at fewer than 70 of over 200 hospitals in Florida. For the period ending June 30, 1999, 53 of the 70 hospitals also exceeded 1,200 live births. Of the 53 hospitals with over 1,200 live births annually, 48 had Level II NICUs. Six hospitals in Florida range between 1,200 and 1,499 live births a year; five have Level II NICU. 59C-1.042(5) - minimum ten-bed unit size AHCA's CON reviewer testified that she believed that AHCA had only deviated from the ten-bed minimum unit once, for CON Number 9243 to North Collier Hospital, a Medicaid disproportionate share hospital with over 2,000 live births. She also testified that, even though the applicant showed the required occupancy level in fewer than ten beds, CON approval for a ten-bed unit was awarded to Boca Raton Community Hospital (Boca Raton), in part, based on its large number of live births. By contrast, according to the chart on page 19 in AHCA's Exhibit 2, four of the seven Level II NICU providers in District 9 operated fewer than 10 beds at the time Wellington's application was approved. Apparently, unlike in the case of the Boca Raton application, AHCA held Wellington to the requirement of showing that it could reach 80 percent occupancy in the beds, although AHCA's expert health planner testified that the standard was a "benchmark," not an absolute bar to approval. In general, 1.1 Level II NICU patient days result from each live birth. The ratio of 1.1 to 1, when applied to 80 percent occupancy in a ten-bed unit, results in a mathematical necessity for 2,920 patient days a year, or a project volume of at least 2,654 live births a year. The use of the 80 percent district-wide occupancy standard for normal circumstances as a facility-specific standard for not normal circumstances is unreasonable and conflicts with the minimum volume requirement of 1,000 live births in Rule 59C-1.042(6). AHCA's application of the 80 percent occupancy requirement to Wellington is inappropriate and inconsistent with the agency's prior action. For example, in this case, arguably the failure to meet the normal standard for district occupancy might justify requiring a higher than normal facility standard, but AHCA has not done so with any apparent consistency. Only four out of 57 Level II providers in Florida exceed 2,654, the number of live births necessary to achieve the equivalent of 80 percent occupancy in a ten-bed NICU, three of those exceed 3,000 live births a year, and the fourth is in the range between 2,500 to 2,999 live births a year. Applying the 80 percent test with a 1.1 to 1 ratio to project Level II patient days, the six most recently approved Level II NICU applicants fall short, with projected occupancies ranging from 30 to 40 percent. 59C-1.042(8) - quality of care staffing standards Wellington provides obstetrical services in its Department of Maternal Health, also called the Center for Family Beginnings. Seven dedicated beds are used for labor, delivery, recovery, and postpartum care in that Department, with the frequent need to use overflow beds. Despite the screening of mothers prior to delivery to eliminate those whose babies are likely to need Level II or higher care, at least 25 percent of all expected normal deliveries develop into high risk problems. Wellington is already equipped to handle these unexpected, high risk babies, as it must do prior to transferring them. Wellington also provides follow-up care to high risk babies as a result of their agreement with St. Mary's to allow "back transferring" of stabilized babies. Wellington has a neonatologist-perinatologist on call 24 hours a day. It has neonatal intensive care nurses with Level II and Level III experience on staff 24 hours a day. AHCA questioned the adequacy of the staffing proposed in the CON application because a medical director and respiratory therapists are not explicitly listed on Schedule 6. The medical director will be the same neonatologist- perinatologist who is currently on staff and who will continue to receive professional fees for services, but will not be a hospital employee. That arrangement is explained in the notes to Schedule 6. Similarly, the category "Other Ancillary," Wellington explained in the assumptions to Schedule 6, includes two full-time equivalent staff positions for respiratory therapists. Wellington has on staff two perinatologists, who are doctors specializing in high risk maternal-fetal medical care. One of them moved to Wellington when another NICU program in the County was closed. See Findings of Fact 26. 