The Issue Whether Certificate of Need application (Number 9078) for an adult kidney transplantation program, filed by St. Luke's Hospital Association, meets the statutory and rule criteria for approval.
Findings Of Fact The Agency for Health Care Administration (AHCA) is the state agency authorized to administer the Certificate of Need (CON) program for health care facilities and services in Florida. Pursuant to Rule 59C-1.044, Florida Administrative Code, AHCA requires applicants to obtain separate CONs for the establishment of each adult or pediatric organ transplantation program, including heart, kidney, liver, bone marrow, lung, lung and heart, pancreas and islet cells, and intestines transplantations. For purposes of determining the need for organ transplantation services, the State of Florida is divided, by rule, into four service planning areas, corresponding generally with the northern, western central, eastern central and southern regions of the state. St. Luke's and Existing Providers St. Luke's Hospital Association operates St. Luke's Hospital (St. Luke's), a 289-bed, non-for-profit hospital with 17 beds for skilled nursing care and 272 acute care beds. St. Luke's is located on Belfort Road in Jacksonville, Duval County, Florida, AHCA, District 4, organ transplantation service planning area one. Available services at St. Luke's include obstetrics, open heart surgery, neurosurgery, adult bone marrow, and adult liver transplantation. The transplant services have been added during the last six or seven years. The severity of the illnesses and diseases treated at St. Luke's is represented by its relatively high Medicare case weight of 1.7 in 1997, after the addition of relatively low intensity obstetrics services. In 1998, St. Luke's applied for CONs to establish adult pancreas and islet cell, and adult kidney transplant programs. St. Luke's received the CON to establish the pancreas and islet cell transplant program. The application for a CON to establish an adult kidney transplant program is at issue in this proceeding. The parties stipulated that the letter of intent and application, for CON Number 9078, to establish the adult kidney transplant program, were timely filed. Methodist Medical Center, Inc., d/b/a Methodist Medical Center (Methodist) is a 244-bed acute care hospital, serving primarily adults, with special units for diabetes, hospice, and occupational medicine programs. The services do not include either obstetrics or pediatrics. In 1989, Methodist received a CON allowing its establishment of kidney transplant services. Methodist is located approximately one and a half miles north of downtown Jacksonville. Methodist's representatives contend that an additional kidney transplant program in Jacksonville, at St. Luke's, is not needed and will be detrimental to Methodist. St. Luke's, it was argued, will draw from a limited supply of organs and increase Methodist's financial losses. Those losses at Methodist were expected to range between $5 million and $8 million in 1999. Methodist's accountant described the hospital's financial health as poor to critical. The kidney transplant program provides a positive financial contribution at Methodist, largely due to Medicare reimbursements. At the time of the final hearing, Methodist was managed by Shands-Jacksonville, an affiliate of Shands Teaching Hospital and Clinics (Shands) at the University of Florida in Gainesville, and of University Medical Center in Jacksonville (University Hospital). Shands is also located in organ transplant service area one, but Gainesville is in AHCA District 3, not in 4 like Jacksonville. University Hospital is located across the street from Methodist and serves essentially the same inner-city, lower socio-economic population. St. Luke's was first established in the late 1800's. Previously located directly across the street from Methodist, St. Luke's was relocated near the intersection of J. Turner Butler Boulevard at Interstate 95, south of downtown Jacksonville in 1984. In 1987, St. Luke's became affiliated with the Mayo Clinic in Jacksonville (Mayo-Jacksonville). The two facilities share an administrator. St. Luke's receives approximately three- fourths of its admissions from Mayo-Jacksonville physicians. The Mayo-Jacksonville clinic is located approximately 12 miles from St. Luke's at J. Turner Butler Boulevard and Highway A-1-A. The multi-specialty and multi-subspecialty clinic, is staffed by 230 full-time salaried physicians. The governing board of Mayo-Jacksonville reports to the executive committee of its sole corporate member, the Mayo Foundation for Medical Education and Research (Foundation) in Rochester, Minnesota. The Foundation is the parent organization for the original Mayo Clinic in Rochester (Mayo-Rochester) and its affiliated hospitals, St. Mary's Hospital (with 1100 beds) and Methodist Hospital (with 700 to 800 beds), both in Rochester, Minnesota. In addition to the one in Jacksonville, the Foundation has also established a clinic in Scottsdale, Arizona (Mayo-Scottsdale). The Mayo-Scottsdale clinic is affiliated with a local inpatient hospital. Other related organizations include the Mayo Medical School and the Mayo Graduate School of Medicine. Issues Related to Need St. Luke's contends that its transplant surgeons would increase the total number of kidney transplants in Florida, by using less than ideal donor organs and by expanding waiting lists to enhance the possibility of donor/recipient matches. St. Luke's expects to overcome some of the usual limitations on available cadaveric organs because living donors can also be used to provide kidneys. Finally, St. Luke's maintains that a need exists for dual transplant programs, particularity the combination of kidney and pancreas programs. St. Luke's proposes to provide adult kidney transplants as an alternative to life-long dialysis or death for patients suffering from end-stage renal disease. Nationally, the number of dialysis patients increased from 123,822 in 1987 to 287,000 in 1996. The number of patients waiting for kidney transplants increased from 13,000 in 1987 to 41,000 in 1999. The mortality for patients on waiting lists also increased from over 1700 in 1996 to over 2000 in 1997. Due to the large and growing demand for organs, the federal government contracts with the United Network for Organ Sharing (UNOS) to coordinate the allocation of cadaveric organs. UNOS has designated five organ procurement organizations (OPOs) in Florida, one at the University of Florida in Gainesville (the UF OPO), and the others at centers in Orlando, Tampa, Fort Myers, and Miami. When cadaveric organs become available and are retrieved by surgeons from the nearest OPO, UNOS governs the priority in offering the organs. Organs are offered first to the United States military transplant centers, second to potential recipients who are six antigen or "perfect matches," then as paybacks to OPOs who have provided "perfect matches," and finally to various categories of other high-grade matches. After the organ is offered but not taken in the mandatory UNOS sharing hierarchy, the organ becomes available to local programs within the procuring OPO. St. Luke's will participate in the UNOS program for kidneys as it currently does for other organs, and expects to follow the medical protocols established at Mayo-Rochester, where kidney transplants have been performed for 30 years. St. Luke's has included $100,000 in start-up costs for Mayo-Rochester staff to train the St. Luke's staff. In establishing its successful liver transplant program, St. Luke's allocated $75,000 for comparable start-up costs. Rule 59C-1.044(8)(d), Florida Administrative Code, provides for the determination of the need for new programs, in part, based on the number of transplants performed at existing providers, which must exceed 30. An applicant must also provide a reasonable projection of volume, in excess of 15 a year by the second year of the proposed new program. Currently, two adult kidney transplant programs are approved or operational in each of the four service planning areas of Florida: at Shands in Gainesville and Methodist in Jacksonville in the north, which is service planning area one and coincides with the UF OPO; at Southwest Florida Regional in Fort Myers and Tampa General in western central Florida, which is service planning area two; at Florida Hospital in Orlando and Bert Fish Memorial in Volusia County in eastern central Florida, in service planning area three; and at the Cleveland Clinic Florida in Broward County and Jackson Memorial in Miami in the south, in service planning area four. At the time of this hearing, Bert Fish Memorial and the Cleveland Clinic were approved but not operational. The six operational Florida programs increased in volume from 442 transplants in 1994 to 641 in 1997, or an average increase of 13.2% a year. However, recent growth has been less dramatic. Using one year longer to establish a trend, from 1994 to 1998 data, the average annual increase was 9% a year. Kidney transplant volumes ranged, in 1997, from a low of 45 at Southwest Florida to highs of 150 at Jackson Memorial and 162 at Tampa General. From 1994 to 1997, the volume of kidney transplants within service planning area one increased from 35 to 52 at Methodist, and from 106 to 127 at Shands. As the parties stipulated, that volume exceeds the required minimum of 30 transplants at each provider in the service planning area. As also required by rule and stipulated by the parties, there are no new approved but not yet operational providers within service planning area one. Methodist notes that St. Luke's would be the first Florida program approved in a city which already has an existing kidney transplant service. The United States Renal Disease System (USRDS) is a national organization which collects and reports statistics on patients with end-stage renal disease (ESRD). USRDS is divided into regional networks, including Network Seven which is the ESRD Network of Florida, Inc. The Board of Directors of Network Seven adopted the following motion: The Network Seven Board of Directors reviewed the report of the Network's task force regarding the need for additional renal transplant resources for Service Area 1. After a lengthy discussion, the Board unanimously agreed that the Standardized Transplantation Ratio for Florida's Service Area 1 would not justify the establishment of a new stand-alone renal transplant program in this area. However, it agreed that the availability of a multi-organ transplant service (ie: pancreas and kidney) would be beneficial to those ESRD patients in residing [sic] Service Area 1. Two dual organ kidney and pancreas transplant programs are currently located in Florida, at Shands in Gainesville and at Jackson Memorial in Miami. Methodist notes that both are associated with medical schools at teaching hospitals, and are geographically well-suited to serve north and south Florida. Methodist's transplant surgeon who is the medical director of its program, and served on the Network 7 task force, agreed that a kidney/pancreas program is desirable. Apparently, most pancreas transplants are also done with kidneys but not vice versa. Relatively, few kidney/pancreas transplants are performed, although the number has doubled nationally since 1991. In 1997, there were 3 kidney/pancreas transplants at Shands, 3 at Mayo- Rochester and 33 at Jackson Memorial. The low volume of the dual transplant procedures reflected both medical skepticism and the absence of insurance reimbursement for the procedure when it was considered experimental. Having performed six dual transplants for no charge in 1998, Shands has been able to convince a majority of its third-party payors in Florida to pay for the procedure. The federal government, through the Medicare program, also changed its policy and now reimburses for kidney/pancreas transplants. As a result, the number of dual transplants is reasonably expected to increase. No CON is issued, under the Florida system, to authorize the dual kidney/pancreas program only. As Methodist noted, St. Luke's did not offer to condition its CON by limiting itself to a dual transplant program. The standardized transplantation ratio (STR), on which the Network Seven Board relied, is the ratio of first kidney transplants to the expected number based on the estimated national rate adjusted for age. For the four Florida organ transplant service planning areas, the STRs reported by Network Seven are as follows: Region 1 (North) 1.00 Region 2 (West Central) 1.35 Region 3 (East Central) 1.19 Region 4 (South) .66 A STR of 1.0 indicates generally, that a region is performing transplants as expected based on the national average. Therefore, the suggestion that the performance is mediocre is rejected. Methodist supports its argument that no need exists for an additional kidney transplant program at St. Luke's, based on Network Seven's finding that the STR for the region is roughly what should be expected. St. Luke's, however, asserted that the STR could be raised to the level of region two with the approval of a new program. In fact, the approval of a program at the Cleveland Clinic in Broward County, in region four, was supported by Methodist's expert health planner, among others, in part, by the desire to raise the STR. That situation can be distinguished based on geography and the failure in region four to meet expectations, while a better performance than the national average is not to be expected necessarily from the approval of another program in the same city in region one. While the STR is helpful in an analysis of need, Rule 59C-1.044(8)(d), Florida Administrative Code, requires consideration of the projected transplant volume based on the number of end-stage renal disease patients. Basically, these are patients whose kidneys have ceased to function. From June to December 1998, Network Seven estimated that the number of patients with kidney failure in service planning area one increased from approximately 2800 to 3000. Using expected population growth only, not the historical growth rate, St. Luke's conservatively estimated in its CON that number of patients would reach approximately 2900 by the end of the year 2000. Because some patients are not medically appropriate transplant candidates or will, for other reasons, never receive the service, St. Luke's used a ratio of patients to project transplant cases. Using only 20% of patients between ages 14 and 65, St. Luke's reasonably projects a need for over 300 kidney transplant surgeries in service planning area one in the year 2000. Using population increase and the lower historical growth rate of 9.5%, St. Luke's established a need for up to 450 kidney transplants in 2000 in service planning area one. Either number is sufficient to document St. Luke's ability to perform at least 15 kidney transplants by the end of the second year of operation, as required by rule. Methodist's expert further reduced by 40% the number of potential transplant patients to get what the projected to be the actual number of surgeries. This number is intended to take into consideration the limited number of cadaveric organs. The result is, however, unrealistically lower numbers, in the range of the actual number of surgeries currently performed in area one and is, therefore, rejected. In fact, despite the limitations on cadaveric organs, the number of kidney transplants has continued to increase. St. Luke's experience with liver transplants is also evidence of its ability to exceed the minimum number of 15 kidney transplants in the second year of operation. Specifically, St. Luke's expects to perform 15 kidney transplants in the first year, and 30 in the second year. More than double the projected number of Florida residents received liver transplants, 25 or 26 as compared to 12 or 13 cases in the first seven months of that program at St. Luke's. Compared to projections of 15 liver transplants in year one, 30 in year two, St. Luke's transplant surgeons actually performed 113 after 18 months. Significantly, the volume at Shands has also increased based on the annualized volume for the first quarter of 1999. St. Luke's also demonstrated that it is successfully transplanting livers which were rejected by other Florida programs. Currently, the same team of transplant surgeons harvests all abdominal organs, livers, kidneys, and pancreases, but can use only the livers at St. Luke's. The surgeons who perform the liver transplants at St. Luke's will also perform kidney transplants. As a result of the team's aggressive use of organs and recent changes in federal government requirements for notice of potential donors and reimbursement policies, St. Luke's is reasonably expected to assist in expanding the available supply of cadaveric organs and in increasing the number of transplant surgeries. Subsection 408.035(1)(a) - need in relation to district plan The District 4 health plan, developed by the Health Planning Council of Northeast Florida, Inc., includes preferences applicable to the evaluation of St. Luke's application. Preference one applies to applicants who will meet identified needs with acceptable quality in an economical manner. St. Luke's expert conceded that its proposal will be more costly and require longer average lengths of stay when compared to that at Methodist but not as compared to other Florida programs. St. Luke's projected an average length of stay of 7.6 days at $50,123 per case, but the Florida average is 10.5 days at $81,048. No construction is required for implementation of the project which has a total cost of $238,450. Therefore, St. Luke's proposal generally meets the requirements of preference one. Preference two, for applicants who will alleviate a geographic access problem, is not met by St. Luke's. One argument advanced by St. Luke's and rejected is that the existing providers are not using organs at the appropriate rate. Considering 1997 data, Shands and Methodist appear not to accept and use kidneys at the expected rate, as calculated and assigned by UNOS. The reported expected acceptance rate for Methodist is 30.7% in contrast to an actual rate of 11.5%. Shand's assigned expected rate is reported to be 53.8% but its actual rate of acceptance is shown as 37.4%. Corrected UNOS data shows the opposite result, that acceptance rates are higher than expected. UNOS data is inconsistent and inconclusive. In general, the data is so unreliable as to have no significant probative value. St. Luke's meets preference three by caring for HIV positive patients. St. Luke's also demonstrated its access to adequate staff for a kidney transplant program, meeting the requirement of preference four. Methodist questioned St. Luke's failure to list a certified transplant nephrologist on its staff, but physician services are provided by salaried employees of Mayo-Jacksonville. Preference five favors applicants who demonstrate that a new service will not have a significant negative impact on similar facilities. Even though there may be sufficient numbers of kidney disease patients who qualify for and have access to transplants in service area one, the geographic overlap of the programs is an issue of concern related to impact. Methodist primarily serves transplant service area one patients. St. Luke's draws 50% of its patients from Duval and the five surrounding counties, 35% from other areas of Florida, and 15% from elsewhere, primarily Georgia and the southeastern United States, but that also includes 3% of international origin. It is reasonable to expect St. Luke's to maintain approximately the same patient origin mix in a kidney program. This mix will require St. Luke's to perform only 8 kidney transplants on patients from service area one in order to reach the minimum volume requirement of 15 in the second year, which is actually projected for the first year. Currently, 16 Mayo-Jacksonville patients who are on the waiting list for kidney transplants at Methodist would likely receive transplants at St. Luke's if it had a program. Taking into consideration growth and applying a traditional impact analysis, Methodist will lose two to four cases, and Shands will lose nine cases in the first year of a competing program at St. Luke's. With that level of impact, both programs remain substantially above the minimum required by AHCA rule. One expert equated the loss of ten cases from Methodist, to a financial loss of $100,000, after reimbursement deductions and reduced expenses. The overall magnitude of Methodist's financial losses is so great that the loss of the contribution from the kidney transplant program is insufficient to affect the hospital's profitability. Similarly, the loss of nine cases from Shands leaves volume significantly above the minimum required. Methodist and St. Luke's differ in their reliance on cadaveric and living donors, which also should help alleviate any impact of competition for cadaveric organs on the existing program at Methodist. While Methodist uses 50% living donors, St. Luke's projects a more traditional mix of 30% living. It is reasonable to expect that the growth in transplants, and the differences in patient and organ origins will allow Methodist to avoid any detrimental effect from the establishment of a program at St. Luke's. Methodist suggested that the approved program in Volusia County, and to a lesser extent, that in Broward County will also be unable to achieve minimum volumes if a program is established at St. Luke's. Methodist's support for the Volusia County program, however, lends credence to St. Luke's assertion that the geographic overlap is minimal. St. Luke's demonstrated that the number of projected transplants, taking into consideration the approved programs, is considerably lower than the expected numerical increase in surgeries. Projections of 30 at St. Luke's, six at the Cleveland Clinic, and 25 at Bert Fish during the year 2000 are achievable from the projected growth in kidney transplants. The data also indicates that the Florida waiting lists for transplant candidates could and should be expanded. Separate transplant provider lists are coordinated into the organ sharing list maintained by UNOS. Nationally, 150 people for every one million are on waiting lists for kidney transplants. That number, even adjusted to exclude older patients, is double the ratio for the Florida waiting list. Some expansion is reasonably expected as a result of the establishment of a new Florida program. The numbers needed and projected at each program, the differences in projected patient origins, the ability to expand the waiting list and the absence of an adverse impact from the establishment of the liver transplant program at St. Luke's provide some assurance that a kidney transplant program will not be detrimental to the existing providers. Preference six, for applicants who will maximize services to rural county residents, is met by St. Luke's service to surrounding rural areas. In addition to the general health plan preferences for CON applicants, the District 4 health plan includes specific preferences for transplant services. The parties stipulated that preferences one and five for applicants in major population areas (over 250,000) and for pediatric services are not at issue. Specific preference two applies to applicants with relationships with a broad spectrum of other health care providers, including agreements for patient transfers and organ procurement. In response, St. Luke's refers to its active participation in the UF OPO. As Methodist notes, however, a continuation of the existing relationship, with Mayo physicians performing kidney transplants at Methodist, is the most cost- effective and non-duplicative alternative. St. Luke's transplant surgeons will continue to provide coverage for the surgeons at Methodist. Transplant-specific preference three favors applicants who have a significant role in regional and national research efforts, including by government contracts or research grants. Methodist insists that a distinction be made between the well- known work of the Mayo Foundation and that of St. Luke's. The Mayo Foundation divides its services into three major segments - medical care, medical research, and medical education. Research is supported by over $100 million from government agencies and $80 million from the Foundation. Over a thousand residents and fellows are enrolled in Mayo educational programs. Over 75 transplant-specific research projects within the Mayo system are coordinated by a single institutional review board. Admittedly, a non-university facility, St. Luke's does participate in Mayo educational and research activities. Over 60 Mayo-Rochester physicians, residents, and fellows were rotating through Mayo-Jacksonville and practicing at St. Luke's at the time the CON application was filed. St. Luke's separate budget for basic science research also exceeded $10 million for over 200 active research protocols. The medical research building at Mayo-Jacksonville exceeds 80,000 square feet in size. For these reasons, St. Luke's demonstrated that its participation in educational and research activities satisfies the preference. Transplant preference four favors applicants with a specific commitment to provide charity care. In its application, St. Luke's commits to providing 6% of total kidney transplants to Medicaid or charity patients. One expert witness noted that St. Luke's commitment exceeds the statewide volume of 4% Medicaid/charity kidney transplant patients, which was the condition for approval of the Bert Fish CON. Most patients with end-stage renal disease are covered by Medicare. In calendar years 1996-1998, Shands provided over 30% Medicaid and from 4 to 8% charity care. Methodist provided from 9 to 11% Medicaid and approximately 2% charity care. By contrast, St. Luke's provided from .7% to 1.2% Medicaid and just over 2% charity case. St. Luke's meets the preferences by specifying a reasonable commitment for the kidney transplant program, although it has historically provided comparatively insignificant Medicaid and charity care. Since organ transplant service area one includes Districts 1, 2, and 3, as well as 4, St. Luke's and AHCA also considered the local health plans for those districts. Both noted that District 3 has a preference for organ transplant applicants which are teaching hospitals, as defined by Florida Statutes. St. Luke's does not meet that preference. It is not a statutory teaching hospital. On balance, St. Luke's does meet the intent of local health plans preferences and, therefore, the requirements of Subsection 408.035(1)(a), Florida Statutes. Subsection 408.035(1)(b) - increase/improve availability, access, quality of care, efficiency, utilization, and adequacy of like and existing facilities in the district In its application, St. Luke's illustrated the concern for renal patients as follows: End-stage renal disease is a large and growing problem in Florida and north Florida. with 14,168 ESRD patients in Florida and 2,822 ESRD patients in service planning area one during 1998, with 787 Florida residents added to the kidney waiting list during 1997, and with Florida resident deaths due to diabetes growing to 3,828 deaths by 1997, the magnitude of the ESRD problem is evident. St. Luke's Exhibit 1 at p. 96. St. Luke's plans to serve an increasing pool of patients within the District and the service planning area. With its aggressive use of organs, St. Luke's can also increase available cadaveric organs, thus increasing numerically, the accessibility, availability and utilization of kidney transplant services in the district. The efficiency of all providers is also reasonably expected to be enhanced due to the introduction of competition into the market. Currently, the relationship between Methodist and Shands is not competitive. Subsection 408.035(1)(c) - quality of care Modeled after that of the Mayo Clinic Rochester, St. Luke's kidney transplant program will be emulating a program with the nation's best survival rates despite its use of organs which have been rejected by others. St. Luke's is licensed by the AHCA, certified to participate in the Medicare and Medicaid programs, accredited by the Joint Commission on the Accreditation of Health Care Organizations (JCAHO), and certified by UNOS to perform transplants. The parties stipulated that St. Luke's has a history of providing a high quality of care. The evidence also supported a finding that St. Luke's will also provide the same high quality of care in kidney transplantation services, using the same physical spaces, by essentially the same staff. St. Luke's staff will require only specialized kidney transplant training and equipment. Subsection 408.035(1)(d) - available and adequate alternatives An alternative to a new kidney transplant provider is the expansion of the volume of cases performed at existing providers. There are no physical constraints to the alternative, only the need for additional staff and supplies. Methodist and Shands can absorb the projected increase in kidney transplant surgeries in the service planning area. Given that lack of constraint, the minimum volume established for existing providers by rule, gives the guidance to determine whether it is appropriate to expand volumes at existing providers or to introduce a new provider. Because there is no competition in the service area in which the existing providers are well above the minimum volume, and the projected volumes for the new programs are exceeded by the projected additional transplants, the establishment of an additional program is appropriate. Subsection 408.035(1)(e) - economies and improvements from joint operative or shared resources The advantages of developing a kidney transplant program at St. Luke's include: the ability to utilize the existing infrastructure which supports the liver and bone marrow transplant programs; and the ability to adopt Mayo Rochester's treatment protocols, standards, and training resources, and to participate in its research projects. The only clearly identified disadvantage is the risk of undermining the cooperation of Mayo-Jacksonville transplant surgeons with Methodist and the loss of some transplant surgeries from Methodist and Shands. On balance, the introduction of a kidney program in Florida, emulating the Mayo-Rochester program, offers a valuable sharing of Mayo resources. Subsection 408.035(1)(f) - need for equipment or services not accessible in adjoining areas St. Luke's proposal will not result in the introduction of any special equipment or services which are not reasonably or economically accessible in adjoining areas. Subsection 408.035(1)(g) - need for research and educational facilities; (1)(h) - needs of training programs and schools for health professionals Mayo-Jacksonville has active research, medical residency, and fellowship training programs in Jacksonville. Most of the inpatient care associated with the research and educational programs is provided at St. Luke's. A new program at St. Luke's offers new educational opportunities for Mayo- Jacksonville physicians. Subsection 408.035(1)(h) - availability of personnel for project accomplishment (see also Rule 59C-1.044) While the statutory criteria generally, considers whether CON proposals include plans to employ the necessary personnel, the organ transplant rule gives much greater detail. As required by rule, St. Luke's has the staff needed to care for the transplant patients. It offers 24-hour on-site dialysis, and is staffed by renal care and dialysis nurses, nutritionists, respiratory therapists, social workers, psychologists, dialysis laboratory workers and administrators. Physicians include board and UNOS certified transplant surgeons, anesthesiologists, pathologists, psychiatrists, nephrologists, endocrinologists, and immunologists and infectious disease specialists. In addition to the health care professionals needed for operation of a kidney transplant program, St. Luke's has significant experience with the data collection process necessary to evaluate adequately a transplant program. Among the requirements of the Rule are a 24-hour shared call system for organ procurement, and clinical review committees, which already exist. St. Luke's operates a 17-bed intensive care transplant unit capable of prolonged reverse isolation, if required. Equipment is available and in operation for cooling, flushing, and transporting organs, as are an on-site tissue typing laboratory and an in-house blood bank, as the parties stipulated. Subsection 408.035(1)(h) - availability of funds for project accomplishment and Subsection 408.035(1)(i) - immediate and long-term financial feasibility The total project cost is $238,450, which covers filing fees, staff training, and equipment. No renovation or construction costs are anticipated because St. Luke's has adequate capacity to implement the kidney program in existing spaces. Methodist's expert testified that the financial feasibility of the project cannot be determined due to errors on Schedule 2 of the CON application and the lack of reliable utilization projections. As previously determined, the utilization projections are supported by the projected number of area one patients with kidney failure who ultimately have transplant surgeries. Schedule 2 of the CON application lists the capital project commitments of the applicant. St. Luke's listed projects which total $35.9 million taken from a "1998 Capital Budget Request Summary." The total, in excess of $35 million, represents the budget request summary of just over 34 million, minus approximately $4 million that had already been spent, plus a little over $5 million for the two pending CONs and expansion of an intensive care unit (ICU). The ICU expansion cost of $500,000, was understated by $766,000. At the hearing, however, St. Luke's expert testified that he mistakenly listed St. Luke's "wish list," when he used $34 million, which exceeded "approved" projects by $17 to $18 million. That total would have been approximately $16,974,000. The available cash and investments for St. Luke's, approximately $80 million, is sufficient to cover the project costs and other capital projects at either $35 million or $16 million, or $21 million if, as asserted at hearing, the $16 million is understated by $5 million. The proposal is financially feasible in the short-term, even considering the decline in available cash and investments to $65 million at the time of the final hearing. In terms of long-term financial feasibility, the experts considered profits or losses from operations. St. Luke's experienced losses from operations of $4.5 million, $4 million, and $12.9 million in the years 1996, 1997, and 1998, respectively. When investment income is considered, however, St. Luke's had a positive income figure of $5.2 million in 1997 and losses reduced to $.7 million in 1998. St. Luke's explained the losses as temporary due to the initiation of costly new services, the enhancement of information systems, and an increase in charity care. The charges for kidney transplants at St. Luke's are expected to equal $57,200 a case, or $1.7 million in gross revenue for 30 cases at the end of the second year of operations. The expected charges are reasonable when compared to charges, in 1996, of $50,000 at Mayo-Rochester, $42,000 at Shands, $38,000 at Methodist, and a Florida average of $81,000. Kidney transplants continue to receive cost-based reimbursements from Medicare. From the $1.7 million in gross revenue, St. Luke's expert projected an incremental profit of approximately $100,000. In addition, the audited financial statements of the Foundation were submitted with St. Luke's CON, with a statement of the Foundation's willingness to fund the project. With over $1 billion in cash and investments and, for 1997, net income over $31 million, the Foundation is able to assure the short and long- term financial feasibility of the kidney transplant program at St. Luke's. Subsection 408.035(1)(j) - needs of a health maintenance organization (HMO) Although the Mayo organization includes a licensed Florida HMO, the proposal is not intended to serve its needs any more than those of any other potential patients. Mayo- Jacksonville and St. Luke's have contracts to provide services to a number of other HMOs. Subsection 408.035(1)(k) - substantial services to non-resident of the district or adjacent districts Currently, St. Luke's attracts 51% of its patients from Duval County, another 21% from the other counties in District 4, 16% from the rest of Florida, and the remaining 12% from outside of Florida. The patient origin for Mayo-Jacksonville is even more geographically dispersed than that of St. Luke's, with 22% of from outside of Florida. By comparison, nearly 99% of Methodist's patients come from North Florida. St. Luke's patient origin data indicates the reasonableness of its expectation that 15% of kidney transplant patients will come from outside Florida. St. Luke's, therefore, meets the criterion for substantial service to non-residents. Subsection 408.035(1)(l) - impact on costs, effects of competition on improvements or innovations in financing and delivering services with quality assurance and cost-effectiveness St. Luke's expects expanded transplant services to reduce its overall fixed cost per transplant. The introduction of a Mayo-affiliated medical program is reasonably expected to introduce beneficial competition to the market which currently has no competition. The fact that competition will come from a nationally-known, very successful program is expected to have a positive impact on existing programs. Subsection 408.035(1)(m) - costs and methods of construction Methodist contends that St. Luke's omission of architectural drawings or floor plans in the CON makes it impossible to consider the statutory criteria related to construction. While St. Luke's failed to include any architectural drawings, it did include descriptions of the existing spaces and in-house services which will support the program. Schedule 1 and 9 of the application show that no costs are associated with construction, expansion, remodeling or demolition. Architectural drawings were not submitted and not required by AHCA for CONs filed by the Cleveland Clinic (kidney transplant), Tampa General (lung transplant), and University Medical Center (heart transplant). In each instance, the facility proposed using existing spaces for the new programs. Based on AHCA's past practices in comparable circumstances, St. Luke's application is not flawed due to the absence of architectural plans. Subsection 408.035(1)(n) - history of and proposed services to Medicaid and medically indigent patients St. Luke's has historically provided limited Medicaid and charity care. See Findings of Fact 39 and 40. St. Luke's proposal to perform 3% Medicaid and 3% charity kidney transplants in the second year of operation is the equivalent of one Medicaid and one charity case. That commitment, however, exceeds the Florida average and the commitment AHCA required of Bert Fish program. The commitment made by St. Luke's is adequate for kidney transplant services. Subsection 408.035(1)(o) - past and proposed continuum of care in multi-level system St. Luke's affiliation with Mayo physicians' practices and the Mayo-Jacksonville clinic allow it to incorporate kidney transplant services into a multi-level system which includes home health and outpatient care. Subsection 408.035(2)(a) - capital expenditures proposals (a) less costly alternatives; (b) utilization of similar services; (c) alternatives to new construction; and (d) serious access problems Subsection 408.032(2), Florida Statutes, defines capital expenditures as follows: "Capital expenditure" means an expenditure including an expenditure for a construction project undertaken by a health care facility as its own contractor, which, under generally accepted accounting principles, is not properly chargeable as an expense of operation and maintenance, which is made to change the bed capacity of the facility, or substantially change the services or service area of the health care facility, health service provider, or hospice, and which includes the cost of the studies, surveys, designs, plans, working drawings, specifications, initial financing costs, and other activities essential to acquisition, improvement, expansion, or replacement of the plant and equipment. In this project, St. Luke's proposes to incur the cost for kidney transplant equipment to establish the new service. The least costly alternative is enhanced Mayo participation in the program at Methodist. Methodist is, however, sufficiently utilized, well in excess of the rule minimum. No new construction is required at St. Luke's to implement the kidney transplant service. Patients will not, however, experience serious problems with access to kidney transplant services if St. Luke's is not approved. There are no physical constraints on the expansion of services at Shands or Methodist. In the absence of physical constraints at existing providers, but in consideration of their volumes which are well in excess of that required, the introduction of competition of the Mayo quality at such low cost is, on balance, desirable for the health care system.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED That a final order be entered issuing CON 9078 to establish a new adult kidney transplant program at St. Luke's Hospital in Jacksonville. DONE AND ENTERED this 17th day of February, 2000, in Tallahassee, Leon County, Florida. ELEANOR M. HUNTER Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 17th day of February, 2000. COPIES FURNISHED: Sam Power, Agency Clerk Agency for Health Care Administration Fort Knox Building 3, Suite 3431 2727 Mahan Drive Tallahassee, Florida 32308 Julie Gallagher, General Counsel Agency for Health Care Administration Fort Knox Building 3, Suite 3431 2727 Mahan Drive Tallahassee, Florida 32308 Richard A. Patterson, Esquire Agency for Health Care Administration Fort Knox Building 3 2727 Mahan Drive, Suite 3431 Tallahassee, Florida 32308 F. Philip Blank, Esquire R. Terry Rigsby, Esquire Geoffrey D. Smith, Esquire Blank, Rigsby & Meenan, P.A. 204 South Monroe Street Tallahassee, Florida 32301 Michael J. Cherniga, Esquire Seann M. Frazier, Esquire Greenberg Traurig, P.A. Post Office Drawer 1838 Tallahassee, Florida 32302
