The Issue Whether the adult open heart surgery rule in effect at the time the applications were filed until January 24, 2002, or the rule as amended on that date applies to this case. Whether either or both, Lifemark Hospital of Florida, Inc., d/b/a Palmetto General Hospital ("Palmetto General") and Miami Beach Healthcare Group, Ltd., d/b/a Aventura Hospital and Medical Center ("Aventura Hospital") demonstrated the existence of not normal circumstances for the issuance of certificates of need ("CONs") to establish adult open heart surgery programs in Dade County.
Findings Of Fact The Agency for Health Care Administration ("AHCA") administers the certificate of need ("CON") program for health care facilities and services in Florida. Section 408.034, Florida Statutes. Aventura Hospital Miami Beach Healthcare Group, Ltd., d/b/a Aventura Hospital and Medical Center ("Aventura Hospital") is the applicant for CON No. 9395 to establish an adult open heart surgery program in Dade County, in AHCA District 11. Aventura Hospital is a 407-bed community hospital located in the recently incorporated City of Aventura in northeast Dade County. It is approximately one mile west of the Atlantic Ocean on U.S. Highway 1, three-tenths of a mile south of the Broward/Dade County line. It is halfway between Fort Lauderdale and downtown Miami. Aventura Hospital is owned by the Hospital Corporation of America ("HCA"), which operates hospitals in 30 states and 3 countries, including 40 hospitals in Florida. The 407 beds at Aventura Hospital include 327 acute care beds, 32 adult psychiatric beds, 24 adult substance abuse beds, and 24 obstetrics beds. Services, in addition to those provided in the specialty beds, include general medical/surgical services, oncology, a breast diagnostic center, children's after-hours walk in clinic, comprehensive cancer center, dialysis, intensive care, orthopedics, inpatient and outpatient surgery, and physical, speech and occupational therapies. It is a Baker Act facility. The Aventura Hospital staff has from 700 to 750 medical doctors, and 1,200 to 1,300 employees. The emergency room ("ER") has approximately 34,000 annual visits. According to one ER physician on the staff, the average age of patients presenting at the Aventura Hospital ER is 84 years old. That results in a higher than average hospital admission rate from the ER, 35 to 40 percent, as compared to 15 percent nationally. The staff includes 52 clinical cardiologists, 27 invasive cardiologists and five cardiovascular thoracic surgeons. They currently perform, at Aventura Hospital, inpatient and outpatient cardiac catheterizations ("caths"), pacemaker implants, echocardiograms, cardiac stress and cardiac nuclear testing, diagnostic and transesophageal echocardiograms, diagnostic and interventional vascular surgeries. For the 12 months ending June 30, 2001, 422 open heart patients left the Aventura Hospital's primary service area for their surgeries, and 1,132 received cardiac cath procedures. At Aventura Hospital, from April 1999 through March 2000, 178 diagnostic cardiac caths were performed. In terms of total cardiology services, Aventura Hospital is the largest non-open heart provider in the District, ranking second to Mount Sinai Medical Center ("Mount Sinai"). In calendar year 2001, there were 3,489 cardiovascular disease discharges from Aventura Hospital. The boundaries of the primary service area, from which Aventura Hospital draws most of its patients, are Hollywood Boulevard to the north, U.S. Highway 441 to the west, the Bal Harbour/Miami Shores communities near 125 Street to the south and the Atlantic Ocean to the east. Parkway Regional Medical Center ("Parkway Regional") in Dade County, and Memorial Regional Medical Center ("Memorial Regional") in Hollywood, in Broward County, are the closest hospitals to Aventura Hospital. The primary service area has a population of approximately 250,000 residents and includes growing retirement communities such as Sunny Isles Beach, Hallandale Beach, Southeast Hollywood, North Miami Beach, part of Miami Shores, and Bal Harbour. Parkway Regional and Aventura reported a combined total of 1,721 ischemic heart diseases (IHD) discharges in calendar year 2000. IHD is the diagnostic category for patients experiencing a narrowing of the arteries who are most likely ultimately to require open heart surgery. An international patient services department at Aventura Hospital assists patients, particularly from Canada, and Central and South America. Aventura Hospital is a member of the Miami Medical Alliance, also known as Salud Miami, which has promoted Miami as a destination for health care. Miami Heart Institute (Miami Heart), Mount Sinai, Baptist Hospital (Baptist), South Miami Hospital (South Miami), Miami Children's Hospital and Jackson Memorial Hospital (Jackson Memorial) are among the members of the Alliance. At the time the CON application was filed, Aventura Hospital was scheduled for expansion with the addition of a three-story tower and other capital projects costing an estimated $50 million. Subsequently, in December 2001, Aventura Hospital received approval from HCA for the expenditure of an additional $80 million to build the tower up to nine stories immediately, with the structure capable of ultimately being increased to 12 stories. It is expected to be able to withstand a direct hit from a Class V hurricane. In the past, Aventura Hospital has been entirely evacuated twice due to hurricane warnings. When construction is complete, the ER will be approximately three times larger, relocated to the first floor of the new tower, and projected to receive 50,000 visits annually. Ten new operating rooms on the second floor will include two that are properly-sized for cardiovascular surgeries. Because of higher ceilings in the new tower, the second floor of the new building will connect to the third floor of the existing building, on which the cardiac cath lab and related diagnostic equipment is located. If the open heart program is approved, a ten-bed cardiovascular intensive care unit ("CVICU") will be added to the second floor of the new building, and a second cardiac cath lab will be constructed. A dedicated elevator will connect the surgery suites to a 42-bed intensive care unit ("ICU") on the third floor. The remaining floors will consist of single patient rooms equipped or capable of being equipped for telemetry monitoring. The projected building cost for the portion of the construction related to the open heart surgery program is $3 million. Mount Sinai which purchased Miami Heart from HCA, has agreed to close one of its two open heart surgery programs within one year following the issuance of an adult open heart surgery CON to Aventura Hospital. Otherwise, Mount Sinai is committed to operate both programs for five years from June 30, 2000. Jeffrey Gregg, the head of the CON program at AHCA testified that he believes that it is "unprecedented" for an applicant to submit a letter from an existing provider committing to close a program. (Tr. 3061). Aventura Hospital has also offered to commit to providing 2.5 percent of the patient days generated by the adult open heart surgery program to Medicaid and charity patients. Palmetto General Lifemark Hospitals of Florida, Inc., d/b/a Palmetto General Hospital ("Palmetto General") is an applicant for CON No. 9394 to establish an adult open heart surgery program, also in Dade County, AHCA District 11. Palmetto General is a 360-bed acute care hospital located in the City of Hialeah in northwest Dade County at the intersection of 122nd Street, Northwest, and the Palmetto Expressway. Palmetto General is an affiliate of the Tenet Health Care Corporation ("Tenet"), which operates 16 hospitals in Florida, five in Dade County. They are, in addition to Palmetto General, Hialeah Hospital, North Shore Medical Center, Parkway Regional in northern communities, and Coral Gables Hospital in the south. Tenet owns Florida Medical Center, which has an adult open heart surgery program in Broward County. Tenet also operates the open heart program at the Cleveland Clinic in Broward County. The 360 beds at Palmetto General are divided into 253 acute care beds (excluding obstetrics and pediatrics), 48 adult psychiatric beds, and 10 neonatal intensive care beds. Services available on the Palmetto General campus include outpatient imaging and surgery, psychiatry, oncology, rehabilitative therapies, and intensive care. Palmetto General has a staff of 600 physicians, 350 of whom are on the active staff, and 1,500 employees. Palmetto General has approximately 40 cardiologists on staff, 19 of whom are invasive cardiologists. The services available include ultrasound, exercise testing, arrhythmia studies, including halter monitoring and electrophysiology, surgical insertions of pacemakers and defibrillators, and diagnostic cardiac caths. For the 12 months ending June 30, 2001, 1,658 cardiac caths and 668 open heart procedures were performed on patients from the Palmetto General primary service area. At Palmetto General, there were 528 diagnostic cardiac caths performed from April 1999 through March 2000, making it the largest cardiac cath provider in Dade County, which does not also have an open heart program. In calendar year 2001, there were 3,089 cardiovascular disease discharges from Palmetto General. The primary service area for Palmetto General includes the communities of Hialeah, Hialeah Springs, Miami Lakes, and portions of Opa Locka. Approximately 450,000, or 22 percent of the 2.2 million people living in District 11, live in the Hialeah area, over 50,000 are over 65 years old. The 65 and older population in the Palmetto General primary service area is projected to increase by 10 percent by 2005. Seventy to 80 percent of the residents of Palmetto General's primary service area are Hispanic, many first-generation. Most of the staff and employees of Palmetto General are Hispanic or speak Spanish. In addition to Palmetto General, the primary service area includes two other hospitals, Hialeah Hospital and Palm Springs General Hospital ("Palm Springs General"). Of the three, only Palmetto General has a cardiac cath lab. About 400 suspected heart attack patients are treated in the ER at Palmetto General each year. The ER has approximately 60,000 annual visits. It is the third busiest ER in the county. Although the use rate for open heart surgery has been flat or declining throughout the district, it has increased in the Palmetto General service area. While District 11 had an absolute increase of 51 open heart cases from 1999 to 2000, there was a 91-case increase in the Palmetto General service area. Together Palmetto General, Hialeah Hospital, and Palm Springs reported 2,206 IHD discharges, 982 of those from Palmetto General. Subsequent to filing the open heart CON application, Palmetto General developed a $23 million master facility plan of capital expenditures to upgrade the facility in response to operational deficiencies and capacity constraints. Tenet approved the expenditure of $6 million in the first year. When entirely implemented, the plan will result in doubling the size of the ER, expanding maternity labor and delivery areas, building a new 18-bed intensive care unit with space to add ten more beds later, and refurnishing existing operating rooms and adding three more. Palmetto General also, in 2002, experienced significant discord among the medical staff which apparently has been resolved with a change in the hospital's senior management. Palmetto General maintains that its master facility plan is independent of its plans for an open heart surgery program, although the master plan supports and facilitates that proposal. Mount Sinai and Aventura Hospital contend that Palmetto General has impermissibly amended the architectural plans for the open heart surgery program. The plans, as submitted in the CON, showed the addition of two open heart operating rooms on the ground floor, with an area of shelled-in space, and mechanical/electrical space, and part of the roof, above that on the first floor, and an elevator and corridor on the second floor within the same area designated as being within the scope of work. A separate area of work, on the schematic drawing of the second floor, showed a four-bed CVICU. On the master facility plan, the two open heart surgery operating rooms are in the same location but reconfigured. The space above is still shown as shelled-in and it may have columns. On the second floor, the four-bed CVICU for open heart patients is no longer a separate unit but is included in an existing ten- bed CVICU. The CVICU is adjacent to the existing cardiac cath lab and to an area shown for cath lab expansion, previously a part of the roof on the CON drawing. As a result of the use of the existing space for the CVICU, the total area devoted to the open heart program is reduced in size. Although the two open heart operating rooms are reconfigured and the four-bed open heart CVICU will not be an entirely separate unit, the concept for the open heart surgery program is essentially unchanged. Construction detailed drawings of the master plan were expected to be completed in January 2003. If the open heart surgery program CON is approved, Palmetto General will commit to providing 7.5 percent of open heart and angioplasty services to Medicaid and charity care patients. Existing District 11 Providers Baptist, Cedars Medical Center ("Cedars"), Jackson Memorial, Mount Sinai, Miami Heart, Mercy Hospital ("Mercy"), South Miami, and Kendall Medical Center ("Kendall") are the eight hospitals in Dade County which have open heart surgery programs. Mount Sinai and Miami Heart are, as previously noted, both owned by Mount Sinai. They are located within two miles of each other on Miami Beach, near the Julia Tuttle Causeway. Jackson Memorial which, like Mount Sinai, is a University of Miami Medical School teaching hospital is located in downtown Miami, across the street from Cedars and near Mercy. Kendall is further south and west. South Miami and Baptist are in South Central Dade County. In the summer and fall of 2000, when AHCA published the fixed need pool, and Aventura Hospital and Palmetto General filed their applications, four of the eight open heart programs in Dade County were operating at volumes below 350 cases a year. In 1999, those programs and volumes were Cedars, with 340 surgeries, Jackson Memorial with 332, South Miami at 211, and Kendall with 187. In 2001, Cedars increased to 361 open heart cases and Jackson Memorial reported 513. The programs at Kendall and South Miami have continued to operate below 350 cases a year. The volume at Kendall was 184 in 2000, and 295 in 2001. South Miami reported 175 and 148 in calendar years 2000 and 2001, respectively. Like Aventura Hospital, Cedars, and Kendall are owned by HCA. South Miami and Baptist Hospital, which are 3.5 miles apart, are both affiliated with the Baptist health care system. Because volumes were below 350 at existing programs, AHCA published a numeric need for zero additional programs in District 11 for the January 2003 planning horizon. The rule on numeric need, as revised on January 24, 2002, reduced the minimum volume for existing providers to 300 open heart surgeries for the 12-month period specified in the rule, although it implicitly increased the expected size of each existing program to 500 cases by increasing the divisor in the numeric need formula. Under either rule, the applicants must demonstrate the existence of not normal circumstances for the approval of any additional open heart surgery programs in the district. Under the old rule, with 350 as the divisor in the formula, the numeric calculation, before being reduced to zero because of low volume programs, resulted in a need for 2.1 additional programs. That number is a negative one under the new rule. Aventura Hospital projected that its open heart surgery volumes would be 240, 