59C-1.030(2) - health care access criteria Rule 59C-1.030(2), Florida Administrative Code, requires consideration of criteria related to the need for the services proposed and the expected accessibility of the services for residents of the district. The criteria largely overlap with those in Subsections 408.035(1)(b), (d), and (f), and (2), Florida Statutes, which are also related to need and access. See Findings of Fact 20-25 below. In addition to more general need and access issues, the rule requires considerations of access for low income, minorities, and other medically underserved patients, including those receiving Federal financial assistance, Medicare, Medicaid, and indigent persons. The parties stipulated that related criteria in Subsection 408.035(1)(n) - evaluating the applicant's past and proposed Medicaid service - is met or not at issue, based on Wellington's commitment to provide 30 percent Medicaid in the NICU, and historical provision of 32.4 percent Medicaid in the obstetrics unit. By stipulating that the criteria are not at issue or are met in Subsection 408.035(1)(a) - need related to district health plan - the parties necessarily agreed that the local health plan requirement for a commitment to provide at least 30 percent Medicaid/Indigent patient days was met, and so, therefore, is the income accessibility concern of the Rule. Wellington addressed the Rule criterion for minority access to NICU services. The only Haitian doctor specializing in obstetrics and gynecology (OB/GYN) in Palm Beach County, who speaks fluent Spanish as well as Creole, delivers 99 percent of his patients' babies at Wellington. From 60 to 80 percent of his patients come from Lake Worth, most of whom are Haitians and Hispanics, including Gualemalans and Mexicans. Another OB/GYN group of four doctors, with privileges at four different hospitals, delivers 30 to 40 babies a month at Wellington, based on their preference for the care provided at Wellington. The only OB/GYN group in Palm Beach County, which has two affiliated perinatologists, both of whom are on staff at Wellington, serves large numbers of patients from Clewiston, Belle Glade, Pahokee, and Okeechobee. These areas are low income, farming communities located, in driving time, from 45 minutes to 1 1/2 hours west of Wellington. Even when predicted to have high risk births, mothers from the low income areas who are told to go to St. Mary's Hospital because it has a Level II NICU are approximately 70 percent non-compliant. St. Mary's is an additional 45-minute drive east of Wellington. 408.035(1)(b) - availability, quality of care, efficiency, appropriateness, accessibility, extent of utilization, and adequacy of like and existing facilities and services; (d) - availability and adequacy of alternatives, such as outpatient or home care; (e) - economics of joint, cooperative, or shared resources; (f) - need for services not reasonably and economically accessible in adjoining areas; and 408.035(2)(a), (b) and (c) - less costly, more efficient or more appropriate alternatives, such as existing inpatient facilities, sharing arrangements; and (d) - serious problems for patients to obtain care without proposed service. In addition to the absence of numeric need under normal circumstances, and the absence of the requisite birth volume which results from the imposition of the district occupancy standard to the hospital, AHCA also determined that Wellington failed to show any problems with patient access to like and existing facilities. Currently, there are 70 licensed and 20 approved Level II NICU beds in District 9. Overall, the occupancy rate for the District is approximately 66 percent. In addition, existing Level II NICU providers are located within two hours driving time for all residents of the district, as required for NICU which is classified as a tertiary service. Seven hospitals in District 9 provided Level II NICU care in 1998 to 1999. These included Lawnwood Regional Medical Center (Lawnwood) in St. Lucie County, Martin Memorial Medical Center (Martin Memorial) in Martin County, and Palm Beach Gardens Medical Center (Palm Beach Gardens) in Palm Beach County, West Boca Raton Hospital (West Boca), St. Mary's Hospital (St. Mary's), Good Samaritan Hospital (Good Samaritan), and Bethesda Memorial Hospital (Bethesda). In addition to the licensed beds, 20 approved beds had been allocated as follows: four for Good Samaritan, ten for Boca Raton Community Hospital, and six for West Boca. All of the existing Level II providers are located in eastern Palm Beach County along the Interstate 95 corridor. The population of Palm Beach County is migrating west. The Wellington community is experiencing significant growth. One indication is approval for the opening of five new schools in Wellington, three elementary, one middle, and a high school approximately 3 miles from the hospital. The number of new residential housing starts in Wellington has increased from 4,332 in 1990 to 6,012 in 