Findings Of Fact In June 1983 Delray filed an application with HRS for a CON for a cardiac catheterization laboratory and open heart surgery service for its hospital in Delray, Palm Beach County, Florida. During the same batching cycle, JFK/HI filed an application for a CON to establish a cardiac catheterization laboratory on the campus of John F. Kennedy Memorial Hospital in Atlantis, Palm Beach County, Florida. The Delray application was reviewed as one application by HRS. In November 1983, and during a subsequent batching cycle, JFK filed an application for a CON to establish an open heart surgery program. Delray Community Hospital is located in the Medical Center at Delray, the geographic center of the southern half of Palm Beach County. The Medical Center already does or will include a 160-bed acute care hospital (with a 51-bed addition in progress) a 120-bed skilled nursing facility, a 72-bed psychiatric hospital, a 60-bed rehabilitation hospital, an adult congregate living facility, medical office buildings and a shopping mall. Delray intends to perform coronary angioplasty in its cardiac catheterization laboratory. Delray is accredited by the Joint Commission on Accreditation of Hospitals. JFK is a 333-bed acute care hospital located in Atlantis, Florida, adjacent to Lake Worth, Florida, in central Palm Beach County. It is accredited by the Joint Commission on Accreditation of Hospitals. The hospital presently offers a full range of acute care services, including blood banking and renal dialysis. HRS has recently approved the establishment of a cancer center, outpatient surgery center, and psychiatric unit at JFK. PBGMC is an acute care hospital located in Palm Beach Gardens, the northern portion of Palm Beach County. The hospital offers cardiac catheterization and open heart surgery services. The great majority of PBGMC's cardiac patients reside in Martin County, northern Palm Beach County, Ft. Pierce, and Okeechobee. Approximately 80 percent of JFK's patients reside in the communities of Lake Worth, West Palm Beach, and Lantana, all of which are in central Palm Beach County. Delray's primary service area is located in the southern part of Palm Beach County and includes the City of De1ray, unincorporated Delray, sections of western Boynton Beach, and some sections of western Boca Raton. Approximately 75 percent of Delray's patients are drawn from its primary service area. Delray's service area is also described as that area of Palm Beach County between Hypoluxo Road and the Broward County line. JFK is north of Hypoluxo Road. Accordingly, the Delray primary service area does not overlap with the JFK Primary service area. North Ridge is an acute care hospital located in Ft. Lauderdale, Broward County, Florida. The hospital offers cardiac catheterization and open heart surgery services. The general service area of the hospital is primarily north Broward County. The facility also draws patients from southern Palm Beach County. North Ridge is located in HRS District Ten. Delray, JFK, and PBGMC, however, are located in HRS District Nine. District Nine is comprised of the following counties: Palm Beach, Martin, Okeechobee, St. Lucie, and Indian River. The service area for cardiac catheterization services and for open heart surgery services consists of the entire service district. At the present time, the only cardiac catheterization laboratory and open heart surgery service in HRS District Nine are located at PBGMC. In 1986, the Florida Bureau of Economic and Business Research projects that just over one million people will live in District Nine. Approximately 70 percent of the population of District Nine lives in Palm Beach County, and 30 percent lives in the four remaining counties to the north. Ninety percent of the population living within HRS District Nine live within 2 hours travel time, under average travel conditions, of Delray and JFK. Section 10-5.11(15)(1), Florida Administrative Code, provides a formula for computing the number of cardiac catheterization laboratories needed in a District. A two-year planning horizon is used in determining need. In HRS District Nine, a 1981 statewide use rate is employed in the formula since there were no existing cardiac catheterization laboratories in the District in 1981. According to the need formula, there is a 1986 need for five cardiac catheterization laboratories in District Nine. Subtracting the one existing laboratory leaves a net need of four cardiac catheterization laboratories in the District. The need formula for determining the number of open heart surgery programs in the District is found in Section 10-5.11(16)(h), Florida Administrative Code. A two-year planning horizon is used in computing the need for this service. In HRS District Nine, a 1981 statewide use rate is utilized in the formula because there were no open heart surgery programs in the District in 1981. According to this formula, there is a need in HRS District Nine for three open heart surgery programs, or a net need for two programs in the District. Section 10-5.11(15)(o), Florida Administrative Code, provides that no additional cardiac catheterization laboratories shall be established in a service area unless the average number of procedures performed by existing laboratories is greater than six hundred. The PBGMC laboratory was established in 1982 and has yet to perform six hundred procedures on an annualized basis. Each expert health planner agreed that the applications at issue should be granted, notwithstanding PBGMC's inability to meet the six hundred procedure standard at this time, in that: the projected need for cardiac catheterization services in District Nine is overwhelming; there has been significant growth in the number of procedures performed at PBGMC; based upon such growth, and PBGMC's own projections, it is likely that PBGMC will perform six hundred procedures in 1984; PBGMC's laboratory) is still in a "start-up" phase; and PBGMC expects minimal impact from the approval of these applications. Section 10-5.11(16)(k), Florida Administrative Code, provides that no additional open heart surgery programs shall be established within a service area unless each existing open heart surgery program within the area is operating at and is expected to continue to operate at a minimum of 350 surgery cases per year. The PBGMC open heart surgery program was established in November, 1983, and has yet to perform 350 cases on an annual basis. The expert health planners agree that pending applications should be granted, nonetheless, in that; the projected need for open heart surgery services in District Nine is overwhelming; the PBGMC program just began operation; PBGMC projects that it will reach the 350 procedures a year standard in its own application for open heart surgery services; and the PBGMC program has experienced tremendous growth in utilization during its first several months of operation. Historically, Palm Beach County residents needing cardiac catheterization and open heart surgery services have been referred to Broward County and Dade County hospitals. This referral pattern is not in the best interest of the patients, patients' families, or treating physicians. There is potential for danger, even death, to the patient in transport, the patient does not receive continuity in care from his/her primary physician, and psycho-social problems exist for patients and families. While the cardiac catheterization laboratories and open heart surgery programs in Broward County may he within two hours' travel time of many of the residents of District Nine, it was demonstrated that it is neither reasonable nor economical for patients in District Nine to travel to Broward County for cardiac catheterization or open heart surgery. It is the policy of JFK to admit all patients who demonstrate a need for service, and JFK participates fully in the Medicaid program. This policy will be consistent for cardiac catheterization and open heart surgery services at JFK. Delray is in the process and will obtain a Medicaid contract for indigent patients using cardiac catheterization and open heart surgery services at Delray since Delray believes it has an obligation to provide such regional services to all in need. Based on projected need and the intentions of JFK medical staff cardiologists and internists regarding utilization of the proposed cardiac catheterization laboratory, JFK will perform 300 cardiac catheterization procedures annually within its first three years of operation. Delray's financial projections for the cardiac catheterization laboratory were based on 520 procedures performed during the lab's first year of operation and 650 procedures during the lab's second year of operation. These projections are reasonable in light of the number of procedures needed according to the applicable need methodology and the number of cases presently being referred out of Palm Beach County by physicians using JFK and Delray. The service costs for the proposed JFK laboratory and for the proposed Delray laboratory are comparable to the cost for such services at other facilities in the area. Both Delray and JFK have the financial resources to provide capital for the proposed cardiac catheterization laboratories. There have been significant advances in the technology regarding cardiac catheterizations. Catheterization is no longer simply a diagnostic tool, but can also be used in the emergency treatment of heart attack victims. However, to be effective, the catheterization service must be quickly available in a facility close to the patient. Further, more coronary angioplasty is being performed, a procedure that takes longer and reduces the capacity of cardiac catheterization laboratories. Approval of cardiac catheterization laboratories at Delray and at JFK should positively impact and help reduce mortality rates for cardiovascular diseases in District Nine. Regional, or tertiary care, services should be located in the major metropolitan areas. In District Nine, Palm Beach County is the major population base, accounting for 70 percent of the District's population. It is not reasonable, from a planning perspective to establish an open heart surgery program in an area with a relatively small population base. Open heart surgery is a very sophisticated service, in relation to general acute care services. In order to operate a quality open heart surgery program, a hospital needs access to adequate resources relative to staff and other facility capabilities. Delray already has a number of existing programs and departments in place which can economically be utilized with a catheterization lab and open heart surgery service. Delray has one operating room sized as a primary open heart surgery room and another room sized as a backup operating room for open heart surgery. In addition Delray has departments for nuclear medicine, respiratory therapy, physical therapy, and various types of imaging, which can be utilized in a cardiovascular program. Delray also can take advantage of national purchasing contracts through NME which should result in cost savings to the patients. In that the open heart surgery suite at JFK was constructed pursuant to JFK's recent expansion and renovation of its surgery department, any indirect overhead expense associated with the implementation of the JFK open heart surgery program is insignificant, as such costs are already being absorbed by the facility. Based on projected need and the intentions of JFK medical staff cardiologists and internists regarding utilization of the proposed program, JFK will perform 200 open heart surgery procedures annually within the first three years of operation. Delray has projected that it will perform 195 open heart surgeries during year one and 270 open heart surgery procedures during the second year of operation. These projections are reasonable in light of the number of procedures projected by the applicable need methodology described above and in light of the number of cases referred out of District Nine by physicians on staff at Delray and JFK. JFK did not utilize Medicare DRG rates in preparing its pro forma statement of income and expense in that it sought to determine the feasibility of the utilization of the surgical suite to perform open heart surgery, rather than considering all costs and revenues associated with the patient's hospital stay. Although the hospital will be reimbursed by Medicare on a DRG basis, it is difficult to project accurately on that basis, as JFK's DRG rates have already changed three times in six months. The pro forma contained in JFK's application for a CON to establish open heart surgery services assumed DRG implementation. That pro forma, if projected forward to 1986, the year in which the service will be instituted, still shows the project to be financially feasible. On the other hand, Delray projected its expenses using the DRG rates although it has no contract obligating it to use those rates at the present time. Even so, by considering all directly related expenses, Delray has demonstrated that its cardiac cath lab and open heart surgery service would be financially feasible on an immediate and long-term basis. Delray's projected costs and charges are comparable to or lower than the charges established by other institutions in the service area. Likewise, the charges for open heart surgery at JFK will be comparable to charges established by similar institutions in the service area. Both Delray and JFK have adequate capital resources to establish open heart surgery programs. Neither Delray nor JFK should have any problem recruiting fully qualified cardiovascular surgeons based upon the overwhelming need for the programs, based upon the desirability of working and living in the Palm Beach County area, and based upon the recent experience of PBGMC, which hospital has just recently recruited a cardiovascular surgeon for its program. Neither PBGMC nor North Ridge participate in the Medicaid program. Accordingly, the approval of open heart surgery programs (and cardiac catheterization laboratories) at Delray (which will obtain a Medicaid contract) and at JFK (which already has a Medicaid contract), will result in the availability of cardiac services to indigent and Medicaid patients in District Nine for the first time ever. At the time of the final hearing, the open heart surgery service at PBGMC had been in operation less than six months. However, that service was experiencing rapid growth. The service areas of PBGMC and Delray for cardiac catheterization and open heart surgery do not overlap to any significant extent. Less than 3 percent of the PBGMC cath lab and open heart surgery patients come from the Delray service area. A cath lab and open heart surgery service at Delray will have no impact on the ability of PBGMC to obtain and maintain the minimum number of procedures required by the applicable rules. Although PBGMC, located in northern Palm Beach County, may he impacted by JFK located in central Palm Beach County, the record is clear that most of PBGMC's cardiac patients reside in northern Palm Beach County - Stuart, Ft. Pierce, Okeechobee, and Belle Glade, all of which are located outside of Palm Beach County. Accordingly, PBGMC has become a primary provider of cardiac services to the residents of the four counties in District Nine north of Palm Beach County. Therefore, the approval of open heart surgery programs (in addition to cardiac catheterization laboratories) at Delray and JFK will result in a highly appropriate locating of facilities according to health planning standards: Delray serving the residents of southern Palm Beach County, JFK serving the residents of central Palm Beach County, and PBGMC serving the residents of northern Palm Beach County and the four counties north of Palm Beach County. Moreover, the approval of all applications herein will result for the first time in cardiac services being reasonably and economically accessible to residents of District Nine. Although North Ridge failed to prove any impact it would suffer from approval of the programs sought by JFK, it is likely that North Ridge will experience some loss of patients from south Palm Beach County if Delray opens a high-quality cardiac catheterization laboratory and open heart surgery program. However, it is not likely that Delray will immediately begin to serve 100 percent of the patients in south Palm Beach County requiring those services, and North Ridge can still continue to compete for those patients. Further, the only impact shown by North Ridge from the loss of patients from Palm Beach County is economic. More significantly, any financial losses that might be experienced by North Ridge can be more than offset by reducing some of its current expenses. During its last fiscal year, North Ridge paid over $11 million to related companies, including a $3.7 million management fee which was shown to be exorbitant. More than $4.5 million of the monies paid to related companies was not permitted by Medicare as reimbursable costs. It was also shown that North Ridge is overstaffed and is paying an excessive amount for supplies for its cardiac catheterization laboratory and open heart surgery program.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is, RECOMMENDED that a final order be entered: Dismissing the petitions of North Ridge, PBGMC, and Delray in opposition to the JFK applications in that each of the Petitioners and Intervenors have failed to demonstrate standing to contest the JFK applications; Dismissing the petitions of North Ridge and PBGMC in opposition to the Delray application in that each has failed to demonstrate standing to contest the Delray application; and Granting Certificates of Need to Delray and JFK for cardiac catheterization laboratories and open heart surgery services. DONE and ORDERED this 18th day of December, 1984, in Tallahassee, Florida. LINDA M. RIGOT Hearing Officer Division of Administrative Hearings 2009 Apalachee Parkway Tallahassee, Florida 32301 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 18th day of December, 1984. COPIES FURNISHED: Richard M. Benton, Esquire P. O. Box 1833 Tallahassee, Florida 32302-1833 Robert S. Cohen, Esquire 318 North Monroe Street P. O. Box 669 Tallahassee, Florida 32302 C. Gary Williams, Esquire Michael J. Glazer, Esquire P. O. Box 391 Tallahassee, Florida 32302 Robert Weiss, Esquire Perkins House, Suite 101 118 North Gadsden Street Tallahassee, Florida 32301 John Gilroy 318 North Calhoun Street P. O. Drawer 11300 Tallahassee, Florida 32302-3300 David Pingree Secretary Department of Health and Rehabilitative Services 1323 Winewood Boulevard Tallahassee, Florida 32301
Recommendation Based upon the findings of fact and conclusions of law recited above, it is recommended that the decision of the respondent to deny petitioner's proposal to establish a new ten station dialysis facility in Dade County be AFFIRMED. DONE AND ORDERED in Tallahassee, Leon County, Florida, this 21st day of August, 1978. DIANE D. TREMOR Hearing Officer Division of Administrative Hearings 530 Carlton Building Tallahassee, Florida 32304 (904) 488-9675 COPIES FURNISHED: Bart Pelstring, Administrator Dialysis Associates, Inc. 2125 Biscayne Boulevard Miami, Florida 33137 Eric J. Haugdahl Assistant General Counsel Department of HRS 1323 Winewood Boulevard Suite 406 Tallahassee, Florida 32301 Mr. Art Forehand, Administrator Office of Community Medical Facilities 1323 Winewood Boulevard Tallahassee, Florida 32301 ================================================================= AGENCY FINAL ORDER ================================================================= STATE OF FLORIDA DEPARTMENT OF HEALTH AND REHABILITATIVE SERVICES DIALYSIS ASSOCIATES, INC., Petitioner, vs. CASE NO. 78-779 DEPARTMENT OF HEALTH AND REHABILITATIVE SERVICES, OFFICE OF COMMUNITY MEDICAL FACILITIES, Respondent. /
Recommendation Based upon the findings of fact and conclusions of law recited above, it is recommended that petitioner's applications for certificates of need to institute cardiac catheterization and open heart surgery services be GRANTED. Respectfully submitted and entered this 15th of January, 1979, in Tallahassee, Florida. DIANE D. TREMOR Hearing Officer Division of Administrative Hearings 530 Carlton Building Tallahassee, Florida 32304 (904) 488-9675 COPIES FURNISHED: Kenneth F. Hoffman Rogers, Towers, Bailey, Jones and Gay Post Office Box 1872 Tallahassee, Florida 32302 Robert M. Eisenberg District IV Legal Counsel Post Office Box 2417-F Jacksonville, Florida 32231 Charles Collette Art Forehand, Administrator Assistant General Counsel Office of Community Medical Department of HRS Facilities 1317 Winewood Boulevard Department of HRS Tallahassee, Florida 32301 1323 Winewood Boulevard Tallahassee, Florida 32301
Findings Of Fact Upon consideration of the oral and documentary evidence adduced at the hearing, the following relevant facts are found: On September 14, 1977, respondent received petitioner's (BMA) application for approval of a capital expenditure proposal to establish a new twenty-station chronic renal dialysis facility in Clearwater, Florida. Petitioner is a subsidiary of National Medical Care, Inc., which is the largest provider of chronic dialysis services, operating some sixty facilities nationwide. BMA currently operates two facilities in the Florida Gulf Health Systems Agency (FGHSA) region -- a twenty-five station facility in Tampa and a twenty station facility in St. Petersburg. BMA also operates facilities in Sarasota, Gainesville and Orlando, Florida. The present application proposes to spend $470,000.00 for leasehold improvements and $140,000.00 for equipment for a total capital expenditure of $610,000.00. The proposed facility is designed to provide outpatient hemodialysis treatments to medically stable, ambulatory patients suffering from end state renal disease (ESRD). Such patients suffer negligible kidney functions and require either regular chronic dialysis treatment or transplantation. Those patients who undergo hemodialysis generally have three treatments per week, each treatment lasting from four to six hours. By letter dated December 12, 1977, the respondent's administrator notified petitioner that its capital expenditure proposal was not favorably considered for two reasons, both relating to the need for such services within the applicable service area. The first reason cited by the respondent was the finding by the FGHSA that only five additional stations would be needed in the year 1978. Due to the fact that the FGHSA failed to provide respondent with its recommendation within sixty days, respondent was required, pursuant to F.S. Section 381.494(5)(e), to deem that the proposal was recommended for approval by the FGHSA. The second reason for disapproval listed by the respondent was its own determination that a surplus of eleven stations would exist in the service area of 1978. This figure of eleven was amended at the hearing to four. Subsequent to the time that petitioner's application was considered at the local and state levels, respondent approved the application of Kidneycare of Florida, Inc. for the establishment of a ten station chronic renal dialysis facility in Clearwater, Florida. This action occurred on February 15, 1978, after an administrative hearing was held in which petitioner BMA was an intervenor. That case (Case No. 77-2203) is presently on appeal in the District Court of Appeal, Second District. Apparently, the BMA and the Kidneycare applications were submitted to and considered by the local and state reviewing authorities during the same period of time. The generally accepted formula for arriving at a projected need for additional dialysis stations is not in dispute. The starting point is the actual number of persons who are ESRD patients within the service area. To this number is added the number of patients expected to develop ESRD during the planning period. This sum is then reduced by the number of successful kidney transplants expected to occur and by the number of patients expected to die within the planning period. For planning purposes, veteran administration patients and dialysis machines are not to be included in the projections. In order to arrive at a valid project patient population figure for the planning period, it should be appropriate to add the number of transient patients or winter visitors to the area and subtract the number of patients trained for home dialysis. To arrive at the number of stations (machines) required to serve the project patient population at the end of the planning period, the projected patient pool is divided by the station utilization factor (a ratio of number of patients per station). The number of existing stations in the area is then subtracted from this figure, thus yielding the number of additional stations needed. Thus the ideal formula reads as follows: current patient pool + new patients successful transplants mortality factor home trainees + winter visitors V.A. patients = projected patient pool divided by station utilization factor number of existing non V.A. stations + additional stations needed This formula necessarily employs certain conjectural components and the dispute in this proceeding concerns the derivation and propriety of the statistics used to supply these conjectural components. It appears from the testimony and documentary evidence that the respondent relied exclusively on the data supplied by the FGHSA, with the exception of the station utilization factor. Therefore, it is presumed that the figures utilized by the FGHSA in its analysis were also utilized by respondent. In arriving at the projected patient pool, the petitioner and the HSA were in agreement with the number of new patients and the number of successful transplants. They were not in agreement with the projected morality figure or with the projected number of veterans administration patients. The HSA utilized the actual morality figure (21.8 percent) for the 1975-76 year. The petitioner utilized the figure of 15 percent. The actual morality rate for the 1976-77 year was 14.1 percent. Had the HSA had this more recent statistic available to it at the time, it would have utilized it. A more appropriate method would have been to average the two figures. This would have increased the number of deaths projected by the petitioner and decreased the number projected by the HSA. The evidence with respect to the patient cap at the V.A. hospital was based upon hearsay and thus is not sufficient to refute the HSA's projections in that area. Neither the HSA nor the petitioner took into account the number of transient patients or the number of existing patients who would undergo home dialysis training within the planning period. Each of these factors was deemed too speculative or conjectural for a meaningful computation of projected needs. Testimony was adduced to the effect that the intervenor Kidneycare had received a nine-year grant to establish home dialysis training in the subject service area, and that once this program was underway, it was expected that from 30 to 50 patients would be trained in home dialysis. The utilization factor per station or machine was also in dispute. In making their projections, both the petitioner and the HSA used a factor of 3.2. This result is obtained by assuming that each machine has a capacity for dialyzing two patients per day, and that each patient must be dialyzed three times per week. Assuming a capacity rate of 80 percent, the utilization factor is 3.2 patients per station. Using a capacity rate of 90 percent, the utilization factor is 3.6 patients per station. The respondent utilized the 3.6 factor in projecting future need. This 3.6 utilization standard has consistently been used by respondent in its review of other free-standing chronic renal dialysis facilities, and petitioner has failed to demonstrate that such a standard is unreasonable. The remaining area of the formula in dispute is the number of existing non-V.A. stations in the area to be served. The parties agreed that as of the end of 1977, there were 73 chronic renal dialysis stations in existence or authorized in the four county are covered by the FGHSA. The dispute arose over the actual utilization by Tampa General Hospital of its existing 14 stations. The assistant hospital administrator at Tampa General Hospital testified that it is the future intent of said hospital to reduce the number of stations available for stable chronic patients in order to make room for more unstable chronic and acute patients. This "future intent" is still in the recommendation stage and the testimony regarding this intent was not specific as to the actual number of stations to be withdrawn. The testimony established that a reasonable planning period for chronic renal dialysis equipment is one year. If one considers the one year period to commence at the time that the proposed facility can be operational, the testimony indicates that the one year period would run from the end of 1978 through the end of 1979. In applying the facts discussed above to the acceptable formula, it is found that the patient pool projected by the HSA must be increased by utilizing a lower mortality rate (18 percent in lieu of 21.8 percent) and that the petitioner's projected patient pool must be decreased by utilizing a higher number of deaths and a higher number of V.A. patients. The resulting figures must also be offset by applying a station utilization factor of 3.6 in lieu of 3.2 and by adding to the number of existing stations the ten stations for which the intervenor Kidneycare recently received approval from respondent. Applying these adjustments to the figures projected by the respondent, the projected patient pool for non-V.A. patients for the end of 1978 approximates 294, and the figure for the end of 1979 is somewhere close to 326. A utilization factor of 3.6 patients per station indicates an approximate need for 82 stations by the end of 1978 and 90 stations by the end of 1979.
Recommendation Based upon the findings of fact and conclusions of law recited above, it is recommended that respondent's denial based upon the ground of lack of demonstrated need for additional dialysis stations in the service area be reversed. It is further recommended that, a need having been shown for an additional seven stations in the planning period, petitioner be permitted to submit a revised or amended application within twenty days for approval of a seven station facility. Respondent should then act upon said revised application within fifteen days from receipt of the same. Respectfully submitted and entered this 9th day of May, 1978, in Tallahassee, Florida. DIANE D. TREMOR Hearing Officer Division of Administrative Hearings 530 Carlton Building Tallahassee, Florida 32304 904/488-9675 COPIES FURNISHED: Art Forehand, Administrator Office of Community Medical Facilities 1323 Winewood Boulevard Tallahassee, Florida 32301 Harold W. Mullis, Jr. Trenam, Simmons, Kemker, Scharf, Barkin, Frye and O'Neill Post Office Box 1102 Tampa, Florida 33601 Eric J. Haugdahl Assistant General Counsel 1323 Winewood Boulevard Building 1, Room 406 Tallahassee, Florida 32304 John H. French, Jr. 630 Lewis State Bank Building Tallahassee, Florida 32304
Findings Of Fact The Agency For Health Care Administration ("AHCA") is the state agency authorized to issue, revoke, or deny certificates of need ("CONs") for health care facilities and programs in Florida. AHCA published a numeric need for an additional adult open heart surgery ("OHS") program in AHCA District 1. District 1 is approximately 90 to 95 miles in length, from west to east, and includes Escambia, Santa Rosa, Okaloosa, and Walton Counties. Adjacent to Escambia County, north and further west, is the State of Alabama. Adjacent to Walton County and further east are (from north to south) Holmes, Washington, and Bay Counties, Florida, which are in AHCA District 2. The adult population of the District 1 is distributed so that 49 percent is in Escambia, 17 percent in Santa Rosa, 28 percent in Okaloosa, and 6 percent in Walton County. Fort Walton Beach Medical Center ("FWBMC"), in Fort Walton, Okaloosa County, and Baptist Hospital, Inc. ("Baptist"), in Pensacola, Escambia County, are competing applicants for an adult OHS CON. The parties stipulated to the need for one additional adult OHS program. Existing OHS Providers In AHCA District 1, Sacred Heart Hospital ("Sacred Heart") and West Florida Regional Medical Center ("West Florida") are the only two hospitals currently authorized to operate adult OHS programs, and both are located in Pensacola, Escambia County. There are also OHS programs adjacent to District 1, in District 2 and in Alabama. In 1991-1992, there were 507 OHS at West Florida, and 512 at Sacred Heart. Using the same quarters for the year for 1992-1993, OHS volumes declined to 447 at West Florida, and 408 at Sacred Heart. The following year (1993- 1994), volumes increased to 456 at West Florida, and 541 at Sacred Heart. The most recent data available from the local health council, for comparable quarters in 1994-1995, shows 483 procedures at West Florida and 743 at Sacred Heart, or a total of 1226. Using county-specific use rates and county-specific market shares, the total estimated number of OHS in District 1 facilities will be approximately 1275 in 1996, 1297 in 1997, and gradually rising to 1360 in the year 2000. Absent approval of any additional programs, Sacred Heart is projected to perform 764 procedures in 1996 and 811 in the year 2000, with West Florida Regional projected to perform 512 in 1996 and 550 in the year 2000. Sacred Heart Sacred Heart is a 391-bed not-for-profit hospital in Pensacola. The primary service area for Sacred Heart includes Escambia and Santa Rosa Counties. The secondary service area includes Okaloosa County, and Baldwin and Escambia Counties in Alabama. Sacred Heart is a disproportionate share provider. There has been an OHS program at Sacred Heart for over twenty years. Currently, three of the seven inpatient surgery operating rooms are used for OHS, with a heart- lung machine for each room. Sacred Heart also operates three cardiac catheterization ("cath") lab rooms, two primarily for caths and the third for electrophysiology studies. The designation of a third OHS operating room in March 1995, eliminated the need to schedule cardiac caths and angioplasties for limited, specific slots of time, by assuring the availability of an operating room for OHS back-up for patients who "crash" or need immediate OHS during a cardiac cath lab procedure. In 1993, a review of open heart surgery outcomes at Sacred Heart indicated higher than expected mortality rates. At that time mortality rates at Sacred Heart were statistically substantially above those at West Florida. When mortality rates were higher, the volume of OHS procedures at Sacred Heart was between 408 - 541, in contrast to current volumes in excess of 700 cases. Before 1993, two cardiovascular surgeons were on the Sacred Heart staff. Since the fall of 1993, two additional cardiovascular surgeons, affiliated with the Cardiology Consultants group, have been added to the staff at Sacred Heart, the more recent in the summer of 1994. Cardiology Consultants, a group of fifteen cardiologists, and its affiliate group of two cardiovascular surgeons, Cardiothoracic Surgery Associates of Northwest Florida, are the primary referral sources for 75 to 80 percent of OHS cases at Sacred Heart. The group operates the cardiology program at Sacred Heart. Cardiology Consultant's referrals for OHS are made to its two affiliated cardiovascular surgeons and to the two other cardiovascular surgeons, who are in a separate group. Cardiology Consultants has established an outreach program to smaller community hospitals. Two of the group's cardiologists conduct monthly case management conferences in Fort Walton Beach. They review, with local cardiologists, the treatment and subsequent care of patients previously referred to the group. In addition, cardiologists from the group have regularly scheduled consultation hours at hospitals in Atmore, Brewton, and Baldwin, Alabama. One member of Cardiology Consultants practices full-time in Foley, Alabama, where an 82-bed hospital is located. Although 100 percent utilization is unreasonable and impossible, Sacred Heart estimated that it had the capacity to perform 980 OHS a year and that the district had the capacity to perform 2,450 OHS a year, at a time when Sacred Heart had two cardiovascular surgeons and the district had five. Sacred Heart supports the approval of a new OHS program at Baptist, provided that Sacred Heart manages the entire program for the first two years and that a monitoring process assures adequate volumes to maintain the quality of care at Sacred Heart. West Florida Regional Medical Center West Florida, the only other OHS provider in District 1, is affiliated with the Columbia/HCA Health Care Corporation, as is the applicant, FWBMC. Until two years ago, West Florida served approximately 71 percent of OHS patients residing in Okaloosa and Walton Counties, as compared to 29 percent served at Sacred Heart. Sacred Heart, due to its and Cardiology Consultants' outreach, is gaining a greater share of the market. West Florida, FWBMC, and Gulf Coast Community Hospital, in Panama City, are three of five Columbia/HCA Health Care Corporation hospitals in what is called the Columbia North Gulf Coast Network. The other two are Twin Cities Hospital, with 75 beds in Niceville, and Andalusia Hospital in Andalusia, Alabama. The Gulf Coast Network negotiates managed care contracts and purchasing agreements on behalf of the five Columbia hospitals in the area. In District 1, Columbia also owned a hospital in Destin, which is now closed. Bay Medical Center Bay Medical Center is an independent, tax-exempt special district, authorized by the Florida Legislature in July, 1995, to operate an existing public hospital, and to meet the health care needs of residents of Panama City and the surrounding