312, and 347 during the first three years of operations, anticipating these to be the years ending in September of 2004, 2005, and 2006, respectively. Palmetto General projected volumes of 148, 210, and 250 open heart surgeries and 225, 230, and 310 angioplasties, in the first three years. From 1996 to 2001, the total annual volume of open heart surgeries in District 11 declined by 346, from 3,821 in 1996, to 3,421 in 2000, then increased slightly to 3,475 in 2001. Therefore, if Aventura Hospital and Palmetto General achieve projected volumes, it will result largely from redirecting cases from existing providers including one that would close if Aventura's CON is approved. The declining open heart volumes also reflects a technological improvements and a shift to less invasive angioplasty procedures. The number of angioplasties performed in District 11 increased from 6,384 in 2000, to 7,682 in 2001. Mount Sinai and Miami Heart Mount Sinai is one of six statutory teaching hospitals in Florida, with 19 accredited training programs, including residencies and fellowships. The cardiovascular and thoracic surgery residency program is shared with Jackson Memorial. In addition to the University of Miami, Mount Sinai is affiliated with the medical schools at Nova Southeastern University, Barry University, and the University of South Florida. Mount Sinai has the largest open heart volume in District 11, with over 40 percent of the total volume. It also has the broadest geographical draw for patients, with only 60 percent of the cases originating from the District. In the year from April 1999 to March 2000, Mount Sinai reported performing 1,034 adult open heart surgeries and 4,318 adult inpatient cardiac caths. In calendar years 2000 and 2001, the volume of open heart surgeries at Mount Sinai remained virtually constant at 980 and 976, respectively. Angioplasties increased during that same period of time from 1,037 to 1,067. At Miami Heart, from April 1999 through March 2000, 483 open heart surgeries and 4,179 cardiac caths were performed. The combined total of therapeutic cardiac caths or angioplasties performed at Mount Sinai and Miami Heart is approximately 2,500 a year. There is evidence that Mount Sinai has begun to phase-out open heart cases at Miami Heart where the volume dropped to 390 surgeries in 2000, and to 296 in 2001. In a travel time study commissioned by Mount Sinai, the drive time from Palmetto General ER to Mount Sinai ER was 28 minutes to travel the 15.5 miles. From various zip codes within the Palmetto General service area to the Mount Sinai ER, travel times ranged from 14 minutes to 36 minutes. Driving times from Aventura to Mount Sinai ranged from 18 to 37 minutes. Due to its close proximity, to Mount Sinai, it reasonably should take approximately the same driving time to reach Miami Heart. In an Aventura Hospital survey of transfers of high- risk cardiac patients, the average times were estimated to range from 59 minutes from Aventura Hospital to Mount Sinai and 1 hour and 26 minutes from Aventura Hospital to Miami Heart Institute. Those times must include more than actual drive time, otherwise the differences between Mount Sinai and Miami Heart would not be so significant. One would also anticipate that, while under common ownership, transfers from Aventura Hospital to Miami Heart would have been less cumbersome. The accompanying narrative in the CON suggests that time frames may have been counted from the time the decision to transfer is made to the time the patient arrives at the receiving facility. The testimony regarding the data compilation process was vague and inadequate and, therefore, the conclusions are unreliable. The Mount Sinai study showed travel times of 27 minutes to Miami Heart and 28 minutes to Mount Sinai from Palmetto General. That difference of one minute is confirmed in data underlying Aventura Hospital time travel study. Based on projected volumes, prior transfers, referral patterns and market shares, an open heart program at Palmetto General will reduce the volumes at Mount Sinai and Miami Heart by 92 to 107 open heart surgeries a year, for a financial loss of $1.6 million. An open heart program at Aventura is expected to reduce the combined volume at Mount Sinai and Miami Heart by 196 cases. A combined reduction of approximately 300 cases and the closure of one of the programs would leave the remaining Mount Sinai program at approximately 900 open heart cases, with a loss of $4.7 million. Mount Sinai was projected to experience a net loss from operations of $32 million in 2002. There was testimony that overall financial management and the potential for profitable operations have improved. Despite the fact that an Aventura program will have almost double the adverse impact of one at Palmetto General, Mount Sinai, in the asset purchase agreement resulting in its acquisition of Miami Heart from HCA, agreed not to contest the application filed by Aventura Hospital. Jackson Memorial Jackson Memorial is the hospital designated to provide indigent care in Dade County, through a public health trust funded by a portion of sales taxes. In the 12 months ending March 2000, 334 open heart surgeries and 3,644 cardiac caths were performed at Jackson Memorial. In 2000 and 2001, the open heart volume increased to 438 and 513 surgeries, respectively. The Mount Sinai travel time study, showed that the distance from Palmetto General to Jackson Memorial was 10.7 miles and that the average drive took 22 minutes. Jackson Memorial will lose an estimated 46 cases to Palmetto General, in the third year of an open heart program in 2004, and 12 cases to an Aventura Hospital program, or a combined total of approximately 60 cases a year. Mercy Mercy had a volume of 412 open heart surgeries and 2,704 cardiac caths, from April 1999 through March 2000. In calendar year 2000 and 2001, the open heart volumes at Mercy were 492 and 478, respectively. The average driving time from Palmetto General to Mercy ranged from 24 minutes to 38 minutes, averaging 27 minutes in Mount Sinai's expert's study. If Palmetto General is approved, a reduction of 44 open heart cases is expected at Mercy. An Aventura Hospital program is expected to result in a five-case reduction at Mercy. Cedars The volume at Cedars was 316 open heart cases from April 1999 through March 2000. In calendar years 2000 and 2001, the volume increased to 334 and 361 open heart surgeries, and to 1,323 and 1,468 angioplasties, respectively. The average driving time to Cedars, from Palmetto General, was 23 minutes, in the Mount Sinai travel time study, with a range of drive times from 17 minutes (starting at 4:19 a.m.) to 30 minutes (starting at 7:06 a.m.). If Palmetto General is approved to become an open heart provider, Cedars' volume is expected to be reduced by 20 surgeries. If Aventura Hospital becomes an open heart provider, Cedars' volume will be reduced by an estimated 14 cases. Kendall Kendall had a volume of 180 open heart cases for the year ending March 2000. Kendall has consistently been a low volume open heart provider, increasing from 136 surgeries in 1989, to 295 in 2001. Kendall is located in southwestern Dade County, well beyond the primary service areas of Palmetto General and Aventura Hospital. The common feature shared with Palmetto General is that Kendall is also considered an Hispanic or Spanish-speaking hospital, although every hospital in Dade County is staffed to serve Spanish-speaking patients. Mount Sinai's study found the average drive time from Palmetto General to Kendall to be 23 minutes, covering 14.6 miles. Estimates of case reductions at Kendall are six if Palmetto General is approved and one if Aventura Hospital is approved. South Miami and Baptist South Miami reported a volume of 199 open heart cases for the year ending March 2000. The volume of open heart surgeries has been low, over the years, from 132 in 1989, to 148 in 2001, never exceeding 215 cases in any one year. South Miami has become a referral center for complex, multi-vessel angioplasties. Angioplasties increased, at South Miami, from 723 in 2000, to 837 in 2001. Like Kendall, South Miami and Baptist have no overlap with the primary service areas of Aventura Hospital and Palmetto General. If Palmetto General offers open heart services, then South Miami would lose approximately nine cases in the third year of operations. If Aventura Hospital's CON is approved, then South Miami would lose an estimated two cases that year. The volumes at Baptist, from April 1999 through March 2000, were 472 open heart surgeries and 4,730 cardiac caths. The Baptist volume of open heart cases declined to 428 in 2000, and 408 in 2001. Baptist's volume is expected to decline by 14 cases lost to Palmetto General, and two to Aventura Hospital. Existing District 10 Providers Mount Sinai, in its proposed recommended order, suggested that Memorial Regional, the Cleveland Clinic, and Florida Medical Center all in Broward County, are available open heart providers for northern Dade County residents. Tenet operates the open heart program at the Cleveland Clinic, which is 17 miles north of Palmetto General. The average travel time to the Cleveland Clinic, in the Mount Sinai study, was 26 minutes, but that is unreliable because it includes one run where the driver obviously had to speed, at 4:42 a.m., to average over 60 miles per hour. The staff at Cleveland Clinic is not predominantly Spanish-speaking. The medical staff is also closed so that only Cleveland Clinic doctors practice at that hospital. Patients have interruptions in their continuity of care when referred to an entirely different medical staff. In addition, the Cleveland Clinic is a referral hospital drawing patients from outside the area. It does not function as a community hospital. The Cleveland Clinic is not, therefore, an alternative provider for Dade County residents. At Memorial Regional, six miles north of Aventura Hospital, there were 766 open heart surgeries performed in one 12-month period in 1999 and 2000 and 641 in calendar year 2000. Twenty-six percent of the Aventura Hospital primary service area open heart surgeries were performed at Memorial Regional in 2001, as compared to 5 percent from the Palmetto General Area. Over 30 percent of the angioplasties performed on Aventura Hospital service area residents were performed at Memorial Regional in 2001, and less than 4 percent for Palmetto General service area residents. If Aventura Hospital is approved, the loss in volume from Memorial Regional would be approximately 103 cases a year. Aventura Hospital noted that Memorial Regional has experienced capacity problems. In Columbia Hospital Corporation of South Broward vs. AHCA, the administrative law judge found that the proposal to establish a new hospital in Miramar was intended to " . . . allow Memorial Regional and Memorial West the opportunity to decompress and operate at reasonable and efficient occupancies into the foreseeable future without the operational problems caused by the current over-utilization." There is evidence that the relief resulting from the construction of the Miramar Hospital, will not alter the difficulties that Aventura Hospital-based doctors experience in gaining access to the cardiac cath lab at Memorial Regional. Florida Medical Center has approximately 450 open heart surgery cases a year. It is a Tenet facility in Western Broward County. The financial data from Florida Medical Center was used in Palmetto General's projections of income and expenses, but there was no evidence that Florida Medical Center's open heart program is a viable alternative to programs at either Aventura Hospital or Palmetto General. Review Criteria Subsection 408.035(1) - need in relation to applicable district health plan; 59C-1.030(2)(a)-(e) - need that the population has, particularly low income, ethnic minorities, elderly, etc.; relocation of a service; needs of medically underserved, Medicare, Medicaid and indigent persons; and Subsection 408.035(11) - past and proposed Medicaid and indigent care. The District 11 health plan includes preferences for applicants seeking to provide tertiary services who have provided the highest Medicaid and charity care, and who have demonstrated the highest ongoing commitment to Medicaid and indigent patients. Aventura Hospital provided approximately 1 percent charity, 6 to 7 percent Medicaid and 17 percent Medicare in 2001. It qualified as a disproportionate share Medicare hospital. Aventura Hospital's proposed CON commitment is to provide a minimum of 2.5 percent of open heart surgery and angioplasty patient days to Medicaid and charity patients. Palmetto General is and, for at least the last ten years, has been a disproportionate share Medicaid and Medicare provider. Over 20 percent of the total care at Palmetto General has been given to Medicaid patients in recent fiscal years. The care to indigent patients was approximately $8 million in one year. In this regard, Palmetto serves as a "safety net" hospital for poor people, like Jackson Memorial and Mount Sinai. Palmetto General will meet the needs of ethnic minorities, and more Medicaid, low income and indigent patients. Aventura Hospital is serving an older population and, in effect, would be relocating an open heart program from Miami Heart. In a service like open heart surgery, Medicare is the dominant payor. Subsection 408.035(2) - availability, quality of care, accessibility, extent of utilization of existing facilities in the district; Rule 59C-1.033(4)(a) - two-hour travel time; and Subsection 408.035(7) - enhanced access for residents of the district. The applicants contend that the existing programs in the district are geographically maldistributed to the detriment of the residents of northeast and northwest Dade County. They also contend that those access issues outweigh the fact that district residents can reach open heart providers within the two- hour travel time standard in the open heart rule. In its proposed recommended order, Mount Sinai noted that if Dade County is divided in half using " . . . State Road 836 (also known as the Palmetto Expressway), which runs east-west in the center of the County, near Miami International Airport . . . ," there are four existing open heart providers in the north and four in the south. This statement must be inaccurate because Palmetto General's location was described as being on the Palmetto Expressway with no existing open heart providers in the same service area. The existing programs in District 11 are inappropriately dispersed geographically to serve the population, as it is distributed throughout Dade County. The Hialeah area, with 22 percent of the population, is larger than 14 counties in Florida which have at least one open heart surgery program. The population in the Aventura Hospital primary service area, 250,000 residents, is roughly half that of Hialeah, but is equal to or larger than five counties in Florida which have open heart surgery programs. If the applicants' patients are not transferred to other hospitals, then the volume of open heart procedures at those hospitals will decline. The medical literature and experts in the field demonstrate a relationship between volume and quality. In Florida, the old rule and new rule set the minimums for existing providers at 350 and 300, respectively. If Aventura Hospital's open heart CON is approved, almost 200 surgeries will be lost from Miami Heart and Mount Sinai, approximately half of that from the program that will be closed, and just over 100 from Memorial Regional. The effect on the low volume providers will be negligible, one lost case to Kendall and two from South Miami. Based on its projections, Aventura Hospital expects to reach 347 open heart surgeries in its third year of operation. Even assuming that most of the cases would be redirected from other providers, the projection is aggressively based on the assumption that Aventura Hospital