1999. The housing starts in Wellington's primary service area represent over 48 percent of the total for Palm Beach County. Approximately 35,000 of the 80,000 women in Palm Beach County aged 35 to 44, who are more likely to have high risk pregnancies, live in the Wellington service area. Births at the three obstetrics providers in western Palm Beach County have increased from 1,441 in 1995 to 2,580 in 1999, including an approximately 200 percent increase at Wellington, from 345 in 1995 to 1,057 in 1999 (for the 12 months ending in August). Prior to October 1, 1999, the two closest hospitals to Wellington with Level II NICU services were Good Samaritan, with seven existing and four approved beds, and St. Mary's, with 22 beds. After Good Samaritan closed its obstetrics and NICU services, the two closest Level II NICU providers to Wellington are St. Mary's and West Boca, with nine licensed and six approved beds. For the 12-month period from July 1998 to June 1999, there were 3,832 NICU II patient days, or 149.98 percent occupancy in the seven operational beds at Good Samaritan; 5,743 patient days, or 71.52 percent in 22 beds at St. Mary's; and 3,210 patient days or 97.72 percent in the nine licensed beds at West Boca. With the closing of Good Samaritan, patients who were using its seven beds were assumed mostly likely to go to St. Mary's, which is owned by the same parent company. AHCA calculated a blended occupancy rate of 84.05 percent for St. Mary's with the addition of nine Good Samaritan beds (seven operational and two of four approved) to its existing 22 beds. Despite the high occupancy in the nearest facilities, the others in the District were relatively low for the same period of time: 39.15 percent in ten Level II NICU beds at Lawnwood, 8.38 percent in five beds at Martin Memorial, 19.23 percent in five beds at Palm Beach Gardens, and 50.46 percent in 12 beds at Bethesda. - immediate or long-term financial feasibility, as related to utilization AHCA rejected Wellington's projection of the volume of babies it would receive as Level II transfers from Glades General Hospital and Palms West Hospital. For the year ending August 1999, there were 737 live births at Glades General and 786 at Palms West. From that, Wellington projected 797 births at Glades General and 850 at Palms West in 2002. From that, Wellington expects to receive 231 transfers from Glades General and 197 from Palms West. The projections are based on historical birth to patient day ratios for the County, reasonable projections of volume, and reasonable market share assumptions. AHCA accepted Wellington's projections of its internal birth volume, which was 1,714 live births by January 31, 2000, resulting in a range between 1,192 and 1,834 Level II days. Based on the reasonableness of the expected transfers and the undisputed reasonableness of internal birth projections, Wellington demonstrated that it will achieve 73.5 percent occupancy in a ten-bed unit, or 75.2 percent in a seven-bed unit, by January 2003. As a result of reasonable utilization projections, as otherwise stipulated by the parties, the project is financially feasible. Factual Summary In general, Wellington demonstrated that the number of live births at Wellington, the closing of the nearest Level II provider, occupancy levels at nearby providers, the distances to other existing providers, particularly from various western areas of its service area, and the demographic and growth patterns within the County are not normal circumstances for the approval of its proposal. On balance, Wellington meets the criteria for approval for approval of CON Number 9253, to convert 16 substance abuse beds to a ten-bed Level II NICU.
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 issuing Certificate of Need Number 9253 to Wellington Regional Medical Center, Inc., to convert 16 substance abuse beds to 10 Level II neonatal intensive care beds. DONE AND ENTERED this 25th day of August, 2000, in Tallahassee, Leon County, Florida. ELEANOR M. HUNTER Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 25th day of August, 2000. COPIES FURNISHED: Sam Power, Agency Clerk Agency for Health Care Administration 2727 Mahan Drive Fort Knox Building 3, Suite 3431 Tallahassee, Florida 32308-5403 Julie Gallagher, General Counsel Agency for Health Care Administration 2727 Mahan Drive Fort Knox Building 3, Suite 3431 Tallahassee, Florida 32308-5403 Mark S. Thomas, Esquire Richard A. Patterson, Esquire Agency for Health Care Administration 2727 Mahan Drive Fort Knox Building 3, Suite 3431 Tallahassee, Florida 32308-5403 Robert D. Newell, Jr., Esquire Newell, Terry & Rigsby, P.A. 817 North Gadsden Street Tallahassee, Florida 32303-6313