areas. Panama City is in Bay County, which is in AHCA District 2, immediately adjacent to southern Walton County. The hospital has 353 licensed beds and is located approximately 2 miles from Gulf Coast Community Hospital. Bay Medical has approximately $43 million in long-term debt financed through tax-exempt revenue bonds. Bay Medical provides cardiac cath, open heart surgery and angioplasty, obstetrics, and inpatient psychiatric services. As a full-service regional tertiary hospital, Bay Medical also has renal dialysis, neurosciences, a hyperbaric chamber, and radiation oncology. Approximately 97 percent of all indigent care services rendered in Bay County are provided by Bay Medical. Under a certificate of convenience from Bay County, Bay Medical operates an advanced life support transportation system for intra-hospital transfers. The transportation system received a subsidy of approximately $450,000 in 1994, having not reached sufficient volume to break even. The staff at Bay Medical includes seven cardiologists and four cardiovascular surgeons. For the fiscal year ending September 30, 1995, 329 OHS cases and 2,447 caths (including 469 angioplasties) were performed at Bay Medical. In 1994, two OHS cases at Bay Medical originated in Okaloosa and Walton Counties, one from Point Washington and one from Crestview. Until the 1995 legislation establishing the special district, Bay Medical Center was limited to doing business in Bay County. Bay Medical is now authorized to establish business entities or satellite clinics in neighboring southern Walton and Okaloosa Counties, including the beach communities located between Panama City and the Destin/Sandestin area. Destin is approximately 45 miles and Fort Walton is approximately 65 miles from Bay Medical. With its existing OHS operating room and an additional one that was scheduled to be equipped for OHS in November 1995, Bay Medical has the capacity to double the 329 OHS cases and to accommodate an additional 300 angioplasties. Alabama Hospitals Three OHS programs exist in Mobile, Alabama, within 45 miles of Pensacola, but few referrals are made from District 1 to the Mobile hospitals. When out-migration to Alabama occurs, the relatively few cases go either to a large university teaching hospital or to a veterans administration hospital, both in Birmingham. Con Applicants Baptist Hospital Baptist is licensed to operate 601 beds, and 541 of those beds are located in Baptist Hospital ("Baptist"), Pensacola. The other 60 beds are located at Gulf Breeze Hospital, approximately 10 miles southeast of Pensacola in Santa Rosa County. The licenses for the two facilities were combined into a single license in April 1995. Baptist Hospital is a major acute care hospital and tertiary referral center, with an active oncology program providing infusion services, chemotherapy, and radiation therapy, and a wide range of psychiatric and substance abuse services. It is accredited by the Joint Commission for Accreditation of Health Care Organizations (JCAHO). Baptist is a state-designated trauma center. Emergency ambulance transportation and life flight, covering northwest Florida and southwest Alabama, are provided by Baptist, consistent with its extensive outreach to physicians, clinics, and to a 55-bed Baptist Health Care hospital located in the town of Jay in Santa Rosa County. Baptist is a disproportionate share provider under the state Medicaid and the federal Medicare programs. In District 1, Baptist provided care to the largest number of patients with AIDS for 1993 and 1994. Baptist offered to condition its CON-approval on providing 1.8 percent of total OHS to Medicaid patients and .9 percent to charity. Baptist has a sophisticated cardiology program, providing a wide range of non-invasive, as well as diagnostic and therapeutic services, including inpatient and outpatient cardiac caths, echocardiography, and electrophysiology. Baptist was the first hospital in District 1 to offer electrophysiology, beginning in 1983. Baptist also offered angioplasty services before they were regulated. The general term "angioplasty" includes traditional coronary balloon angioplasty, arthrectomies, and stents. In traditional balloon or percutaneous transluminal coronary angioplasty ("PTCA"), an obstruction in an artery is opened by inflating a balloon-type device at the end of the catheter. As a grandfathered provider, Baptist continues to provide emergency angioplasties, which are typically performed on patients presenting to an emergency room with evidence of acute myocardial infarction (heart attack). Approximately 70 emergency angioplasties were performed at Baptist in 1995. In the year ending in June 1995, there were approximately 990 diagnostic cardiac caths at Baptist. One fourth to one third of all cardiac caths result in a finding that a follow- up interventional procedure is needed. Cardiology Consultants also operate the cardiology program at Baptist, as a part of the Sacred Heart program. The unified Baptist/Sacred Heart cardiology department has a common medical staff, a single section chief, joint peer review, and shared on-call teams. Baptist/Sacred Heart cardiologists also staff Baptist's Jay affiliate and four smaller hospitals in Alabama. Services available through the outreach program include computerized EKG interpretation, multi-monitor scanning, and mobile cardiovascular ultrasound services. Baptist and Sacred Heart have licenses for cardiovascular information systems software, with common data elements, and report formats. If approved, Baptist would implement OHS services with quality assurance, case management, and other protocols used at Sacred Heart. The two hospitals' surgical team members will cross-train and eventually have the ability to operate at either facility with any of the cardiovascular surgeons on staff. Baptist has approval from an affiliate of Sacred Heart, the Daughters of Charity National Health System, to access its national cardiac database. Cardiology Consultants would recruit an additional cardiovascular surgeon for the Baptist OHS program. Baptist proposes to renovate approximately 5700 square feet and to use two existing operating rooms in the surgical suite in the Pensacola hospital for OHS. Between the two operating rooms, an area which currently is a cystoscopy room would be used for perfusion services. Baptist proposes to add two beds to the 8-bed coronary ICU unit located on the first floor, adjacent to the operating rooms. A progressive care unit on the fourth floor will also serve OHS patients. Baptist's proposal was criticized as a response to an institutional desire to complete the range of cardiac services available at Baptist, not a response to a community need for the service. Baptist was also criticized for its potential adverse impact on the OHS program at Sacred Heart, although Sacred Heart supports Baptist's proposal. Baptist's proposal relies on Sacred Heart for management services and Cardiology Consultants for volume monitoring. The only document stating the proposed terms of an agreement with Sacred Heart is a letter of May 1, 1995, from Sacred Heart's President and CEO. The letter requested written confirmation of the ground rules by Baptist, which has not been done. The State Agency Action Report, which gives the reasons for AHCA's preliminary approval of the Baptist application, includes a reviewer's statement that "Concern is raised regarding control and responsibility for the proposed open heart surgery program between the parties of the 'cooperative arrangement'. At the final hearing, AHCA's expert testified that she was not concerned about the details of the proposed agreement because it cannot affect the OHS program negatively. Fort Walton Beach Medical Center FWBMC is a 247-bed hospital, with 170 medical/surgical beds, averaging 52 percent occupancy, or approximately 128 patients. A 20-bed comprehensive medical rehabilitation unit and an 18-bed skilled nursing unit are CON-approved and under construction at FWBMC. Comprehensive rehabilitation services were scheduled to begin in February, 1996, and skilled nursing in the Spring of 1996. FWBMC has received, with its accreditation, letters of commendation from the JCAHO. FWBMC is located 45 miles from the Gulf of Mexico in the center (from east to west) of Okaloosa County. The primary service area for FWBMC is Okaloosa County and the southern fringes of Santa Rosa and Walton Counties. The communities of Fort Walton Beach, including Eglin Air Force Base, Niceville, and Valparaiso, Santa Rosa Beach, Sandestin, Destin, Navarre Beach, Crestview, and DeFuniak Springs are in the service area. FWBMC does not include Bay County, which is southeast of Walton, in its service area. Okaloosa County has a population of 157,000, which is growing, in part, by attracting retirees, including retired military personnel. Eglin Air Force Base is located on 724 square miles of federally owned land in the County. The Base hospital, located approximately 8 miles northeast of FWBMC, is a regional facility for approximately 20,000 active and 30,000 retired military personnel. Eglin Hospital operates 80 of its 155 beds and is a basic medical/surgical hospital, with small psychiatric and obstetrics units. Eglin provides significant outpatient clinic care. Eglin Hospital does not have OHS or cardiac cath. When a service is not available at Eglin Hospital, the patient receives a non-availability statement authorizing the patient to receive that specific service at another hospital. Eglin patients are most often referred to FWBMC for neurosurgery, psychiatric care, intensive care, coronary care and cardiac caths, and, when Eglin's capacity is exceeded, for obstetrical care. OHS cases from Eglin are referred to the two Pensacola providers. In addition to FWBMC and Twin Cities, other hospitals in Okaloosa County are North Okaloosa Medical Center, with 115 beds, and Harbor Oaks, a psychiatric adolescent hospital. In Walton County, there is one hospital, Walton Regional in DeFuniak Springs. Currently, at FWBMC, non-interventional diagnostic procedures include nuclear stress testing, and echocardiography, which is a type of ultrasound. Although transesophageal echocardiography, in which the patient swallows a probe that touches the back of the heart, gives far better resolution and a clearer picture of the heart, FWBMC has been unable to justify the maintenance of the probe due to low volumes of the procedure. Five cardiologists are on staff at FWBMC. Two of them also work at North Okaloosa Medical Center, four of the five also see patients at Twin Cities Hospital in Niceville. The cardiologists performed approximately 700 cardiac cath lab procedures in 1995. Rule 59C-1.032(6)(a), Florida Administrative Code, requires cardiac cath labs to have written protocols for the transfer of patients by emergency vehicle to a hospital with OHS within 30 minutes average travel time. Emergency heart attack patients benefit most from having angioplasties within two hours of the onset of symptoms. In reality, however, the experience at FWBMC is that preparing the patient for transfer, waiting for the helicopter or ambulance, exchanging information between transferring hospital staff and transport personnel, and between transport personnel and receiving hospital staff, and actual travel time can take up to two and a half hours. The only interventional cardiologist in Okaloosa County performed 28 PTCAs at West Florida in Pensacola, in 1994. American College of Cardiology and American Heart Association ("ACC/AHA") guidelines set an annual minimum of 75 therapeutic cath procedures for interventional cardiologists. The application and the testimony were in conflict on the issue of whether one or two cardiovascular surgeons would perform OHS at FWBMC when the program opens. Initially, case volumes would support only one cardiovascular surgeon, but at least two are needed to provide 24 hour coverage. Although Fort Walton's administrator testified that there would be two cardiovascular surgeons at some point, the application describes the need to recruit a surgical team consisting of one surgeon. FWBMC plans to construct an operating room, dedicated to OHS, to renovate an adjacent operating room for OHS, and a middle room as a pump room, and to purchase the equipment necessary for the OHS program. The program protocols will be developed using the experiences of other Columbia affiliates, including West Florida, Miami Heart Institute, and Bayonet Point Hospital in Hudson, Florida. The staff at FWBMC has the ability to apply an intra-aortic balloon pump assist. FWBMC also has an established thrombolytic protocol, and a team to evaluate the outcomes of patients with cardiovascular disease. Approximately 10 nurses at FWBMC have a minimum of three years experience with OHS critical care. Within the past two years, four nurses have been hired by FWBMC directly from OHS programs. The majority of ICU and CCU nurses are certified in cardiac life support. As a Columbia facility, FWBMC also has on-line access to other Columbia affiliates information systems, including other hospitals' policies, protocols, and volumes, and would utilize Columbia's resources for training and refresher courses for staff. FWBMC is committed to providing three percent of OHS services for Medicaid and two percent for indigent patients. FWBMC also commits, as a condition for CON approval, to having charges set at 85 percent of the maximum allowable rate increase (MARI) adjusted average for existing providers' OHS charge. FWBMC's proposal was criticized as being unable to attract the volumes projected, the cardiovascular surgeons needed for 24 hour coverage, or to provide OHS at the cost proposed. FWBMC was also criticized for the potential adverse impact on the OHS programs at Bay Medical Center and West Florida. Statutory Review Criteria Section 408.035(1)(a)-need for the service in relation to local and state health plan The parties agree that the 1994 District One Health Plan Certificate of Need Allocation Factors to apply the review of their CON applications. The District 1 health plan gives a preference to a CON applicant that best demonstrates cost efficiency, lower project costs, and lower patient charges. Baptist's total project costs are $1.58 million, FWBMC's are $2.2 million. Baptist's project is confined to the renovation of 5,700 square feet of existing space, as compared to FWBMC's combined renovation of 1,100 square feet and new construction of 1,600 square feet. FWBMC commits, as a condition for the award of its CON, to set OHS charges at not more than 85 percent of the MARI, adjusted district average. In the application, FWBMC further explains that its proposed fixed rate structure will not exceed 85 percent of the adjusted district average for existing district providers' DRG charges, using a six percent annual inflation rate. Using 1994 data for the World Health Organization's classification of Major Diagnostic Category-5 ("MDC-5"), a grouping of cardiovascular diseases, excluding OHS, Baptist demonstrated that charges per discharge were highest at FWBMC, followed in order by Baptist, West Florida, and Sacred Heart. Outside the district, Bay Medical's cardiology rates were approximately 16 percent lower than those at FWBMC. Baptist's expert concluded, therefore, that FWBMC's second pro forma year open heart revenue per case would be $75,314 per case, not $47,534 as projected in the CON application. By comparison the same methodology shows MDC-5 revenues per admission at West Florida and Baptist varying by only two percent. Baptist's second pro forma year revenue per case, using the same methodology, is $60,268, as compared to its CON projection of $61,441. Revenues per case for two different categories of inpatient cardiac caths, for the 12 months ending December 31, 1994, were $13,721 at FWBMC and $10,901 at Baptist in one category, and $11,219 at FWBMC and $9,186 at Baptist in the other. Baptist also contends that charge master items, including procedures, ancillaries, and tests which are common to other MDC-5 categories cannot realistically be billed at a different rate when related to OHS. FWBMC asserts that its commitment to lower charges can be accomplished by adjusting the charge master for "big ticket" items included in OHS cases, such as the use of the OHS operating rooms or the daily charge for cardiovascular intensive care beds. Baptist's assertion that FWBMC cannot set charges to meet the commitment is rejected in view of a similar commitment having been offered by Baptist in a prior application, and the apparent implementation of a similar pricing formula at another Columbia facility, Tallahassee Community Hospital ("TCH"). Beyond stating that "big ticket" item pricing could be used, FWBMC, however, failed to explain any details for implementing charges in this case, in view of its higher MDC-5 charges, and its existing requests for amendments to the MARI. There was no evidence that the charge structure is comparable to that which existed at TCH, although a former TCH administrator now works at FWBMC. Assuming arguendo that FWBMC can discount OHS charges by 15 percent, FWBMC concedes that lower patient charges will benefit directly only the payor groups which have reimbursement formulas related to actual charges. The direct benefit affects not more than 38 percent of the patients who are in a payor category which is declining with the rise in managed care. Indirectly, FWBMC noted, charges can be a starting point for negotiating managed care rates. FWBMC's lack of specificity on how it would set charges despite its higher MDC-5 charges, its limited benefit to patients due to shifts in payor mix, and the fact that an affiliate hospital is setting charges used to calculate the district average diminish the importance of the FWBMC pricing proposal as a community benefit in an OHS program. In addition, AHCA's expert noted, 1992 data indicated "that District 1 had on the whole lower average charges for OHS than the state." In general, the Baptist application better meets the first preference of the local health plan. Based on Baptist's failure to address local health plan preference 2 in its CON application, and FWBMC's statement that the preference, related to the conversion of beds, is inapplicable, the preference is deemed inapplicable or not at issue. Preference three for CON applications to convert existing capacity to expand existing or new services over CON applications seeking new construction, is better met by Baptist. FWBMC will construct an additional 1670 square feet and renovate 1100 square feet, and Baptist will renovate 5700 square feet of existing space. Preference four, favoring joint ventures and shared services that mutually increase existing resource efficiency over unilateral CON applications, is of limited value in distinguishing between the applications of Baptist and FWBMC, because both are unilateral applications. Through the influence of Cardiology Consultants, more shared cardiology services currently exist between Baptist and Sacred Heart, and could continue for at least two years, subject to the terms of an proposed agreement which has not been negotiated or accepted by the Boards of Directors of the hospitals. West Florida and FWBMC also have the potential for cooperation due to their common ownership. Although AHCA's initial reviewer gave Baptist full credit for meeting the preference, AHCA's expert testified at hearing that she would not have given Baptist that credit. Financial access is the concern embodied in preference five, for CON applicants demonstrating a commitment to the provision of services regardless of the ability of patients to pay; preference six, for CON applications specifying the greatest percentage of services to Medicaid and indigent patients; and preference seven, for applicants with the best history of Medicaid and indigent service. The preferences do not necessarily apply solely to assure the availability of OHS to Medicaid and indigent patients, most of whom are children or women below the age of 65, who are less likely to need OHS than older persons. In District 1, for example, an annual average of 2.8 percent of OHS patients are covered by Medicaid. One health planning expert described the preferences as rewarding a provider of charity services with an off-setting potentially profitable service, as demonstrated by the applicants' pro formas, although the trend towards managed care is limiting the ability of hospitals to do such "cost sharing". See, also, Subsection 408.035(1)(n), Florida Statutes. Baptist is a disproportionate share Medicaid provider, FWBMC is not. FWBMC noted that it has served more patients in the self-pay category, which includes most uninsured patients who are ultimately categorized as bad debt or charity. In 1994, self-pay at Baptist was 5.85 percent and 9.98 percent at FWBMC. At FWBMC, Medicaid was approximately 12 percent, and charity care was approximately 1.7 percent of the total in 1994. By contrast, in 1994, Baptist's Medicaid patient days were 17 percent of its total, or 19 percent when Medicaid health maintenance organizations ("HMOs") are included. At the same time, charity care was 3.8 percent of the total at Baptist. Baptist proposes to serve four Medicaid and six self-pay patients of the total number of 175 patients in year one, and four Medicaid and seven self- pay of the 227 patients in year two. FWBMC proposes to serve three percent Medicaid and two percent indigent of its projected total of 203 patients in year one, and of 221 patients in year two. Although the Baptist and FWBMC commitments are comparable in terms of combined total number of Medicaid and indigent patients, Baptist better meets the financial access preferences due to its commitment, combined with its history and status as a disproportionate share Medicaid provider. Local health plan preferences which are inapplicable to or fail to distinguish between the CONs at issue are: 8, for bed expansions; 9, on bed distribution; 10 and 11, on bed occupancy rates; 12, related to subdistrict case loads; 13, for facility occupancy rate projections; 14, for pediatric unit conversion; 15, for ICU/CCU conversions; 16, 17, 18, 19, and 20, related to technology and major equipment applications. Local health plan preference 21, for applicants demonstrating a history and willingness to serve AIDS patients, is met by both Baptist and FWBMC. Baptist served more HIV+/AIDS patients in 1994, having admitted 88 people with illnesses classified in the DRGs related to AIDS, for 808 of its total of 88,423 patient days. At the same time, FWBMC admitted 14 patients in the same DRGs for 185 of its total of 35,648 patient days. Mortality rates for AIDS, as an indicator of the incidence of HIV and AIDS, are considerably lower in Okaloosa than in Escambia County. Baptist meets preference 22, as the District 1 hospital which has provided the greatest percentage of patient days to AIDS patients. The first state health plan preference supports the establishment of OHS programs in larger counties within a district where the percentage of elderly is higher than the statewide average and the total population exceeds 100,000. Although the populations of both Escambia and Okaloosa Counties exceed 100,000, neither exceeds the statewide average percentage of elderly (defined as residents age 65 and older). Escambia County had approximately 275,000 residents, compared to approximately 157,000 in Okaloosa County. The statewide percentage of the population 65 and over was 18.6 percent in 1995, but only 12 percent in Escambia, and 10 percent in Okaloosa. The second state preference is given for new OHS programs clearly demonstrating an ability to perform more than 350 OHS procedures annually within three years of initiating the program. There is a direct relationship between higher volumes of cases and better outcomes in OHS. Using a New York study, the ACC/AHA guidelines for cardiovascular surgeons set a minimum of 100 to 150 OHS cases a year in which the surgeon performs as the primary surgeon, and an institutional minimum of 200 to 300 cases for each OHS program. The institutional minimum set by AHCA for OHS programs in Florida is 350 OHS cases a year. Baptist projects that 175 OHS and 239 PTCAs will be performed at Baptist Hospital in the first year of operation, and 227 OHS and 243 PTCAs in the second year. The actual number of direct Baptist patient transfers (from bed to bed, without an interim discharge) for OHS was 116 in 1993, 129 in 1994, and 88 in the first 9 months of 1995. Because Baptist would be keeping most of the existing transfers and splitting the existing and growing Sacred Heart volume of over 800 cases projected by the year 2000, performed by the same cardiovascular surgeons who have the ability to re-direct up to 75 to 80 percent of that volume, Baptist demonstrated that it has the ability to reach 350 procedures within three years. Most of the OHS performed at FWBMC would, in the absence of a FWBMC OHS program, be performed at West Florida. FWBMC projects that it will reach volumes of 203 OHS and 215 PTCAs in 1997, and 221 OHS and 234 PTCAs in 1998. The projections assume that FWBMC will be able to capture 76 percent of the OHS patients residing in Okaloosa and Walton Counties in year one and 80 percent in year two, which is the historical market share for West Florida. FWBMC would expect to keep most of its current acute transfer (bed-to-bed) patients for OHS or angioplasties, of which there were 167 in 1994, and 200 in the first 8 months of 1995. In addition, FWBMC expects to have an additional five percent in- migration, which appears to be a conservative estimate when compared to the current twelve to fourteen percent in-migration to District 1 for cardiac cath services, and twenty to twenty-five percent in-migration for OHS. The current in-migration is, however, to Pensacola not to Okaloosa County. In less than a year, from 1994 to the first ten months of 1995, Sacred Heart, as a result of its and Cardiology Consultants' out-reach programs, more than doubled its referrals from Fort Walton Beach, shifting referrals away from West Florida. The underlying assumption that FWBMC can attract over 75 percent of the Okaloosa/Walton resident market in year one and 80 percent in year two, based on West Florida's historical market, is rejected as not supported by the evidence. Although both FWBMC and West Florida are Columbia facilities, the new program at FWBMC will have no track record, will admittedly continue to transfer more complex cases, has not yet identified cardiovascular surgeons and, therefore, has no OHS referral relationships with cardiologists and primary care physicians in the district. Baptist estimates that FWBMC reasonably can expect to perform between a third and a half of the OHS from Okaloosa/Walton residents, resulting in 108 to 164 OHS in 1997, 110 to 167 in 1998. FWBMC did not demonstrate that it can reach 350 OHS cases within three years of initiating the program. State health plan preference three for improved access to OHS for persons currently seeking services outside the district is not a significant factor in distinguishing between the applicants, due to the relatively small out-migration experienced in District 1. More out-migration does occur from Walton and Okaloosa than from Escambia and Santa Rosa Counties, which supports FWBMC's claim that its location better enhances accessibility within the district. Preference four, for a hospital which meets the Medicaid disproportionate share criteria, and provides charity care, and otherwise serves patients regardless of their ability to pay, favors the Baptist application. Preferencefive applies to an applicant that can offer the service at the least expense, while maintaining high quality of care standards. The health plan preference further suggests that the physical plant of larger facilities can usually accommodate the required operating and recovery room specifications with lower capital expenditures than smaller facilities, and that the larger hospital generally has the greater pool of specialized personnel. FWBMC presented evidence that other hospitals its size, for example Columbia-affiliate Bayonet Point in Hudson, Florida, operate successful OHS programs. Nevertheless, Baptist is entitled to the preference based on its size, renovation plans, project costs, and existing depth of specialized and tertiary services. Preference six, favors hospitals with protocols for the use of innovative techniques as alternatives to OHS, such as PTCA and streptokinase therapy. Baptist, as a grandfathered provider and by virtue of protocols approved by AHCA does provide PTCA. Both Baptist and FWBMC offer streptokinase and other alternative thrombolytic therapies. FWBMC will be able to expand cardiac cath lab services to include PTCA, if approved for OHS. Beyond PTCA, the application and testimony do not indicate the scope of angioplasty procedures proposed by FWBMC. On balance, Baptist's application better meets the need for an additional adult OHS program in relation to the applicable local and state health plans. Section 408.035(1)(b) - availability, quality of care, efficiency, appropriateness, accessibility, extent of utilization, and adequacy of like and existing health care services in the district; (1)(b) - accessibility to all district residents; (2)(b) - appropriate and efficient use of existing inpatient facilities, and (2)(d) - serious problems in obtaining inpatient care without the proposed service. AHCA has established, by rule, that OHS is a tertiary service not intended to be available necessarily at every qualified hospital. Rule 59C- 1.033(4)(a), Florida Administrative Code, sets the objective of having OHS available to at least 90 percent of the population of each district within a maximum two hour drive under average travel conditions. With the existing providers in District 1, the access standard is met. Because the geographic access standard of the rule is met in District 1, Baptist's expert asserts that geographic access is relatively insignificant in distinguishing between the applications in this case. That position is rejected as inconsistent with the statute. Although transfers are inherent in the concept of tertiary services, enhancing access to decrease transfers and the distance and time required for transfers is a valid basis for distinguishing between competing applicants. AHCA's expert testified that "assuming that everything else is equal, then . . . avoid[ing] more transfers . . . could be important." Using weighted average travel times for residents, based on the 1995 adult (15 and over) population, Okaloosa County residents are 62.35 minutes from the closer of the two existing district OHS providers. That would be reduced to 17.42 minutes if an OHS program is established at FWBMC. Walton County residents' average travel times would decrease from 79.7 minutes to 47.89 minutes with a program at FWBMC. For Santa Rosa residents, the improvement would be approximately one and a half minutes, from 25.85 to 24.43 minutes. If Baptist's application were approved, the travel time for Escambia County residents would improve from 15.8 to 11.17 minutes. Currently, 75 percent of district residents are within an hour of an OHS program. The establishment of a program at FWBMC would improve geographic access by increasing to 98 percent the number of district residents within one hour of an OHS program. The establishment of an OHS program at FWBMC also will assist in alleviating the current mal-distribution of cardiac resources. The program would attract more interventional cardiologists to the eastern areas of district, where there currently is one, and would attract cardiovascular surgeons, where there are none. County OHS use rates varied in 1994, from 1.72 discharges per thousand population in Okaloosa County to 2.12 in Escambia. Angioplasty use rates were 1.84 for Escambia and 1.55 for Okaloosa residents. The difference is attributable to the relative accessibility of OHS in Escambia, the population difference of more people over 65 in Escambia, and the availability of fifteen cardiologists at Baptist and Sacred Heart, as compared to five at FWBMC. There is no evidence of inefficiency or quality of care concerns at the existing providers, after the decline in 1993 mortality rates at Sacred Heart. The extent of utilization of the existing providers and the evidence regarding capacity demonstrates that available OHS capacity exists in District 1, and will continue to exist through the year 2000, based on all of the parties' projections. Due the overlap in medical staff, referral sources, market shares, and physical proximity, the approval of a new program at Baptist is reasonably expected to have the greatest adverse impact on the volume of OHS performed at Sacred Heart. For the year ending in September 1995, approximately 564 cases were referred to Sacred Heart by Cardiology Consultants, 91 by Gulf Coast Cardiology, 44 by Fort Walton Beach Cardiology Group, and another 44 from various other sources. Using Baptist's current 43.8 percent share of the combined Baptist/Sacred Heart MDC-5 market, and the projected total volumes, Baptist would have 339 of the combined 776 OHS in 1997, and 355 of 811 in 2000. The remaining cases would leave Sacred Heart at or below 1993 levels, when its mortality rates were statistically significantly higher than those at West Florida, although there is no evidence that volume was the cause of the 1993 mortality rates. Sacred Heart witnesses testified that they assume that the minimum volume assured for Sacred Heart would be 350 cases, as referenced in the OHS rule, but the Baptist/Sacred Heart agreement has not been negotiated. Any minimum volume agreement is also directly dependent on Cardiology Consultants' ability to retain their share of the OHS market and their ability to allocate cases between the two hospitals. Baptist emphasized that the programs at Baptist and Sacred Heart ultimately will become competitors. The establishment of an OHS program at FWBMC, Baptist asserts, will reduce OHS volume at West Florida below 350, and will redirect OHS patients from Bay Medical Center in Panama City, which has not reached the 350 minimum. The projected volume of OHS at Bay Medical was 332 procedures in 1995. The loss of Bay Medical cases, according to Baptist's expert, will occur because Columbia facilities, including Gulf Coast Community Hospital in Panama City, will refer patients to FWBMC. Baptist's expert relied on 1994-1995 (third quarter) data which demonstrated that more referrals were made to West Florida than to Bay Medical in some areas of District 1 which are closer to Bay Medical. However, the total number of Bay County residents receiving OHS in District 1 was nine, three at Sacred Heart and six at West Florida. Virtually no overlap exists between the service areas of Bay Medical and FWBMC, while substantial staff overlap exists between Bay Medical and Gulf Coast. All eight cardiologists on the staff of Gulf Coast are also on the staff of Bay Medical. It is not reasonable to conclude that the cardiologists will make referrals for OHS to more distant hospitals where they have no staff privileges. FWBMC projects that one quarter of one percent of its discharges will come from Bay County. In 1994, there were 3 OHS cases at Bay Medical from Okaloosa and Walton Counties. Baptist's assertions that referral patterns in Districts 1 and 2 are dictated by the presence of Columbia facilities in various communities, and that Bay Medical would be affected adversely by the establishment of an OHS program at FWBMC are rejected as not supported by the evidence. An OHS program at FWBMC will reduce the volume of OHS cases at West Florida. Using FWBMC's estimates that it will have 203 OHS in 1997 and 221 in 1998, retaining many patients who would have required transfers to Sacred Heart and West Florida, with five percent in-migration, and assuming that the volume ranges from 483 to 550 cases at West Florida, then West Florida can remain marginally above 350 cases. The remaining volume is inadequate to provide the minimum 100 to 150 OHS for each of the four cardiovascular surgeons, to assure a high quality program without reducing the number of surgeons. Section 408.035(1)(c) - applicant's quality of care Both Baptist and FWBMC provide high quality of care in existing programs, as reflected, in part, by their JCAHO accreditations. Baptist's application better documents its ability to establish a high quality OHS program, to the detriment of that at Sacred Heart. FWBMC does not document its ability to establish a quality OHS program, due to its size, relative lack of tertiary programs, lack of some supplementary diagnostic and therapeutic cardiac services, and failure to identify cardiovascular surgeons and interventional cardiologists who will perform OHS and angioplasties at FWBMC. Section 408.035(1)(d) - availability of alternatives to inpatient care There are no alternatives to inpatient angioplasty and OHS care. Section 408.035(1)(e) - economics of joint, cooperative and shared health care resources Baptist would benefit from duplicating the program at Sacred Heart and, presumably, from Sacred Heart's clinical management of the Baptist program for the first two years. The precise nature of Sacred Heart's contribution to the Baptist program is subject to the terms of an agreement which has not been negotiated and, therefore, is impossible to evaluate. FWBMC would also benefit from the experiences of other Columbia affiliates which are OHS providers. Although both applicants address quality of care benefits of cooperation, neither demonstrates any economic benefit. Section 408.035(1)(f) - district need for special equipment or services not accessible in adjoining areas Baptist and FWBMC are proposing to provide equipment and services which are already available in District 1 and the adjoining areas. Section 408.035(1)(g) - need for medical research and educational and training programs; and (1)(h) - use for clinical training and by schools for health professionals Neither Baptist nor FWBMC proposed to meet a need for research, educational, or training programs. Section 408.035(1)(h) - availability of personnel and funds The parties stipulated that each applicant has the ability and means to fund the accomplishment and implementation of their projects. The parties also stipulated that proposed non-physician staffing is available and that staffing levels, salaries, and benefits are reasonable. FWBMC's physician recruitment proposals are unclear and too incomplete to conclude that it can adequately support an OHS and angioplasty program. Section 408.035(1)(i) - immediate and long-term financial feasibility The parties stipulated that each proposal is financially feasible in the immediate and long term if the volume projections are proven. Baptist's volume projections are supported by the evidence that the OHS and angioplasty cases can be shifted from Sacred Heart to Baptist. FWBMC failed to show that it can achieve projected volumes by similarly shifting cases from West Florida due to distance, the absence of overlapping cardiology staff, increased competition from Sacred Heart, and the need to continue to refer complex cases to more established programs. Therefore, FWBMC's proposed OHS program is not found financially feasible in the long term. Section 408.035(1)(j) - special needs of health maintenance organizations (HMOs) Neither Baptist nor FWBMC proposes to meet the special needs of HMOs. Section 408.035(1)(k) - needs of entities which provide substantial services to individuals not residing in the service district Neither applicant asserted at hearing that its proposal is based on the provision of substantial services to non-residents. The parties did demonstrate that over 20 percent of OHS are performed on non-residents, many from surrounding areas in Alabama. Section 408.035(1)(l) - cost-effectiveness, innovative financing, and competition FWBMC proposed an innovative system for charging for OHS services. The explanation of how one affiliate hospital implemented the alternative charging