will have a market share of 87 percent of its primary service area. If Palmetto General's open heart CON is approved, the greatest impact will also be on Mount Sinai and Miami Heart, a loss of approximately 100 surgeries a year, and on Jackson Memorial, a loss of 46 surgeries a year. Palmetto General projected that it would reach a volume of 250 open heart surgeries by the end of the third year of operations. South Miami would lose nine and Kendall would lose six open heart cases. Neither an Aventura nor a Palmetto area program will keep the existing low volume providers below 300 or 350 open heart surgeries. With or without them, South Miami and Kendall are expected to continue to operate below the objective set by the open heart rule. The absence of a material adverse impact on low volume providers is the result of the absence of any overlap in the service areas of the applicants and South Miami and Kendall. In District 11, only Cedars is likely to end up having open heart surgery volumes in a range between 300 and 350 cases as a result of the approval of both programs. Difficulties and delays in patient transfers for open heart or angioplasty services were raised as possible not normal circumstances in Dade County. Aventura Hospital witnesses presented anecdotal evidence of patients who could have benefited from the availability of angioplasty and open heart case without transfers. The evidence was inadequate to demonstrate that access to existing facilities is not available within a reasonable time. Palmetto General provided a review of medical charts to show patients whose outcomes would have been improved if it had an open heart program. Physicians who testified about those patients differed in their conclusions concerning the urgency of transfers, the need for primary angioplasty or thrombolytics, and the causes of delays. No medical records indicated patient outcomes after they were transferred. Aventura Hospital and Palmetto General also contend that the residents of their primary service area are at a disadvantage by not having timely access to primary angioplasty for patients who are having heart attacks. Treatment in their ERs is limited to administering thrombolytic or clot-busting drugs in an effort to save heart muscle. Increasingly, research has shown the benefits of primary angioplasty over thrombolytics as the most effective treatment to restore blood flow to heart muscle. The benefits include lower mortality rates and few complications, and are enhanced if the "door-to-balloon" time is less than 90 minutes. In Dade County, transfer times typically range from two to five hours, including the time to contact a receiving facility, to find a receiving physician, to receive insurance authorization, to summon an ambulance, and to prepare the patient medically for transfer, as well as the actual travel time. Research also shows that the quality of an open heart surgery program continues to be linked to its volume. In Florida, AHCA has not revised its rules either to provide for angioplasty services without open heart surgery back-up, or to reduce the tertiary designation of open heart surgery programs. Therefore, the need for more timely access to angioplasty is rejected as a not normal access issue. Palmetto General, due to operational difficulties is unlikely to meet the 90-minute reperfusion goal. In fact, most hospitals with open heart programs do not. Palmetto General does not plan to construct a second cardiac cath lab for use at the time it establishes an open heart program. Mount Sinai witnesses questioned the ability of a hospital with one cath lab to provide emergency primary angioplasty services. An additional cath lab is not required in the open heart rule and, while difficulties in scheduling are likely to occur, successful open heart programs have been operated with one cath lab initially, including Tenet-operated Delray Medical Center. Palmetto General can, when needed, construct a second cardiac cath lab in approximately six months without CON review. AHCA has not revised the open heart surgery rule to respond to the development of primary angioplasty as a preferred treatment. By its adoption of a new rule maintaining the link between angioplasty and open heart surgery, and maintaining the tertiary nature of open heart surgery, AHCA has placed the State of Florida on the side of the debate which is more concerned about the link between volumes and quality in open heart programs. Palmetto General also attempted to demonstrate the existence of access constraints at Jackson Memorial. The evidence showed discrepancies in lengths of stay, with indigent patients generally hospitalized longer. But those discrepancies were subject to other interpretations, including the possibility that indigent patients are more sick because lengths of stay were longer before and after indigent patients are transferred to and from Jackson Memorial. The maldistribution of open heart programs in Dade County as compared to the areas of significant population growth is a not normal circumstance affecting the availability, access, extent of utilization, and quality of care of existing facilities in the district. The commitment to the closure of an existing program is also a not normal circumstance in favor of the Aventura Hospital proposal. Subsection 408.035(3) - applicant's quality of care; Rule 59C- 1.030(2)(f) - accessibility of facility as a whole; Subsection 408.035(10) - costs and methods of construction. The parties stipulated that both Aventura Hospital and Palmetto General have a record of providing quality care with regard to the scope and intensity of services provided historically, and that both are accredited by the Joint Commission on Accreditation of Health Care Organizations. The parties also stipulated that both applicants can establish quality perfusion services and recruit qualified perfusionists at the costs identified in their applications. Palmetto General failed to identify any surgeons who would staff their proposed open heart program. Two cardiac surgeons in a group which submitted a letter of interest included in the Palmetto General CON application were killed in a car accident a month before the final hearing. While the absence of named surgeons affects the certainty of referrals, there is no requirement, in AHCA rules, that surgeons be named in CON applications. One board-certified and a second at least board-eligible surgeon must be on the hospital staff if it starts an open heart program. Tenet has the resources and the senior management at Palmetto General has the experience to recruit qualified medical and nursing staff. The plan for a four-bed CVICU at Palmetto General was criticized as allocating too few beds for open heart surgery patients. Using the normile statistical methodology, one expert witness testified that a six-bed CVICU is required to accommodate the expected patient census in the third year of an open heart program. Using an average daily census of 1.43 patients and a target occupancy rate of 70 percent in the four-bed CVICU, however, only two beds are needed in the first year. Subsequently, as needed, acute care beds may be converted to ICU beds without CON review. Subsection 408.035(4) - needs that are not reasonably and economically accessible in adjoining areas. Mount Sinai contends that the residents of the Aventura and Hialeah areas reasonably and economically receive open heart services in Broward County. The statistical data and evidence of capacity constraints, even after the Miramar hospital is constructed, and the closure of one of the programs that residents of the Aventura Hospital primary service area have relied on and its relocation to their area, is more appropriate than increasing their reliance on Memorial Regional. The evidence does not demonstrate that the residents of the Palmetto General service area have reasonable access to Cleveland Clinic, Memorial Regional or any other Broward County hospital with an open heart surgery program. Subsection 408.035(5) - needs of research and educational facilities. Aventura Hospital is not a statutory teaching hospital. It does have podiatry, nursing, and occupational and physical therapy students training at the hospital. Residents and interns from the primary care program at Nova Southeastern University, from the Barry University School of Podiatry, and area nursing and technical schools receive some of their training at Palmetto General. Although one rating service places Palmetto General in the category of a teaching hospital, it is not a statutory teaching hospital. A program at Aventura Hospital will have a greater adverse effect on Mount Sinai, while one at Palmetto General will have a greater adverse effect on Jackson Memorial. Both Mount Sinai and Jackson Memorial are statutory teaching hospitals. Subsection 408.035(6) - management personnel and funds for project accomplishment; Subsection 408.035(8) - immediate and long term financial feasibility. Both Aventura Hospital and Palmetto General have adequate funds and experienced management to establish open heart surgery programs. In the pre-hearing stipulation, the parties agreed that the applicants have sufficient available funds for capital and operating expenses to initiate open heart surgery programs and to operate the programs, in the short term, until financially self- sufficient. Aventura Hospital reasonably projected net profits of approximately $543,000 from an open heart program in the first year of operation, and $1 million in the second year. Aventura Hospital reasonably relied on the experiences of other HCA open heart providers in the area, particularly Miami Heart and JFK Medical Center in Palm Beach County. Mount Sinai questioned the reasonableness of Palmetto General's projection that it will generate higher profits than Aventura Hospital with lower case volumes. It also questioned Palmetto General's ability to attain the volumes projected. Palmetto General projected a net profit of just over $700,000 in the first year, $1.18 million in the second year, and $1.5 million in the third year, with 148 open heart cases in the first year, 210 in the second year, and 250 in the third year. By comparison, Aventura Hospital's first three-year projections for open hearts were 240, 312, and 347. Aventura's projected volume was potentially overstated in view of the experience at HCA facility Columbia Westside in Broward County which has achieved approximately half the open hearts projected. But the differences in projections reasonably reflect Aventura's draw from a smaller but older population and Palmetto General's draw from a larger, poorer but younger population. Palmetto General's projected volumes are reasonable considerating the number of actual open heart surgeries, 668, originating from its primary service area in the 12-months ending in June 2001. Palmetto General reasonably and conservatively based its reimbursement rates on those received at Florida Medical Center in Broward County, which actually has a lower reimbursement rate than Dade County. Mount Sinai also demonstrated that charges at three South Florida Tenet facilities, Delray Medical Center, North Ridge Medical Center, and Florida Medical Center were significantly higher than those at Mount Sinai. But those facilities operate successfully in competitive markets in Districts 9 and 10, which supports the testimony that, for open heart surgery, charges are not very relevant. Most compensation is derived from fixed-rate reimbursement from Medicare. Subsection 408.035(9) - extent to which proposal fosters competition that promotes quality and cost effectiveness. In the District, HCA, the parent of Aventura Hospital, after the sale of Miami Heart, continues to operate Cedars, which has exceeded 350 cases for the first time in 2001, and Kendall, which at 295 cases in 2001, has been a chronically low volume open heart provider. That would raise doubts about the projected volumes at Aventura Hospital, but for the demographics of its location and the closure and, in effect, proposed relocation of the Miami Heart program to a more geographically appropriate area of the District. The relocation, therefore, makes the proposal a "wash" resulting in no net increase in programs or competition in the District. By contrast, the approval of a program operated by Tenet which has five Dade County hospitals, none with an open heart program, does introduce a new provider into the market in a location with special needs due to the larger critical mass of people, their ethnicity, relative poverty and fewer, more distant alternate open heart providers. Subsection 408.035(12) - nursing home beds. The criterion related to nursing home beds, by stipulation of the parties, is inapplicable to this case. Summary of Findings On balance, Palmetto General is preferable as the hospital with the larger critical mass of population, the status as a disproportionate share provider of Medicaid and Medicare, the improved geographical access for a large ethnic group with relatively high IHD and heavy demands for services, including cardiac care services in its ER and in the ERs of other hospitals within its primary service area. In addition, the detriment to existing providers, predominantly Mount Sinai and Jackson Memorial will not reduce the volumes below 350 open heart cases. On balance, the Aventura Hospital proposal, while less compelling, because it is not a Medicaid disproportionate share hospital, is not a new entrant to the market, and has a population which is half that in the Palmetto General primary service is also entirely approvable. The hospital has facilities superior to those at Palmetto General. It is better prepared to implement an open heart program, with plans to open a second cardiac cath lab immediately and with the cardiothoracic surgeons identified for the program. Within its service area population, Aventura Hospital has a large population of elderly people, who present to its hospital with symptoms of heart attacks. The troubling adverse impact on Memorial Regional is offset by the evidence of crowding and scheduling difficulties specifically in the Memorial Regional cardiac cath lab. The troubling adverse impact on the combined Miami Heart and Mount Sinai programs is offset by the Asset Purchase Agreement which contemplated the relocation of at least a portion of the Miami Heart cases to Aventura Hospital. Even with the additional loss of 100 open heart cases to Palmetto General, Mount Sinai will remain the largest Dade County provider, retaining from 900 to 1,000 annual open heart cases. The approval of both applications will improve access to open heart surgery and angioplasty care in District 11.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a final order be entered issuing CON Application No. 9394 to Lifemark Hospitals of Florida, Inc., d/b/a Palmetto General Hospital, and CON Application No. 9395 to Miami Beach Healthcare Group, Ltd., d/b/a Aventura Hospital and Medical Center. DONE AND ENTERED this 14th day of April, 2003, 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 14th day of April, 2003. COPIES FURNISHED: Valda Clark Christian, General Counsel Agency for Health Care Administration 2727 Mahan Drive Building Three, Suite 3431 Tallahassee, Florida 32308-5403 Lealand McCharen, Agency Clerk Agency for Health Care Administration 2727 Mahan Drive Building Three, Suite 3431 Tallahassee, Florida 32308-5403 Michael O. Mathis, Esquire Agency for Health Care Administration 2727 Mahan Drive Building Three, Suite 3431 Tallahassee, Florida 32308-5403 C. Gary Williams, Esquire Michael J. Glazer, Esquire Ausley & McMullen 227 South Calhoun Street Post Office Box 391 Tallahassee, Florida 32302 Geoffrey D. Smith, Esquire Sandra L. Schoonover, Esquire Blank, Meenan & Smith, P.A. 204 South Monroe Street Post Office Box 11068 Tallahassee, Florida 32302-3068 Stephen A. Ecenia, Esquire R. David Prescott, Esquire Rutledge, Ecenia, Purnell & Hoffman, P.A. 215 South Monroe Street, Suite 420 Post Office Box 551 Tallahassee, Florida 32302-0551