The Issue Whether Certificate of Need Application Number 6785 should be approved for the conversion of 10 acute care medical/surgical beds to a 10 bed Level II neonatal intensive care unit at University Community Hospital.
Findings Of Fact On August 9, 1991, HRS published a fixed need pool for Level II and III Neonatal Intensive Care Services in the Florida Administrative Weekly, Volume 17, Number 32. For District 6, HRS published a "Preliminary Estimate of Bed Need" for an additional 10 Level II Neonatal Intensive Care Unit (NICU) beds, with an explanatory footnote which was as follows: "Due to pending litigation regarding the inventory of neonatal intensive care unit beds, no fixed need projection is made." The pending litigation was a challenge to the inclusion of 11 beds at Winter Haven Hospital ("Winter Haven") on the inventory of existing Level II NICUs. Following an amendment of the "grandfathering" rules, Winter Haven's dispute with AHCA was settled. Winter Haven's 11 bed NICU is included on the Level II inventory and its petition in this proceeding, which a Winter Haven witness described as their "fall back position", has been voluntarily dismissed. Humana of Florida, Inc., d/b/a Humana Women's Hospital Tampa ("Humana") intervened in these proceedings. Subsequent to the hearing and filing of proposed recommended orders, Humana entered its notice of voluntary withdrawal of its petition on March 17, 1993. AHCA is the state agency which administers CON laws, following transfer of that responsibility from HRS. See, Chapter 92-33, Laws of Florida. University Community Hospital ("UCH") is a 424 bed hospital in Tampa, Hillsborough County, Florida, AHCA District 6, with services which include open heart surgery, pediatric intensive care, and obstetrics. UCH began obstetrics services on September 2, 1991. In its first full year of operation, there were 1299 deliveries in its 31 bed obstetrics unit. UCH projected that there would be 1500 to 1800 deliveries in its second year of obstetrics services. Numeric Need and Occupancy Levels UCH filed its application to convert 10 acute care beds to establish a 10 bed Level II NICU on September 26, 1991, in response to HRS' August 9, 1991 publication of need. Total project cost was estimated at $765,000. Although HRS described the District 6 publication as a "preliminary estimate," there is no statutory or rule authority for the publication of any numeric need number other than the fixed need. By letter dated December 16, 1991, Tampa General Hospital ("Tampa General") notified HRS that the utilization data for Tampa General, which was used to calculate numeric need was incorrect. Tampa General reported 11,112 Level II NICU patient days for 1987, 11,387 for 1988, and, initially, 10,770 for 1990. Tampa General also reported a 20 percent increase in births from 1988 to 1990, and a 117 percent utilization increase in Level III NICU patient days. Tampa General's revised figures distinguished between services provided in its special care nursery and those provided in Level II NICU beds. The revised report divided the total 10,770 into 4,600 patient days in special care nursery beds and 6,170 in Level II NICU beds, but does not specifically take into account the intensity of nursing care or the severity of infants' conditions. Using 6,170 patient days, rather than 10,770, AHCA recalculated numeric need, determined that the numeric need was zero, and used zero need in reviewing the District 6, Level II NICU applications filed in this batch. AHCA did not publish the revised calculation of zero need. AHCA's policy is to not recalculate a fixed need pool, unless there is time to republish before applications are due. Nevertheless, AHCA takes the position that the need publication in this case may be revised because it was preliminary. Using the August bed need projection published by HRS, Level II NICU beds were reporting 86.5 percent occupancy in the twelve month period ending six months prior to the publication. If Tampa General's utilization rates are decreased from 114.28 percent to 70.43 percent, revised district utilization rates would decrease from 86.5 percent to 72.83 percent. Staffing ratios and costs indicate that some neonates in the Tampa General special care nursery received care consistent with Level II NICU services. There is more credible evidence to support the data used by the agency in its publication of need than there is to support its revised determination of zero need. Minimum 1,000 Births Rule 10-5.042(6), Florida Administrative Code, is, in relevant part, as follows: Hospitals applying for Level II neonatal intensive care services shall not normally be approved unless the hospital had a minimum service volume of 1,000 live births for the most recent 12-month period ending 6 months prior