system and how FWBMC would do so was, however, incomplete and inadequate, when compared to evidence of its existing high costs for cardiology services and limited payor group benefit. Section 408.035(1)(m) - construction costs and methods The parties stipulated that the project costs, schedules, and architectural designs are established and reasonable. Section 408.035(1)(o) - multi-level continuum of care The parent corporations of both applicants include clinics, nursing homes, as well as other acute care facilities within their organizations. Section 408.035(2)(a) - less costly, more efficient alternatives studied and found not practicable; and 2(c) alternatives to new construction considered The utilization of OHS and angioplasty programs at existing providers when compared to their available capacity, and the direct correlation between higher volumes and higher quality, indicate that the least costly, most efficient practicable alternative is to rely on existing providers to meet the need for OHS and angioplasty services in District 1. On balance, the statutory criteria for evaluating CON proposals which focus on problems in existing services do not support the need for an additional adult OHS program at either Baptist or FWBMC. Criteria related to geographic access favor FWBMC. Criteria related to quality of care and long term financial feasibility (due to volume projections) favor Baptist. Rule Criteria AHCA has promulgated Rule 59C-1.033, Florida Administrative Code, which imposes additional requirements on OHS programs. By proposing to use the group of cardiovascular surgeons who currently perform OHS at Sacred Heart, Baptist demonstrated the ability to provide the range of OHS procedures required by rule, including valve repair or replacement, congenital heart defect repair, cardiac revascularization, intrathoracic vessel repair or replacement, and cardiac trauma treatment. FWBMC can recruit cardiovascular surgeons who are qualified to perform the required range of operations. As stipulated by the parties, both Baptist and FWBMC demonstrated the ability to implement and apply circulatory assist devices, such as intra-aortic balloon assist and prolonged cardiopulmany partial bypass. Both Baptist and FWBMC have the supporting departments needed for OHS, including existing hematology, nephrology, infectious disease, anesthesiology, radiology, intensive and emergency care, inpatient cardiac cath, and non- invasive cardiographics. Baptist has more historical experience with innovative cardiology services and a greater range of cardiographic services than FWBMC. OHS programs must be available for elective surgeries 8 hours a day for 5 days a week, with the capability for rapid mobilization, within 2 hours, 24 hours a day for 7 days a week. Baptist can meet the service accessibility requirement of the rule, but FWBMC failed to show that it can. FWBMC's inconsistency concerning the composition of its OHS team and initial low volumes result in uncertainty whether it can meet the requirements for hours of operation. The residents of District 1 are well served by the existing OHS programs, which have the capacity to meet projected need through the year 2000. AHCA's expert testified that FWBMC's application essentially states that ". . . we are going to get patients who would otherwise have gone to the two existing programs; . . . There was no documentation or even discussion that patients requiring the service weren't able to get the service now, or were having to leave the district to do so." The same is true of the Baptist proposal. In this case, need arises solely from the numeric need publication, and the pool of patients treated in the cardiology department at Baptist, whose transfer to Sacred heart for OHS can be avoided if a program exists at Baptist. At some level between AHCA's minimum of 350 and Sacred Heart's maximum capacity of 980 OHS cases, an additional OHS program is needed and Baptist is the provider which has better demonstrated its ability to operate an OHS program. The major disadvantage in the approval of the OHS program at Baptist is the risk that approval is premature and, therefore, detrimental to the quality of OHS services at Sacred Heart absent the implementation of the safeguards proposed by Sacred Heart in the following letter: Sacred Heart Hospital Office of the President 5151 N. Ninth Avenue P.O. Box 2700 Pensacola, FL 32513-2700 May 1, 1995 Mr. James F. Vickery President Baptist Health Care Corporation Post Office Box 17500 Pensacola, FL 32522-7500 Dear Jim: Please accept this letter of support from Sacred Heart Hospital for your March 1995 Certificate of Need application to establish an adult open heart surgery services program in District I. Sacred Heart Hospital recognizes that there is a net need for an additional open heart surgery program in District I, and we believe that the most efficient and cost-effective way to develop such a program is using resources currently available at Baptist Hospital. Sacred Heart Hospital is willing to work with Baptist Hospital in the establishment of the ----proposed open heart surgery program, in a relationship which includes, but may not be limited to, the following: the establishment of a cooperative program involving open heart surgery, angio- plasty and cardiac catheterization performed at both facilities; the sharing of cardiology staff including open heart surgery team personnel in a manner which will result in the most efficient use of resources between the two hospitals and which will also assure that each member participates in a minimum volume of surgical cases necessary for the achievement of quality standards; the coordination of other resources, including facilities and equipment, in an effort to avoid duplication to the greatest extent practical and feasible; the provision of initial and on-going training of open heart surgery personnel at both facilities by Sacred Heart Hospital; the provision of on-going oversight by Sacred Heart Hospital of utilization review and quality improvement programs, procedures and protocols for the cooperative cardiology program for a minimum of two years; and the clinical management by Sacred Heart Hospital of the cooperative cardiology program for a minimum of two years. I am attaching a copy of the action taken by the Executive Committee of our Board of Directors at its meeting on April 28, 1995, if you are in need of such a document. In order to have a complete record of this proposal, to include your acceptance and agreement with the above plan, please con- firm in writing that it will be the ground rules with which we will begin and work towards a first-class Cardiology Program sponsored by our two institutions. Should your March 1995 application be approved by the Agency for Health Care Administration, we anticipate a productive working relationship that will benefit the residents of District I. Sincerely, Sister Irene President and CEO Enclosure There is no proof of record that Baptist responded or agreed to Sacred Heart's proposal, although Baptist relies on these conditions to support the approval of its application. See, Baptist's proposed findings of fact 34.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the application of Fort Walton Beach Medical Center, Inc., be denied, and that the application of Baptist Hospital, Inc., be approved on condition that Baptist provide annually 1.8 percent of total open heart surgery patient days to Medicaid patients and .9 percent to charity, and that Baptist, prior to commencing an OHS program, enter into an agreement with Sacred Heart consistent with the terms proposed in the letter of May 1, 1995. DONE AND ENTERED this 8th day of August, 1996, 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 August, 1996. APPENDIX TO RECOMMENDED ORDER, CASE NO. 95-4171 To comply with the requirements of Section 120.59(2), Florida Statutes, the following rulings are made on the parties' proposed findings of fact: Petitioner, Fort Walton Beach's Proposed Findings of Fact. Accepted in Findings of Fact 5. Accepted in Findings of Fact 2. Accepted in Findings of Fact 2 and 4. Accepted in Findings of Fact 4, 26, and 95. Accepted in Findings of Fact 4. Accepted in or subordinate to preliminary statement and Findings of Fact 13. 7-10. Accepted in or subordinate to Findings of Fact 2-5. 11-13. Accepted in or subordinate to Findings of Fact 11, 34, and 68. 14-28. Accepted in or subordinate to Findings of Fact 65 - 76. 29-51. Accepted in or subordinate to Findings of Fact 34 and 66 (with travel time distinguished from transfer times). 52. Rejected in Findings of Fact 73. 53-65. Accepted in or subordinate to Findings of Fact 5, 9- 11, 26, and 93. 66-72. Accepted in Findings of Fact 25-26, 70 and 93. 73-75. Accepted in or subordinate to Findings of Fact 9. Accepted in or subordinate to Findings of Fact 26. Accepted in or subordinate to Findings of Fact 58. Accepted in Findings of Fact 24. Rejected conclusion in first sentence of Findings of Fact 65-66. Accepted in Findings of Fact 25, 70 and 93. 81-83. Accepted in or subordinate to Findings of Fact 26. 84. Accepted in Conclusions of Law 93 and 108-110. 85-88. Accepted in Findings of Fact 93 and Conclusions of Law 108-110. 89. Accepted in Findings of Fact 9, 12 and 13. 90-93. Accepted in or subordinate to Findings of Fact 2, 5, and 65-69. Rejected Conclusions of Law in Findings of Fact 108-110. Rejected first sentence in Conclusions of Law 108 and second sentence in Findings of Fact 64, 87, and 92. 96-97. Accepted in or subordinate to Findings of Fact 29. 98-102. Accepted in part to Findings of Fact 33, 34, 35 and 59. Accepted in or subordinate to Findings of Fact 34 and 37. Rejected in Finding of Fact 25 and 26. Accepted, except first sentence in Preliminary Statement. Rejected in part in Findings of Fact 35, and 88-92. 107-110. Accepted in part in Findings of Fact 57-59. 111-114. Rejected in Findings of Fact 59. 115. Accepted, but see No. 80. 116-118. Accepted in or subordinate to Findings of Fact 57. 119. Accepted in or subordinate to Findings of Fact 62. 120-121. Accepted in or subordinate to Findings of Fact 58. 122. Accepted, except last sentence in Findings of Fact 58. 123-125. Accepted in or subordinate to Findings of Fact 73. 126-128. Accepted in or subordinate to Findings of Fact 72. 129-137. Accepted in or subordinate to Findings of Fact 71. 138-143. Rejected conclusion in Findings of Fact 42-45. 144-154. Accepted in or subordinate to Findings of Fact 49-51 and recommended conditions. 155-174. Accepted in or subordinate to Findings of Fact 12, 13, 26, 28, 58, 71, 93 and 95 and Conclusions of Law 98-104. 175. Rejected as inconsistent with testimony and rules. 176-178. Accepted in or subordinate to Findings of Fact 12, 13, 26, 28, 58, 71, 93 and 95 and Conclusions of Law 98-104. Rejected as inconsistent with testimony and rules. Rejected Conclusions of Law in Findings of Fact 109. Respondent, Baptist Hospital's Proposed Findings of Fact. Accepted in Findings of Fact 2 and 4. Accepted in Findings of Fact 22. Accepted in or subordinate to Findings of Fact 24. Accepted in Findings of Fact 22. Accepted in or subordinate to Findings of Fact 27 and 47. Accepted in Findings of Fact 29, 36, and 47. Accepted in or subordinate to Findings of Fact 5 and 8. Accepted in or subordinate to Findings of Fact 5 and 14. Accepted in or subordinate to Findings of Fact 7. Accepted in Findings of Fact 65. Accepted in or subordinate to Findings of Fact 63. Accepted in Findings of Fact 65. Accepted, except last sentence, in Conclusions of Law 110. Accepted in Preliminary Statement. Accepted in preliminary statement and Findings of Fact 41-45. 16-23. Accepted in or subordinate to Findings of Fact 25. 24-33. Accepted in or subordinate to Findings of Fact 11 and 26. Accepted in Findings of Fact 95. Accepted in or subordinate to preliminary statement and Findings of Fact 71. 36-37. Accepted in or subordinate to Findings of Fact 11 and 26. Accepted in Findings of Fact 95. Accepted in or subordinate to preliminary statement and Findings of Fact 71. Accepted in Findings of Fact 70. Accepted in or subordinate to Findings of Fact 11 and 26. Issue not reached. 43-46. Accepted in or subordinate to Findings of Fact 25. 47. Accepted in Findings of Fact 9. 48-49. Subordinate to Findings of Fact 11, 25, 26, and 95. Accepted in or subordinate to Findings of Fact 58. Accepted in or subordinate to Findings of Fact 92. Accepted in or subordinate to Findings of Fact 49. 53-60. Accepted in or subordinate to Findings of Fact 29-39. 61. Accepted in preliminary statement and Findings of Fact 95. 62-73. Accepted in or subordinate to Findings of Fact 57-59. 74-99. Accepted in or subordinate to Findings of Fact 6 and 7 and/or 10-12 and/or 58-59. 100-104. Issue not reached or deemed irrelevant. 105-106. With "serious" deleted, rejected in or subordinate to Findings of Fact 65-69 107-108. Accepted in part or subordinate to Findings of Fact 65-69. 109-110. Accepted in part or subordinate to Findings of Fact 56, and 65-69. 111-112. Rejected, except "serious", in part in or subordinate to Findings of Fact 65-69. 113-114. Accepted in or subordinate to Findings of Fact 65-69. 115. Accepted in Findings of Fact 60. 116. Accepted in or subordinate to Findings of Fact 65-69. 117. Accepted in Findings of Fact 65. 118-122. Rejected conclusions in part in Findings of Fact 59. 123. Accepted in Findings of Fact 59. 124-126. Accepted in part in Findings of Fact 59. 127. Not at issue. 128-129. Subordinate to Findings of Fact 59. 130. Accepted in Findings of Fact 59. 131-132. Subordinate to Findings of Fact 59. 133. Accepted in Findings of Fact 59. 134-135. Subordinate to Findings of Fact 59. 136-137. Accepted in Findings of Fact 33 and 91. 138. Subordinate to Findings of Fact 59. 139-140. Accepted in or subordinate to Findings of Fact 59. 141. Rejected as not having been demonstrated as solely residents' decision. 142-149. Accepted in or subordinate to Findings of Fact 59. 150. Rejected word "gimmick" in Findings of Fact 42-45. 151-152. Accepted in or subordinate to Findings of Fact 59. Accepted in Findings of Fact 58. Accepted in or subordinate to Findings of Fact 58, 71 and 95. Rejected in or subordinate to Findings of Fact 59 and 73. Accepted in or subordinate to Findings of Fact 59 and 73. Accepted in Findings of Fact 14 and 15. 158-159. Rejected in Findings of Fact 72. 160-161. Accepted in or subordinate to Findings of Fact 79. 162-165. Rejected conclusion in Findings of Fact 79. 166. Rejected in Findings of Fact 9, 12, 70, 93. 167. Accepted. 168. Rejected as not supported by the evidence. 169-180. Accepted in or subordinate to Findings of Fact 24 and 49-51. 181-190. Accepted in or subordinate to Findings of Fact 41-45. 191-192. Accepted in Findings of Fact 70 and 93. (Footnote rejected.) 193. Accepted in Findings of Fact 65. 194-195. Rejected in Findings of Fact 66-68. 196. Accepted in Findings of Fact 65. 197-199. Issue not reached. 200. Accepted in or subordinate to Findings of Fact 13, 71 and 95. 201. Rejected in Findings of Fact 13, 71 and 95. 202. Accepted in or subordinate to Findings of Fact 40-45. 203. Accepted in or subordinate to Findings of Fact 47. 204. Accepted in or subordinate to Findings of Fact 48. 205-206. Accepted in or subordinate to Findings of Fact 49. 207. Subordinate to Findings of Fact 52. 208. Accepted in Findings of Fact 71 and 95. 209. Subordinate to Findings of Fact 52. 210-213. Accepted in general in Findings of Fact 26 as compared to Findings of Fact 37. 214. Accepted in Findings of Fact 53 and 54. 215. Accepted in Findings of Fact 52. 216. Accepted in Findings of Fact 57-59. 217. Accepted in Findings of Fact 60. COPIES FURNISHED: Richard Patterson, Senior Attorney Agency for Health Care Administration 325 John Knox Road, Suite 301 Tallahassee, Florida 32303-4131 Michael J. Cherniga, Esquire David C. Ashburn, Esquire Greenberg, Traurig, Hoffman Lipoff, Rosen and Quentel Post Office Box 1838 Tallahassee, Florida 32302 John Radey, Esquire Jeffrey Frehn, Esquire 101 North Monroe Street, Suite 1000 Post Office Drawer 11307 Tallahassee, Florida 32302 R. S. Power, Agency Clerk Agency for Health Care Administration 2727 Mahan Drive Fort Knox Building 3, Suite 3431 Tallahassee, Florida 32308-5403 Jerome W. Hoffman, General Counsel Agency For Health Care Administration 2727 Mahan Drive Fort Knox Building 3, Suite 3431 Tallahassee, Florida 32308-5403
The Issue Whether there is need for a new Pediatric Heart Transplant and/or Pediatric Heart and Lung Transplant program in Organ Transplant Service Area (OTSA) 3; and, if so, whether Certificate of Need (CON) Application No. 10471 (heart) and/or 10472 (heart and lung), filed by The Nemours Foundation, d/b/a Nemours Children’s Hospital (Nemours or NCH), to establish a Pediatric Heart Transplant and/or Pediatric Heart and Lung Transplant program, satisfy the applicable statutory and rule review criteria for award of a CON.
Findings Of Fact Based upon the demeanor and credibility of the witnesses and other evidence presented at the final hearing and on the entire record of this proceeding, the following Findings of Fact are made: The Parties The Applicant, Nemours Nemours Children’s Hospital is a licensed Class II specialty children’s hospital located in Orange County, Health Planning District 7, Subdistrict 7-2, OTSA 3, which is owned and operated by The Nemours Foundation. Nemours is licensed for 100 beds, including 73 acute care, nine comprehensive medical rehabilitation, two Level II neonatal intensive care unit (NICU), and 16 Level III NICU beds, and is a licensed provider of pediatric inpatient cardiac catheterization and pediatric open-heart surgery. As the primary beneficiary of the Alfred I. duPont Testamentary Trust established in the will of Alfred duPont, the Foundation was incorporated in Florida in 1936. The Foundation set out to provide children and families medical care and services, its mission being “[t]o provide leadership, institutions, and services to restore and improve the health of children through care and programs not readily available, with one high standard of quality and distinction regardless of the recipient’s financial status.” Foundation assets reached $5.5 billion, by the end of 2015. The Foundation has funded $1.5 billion of care to Florida’s pediatric population through subspecialty pediatric services, research, education, and advocacy. Nemours has established a pediatric care presence throughout the State of Florida. Nemours operates over 40 outpatient clinics throughout Florida that offer primary care, specialty care, urgent care, and cardiac care services to pediatric patients in central Florida, Jacksonville, and the panhandle region. Nemours also provides hospital care to pediatric inpatients at Nemours Children’s Hospital in Orlando, as well as through affiliations with Wolfson’s Children’s Hospital in Jacksonville, West Florida Hospital in Pensacola, and numerous hospital partners in central Florida. The resources Nemours offers in the greater Orlando area are especially significant with 17 Primary Care Clinics, five Urgent Care Clinics, 10 Specialty Care Clinics, nine Nemours Hospital partners, and, of course, NCH itself. These clinics are located throughout OTSA 3 where Nemours determined access to pediatric care was lacking, including Orlando, Melbourne, Daytona Beach, Titusville, Kissimmee, Lake Mary, and Sanford, as well as neighboring Lakeland. The clinics are fully staffed with hundreds of Nemours-employed physicians who live in the clinic communities. Through these satellite locations, as well as the Nemours CareConnect telemedicine platform, Nemours is able to bring access to its world-class subspecialists located at NCH to children throughout the State of Florida who otherwise would not have access to such care. Nemours was established to provide state of the art medical care to children through its integrated model. Nemours’ development has been and continues to be driven by its mission and objective to be a top-tier, world-class pediatric healthcare system. NCH is the first completely new “green field” children’s hospital in the United States in over 40 years, allowing Nemours to integrate cutting-edge technology and a patient-centered approach throughout. Nemours has created a unique integrated model of care that addresses the needs of the child across the whole continuum, connecting policy and prevention, to the highest levels of specialized care for the most complex pediatric patients. From its inception, Nemours envisioned the development of a comprehensive cardiothoracic transplant program as proposed by the CON applications at issue in this proceeding. NCH is located in the Lake Nona area, just east of downtown Orlando in a development known as Medical City. Medical City is comprised of a new VA Hospital, the University of Central Florida (UCF) College of Medicine and School of Biomedical Sciences, the University of Florida (UF) Research and Academic Center, the Sanford Burnham Medical Research Institute, and a CON-approved hospital, which is a joint venture between UCF and AHCA, which will serve as UCF’s teaching hospital. Medical City is intended to bring together life scientists and research that uses extraordinarily advanced technology. Co- location in an integrated environment allows providers and innovators of healthcare, “the brightest minds,” so to speak, to interact and to share ideas to advance healthcare and wellness efforts. Agency for Health Care Administration AHCA is the state health-planning agency that is charged with administration of the CON program as set forth in sections 408.031-408.0455, Florida Statutes. Context of the Nemours Applications Pursuant to Florida Administrative Code Rule 59C-1.044, AHCA requires applicants to obtain separate CONs for the establishment of each adult or pediatric organ transplantation program, including: heart, kidney, liver, bone marrow, lung, lung and heart, pancreas and islet cells, and intestine transplantations. “Transplantation” is “the surgical grafting or implanting in its entirety or in part one or more tissues or organs taken from another person.” Fla. Admin. Code R. 59A-3.065. Heart transplantation, lung transplantation, and heart/lung transplantation are all defined by rule 59C-1.002(41) as “tertiary health services,” meaning “a health service which, due to its high level of intensity, complexity, specialized or limited applicability, and cost, should be limited to, and concentrated in, a limited number of hospitals to ensure the quality, availability, and cost effectiveness of such service.” AHCA rules define a “pediatric patient” as “a patient under the age of 15 years.” Fla. Admin. Code R. 59C-1.044(2)(c). AHCA rules divide Florida into four OTSAs, corresponding generally with the northern, western central, eastern central, and southern regions of the state. Fla. Admin. Code R. 59C-1.044(2)(f). The programs at issue in this proceeding will be located in OTSA 3, which is comprised of Brevard, Indian River, Lake, Martin, Okeechobee, Orange, Osceola, Seminole, and Volusia Counties. Currently, there are no providers of PHT in OTSA 3, and there are no approved PHLT programs statewide. The incidence of PHT in Florida, as compared to other types of solid organ transplants, is relatively small. The chart below sets forth the number of pediatric (ages 0-14) heart transplant discharges by year for the four existing Florida PHT programs during Calendar Years (CY) 2013 through 2016, and the 12-month period ending June 2017: HOSPITAL HEART TRANSPLANT CY 2013 CY 2014 CY 2015 CY 2016 12 MONTHS ENDING JUNE 2017 All Children’s Hospital 7 14 9 8 7 UF Health Shands Hospital 6 8 15 15 9 Memorial Regional Hospital 5 5 5 7 4 Jackson Health System 2 2 1 4 1 Total 20 29 30 34 21 The above historic data demonstrates that the incidence of PHT statewide is relatively rare, and does fluctuate from program to program and from year to year. As can be seen, the most recent available 12-month data reflects that only 21 PHTs were performed during that time, for an average program volume of only 5.25 cases. Florida has more existing and approved PHT programs than every other state in the country except California, which has more than double the pediatric population of Florida. And like Florida, two of the California programs are extremely low- volume programs. Additionally, evidence regarding the number of PHLT patients demonstrated just how rare this procedure is. From 2013 to 2016, there was an annual average of only four PHLTs nationally, with only one actual transplant on a Floridian. Nemours’ health planner stated that although Nemours projected in its application that it would perform one heart/lung procedure each year, it is a “very low-volume service,” and Nemours in actuality expects that there will be years with zero volume of PHLT. The CON Applications Nemours filed its applications for heart transplantation, heart/lung transplantation, and lung transplantation in the second Other Beds and Programs Batching Cycle of 2016. Nemours is proposing the development of a comprehensive cardiothoracic transplant program, which will be the only such program in Florida. This will be achieved by combining three types of transplant services (heart, lung, and heart/lung) in one comprehensive cardiothoracic transplant program. Each application was conditioned on the development of all three transplantation programs. Nemours is located in OTSA 3, where there is currently no PHT provider, PLT provider, or PHLT provider. There are, however, three providers of pediatric open-heart surgery and pediatric cardiac catheterization, and a large, growing pediatric population. Unlike any other facility in Florida, the Nemours Cardiac Center (Cardiac Center) is uniquely organized to treat all forms of congenital heart disease. The Cardiac Center employs a “programmatic approach” to offer the most beneficial environment and the finest care available for pediatric patients. The Cardiac Center, physically located at NCH, throughout Florida, is organized as a single Department of Cardiovascular Services to house Cardiac Surgery, Cardiac Anesthesia, Cardiac Intensive Care Unit (ICU), and Cardiology. Cardiac Center physicians throughout Florida are organized as a single entity with the goal of providing the highest quality, patient-centered care to all patients without the usual barriers created by the departmental “silos.” The entire Cardiac Center clinical team, including nurses and physicians, is dedicated solely to the special challenges of congenital heart abnormalities and makes the care of children with heart disease the life’s work of team members. The fully integrated organizational structure permits the team to take shared responsibility for all aspects of the delivery of quality care to these pediatric patients from admission to discharge. The Cardiac Center holds weekly patient consensus conferences, where all providers, including physicians, nurses, and the patients’ caregivers, participate in case reviews of all inpatients and those patients scheduled for surgery or catheterization. The Cardiac Center is “state of the art” with a designated cardiovascular operating room, a designated cardiovascular lab that includes an electrophysiology lab, and a dedicated comprehensive care unit. In addition, The Foundation has furthered the commitment to the Cardiac Center by funding an additional $35 million expansion to the sixth floor of NCH, adding an additional 31 inpatient beds, an additional operating room, and a comprehensive cardiovascular intensive care unit. Dr. Peter D. Wearden joined Nemours in 2015 as the chief of cardiac surgery, chair of the Department of Cardiovascular Services, and director of the Cardiac Center at Nemours. Dr. Wearden will serve as director of the Comprehensive Cardiothoracic Transplant Program at Nemours and will be instrumental in the development and implementation of the program. Dr. Wearden was recruited from the Children's Hospital of Pittsburgh (CHP), where he served as the surgical director of Heart, Lung, and Heart/Lung Transplantation. He was also the director of the Mechanical Cardiopulmonary Support and Artificial Heart Program. CHP rose to a US News and World Report top 10 program during Dr. Wearden’s tenure. CHP is at the forefront of organ transplantation and is where the first pediatric heart/lung transplantation was performed. Dr. Wearden is a trained cardiothoracic surgeon who completed fellowships in both cardiothoracic surgery (University of Pittsburgh) and Pediatric and Congenital Heart Surgery (Hospital for Sick Children, Toronto, Canada). He is certified by the American Board of Thoracic Surgery and holds additional qualifications in Congenital Heart Surgery from that organization. In his tenure as a board-certified pediatric transplant specialist, he has participated in over 200 pediatric cardiothoracic transplantations, of which he was the lead surgeon in over 70. In addition, he has procured over $20 million in National Institutes of Health research funding since 2004 specific to the development of artificial hearts and lungs for children and their implementation as a live-saving bridge to transplantation. Dr. Wearden was a member of the clinical team that presented to the Food and Drug Administration (FDA) panel for approval of the Berlin Heart, the only FDA-approved pediatric heart ventricular assist device (VAD)1/ currently available, and he proctored the first pediatric artificial heart implantation in Japan in 2012. A VAD is referred to as “bridge to transplant” in pediatric patients because the device enables a patient on a waiting list for a donated heart to survive but is a device on which a child could not live out his or her life. Both utilization of VADs and heart transplantation procedures are in the “portfolio of surgical interventions” that can save the life of a child with heart failure. Dr. Wearden is an international leader in the research and development of VADs. Victor Morell, an eminent cardiac surgeon and chief of Pediatric Cardiac Surgery at CHP, testified that Dr. Wearden’s presence in Orlando alone and the work that he will be able to do with VADs and a PHT program will likely save lives. Many of the physicians that comprise the Nemours Cardiac Center transplant team not only have significant transplant experience, but also have experience performing transplants together. These physicians came with Dr. Wearden from CHP, were trained by Dr. Wearden, or otherwise worked with Dr. Wearden at some point in their careers. The physicians recruited to the Nemours transplantation team were trained at or hail from among the most prestigious programs in the country. For example, Dr. Kimberly Baker, a cardiac intensivist, was trained by Dr. Wearden in the CHP ICU. Dr. Constantinos Chrysostomou, Nemours’ director of cardiac intensive care, worked with Dr. Wearden at CHP, and has experience starting the pediatric ICU in Los Angeles at Cedar Sinai Hospital. Dr. Steven Lichtenstein, chief of cardiac anesthesia, held the same position at CHP for 12 years before he was recruited to Nemours. Dr. Karen Bender, a cardiac anesthesiologist, was recruited by Dr. Wearden from the Children’s Hospital of Philadelphia – one of the leading programs in the country. Dr. Michael Bingler, a cardiac interventionalist, was at Mercy Children’s Hospital in Kansas City for eight years. Dr. Adam Lowry of the Nemours cardiac intensive care center previously trained at both Texas Children’s Hospital (the number one program in the country) and Stanford. The 11 physicians that comprise the Cardiac Center’s Cardiothoracic Physician Team have collectively participated in 1,146 cardiothoracic transplantations. These physicians came to Nemours to care for the most acute, critically ill patients, including those requiring PHT. In addition to the physician team, the expertise and skill of the non-physician staff in the catheterization lab, the operating room, and the cardiac ICU are crucial to a successful program. Dr. Dawn Tucker is the administrative director of NCH’s Cardiac Center and heads the nursing staff for NCH’s Cardiac Center, which includes 23 registered nurses with transplant experience. Dr. Tucker holds a doctorate of Nursing Practice and was formerly the director of the Heart Center at Mercy Children’s Hospital in Kansas City, where she oversaw the initiation of a PHT program. The average years of experience for total nursing care in cardiac units across the nation is two years. The average years of experience in the Nemours Cardiac Center is eight years. Medical literature shows the greater the years of nursing staff experience, the lower the mortality and morbidity rates. The nursing staff at Nemours, moreover, has extensive experience in dealing not only with pediatric cardiac patients, but with pediatric heart transplants as well. The Cardiac Center’s cardiothoracic nursing staff has over 220 years of collective cardiothoracic transplant experience. Nemours operates a “simulation center” that allows the Cardiac Center to simulate any type of cardiac procedure on a model patient before performing that procedure on an actual patient. The model patient’s “heart” is produced using a three- dimensional printer that creates a replica of the heart based on MRI’s or other medical digital imaging equipment. These replica hearts are printed on-site, using the only FDA-approved software for such use, and are ready for use in the simulation center within a day after medical imaging. Nemours Cardiac Center currently performs what the Society of Thoracic Surgeons has coined “STAT 5” cardiac procedures. STAT 5 cardiac procedures are the most complex; STAT 1 procedures are the least complex. A PHT is a STAT 4 procedure. Since Dr. Wearden’s arrival at the Nemours Cardiac Center, there have been no patient mortalities. The uncontroverted evidence established that Nemours has assembled a high-quality, experienced, and unquestionably capable team of physicians and advanced practitioners for its cardiothoracic transplantation programs and is capable of performing the services proposed in its applications at a high level. UF Health Shands While not a party to this proceeding,2/ UF Health Shands’ (Shands) presence at the final hearing was pervasive. AHCA called numerous witnesses affiliated with Shands in its case-in-chief. The scope of the testimony presented by Shands- affiliated witnesses was circumscribed by Order dated December 13, 2017 (ruling on NCH’s motion in limine) that: At hearing, the Agency may present evidence that the needs of patients within OTSA 3 are being adequately served by providers located outside of OTSA 3, but may not present evidence regarding adverse impact on providers located outside of OTSA 3. Baycare of Se. Pasco, Inc. v. Ag. for Health Care Admin., Case No. 07-3482CON (Fla. DOAH Oct. 28, 2008; Fla. AHCA Jan. 7, 2009). UF Health Shands Hospital is located in Gainesville, Florida. UF Health Shands Children’s Hospital is an embedded hospital within a larger hospital complex. Shands Children’s Hospital has 200 beds and is held out to the public as a children’s hospital. The children’s hospital has 72 Level II and III NICU beds. Unlike Nemours, Shands offers obstetrical services such that babies are delivered at Shands. It also has a dedicated pediatric intensive care unit (PICU) as well as a dedicated pediatric cardiac intensive care unit. The Shands Children’s Hospital has its own separate emergency room and occupies four floors of the building in which it is located. It is separated from the adult services. Shands Children’s Hospital is nationally recognized by U.S. News & World Report as one of the nation’s best children’s hospitals. The children’s hospital has its own leadership, including Dr. Shelley Collins, an associate professor of pediatrics and the associate chief medical officer. As a comprehensive teaching and research institution, Shands Children’s Hospital has virtually every pediatric subspecialty that exists and is also a pediatric trauma center. The children’s hospital typically has 45 to 50 physician residents and 25 to 30 fellows along with medical students. Over $139 million has been awarded to Shands for research activities. As a teaching hospital, Shands is accustomed to caring for the needs of patients and families that come from other parts of the state or beyond. Jean Osbrach, a social work manager at Shands, testified for AHCA. Ms. Osbrach oversees the transplant social workers that provide services to the families with patients at Shands Children’s Hospital. Ms. Osbrach described how the transplant social workers interact with the families facing transplant from the outset of their connection with Shands. They help the families adjust to the child’s illness and deal with the crisis; they provide concrete services; and these social workers help the families by serving as navigators through the system. These social workers are part of the multidisciplinary team of care, and they stay involved with these families for years. Shands is adept at helping families with the issues associated with getting care away from their home cities. Shands has apartments specifically available in close proximity to the children’s hospital and relationships with organizations that can help families that need some financial support for items such as lodging, transportation, and gas. Ms. Osbrach’s ability to empathize with these families is further enhanced because her own daughter was seriously ill when she was younger. Ms. Osbrach testified that, while she was living in Gainesville, she searched out the best options for her child and decided that it was actually in Orlando. Despite the travel distance, she did not hesitate to make those trips in order to get the care her child needed at that time. The Shands Children’s Hospital is affiliated with the Children’s Hospital Association, the Children’s Miracle Network, the March of Dimes, and the Ronald McDonald House Charities. Shands operates ShandsCair, a comprehensive emergency transport system. ShandsCair operates nine ground ambulances of different sizes, five helicopters, and one fixed-wing jet aircraft. ShandsCair does over 7,000 transports a year, including a range of NICU and other pediatric transports. ShandsCair is one of the few services in the country that owns an EC-155 helicopter, which is the largest helicopter used as an air ambulance. This makes it easier to transport patients that require a lot of equipment, including those on extracorporeal membrane oxygenation (ECMO). Patients on ECMO can be safely transported by ground and by air by ShandsCair. Shandscair serves as a first responder and also provides facility-to- facility transport. It has been a leader in innovation. The congenital heart program at Shands includes two pediatric heart surgeons, as well as pediatric cardiologists Dr. Jay Fricker and Dr. Bill Pietra, both of whom testified for AHCA. Dr. Fricker did much of his early work and training at the Children’s Hospital of Pittsburgh, and came to the University of Florida in 1995. He is a professor and chief of the Division of Cardiology in the Department of Pediatrics at Shands. He is also the Gerold L. Schiebler Eminent Scholar Chair in Pediatric Cardiology at UF. He has been involved in the care of pediatric heart transplant patients his entire career. Dr. Bill Pietra received his medical training in Cincinnati and did his early work at several children’s hospitals in Colorado. He came to the University of Florida and Shands in July 2014 and is now the medical director, UF Health Congenital Heart Center. Shands performed its first pediatric heart transplant in 1986. Shands treats the full range of patients with heart disease and performs heart transplants on patients, from infants through adults, with complex congenital heart disease. Shands provides transplants to pediatric patients with both congenital heart defects and acquired heart disease (cardiomyopathy). Shands will accept the most difficult cases, including those that other institutions will not take. Data presented by AHCA dating back to the beginning of 2014 demonstrate that Shands has successfully transplanted numerous patients