The Issue Whether any of the applications of Oak Hill Hospital, Citrus Memorial Hospital, or Brooksville Regional Hospital for adult open heart surgery programs should be granted?
Findings Of Fact District 3 Extended across the northern half of the state with a reach from central Florida to the Georgia line, District 3 is the largest in land area of the eleven health service planning districts created by the Florida Legislature. See Section 408.032(5), Florida Statutes. Sites of the three hospitals whose futures are at issue in this proceeding are in two of the sixteen District 3 counties: Citrus County and at the southern tip of the district, Hernando County. The three hospitals aspire to join the ranks of District 3's six existing providers of adult open heart surgery programs. Three of the existing providers are in Alachua County, all within the incorporated municipality of Gainesville: Shands at Alachua General Hospital, Shands at the University of Florida, and North Florida Regional Medical Center. Two of the existing providers are in Marion County: Munroe Regional Medical Center and Ocala Regional Medical Center. The sixth provider, opened in November of 1998 as the most recently approved by AHCA in the district, is in Lake County: the Leesburg Regional Medical Center. The CON status of the two Ocala providers is somewhat unusual. Located across the street from each other in downtown Ocala, they share virtually the same medical staff. Pursuant to a Stipulation and Settlement Agreement with the State of Florida, the two have offered adult open heart surgery services since 1987 under a single certificate of need issued for a joint program that reflects their proximity and identity of medical staff. The Agency's view of the arrangement has evolved over the years. It now holds the position that Munroe Regional and Ocala Regional operate independent programs. Accordingly, AHCA lists each as separate programs on its inventory of adult open heart services in District 3. Nonetheless, the two operate as a joint program pursuant to the Settlement Agreement and under state sanction reflected in the agreement, that is, they derive their authority to offer adult open heart surgery services from a single certificate of need. Other than a change of attitude by the Agency, there is nothing to detract from the status they have enjoyed since the agreement reached with the state in 1987: two hospitals operating a joint program under a single certificate of need. The three Gainesville providers all operated at an annual volume of less than 350 procedures during the reporting period that was most current at the time of the filing of the applications by the three competitors in this case. Those competitors are: Citrus Memorial, Oak Hill, and Brooksville Regional. Citrus Memorial, Oak Hill, Brooksville Regional Citrus Memorial Health Foundation, Inc., is a 171-bed, not-for-profit community hospital located in Inverness, Florida. HCA Health Services of Florida, Inc., d/b/a Oak Hill Hospital is a 204-bed hospital located in Oak Hill, Florida. Hernando HMA, Inc., d/b/a Brooksville Regional is a 91- bed hospital located in Brooksville, Florida. Hernando HMA, Inc. (the applicant for the program to be sited at Brooksville Regional) also operates a second campus under a single hospital license with Brooksville Regional. The 75-bed campus is in southern Hernando County in Spring Hill. Citrus and Hernando Counties Citrus Memorial is in Citrus County to the south of the cities of Gainesville and Ocala, the sites of five of the existing providers of adult open heart surgery in the district. Further south, Oak Hill and Brooksville Regional are in Hernando County. Although adjacent to each other along a boundary running east-west, the county line is a natural divide, north and south, with regard to service areas for open heart surgery. Substantially all Citrus County residents, including Citrus Memorial patients, receive open heart surgery and angioplasty services at one of the two Ocala providers to the north. In contrast, almost all Hernando County residents (94 percent) receive open heart services at Bayonet Point, a provider in Health Planning District 5 to the south of Hernando County. The neatness of this divide would be disrupted by the approval of the application of Brooksville Regional. Brooksville's application includes part of south Citrus County in its designated primary service area, an appropriate choice because of Brooksville Regional's location on Route 41 with good access to Citrus County. At present, however, the divide between north and south along the Citrus/Hernando boundary remains a Mason-Dixon line of open heart surgery service areas. During the year ended September 1999, for example, 408 Citrus County residents received open heart surgery in Florida. Of these, 85 percent received them in Ocala at one of the two providers there. During the same period, 618 Citrus County residents underwent angioplasty, with 89.7 percent of them going to the two Ocala providers. During the year ended March 1999, 698 Hernando County residents underwent open heart surgery at Florida Hospitals. Of the 663 residents of Oak Hill's primary service area, 94.3 percent received services at Bayonet Point in District 5. Similarly, of the 779 Oak Hill primary service area residents receiving angioplasty, 93.8 percent went south to Bayonet Point. Brooksville Regional projects that 10 percent of its OHS/angioplasty volume will be from Citrus County. Still, 90 percent of the volume is projected to be from Hernando County. Thus, even with the threat posed by Brooksville's application to the divide at the Citrus/Hernando boundary, the overwhelming percentage of Brooksville's patients will be from south of the Citrus-Hernando boundary. In sum, there is de minimis competition between would- be-provider Citrus Memorial and the providers to the north vis- a-vis would-be-providers Oak Hill and Brooksville Regional and the providers to the south in the arena of open heart surgery services needed by residents of the district. Bayonet Point Under the umbrella of HCA Health Services of Florida, Inc., Bayonet Point is a provider of open heart surgery services in Pasco County. Only thirty minutes by road from its sister HCA facility Oak Hill and 45 minutes from Brooksville Regional, Bayonet Point captures approximately 94 percent of the open heart surgery patients produced among the residents of Hernando County. Although its location is in a county that is only one county to the south of the two Hernando County hospitals, Bayonet Point is in a different health planning district. It is in District 5 on its northern edge. The residents of Hernando County who receive open heart surgery services at Bayonet Point, a premier provider of adult open heart surgery services in the state of Florida, are well served. Operating at far from capacity, the quality of its open heart program is excellent to the point of being outstanding. Position of the Parties re: "not normal" circumstances The Agency's Open Heart Surgery Rule, Rule 59C-1.033, Florida Administrative Code (the "Rule") establishes a need methodology and criteria applicable to review of certificate of need applications for the establishment of adult open heart surgery programs. The Rule also governs a hospital's ability to offer therapeutic cardiac catheterization interventional services (i.e., coronary angioplasty). Pursuant to Rule 50C- 1.032, Florida Administrative Code, a cardiac catheterization program that includes the provision of coronary angioplasty must be located within a hospital that provides open heart services. Applying the methodology of Rule 50C-1.033 (the "Rule"), AHCA determined that a "fixed need pool" of zero existed in District 3 for the July 2002 planning horizon. Calculation under the formula in the Rule produced a fixed need pool of one. Several District 3 programs, however, did not have an annual case volume of 350 or more procedures. The Rule's methodology requires that calculated numeric need be zeroed out whenever there are existing programs in a district with a sub- 350 annual volume. (See Section (7)(a)2., of the Rule.) As required, therefore, the Agency published a numeric need of zero for the applicable planning horizon. The determination of zero numeric need was not challenged and so became final. Their aspirations confronted with a numeric need of zero, Citrus Memorial, Oak Hill and Brooksville Regional, nonetheless, each filed applications seeking the establishment of adult open heart surgery programs. As evidenced by the Agency's initial decision to grant Citrus Memorial's application and by its change of position with regard to Oak Hill's application, the Agency is in agreement that "not normal" circumstances exist to justify granting the applications of both Citrus Memorial and Oak Hill. Thus, while the parties may differ as to the precise identification of those circumstances, all agree that there are circumstances that support the approval of at least one application (and perhaps two) for an adult open heart surgery in District 3 for the July 2002 planning horizon. It is undisputed that a new OHS program in Hernando County would have no effect on the three existing programs located in Gainesville that perform less than 350 procedures annually. This circumstance is a "not normal" circumstance, as previously found by the Agency. It allows an application's approval in the face of the Rule's dictate that the Agency will not normally approve an application when an existing provider falls below the 350 watermark. It is not, however, a circumstance that compels the award of a CON to any of the parties as in the case of "not normal" circumstances typically recognized by the Agency. (An example of such a circumstance would be an access problem for a specific population.) Rather, it is a circumstance that allows the Agency to overcome the zeroing-out effect of the Rule that demanded a fixed-need pool of zero. It is a circumstance that allows AHCA to award an adult open heart surgery CON to one of the Hernando County hospitals provided there is a demonstration of need. There are no typical "not normal" circumstances that support any of the applications. There are no geographic, economic or clinical access problems for the residents of the any of the primary service areas of the three applicants that rise to the level of "not normal" circumstances. Nor would granting the applications of any of the three support cost efficiencies. In the case of Oak Hill, moreover, granting its application would both reduce the operating efficiencies at Bayonet Point and increase the average operating cost per case at Bayonet Point. Approval of an application is not compelled by the "not normal" circumstance that exists in this case. The "not normal" circumstance simply clears the way for approval provided there is a demonstration of need. Stipulated Matters The parties stipulated that all applicants have a good record of providing quality of care and that all sections of the respective applications addressing that issue be admitted into evidence without further proof so as to establish record of quality of care. Accordingly, the parties stipulated that each application satisfies Section 408.035(1)(c) as to "the applicant's record in providing quality of care." The parties stipulated that, subject to proving their ability to generate the open heart surgery and angioplasty volumes projected in their respective applications, each applicant has the ability to provide adequate and reasonable quality of care for those proposed services. Accordingly, subject to the proof involving service volume levels, each application satisfies Section 408.035(1)(c) as the "ability of the applicant to provide quality of care . . .". The parties stipulated that all applicants have available and adequate resources, including health manpower, management personnel, and funds for capital and operating expenditures in order to implement and operate their proposed projects. Furthermore, they stipulated that all sections of their respective applications relating to those proposed projects and all sections of their respective applications relating to those issues were to be admitted into evidence without proof. Accordingly, all applications satisfy that portion of Section 408.035(1)(h), Florida Statutes (1999) related to the availability of resources. The parties stipulated that all applications satisfy, and no further proof is required to demonstrate, immediate financial feasibility as referenced in Section 408.035(1)(i), Florida Statutes (1999). The parties stipulated that the costs and methods of proposed construction, including schematic design, for each proposed project were not in dispute and were reasonable, and that all sections of each application related to those issues were to be admitted into evidence without further proof. (Stip., p.3.) Accordingly, each application satisfies Section 408.035(l)(m), Florida Statutes (1999). The parties stipulated that each application contained all documentation necessary to be deemed complete pursuant to the requirements of Section 408.037, except that Section 408.037(b)3. is still at issue regarding operational financial projections (including a detailed evaluation of the impact of the proposed project on the cost of other services provided by the applicant). The parties stipulated that each applicant satisfied all of the operational criteria set forth in the Rule (those operational criteria being encompassed in subsections 3, 4, and 5). Accordingly, it is undisputed that each applicant will have the support services, operational hours, open heart surgery team mobilization, accreditation, availability of health personnel necessary for the conduct of open heart surgery, and post- surgical follow-up care required by the Rule in order to operate an adult open heart surgery program. The Hernando County Hospitals Oak Hill Oak Hill is located on Highway 50, in the southern part of Hernando County, between the cities of Brooksville and Springhill. Oak Hill's licensed bed compliment includes 123 medical/surgical beds, 24 ICU beds, 50 telemetry beds, and 7 beds for obstetrics. Oak Hill provides an array of medical services and specialties, including: cardiology, internal medicine, critical care medicine, family practice, nephrology, pulmonary medicine, oncology/hematology, infectious disease treatment, neurology, pathology, endocrinology, gastroenterology, radiation oncology, and anesthesiology. Board certification is required to maintain privileges on the medical staff of Oak Hill. Oak Hill's six-story facility is situated on a large campus, and has been renovated over time so that the hospital's physical plant permits the provision of efficient care for patients. Oak Hills's surgery department has five operating rooms, plus a cystoscopy room. The department performs approximately 7,800 surgeries annually, a figure that demonstrates functional efficiency. Oak Hill is JCAHO accredited, with commendation. Recently named one of the nation's top 100 hospitals for stroke care by one organization, it has also received recognition for the excellence of its four intensive care units. Oak Hill's cancer program is the only one to have received full accreditation from the American College of Surgeons within a six-county contiguous area. Oak Hill recently expanded its emergency department and implemented a fast track program called Quick Care. The program is designed to treat lower acuity patients more rapidly. Gallup Organization surveys reflect a 98 percent patient satisfaction rate with the emergency department, the eighth best rate among the approximately 200 HCA-affiliated hospitals. During 1999, the emergency department treated 24,678 patients. During the same period, 376 patients presented to Oak Hill's emergency