to the beginning date of the quarter of the publication of the fixed need pool. There is no dispute that UCH initiated obstetrics services in September 1991, the same month in which it filed the CON application at issue in this case. Because the August 9, 1991 publication was the time for determination of need, then UCH does not meet the requirements of the rule. Standards For Review The publication of numeric need, minimum district occupancy levels, and minimum birth volumes are factors which determine the standard for review of CON applications. Due to the lack of any statutory or rule authority for the publication of preliminary estimates of numeric need, the nature and only possible effect of the pending litigation, AHCA's untimely revision of the numeric need number, and its failure to publish the revised number to allow a point-of-entry for challenges to the revised numeric need number and occupancy level, UCH is not required to demonstrate not normal circumstances. The failure to meet the minimum birth volume rule does, however, necessitate a showing of not normal circumstances for the approval of the UCH application. UCH assesses that its birth volume, and the number of neonates at UCH in need of Level II NICU care, the absence of available, accessible alternative hospitals, and the standard of care in the district are not normal circumstances which outweigh the minimum birth volume requirement. Available Alternatives Subsection 408.035(1)(b), Florida Statutes, also requires consideration of the availability, quality of care, efficiency, appropriateness, accessibility, extent of utilization, and adequacy of other Level II NICUs in the district. AHCA asserts that its corrected data showing zero need is a major indicator of available alternatives. As noted, however, UCH demonstrated the unreliability of the corrected data. In addition, geographic, economic, and other practical concerns may also affect accessibility. The total District 6 inventory of Level II NICU beds with 1990 occupancy and patient days as published on August 9, 1991, is as follows: Hospital Occupancy Patient Days Humana - Brandon 108.82 1,986 Humana Woman's 72.35 3,961 Tampa General 114.28 10,011 Manatee Memorial 90.23 1,976 Lakeland Regional 75.50 4,409 Winter Haven 49.02 1,968 The inventory is accepted as valid for the same reasons that the original publication of need is accepted as more reliable than the revised estimates. See, Finding of Fact 13. Tampa General's Level II and III nurseries are not available alternatives, because they exceed 90 percent occupancy. See, Findings of Fact 10 and 13. Humana Brandon is not an alternative with its Level II and III NICU beds exceeding capacity. Expert testimony on traffic practice and referral patterns support UCH's assertion that facilities in Winter Haven or Lakeland are not viable alternatives, although within the two hour travel time established by the rule on geographic access. Normal referral patterns are from more rural to more urban areas. Humana Women's, which is seven miles from UCH and has a transfer agreement with UCH, is the most geographically accessible, available alternative. The parties disagree over whether Humana Women's is economically accessible and has the capacity to serve most of the Level II neonates born at UCH. Humana Women's increased its service to 10-11 percent Medicaid obstetrics patients in 1991-1992, in contrast to UCH's level of 7 percent Medicaid obstetrics patients, and therefore, is no longer economically inaccessible to Medicaid patients. Humana Women's has 15 Level II NICU beds, which reported 72 percent occupancy in 1990. The demographic characteristics of the UCH service area include 7.1 percent Medicaid eligible population, and overlaps with the service area of Humana Women's. In addition, UCH and Humana Women's have overlapping medical staffs. For these reasons, Humana Women's experiences provide the most reliable indication of the accuracy of UCH's projections. At Humana Women's 7 percent of neonates require Level II and III care. By contrast, Lakeland Regional Medical Center experiences 12.7 percent neonates requiring NICU care, close to that projected by UCH, however, 30 percent of Lakeland Regional's patients are in the Medicaid payor category. The link between Medicaid and the greater need for NICU care was established by expert testimony. On this basis, the expert projections that 7 percent, not 10-15 percent, of UCH newborns will need Level II NICU care is accepted as reasonable. Average lengths of stay in Humana Women's Level II NICU beds were 6 to 7 days, not 10 days as projected by UCH. That data also supports AHCA's expert's conclusion that the average length of stay in UCH's stabilization unit, 2.3 days, is not