that were less than six months old at the time of transplantation. This data also demonstrates that Shands serves all of central and north Florida, as well as patients that choose to come to Shands from other states. PHT patients now survive much longer than in the past, and in many cases, well into adulthood. Because Shands cares for both adult and pediatric patients, it has the ability to continue to care for PHT patients as they transition from childhood to adulthood. Managed care companies are now a significant driver of where patients go for transplantation services. Many managed- care companies identify “centers of excellence” as their preferred providers for services such as PHT. Shands is recognized by the three major managed-care companies that identify transplant programs as a center of excellence for PHT services. AHCA’s Preliminary Decision Following AHCA’s review of Nemours’s applications, as well as consideration of comments made at the public hearing held on January 10, 2017, and written statements in support of and in opposition to the proposals, AHCA determined to preliminarily deny the PHT and PHLT applications, and to approve the PLT application. AHCA’s decision was memorialized in three separate SAARs, all dated February 17, 2017. Marisol Fitch, supervisor of AHCA’s CON and commercial-managed care unit, testified for AHCA. Ms. Fitch testified that AHCA does not publish a numeric need for transplant programs, as it does for other categories of services and facilities. Rather, the onus is on the applicant to demonstrate need for the program based on whatever methodology they choose to present to AHCA. In addition to the applicant’s need methodology, AHCA also looks at availability and accessibility of service in the area to determine whether there is an access problem. Finally, an applicant may attempt to demonstrate that “not normal” circumstances exist in its proposed service area sufficient to justify approval. Statutory Review Criteria Section 408.035(1) establishes the statutory review criteria applicable to CON Applications 10471 and 10472. The parties have stipulated that each CON application satisfies the criteria found in section 408.035(1), (d), (f), and (h), Florida Statutes. The only criteria at issue essentially relate to need and access. However, the Agency maintains that section 408.035(1)(c) is in dispute to the extent that center transplant volume as a result of Nemours’ approval would lead to or correlate with negative patient outcomes. AHCA believes that there is no need for the PHT or PHLT programs that Nemours seeks to develop because the needs of the children in the Nemours service area are being met by other providers in the state, principally Shands and Johns Hopkins All Children’s Hospital. Section 408.035(1)(a) and (b): The need for the health care facilities and health services being proposed; and the availability, quality of care, accessibility, and extent of utilization of existing health care facilities and health services in the district of the applicant. Florida Administrative Code Rule 59C-1.044(6)(b).3/ The criteria for the evaluation of CON applications, including applications for organ transplantation programs, are set forth at section 408.035 and rule 59C-1.044. However, neither the applicable statutes nor rules have a numeric need methodology that predicts future need for PHT or PHLT programs. Thus, it is up to the applicant to demonstrate need in accordance with rule 59C-1.044. There are four OTSAs in Florida, numbered OTSA 1 through OTSA 4. NCH is located in OSTA 3, which includes the following counties: Seminole, Orange, Osceola, Brevard, Indian River, Okeechobee, St. Lucie, Martin, Lake, and Volusia. (See § 408.032(5), Fla. Stat; Fla. Admin. Code R. 59C- 01.044(2)(f)3.) OTSA 3 also generally corresponds with the pediatric cardiac catheterization and open-heart surgery service areas defined by AHCA rule. (See Fla. Admin. Code R. 59C- 1.032(2)(g) and 59C-1.033(2)(h)). Currently, there is no provider of PHT in OTSA 3, but there are three providers of pediatric cardiac catheterization and pediatric open-heart surgery: Orlando Health Arnold Palmer Hospital for Children; Florida Hospital for Children; and Nemours. There are no licensed providers of PHLT anywhere in the State of Florida. There are four existing providers and one approved provider of PHT services in Florida: UF Shands in OTSA 1; Johns Hopkins All Children’s Hospital in OTSA 2; Jackson Memorial Hospital in OSTA 4; and Memorial Regional Hospital, d/b/a Joe DiMaggio’s Hospital in OTSA 4; and a third approved program in OTSA 4, Nicklaus Children’s Hospital, which received final approval from AHCA in August 2017. As noted above, there is no fixed-need pool published for PHT, PHLT, or PLT programs. Alternatively, AHCA follows rule 59C-1.008(2)(e)2., which requires consideration of population demographics and dynamics; availability, utilization and quality of like services in the district, subdistrict, or both; medical treatment trends; and market conditions. To quantify the need for a new PHT program in District 7, OTSA 3, Nemours created and presented a methodology that started with the statewide use rate in its projected first year. Then for the second year, Nemours aggressively increased the use rate to the highest rate in any of the other transplant service areas in the state. Then, in an even more aggressive (and unreasonable) assumption, Nemours projected that it would essentially capture all of the cases in OTSA 3 by the second year of the program. In its application, the assumptions resulted in a projection that Nemours would do four transplants in the first year of operation and eight in the second. These projections fall short of the rule requirement that the applicant project a minimum of 12 transplants per year by the second year of operation. Fla. Admin. Code R. 59C-1.044(6)(b)2. At hearing, Nemours updated (increased) those first and second year projections to 7 and 13 cases, respectively. However, these updated projections included one child, aged 15 to 17, in year one, and two in year two. There are several reasons these projections lack credibility. First, as noted, Nemours assumed a near- 100 percent market share based on the highest use rate in the state by just year two. Second, when Nemours prepared its update, it used the most recent calendar year data. However, this was not the most current data. Calendar Year 2016 reflected 34 cases statewide, but that number had dropped to 21 for the most recent 12-month period available at the time of the hearing. Use of this most recent 12-month data would have significantly decreased the Nemours PHT volume projections. In addition, the projection of 13 cases by year two would place Nemours at a higher PHT case volume than three of the four established programs in the state, and would be at a level that is nearly equivalent to the much more established Shands program. This is not credible, especially considering that Nemours also admitted at hearing that only two OTSA 3 residents received pediatric heart transplants in 2016. The existence of unmet need cannot be based solely on the absence of an existing service in the proposed service area. Fla. Admin. Code R. 59C-1.008(2)(e)3. While Nemours’ own health planner agreed that the absence of a PHT program in OTSA 3 is not itself a basis for finding need, Nemours nevertheless argues that this rule is inapplicable in this proceeding because the title to this subsection of the rule is “Comparative Review” and a portion of this subsection addresses competing applications in the same cycle. As detailed further in the Conclusions of Law section herein, this interpretation is unconvincing and rejected. AHCA interprets this rule provision to apply to those batched applications submitted without the submission of a competing application in the same batching cycle, as with Nemours in this proceeding. Nemours initiated its cardiac catheterization and cardiac surgery program in June/July 2016. In its PHT application, Nemours projected that it would meet or exceed the rule minimum required volumes of 200 cardiac catheterizations and 125 open-heart surgery cases by the end of 2017. Actual volumes achieved by Nemours in CY 2017 were 97 open-heart cases and 196 cardiac catheterizations. The incidence of PHLT is extremely low. During the four calendar years, 2013 through 2016, there were only 16 PHLT transplants performed nationwide. Only one Florida resident received a PHLT during that four-year period, and that was performed in Massachusetts. Also during that four-year period, only three Florida residents were registered for PHLT. There is no evidence in this record as to why two of the three registered Florida residents did not obtain a PHLT. Based on the national use rate for PHLTs from CY 2013 through CY 2016, Nemours projects that it will perform an average of one PHLT per year. Nemours acknowledges that due to the extremely low incidence of PHLTs, there may be some years that no PHLTs are performed at Nemours. Geographic Access There is no evidence of record that families living in central Florida are currently being forced to travel unreasonable distances to obtain PHT services. Indeed, there are five existing or approved programs within the state, with at least two located very reasonably proximate to OTSA 3. According to the analysis of travel distances for PHT patients living in OTSA 3 contained in the Nemours application (Exhibit 15), only some residents located in Brevard and Indian River Counties are not within 120 miles of an existing PHT program. There was agreement that patients that need a PHT are approaching the end-stage of cardiac function, and in the absence of a PHT will very likely die. Accordingly, it is reasonable to infer that the parents of a child living in central Florida and needing a PHT will travel to St. Petersburg or Gainesville for transplant services rather than let their child die because the travel distance is too far. To the contrary, the evidence in this record from witnesses on both sides, as well as common sense, is that families will go as far as necessary to save their child. The notion that there is some pent-up demand for PHT services among central Florida residents (especially when there is no evidence of a single OTSA 3 patient being turned down or unable to access a PHT) is without support in this record. The parents of four pediatric patients testified at the final hearing. Two testified for Nemours. The other two testified for AHCA and were parents of children that received PHTs at Shands. One of the Nemours witnesses was the parent of a child that has not received a transplant. The other received transplant services at Johns Hopkins All Children’s Hospital in St. Petersburg. The parents of the two Shands patients were representative of the two broad categories of PHT patients. One was a patient with a congenital heart defect that lives in Cocoa Beach (Brevard County). The patient likely had the heart defect since birth, but it was not diagnosed until she was six years old. That patient was asymptomatic at the time of diagnosis but deteriorated over a period of years. While she was first seen at Shands, the family had the time and researched other prominent institutions, including Texas Children’s Hospital, Boston Children’s Hospital, Children’s Hospital of Pittsburgh, and the Mayo Clinic in Rochester, Minnesota. They did this because, like all of the parents that testified, they “would have gone to the ends of the earth” to save their child. This family researched the volumes and experience of the programs they considered and looked for what they felt was the best program for their child, and ultimately chose Shands. It was clear that they felt Shands was the right choice. Their daughter received her heart transplant at Shands, is doing well, and is now considering what college to attend. Additionally, this family did not find the two hours and 35 minute travel time from their home in Brevard County to Shands to be an impediment, and actually consider Shands as being relatively close to their home. This testimony supports the obvious truism that obtaining the best possible outcome for a sick child is the paramount goal of any parent. The other parent witness called by AHCA has a daughter that, on Christmas Eve in 2008, went from perfectly healthy to near death and being placed on life support within a 24-hour period. As opposed to a congenital heart defect, this patient had cardiomyopathy. This family lives in Windermere, a suburb of Orlando. She acquired a virus that attacked her heart. She was initially treated at Arnold Palmer Children’s Hospital where she had to be placed on ECMO. From there, she was safely airlifted to Shands while still on ECMO where, upon arrival, the receiving team of physicians informed the family that she was one of the most critically ill children they had ever seen. After an 11-hour open-heart surgery, a Berlin Heart was successfully implanted and kept her alive for four months until an appropriate donor heart became available. This patient also had an excellent outcome and is now a student at the University of Florida. The following exchange summarizes how the child’s mother felt about the inconvenience of having to travel from the Orlando area to Gainesville: Q If a family in Orlando told you, or in your city of residence told you that their child was critically ill and they were worried about having to travel and potentially spend time in Gainesville to get care, what would you tell them? A Well, I would tell them to just take it a day at a time and – when your child is critically ill, convenience never really comes into your mind. What comes into your mind is how do I help my child live. And so you will go anywhere. And it’s just an hour and a half, it just doesn’t matter. When you are talking about saving your child, it means nothing. It literally means nothing. It is clear from the testimony of these two parents that nothing about having a gravely ill child is “convenient.” It creates great stress, but it was also clear that having an experienced provider was more important than just geographic proximity. The mothers of the two Shands patients persuasively spoke of their concerns about further diluting the volumes of the existing programs that could result from approval of a sixth pediatric heart transplant program in Florida, particularly when there are two other programs that are not that far from the Orlando area.4/ While transplantation is not an elective service, it is not done on an emergent basis. As noted, the number of families affected is, quite fortunately, very small. While having a child with these issues is never “convenient,” the travel issues that might exist do not outweigh the weight of the evidence that fails to demonstrate a need for approval of either application. The Orlando area, being centrally located in Florida, is reasonably accessible to all of the existing providers. Most appear to go to Shands, which is simply not a substantial distance away. The credible evidence is that families facing these issues are able to deal with the travel inconvenience. In addition, Nemours presented evidence regarding the various locations at which they provide services, ranging from Pensacola to Port St. Lucie. Clearly, Nemours sees itself as providing some cardiac services to patients in these locations, but it would also suggest that patients seen at these locations may be referred to NCH for transplant services, which would mean that some patients would be bypassing closer facilities. As observed by AHCA, for Nemours to posit that it is appropriate for patients to travel from Pensacola or Jacksonville to Orlando while asserting that it is not acceptable for patients in Orlando to go to Gainesville or St. Petersburg is an illogical inconsistency. Financial Access Nemours asserts that approval of its proposed programs will enhance financial access to care. Nemours currently serves patients without regard to ability to pay and will extend these same policies to transplant recipients. Approximately half of Nemours’ projected PHTs are to be provided to Medicaid recipients, the other half to commercially insured patients.5/ However, there was no competent evidence of record that access to PHT or PHLT services was being denied by any of the existing transplant providers because of a patient’s inability to pay. Transplant Rates at Shands In its need methodology, Nemours utilized the use rate from OTSA 1 where Shands is located because it is the highest use rate in the state. Despite this, Nemours then asserted that Shands is not performing as many PHTs as it could or should. The Nemours CON applications are not predicated on any argument that their proposed programs are needed because of poor quality care at any of the existing pediatric transplant programs in Florida. Indeed, Dr. Wearden stated his belief that Shands provides good quality care in its transplant programs, and he respects the Shands lead surgeon, Dr. Mark Bleiweis. As evidence of his respect for the Shands PHT program, Dr. Wearden has referred several transplant patients to Dr. Bleiweis at Shands. Despite that position, Nemours argued that the Shands program is unduly conservative and cautious in its organ selection and may have some “capacity” issues due to a few cited instances of apparent surgeon unavailability. These assertions, made by Nemours witnesses with no first-hand knowledge of the operations of the Shands program, are not persuasive. With regard to whether the Shands program is unduly “cautious,” “conservative,” or “picky,” Nemours relied on a document produced by Shands in discovery. Nemours also relied on data reported by Shands to the Scientific Registry of Transplant Recipients (SRTR). The data included a list of all of the organs offered to Shands since the beginning of 2015, the sequencing of the offer of that organ to Shands, whether the organ was transplanted at Shands or elsewhere, the primary and secondary reasons the organ was refused (if refused) and other information. The SRTR exhibit demonstrates that a high number of the organs that are offered are not acceptable for transplant on patients waitlisted at Shands. It also shows that organs that are accepted may have to be examined by many different centers before being deemed potentially acceptable. This demonstrates the extensive level of complexity, nuance, and clinical judgment involved in the decision to accept an organ for transplant in a pediatric patient. Indeed, Dr. Wearden agreed that the decision by a program to accept or turn down an organ involves both clinical expertise and judgment, and that there are many reasons an organ might be turned down, which helps explain why the transplanted percentage of total organs offered nationally is on average, so small. Dr. Wearden chose a few examples of organs that were not taken by Shands to express an opinion that Shands may be unduly conservative in its organ selection. However, this assertion was credibly refuted by Dr. Pietra, a transplant cardiologist and the medical director of the UF Health Congenital Heart Center. Dr. Pietra discussed the complexity of these cases and how simply looking at the SRTR data does not provide enough information to reach Dr. Wearden’s conclusion. An organ that might be acceptable for one patient would not be acceptable for another for a host of reasons. Many more organs are rejected by transplant centers than are accepted. Dr. Pietra credibly opined that being conservative and cautious are important traits for a transplant surgeon, particularly for one that wants the accepted organ to work well for the patient long-term. That does not mean that Shands is rejecting organs when it should have taken them, nor does the SRTR data support the proposition that the Nemours program should be approved because its program may have accepted an organ for a particular patient that Shands might have rejected. Nemours also argues that Shands performs PHTs at a rate lower than the region and the country, and that this should mitigate for the approval of another program. This assertion is predicated on waitlist information reported in the SRTR data. Patients that are placed on the waitlist have different status designations, depending on the severity of their condition. That status may change, up or down, over time. Due to the shortage of organs, until a patient reaches status 1A, he or she is unlikely to be offered an organ. The evidence reflected that Shands puts patients on the PHT organ waitlist at a time earlier than the moment they require the transplant surgery under what is called the “pediatric prerogative.” This helps those patients maintain their status on the list but does not result in organs being provided to less severely ill patients to the detriment of those in greater need. Further, the record evidence supports the finding that Shands waitlists patients because the clinical determination has been made that the child will ultimately require a transplant. This was corroborated by the parent of a Shands PHT patient who testified that when her daughter was placed on the waitlist, Dr. Fricker concluded at that time that her daughter would ultimately need a PHT, even though she was placed on a lower status initially, and it was a few years before the transplant occurred. Transplant surgeon Dr. Victor Morell, of the Children’s Hospital of Pittsburgh, testified that he waitlists his PHT patients not only when they need the procedure performed immediately, but rather when, in his clinical judgment, he determines the patient will ultimately need a PHT. This testimony supports the finding that there is nothing clinically unusual or inappropriate about how the Shands program waitlists patients. Shands realizes that its philosophy, which is contemplated within and permitted under the United Network for Organ Sharing (UNOS) rules, makes its statistics, both in terms of percent of patients transplanted and waitlist mortality, look worse. While Shands’ waitlist mortality may be higher than expected as reflected in the SRTR data, it is still significantly lower than in the UNOS region or the United States. Shands advocates for its patients by their waitlist practices because it believes it helps secure the best outcomes for its patients. It does not indicate need for a new PHT program. Nemours also suggests that there may be a “capacity” problem at Shands because the organ rejection information provided by Shands shows that, during the 3-year period of CY 2015 through CY 2017, there were seven entries showing as either a primary or secondary reason for organ rejection that the surgeon was unavailable. However, this included both adult and pediatric hearts, and further investigation revealed that in only four instances were there potential PHT recipients at Shands. Of those four hearts that were rejected, two were not accepted by any PHT provider, and the two that were accepted were placed with adult transplant patients, not PHT patients. Shands has two PHT transplant surgeons. In very few instances at Shands, an organ was offered but not accepted because the surgeon was not available for one of several reasons. In one instance, there was another transplant scheduled. A surgeon could be ill, could be gone, or may have just completed another long surgery and be too fatigued to safely perform another. Like Shands, Nemours also has two experienced PHT surgeons. Although Dr. Wearden believes that Nemours would endeavor to not reject an organ for this reason, this ambition ignores reality. He cannot guarantee that the same could not or would not happen at Nemours for the same reasons it occasionally occurs at Shands. As explained by Dr. Pietra, when there are only small to medium volume programs, there is not likely to be a sufficient number of surgeons such that this scenario can be avoided entirely. Not Normal Circumstances In both its heart and heart/lung applications, Nemours articulated the following “not normal circumstances” in seeking approval: Florida does not have any approved pediatric heart/lung transplant programs. Florida's only two approved pediatric lung transplant programs have not performed any lung transplant programs in the last two reporting years according to AHCA reporting data. Significantly, there are no pediatric heart transplant or lung transplant programs in AHCA's Organ Transplant Service Area OTSA 3 in which NCH is located-an area of the State with one the fastest growing and youngest populations. Florida has no other pediatric comprehensive, multi-organ thoracic transplant program. Florida has no other pediatric comprehensive, multi-organ thoracic transplant program that is part of a pediatric specific integrated delivery system such as Nemours offers. NCH offers a unique, dedicated model of cardiothoracic care developed at its Alfred I. duPont Hospital for Children (AIDHC) in Wilmington, Delaware and implemented upon the opening of the program at NCH. The key and differentiating element of this Model of Care is a unified team of cardiac clinical and administrative professionals who serve children with cardiac problems in dedicated facilities (the "Cardiac Team"). The Cardiac Team only cares for children with cardiac diagnoses. As such, the Cardiac Team of anesthesiologists, surgeons, cardiologists, nurses, and other support personnel do not "float" to other hospital floors or departments as in a typical hospital setting. This dedicated model of cardiac care allows the Cardiac Team to develop highly specialized knowledge and relationships to provide the best treatment protocols for patients with cardiac conditions. NCH has developed state-of-the art facilities and innovative clinical pathways for the care of the most complex pediatric thoracic patients. NCH has and will bring new opportunities for research in pediatric cardiology, cardiac surgery, and pulmonary medicine, particularly clinical translational and basic research into the linkages between childhood obesity and cardiac conditions. Nemours operates a regional network of clinics in Florida, with primary locations in Pensacola, Jacksonville, and Orlando, that will operate in partnership with NCH for the appropriate regional referral of patients in Florida for pediatric thoracic care. NCH can reduce the out-migration of pediatric, thoracic transplant patients from OTSA 3 to other parts of the State as well as the out-migration of these patients to other out-of-state transplant programs. Similarly, NCH will reduce the outmigration of organs donated in Florida to other states ensuring that Florida recipient patients are first priority for organs donated in Florida. NCH has in place the infrastructure, facilities, and resources to seamlessly add thoracic transplant services to its existing comprehensive cardiac surgery program. Additional needed staff are already being recruited to this program. As a result, the project has minimal incremental cost that will need to be incurred. Total project costs are, therefore, estimated to be $715,425.00. In addition, according to Nemours, an additional “not normal” circumstance has emerged since the filing of the applications: the approval of Nemours’ PLT application in the absence of a PHT program at the facility, which it contends is “a very unusual situation.” Noteworthy about these purported reasons for approval are that: (1) none of them are specifically directed at a unique circumstance relating to a need for another PHT program; and (2) most of them are either a recitation of the fact that there is no existing program in the service area or are about Nemours’ capability to provide these services. They are not directed at whether there is a need for its proposed programs. In fact, the main thrust of Nemours’ case was directed at proof regarding its capabilities. But the flaw in this theme is best demonstrated in the testimony of Dawn Tucker, the last witness called by Nemours. Ms. Tucker is the cardiac program administrative director for Nemours. When asked why she supported the proposed program, she talked about the experience of the team, a desire to care for sick patients, an organization (Nemours) that financially supports the program, and the network of centers that Nemours has in Florida. These factors address why Nemours “wants” these CONs. None of them addresses the threshold issue of whether there is a “need” for these programs in OTSA 3. More specifically, the first, third, and fourth bullet points are all based on the absence of a program in OTSA 3. By rule, that is not a basis for establishing need. Fla. Admin. Code R. 59C-1.009(2)(e)3. AHCA appropriately rejected the absence of a program in OTSA 3 as the sole basis upon which need for the proposed projects could be established. The second bullet point relates to the pediatric lung transplant application that is not at issue in this matter. The fifth and sixth bullet points relate to the Nemours integrated model of care. But again, this does not address whether there is a need for the proposed programs. The fact that Nemours has an employed-physician model is not unique or “not normal.” AHCA considered the information regarding the model of care and correctly noted that the model of care does not itself enhance access or improve outcomes. It should be noted that Shands’ doctors are employed by the University of Florida. In addition, the reliance on this model does not guarantee a robust program. This bullet point references the much older and more established Alfred I. duPont Hospital for Children in Wilmington, Delaware, that is touted as the model for Nemours. Nemours presented evidence relating to its more established hospital in Delaware that also provides PHT services. However, the PHT program at duPont is a low-volume program, performing only one PHT in 2016. None of the managed- care companies that recognize Shands as a center of excellence also recognizes the duPont Hospital as such. One of the companies--Lifetrac--acknowledges duPont as a “supplemental” program, whereas Shands is one of its “select” programs. This demonstrates that simply having the financial resources of the duPont Foundation or the model of care used by that organization does not guarantee high volumes or success. The “not normal circumstance” bullet points regarding Nemours’ facilities, research, and other infrastructure similarly do not demonstrate need. Otherwise, a hospital could obtain a CON for a new program by spending the money in advance and then demanding approval based upon those expenditures. AHCA recognized that Nemours had recruited some very qualified clinicians, but correctly noted that that does not create or evidence need for the proposed programs. The remaining bullet point asserts that approval of the PHT and PHLT programs could reduce outmigration of both patients and organs. By definition, because neither of these transplant programs exists in OTSA 3, all patients leave OTSA 3 for these services. Again, that alone does not establish need, nor is it automatically a “not normal” circumstance. As discussed herein, Nemours has not demonstrated a sufficient need or an access problem that justifies approval of either application. With regard to the outmigration of organs from Florida, Nemours has argued that Florida is a net exporter of organs and that this is a “not normal” circumstance justifying approval of its application. However, organs harvested in one state are commonly used in another. There is nothing unusual or negative about that fact. Indeed, Dr. Wearden agreed that in his experience, this is a common occurrence. There is a national allocation system through UNOS and this sharing, as explained by Dr. Pietra, facilitates the best match for organs and patients. UNOS divides the country into regions for the purpose of allocation of donor organs, with Florida being one of six states in Region 3. The evidence of record did not establish that approval of the Nemours applications would result in the reduction of organs leaving Florida, or even that such would be a desirable result. Nemours also argued at hearing that approving their applications would increase the number of donor organs that are procured and transplanted in Florida. Nemours suggested that its programs would increase public awareness and implied that it would accept organs for future patients that surgeons at other programs turn down. However, these arguments are purely conjectural and are rejected. No record evidence exists which demonstrates that a Nemours program would increase the supply of organs in Florida. Indeed, Nemours presented no such relevant data or statistical evidence in its applications to demonstrate that this will occur. Finally, Nemours argues that its PHT and PHLT applications should be approved because it does not make sense for AHCA to have approved the PLT program but denied the other two applications. Nemours goes on to note that while there are hospitals in the country that do PHTs but not PLTs, there are no hospitals that do lungs but not hearts. Regardless of whether that is true, Florida law separates these three services into separate CON applications, which are reviewed independently. The wisdom of the rule is not at issue in this proceeding. Regardless of any overlap in the skill sets required to perform these procedures, approval of the pediatric lung transplant application does not determine need for pediatric heart or pediatric heart/lung programs. Nemours failed to establish that “not normal” circumstances currently exist that would warrant approval of either the PHT or PHLT programs. Nor did Nemours credibly demonstrate any other indicators of need for its proposed programs. Section 408.035(1)(c): The ability of the applicant to provide quality of care and the applicant’s record of providing quality of care. The parties stipulated that Nemours is a quality provider. However, AHCA maintains that this criterion is in dispute to the extent that center transplant volume as a result of Nemours’ approval would lead to or correlate with negative patient outcomes. Nemours failed to demonstrate that it would achieve the volumes it projected unless it takes significant volumes from other Florida providers.6/ Approval of Nemours will not create transplant patients that do not exist or are not currently able to reasonably access services. While Nemours has assembled a team of professionals with varying levels of transplant experience, it has not been demonstrated that it will achieve volume sufficient to reasonably assure quality care.7/ Section 408.035(1)(e): The extent to which the proposed services will enhance access to health care for residents of the service district. Approval of the Nemours PHT and PHLT programs would unquestionably improve geographic access to those services for the very few residents of OTSA 3 that need them. However, given the extreme rarity of pediatric heart and heart/lung transplants, approval of the Nemours programs would not result in enhanced access for a significant number of patients. Moreover, there was no credible non-hearsay evidence presented at hearing that any resident of OTSA 3 that needed PHT or PHLT services was unable to access those services at one of the existing PHT programs in Florida or, for PHLT, at a facility elsewhere. Based upon persuasive evidence at hearing, there is also clearly a positive relationship between volume and outcomes. As with any complex endeavor, practice makes perfect. In this instance, maintaining a minimum PHT case volume provides experience to the clinicians involved and helps maintain proficiency. According to the credible testimony of Dr. Pietra, programs should perform no fewer than 10 PHTs per year. “If you can stay above 10, then your program is going to be exercised at a minimum amount to keep everybody sort of at a peak performance.” The clear intent of the minimum volume requirement of 12 heart transplants per year contained in rule 59C- 1.044(6)(b)2. is to ensure a sufficient case volume to maintain the proficiency of the transplant surgeons and other clinicians involved in the surgical and post-surgical care of PHT patients. In addition, pediatric transplant programs are measured statistically based on outcomes, such as mortality and morbidity. Because of this, the loss of even one patient in a small program can be devastating to that hospital’s mortality statistics. As such, small programs may become less willing to take more complicated patients. In a perverse sort of way, adding more programs that dilute volumes may decrease, rather than increase, access because of the fear a small program might have for taking more complex patients. Adequate case volume is also important for teaching facilities, such as Shands, to benefit residents of all the OTSAs by being able to train the next generation of transplant physicians. The mothers of the two Shands patients that testified made note of the complexity of their daughters’ conditions and how their cases were used for training purposes. There was no persuasive evidence of record that approval of the Nemours applications would meaningfully and significantly enhance geographic access to transplant services in OTSA 3. The modest improvement in geographic access for the few patients that are to be served by the two programs is not significant enough to justify approval in the absence of demonstrated need. There is no evidence that approval of the Nemours applications will enhance financial access nor that patients are not currently able to access PHT or PHLT services because of payor status. Section 408.035(1)(g): The extent to which the proposal will foster competition that promotes quality and cost- effectiveness. It is clear that establishing and maintaining a transplant program is expensive. Given the limited pool of patients, the added expense of yet a sixth Florida program is not a cost-effective use of resources. This criterion also relates to the Nemours position that AHCA should approve the PHT and PHLT applications simply because the PLT application was approved, and it would not be cost-effective for Nemours unless the PHT and PHLT applications were also approved. However, each of these applications must rise or fall on its own merit. As of the hearing, Nemours had not yet implemented its PLT program. Given the absence of need for either the PHT or PHLT programs, the cost-effective solution might be for Nemours to reconsider implementation of the PLT program. 408.035(1)(i): The applicant’s past and proposed provision of health care services to Medicaid patients and the medically indigent. AHCA agreed at hearing that Nemours satisfies section 408.035(1)(i). Nonetheless, Nemours provides a very high level of Medicaid services, and projects a high-level volume related to Medicaid patients and charity care patients. As noted, approximately half of the PHTs projected by Nemours will be performed on Medicaid patients. Conformance with this criterion would mitigate toward approval had there been persuasive evidence that Medicaid and medically indigent patients are currently being denied access to PHT and PHLT services. However, no such evidence was presented.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a final order be entered denying CON Application Nos. 10471 and 10472 filed by The Nemours Foundation, d/b/a Nemours Children’s Hospital. DONE AND ENTERED this 31st day of July, 2018, in Tallahassee, Leon County, Florida. S W. DAVID WATKINS Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 31st day of July, 2018.
The Issue Whether the adult open heart surgery rule in effect at the time the certificate of need (CON) applications were filed, and until January 24, 2002, or the rule as amended on that date is applicable to this case. Which, if any, of the applications filed by Martin Memorial Medical Center, Inc. (Martin Memorial); Bethesda Healthcare System, Inc., d/b/a Bethesda Memorial Hospital (Bethesda); and Boca Raton Community Hospital, Inc. (BRCH) meet the requirements for a CON to establish an adult open heart surgery program in Agency for Health Care Administration (AHCA) Health Planning District 9, for Okeechobee, Indian River, St. Lucie, Martin, and Palm Beach Counties, Florida.