department with an acute myocardial infarction, and there were 258 such patients during the first eight months of 2000. Oak Hill operates a mature cardiology program with ten Board-certified cardiologists on staff. Eight of the ten perform diagnostic cardiac catheterizations in the hospital's cath laboratory. Oak Hill's program is active with regard to both invasive and non-invasive cardiology. The non-invasive cardiology laboratory offers a variety of services, including echocardiography, holter monitoring, stress testing, electrocardiography, and venous, arterial and carotid artery testing. The invasive cardiology laboratory has been providing inpatient and outpatient cardiac catheterization services since 1991. During calendar year 1999, Oak Hill saw 1,671 diagnostic cardiac catheterization procedures and transferred 619 cardiac patients to Bayonet Point, 258 for open heart surgery, 311 for angioplasty, and 50 patients for cardiac catheterization. The volume of catheterization procedures at Oak Hill has led to the construction of a second "cardiac cath" laboratory suite, scheduled for completion in May of 2001. The cath lab's medical director (Dr. Mowaffek Atfeh, the first interventional cardiologist in Hernando County) has served in that capacity since inception of the lab in 1991. The cath lab equipment is state-of-the-art. Oak Hill's cath lab provides excellent quality of care through its Board-certified cardiologists and the dedication and experience of its well- trained nursing and technical staff. Brooksville Regional Originally a 166-bed facility operated by Hernando County, 75 of the beds at Brooksville Regional were moved in 1991 to create a second facility at Spring Hill. A few years later, the facilities went into bankruptcy. The bankruptcy proceeding concluded in 1998, with operational control of both facilities being acquired by Hernando HMA, Inc. ("Hernando HMA"). The CON applicant for the adult open heart surgery program to be sited at Brooksville Regional, Hernando HMA is a wholly-owned subsidiary of Health Management and Associates, Inc. ("HMA"), a corporation located in Naples, Florida, and whose shares are traded publicly. Under the arrangement produced by the bankruptcy proceeding, Hernando County retained ownership of the buildings and the land. Hernando HMA, in turn, operates the facilities per a long-term lease with the County. Hernando HMA operates the Brooksville Regional and Spring Hill Campuses under a single hospital license issued by AHCA. The two campuses therefore share key administrative staff, including their chief executive officer. They share a single Medicare provider number and they have a common medical staff. HMA (Hernando HMA's parent) operates 38 hospitals throughout the country, many in the State of Florida. Among the 38 is Charlotte Regional Medical Center in Charlotte County, an existing provider of adult open heart surgery and recently recognized as one of the top 100 OHS programs in the country. Charlotte Regional will be able to assist Brooksville Regional with staff training and project implementation if its application is approved. An active participant in managed care contracting, Hernando HMA is committed to serving all payer groups, including Medicaid and indigent patients. It recently qualified as a Medicaid disproportionate share provider. It also serves patients without ability to pay. In fiscal year 2000, it provided $5 million of indigent care. Under the lease agreement Hernando HMA has with Hernando County, it must continue the same charity care policies as when the facilities were operated by the County. Hernando HMA must report annually to the County to show compliance with this charity care obligation. Also under the lease, Hernando HMA is obliged to invest $25 million in renovations and improvements to the two facilities over a 5-year period. About $10 million has already been invested. If the adult open heart surgery program is granted this would nearly satisfy the $25 million obligation. The County reserves to itself certain powers under the lease. For example, the County reserves the authority to pre- approve the discontinuation of any services currently offered at these facilities. Also, if Hernando HMA seeks to relocate either of the two, the County retains the authority whether to approve the relocation. The Spring Hill facility is located in the southwest portion of Hernando County, very near the Pasco County line. It is a general acute care facility, offering a full range of cardiology and other acute care services. Spring Hill was recently approved to add the tertiary service of Level II Neonatal Intensive Care. The Brooksville facility is located in the geographic center of Hernando County. Its service area is all of Hernando County and southern Citrus County. Brooksville is a full- service, general acute care facility. It offers services in cardiology, orthopedics, general surgery, pediatrics, ICU, telemetry, gynecology, and other acute services. Brooksville Regional has 91 acute care beds. Normally, the beds are used as 12 ICU beds, 24 telemetry beds, and 55 medical/surgical beds. During its peak annual period of occupancy, Brooksville has the capability to use up to 40 beds for telemetry purposes. The hospital has ample unused space and facilities associated with its 91 beds that resulted from the move of the 75 beds to create the Spring Hill campus. Brooksville Regional offers full scope cardiology services and technologies, including diagnostic cardiac catheterization. Just as in the case of Oak Hill, the cardiac cath lab is state-of-the-art. The only cardiac services not offered at the hospital are open heart surgery and angioplasty. The quality of cardiology and related services at Brooksville Regional are excellent. The equipment, the nursing staff, the allied health professional staff, and the technology support services are very good. The medical staff is broad- based and highly qualified. Brooksville Regional offers substantial educational and training programs for its nursing staff and other personnel on staff. Brooksville Regional routinely treats patients in need of OHS or angioplasty services. Nearly 400 patients per year receive a diagnostic cardiac cath at Brooksville Regional and are then transferred for open heart surgery or angioplasty. The vast majority of these patients are transferred to Bayonet Point, about 45 minutes away. In addition to transfers of patients following diagnostic catheterization, Brooksville Regional transfers about 120 patients per year to Bayonet Point who have not had such services. These patients fall into two categories: (1) high- risk patients, and (2) persons presenting at Brooksville's emergency room in need of angioplasty or open heart surgery. The Proposals Citrus Memorial By its application, Citrus Memorial proposes to establish a program that will provide adult open heart surgery and angioplasty services. There is no dispute that Citrus Memorial has the ability to provide adequate and reasonable quality of care for the proposed project (just as per the stipulation of the parties, there is no dispute that all of the applicants have such ability.) There is also no dispute that each applicant, including Citrus Memorial, will have all of the staff, equipment and other resources necessary to implement and support adult open heart surgery and angioplasty services. The ability to provide high quality care stems, in part, from Citrus Memorial's contract with the Ocala Heart Institute. Under the contract the Institute will provide supervision of the implementation and ongoing operations of the Citrus Memorial program. This supervision will be provided under the leadership of the president of the Institute, cardiovascular surgeon Michael J. Carmichael, M.D. The contract between Citrus Memorial and the Ocala Heart Institute is exclusive. Citrus Memorial will not extend medical staff privileges to any cardiovascular surgeon not affiliated with the Ocala Heart Institute unless approved by the Institute. The Ocala Heart Institute (whose physician members include not only cardiovascular surgeons, but also cardiovascular anesthesiologists and invasive cardiologists) has similar exclusive contracts for the operation of adult open heart surgery programs at Monroe Regional Medical Center and at Ocala Regional Medical Center and at Leesburg Regional Medical Center. At these three hospitals, the Institute's physicians have consistently produced excellent outcomes. The Ocala Heart Institute produces these results not just through the skills of its physicians but also through the use of the same clinical protocols at each hospital governing the provision of open heart surgery. Citrus Memorial proposes to follow identical protocols at its facility. Excellent open heart surgery outcomes for the Institute's physicians are also the product of standardized facility design, equipment and supplies. The standardization of design, equipment, supplies, and protocols has the added benefit of clinical efficiencies that reduce costs and shorten lengths of stay. Beyond supervision of the initial implementation of the program, the Ocala Heart Institute will provide the medical directorship for Citrus Memorial's program. In cooperation with Munroe Regional, the directorship's 24-hour-a-day, 7-days-a-week coverage of the program will include scheduled case, emergency case, and backup coverage by cardiovascular surgeons, cardiovascular anesthesiologists, perfusionists, and interventional cardiologists. The Ocala Heart Institute will provide education and training to Citrus Memorial's medical staff and other hospital personnel as appropriate. The Institute's obligations will include continually working to improve the quality of, and maintain a reasonable cost associated with, the medical care furnished to Citrus Memorial's open heart surgery and angioplasty patients, consistent with recognized standards of medical practice in the field of cardiovascular surgery. The contract with the Ocala Heart Institute ensures to the extent possible that Citrus Memorial will have a high- quality adult open heart surgery program. Oak Hill Through approval of its application to establish an adult open heart surgery program at its facility, Oak Hill hopes Hernando County residents who now must travel outside the county to receive open heart and angioplasty services will be better served. In particular, Oak Hill hopes to provide these services to the residents of the six zip code area that comprise its primary service area ("PSA"). Containing 75 percent of the county's population, Oak Hill's PSA also encompasses the county's concentration of recent growth. Oak Hill's administration is committed to the proposal contained in its application. It has the support of the hospital's Board of Trustees and medical staff. Not surprisingly, the proposal enjoys a measure of popularity in the county. A petition in support of a program at Oak Hill drew 7,628 signatures from residents of Hernando County. This popularity is based in the fact that residents now must leave District 3 (albeit Bayonet Point in District 5 is close to Oak Hill and closer for many residents of south Hernando County) to receive open heart and angioplasty services. The number of affected residents is substantial. In 1999, for example, over 600 cardiac patients were transferred by ambulance from Oak Hill to Bayonet Point. A greater number of patients traveled on a scheduled basis to Bayonet Point for cardiac care. The vast majority of Hernando County residents and Oak Hill primary service area residents in need of OHS services receive them at Regional Medical Center-Bayonet Point. HCA Health Services of Florida, a subsidiary of HCA-The Healthcare Company ("HCA") holds the Bayonet Point license. It also is the licensee of Oak Hill and other hospitals in Florida including North Florida Regional and Ocala Regional. Bayonet Point (Regional Medical Center-Bayonet Point) is an acute care hospital in Hudson. Hudson is in Pasco County, the county immediately to the south of Hernando County. Although in a separate health planning district (District 5), Bayonet Point is relatively close to Oak Hill, 17 miles to the south. Bayonet Point's open heart surgery program experiences the fourth highest case volume in the state. The program is recognized as one of the top two programs in the state. It enjoys a national reputation. For example in July of 1999, it was ranked 50th in the nation in cardiology and heart surgery in U.S. News and World Report's list of "America's Best Hospitals." Oak Hill, as a sister hospital of Bayonet Point under the aegis of HCA, plans to develop its program in cooperation with Bayonet Point and its cardiovascular surgeons so as to bring the high quality program at Bayonet Point to Oak Hill's community and patients. A prospective operational plan for the adult open heart surgery program has been initiated by Oak Hill with assistance from Bayonet Point. Oak Hill, unlike Citrus Memorial, did not present evidence concerning the specific duties to be imposed on each physician group under contract. Nor did Oak Hill present evidence as to whether and how those groups would create and implement the type of standardization of protocols, facility design, equipment, and supplies that Citrus Memorial's program will rely upon for high quality and reduced costs. Nonetheless, it can be expected that the cooperation of Oak Hill and Bayonet Point, as sister HCA hospitals, will continue through the development and implementation of appropriate staff training, policies, procedures and protocols in the establishment of a high quality program at Oak Hill. Oak Hill's achieved volume in its open heart surgery program, if approved, will be at the direct expense of Bayonet Point. Its approval will increase the operating costs per case at Bayonet Point. Patients transferred from Oak Hill to Bayonet Point for OHS and angioplasty receive excellent outcomes. Patients are transferred to Bayonet Point for OHS and angioplasty smoothly and without delay particularly because Bayonet Point operates a private ambulance system for the transport of cardiac patients to its hospital. Two groups of cardiovascular surgeons are the exclusive cardiovascular/thoracic surgeons at Bayonet Point. Although, at present, there are no capacity constraints at Bayonet Point, both groups support a program at Oak Hill and are committed to participate in an open heart surgery program at Oak Hill. If approved, Oak Hill will enter similar exclusive contracts with the two groups. Raymond Waters, M.D., a cardiovascular surgeon, heads one of the groups. He has performed open heart surgery at Bayonet Point since its inception and is largely responsible for the development of the surgery protocols used there. Dr. Waters has consulting privileges at Oak Hill. In addition to consulting there, Dr. Waters presents medical education programs at Oak Hill. Forty to 50 percent of Dr. Waters' patients come from Hernando County and Oak Hill Hospital. Dr. Waters and his group strongly support initiation of an open heart surgery ("OHS") program at Oak Hill. Their support is based, in part, on the excellence of the institution, including its physical structure, cath labs, intensive care units, nursing staff, medical staff, and the state of its cardiology program. Dr. Waters and his group are prepared to assist in the development of an open heart surgery program at Oak Hill, and to assure appropriate surgery coverage. Oak Hill will create a Heart Center at the hospital to house its OHS program. All diagnostic and invasive cardiac services will be located in one area of the hospital to ensure efficient patient flow and access to support services. The center will occupy existing space to be renovated and newly constructed space on the first floor of the facility. Two new cardiovascular surgery suites, with all support spaces necessary, will be constructed, along with an eight-bed