indicative of UCH's having provided Level II care to 160 to 170 neonates. According to AHCA's expert planner, total capacity at Humana Brandon, Humana Women's and Tampa General is 14,000 patient days. Using the inventory published by the agency, those hospitals reported a total of 15,958 patient days in 1990. Even assuming that UCH overestimated the number of neonates needing NICU care, the capacity at accessible facilities within the district cannot accommodate the additional patients, and constitutes a not normal circumstance outweighing the minimum birth volume requirement. The fact that UCH is the only obstetrics facility in Hillsborough County without Level II and III NICU beds indicates that, if otherwise in compliance with review criteria, UCH's application should be approved to meet the need for additional Level II NICU beds. UCH's expert also testified that the number of Level II NICU beds in the Tampa area were disproportionately low compared to the population. Tampa has 3.2 Level II beds per thousand births in contrast to 7.6 in Lakeland, and 7.7 in Winter Haven. Given the demographic differences among the hospitals' service areas, the bed to population ratio was not shown to be meaningful as an indication of Level II NICU need. State and Local Health Plans Subsection 408.035(1)(a), Florida Statutes requires an evaluation of need in relation to applicable state and district health plans. The 1989 Florida State Health Plan lists the following general categories of preferences, most of which are applicable to any proposal to transfer or convert acute care beds regardless of the proposed new service: for conversion of acute care beds, for providing indigent care, for providing emergency services, for teaching, research and referral hospitals, and for providing specialized services. The District 6 plan issued in June 1990 by the Health Council of West Central Florida includes only one applicable CON allocation factor, which is related to the state health plan indigent care preferences and is as follows: Preference shall be given to an applicant who provides the department with documentation that they provide, or propose to provide, a disproportionate share of Medicaid and charity care patient days in relation to other hospitals in the subdistrict. The charity care definition shall be consistent with the definition used by the Health Care Cost Containment Board as defined in Chapter 89-275, Laws of Florida. The first group of preferences in the State Health Plan includes the following: Preference shall be given to a bed transfer and conversion application in which the applicant proposes a sizable reduction of excess beds in the existing facility. AHCA argues that the preference is not met. Because UCH has 404 licensed beds with an average occupancy of about 50 percent, or 200 empty beds, AHCA states that the conversion of only 10 medical-surgical beds to 10 Level II NICU beds is not a sizable reduction of excess acute care beds. However, AHCA only projected a need for an additional 10 NICU beds, which is the minimum size allowed by AHCA rules. AHCA's position that no additional Level II beds are needed is inconsistent with penalizing UCH for not proposing to convert more beds in this application. Therefore, this preference must be deemed inapplicable to this case. Similarly, given the size of the published need, the objective of reaching 75 percent occupancy in five years is also inapplicable to this application. The second relevant group of preferences relates to whether the conversion of beds will adversely impact disproportionate share providers. That same issue is also addressed in the group of preferences related to indigent care. AHCA argues that this preference is not met, because Tampa General, the only disproportionate share provider in the District, would be adversely affected. The evidence presented at hearing supports a conclusion to the contrary, that Tampa General will not be affected adversely. UCH and Tampa General have an agreement to cooperate in providing NICU services. UCH proposes to assist Tampa General in the delivery of Level III NICU services, by transfers of Level II neonates back to UCH as soon as possible. The fact that Tampa General's Level III utilization has increased substantially, more than 100 percent since 1988, was not disputted. Tampa General's medical director's testimony on the benefits to Tampa General of the agreement with UCH is persuasive. The next group of relevant preferences is entitled "Indigent care." The only local health plan factor also favors applicants which will provide a disproportionate share of Medicaid and charity care. UCH will not provide a disproportionate share of its services to Medicaid and charity care patients. The Level