Findings Of Fact The Agency for Health Care Administration (AHCA) is the agency which administers the certificate of need (CON) program for health care facilities and programs in Florida. It is also the designated state health planning agency. See Subsection 408.034(1), Florida Statutes. For health planning purposes, AHCA District 9 includes Indian River, Okeechobee, St. Lucie, Martin, and Palm Beach Counties. See Subsection 408.032(5), Florida Statutes. AHCA published a fixed need pool of zero for additional open heart surgery programs in District 9, for the January 2002, planning horizon. The mathematical need formula in the rule, using the use rate for open heart surgery procedures in the district as applied to the projected population growth, indicated a gross numeric need for 7.9 programs in District 9. After rounding off the decimal and subtracting four, for the number of existing District 9 open heart surgery programs, the formula showed a numerical need for four additional ones. The need number defaulted to zero, however, because one of the existing programs, at Lawnwood Medical Center, Inc., d/b/a Lawnwood Regional Medical Center (Lawnwood), had not reached the required minimum of 350 surgeries a year, or 29 cases a month for 12 months prior to the quarter in which need was published. Having initiated services in March 1999, the Lawnwood program had not been operational for 12 months at the time the applications were filed in October 1999. The other existing providers of adult open heart services in District 9, in addition to Lawnwood, are Palm Beach Gardens Community Hospital, Inc., d/b/a Palm Beach Gardens Medical Center (PBGMC); Columbia/JFK Medical Center Limited Partnership, d/b/a JFK Medical Center (JFK); and Tenet Healthsystem Hospitals, Inc., d/b/a Delray Medical Center (Delray). All are intervening parties to this proceeding. In the Pre-Hearing Stipulation, the parties agreed that the Intervenors have standing to participate in this proceeding. Despite the publication of zero numeric need, five hospitals in District 9 applied for CONs to establish new adult open heart programs asserting need based on not normal circumstances. Three of those applications are at issue in this case: CON Number 9249 filed by Martin Memorial Medical Center, Inc. (Martin Memorial); CON Number 9250 by Bethesda Healthcare System, Inc., d/b/a Bethesda Memorial Hospital (Bethesda); and CON Number 9248 by Boca Raton Community Hospital, Inc. (BRCH). AHCA initially reviewed and denied all of the applications. After changing its position before the final hearing, AHCA supports the approval of the applications filed by Martin Memorial and BRCH. Martin Memorial Martin Memorial, the only hospital in Martin County, and the only party/applicant not located in Palm Beach County, operates two facilities, a total of 336 beds, on two separate campuses under a single license. The larger hospital, in Stuart, has 236 beds and is located approximately 20 miles south of Lawnwood and 30 miles north of PBGMC. Martin Memorial owns and maintains, at the hospital, its own ambulance service used exclusively for hospital-to-hospital transfers. The drive from Martin Memorial to Lawnwood averages 38 minutes. The drive time to PBGMC averages 48 minutes. By helicopter, it takes 11 or 12 minutes to get from Martin Memorial to PBGMC. The remaining 100 Martin Memorial Hospital beds are located on its southern campus, approximately six miles south of the Stuart facility. Martin Memorial is a private not-for-profit hospital, established in 1939. The parent corporation also operates an ambulatory care center, physician group, billing and collection company, and a foundation. Martin Memorial is applying to operate an open heart program at its Stuart location, where it currently offers cardiology, hematology, nephrology, pulmonary, infectious disease, pathology, blood bank, anesthesiology, diagnostic nuclear medicine, and intensive care services. Martin Memorial has a 25-bed telemetry unit, a 14-bed medical intensive care unit, a nine-bed surgical intensive care unit, and a 22-bed progressive care unit, with an identically equipped 16-bed overflow unit used only for high seasonal occupancy, from approximately December to April. If its CON is approved, Martin Memorial will dedicate four surgical intensive care unit beds and six progressive care beds for post-open heart surgery patients. Martin Memorial agreed to condition its CON on the provision of 2.4% of the project's gross revenues for charity care and 2% for Medicaid. The total estimated project cost is $6.5 million. Martin Memorial intends to affiliate with the University of Florida and its teaching facility, Shands Hospital, to assist in establishing the program and training staff. The cardiovascular surgeon is expected to be a full-time faculty member who will live and work in Martin County. Although initially opposed, AHCA now supports Martin Memorial’s application primarily because (1) it has the largest cardiac catheterization (cath) program at any hospital in this state which does not also provide open heart services; (2) it has a medium size and growing Medicare population, which constitutes the age group most likely to require open heart surgery and related services; (3) Martin County residents now must receive open heart and related services at hospitals outside Martin County, primarily in areas ranging from Palm Beach County south to Dade County; (4) emergency heart attack patients who present at Martin Memorial-Stuart could receive primary angioplasties without transfer; and (5) it is a not-for-profit hospital, while all of the existing open heart providers in the District are for- profit corporate subsidiaries. Of the applicants, Martin Memorial is also located the greatest distance from the existing providers. Bethesda Memorial Bethesda has 362 licensed beds located in Boynton Beach. JFK is nine miles north or an average drive of 18 minutes from Bethesda. Delray is nine miles south or an average drive of 17 minutes from Bethesda. Established in February 1959, Bethesda is a not-for- profit subsidiary of Bethesda Health Care Systems, Inc., which also operates some for-profit subsidiaries, including Bethesda Medical/Surgical Specialists, Bethesda Management Services, and Bethesda Comprehensive Cancer Institute. Bethesda is a disproportionate share provider of Medicaid and Medicare services. The services currently available at Bethesda include obstetrics, Level II and III neonatal intensive care, cardiology, orthopedics, pediatrics, neurological and stroke care, peripheral vascular surgery, wound care, pulmonary and infectious disease care. Bethesda recently eliminated a 20-bed unit for adult psychiatric services, and a 20-bed skilled nursing unit. Currently, at Bethesda, the sickest patients are placed in a 10-bed critical care unit. The hospital also operates a 12- bed surgical intensive care unit, an eight-bed medical intensive care unit, and 30 and 25-bed telemetry units. Bethesda was planning to open a 20-bed extension to the telemetry unit, all in private rooms, in January 2002. If an open heart surgery program is established, Bethesda, will add an eight-bed cardiovascular intensive care unit to care post-operatively for the patients. Bethesda offered to condition its CON on the provision of 3% of total open heart surgeries to Medicaid and 3% of total open heart surgeries to indigent patients. Bethesda's estimated total project cost is $4 million, $1.7 million for equipment, and $2.24 for construction. Bethesda will receive assistance from Orlando Regional Medical Center in training personnel and developing protocols for an open heart program. At Orlando Regional, a statutory teaching hospital, the number of open heart cases ranges from 1,300 to 1,600 a year. Bethesda has a contract with a physicians' group to provide a board-certified cardiovascular surgeon to serve as medical director for the open heart program. AHCA’s position is that the Bethesda application is "approvable" but, of the Palm Beach County applicants, less desirable than that of BRCH. By contrast, Bethesda's experts emphasized (1) the absence of any overlap with the Lawnwood market; (2) the greater need for a new program, based on the volume of cases, in Palm Beach County than elsewhere in the District; (3) the size, growth, and age of the population within Bethesda's market area, and (4) the ability of Bethesda to enhance access for underserved groups, particularly Medicaid patients. Boca Raton Community Hospital BRCH is licensed for 394 beds. Located in southern Palm Beach County, close to the Broward County line, BRCH is from eight to nine miles south of Delray and approximately 15 miles north of North Ridge Medical Center (North Ridge), in adjacent Broward County. On average, the drive from BRCH to Delray takes 20 minutes. The drive from BRCH to North Ridge takes about 25 minutes. Founded in the late 1960's, BRCH operates as a not-for- profit corporation. BRCH has a staff of 750 physicians and 1,600 employees. Services at BRCH include cardiology, a 10-bed Level II neonatal intensive care unit, hematology, nephrology, pulmonology, radiology, nuclear medicine, and neurology. If approved and issued a CON for adult open heart surgery, BRCH will build a new facility for the program, including two new cath labs, an electrophysiology lab and 12 intensive care beds. In the CON, the estimated construction cost was $16.5 million and the estimated equipment cost was $2.7 million of the $20 million estimated for the total project. BRCH agreed to having conditions on its CON (1) to provide 5% of open heart cases in year two to uninsured patients, (2) to establish an outreach program to increase the utilization of open heart services among the uninsured, and (3) to relinquish the CON if it fails to perform at least 350 open heart surgery procedures a year in any two consecutive years after the end of the second year of operations. AHCA determined that it should change its initial position opposing the approval of the BRCH application to one of approval because of (1) the large Medicare population in the service area; (2) the volume of emergency room heart attack patients; (3) the district out-migration for services primarily to North Ridge; (4) the large, well-developed interventional cardiology program; and (5) the not-for-profit organizational structure. When AHCA decided to support the approval of the BRCH application, it did so, in part, based on erroneous data. The cath lab volume was assumed to be approximately 1,800 caths a year, as compared to the actual volume of 667 caths for the year ending March 2001. Having considered the corrected data, AHCA’s expert described BRCH’s application as significantly less compelling, but still preferable to that of Bethesda. BRCH is the largest hospital in number of beds in Florida which does not have an open heart surgery program. AHCA also responded favorably to identified "cultural" access issues, described as underservice to demographic groups, based on race, gender, and class. BRCH presented a plan to equip a mobile unit to provide diagnostic screenings and primary care in underserved areas. Pre-Hearing Stipulations The parties stipulated that all of the applications met the statutory requirements concerning the application content and filing procedures of Sections 408.037 and 408.039, Florida Statutes (1999), and Rule 59C-1.033, Florida Administrative Code. Martin Memorial, Bethesda, and BRCH have a history of providing quality care. See Subsection 408.035(1)(c), Florida Statutes (1999). There are no existing outpatient, ambulatory or home care services which can be used as alternatives to inpatient adult open heart and angioplasty services. See Subsection 408.035(1)(d), Florida Statutes (1999). Martin Memorial and Bethesda have sufficient available funds for capital and operating expenses required for their proposed open heart surgery programs. See Subsection 408.035(1)(h), Florida Statutes (1999). Martin Memorial complied with the requirements related to costs and methods of construction, and equipment for the proposed project. Except for the contention that it omitted $1,687,180 in fixed equipment costs and that the proposed construction project is excessively large and expensive, the parties stipulated that BRCH reasonably estimated construction and equipment costs, including costs and methods of energy provision. See Subsection 408.035(1)(m), Florida Statutes (1999). The parties agreed that Subsections 408.035(1)(p), and 408.035(2)(e), Florida Statutes, related to nursing home beds, are not at issue at in this proceeding. If Bethesda, BRCH, and Martin Memorial can recruit the necessary, competent nursing and surgical staff, they will meet the requirements of Rule 59C-1.033(3), (4)(b), (4)(c), and (5)(c), Florida Administrative Code. Adult open heart surgery services are currently available to District 9 residents within the two-hour travel standard of Rule 59C-1.033(4)(a), Florida Administrative Code. Bethesda, BRCH, and Martin Memorial are accredited by the Joint Commission on Accreditation of Healthcare Organizations (JCAHO), assuring quality as required by Rule 59C-1.033(5)(a), Florida Administrative Code. The parties agreed that if Bethesda, BRCH, and Martin Memorial can recruit the necessary nursing and surgical personnel, their programs would meet the requirements of Rule 59C-1.033(4)(b), (4)(c), (5)(b), and (5)(c), Florida Administrative Code, except that JFK and Lawnwood did not agree that the applicants satisfied the requirements related to cardiovascular surgeons. Martin Memorial will be able to obtain perfusionist services, as required by Rule 59C-1.033(5)(b)5, Florida Administrative Code. Bethesda and BRCH projected reasonable staffing patterns, in their CON schedules 6A, given projected census levels, although the ability to recruit staff and adequacy of projected salaries are at issue. The rule criteria related to pediatric open heart surgery are not applicable to this proceeding. Disputed Statutory and Rule Criteria The following statutory criteria and applicable in this case: Subsections 408.035(1)(a), (b), (c) - for comparison; (e), (f), (g), (h) - related to funding for BRCH, and related to staff recruitment and salaries; (i), (j), (k), (l), (m) - for Bethesda, and related to the size, scope, and fixed equipment cost for BRCH, (n), and (o); and Subsections 408.035(2)(a), (b), (c), and (d), Florida Statutes. The criteria in Rules 59C-1.030, and of Rule 59C-1.033(5)(b) - related to staffing, except as stipulated - are at issue. The parties have also raised the issue of whether AHCA is consistent in applying its agency rules related to open heart cases. The District 9 health plan contains two preferences for open heart applicant hospitals, the first for hospitals with established cardiac cath programs, the second for applicants with a documented commitment to serve patients regardless of their ability to pay or county of residence. All of the applicants have established diagnostic cardiac cath programs and related cardiology services. During the cardiac cath procedure, a catheter is inserted into a cardiac chamber to diagnose heart disease. During a therapeutic cardiac cath procedure, or angioplasty, the catheter with a balloon-tip is inserted into a coronary artery and inflated to open blockages. The latter requires open heart surgery back-up in case a vessel is ruptured and thus, an open heart surgery certificate of need. Martin Memorial operates the largest cardiac cath program at a hospital in Florida which does not also offer open heart surgery. At Martin Memorial, 1,885 inpatient and outpatient caths were performed in 1999, 1,770 in 2000, and 1,286 in the first nine months of 2001. Cardiac caths are only performed at the Stuart facility. Non-invasive cardiology services began in the 1970's at Martin Memorial. A CON to establish the first cardiac cath lab was issued in 1989, and a second, CON-exempt cath lab opened in 1998. Martin Memorial also offers pacemaker implants and peripheral angioplasties to eliminate clots in other areas of the body, for example, in the legs, electrocardiography, echocardiography, stress tests, and cardiac rehabilitation. Neither electrophysiology studies nor defibrillator implants are performed at Martin Memorial. Martin Memorial has an open staff of cardiologists, meaning that its cath lab is available for use by any of the invasive cardiologists on staff. The facilities include two cardiac cath procedure rooms, a control room for the laboratory, a five-bed holding room and a two-bay inpatient recovery area. Bethesda also has an established cardiac cath program with an open staff. Seventeen cathing physicians were listed on the Bethesda roster for the month of March 2001. Of those, five were also the only cardiologists allowed to perform caths at the closed lab at JFK. Some of these cardiologists are permitted to perform emergency angioplasties at Bethesda. Bethesda has, at least, two cardiovascular surgeons on staff. From 1995 to 1998, the volume of cardiac caths at Bethesda increased over 60%, from 133 to 213. For the 12 months ending August 31, 2000, Bethesda cardiologists performed 428 caths. For the 12 months ending September 30, 2001, the cath volume was 506 cases. Currently, cath procedures at Bethesda are performed in one lab with recently upgraded digital equipment. As part of the planned expansion of the hospital, the existing lab will be relocated and a second one added. Permanent pacemakers are implanted at Bethesda, but internal cardioverter defibrillator procedures, electrophysiology, and table studies are not performed. Cardiac cath services, at BRCH, started in 1987. Two cath labs with state-of-the-art digital equipment are used. In the 12 months ending March 31, 2001, there were 667 inpatient and outpatient caths performed at BRCH. Currently, cardiac services at BRCH are the largest source of admissions, approximately 20% of total admissions. The available services include echocardiography, tilt table studies, electrocardiography, stress tests, cardiac wellness and rehabilitation programs, electrophysiology studies, and internal cardioverter defibrillator implants. Each year, one or two "rescue" or salvage angioplasties are performed in extreme, life- threatening circumstances at BRCH. Forty-nine cardiologists are on the closed "invitation-only" medical staff at BRCH, 47 are board-certified and approximately half are invasive cardiologists. The staff also includes seven electrophysiologists, five of whom are board-certified, and seven thoracic surgeons, five of whom perform open heart surgeries at other hospitals. For the first two years of operating an open heart program, BRCH intends to have a closed program, by virtue of an exclusive contract with a single group of cardiovascular surgeons. Subsection 408.035(1)(a) - district health plan preference for serving patients regardless of county of residence or ability to pay; and Subsection 408.035 (1)(n) - history of and proposed services to Medicaid and indigent patients Martin Memorial, Bethesda, and BRCH will serve patients regardless of residence and, they contend, will enhance access for Medicaid, indigent, charity and/or self-pay patients. Each applicant has offered to care for patients in some of these categories as a condition for CON approval. The proposed conditions, are, for Martin Memorial, 2.4% of total project revenues for charity and 2% of admissions for Medicaid patients. Martin Memorial provides a number of services without charge, including follow-up education to former inpatients to assist them in managing diseases such as asthma, diabetes, congestive heart failure and chronic obstructive pulmonary disease. Obstetric care includes one free home visit by a nurse/midwife to check the health of newborns and mothers. Office space is provided for a free clinic for the "working poor" of Martin County, which receives approximately 10,000 annual visits from a patient base of about 2,000 patients. Over $100,000 a year is provided for an indigent pharmacy program. Combining the outreach services with other charitable contributions, including charity care, Martin Memorial valued "community benefits" at $24 million in 1998, $30.5 million in 2000. When Martin Memorial received an inpatient cardiac cath CON, it agreed to provide a minimum of 2.5% of total cardiac caths to Medicaid patients and 3% to charity care. Due to changes in state regulation, Medicaid and charity care for cardiac caths no longer needs to be reported to the state. That data, representing as it does, the base of patients from which open heart cases will come, is useful in evaluating Martin Memorial's projections. In 1999, seven-tenths of one percent of the patients in Martin Memorial's cath lab were Medicaid and four-tenths of one percent were indigent. In 2000, seven-tenths of one percent were Medicaid and two-tenths of one percent were indigent. Martin's cath lab data indicates that its projected open heart levels of Medicaid and indigent care are not attainable. Bethesda offered a commitment to provide 3% of total open heart cases for Medicaid patients and 3% to indigent patients annually. Historically, Bethesda has cared for a relatively large number of Medicaid, minority, and indigent patients. It is recognized as a disproportionate share provider of Medicaid care under the Florida program and of Medicare under the Federal program. The Palm Beach County Health Department provides approximately $1 million a year to Bethesda for charity care. As a percentage of gross revenue, Bethesda provided 8.8% Medicaid and 3.46% charity care in 1999. Approximately 54% of the charity care is attributable to obstetrics and pediatric services. Bethesda's younger patient base and the number of adult open heart Medicaid cases from Bethesda's service area, 2.4% or 7 cases in the year ending September 2000, raise the issue of its ability to generate sufficient cases to meet the proposed commitment. In 1995, 20 of the 36 total resident Medicaid open heart surgeries were performed at the three providers in District 9, Delray, JFK, and PBGMC. In 1999, when Lawnwood began open heart care, the Medicaid volume at the District providers increased to 51 of the 64 total Medicaid resident cases. In 2000, the four programs treated a net number of 56 of 60 resident Medicaid cases. A program at Bethesda also could reasonably be expected to increase the number of Medicaid and charity cases performed in the District, in volume and by reversing outmigration, but the patients must come from a base of patients with cardiac diagnoses. For the year ending September 2000, in Bethesda's service area, 4.9% of cardiac patients were Medicaid and charity patients combined, 1.6% Medicaid and 3.3% charity. Assuming that the same proportions could be maintained for open heart surgeries, Bethesda cannot achieve 3% Medicaid and, although unlikely, has a chance of reaching 3% charity only in the best case scenario. If approved, BRCH commits to providing 5% of total OHS in the second year to uninsured patients and to establish an outreach program to increase utilization by uninsured patients. BRCH has, over the past three and a half years, established outreach programs, which include having nurses and social workers in schools, providing free physical examinations to children who do not have primary care doctors, and performing echocardiograms for high school athletes, equipping police and fire rescue units with portable defibrillators, and operating mobile units for mammography screenings and vans to transport patients to and from their homes for hospital care. A free dental screening program is operated in conjunction with Nova Southeastern University. BRCH also operates a family medical center approximately seven miles west of the hospital. Recently, the Foundation for BRCH purchased, for $1.8 million, a large bus to equip as a mobile clinic. The mobile diagnostic unit is intended to reach uninsured patients to provide primary care and ultimately open heart surgery care to those who might not otherwise be screened, diagnosed and referred. No information was available and no decisions had been made about the staff and equipment, or service areas for use of the van. Because of the lack of more specific plans, it is impossible to determine whether the outreach effort has any reasonable prospects for success in meeting any unmet need. For the years ending June 1996, 1997, and 1998, BRCH provided six-tenths of one percent, and five-tenths of one percent of gross revenues for charity care. In 2000, BRCH provided one-half of one percent for charity care and, in 2001, twenty-seventh hundreds of a percent. The historical levels do not support the proposed commitment of 5% of open heart surgeries for uninsured patients in the second year of the program. Although worded to apply only to the second year, BRCH's President and CEO testified concerning the condition without limiting it to the second year. In Boca Raton Community Hospital, Inc.'s Proposed Recommended Order (Reformatted), filed on July 5, 2002, the condition is described as follows: 49. As conditions of CON approval, Boca will, beginning in the second year of operation of the program and continuing thereafter, provide a minimum of five percent each year of OHS cases to uninsured patients, and establish an outreach program to locate and provide OHS and cardiology services to uninsured patients in Palm Beach County. (Boca Ex. 3 at Schedule C; Pierce, 1899). Boca reasonably decided to focus on the needs of the uninsured, rather than Medicaid patients, because of the low volume of Medicaid patients who require OHS services. (Pierce, 1902). At BRCH, Medicaid and Medicaid health maintenance organization (HMO) care as a percent of total ranged from 1.3% to 1.4% from 1996 through 1998. BRCH projected serving 1.2% to 1.3% open heart Medicaid cases, or four patients in the first year and 1.5% to 1.6%, or seven Medicaid patients in the second year. The projections are consistent with its history although BRCH offered no Medicaid condition. Bethesda and BRCH also claimed not normal circumstances exist in District 9 due to the disparity in open heart care for uninsured and Medicaid patients as compared to the insured. For uninsured residents of Palm Beach County during the twelve months ending June 30, 2000, the use rate was 4.7 per 1000, as compared to 21.8 per 1,000 for insured open heart patients. For angioplasty patients, the insured use rate was 38.2, but the uninsured rate was only 8.9. Assuming that the use rates should not be so different, the discrepancy in access for the uninsured is significant and unfortunate but was not shown to be a not normal circumstance in the health care delivery system. The applicants' proposals, unlikely as they are to meet even the proposed conditions, are inadequate to increase access materially for the uninsured. Comparisons of the level of Medicaid provided statewide to that provided in District 9 without consideration of other factors, including age and income levels, were not useful in analyzing access. Assertions that any discrepancy in care for potential Medicaid open heart patients constitutes a not normal circumstance are not substantiated by this evidence. Subsection 408.035(1)(b) and (2)(b) - availability, quality of care, efficiency, appropriateness, accessibility, extent of utilization and adequacy of like and existing facilities in District Nine In 2006, the population in District 9 is projected to reach 1.2 million people, of which approximately 992,378 will reside in Palm Beach County, 119,573 in Martin County, 181,406 in St. Lucie County, 106,790 in Indian River County, and 31,140 in Okeechobee County. In District 9, throughout Florida, and in the United States, heart disease is the leading cause of death. In 2000, heart disease was the cause in 522 of 1,560 total deaths in Martin County, and 4,337 of 12,795 total deaths in Palm Beach County. From 1995 to 2000, the number of Florida residents having open heart surgeries increased 15.1%. During the same period of time, the number of District 9 resident cases, regardless of where the surgeries were performed, increased from 3,119, to 3,938, an increase of 755 OHS cases, or 24%. Palm Beach County residents represented 427 of the 755 increase, and 2,633 of the total of 3,938 resident cases. The distribution of the remaining 1,305 District resident cases by county was as follows: 597 from St. Lucie, 339 from Martin, 269 from Indian River, and 100 from Okeechobee County. More recent data, however, indicates trends towards a leveling off or even decline in the number, but an increase in the complexity of open heart procedures. Some experts describe open heart volumes having reached a "plateau" in the United States, in Florida, and in District 9. Last year, the number of open heart surgeries in the United States declined 22%. The statewide volume of cases was 32,199 in 1996, 33,507 in 1997, 34,013 in 1998, and 32,097 in 1999. At District 9 hospitals, open heart volumes were 1,670 in 1994, 1,841 in 1995, 2,152 in 1996, 2,407 in 1997, 2,527 in 1998, 2,656 in 1999, and 2,650 in 2000. Cardiac Catheterizations and Angioplasties The major reason given for the stable and declining open heart volume is the increase in the utilization of angioplasty, or therapeutic cardiac cathing, an alternative which costs less and is less invasive. Angioplasty procedures increased from 1995-2000, by over 2,500 cases for District 9 residents, and over 2,600 cases in District 9 hospitals, from 2,104 cases in 1995, to 4,714 in 2000. Among the procedures generally referred to as angioplasties are percutaneous transluminal angioplasty (PTCA) or balloon angioplasty, percutaneous transluminal coronary rotational atherectomy (PTCRA), and the insertion of scaffolding- like devices, called stents, to prevent re-occlusion of coronary arteries. In Florida, diagnostic cardiac caths may be performed at facilities which do not have angioplasty and open heart surgery programs, but angioplasties must be performed, except in rare emergency circumstances, only at hospitals which are licensed to provide open heart services, in case back-up surgery is needed. Lawnwood Regional Lawnwood is located in Fort Pierce, in St. Lucie County, which is second to Palm Beach County in population and in District 9 resident open heart cases. Lawnwood is owned by a subsidiary of HCA, the Hospital Corporation of America, formerly known as Columbia. HCA is a for-profit, investor-owned corporation which owns and operates approximately 200 hospitals in the United States. A $17 million addition at Lawnwood, designed for the open heart program, includes two dedicated operating rooms and a 12-bed intensive care unit. The Lawnwood program has a full-time staff of two surgeons and one additional surgeon who divides his time between Lawnwood and PBGMC. Lawnwood, having opened its program early in 1999, is not considered a mature program. In addition, Lawnwood has had some difficulties with accreditation and disputes with cardiologists. Lawnwood reported one open heart case in the first quarter of 1999, and 143 or 144 for the year. In calendar year 2000, between 330 to 340 open heart surgeries were performed at Lawnwood. In calendar year 2001, the volume was between 333 and 336 cases. Depending on the source of the data, the volume at Lawnwood was reported to be as high as 364 for the twelve months ending September 30, 2000; in a range from 336 to 396 for the twelve months ending March 31, 2001; and up to 412 for the twelve months ending July 2001. The variances result from seasonal patient utilization, and from AHCA’s use, for the fixed need pool, of the most current available data which it receives from the various local health councils. That data is submitted on handwritten or typed forms which are not uniform across districts. Subsequently, the hospitals provide electronic data tapes directly to AHCA, which if properly decoded, should provide more accurate statistics. While there may be variances either way, in this case, the lower volumes for Lawnwood were derived from the more reliable electronic tapes. Based on that data and the testimony of the cardiac surgeon who is the director of the program at Lawnwood, the annual volume of open heart surgeries was approximately 330 in 2000, and 348 in 2001. The new rule, adopted on January 24, 2002, reduces the minimum number required for existing programs to 300 a year, or 25 adult operations a month. The number of angioplasties performed at Lawnwood increased from 465 in 1999, to 845 in 2000. Palm Beach Gardens Medical Center South of the four relatively small northern counties in District 9, PBGMC has 204 beds located in northern Palm Beach County. It is a subsidiary of Tenet Healthsystem Hospitals (Tenet). Adult open heart surgery has been available at PBGMC since 1983. The surgeries are typically performed in two or three of the 11 operating rooms, although five are equipped to handle open heart cases. PBGMC has 94 telemetry beds, and 32 intensive care beds, eight designated for cardiovascular intensive care patients. PBGMC has four cardiac cath labs and separate electrophysiology labs. The medical staff of approximately 400 physicians includes about 200 cardiologists, 24 invasive cardiologists and seven cardiac surgeons. The number of open heart cases at PBGMC was 700 in 1994, 801 in 1995, 913 in 1996, 1,028 in 1997, 1,045 in 1998, 1,124 in 1999, 940 in 2000, and 871 in 2001. The number of angioplasties increased from 552 in 1994, to 1,019 in 1997, to 1,431 in 2000. JFK JFK, which has 387 beds, is located roughly in the center of Palm Beach County, in the City of Lake Worth. Like Lawnwood, JFK is an HCA's subsidiary, having been purchased by that corporation in 1995. Open heart services and cardiac cath services began simultaneously at JFK in 1987. JFK has three open heart operating rooms. JFK, after a major expansion, has a separate entrance to its three cardiac cath laboratories, a dedicated electrophysiology suite, for treatment of arrhythmias, and 17- patient holding area. JFK provides all cardiac services, except heart transplants. The average age of patients at JFK is 74 years old. The medical staff of 504 board-certified or board- eligible physicians includes 25 cardiologists, five invasive cardiologists, two electrophysiologists, and three cardiac surgeons. JFK has recently accepted applications from but not yet extended privileges to three additional cardiovascular surgeons. Volumes of open heart cases at JFK were, with some variances depending on the data source, approximately 428 in 1994, 434 in 1995, 630 in 1996, 674 in 1997, 711 in 1998, 613 in 1999, 621 in 2000, and 610 in 2001. The number of angioplasties ranged from 709 in 1994, to 1,152 in 1997, to 1,281 in 2000. Delray Delray, with 343 beds, in Delray Beach, is the trauma center for southern Palm Beach County. Open heart care began at Delray in 1986. The surgeries are currently performed in three of ten, but soon to be a total of twelve operating rooms with shelled-in spaces set aside for two more. Patients recover in a 15-bed surgical intensive care unit. The Delray medical staff of over 600 physicians has close to 60 cardiologists, including 15 invasive cardiologists and six cardiovascular surgeons. Delray has three cath lab rooms and seven bays for holding patients pre- and post-procedure. For the years 1994 through 2001, open heart volumes at Delray were 542, 606, 609, 705, 771, 758, 759, and 738, respectively. During the same period of time, the annual number of angioplasty procedures increased from 591 in 1994, to 810 in 1997, to 929 in 2000. The existing CON-planned and approved programs in the District are well distributed geographically and allocated appropriately based on population. Considering the declining utilization, the like and existing open heart surgery programs are available and accessible. Subsection 408.035(1)(f) - services that are not reasonably and economically accessible in adjoining areas Over 30% of District 9 resident open heart cases are performed in other districts, the vast majority at North Ridge in District 10 (Broward County). The district outmigration for a service when excessive or difficult can indicate access or quality concerns and constitute a not normal circumstance for approval of a new program. In this case, with adequate available services in District 9 and its close proximity, the outmigration to North Ridge, which is 15 miles or 25 minutes from BRCH is not a not normal circumstance. There is also substantial overlap in the medical staff at both hospitals which allows continuity of care for patients despite transfers. The argument that families, particularly an older spouse, will necessarily have to drive farther to visit the patient is rejected, since that depends on where in the district the person resides not on the distances between hospitals. North Ridge has 391 licensed beds, with 260 to 270 acute care beds in use. At North Ridge, cardiovascular surgeons usually use three OHS operating rooms, although a fourth is also available. Open heart patients recover in a six-bed cardiovascular intensive care unit. The reported volumes of open hearts at North Ridge have been from 1994 through 2001, respectively, 864, 935, 893, 826, 882, 890, 905, and 795. The total number of open heart cases in District 10 has been declining since 1998. The volume of angioplasties at North Ridge increased from 793 in 1994, to 829 in 1997, to 1,155 in 2000, consistent with a rising District 10 use rate from 2.95 to 3.66 over the same period of time. The staff at North Ridge includes 107 cardiologists, 27 interventional cardiologists, and 17 cardiovascular surgeons, many of whom also regularly perform open heart surgeries at Holy Cross, which is approximately a mile south of North Ridge in Fort Lauderdale. At Holy Cross, which also has established referral networks from District 9, open heart volumes declined from a high of 753 in 1998 to 693 in 2000. All of the open heart services proposed by the applicants are reasonably available in adjoining areas, in Districts 10 and 11 to the south and in the other districts to the north. Subsection 408.035(1)(c) - comparisons of quality; and Subsection 408.035(1)(e) - joint, cooperative or shared resources; and Subsection 408.035(1)(g), (h), and (k) - need for research, educational and training programs or facilities for medical and health care professionals; and Subsection 408.035(1)(h) and Rule 59C-1.033 - recruitment, training and salaries for staff The parties stipulated that the applicants have a history of providing quality care. Martin Memorial was accredited with commendation by the JCAHO in 1997, which is now called accreditation without Type I Recommendations. That was followed, in July 2001, with a score of 93 on survey items with some follow-up improvements required related to patient assessment and nutrition. Martin Memorial offers internships, and residencies for training non-physician medical personnel from Barry University, Indian River Community College, and Florida Atlantic University. The cancer center at Martin Memorial is affiliated with the Moffitt Center. Despite the absence of an open heart program, Martin Memorial has participated in clinical trials of cardiac drugs. The Shands Healthcare System of nine affiliated hospitals, including two research and teaching hospitals, is the model for the relationship proposed with Martin Memorial. The partnerships are intended to upgrade the care available in community hospitals and to establish, for complex cases, referral networks for the Shands teaching hospitals. Shands has already satisfied itself that Martin Memorial meets its due diligence test for the quality of its existing program and philosophical compatibility. If Martin Memorial's CON is approved, Shands will assist in training staff for the program. Initially, the program will have one cardiovascular surgeon, a University of Florida medical school faculty member, in Martin County. When that surgeon is ill or on vacation, others from the University of Florida will be available. The logistics of the plan raises questions about the adequacy of coverage to meet the 24-hour requirements of Rule 59C-1.033, Florida Administrative Code. In the JCAHO survey process, Bethesda received a score of 97, as a result of its survey in June 2000, and was accredited for the maximum allowable time, three years. Personnel for a Bethesda program can be appropriately trained at Orlando Regional, a statutory teaching hospital with a high volume open heart program. In June 2000, BRCH received a JCAHO score of 96. BRCH maintains a scholarship program for new nurses making a two-year commitment, and an on-site educational department with a preceptorship for training operating room and emergency room nurses. Nursing students from Florida Atlantic University (FAU), which is located across Glades Road from BRCH, rotate at BRCH. FAU is in the process of establishing a medical school. There is a severe shortage of nurses in the United States, in Florida, and in District 9. All of the hospitals in District 9 have resorted to highly competitive and innovative recruitment and retention strategies, including international recruiting, signing bonuses, child care and, of course, rising salaries and benefits. The demand is greater and shortages more severe in highly specialized areas, such as critical care, telemetry and open heart surgery nursing. The average age of nurses has also increased to 46 or 47 years old, while enrollment in nursing schools and the number of nursing school professors have declined. All of the applicants concede that recruiting and retaining nurses for new open heart program will be a challenge. The likely results are a loss of experienced nurses from existing programs, an increase in total health care costs, an increase in vacancies, and, at least temporarily a decline in the quality of experienced nursing care in existing open heart programs. At this time, there is no evidence that declining open heart utilization will eventually alleviate the shortage of experienced nurses. It has, so far, only eased the need to resort as frequently to other extreme and expensive alternatives, including pay overtime, contracting with private agencies, and bringing in traveling nurses. Subsection 408.035(1)(m) - size, scope and fixed equipment cost at BRCH; Subsection 408.035(2)(c) - alternatives to new construction; and Subsection 408.035(1) (h) - funding for BRCH BRCH plans to construct a 74,000 square-foot cardiac care facility, which will include two open heart operating rooms and two cardiac cath labs, an electrophysiology lab, 12 cardiovascular intensive care beds, and 18 cardiac cath lab bays. Only 18,568 square feet are attributable to the open heart operating rooms and cardiovascular intensive care unit which compares favorably with Bethesda's estimate of 17,759 square feet for the same functions. It is not possible, therefore, to conclude that the size of the BRCH project is excessive as compared to that proposed by Bethesda. BRCH underestimated the cost for fixed equipment for the open heart project by approximately $1.6 million. That omission resulted in understated estimates of depreciation by approximately $275,000. The total project cost for BRCH is approximately $2.2 million when almost $2 million in omitted equipment costs is added to the original estimate of $20 million. All pending capital projects, as shown on Schedule 2 of the BRCH application, total $54 million. With combined cash and investments of $160 million, the BRCH foundation has sufficient funds for the hospital's projects. Although BRCH earned profits of $6.6 million and $7.3 million in 1998 and 1999, respectively, the hospital lost $30 million from operations due to billing and collection errors in 2000. BRCH has a donor who has stated a willingness to donate $20 million for the cardiac care center. BRCH has the funds necessary to build the facility. With Medicare capital cost reimbursement completely phased out, there is insufficient evidence of a direct impact on health care costs based on this proposed capital expenditure. Subsection 408.035(1)(i) - short and long term financial feasibility Martin Memorial initially projected that its program would perform 360 open heart surgeries in year one and 405 in year two. As a result of changes in the use rate, Martin Memorial lowered its second year projection to 375 surgeries while increasing staffing levels. Even if projected open heart surgery revenues of $264,000 in the second year decline in proportion to expected lower utilization, estimated angioplasty revenues of $468,000, are sufficient to make up the deficit and to keep the combined program financially feasible in the short and long term. Bethesda projected volumes of 165 open heart surgeries in the first year and 270 in the second year. Assuming Bethesda's revenues are 90% of the district average, the combined net profit for open heart and angioplasty services is reasonably expected to be approximately $750,000 in the second year operations. The project is profitable, therefore, financially feasible in the short and long term. BRCH's expert projected volumes of 308 open heart surgeries and 289 angioplasties in the first year, and 451 open heart surgeries and 422 angioplasties in the second year. If utilization projections are correct, then BRCH will receive incremental net income