cardiovascular intensive care unit. The hospital's two state- of-the-art cardiac catheterization laboratory suites are available for diagnostic procedures and angioplasty procedures. A large waiting area and cardiac education/therapy room will also be constructed. Open heart surgery patients will progress from the OR to the new CVICU for the first 24-28 hours after surgery. From the CVICU, the patient will be admitted to a thirty-bed telemetry monitored progressive care unit, located on the second floor. Currently a 38-bed medical/surgical unit, thirty of the beds will remain as PCU beds. Eight beds will be relocated to create the CVICU. The PCU will provide continued care, education and discharge planning for post open heart surgery and angioplasty patients. Oak Hill will also implement a comprehensive cardiac rehabilitation program for both inpatients and outpatients. Brooksville Regional Like Oak Hill, part of the purpose of the Brooksville Regional proposal is to provide more convenient OHS and angioplasty services to Hernando County residents in need of them, 94 percent of whom now travel to Bayonet Point in Pasco County for such services. In addition to proposing improvements in patient convenience and access, Brooksville Regional sees its application as increasing patient choice and competition in the delivery of the services. Indeed, patient choice and competition for the benefit of patients, physicians and payers of hospital services are the cornerstone of Brooksville Regional's application. There is support for the proposed program from the community and from physicians. For example, Dr. Jose Augustine, a cardiologist and Chief of the Medical Staff at Oak Hill since 1997, wrote a letter of support for an open heart program at Brooksville Regional. Although he believes Hernando County would be better served by a program at Oak Hill, he wrote the letter for Brooksville Regional because, "if Oak Hill didn't get it, [he] wanted the program to be here in Hernando County." (Oak Hill No. 12, p. 43.) Consistent with his position, Dr. Augustine finds Brooksville Regional to be an appropriate facility in which to locate an open heart program and he would do all he could to support such a program including providing support from his cardiology group and encouraging support other physicians. But Brooksville Regional offered no evidence regarding the identity of its cardiovascular surgeons. Hernando HMA proposes to construct a state-of-the-art building of 19,500 square feet at Brooksville Regional to house its OHS program. Two OHS operating rooms will be built. Eight CVICU beds will be used for the program, to be converted from other licensed beds. A second cath lab will be added. The total project cost is nearly $12 million. Brooksville Regional proposes to serve all of Hernando County. In addition, 10 percent of its volume is expected to come from Citrus County. Brooksville Regional commits to serving all payer groups with the vast majority projected to be Medicare, Medicare HMO/PPO and non-Medicare managed care. Brooksville lists two specific CON conditions in its application. First, it commits to over 2 percent for charity care and 1.6 percent for Medicaid. Second, it commits to establishing the OHS program at Brooksville's existing facility, located at 55 Ponce de Leon Boulevard in the City of Brooksville. The second of these two was reaffirmed unequivocally at hearing when Brooksville introduced testimony that if Brooksville's CON application is approved, its OHS program will be located at Brooksville's existing facility. Need In Common One "not normal" circumstance exist that supports all three applications: the lack of effect any approval will have on the sub-350 performers in the district. Which, if any, of the three applicants should be awarded an adult open heart surgery program, therefore, is determined on the basis of need and that determination is to be made in the context of comparative review. Benefits of Increased Blood Flow Lack of blood flow to the heart caused by narrowed arteries or blood clots during a heart attack, results in a loss heart of muscle. The longer the blood flow is disrupted or diminished, the more heart muscle is lost. The more heart muscle lost, the more likely the patient will either die or, should the patient survive, suffer a severe reduction in the quality of life. The key to prevent the loss of heart muscle in a heart attack is to restore blood flow to the heart through a process of revascularization as quickly as possible. Cardiovascular surgeons and cardiologists make reference to this phenomenon through the maxim, "time is muscle." The faster revascularization is accomplished the better the outcome for the patient. Those who treat heart attack patients seek to restore blood flow within a half hour of the onset of the attack. Revascularization within such a time frame maximizes the chance of reducing permanent damage to the heart muscle from which the patient cannot recover. Achievement of revascularization between 30 minutes and 90 minutes of the attack results in some damage. Beyond 90 minutes, significant permanent damage resulting in death or severe reduction in quality of life is likely. The three primary treatment modalities available to a patient suffering from a heart attack are: 1) thrombolytics; 2) angioplasty and 3) open heart surgery. Thrombolytic therapy is the standard of care for the initial attempt to treat a heart attack. Thrombolytic therapy is the administration of medication, typically tissue plasminogen ("TPA") to dissolve blood clots. Administered intravenously, the thrombolytic begins working within minutes in an attempt to dissolve the clot causing the heart attack and, therefore, to prevent or halt damage to the heart muscle. Thrombolytic therapies are successful in restoring blood flow to the affected heart muscle about 60 to 75 percent of the time. In the event it is not successful or the patient is not appropriate for the therapy, the patient is usually referred for primary angioplasty, a therapeutic cardiac catheterization procedure. Cardiac catheterization is a medical procedure requiring the passage of a catheter into one or more cardiac chambers with or without coronary arteriograms, for the purpose of diagnosing congenital or acquired cardiovascular diseases, and includes the injection of contrast medium into the coronary arteries to find vessel blockage. See Rule 59C-1.032(2)(a), Florida Administrative Code. Primary angioplasty is defined as a therapeutic cardiac catheterization procedure in which a balloon-tipped catheter inflated at the point of obstruction is used to dilate narrowed segments of coronary arteries in order to restore blood flow to the heart muscle. Rule 59C-1.032(2)(b), Florida Administrative Code. More often now, in the wake of cardiac care advances, a "stent" is also placed in the re-opened artery. A stent is a wire cylinder or a metal mesh-sleeve wrapped around the balloon during an angioplasty procedure. The stent attaches itself to the walls of the blocked artery when the balloon is inflated, acting much like a reinforced conduit through which blood flow is restored. Its advantage over stentless angioplasty is improved blood flow to the heart and a reduction in the likelihood that the artery will collapse in the future. In other words, a stent may prevent substantial re-occlusion. The development of stent technology has led to dramatically increased angioplasty procedure volumes in recent years and the trend is continuing. Based on mortality rates, studies suggest that immediate angioplasty, rather than thrombolytic treatment, is the preferred treatment for revascularization. When thrombolytic therapy is inappropriate or fails and a patient is determined to be not a candidate for angioplasty, the patient is referred for open heart surgery. Under the Open Heart Surgery Rule, Rule 59C-1.032, Florida Administrative Code, a cardiac catheterization program that includes the provision of angioplasty must be located within a hospital that also provides open heart surgery services. Open heart surgery is a necessary backup in the event of complications during the angioplasty. The residents of Citrus Memorial's primary service area (and those of Oak Hill's and Brooksville Regional's), therefore, do not have immediate access (that is access to a hospital in their county of residence) to not just open heart surgery services but to angioplasty services as well. In addition to increased benefits to the residents of the proposed service areas, much of the need in this case is based on a demonstration of geographic access problems. For example, population concentration and historical utilization of open heart surgery services in the district demonstrate that the open heart surgery programs in the district are maldistributed. At the same time, the Bayonet Point program's service by virtue of both superior quality and proximity to Hernando County ameliorates the effect of the maldistribution of the programs intra-district particularly with regard to the residents of Hernando County. The four southernmost of the 16 counties in the district (Citrus, Hernando, Sumter and Lake) account for approximately 41 percent of the total adult population and 53.5 percent of the population aged 65 and over within District 3 as a whole. The super majority of aged 65 and over population in these counties is of great significance since that population is the primary base of those in need of adult open heart surgery and angioplasty. This same base accounts for 57 percent of the total annual open heart surgeries performed on district residents. For District 3 as a whole, 27 percent of the adult population is aged 65 and older. In comparison, 38.2 percent of Citrus County residents fall within that age cohort, 37.2 percent of Hernando County residents and 33.3 percent of residents in Lake and Sumter Counties combined fall within that age cohort. In contrast, in the northern part of the district, the counties closest to the three Gainesville open heart surgery programs (Columbia, Hamilton, Suwanee, Alachua, Bradford, Dixie, Gilchrist, Lafayette, Levy, and Union) contain a combined basis of 32.4 percent and Putnam County contains 24.7 percent of the District 3 population aged 65 and over. The overall District 3 open heart surgery use rate (number of surgeries per 1,000 population age 15 and over) is 3.47. Yet, the combined use rate for Columbia, Hamilton, and Suwanee Counties is 1.96, the combined use rate for Alachua, Bradford, Dixie, Gilchrist, Lafayette, Levy, and Union Counties is 1.55, and the Putnam County use rate is 2.05. More specifically, the northern county use rates are significantly below the use rates for the remainder of District 3 counties. Marion County is 4.12. Citrus County is at 4.26. Hernando County is at 6.41. Lake and Sumter Counties are at 4.31. Transfers Drive time is but one component of the total time necessary to effectuate a patient transfer. Additional time is consumed in making transfer and admission arrangements with the receiving hospital, awaiting arrival of an ambulance to begin transport, and preparing and transferring the patient into and out of the ambulance. Time delays that necessarily accompany hospital-to-hospital transfers can be critical, clinically. The fact that a facility-to-facility transfer is required means that the patient is at relatively high risk. Otherwise, the patient would be sent home and electively scheduled later. The need to travel outside the community carries other adverse consequences for patients and their families. Continuity of care is disrupted when patients cannot receive hospital visits from their regular and trusted physicians. Separation from these physicians increases stress and anxiety for many patients, and patients heal better with lower levels of stress and anxiety. Further, most OHS patients are elderly, and travel by their spouses to another community to visit is stressful and difficult at best, sometimes impossible. The elderly loved ones of the patient also tend to have health problems and, even when able, the drive to the hospital is stressful. District 3 Out-migration A high volume of OHS patients leave District 3 for OHS services. During the year ended March 1999, there were a total of 3,520 District 3 residents discharged from Florida hospitals following OHS. Only 2,428 of those OHS cases were reported by hospitals located within District 3. An outmigration rate of 31 percent, on its face, is indicative of a district geographic access problem. The problem is mitigated, however, by an understanding that most of the outmigration is of Hernando County residents who are able to travel or are transferred to Bayonet Point, a provider within 30 to 45 minutes driving time from the two Hernando County applicants in this proceeding. Citrus Memorial Volume Projections and Financial Feasibility Citrus Memorial reasonably projects an open heart surgery case volume of 266 for the first year of operation, 313 for the second year, and 361 for the third year. Citrus Memorial reasonably projects an angioplasty case volume of 409 for the first year of operation, 481 for the second year, and 554 for the third year. The Citrus Memorial program is financially feasible in the long term. It will generate approximately $1 million in not-for-profit income by the end of the second year of operation ($327,609 from open heart surgery cases, and $651,323 from angioplasty cases). Increased Access in Citrus County The two Ocala hospitals are approximately 30 miles from Citrus Memorial. With traffic, the normal driving time from Citrus Memorial to the hospitals is 60 minutes. The driving time from Oak Hill to Bayonet Point is normally 29 minutes or about half the time it takes to get from Citrus Memorial to one of the Ocala providers. The drive time from Brooksville Regional to Bayonet Point is approximately 45 minutes, 25 percent faster than the driving time from Citrus Memorial to the Ocala hospitals. Myocardial infarction patients for whom thrombolytic therapy is inappropriate or ineffective who present to the emergency room at Citrus Memorial, on average, therefore, are exposed to greater risk of significant heart muscle damage than those who present to the emergency rooms at either Oak Hill or Brooksville Regional. The delay in transfer for a Citrus Memorial patient in need of angioplasty or open heart surgery can be compounded by the ambulance system in Citrus County. There are only 7 ambulances in the system. If one is out of the county, the provider of ambulance services will not allow another to leave the county until the first has returned. Citrus Memorial presented medical records of 17 cases in which transfers took more than an hour and in some cases more than 3 hours from when arrangements for transfers were first made. There was no testimony to explain the meaning of the records. Despite the status of the records as admissible under exceptions to the hearsay rule and therefore the ability to rely on them for the truth of the matters asserted therein, the lack of expert testimony diminishes the value of the records. For example in the first case, the patient presented at the emergency room on June 14, 1999. Treatment reduced the patient's chest pain. In other words, thrombolytics appeared to be beneficial. The patient was admitted to the coronary care unit after a diagnosis of unstable angina, and cardiac catheterization was ordered. On June 15, the next day, at about 11:40 a.m., "just prior to going down to Cath Lab, patient developed severe chest pain." (Citrus Memorial Ex. 16, p. 1017.) Following additional treatment, the chest pains were observed half an hour later to be "better." (Id.) Several hours later, at 1:45 p.m., that day, transfer to Ocala Regional was ordered. (Id., p. 1043). The patient's progress notes show that the transfer took place at 3:45 p.m., two hours after the order for transfer was entered. Whether rapid