II NICU providers in District 6 average 40 percent Medicaid participation, and UCH proposes 6 percent. UCH does not meet the disproportionate share preferences in the state or local health plans. The "emergency services" group of preferences apply to applicants who (1)accept indigents for emergency care, (2)have a trauma center, (3) provide a full range of emergency services, and (4) have not been fined for violating emergency service statutes. UCH has an active emergency room, accommodating 45,000 visits in fiscal year 1991, and under expansion to increase its capacity to 60,000 visits a year. UCH, in general, meets the preference for providers of emergency room services. UCH is not a teaching, research, or referral center, nor is its proposed service unavailable within its service area. In response to this group of preferences, UCH has also not demonstrated that patients are leaving the state for this service, that any new physician specialities would be attracted to the area, or that its proposal will expand medical research in Florida. For the group of preferences for specialized services, UCH meets two of three applicable preferences. One for proposing a conversion of medical/surgical beds to NICU beds, another for proposing a commitment to serve 6 percent Medicaid and 5 percent charity care. In 1990, 41 percent of District 6 Level II NICU discharges were Medicaid patients. In 1990, Medicaid services ranged from a high of 61.6 percent of total Medicaid provided by Tampa General to a low of 2 percent by Humana Women's. UCH has shown its 6 percent Medicaid commitment to be reasonable and attainable by demonstrating that 7.1 percent of the population in its service area is Medicaid eligible. The actual Medicaid percentage in the first year for obstetrics services was 7 percent, which coincides with the percentage of Medicaid eligible persons living within the UCH service area. UCH has not emphasized specialized services to substance abusers, other than to have a referral network to community service agencies. The review of UCH's application in relation to state and local health plans results in the conclusion that the proposal is generally supported by preferences for the conversion of excess acute care beds, for not adversely impacting and potentially assisting Tampa General, for having emergency room services, and for providing specialized services with an attainable relatively low, Medicaid commitment. On the negative side are the preferences for applicants serving a disproportionate share Medicaid and charity patients, for teaching, research or referral centers, for services unique to the area, or for specialized service to substance abusing pregnant or postpartum women. On balance, the application of the state and local health plans does not suggest strongly that the UCH application either should or should not be approved, particularly in this case, where comparative review is impossible because UCH is the sole remaining applicant. Other Statutory Criteria Subsection 408.035(1)(c), Florida Statutes, criteria are met by UCH. UCH can provide good quality care in Level II NICU services. It is accredited by the Joint Commission on Accreditation of Health Organizations and has the ability to comply with rule requirements for equipment, staff and physical facilities. UCH already has a board-certified neonatologist on staff. Subsection 408.035(1)(e), favoring joint, cooperative or shared operation of health care services is not a criterion met by the UCH proposal. Although UCH suggests that its transfer agreement with Tampa General complies with the statute and the evidence showed that the two hospitals will cooperate in providing the separate services they each provide, but the transfer agreement does not constitute cooperative operation of the service. Subsection 408.035(1)(f), arguably is a basis for approval of the UCH application, because Level II NICU equipment and services do not exist in the adjoining area of east Pasco County. For District 5, which includes Pasco County, zero need was published for the same batching cycle. Subsection 408.035(1)(g) criterion, related to research and training programs, is not met by the UCH application. UCH meets the criteria in Subsection 408.035(1)(h), by having shown that it has the manpower, personnel and funds to establish and operate a 10-bed Level II NICU. UCH is able to renovate existing space and to acquire the equipment required for the 10-bed NICU for approximately $765,000. AHCA does not dispute UCH's assertion that it has adequate funds to finance this project and that project costs are reasonable. Having already hired a neonatologist, and 6 to 7 of the 11 1/2 to 12 1/2 full time equivalent or FTE's required, UCH has, or can recruit