of $1.6 million from the open heart surgery program and $825,000 from the angioplasty services. Factoring in claims that the Medicare case weight was overstated and depreciation underestimated, the BRCH project is, nevertheless, financially feasible for the short and long term. Typically, any open heart surgery program that can reach volumes in the range of 200 to 250 cases, will be financially feasible. The establishment of an open heart program also has a "halo effect," for the hospital, attracting more patients to the cardiac cath labs and other related cardiology services. Open heart surgery and angioplasty tend to be profitable, generating revenue which hospitals use to offset losses from other services. Subsection 408.035(1)(j) - needs of HMOs All of the applicants will enter into contracts with, but none is a health maintenance organization. Subsection 408.035(1)(l) - probable impact of fostering competition to promote quality assurance and cost-effectiveness Hospitals with higher volumes of open heart surgeries and angioplasties usually have higher quality as measured by lower mortality rates and fewer complications. The open heart surgery rule, in effect at the time the applications were filed, established a minimum volume of 350 annual admissions for existing providers. In the rule as amended on January 24, 2002, the minimum volume for existing programs was reduced to 300. The divisor in the formula for determining need, which represents the average size of a program in the district, was 350 prior to amendment and 500 subsequently. The minimum and average volumes in the rule set, in effect, the protected range for existing programs, not the optimal size, or "cut point" at which outcomes are worse below and better above. According to the American College of Cardiology and American Heart Association (ACC/AHA) the evidence is clear that outcomes are better if an individual performs at least 75 procedures at a high volume center with more than 400 cases. The ACC/AHA guidelines indicate, although more controversial and less clearly established, that acceptable outcomes may be achieved if the individual operator performs at least 75 procedures in centers with volumes from 200 to 400 cases. Because the relationship between higher volumes and better outcomes is continuous and linear, and because research showing the benefits of primary angioplasty with or without open heart surgery back-up is preliminary and limited, the position of the ACC/AHA is, in summary, as follows: The proliferation of small angioplasty or small surgical programs to support such angioplasty programs is strongly discouraged. (Journal of the American College of Cardiology, Vol. 37, no. 8 June 15, 2001, pp. 2239xvii (Tenet Exhibit 5)) An open heart program at Martin Memorial will redirect cases that would otherwise have gone to Lawnwood, PBGMC, and JFK. The proposed Martin Memorial Service area overlaps that of Lawnwood in southern St. Lucie County, an area which generates one quarter of the open heart cases at Lawnwood. Lawnwood is reasonably expected to lose 56 open heart cases a year with total volume going down below 300, resulting in loss of $1.8 million, or 20% of its total revenues. Lawnwood would have unacceptably low volumes threatening the quality of the open heart program. PBGMC, as a result of a new program at Martin Memorial, will lose approximately 170 and 180 open heart cases annually and an equal number of angioplasties reducing its open heart volume to approximately 700 a year. The financial loss would range from $4 to $5 million a year, as compared to total net income which was between $20 and $30 million a year for past three years. PBGMC would not suffer an adverse impact sufficient to threaten either the quality or the financial feasibility of the open heart program or total hospital operations. JFK, which currently receives most of the angioplasty referrals from Martin Memorial, is expected to lose from 25 to 30 open heart cases, and 65 to 70 angioplasties each year during the first two years of a Martin Memorial program. The estimated financial loss to JFK is $1.7 million, a significant detriment when compared to $2.8 million in net income from operations in calendar year 2000. Approval of open heart program at Bethesda will adversely affect case volumes at JFK and Delray. Bethesda projected that, in its first year, 75% of its cases would have gone to Delray and 25% to JFK, and that by the third year, the split would be even at 50% from Delray and 50% from JFK. JFK, depending on the approach to the impact analysis, will lose from 40 to 60 open heart cases in the first year, from 90 to 110 in the second year, and from 115 to 170 in the third year of a program at Bethesda. The volumes of lost angioplasties is expected to be slightly higher. The resulting combined open heart and angioplasty financial loss is $6.6 million, far greater than the significant detriment expected from a Martin Memorial program alone. The annual volume of open heart cases at JFK would be approximately 400 to 500, assuming flat not continued declining utilization. If Bethesda offered the service, Delray's open heart volumes would decline by 124 cases in the first year and by 248 cases in the third year of operations, decreasing total volume to 500 or 600 annual surgeries. Delray had a net income from operations of approximately $24.7 million in 2000, which would indicate that neither quality nor financial stability would be significantly adversely affected. If an open heart program is approved for BRCH, the volumes of cases at Delray and North Ridge will decline. Delray would be expected to lose 163 open heart cases and 235 in years one and two, respectively, and equal numbers of caths and angioplasties, resulting in annual open heart cases reduced from the low 700s to approximately 500 cases. Delray's pre-tax revenue was $39 million in 2001. In terms of quality and financial stability, Delray can withstand the adverse impact of a new program at BRCH. North Ridge would lose approximately 124 open heart cases in year one and 178 in year two, and similar numbers of caths, reducing open heart volumes from the upper 700s to approximately 600 annual cases. North Ridge's pre-tax income was $21 million for the year ending May 31, 2001. It appears that North Ridge could, even with the adverse impact of BRCH, maintain a quality, financially viable open heart program. Subsection 408.035(l) - probable impact on costs The applicants, all not-for-profit corporations, contend that the fact that District 9 has only for-profit open heart hospitals affects charges and is a not normal circumstance for the approval of one or more not-for-profit. District 9 is the only district in Florida in which all open heart providers are for-profit corporations. Statewide, not-for-profit open heart hospitals charge 31% less than for-profit. Martin Memorial's CON proposal includes a charge structure below that at existing programs. Bethesda's planned charges are 10% less than the District 9 average for open heart and angioplasty services. BRCH is the applicant which is most likely to increase competition in District 9, based on the Herfindahl-Hirschman Index (HHI). The HHI's measurement of competition in a market used by economists frequently to analyze anti-trust issues. Charges are not a factor in up to 75% of open heart/angioplasty cases reimbursed by payors, such as Medicare, at set flat rates. In approximately 10% of cases, including complex "outlier" cases exceeding the range for flat rate reimbursement and for other payors on a percent-of-charges basis, charges are not irrelevant. But, the evidence to demonstrate lower charges were applicable to patients of the same severity was questionable. Subsection 408.035(1)(o) - continuum of care There is insufficient evidence the any applicant is preferable based on its ability to promote a continuum of care in a multilevel system. Subsection 408.035(2)(a) - alternatives to inpatient services There are no alternatives to inpatient services for open heart surgery and angioplasty patients. Subsection 408.035(2)(d) - patients who will experience serious problems in the absence of the proposed new service The applicants and AHCA determined that new open heart surgery programs are needed mainly to provide emergency or "primary" angioplasty to patients suffering heart attacks (acute myocardial infections). Primary angioplasty is an alternative to "clot busting" medications, or thrombolytics, and to open heart surgery. Performed on an emergency basis, the three different treatments are used to restore blood flow before heart muscle dies. Because "time is muscle," patients benefit only if treated within a relatively short time after the onset of symptoms. The goal is 90 minutes from door-to-balloon for angioplasty. The decision to treat a patient with a particular therapy is based on a number of factors assessed during triage. Paramedics in consultation with ER doctors at the receiving hospital frequently begin triage and administering medications and oxygen in ambulances equipped with sophisticated diagnostic equipment. As the statistical data demonstrates, angioplasty, whether scheduled or emergency, is increasingly becoming the preferred therapy. Some studies have shown improved outcomes, higher survival rates and fewer complications, from primary angioplasty as compared to thrombolytics. Comparisons have not been made over extended periods of time, and the apparent benefits of angioplasty have not been duplicated in community hospitals as compared to clinical trials in high volume research centers. Estimates of the number of people who could benefit from the availability of angioplasty services at the applicants vary based on the number of elderly in the service area, the number of non-traumatic chest pain ER visits, delays in transfers of emergency patients, and the number of patients being transferred to existing providers for angioplasties or open heart surgeries. Martin Memorial selected five patients as examples of those who could be served in an open heart program at Martin Memorial. The anecdotal evidence of transfer "delays" is insufficient to demonstrate bed unavailability or capacity constraints. Martin Memorial-Stuart and Martin Memorial South transferred 240 heart attack patients to open heart surgery hospitals. Only 18 of the emergency heart attack patients who presented at the Martin Memorial ER were transferred from the ER. Approximately ten patients a year are so unstable that an intra- aortic balloon pump is required during transfer. Martin Memorial presented evidence of delays of two hours or more in transfers of 84 patients from its cath labs to open heart surgery hospitals. The transfer records, created for subsequent certificate of need litigation, were of questionable probative value. The case studies were inadequate to establish whether "delays" were reasonable or not. Factors such as physician consultation time, time to stabilize a patient for transfer and the assumed travel time seem to have been included in the time periods. Bethesda transferred 270 patients for cardiac care from October 1999 through September 2000. Thirty patients were transferred, from November 2000 to July 2001, for angioplasties or open heart surgery after having cardiac caths at Bethesda. Bethesda failed to establish that transfers were delayed due to capacity problems at existing hospitals because emergency patients were not classified separately, and the causes of the time lapses were not identified. Of the applicants, BRCH has the busiest ER, with 50,000 to 52,000 annual visits compared to approximately 48,000 at the two Martin Memorial locations combined. BRCH admitted 439 heart attack patients through its ER during the year ending June 30, 2000. The majority of patients are treated with thrombolytics at BRCH. BRCH transfers approximately one emergency heart attack patient a week on average, or from 30 to 50 a year, for interventional cardiac procedures. BRCH's presentation of evidence of delays in transfers was flawed. The data was collected and used only for litigation, and was incomplete. Some patient records were lost and others were deleted due to inaccurate data. Of the applicants, BRCH is located in an area with the largest percentage of the population age 65 and older, approximately 35%, as compared to 24% in Martin Memorial's service area. Agency Consistency Martin Memorial, through expert witness testimony, compared its situation to that of Brandon, a hospital in AHCA District 6, which was issued an open heart surgery CON in 2001. The expert noted that Martin Memorial and Brandon are both in five county health planning districts, and that they are 19 and from 15 to 17 miles, respectively, from the nearest open heart provider. Three of the counties in District 6 have open heart programs, including Hillsborough County where Brandon is located, as compared to two District 9 counties, St. Lucie and Palm Beach, but not Martin. The Martin Memorial primary service area projected population is 238,861 for 2004, 24.1% aged 65 and older. The Brandon service area population projection is 309,000 for 2004, with 10.5% aged 65 and older. Brandon has 255 beds, Martin Memorial-Stuart has 236. Brandon had 53,000 emergency room visits, and Martin Memorial, at both locations, had 48,503 in 1999. Before defaulting to zero, the numerical formula yielded a need for 3.27 additional open heart programs in District 6 as compared to 3.9 in District 9. Other specific comparisons favorable to Martin Memorial included the number of heart attack patients presenting at its ER, cath lab volumes, patient transfers for open heart and angioplasty procedures. Among others, there are several significant distinguishing facts in Florida Health Sciences Center, Inc. v. Agency for Health Care Administration, Case No. 00-0481CON, (R.O. Mar. 30, 3001, F.O. Oct. 17, 2001) aff'd per curiam sub nom, University Community Hospital v. Agency for Health Care Administration, Case No. 1DO1-3592, et al. (Fla. 1st DCA Sept. 19, 2002), the Brandon case. In that case, the two existing providers performing fewer than 350 cases a year, Blake Medical Center, and Manatee Memorial Hospital, both in Manatee County, were mature programs located 40 miles from Brandon with no service area overlap. By contrast, Lawnwood which is not a mature program and, therefore, has not reached its potential volume, is 20 miles from Martin Memorial, and has an overlapping service area. Martin Memorial's ER volume and the number of transfers from its ERs are the combined experience from two locations. The more accurate comparison is 27,000 ER visits at Martin Memorial-Stuart to 53,000 at Brandon. Emergency heart attack patients presenting at Martin Memorial South would continue to require transfers for primary angioplasty. Finally, the decision in Brandon was based, in large part, on transportation difficulties, inadequate interfacility ambulances and traffic congestion, which are not factors in District 9. Factually, the case of Halifax Hospital Medical Center, d/b/a Halifax Medical Center v. Agency for Health Care Administration, et al., Case No. 95-0742 (AHCA Jan. 14, 1997) is also distinguishable. The applicant could have no effect on the low volume providers located 80 miles to the north. That was one not normal circumstance. Need existed because of another not normal circumstance, i.e., capacity constraints at the only other provider in the same primary service area. In Oak Hill Hospital v. AHCA, Case No. 00-3216CON (R.O. Oct. 4, 2001, F.O. Jan. 22, 2002), appeal dismissed sub nom Hernando HMA, Inc. v. HCA Services of Florida, Inc., Case No. 1DO2-854 (Fla. 1st DCA June 6, 2002), the two approved applicants were in separate counties which constituted entirely separate health care markets. Neither applicant would adversely affect the low volume providers. After the Administrative Law Judge recommended approval of the Citrus County applicant, AHCA, engaging in what appears to be a comparative review of the two remaining applicants from Hernando County, approved a second applicant from the same district at the same time. Some facts are similar to those in this case: The average drive time between hospitals was 30 minutes; transfers and admissions procedures required additional time; there was a recognition of increasing preferences for reperfusion of heart muscle using primary angioplasty; patients and families experience stress and anxiety as a result of transfers. Institution-specific issues included the transfer of 600 cardiac patients by ambulance from Oak Hill, the size of the cardiology and cardiac cath programs (1,641 caths in 1999), the larger elderly population in the service area, and the hospital's size.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Agency for Health Care Administration enter a final order denying Certificate of Need Application Number 9248 filed by BRCH, Certificate of Need Application Number 9249 filed by Martin Memorial, and Certificate of Need Application Number 9250 filed by Bethesda. DONE AND ENTERED this 11th day of November, 2002, in Tallahassee, Leon County, Florida. S 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 11th day of November, 2002. COPIES FURNISHED: Lealand McCharen, Agency Clerk Agency for Health Care Administration Fort Knox Building 3, Suite 3431 2727 Mahan Drive Tallahassee, Florida 32308-5403 Valda Clark Christian, General Counsel Agency for Health Care Administration Fort Knox Building 3, Suite 3431 2727 Mahan Drive Tallahassee, Florida 32308-5403 Gerald L. Pickett, Esquire Agency for Health Care Administration 525 Mirror Lake Drive, North Sebring Building, Suite 310K St. Petersburg, Florida 33701 Lori C. Desnick, Esquire Agency for Health Care Administration Fort Knox Building 3, Suite 3431 2727 Mahan Drive Tallahassee, Florida 32308-5403 Stephen A. Ecenia, Esquire David Prescott, Esquire Rutledge, Ecenia, Purnell & Hoffman, P.A. 215 South Monroe Street, Suite 420 Post Office Box 551 Tallahassee, Florida 32302-0551 W. David Watkins, Esquire R. L. Caleen, Jr., Esquire Watkins & Caleen, P.A. 1725 Mahan Drive, Suite 201 Post Office Box 15828 Tallahassee, Florida 32317-5828 H. Darrell White, Esquire William B. Wiley, Esquire McFarlain & Cassedy, P.A. 305 South Gadsden Street Post Office Box 2174 Tallahassee, Florida 32316-2174 Paul H. Amundsen, Esquire Amundsen, Moore & Torpy, P.A. 502 East Park Avenue Post Office Box 1759 Tallahassee, Florida 32302 Robert D. Newell, Jr., Esquire Law Firm of Newell & Terry, P.A. 817 North Gadsden Street Tallahassee, Florida 32303-6313 C. Gary Williams, Esquire Michael J. Glazer, Esquire Ausley & McMullen 227 South Calhoun Street Post Office Box 391 Tallahassee, Florida 32302 Seann M. Frazier, Esquire Michael J. Cherniga, Esquire Greenberg Traurig, P.A. 101 East College Avenue Tallahassee, Florida 32302
Findings Of Fact The Parties With Shands Teaching Hospital prevented by law from participating, there are only two parties to this proceeding: the applicant, St. Luke's Hospital Association d/b/a St. Luke's Hospital, and the Agency for Health Care Administration. St. Luke's St. Luke's is a 289-bed not-for-profit hospital located in the southeast part of the City of Jacksonville, Duval County. Jacksonville is in Agency District 4. The District includes Baker, Nassau, Clay, St. John's, Flagler and Volusia Counties as well as Duval. St. Luke's is one of a number of affiliates of the Mayo Foundation whose mission it is to provide excellent medical care through practice, education, and research on a multi-campus but unified approach. Other affiliates of the Mayo Foundation are Mayo Clinic Jacksonville (located about 9 miles east of St. Luke's), Mayo Clinic Scottsdale, Arizona and three organizations in Rochester, Minnesota: St. Mary's Hospital, Methodist Hospital and Mayo Clinic Rochester, the famed "Mayo Clinic." Founded prior to the turn of the century, Mayo Clinic was the first multi-specialty medical group practice in the country. It delivers health care based on an integrated, team approach to medicine in which specialists from many different areas consult together for the benefit of the patient, and in which a single medical record accompanies the patient through all phases of care, outpatient or inpatient. The mission of the Mayo Foundation is also that of Mayo Clinic Jacksonville. Providing outpatient services at its campus, Mayo Clinic Jacksonville employs approximately 170 physicians covering all specialties and sub-specialties for adult patients with the exception of obstetrics. The primary role of St. Luke's in the Mayo organization is to provide the inpatient component for the Mayo Clinic Jacksonville medical practice, including provision of tertiary services. In light of this arrangement, St. Luke's patients tend to be more acutely ill than the average hospital patient so that the typical St. Luke's patient has more complex, resource consuming medical problems than the typical hospital patient. Through the arrangement with Mayo Clinic Jacksonville, St. Luke's has evolved into a tertiary care facility serving Florida and beyond. Among the complex tertiary services provided at St. Luke's that require a certificate of need are open heart surgery and bone marrow transplantation. But liver transplantation is not presently authorized at St. Luke's. Others under the Mayo Foundation umbrella, however, have experience in liver transplantation. In fact, Mayo Clinic Rochester operates one of the most successful liver transplant programs in the United States. Its outcome experience, (transplant patient survival rates for one and three years), ranks in the top 3 of the nation's transplant programs, with its 3-year survival rate being ranked first. The Mayo Clinic Rochester program, therefore, has an excellent national and international reputation. The St. Luke's program will rely and benefit from the resources, experience, efficiencies and clinical and research protocols of the Mayo Clinic Rochester program. But neither the Rochester program nor the Mayo Foundation, itself, controls St. Luke's. St. Luke's Health System has the controlling interest in the hospital. St. Luke's Hospital did not need the approval of any of the Mayo Foundation affiliates or the Foundation, itself, to apply for the CON at issue in this proceeding. The Agency for Health Care Administration The Agency for Health Care Administration is the "single state agency [designated by statute] to issue, revoke, or deny certificates of need and to issue, revoke, or deny exemptions review in accordance with the district plans, the statewide health plan, and present and future federal and state statutes." Section 408.034(1), F.S. The Service Planning Area and Existing Providers in the State. In addition to being located in AHCA District 3, St. Luke's is within Service Planning Area One. Described by Rule 59C-1.044, Florida Administrative Code as "district 1, district 2, district 3 excluding Lake County and district 4 excluding Volusia County," Service Planning Area One, from the perspective of land mass, is the largest of the state's four service planning areas. It covers almost half of the state's territory from just north of Orlando through the western panhandle. Another liver transplantation center already exists in service planning area one: the Shands Teaching Hospital at the University of Florida, in Gainesville. Elsewhere in the state, Jackson Memorial Hospital (located in Dade County) provides for liver transplantation services. There is a third facility with a certificate of need allowing it to provide liver transplantation services: Tampa General Hospital. But Tampa General's program is inactive and has been for some time. The Application's Projection for Start-Up Originally, St. Luke's projected that its first year of operation would be 1995. Due to litigation, the program would not now begin until sometime in 1997, with the second year in the 1998/1999 time frame. Pre-hearing Stipulation The parties stipulated to the findings listed in findings of fact Nos. 16 - 20. St. Luke's has a record of providing quality of care and it will provide quality of care in its liver transplantation program. The St. Luke's application demonstrates the availability of resources, including health manpower, management personnel, and funds for capital and operating expenditures and for project accomplishment and operation. The St. Luke's application proposes reasonable costs and methods of proposed construction to implement the liver transplantation program. Rule 59C-1.044, Florida Administrative Code, sets forth standards and need determination criteria for liver transplantation programs. The St. Luke's application satisfies all staffing, other operational and teaching/research requirements set forth therein such as found at (3), (4), (7)(b), and (7)(c). The St. Luke's application also must meet the five transplant minimum volume requirement found at subsection (7)(d). The St. Luke's application, to the extent it involves new construction, has considered alternatives to new construction such as modernization or sharing arrangements which have been implemented to the maximum extent practicable. Considerations Relating to Need 1. History and Current Status of Florida Liver Transplantation Programs Under CON Regulation. On August 7, 1988, AHCA's predecessor, the Department of Health and Rehabilitative Services, adopted what is now the "Organ Transplantation" rule, Rule 59C-1.044, Florida Administrative Code. The rule provided for a "grandfather" process to recognize programs in existence prior to the date of the legislation requiring certificate of need review for such programs, October 1, 1987. The grandfather process allowed Shands, Jackson and Tampa General to receive certificates of need for liver transplantation programs without the normal certificate of need scrutiny. Like St. Luke's, Shands is located in Service Planning Area One; Jackson is in Service Planning Area Four, and Tampa General in Service Planning Area Two. Shands and Jackson Memorial Of the three, Shands and Jackson are highly productive, very active liver transplantation programs. The two transplant programs have been in existence for more than 10 years. Growth of the programs has been slow and gradual. For Shands, growth has been intermittent with stops and starts but toward the end of 1993, it began to experience significant volume. Likewise, after 7 years or so of gradual growth, Jackson began to achieve significant volume in late 1993. Today, both have evolved to the point that in addition to active adult programs, they have active pediatric programs as well. The medical component of the Shands program is provided by the University of Florida and its employed physicians; likewise, the Jackson Memorial program is served by University of Miami physicians. Forty percent of Shands' volume comes from Service Planning Area One, 57 percent from elsewhere in the state, and 3 percent from out of state. Sixty percent of Jackson's liver transplant volume comes from Service Planning Area Four, twenty percent from out of state, ten percent from out of the country and the remainder from Florida outside Service Planning Area Four. There is little, if any, competition between the two. In fiscal year 1995, Shands performed 43 adult liver transplants and 11 pediatric transplants. Shands for calendar year 1995 through September 1 performed 49 adult liver transplants and 7 pediatric transplants. For the twelve months ending in August, 1995, Jackson Memorial handled a total volume of 170 liver transplants, with approximately 148 being adult cases. The volumes of both programs are sustainable. They depict, furthermore, mature and viable programs. In short, after slow growth until late 1993, both Shands and Jackson Memorial are well on their way to becoming liver transplantation centers of excellence. b. Tampa General Quite the opposite is the situation for Tampa General. It has performed only seven or eight transplants over the last 5-year period with four of those in 1992. At the time of hearing, three of the 1992 patients had expired. Moreover, no transplants had been performed in 1995. In actuality, Tampa General as of September, 1995, had not added any patients to its liver transplantation wait list through the first three quarters of 1995 and all of 1994, the previous calendar year. There has not been, therefore, an evaluation process in place at Tampa General which would place transplant candidates in a position to receive the service since 1993. Tampa General's liver transplantation CON is on the verge of being abandoned in fact, if not in law. 2. Projected Growth at Shands and Jackson It is reasonable to assume that 10 to 15 percent of liver transplants at Shands will be performed on pediatric patients in the near future. But, the number of children who have end stage liver disease is not increasing as rapidly as the number of adults. This increase in adult need surpassing the increase in pediatric need will continue so that the ratio of adults to children will increase over the long term. For calendar year 1995, it was anticipated at time of hearing that Shands will perform 70 total liver transplants, with approximately 60 adult cases. The current ratio of adult to pediatric cases will hold for 1996 at Shands. It is anticipated that Shands will handle 80 to 90 transplants in 1996, of which 70 to 80 will be adult cases. If the percentage of pediatric cases holds through 1998/1999 (the second year of St. Luke's program, assuming it receives a CON) Shands should handle a total of 90 to 100 liver transplants, with 77 to 90 of those being adult cases. Approximately 13 percent of Jackson's transplant volume is attributable to pediatric patients. For the 12 months ending in August of 1995, Jackson handled a total of 170 liver transplants, with approximately 148 being adult cases. For calendar year 1995 and annually thereafter, Jackson expects to handle 175 to 200 total transplants, or 153 to 174 adult patients, assuming the current ratio of adult to pediatric cases holds. 3. Demand and Florida Resident Outmigration St. Luke's application, using 1991 data, showed that 598 patients were dying annually in Florida from end-stage liver disease. The figure is minimal however; it excludes those under the age of 15 and over the age of 64. Even more significantly, it excludes patients whose liver damage was caused by alcoholism. It excluded alcoholic liver patients because in 1991 they were not considered good candidates for liver transplantation. Today, however, 25 percent of liver transplants are done on patients with alcoholism. Furthermore, it has become more common for patients older than 64 to be accepted for liver transplantation. In sum, there are well in excess of 600 patients in Florida every year who need liver transplantation services. A great number of those in need of liver transplantation services in Florida, Service Planning Area One and AHCA Districts 3 and 4 are not receiving needed services. It is undisputed that in the United States there is tremendous number of patients with end stage liver disease who could benefit from liver transplantation services. For example, there are 30,000 deaths per year due to alcoholism-induced liver disease, alone. At the same time, Hepatitis C is on the rise. While not all Hepatitis C patients suffer end-stage liver disease, a stable percentage do. The rise in Hepatis C, therefore, creates an ever- increasing demand for liver transplants. The current system for liver transplantation comes nowhere close to providing services to all of those in need. In short, the nation's current system is overwhelmed by demand. The same is true at the state level for Florida, and at a micro-level for Service Planning Area One and AHCA Districts 3 and 4. The inability of the Florida liver transplantation centers to meet the needs of Florida's end-stage liver patients has forced some patients to resort to out-of-state services. In 1994, for example, one-third of all Florida residents who received liver transplants did so at an out-of-state program. By sending 10 Florida residents to Mayo Clinic Rochester, four of whom received livers, St. Luke's, itself, has contributed to this outmigration. But its contribution is relatively minor, and if St. Luke's application were granted, St. Luke's will certainly meet the majority of the needs of these patients, itself. Despite the growth of the Shands and Jackson Memorial programs, the number of patients leaving the state for such service has consistently been in the 60's range over the last five years. Indeed, as of July 1995, more than 50 percent of Florida residents awaiting liver transplants were on wait lists maintained by programs located outside the State of Florida. Recent approval by Medicare of the Shands and Jackson Memorial programs may decrease the number of patients leaving Florida but by precisely how much did not come to light at the hearing. Despite the consistency in the numbers of Florida patients seeking liver transplantation out-of-state, the percentage of potential patients doing so has declined in recent years. From 1991, when 54 percent of patients left the state, the percentage declined to 25.3 percent in 1994, the last full year of data available at the time of hearing. The percentage decline is due, no doubt, to the dramatic improvement in the Shands and Jackson Memorial progress. Recent additions of Drs. Rosen and Tzakis (particularly of Dr. Tzakis), to the programs of Shands and Jackson Memorial, respectively, have enhanced the standings of the programs, and should further propel the decrease in percentage of patients seeking service out-of- state. But, of course, just how much the percentage will decrease is unknown and even if the percentage continues to drop, the raw number of patients leaving the state is not dropping. Raw numbers are not dropping because the raw number of those seeking liver transplant services of the many in need of such services is rising. At bottom, outmigration is a problem and demonstrates a need. While the reasons patients leave Florida for liver transplantation services are complex, including the need to be near out-of-state family members, and the effects of managed care contracts and Medicare administration, there is a significant number of patients leaving Florida for liver transplant programs elsewhere. The addition of another program, one that promises to be active as well as of high quality can only assist in meeting the presently unmet need in Florida demonstrated by outmigration. 4. Key Issue The group of patients with end stage liver disease in Florida and elsewhere cannot all be saved, however, because there are not enough organ donors. There are not, therefore, sufficient livers available for transplantation to meet the enormous demand. Thus, the key factual "need" issue in this proceeding is not whether there is an adequate pool of Florida residents with end-stage liver disease who could benefit from access to a new liver transplantation program. The key issue, instead, is whether adequate donor livers are available to meet the increased ability a St. Luke's program would offer to serve the demand overwhelming the current system. Likely Increase in the Number of Donors UNOS In the 1980's, Congress passed the National Organ Transplantation Act. A task force was set up to look at the issues of organ donation and allocation in the United States. Among the task force's recommendations was to establish a national system for organ allocation. The Executive Branch was authorized by Congress to set up such a national network. The Department of Health and Human Services opted to contract the responsibility for national organ allocation to a private organization: the United Network for Organ Sharing (UNOS). UNOS has a Board of Directors with both physician and non-physician representatives. The board is composed of members from the public, including patients, representatives of allied health fields (such as the American Hospital Association and the American Nursing Association), and representatives from other walks of life. UNOS has an extensive committee structure designed to facilitate the development of policy. Allocation programs have been developed. Although they do not yet have the force of law, these programs are generally voluntarily followed nationwide. OPOs An "Organ Procurement Organization," (OPO), set up to serve a specific geographic region, handles the actual organ procurement and distribution. Florida has five OPOs. They are located in Miami, Southwest Florida, Tampa, Orlando and Gainesville. The Florida OPOs utilize a single statewide liver transplant candidate wait list for determining which patients should receive the next donor liver procured by any one of the five OPOs. Each name on the list is given a ranking, with the allocation decision being based on that priority. The ranking is based on numerous factors, including severity of the patient's condition and length of time on the wait list. The Florida OPOs are part of UNOS Region 3, which consists of Florida, Louisiana, Arkansas, Mississippi, Alabama and Georgia. If a procured organ is not suitable for transplant on any patient found on any local or statewide list in a particular state of a UNOS Region, then transplant centers within other states which are a part of the region have the next allocation priority for that donor organ. If the procured organ is not suitable for use at any transplant center within the region, then the organ is made available on a national network basis. Numbers rising Based on the analysis of forecast ranges which follows, it is reasonable to expect that, at least by 1997, there will be 300 livers retrieved in Florida available for use by Florida's adult programs, including St. Luke's. Moreover, a conservative minimum of 165 donor livers procured in other states within UNOS Region 3 are available, and will continue to be available, to the Florida programs, including the St. Luke's program. Current literature projects between 28 and 44 donors per one million population as a reasonable range of expectation for the donor cadaver rate in the United States. A number of OPOs are currently retrieving organs at a rate of over 30 per one million population. For example, the Orlando OPO, TransLife, achieved an organ donor rate of 33.9 per one million population in 1994. Two of the other Florida OPOs have also experienced organ donor rates in excess of 33 per one million population. In 1994, the State of Florida had 351 organ donor cadavers, which translates to 25 donors per one million population. Historically, there has been a 6 percent annual growth rate in the number of organ donor cadavers. Based upon the most recent Florida data, the 6 percent annual growth rate assumption for organ donor cadavers is conservative. Florida realized 203 such organ donors for the first six months of 1995 which, on an annualized basis, constitutes a 16 percent increase over 1994. This annualized data yields a 1995 Florida organ donor rate of 29 per one million population, compared to the 25 per one million population in 1994. In order to determine the number of donor livers available from any given pool of donor cadavers, it is reasonable to assume a conversion ratio (a percentage representing organs donated which will be suitable for use) of between 70 to 80 percent. In the case of individual OPOs, on occasion, the rate can even be as high as 85 percent but all the experts in this case agreed that 70 percent is achievable. The most likely point at which the conversion ratio would fall is somewhere between 70 and 80 percent with 80 percent being the maximum if providers were aggressive in using all available organs appropriate for transplantation. In comparison, the 1994 Florida conversion rate was 66 percent. For the first six months of 1995, the ration was 118 out of 203 making the conversion rate 58 percent. These lower than normal conversion rates for Florida are indicative of a situation in which there is still a large, untapped pool of donor livers which could be utilized in Florida because only the most ideal livers have been used by Florida's two active programs. In other words, donor livers have been available that programs more aggressive than Shands and Jackson would be able to utilize. Based upon the annualized 1995 data as a benchmark, but assuming the more appropriate 70 to 80 percent conversion rate range (instead of 50 percent) yields 284 to 325 total adult donor livers that should have been available to Florida programs in 1995. Applying the TransLife donor rate of 33.9 per one million population, (a reasonable rate to use in this proceeding because of the national range of 28 to 44 per million and since Translife is located in Florida) to a projected 1997 Florida population of 14.5 million yields 334 to 393 total livers. Accounting for the fact that 85 percent of liver transplants are for adults, adjusting the range of total livers by 15 percent yields 292 to 334 adult livers by 1997. Given that the 1995 annualized rate is already at 29 per one million population, a 30 per one million population rate is a reasonable expectation for the immediate future. Applying a rate of 30 per million population rate, a rate more conservative than the actual TransLife rate, to the 1997 Florida population projection yields 435 donor livers. Applying the same conversion rate and pediatric adjustment methodology then yields a range of 259 to 296 adult donor livers available to Florida programs by 1997. Applying the historical growth rate of 6 percent to the 1995 base of 406 total donor organs yields 456 donor livers by 1997. Applying the conversion rate range and pediatric adjustment to this projection then yields 271 to 310 adult donor livers from Florida in 1997, or 319 to 365 total livers. Available UNOS Region 3 Livers not Utilized by Florida Programs Florida programs do not have to rely upon donor livers procured in Florida alone because supply is available from UNOS Region 3, a net exporter of donor livers nationwide. Shands has used relatively few livers procured in other states in Region 3. For example, 95 percent of the donor livers utilized by Shands were procured in Florida. Jackson has used more from out of state but still the great majority of the livers procured for its program come from within Florida. Between January and June of 1995, 20 percent of the livers used by Jackson came from other states within Region 3. Of the 505 Region 3 livers retrieved in 1994, 236 were used in the Region 3 state in which they were retrieved. Accordingly 269 livers were used in other states within the Region or elsewhere in the United States. Of these 269 donor livers, 104 were livers generated from Florida that were used at a program outside of Florida. Of the remaining net result, 165 livers, a substantial number could have been used in Florida. Coincidentally, in 1994 exactly 165 donor livers were exported from Region 3 to transplant centers in other regions. The 165 pool of donor livers available from other states within UNOS Region 3 is a conservative level. The overall donor rate for Region 3 during 1994 was 20.3 per one million population. This rate should increase substantially given the fact that it is below Florida and national levels. The number of donors generated in UNOS Region 3 is also growing yearly at a 6 percent rate. Moreover, increased awareness among potential donors is influencing the development of more effective, efficient donor rate levels for Region 3. Under a reasonable projection that the Region 3 use rate should soon hit at least 29 donors per one million population, applying the 70-80 percent conversion range, Region 3 should reasonably produce at least 131-150 additional livers in comparison to the 1994 level. Moreover, a driving force in donor organ awareness is promotion by successful transplant patients who become active in supporting such programs in their communities. The increase in Florida programs' transplant volumes indicates that community awareness has increased. St. Luke's application includes a plan to increase potential donor awareness acceptable to AHCA. Nationally, the average wait list time for a liver transplant candidate is 8 to 12 months. The Shands and Jackson Memorial programs have significantly shorter wait list times for their patients. The Shands wait list time, for example, is 30 to 60 days with a median of 28 days. These shorter wait list times reveal that the Shands and Jackson programs are not experiencing the pressure necessary to force the Florida programs to expand the criteria for donor liver selection, to thereby increase the donor liver conversion rate, and to take advantage of donor livers available from other states in Region 3. There is, in other words, no strain on the system. Currently, because the system is functioning so well for Shands and Jackson Memorial, the two are able to utilize only the most ideal donor livers available. But, with experience, it has become common practice to use livers less than ideal. For example, 10 years ago using a liver donated by a person above the age of 70 was considered absolutely unacceptable. Today, these organs are being utilized. There is room, therefore, in the system for more donor livers to become available. Being more aggressive in the donor liver selection process and using more high risk donors, thereby increasing the number of donor livers available to the Florida programs, need not have an unacceptable impact upon outcomes. Mayo Clinic Rochester provides an example. The liver transplant wait list there is comparable to the national average. The resulting pressure causes its surgeons to be aggressive in selecting donor livers. Their aggressive selection manifests itself in the 85 percent conversion rate of the OPO serving the clinic. Nonetheless, Mayo Clinic Rochester produces the best outcomes among programs in the United States. The lack of pressure on Florida explains why Shands and Jackson Memorial are not utilizing to any significant degree organs which become available from other states within Region 3. If wait list pressure builds, UNOS Region 3 should serve as a source of alleviation. The shorter wait list times and corresponding lack of system pressure, too, given the overwhelming demand for services, demonstrates room for another program to identify and serve those with needs that could be met for liver transplantation services. In short, there should be enough livers available for an active third program, without compromise to the ability of either Shands or Jackson to continue to strive towards becoming centers of excellence, goals within reach in the near future, whether St. Luke's CON is approved or not. 6. Forecast of Transplant Volumes St. Luke's reasonably projects that it will perform at least 15 transplants in year one and at least 30 in year two of operation. These projections underlie St. Luke's financial feasibility forecast. Although it is not possible to predict with precision, it is reasonable to assume 80 percent of St. Luke's liver transplant patients will be Florida residents with the remaining 20 percent coming from primarily UNOS Region 3, the southeast portion of the United States. The St. Luke's program will draw patients from throughout the State of Florida. It is expected that roughly 45 percent will be from Service Planning Area One and the remainder from the southern half of the state. The magnitude of demand and the supply of donor livers will allow St. Luke's to reach these start-up volumes, which constitute reasonable market share. In fact, on the demand side, the magnitude of the current outmigration of Florida residents for liver transplantation services is enough, in and of itself, to support these start-up volumes. Quality and resulting reputation of a liver transplant program has a positive influence on whether physicians refer liver transplants to a facility. The success, efficiency and reputation of the Mayo Clinic Rochester program will enhance the St. Luke's program and promote referrals. Furthermore, St. Luke's will have the ability to tap into Mayo Rochester's proven infrastructure and protocols which will significantly facilitate program implementation. Since the filing of the application in this case, St. Luke's has secured the services of a hepatologist who conducts a liver pre-transplant and post-transplant program at Mayo Clinic Jacksonville. It has also hired a second hepatologist to build additional program strength. St. Luke's is already developing a significant pool of patients in need of liver transplantation which will enable a rapid start-up for the St. Luke's program. Since 1994, St. Luke's has referred 12 patients for placement on a liver transplant wait list. It is expected that the volume of referrals will double before the St. Luke's program comes on line. In sum, St. Luke's volume projections are reasonable. 