transfer was required or not is questionable since the patient appears to have been stabilized and had responded to thrombolytics and other therapy. In contrast, the second of the 17 cases is of a patient whose "risk of mortality [was] . . . close to 100%." The physician's notes indicate that at 1:10 p.m. on August 8, 1999, "emergency cardiac cath [was] indicated [with] a view toward revascularization." (Citrus Memorial Ex. 16, p. 1093). The same notes indicate after discussion between the physician and the patient and his spouse "that transfer itself is risky, but that risk of mortality [if he remained at Citrus Memorial] . . . is close to 100 percent." Although these same notes show that at 1:10 p.m., the patient's transfer had been accepted by the provider of open heart surgery, it was not until 3:30 p.m., that the "Ocala team" (id., at 1113) was shown to be present at Citrus Memorial and not until 3:45 p.m., that the patient was "transferred to Ocala." (Id.) Given the maxim that "time is muscle," it may be assumed that the 2-hour and 45- minute delay in transfer from the moment the patient was accepted for transfer until it occurred and the ensuing time thereafter for the drive to Ocala contributed to significant negative health consequences to the patient. Whatever the value of the 17 sets of medical records, they demonstrate that transfers from Citrus Memorial on occasion take up time that is outside the 30-minute and 90-minute timeframes for avoiding significant damage to heart muscle or minimizing such damage to heart attack patients for whom angioplasty or open heart surgery procedures is indicated. Citrus Memorial also presented twenty sets of records from which the "emergent" nature of the need for angioplasty or open heart intervention was more apparent from the face of the records than in the 17 cases. (Compare Citrus Memorial Ex. No. 16 to No. 17). These records reveal transport delays in some cases, lack of immediate bed ability at the Ocala hospitals in others, and in some cases both transport delays and lack of bed availability. In 16 of the cases, it took over 90 minutes for the patient to reach the receiving hospital and in 13 of the cases, it took 2 hours or more. It would be of significant benefit to some of those who present to Citrus Memorial's emergency room with myocardial infarctions to have access to open heart surgery services on site should thrombolytic therapy be inappropriate or prove ineffective. Other Access Factors Besides time considerations, there are other factors that provide comparisons related to access by Citrus Memorial service area residents on the one hand and Hernando County residents to be served by either Oak Hill or Brooksville Regional on the other. Among the other factors relied on by Citrus Memorial to advance its application is a comparison of use rate. The use rate per 1,000 population aged 15 and over for Hernando County is 6.08, compared to 4.13 for Citrus County. "[B]y definition" (tr. 458), the use rates show need in Hernando County greater than in Citrus County. But the use rates could indicate an access problem financially or geographically. In the end, there are a lot of components that make up the use rate. One is obviously the age of the population and underlying heart disease, two, . . . is the physician practice patterns in the county. [S]tudies . . . show that [in] two equivalent populations, . . . one with a very conservative medical community that . . . hospitalizes more frequently . . . [versus] another . . . where the physicians hospitalize less frequently for the same situation or who use a medical approach versus a surgical approach. (Id.) While there may be one possible explanation for the lower use rate in Citrus County than in Hernando County that favors Citrus Memorial, a comparison of use rates on the state of this record is not in Citrus Memorial's favor. Other factors favor Citrus Memorial. In support of its open heart surgery and angioplasty volumes, for example, Citrus Memorial reasonably projects an 80 percent market share for such services from its primary service areas. In contrast, Oak Hill projected a much lower market share from its primary service area: 58 percent. The lower market share projection by Oak Hill is due to the proximity of the Bayonet Point program to Hernando County. The difference in the two projections reveals greater demand for improved access in Citrus County than in Hernando County. This same point is revealed by projected county outmigration. Statewide data reveals that the introduction of open heart surgery services within a county causes a county resident generally to stay in the county for those services. Yet with a new program in Hernando County, Bayonet Point is still projected reasonably to capture one-half of the open heart surgeries and angioplasties performed on Hernando County residents, further support for the notion that Hernando County residents have adequate access to open heart surgery services through Bayonet Point's program. As to angioplasty demand, Oak Hill projected an angioplasty/open heart surgery ratio of 1.3. Citrus Memorial's ratio is 1.5. Geographic access limitations also adversely affect continuity of care. To have open heart surgery performed at another hospital, the patient will have to travel for pre- operative, operative, and post-operative follow-up services and duplication of tests. This lack of continuity of care often results in the patient's primary and specialty care physicians not following the patient and not being involved with all phases of care. In assessing travel time and access issues for open heart surgery and angioplasty services, travel time and distance present not only potential hardship to the patient, but also to the patient's family and friends who accompany and visit the patient. These issues are of particular significance to elderly persons (be they the patient, family member or friend) who do not drive and must rely on others for transport. Financial Access - Indigent Care Consistent with its mission as a community not-for- profit hospital, Citrus Memorial will accept any patient who comes to the hospital regardless of ability to pay. In 1999, Citrus Memorial provided approximately $4.9 million in charity care, representing 3.6 percent of its gross revenues. Citrus County provided Citrus Memorial with $1.2 million dollars in subsidization, part of which was allotted to capital construction and maintenance, part of which was allotted to charity care. Subtracting all $1.2 million, as if all had been earmarked for charity care, from the charity care, the dollar amount of Citrus Memorial's out-of-pocket charity care substantially exceeds the dollars for the same period provided by Oak Hill ($1.3 million) and by Brooksville Regional ($935,000). The percentage of gross revenue devoted to charity care is also highest for Citrus Memorial; Brooksville Regional's is 1.1 percent and tellingly, Oak Hill's, at 0.6 percent is less than one-quarter of Citrus Memorial's percentage of out-of- pocket charity care. "[C]learly Citrus has a much stronger charity care credential than does either Oak Hill or Brooksville Regional." (Tr. 241). But this credential does not carry over into the open heart surgery arena. As a condition to its CON, Citrus Memorial committed to a minimum 2.0 percent of total open heart surgery patient days to Medicaid/charity patients. The difference between Citrus Memorial's commitment and that of Oak Hill's and Brooksville Regional's, both standing at 1.5 percent, is not nearly as dramatic as past performance in charity care for all services. The difference in the comparison of Citrus Memorial to the other applicants between past overall charity care and commitment to future open heart services for Medicaid and charity care is explained by the population that receives open heart and angioplasty services. That population is dominated by those over 65 who are covered by Medicare. Competition Citrus Memorial's current charges for cardiology services are significantly lower than comparable charges at Oak Hill or Brooksville Regional. A comparison of the eight cardiology-related DRGs that typically have high volume utilization reveals that Oak Hill's gross charges are 62 percent greater than Citrus Memorial's gross charges. A comparison of gross charges is not of great value, however, even though there are some payers that pay billed charges such as "self-pay" and indemnity insurance. When managed care payments are a function of gross charges then such a comparison is of more value. On a net revenue per case basis for those DRGs, Oak Hill's net revenues are 10 percent greater than Citrus Memorial's. A 10 percent difference in net revenues, a much narrower difference than the difference in gross charges, is significant. Furthermore, it is not surprising to see such a narrowing since most of the utilization is covered by Medicare which makes a fixed payment to the provider. A comparison of projections in the applications reveals that Oak Hill's gross revenue per open heart surgery cases will be 164 percent greater than Citrus Memorial's gross revenue per such case. Oak Hill's net revenue per open heart surgery case will be 32 percent greater than Citrus Memorial's net revenue per such case. A comparison of projections in the applications also reveals that Oak Hill's gross revenue per angioplasty case will be 74 percent greater than Citrus Memorial's and that Oak Hill's net revenues per angioplasty case will be 13 percent greater than Citrus Memorial's. If a program is established at Oak Hill, there will be a hospital within District 3 with a new open heart surgery program. But what Oak Hill, under the umbrellas of HCA, proposes to do in reality is to take a quarter of the volume from [Bayonet Point, a] premier facility to set up in a sense a satellite operation at a facility . . . 16 miles away . . . [when] those patients already have an established practice of going to the premier tertiary facility . . . [ and when the two enjoy] a very strong positive relationship. (Tr. 1434). Such an arrangement will do little to nothing to enhance competition. Comparing Citrus Memorial and Brooksville Regional gross revenues on the basis of the same cardiology-related DRGs reveals that Brooksville's gross charges are 83 percent greater than Citrus Memorial's charges. A comparison of projections in the applications reveals that Brooksville Regional's gross revenue per open heart surgery case will be 147 percent greater than Citrus Memorial's and the Brooksville's net revenue per open heart surgery case will be 45 percent greater than Citrus Memorial's. A comparison of projections in the applications reveals that Brooksville's gross revenue per angioplasty case will be 36 percent greater than Citrus Memorial's and that Brooksville's net revenue per angioplasty case will be 7 percent lower than Citrus Memorial's. Impact of a Citrus Memorial Program on Existing Providers Citrus Memorial reasonably projected that by the third year of operation, a Citrus Memorial program will take away 100 cases from Ocala Regional. In 1999 Ocala Regional had an open heart surgery volume of 401 cases. In 2000, its annual volume was 18 cases more, 419. This is a decline from both the immediately prior two-year period, 1997 to 1998 and the two-year period before that of 1995 to 1996. The volume decline for the two-year period 1999 to 2000 compared to the previous two-year period, 1997 to 1998 is not at all surprising because of "two big factors." (Tr. 97). First, in 1997 and 1998, Ocala Regional was used as a training site for the development of Leesburg Regional's open heart surgery program that opened in December of 1998. In essence, Ocala Regional enjoyed an increase in the volume of cases in 1997 and 1998 when compared to previous years and a spike in volume when compared to both previous and subsequent two-year periods because of the 1997-98 short-term "windfall.) (Id.) Second, Ocala Regional was a Columbia-owned facility. In 1999 and thereafter, "Columbia developed a lot of bad publicity because of some federal investigations that were going on of the Columbia system." (Id.) The publicity negatively affected the hospital's open heart surgery volume in 1999 and 2000. The second factor also helps to explain why Ocala Regional's volume in 1999 and 2000 was lower than in 1995 and 1996. There are other factors, as well, that help explain the lower volume in 1999 and 2000 than in 1995 and 1996. In any event if impact to Ocala Regional, alone, were to be considered for purposes of the prohibition in Rule 59C- 1.033(7)(c), that a new program will not normally be approved if approval would reduce 12-month volume at an existing program below 350, then the impact might result in veto by rule of approval of a program at Citrus Memorial. But Ocala Regional is but one hospital under a single certificate of need shared with another hospital across the street from its facility: Munroe Regional. Annualization for 1999 of discharge data for the 12 months ending September 30, 1999 shows that Munroe Regional enjoyed a volume of 770 cases. There is no danger that the program carried out by Ocala Regional and Munroe Regional jointly under a single certificate of need will fall below 350 procedures annually should Citrus Memorial be approved. Oak Hill Need for Rapid Interventional Therapies and Transfers A high number of residents of Oak Hill's proposed service area present to its emergency room with myocardial infarctions. Many of them would benefit from prompt interventional therapies currently made available to them at Bayonet Point. Over 600 patients annually, almost two patients every day, must be transferred by ambulance from Oak Hill to Bayonet Point for cardiac care. A significant number of them would benefit from interventional therapy more rapidly available. The travel time from Oak Hill to Bayonet Point is the least amount of time, however, of the travel time from any of the three applicants in this proceeding to the nearest existing open heart provider; Brooksville Regional to Bayonet Point or Citrus Memorial to one of the Ocala providers. The extent of the benefit, therefore, is difficult to quantify and is, most likely, minimal. As with the other two applicants, thrombolytic therapy is the only method of revascularization currently available to Oak Hill's patients because Oak Hill is precluded by Agency rule and clinical standards from offering angioplasty without on-site open heart surgery backup. The percentage of MI patients who are ineligible for thrombolytic therapy, coupled with the percentages of patients for whom thrombolytic therapy is ineffective, are extremely significant given the high number of MI patients presenting to Oak Hill's emergency room. During 1998, 418 patients presented to Oak Hill's ER with an MI, and 376 MI patients presented in 1999. During the first eight months of 2000, 255 MI patients presented to Oak Hill's ER, an annualized rate of 384. Conservatively, thrombolytic therapy is not effective for at least 10 percent of patients suffering from an acute MI, either because patients are ineligible to receive the treatment or the treatment fails to clear the blockage. Accordingly, it may be conservatively projected that at least 104 patients who presented to Oak Hill's ER between 1998 and August 2000 (10 percent of 1049) suffering an MI were in need of angioplasty intervention for which open heart surgery backup is required. Most patients are diagnosed as in need of OHS or angioplasty as a result of undergoing a diagnostic cardiac catheterization. Oak Hill performs an extremely high volume of cardiac cath procedures for a hospital that lacks an OHS program. In 1999, for example, it performed 1,641 cardiac catheterizations. This is a higher volume than experienced by any of six hospitals during the year prior to which they recently implemented new OHS programs. If Oak Hill had an OHS program, most of