and hire, the necessary staff. Financial Feasibility Under Subsection 408.035(1)(i), the financial feasibility of a project must be considered. UCH estimated that a Level II NICU will generate $290,000 in year one, and $336,000 in year two revenues. The projections were based on providing Level II NICU services to 11 to 12 percent of newborns, or 2290 patient and 2670 patient days in years one and two, respectively. This underlying assumption is rejected. See, Finding of Fact 26. UCH's projection of a 10 day average length of stay in Level II NICU beds is not supported by Humana Women's experience of 6 to 7 days. See, finding of Fact 27. From the testimony and assumptions, attached to UCH's projected revenues and expenses, it is possible to determine that reduced total patient revenues will result from lower than projected numbers of patients and days. It is also apparent that deductions from revenue and some operating expenses will also decrease. There is, however, no testimony from which the relative proportions of adjustments to each item and the effect on charges for NICU services be calculated. Nor is there testimony regarding any minimum utilization necessary for the project to be financially feasible. Therefore, UCH has failed to meet the burden of showing that the proposed Level II NICU at UCH will be financially feasible. On balance, but not excluding all the applicable criteria, the most positive factors of the UCH proposal, the published need and potential benefits to Tampa General, do not outweigh the most negative ones, the failure to demonstrate financial feasibility and to make a more significant commitment compared to the district demand for Medicaid in Level II NICU beds.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the application of University Community Hospital for Certificate of Need 6785 to convert 10 acute care beds to 10 Level II neonatal intensive care beds be DENIED. DONE AND ENTERED this 8th day of October, 1993, in Tallahassee, Leon County, Florida. ELEANOR M. HUNTER Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 8th day of October, 1993. APPENDIX TO RECOMMENDED ORDER, CASE NO. 92-1490 To comply with the requirements of Section 120.59(2), Fla. Stat. (1991), the following rulings are made on the parties' proposed findings of fact: UNIVERSITY COMMUNITY HOSPITAL Accepted in Findings of Fact 5 and 36. Accepted in Finding of Fact 6. Accepted in Finding of Fact 7. Accepted in Finding of Fact 2. Accepted in Finding of Fact 2. Accepted in Finding of Fact 3. Accepted in Findings of Fact 1 and 2. Accepted in Finding of Fact 2. Accepted in Finding of Fact 8. Accepted in Findings of Fact 9 and 10. Accepted in Finding of Fact 11. Accepted in Finding of Fact 11. Issue not reached. Issue not reached. Issue not reached. Accepted in Findings of Fact 10 and 11. Accepted in Finding of Fact 13. Subordinate to Finding of Fact 13. Accepted in Finding of Fact 10. Subordinate to Finding of Fact 13. Accepted in Findings of Facts 5 to 13. Subordinate to Finding of Fact 13. Subordinate to Finding of Fact 13. Accepted in Finding of Fact 13. Accepted in Findings of Fact 10 and 13. Accepted in Finding of Fact 47. First two sentences, Subordinate to Finding of Fact 6, Last two sentences, Rejected in Finding of Fact 26. Accepted in Finding of Fact 28. Rejected in Findings of Fact 50 and 51. Accepted in Finding of Fact 27. Rejected. Accepted in Finding of Fact 29. Accepted in Finding of Fact 36. Accepted in relevant part in Finding of Fact 34. Subordinate to Finding of Fact 26. Subordinate to Finding of Fact 26. Conclusion rejected in Finding of Fact 30. Rejected in Finding of Fact 41. Rejected in Findings of Fact 50 and 51. Accepted in relevant part in Finding of Fact 41. Accepted in Finding of Fact 34. Accepted in relevant part in Finding of Fact 38. Accepted in Findings of Fact 20, 22, and 28. Accepted in Finding of Fact 23. Accepted in Finding of Fact 25. Subordinate to Finding of Fact 25. Accepted in Finding of Fact 24. Accepted in Finding of Fact 29. Accepted in Finding of Fact 34. Accepted in Finding of Fact 47. Accepted in Finding of Fact 47. Accepted in Finding of Fact 47. Rejected in Finding of Fact 48. Rejected in Findings of Fact 50. Rejected in Findings of Fact 48. Subordinate to Finding of Fact 50. Subordinate to Finding of Fact 50. Unable to determine. Unable to determine. Accepted. Unable to determine. Rejected in Finding of Fact 45. Accepted in Finding of Fact 47. Accepted in Finding of Fact 47. Accepted in Finding of Fact 47. Accepted in Finding of Fact 47. Accepted in Finding of Fact 47. Accepted in Finding of Fact 47. Accepted in Finding of Fact 28. Issues not reached due to Humana's Voluntary Dismissal. Issues not reached due to Humana's Voluntary Dismissal.