7. Financial Feasibility The St. Luke's program is financially feasible in the near term. St. Luke's itself has over $54 million in liquid assets and its parent, the Mayo Foundation, has over $1 billion in liquid assets and over $1 billion in total assets. The Foundation fully supports the proposed St. Luke's program from both a start-up and operational standpoint. The Foundation will provide financial support in the unlikely event money is lost in the immediate or long term and St. Luke's finds itself in need of outside support. In any event, there is little likelihood that there will be a cash shortfall to operate the program as proposed in the application. If there were any shortfalls, St. Luke's itself has more than ample cash on hand to ensure its viability. The St. Luke's application contains a hospital-wide budget projection for St. Luke's in 1994 of $4,672,000 in net income. The actual St. Luke's experience in 1994 was a net income of $81,000. The reduction of actual income over the projected income was the result of several extraordinary events, not likely to recur. They either will not be perpetuated or have been accounted for in future years. Indeed, St. Luke's income through the first eight months of 1995 was on the rebound with a net income of $3.8 million. St. Luke's reasonably and conservatively projected its revenues and costs to demonstrate long-term financial feasibility of its program. The program will make a positive contribution of approximately $900,000 to the St. Luke's hospital-wide margin by the second year of operation. Each of the line-items and underlying assumptions related to the calculation of revenues and costs are reasonable and achievable. In fact, they are conservative. For example, St. Luke's marginal costs per case are probably overstated in comparison to Shands current costs. Shands marginal cost per case is $58,000, compared to a projected cost of $75,000, for St. Luke's. The results of St. Luke's financial projections for the project would not be materially affected given that the program will not now be implemented any earlier than 1997. 8. Medicaid Patients According to St. Luke's application, the St. Luke's Hospital proposed liver transplant program is being developed to provide care primarily to Florida residents who are medically in need of transplantation. Medicaid and indigent patients who traditionally have trouble accessing this expensive and sophisticated care will be included in the patients expected to be served. In support of this commitment, St. Luke's Hospital commits to provide care to all patients in need of the proposed service, regardless of ability to pay, up to the point that the financial viability of the program is impaired. Translation of this commitment into action is the representation in Table 7 of the application (Utilization By Class of Pay) that three Medicaid/Indigent patients are expected to be served in Year 1 and an additional four Medicaid/Indigent patients are to be served in Year 2. Petitioner's Ex. 1c., Omissions Response, CON Application, Vol. 4, p. 9. St. Luke's application stresses, however, that its commitment is not limited to just three and four Medicaid/Indigent patients in years one and two: It must be understood, however, that as stated above, St. Luke's commits to provide care to all patients, regardless of ability to pay. If additional Medicaid/Indigent patients are identified they, too, will be served. (e.s.) Id. Lest the agency be misled into thinking that St. Luke's will not make serious effort to identify Medicaid and indigent patients in need of liver transplantation services, the application follows with a statement promising beneficial advancement in medicaid and indigent patient access to liver transplantation services: The result of this commitment will be a significant improvement in access to liver transplant care for those with limited financial resources in Florida. Id. St. Luke's pledge to provide liver transplantation care to medicaid and indigent patients is central to its case that its application be granted. This is because St. Luke's has neither a generous nor dependable history in this regard. Between 1991 and 1994, St. Luke's provided medicaid and indigent patient days as follows: 0.9 percent in 1991, 1.1 percent in both 1992 and 1993, and 0.8 percent in 1994. Its record with regard to tertiary services is even poorer. Of the 17 bone marrow transplants done between 1992 and 1994, none was Medicaid. Of the 975 open heart surgeries analyzed since 1992 only five were Medicaid, less than 0.6. St. Luke's record stands in stark contrast to the record of its nearest prospective competitor: Shands. In its most recent year, 31 percent of the bone marrow transplants done at Shands were Medicaid while 17 percent of its open heart surgeries were Medicaid. Shands, operating five organ transplant programs (heart, liver, kidney, lung and pancreas) is a disproportionate share provider of Medicaid services. Jackson Memorial provides even a larger percentage of its services to Medicaid patients and, in fact, is by far the largest disproportionate Medicaid provider in the state. Much of Shands' patient care of Medicaid patients is in the areas of obstetrical and general pediatric care, neither of which is provided by St. Luke's. But even with these areas of care excluded, the comparison is not favorable; Shands still provides 13 percent of its care to Medicaid patients, as opposed to St. Luke's 0.8 percent for 1994 and the beginning of 1995. For 1995, through July (two months prior to hearing), St. Luke's Medicare and Medicaid rates were at even lower levels than its historic levels. All of the other hospitals in Duval County have higher Medicaid and indigent patient loads than St. Luke's. The lower percentages have been true for St. Luke's even when it has had a strong profit margin. The decrease in the number of Medicare and Medicaid patients at St. Luke's is due, in part, to its costs increasing at a rate greater than its revenue in recent years. This, in turn, is due, at least in part, to the increase in managed care patients among the number of patients overall. Managed care is a less favorable payor on average than insurance. Hospital patients covered by insurance are decreasing as managed care patients increase. The percentages for St. Luke's is not likely to increase given data reflecting past performance. Thus, its pledge becomes all important. Provided St. Luke's satisfies its promise to treat all patients regardless of their ability to pay and as long as St. Luke's identifies patients who fall into this category, then by the second year of the program's operation, percent of the patient days will be attributable to Medicaid and 87 percent will attributable to patients covered with some type of insurance. Out of the insurance, approximately 25 percent or 8 cases would be covered by managed care insurance product, with 55 to 60 percent covered by commercial insurance product. Given the firmness of St. Luke's pledge with regard to Medicaid patients, its financial projections demonstrate reasonable payor mix calculations. 9. Improved Access for Florida Residents Access to a new program at St. Luke's will place the competitive pressure on Florida's system necessary to procure and utilize every possible donor liver from UNOS Region 3 as well as from Florida. The addition of a larger portion of Florida's liver transplant demand pool to a wait list at the St. Luke's program alone will have the positive benefit of creating this pressure. Since St. Luke's began seeking a certificate of need, both programs have made a significant investment in terms of staff and resources and significantly increased their volumes to evolve into mature, strong programs. There is no evidence, however, to suggest that the Shands and Jackson Memorial program developments are in reaction to the St. Luke's application. Nonetheless, given Mayo Clinic's reputation and the quality of care rendered within the Mayo Clinic system, the establishment of a program at St. Luke's will have a material impact on reversing outmigration by Florida residents for liver transplantation services. Patient outmigration for this type of service is undesirable from a health planning perspective and does not represent optimal or cost efficient care. This outmigration disturbs the continuity of care for the patient. The patient is unable to maintain close contact with his or her local physician. This patient outmigration also causes adverse impacts upon the patient's family infrastructure in cases in which outmigration occurs for reasons other than to be with family. The patient not only has to deal with the emotional trauma of having a terminal illness in the absence of a transplant, but also with having to be dislocated from familiar surroundings and the emotional and family support system that may already exist. This outmigration causes the patient or the patient's third party reimburser to incur significant costs due to transportation, temporary housing, and other expenses attendant to leaving Florida. The Agency and the 1994 State Health Plan recognize that this patient outmigration is undesirable, and agree that Florida's health planning should encourage an environment to reduce such outmigration. The level of outmigration for programs located in other states is indicative of inability, for whatever reason, of Florida's two active programs to serve the need in Florida. 10. Compliance with State and Local Health Plan Preferences The St. Luke's application satisfies to a significant degree almost all of the State and Local Health Plan preferences. For the remainder, the application complies with the intent, but not necessarily the letter. District 4 Local Health Plan contains eight "allocation factors". There is no dispute that the St. Luke's application satisfies the first criterion that transplant centers be located in a major metropolitan area with a county population of 250,000 or more "so that access to the services would be enhanced". There is no dispute that the St. Luke's application satisfies the second criterion requiring the applicant to document written relationships with a broad spectrum of other health care providers, thereby helping to ensure continuity of care and non-duplication of costly services. The third Local Health Plan criterion addresses stand-alone regional or national referral centers. The Agency unreasonably found that the St. Luke's application did not satisfy this criterion because the majority of its patients reside in District 4. The St. Luke's application did demonstrate, however, that St. Luke's/Mayo Clinic Jacksonville is a regional provider. Moreover, affiliation of the St. Luke's liver transplant program with the nationally recognized Mayo Clinic Rochester program would be relevant to this criterion once the program was initiated in Jacksonville. The District 4 Local Health Council supports approval of the St. Luke's application. The Local Health Council itself agreed that the proposed St. Luke's program "will serve a national clientele whose needs cannot be reflected within a formula designed to serve a portion of a single state". There is no dispute that the St. Luke's application satisfies the fourth allocation factor which gives preference to hospitals and program which have a significant role in regional or national research efforts. St. Luke's/Mayo Clinic Jacksonville is already substantially involved with and committed to medical research, including research related to liver disease. That research effort will be even further enhanced because of the leading national and international role of the Mayo Rochester liver transplantation program in research, and the participation of St. Luke's in that research. The fifth and sixth allocation factors are not applicable because they address regional matters related to pediatric programs. There is no dispute that the St. Luke's application satisfies the seventh Local Health Plan criterion which prefers applicants "who submit a plan to increase local organ donations." There is no dispute that the St. Luke's application satisfies the eighth Local Health Plan criterion which prefers applicants who formally commit to charity care in the application. St. Luke's application was preliminarily reviewed under allocation factors contained in the 1989 State Health Plan. There is no dispute that the St. Luke's application satisfies the first criterion which requires assurance that it will accept transplant patients regardless of ability to pay. There is no dispute that St. Luke's satisfies the third State Health Plan criterion preferring applicants with the other organ transplantation programs. St. Luke's has an adult bone marrow transplantation service. As an affiliate of St. Luke's, Mayo Clinic Rochester, in addition to liver transplantation, has heart, kidney, bone marrow, and pancreas transplantation programs. There is no dispute that St. Luke's satisfies the fourth State Health Plan criterion which prefers teaching hospitals for the establishment of any organ transplant program. Although the Agency notes that St. Luke's is not a statutorily-designated teaching hospital, this particular State Health Plan criterion does not impose any such restriction upon the term "teaching hospitals". The St. Luke's application satisfies the fifth State Health Plan criterion given to a member of UNOS because of its close affiliation with Mayo Clinic Rochester, a member of UNOS. There is no dispute that the St. Luke's application satisfies the sixth State Health Plan criterion requiring implementation of the Uniform Anatomical Gift Act. There is no dispute that the St. Luke's application satisfies the seventh State Health Plan criterion preferring teaching hospitals which document the establishment of a residency program related to the proposed transplant program. The St. Luke's application also satisfies the eighth State Health Plan preference for NIH-approved facilities in Medicare designated centers. Again, affiliation with the Mayo Clinic Rochester program is relevant, with Mayo Clinic Rochester participating in NIH transplant data base research and being Medicare certified. The more recent 1993 and 1994 State Health Plans adopted most of the criterion found in the 1989 Plan. Moreover, the 1994 Plan addresses a goal of enhancing Florida's health care system. In that regard, the 1994 Plan addresses the establishment of centers of excellence, stating that "Florida should ensure that its consumers have a choice of outstanding medical and specialized care centers within the State and not be forced to seek better reputation out-of-state". Given the positive attributes of establishing a Mayo Clinic liver transplant program and the benefits to the system which can be achieved, St. Luke's application satisfies this State Health Plan goal. That same discussion in the 1994 Plan concerning centers of excellence also relies upon the National Opinion Research Center (NORC) mathematical model for measuring the best hospitals in the United States. The NORC published rankings in July, 1995, which rated Mayo Clinic's gastroenterology program as the number one program in the U.S. This ranking is relevant to the St. Luke's application because St. Luke's/Mayo Clinic Jacksonville has direct access to that program, and because the Mayo Clinic Rochester liver transplantation program will be installed at St. Luke's. Moreover, the NORC rating is relevant to support the notion that Mayo Clinic's reputation will give St. Luke's the ability to support its volume forecasts, to redirect outmigration, and to achieve the quality goals of its application. The 1994 Plan also emphasizes managed care as a means to develop a better Florida health care system. The Mayo Clinic Rochester program is a strong, viable, and aggressive participant in the managed care arena nationwide, presenting a tangible benefit to the St. Luke's program. Further, the St. Luke's application addresses the legislative approach in Florida which encourages the establishment of integrated systems and programs because they will have the best opportunity to control costs and assure quality and succeed in the market place. St. Luke's and Mayo Clinic Jacksonville already operate as part of an integrated system with enhanced opportunities to control costs and ensure quality. 11. Impact to Existing Providers The addition of the St. Luke's program will have competitive impact upon the two existing programs. At their current volumes, both the Shands and Jackson Memorial programs far exceed the quality volume standard of 35 transplants annually as set forth by UNOS, and both are financially healthy. When assessing the financial performance of a specific program which has been added to hospital operations, the analysis should assess the "contribution margin" performance of the program. Also known as "incremental analysis," assessment of the contribution margin involves determining the difference between program net revenues and the variable costs of providing the service (i.e., those costs that vary either up or down depending upon volume and which are directly attributable to providing the service.) Accordingly, the contribution margin analysis appropriately disregards hospital-wide overhead which would already be incurred and absorbed by the hospital in the absence of the specific service and which would be reflected in the hospital-wide profit margin experienced before the new program came on line. Under this incremental analysis approach, the Shands adult and pediatric programs are profitable, with both making a positive contribution to overall hospital margin. In the fiscal year 1995, the Shands adult program generated a contribution of $1.7 million and the pediatric program generated a $16,000 contribution to Shands hospital-wide margin. These profitable results are based upon Shands having performed 43 adult cases and 11 pediatric cases. Hospital-wide, Shands finds itself in a very strong financial position. For example, in fiscal year 1994, Shands' net income was $20.6 million. For fiscal year 1995, Shands did even better, generating a net income of $21.2 million, with $15 million being attributable to operating profit. In comparison, in its 1995 budget, Shands projected a net profit of $8 million with an operating profit of $4 million to $5 million, so its actual 1995 performance far exceeded its budget expectations. Shands has cash and investments available to it in the amount of $78 million. Its fund balance is $275 million. The significant degree of Shands' financial health is also emphasized by its intent to purchase five hospitals within the Santa Fe Health System. This acquisition is being undertaken with the hospital now being on a more conservative course for the future. It is possible that Shands will finance the five-hospital acquisition entirely through a bond issue, relying upon the net income of the purchased hospitals to pay back principal and interest on the bonds. Shands will have to incur exposure and risk and pledge its full faith and credit behind this financing as a covenant of the bond issue. An earlier $265 million 1993 capital expansion project was also to be financed out of bond proceeds. Shands intended, however, to contribute substantial cash to that product in order to reduce the level of exposure and risk that it would incur. For the Santa Fe Health System acquisition, Shands will not be making any equity contribution to the project, and instead will rely totally upon bond proceeds for financing. Shands' willingness to take risks in regards to the Santa Fe Health System acquisition that it was not willing to take in 1993 is another strong indicator of its financial health. The Agency has raised a concern over whether the St. Luke's program would divert paying patients and somehow hinder Shands' ability to provide liver transplantation services to Medicaid patients. It readily appears, however, that Shands enjoys tremendous financial means to continue to carry out any indigent care role it desires in its liver transplantation program. Achievement by St. Luke's of its second year volumes is not likely to come at unacceptable expense to Shands so long as St. Luke's fulfills its promises with regard to Medicaid and Indigent cases. Given that Shands' program is already profitable at a volume of 43 adult and 11 pediatric cases, based upon fiscal year 1995 data, there is no evidence to suggest that it would not continue to be profitable with Shands growing to 68 or even 76 adult cases by 1996, prior to the St. Luke's program coming on line. Likewise, there is no evidence to suggest that the Shands program would not remain profitable assuming it lost 24 cases to St. Luke's in the 1998- 1999 time frame "redirected" from what would be a volume of 77 to 90 adult cases at Shands in the absence of the St. Luke's program. The St. Luke's program will have the ability to offer liver transplantation at a significantly lower charge than currently available in the market place, thereby resulting in lower costs to the system and enhancing price competition. The St. Luke's projected charge for its second year of operation at $180,000 compares favorably with a projected comparable Shands charge of $191,000 per case. The St. Luke's charge at $180,000 per case compares favorably with a projected $257,000 per case at the Jackson Memorial program. Furthermore, it is likely that the St. Luke's program will achieve a reduction in both costs and charges as the St. Luke's program matures and becomes more "Rochester-like". St. Luke's also compares favorably with the Jackson and Shands programs on other relevant charges. Major Diagnostic Category (MDC) 7 contains most of the Diagnostic Related Groups (DRGs) related to liver disease. Shands DRG-specific rates with an MDC-7 are approximately 20 percent higher than St. Luke's charges. Jackson Memorial Hospital's DRG specific rates under MDC-7 are approximately 40 percent higher than St. Luke's charges in MDC- 7. A "case mix index" adjustment accounts for differences in intensity and resource consumption among hospitals. For 1994, Shands' overall case mix index adjusted inpatient revenue per admission was approximately 15 percent higher than the comparable benchmark for St. Luke's. Jackson's case mix adjusted inpatient revenue per admission was approximately 41 percent higher than the St. Luke's benchmark. Shands and Jackson also have higher charges than St. Luke's when comparing tertiary services already offered by each of the three hospitals. The DRGs applicable to open heart surgery are 104 through 108. Shands' revenues per discharge are significantly higher than St. Luke's revenues per discharge for each of those DRGs, by 54 percent for DRG 107, and by 56 percent for DRG 108. Jackson's revenues per discharge are significantly higher than St. Luke's revenues per discharge for each of those DRGs, by 97 percent for DRG 104, by 62 percent for DRG 105, by 94 percent for DRG 106, by 86 percent for DRG 107, and by 44 percent for DRG 108. For DRG 481, bone marrow transplant, Shands' revenues per discharge are 13 percent higher than St. Luke's revenues per discharge. Unable to fend for itself in this proceeding, Shands' case was left to the agency But in AHCA, Shands finds a worthy ally. The point was well- made by the agency that Shands will suffer if it is left to care for all the Medicaid and indigent patients in need of liver transplantation services without a fair number of such patients being served by a new program at St. Luke's. Shands, it is true, receives state funds for indigent patient care, under-funded state programs, and non-reimbursable teaching costs. But these funds are susceptible to reimbursement rate declines. Worse, there are no guarantees that these funds will continue. The loss of commercial paying patient would be a net incremental loss to Shands of $69,000. It is expected that due to the proximity of Shands and St. Luke's, and the overlap in geographic service areas, up to 12 patients could be pulled from Shands in the first year of St. Luke's operation and up to 24 of St. Luke's 30 patients in year two of St. Luke's operation could come from the area of overlap with Shands. The impact of these numbers will be lessened by the increase in livers suitable for use and the concomitant increase in the number of procedures performable in Service Planning Area One, as well as statewide. Nonetheless, there will be an adverse impact to Shands, making St. Luke's pledge to identify and treat certain numbers of Medicaid patients all the more important. 12. Analysis of Agency Policy Relevant To Review of Application Since the preliminary denial of the St. Luke's application, the Agency has approved a heart transplant program at University Hospital in Jacksonville, and a kidney transplant program at Florida Medical Center in Broward County. The Agency preliminarily denied the University application, seeing no need for a fifth heart transplantation program in Florida. The University Hospital application was approved through litigation settlement just six months prior to the final hearing involving the St. Luke's application. The University of Florida and Shands supported approval of the University application. They would provide operational and resource support for the University program. Comparing the heart transplant market place to the liver transplant market place, the justification for approving a new heart transplant program is significantly less than the justification for approving a new liver transplant program. From a comparative standpoint, the market for heart transplantation in Florida in about half of the size of the market for liver transplantation. The two existing liver transplant programs that perform twice the volume of the four existing heart programs. The available pool of donor hearts available in Florida is 60 to 70 percent less than the current pool for liver donors. In fact, like donor livers, donor hearts are a scarce resource. Compared to liver transplantation, there is significantly less outmigration for heart transplant services by Florida residents, and there is significantly less Florida residents on out-of-state wait lists for heart transplantation services. Through witnesses from Jackson and Shands, the Agency expressed reservations about approving an organ transplantation program at a hospital which did not already have a solid organ transplant program of any other type in existence. University Hospital, however, prior to receiving approval for its heart transplant program did not have any other type of solid organ transplant program. Like St. Luke's, University does have a bone marrow transplant program. Approval of the University application added a third heart transplantation program to Service Planning Area One. The existing programs are located at Shands and at Tallahassee, Memorial Hospital in Tallahassee, Leon County, Florida. Rule 59C-1.044 sets forth a requirement that existing programs within the service planning area be performing at least 24 heart transplants a year before approval of a new program. At the time the University program was approved, the Tallahassee program was operating, and has been consistently operating, at below 10 transplants per year. At the time that the University application was approved, the Shands program was handling 38 heart transplants per year above the minimum, but well below its current liver transplantation volume. In not opposing approval of the University application, Shands realized that the University program would draw private pay patients away from Shands' heart transplant program. Likewise, in deciding to approve the University application, the Agency recognized the same impact. A primary factor the Agency relied upon to support approval of the University program was improving access for Medicaid patients. The health planner from Shands who testified for the Agency explained that University of Florida/Shands found there to be a need for an additional heart transplant program in Service Planning Area One but not for a liver transplant program because "University of Florida physicians...propos[ed] the service," (Tr.1125), and they felt need was demonstrated. The University heart transplantation program CON contains a condition that, by the second year of operation, three transplants must be provided to charity care/Medicaid patients on an annual basis. In its application, St. Luke's included a hospital-wide pro forma; the University application did not. The service specific pro forma in the University application projected only a $5,000 profit for its heart transplant program, while St. Luke's projected $900,000. The settlement agreement entered into between University and the Agency predicted approval upon a "weighing of all applicable statutory and rule review criteria." The Agency approved a new kidney transplant program at Florida Medical Center in December 1993. The University of Miami transplant program supports, and would specifically provide operational and other resource support to, the Florida Medical Center program. The Florida Medical Center application projects financial losses for its program, including a $150,000 loss by the second year of operation and a $100,000 loss by the third year of operation. Both Jackson and Florida Medical Center are located within Service Planning Area Four. Rule 59C-1.044 requires that existing programs be handling a minimum volume of 30 cases prior to the approval of new programs. At the time the Florida Medical Center application was approved, the Jackson kidney transplant program was handling 86 kidney transplants annually, well below its current liver transplantation volume. An Agency witness who opposed the St. Luke's program was Dr. Joshua Miller, director of the JMH/University of Miami transplant program. Dr. Miller argued that, among other reasons, the St. Luke's application should not be approved because St. Luke's does not have a solid organ transplant program. He also asserted that the St. Luke's program would not increase donor organ awareness and would not improve access. Dr. Miller joined in the University of Miami's support for the Florida Medical Center kidney transplant application, arguing that it would enhance donor awareness and improve access. In approving the Florida Medical Center application, the Agency found that the Florida Medical Center program would improve donor organ awareness, improve access, and that it had the capability to bring on line a quality program. Like St. Luke's, Florida Medical Center did not have any solid organ transplant program. Florida Medical Center is significantly closer to the existing kidney transplant program at Jackson Memorial Hospital than Shands is to St. Luke's. Geographically, Service Planning Area One is much larger than Service Planning Area Four. Subsequent to approval of Florida Medical Center application, Florida Medical Center attempted to transfer the CON to Cleveland Clinic Hospital located in Broward County. The University of Miami transplant program opposed implementation of the project at Cleveland Clinic. The Agency espoused a planning policy through one of its physician experts that in assessing the need for a new liver transplant program, the Agency should not approve a new program is there is ample capacity already within the system or, alternatively, if the existing programs express a willingness or intent to continue to expand capacity. This policy is unreasonable because both of the existing programs have the ability to expand their capacity at will and the policy effectively gives the existing providers absolute veto power over any new program. Moreover, it nullifies the liver transplant rule and its need methodology. Since the rule grandfathered three programs, if capacity controls then the promulgation of the rule was meaningless as to allowing any more programs. The Agency's original denial of the St. Luke's application was predicated upon the position that allowing a new program to come on line would be "a bit premature". The Agency found that the existing programs had not yet matured. A liver transplantation program is mature when it is handling 50 transplants annually. This total could include pediatric cases as long as the majority are adults. Under Agency rules, a CON reviewable service which fails to show any utilization for a 1-year period of time must secure a new CON to reactivate. Presumably, this rule applies to Tampa General. The potential for a new liver transplant program to increase the availability of donor organs is an appropriate factor to be taken under consideration of need for the new program. The Agency stresses the importance of demonstrating enhanced access for those who require a service but who are unable to obtain it. On the other hand, fostering competition and the benefits that could be derived through new competition is an irrelevant inquiry for purposes of balancing the statutory and rule criteria when considering the St. Luke's application, according to the Agency. Florida programs should wait-list as many liver transplant candidates as possible. Even if a patient expires while on the wait list, it was better to have had the individual on a wait list with the opportunity for a transplant. Once on the wait list, any available organ that is suitable for use in the patient should be obtained for transplantation. With this background, the Agency urged the adoption of a policy in regards to the St. Luke's application which finds that the existing lack of pressure on the system and the resulting "equilibrium" enjoyed by the Shands and Jackson program was somehow the most desirable, optimal situation. The Agency believes that when there is "strain" on Florida's liver transplantation system, then it is appropriate to consider the addition of a new program. With regards to assessing adverse impact on existing programs, the Agency looks at the existing provider's present scheme, health, what impact will not hurt the program, and overlap in the event a new program comes on line. Moreover, when assessing the need for organ transplantation services, it is not Agency policy to guarantee a particular volume level for existing programs. Instead, it is Agency policy to achieve a comfort level that there is an adequate volume pool under which all programs can operate effectively.
Recommendation Based on the foregoing, it is, hereby, RECOMMENDED That St. Luke's CON Application No. 7202 for a liver transplantation program be GRANTED; That the granting of the application be conditioned upon St. Luke's pledge to provide three Medicaid patients in year 1 and four Medicaid patients in year 2 of operation with liver transplants and that thereafter at least 10 percent per year (averaged every 3 years) of liver transplants performed at St. Luke's be provided to indigent and/or Medicaid patients. DONE AND ENTERED this 29th day of March, 1996 in Tallahassee, Leon County, Florida. DAVID M. MALONEY, 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 29th day of March, 1996. APPENDIX TO RECOMMENDED ORDER, CASE NO. 93-4890 The following rulings are made on the parties, proposed findings of facts: St. Luke's: 1. Paragraphs 1 - 93, 97 - 113, 115, 116 - 126, 128, 132, 133, 134 - 138, 140 - 146, 154 - 166, 176 - 182, 188, 190, 193 - 240, 245 - 260, 271 are accepted. 2. Paragraphs 94 - 96, 114, 117, 127, 130, 134, 139, 148, 150 - 152, 167, 168, 170 - 173, 175, 183, 184, 192, 241 - 244, 262 - 270, 272 are subordinate. Paragraph 129 is rejected on the basis of past performance. This finding of fact is accurate only if St. Luke's meets its pledge to provide liver transplantation services to indigent and Medicaid patients. Paragraph 131 is rejected. A St. Luke's program will have competitive impact that is negative as well as positive. The impact will be detrimental to Shands unless St. Luke's provides its fair share of liver transplantation services to Medicaid and charity cases. Paragraph 147 is accepted in part and rejected in part. Again, competitive impact to Shands will be detrimental unless St. Luke's fulfills its promise to provide an adequate number of Medicaid and charity cases with liver transplantation services. Paragraph 149 is rejected. See Rulings on St. Luke's proposed findings of fact nos. 129, 131 and 147 above. Paragraph 153 is rejected. There is no evidence to support such an assumption. Paragraph 169 is accepted. The second sentence is rejected for lack of evidence. Paragraph 174 is accepted except when patient outmigration is due to the patient's need to be close to family members who reside out of Florida. Paragraph 185 is accepted, provided St. Luke's meets its commitment to provide liver transplantation services to Medicaid patients. Paragraph 186 is accepted as a statement made in the application and therefore as a basis underlying St. Luke's pledge toward treating a fair number of Medicaid patients to alleviate negative competitive impact on Shands. It is rejected, however, as a commitment St. Luke's could, in fact, fulfill. As Dr. Schiff testified, no liver transplant center could take all suitable indigent patients and remain fiscally sound. Vol. V, p. 542 of the transcript. Paragraph 187 is accepted that St. Luke's commitment is the same as Mayo Clinic Rochester's. Rejected otherwise for the same reason in the ruling on Proposed Finding of Fact No. 186, above. Paragraph 189 is rejected as to the first sentence. While not providing obstetrical, pediatrics, mental health, or substance abuse services explains in part St. Luke's low levels of Medicaid cases, it does not explain St. Luke's low levels in other areas of practice and delivery of medical services. To the contrary, not providing these services, since they are areas of medicine tending to generate great numbers of Medicaid cases, is consistent with St. Luke's low level of providing Medicaid services in other areas of service. The second sentence is accepted to the extent it explains Medicaid demand lower than in other areas in Jacksonville. St. Luke's location does not, however, justify its low level of Medicaid cases. Paragraph 191 is rejected. Paragraph 261 is irrelevant. AHCA: 1. Paragraphs 1, 2, 4, 5, 7 - 10, 14 - 17, 21, 23 - 25, 27 - 30, 32, 34, 38, 44, 47 - 52, 63, 68, 69, 71 - 76, 78 are accepted. 2. Paragraphs 6, 11, 12, 20, 22, 36, 41, 53, 55, 56, 59, 80, 82 are subordinate. Paragraph 3 is accepted in part. The finances of the Mayo Foundation bear some relationship to the case since they are available if St. Luke's should ever find itself in the unlikely position of needing them. Paragraph 13 is accepted in part. It is rejected as not relevant to the extent that granting the application is conditioned upon requiring St. Luke's to fulfill its pledge to provide liver transplantation services to Medicaid and/or indigent patients. Paragraph 18 is rejected. St. Luke's expectations are legitimately based on performance in years other than in 1993 and 1994, including performance during the months in 1995 for which data was available at the time of hearing. 6. Paragraphs 19, 31, 33, 40, 42 - 45, 66, 67, 54, 58, 60 - 62 are rejected as against the greater weight of the evidence. Paragraph 26 is rejected. Despite the dramatic development of the Shands and Jackson Memorial program, substantial need exists in Florida for liver transplantation services. Paragraph 35 is rejected in part. That Mr. Richardson's projections were unreasonably optimistic is rejected as against the greater weight of the evidence including the assumptions contained in this proposed findings which are accepted. Paragraph 37 is accepted in part and subordinate in part. Despite agreement as to a 70 percent conversion rate as a minimum, it was not unreasonable for Mr. Richardson to use an 80 percent conversion rate since such a rate is achievable if aggressive use is made of available livers as promised by St. Luke's. Paragraph 39 is accepted in part and rejected in part. The first sentence is rejected. See rulings on AHCA's paragraphs 35 and 37, in 8., and 9., above. Paragraph 46 is rejected in part as argumentative. That St. Luke's approach was a "a sort of hybrid ... between proposing to fill an unmet need, and simply squeezing into the market," is argumentative. Otherwise accepted. Paragraph 57 is rejected as against the greater weight of the evidence. Paragraph 64 is accepted except for the 4th and 6th sentences. No party suggested the building of a hospital to serve liver transplant patients, alone. Each of the existing liver transplantation centers in Florida and St. Luke's have or propose the centers within existing hospitals. The 6th sentence is rejected as opinion without factual support and contrary to the greater weight of the evidence which showed more liver transplantation services could be conducted to serve Florida citizens if the St. Luke's application is granted. Paragraph 65 is rejected as primarily argumentative and reciting conclusions as opposed to findings of fact. Paragraph 70 is rejected. Paragraph 77 is accepted as to the facts with the exception of the last sentence which is against the greater weight of the evidence and with the exception of the implication that having Mayo-trained physicians creates a "Mayo South." Paragraph 79 is rejected as to the first sentence since it is a conclusion rather than a finding of fact. Otherwise, accepted. Paragraph 81 is accepted in part, rejected in part as against the greater weight of the evidence. COPIES FURNISHED: Sam Power, Agency Clerk Agency for Health Care Administration Fort Knox Building 3 2727 Mahan Drive, Suite 3431 Tallahassee, FL 32308-5403 Jerome W. Hoffman, General Counsel Agency for Health Care Administration Fort Knox Building 3 2727 Mahan Drive, Suite 3431 Tallahassee, FL 32308-5403 John F. Gilroy, Esquire Agency for Health Care Administration Fort Knox Building 3 2727 Mahan Drive, Suite 3431 Tallahassee, FL 32308-5403 Michael J. Cherniga, Esquire Greenberg, Traurig, Hoffman, Lipoff, Rosen & Quentil, P.A. Post Office Drawer 1838 Tallahassee, FL 32302