the patients at Oak Hill determined to be in need of angioplasty or OHS could receive those procedures at Oak Hill. Such an arrangement would avoid the inevitable delay and stress occasioned by a transfer to Bayonet Point or elsewhere. Furthermore, if Oak Hill had an OHS program then those patients in need of diagnostic cardiac catheterization and angioplasty sequentially would have immediate access to the interventional procedure. The need is underscored for those patients presenting to Oak Hill's ER with myocardical infarctions who do not respond to thrombolytics because, as stated earlier in this order, access to angioplasty within 30 minutes of onset is ideal. Oak Hill transfers an extremely high number of cardiac patients for angioplasty and open heart surgery. In 1999, Oak Hill transferred 258 patients to Bayonet Point for open heart surgery, and 311 for angioplasty/stent procedures. Of course, most OHS patients are scheduled on an elective basis for surgery, rather than being transferred between hospitals, as is evident from the fact that during the 12-month period ending March 1999, 698 Hernando County residents underwent OHS. For now, Oak Hill patients determined to be in need of urgent angioplasty or open heart surgery must be transferred by ambulance to an OHS provider which for the vast majority of patients is Bayonet Point. Approximately 17 miles south, the average drive time to Bayonet Point from Oak Hill is 30 minutes but it can take longer when on occasion there is traffic congestion. Once the transfer is achieved and patient receives the required procedure, the drive can be difficult for the patient's family and loved ones. Community members often express to physicians and hospital staff their support and desire for an OHS program at Oak Hill. Many believe travel outside Hernando County for those services is cumbersome for loved ones who are important to the patient's healing process. The community support and demand for these services is evidenced by the 7,628 resident signatures on petitions in support of Oak Hill's efforts to obtain approval for an OHS program. While a program at Oak Hill would be more convenient, Oak Hill did not demonstrate a transfer problem that would rise to the level of "not normal" circumstances. Because of Oak Hill's relationship with Bayonet Point, Bayonet Point's proximity and excess capacity, coupled with the high quality of the program at Bayonet Point, Oak Hill's case is more in the nature of seeking a satellite. As one expert put it at hearing, [Oak Hill] is, in fact, a satellite. And my question is, [']What's the wisdom of doing that if you don't have the problems that normally are being addressed when you grant approval of a program?['] In other words, if you don't have transfer issues [that rise to the level of "not normal" circumstances], if you don't have access issues, if you're not achieving any price competition, if it's not particularly cost effective, why would you [approve Oak Hill]? (Tr. 1537-38). Oak Hill's Projected Utilization Oak Hill projected a range of 316 to 348 OHS cases during its first year, and by its third year a range of between 333 and 366 cases. Those volumes are sufficient to ensure excellent quality of care from the beginning of the program, particularly with the involvement of the Bayonet Point surgeons. Oak Hill defined its primary service area (PSA) for OHS based on historic MDC-5 cardiology related diagnosis discharges from its hospital. For the 12-month period ended March 1999, over 90 percent of Oak Hill's MDC-5 discharges were residents of six zip codes, all in the vicinity of Oak Hill Hospital and within Hernando County. Accordingly, that area was chosen as the PSA for projecting OHS utilization. Out-of-PSA residents accounted for only 8.9 percent of Oak Hill's MDC-5 discharges, and of these, 1.5 percent were out-of-state patients, and 4.9 percent were residents from other parts of District 3. For the year ending ("YE") March 1999, Oak Hill had an MDC-5 market share of 40.9 percent within its PSA, without excluding angioplasty, stent, and OHS cases. If angioplasty, stent, and OHS cases are excluded, Oak Hill's PSA market share was 52.7 percent. In order to project OHS service demand, Oak Hill examined the population projections for 1999 and 2004 for District 3, and for Oak Hill's PSA. The analysis was based on age-specific resident populations and use rates, to serve as a contrast to the Agency's projections. The numeric need formula in the OHS Rule utilizes a facility based use rate derived by totaling all of the reported OHS cases performed by hospitals within a District during a given time period, and then dividing those cases by the adult population aged 15 and over. While a facility-based use rate measures utilization in those District hospitals, however, it does not measure out-migration. Nor does it reflect the residence of the patients receiving those services. On the other hand, a resident-based use rate identifies where patients needing OHS actually come from, and permits development of age specific use rates. For example, the resident-based use rates reflects that the southern portion of District 3 has a much higher concentration of elderly persons than does the northern portion of the District, and reveals extremely high migration out of the District for OHS services. Oak Hill's PSA is more elderly than the District 3 population as a whole. In 1999, 32.8 percent of the Oak Hill PSA population was aged 65 or over, as opposed to only 21.5 percent for District 3 as a whole, with similar results projected for the population in 2004, the projected third year of operation of Oak Hill's program. Based on the district-wide use rate resulting from the OHS Rule need methodology, Hernando County would be expected to generate 276 OHS cases in the planning horizon of July 2002 (use rate of 2.3 per 1000 adult population). Application of this OHS Rule use rate to Hernando County clearly understates need if resources to meet the need are considered within the isolation of the boundaries of District 3. For example, the OHS Rule based projection of 276 OHS cases in 2002, is far below the actual 664 Hernando County resident OHS discharges during YE March 1998, and the 698 OHS cases during YE March 1999. While the facility-based district-wide use rate was 2.3, the Hernando County resident-based use rate was 6.45 per 1000 population. The fact of increasing use rates with age is demonstrated by the Hernando County resident use rate of 6.95 for ages 55-64, increasing to 12.01 for ages 65-74, and increasing again to 14.95 for age 75 and over. But focusing on Hernando County use rates within District 3 ignores the reality of the proximity of an excellent program at Bayonet Point. Oak Hill reasonably projected OHS demand in its PSA by examining the age-specific use rates of residents in the southern portion of District 3, which experienced an overall use rate of 4.55 for the year ending March 1999. Those age-specific use rates were then applied to the age-specific population forecast for each of the three horizon years of 2002 through 2004, resulting in an expected PSA demand for OHS of 547 cases in 2002, 561 cases in 2003, and 575 cases in 2004. Those projections are conservative given that 663 actual open heart surgeries were reported among PSA residents during the YE March 1999. The same methodology was used to project angioplasty service demand in the PSA, resulting in an expected demand ranging from 721 cases in 2002 to 758 cases in 2004. Oak Hill then projected its expected OHS case volume by assuming that its first year OHS market share within its PSA would be the same as its MDC-5 market share, being 52.7 percent. Oak Hill next assumed that by the third-year operation its market share would increase to equal its current cardiac cath PSA market share of 57.9 percent. It further assumed that it would have a non-PSA draw of 8.9 percent, which is equal to its current non-PSA MDC-5 market share. Oak Hill reasonably expects that 91.1 percent of its OHS cases would come from within its six zip code PSA, with the remaining 8.9 percent expected to come from outside that area. Oak Hill then projected an expected range of OHS discharges during its first three years of operation by using both a low estimate and a high estimate. The resulting utilization projections reflect a low range of 316 OHS cases in 2002, 324 cases in 2003, and 333 cases in 2004. The high range estimate for the same years respectively would be: 348, 357, and 366 cases. The same methodology was used to project angioplasty cases, resulting in the following low range: 417 cases in 2002; 428 in 2003; and 438 in 2004. The expected high range for the same respective years would be: 458, 470, and 482. Oak Hill's OHS and angioplasty utilization projections are reasonable. Long-term Financial Feasibility Long-term financial feasibility is defined as a demonstration that the project will achieve and maintain financial self-sufficiency over time. Oak Hill's projected gross charges were based on Bayonet Point's charge structure. The projected payer mix was based on Oak Hill's cardiac cath experience. Projected net reimbursement by payor source was based on Oak Hill's experience for Medicare, Medicaid, and contractual adjustment history. Oak Hill's expenses were projected on a DRG specific basis using information generated by the cost accounting system at Bayonet Point. The use of Bayonet Point's expense experience is a reasonable proxy for a number of reasons. Its patient base is comprised of patients who are reasonably expected to be the base of Oak Hill's patients. Management there is similar to what it will be at an Oak Hill program. And, as stated so often, the two facilities are relatively close in location. To account for differences between Bayonet Point's expenses and Oak Hill's project costs, interest and depreciation, adjustments were made by Oak Hill as reflected in its application. As a means of compensating for fixed costs differentials between the two hospitals, Oak Hill added its salary costs projected in Schedule 6 to the salary expenses already included in Bayonet Point's costs. (Schedule 6 nursing, administration, housekeeping, and ancillary labor costs exceeded $3 million in the first year of operations.) This counting of two sets of salary expenses offsets any economies of scale cost differential that may exist between the OHS programs at Bayonet Point and Oak Hill. A reasonable 3 percent annual inflation factor was applied to both projected charges and costs. The reasonableness of Oak Hill's overall approach is supported by Citrus Memorial's use of a substantially similar pro forma methodology in modeling its proposed program on Munroe Regional Medical Center. Oak Hill reasonably projects a profit of $1.38 million in the first year of operation, and that profitability will increase as the case volumes grow thereafter. An Oak Hill program will cost Bayonet Point (a sister HCA hospital) patients and may diminish the corporate profits of the two hospital's parent corporation, HCA Health Services of Florida, Inc. It is clear from the parent's most recent audited financial statements, however, that it has ability to absorb a lower level of profit from Bayonet Point without jeopardizing the financial viability of Oak Hill. Brooksville Regional argues that the financial impact to Bayonet Point of an Oak Hill program demonstrates that the Oak Hill application is nothing more than a preemptive move to stifle competition. Oak Hill, in turn, characterizes its proposal as a sound business judgement to compete with non-HCA hospitals in District 3. Whatever characterization is applied to the Oak Hill proposal, it is clear that it is financially feasible in the long term. Other Statistics The AHCA population estimates for January 1, 1999, show a Hernando County population of 108,687 and a Citrus County population of 98,912. The same data sources show the "age 65 and over" population (the "elderly") in Hernando to be 40,440 and in Citrus to be 37,822. During the year 2000, there were 2,545 more people aged 65 and over in Hernando County than in Citrus County. By the year 2005, the difference is expected to be 3.005. The total change in the elderly population between 2000 and 2005 is projected to be 4,109 in Citrus County and 4,614 in Hernando County. Generally, the older the population, the older the OHS use rate. Comparatively, then, Hernando County has the larger population to be served both now, and in all probability, in the foreseeable future. Oak Hill has the largest cardiology program among the applicants. For the 12-month period ending September 1999, MDC- 5 discharges were 1,130 at Brooksville Regional, 2,077 at Citrus Memorial and 2,812 at Oak Hill. The combined Brooksville and Spring Hill Regional Hospital MDC-5 case volume of 2,238 is below Oak Hill's MDC case volume for the same period. Oak Hill is the largest cardiac cath provider among the applicants. For the 12-month period ending September 2000, Citrus Memorial reported 646 cardiac catheterization procedures and Brooksville Regional reported 812. Oak Hill reported 1,404 such procedures, only sixty shy of a volume double the combined volume at the other two applicants. The level of ischemic heart disease in an area is indicative of the level of open heart surgery needed by residents of the area. The number of ischemic heart disease cases by county during the 12-month period ending September 1999 were: 1,038 for Alachua; 1,978 for Citrus; 2,816 for Marion; and, Hernando, 3,336. During the 12-month period ending September 1999, 657 Hernando County residents underwent OHS at Florida hospitals, while only 408 residents of Citrus County did so. Similarly, 948 Hernando County residents had angioplasty, while only 617 Citrus County residents underwent angioplasty. For the year ending June 30, 1999, the Citrus County OHS use rate was 4.26 per 1,000 population, substantially lower than the Hernando County use rate of 6.41. A comparison of the use rates for the year ending September 30, 1999, again shows Hernando County's use rate to be higher: 4.13 for Citrus, 6.08 for Hernando. Hernando County also experiences a higher cardiovascular mortality rate than does Citrus County. During 1998, the age-adjusted cardiovascular mortality rate per 100,000 population for Citrus was 330.88 and 347.40 for Hernando. During 1999, those mortality rates were 304.64 in Citrus and 313.35 in Hernando (consistent with the decline between 1998 and 1999 for the state as a whole). The Hernando mortality rates greater than Citrus County's indicate a greater prevalence of heart disease in Hernando County than in Citrus County. Most importantly, during 1999, Oak Hill transferred 619 patients to Bayonet Point for cardiac intervention - 258 for open heart surgery, 311 for angioplasty/stent, and 50 for cardiac cath. Brooksville Regional transferred a combined 383 patients after diagnostic cardiac catheterization to other hospitals for either angioplasty or OHS. Brooksville Regional has 91 licensed beds, Citrus Memorial has 171 beds and Oak Hill has 204 beds. Although with Spring Hill one could view Brooksville Regional as "two hospital systems with 166 beds under common ownership and control" (Tr. 1544), at 91 beds, Brooksville would become the smallest OHS program in the state in terms of licensed bed capacity, Hospitals of less than 100 beds are not typically of a size to accommodate an OHS program. There might be dedicated cardiovascular hospitals of 100 beds or less with capability to support an open heart surgery program, but "open heart surgical services in [a general, surgical-medical hospital of less than beds] would overwhelm the hospital as far as the utilization of services." (Tr. 126). Oak Hill's physical plant, hospital size, number of beds, medical staff size, number of cardiologists, cath lab capacity, number of cath procedures, number of admissions, and facility accessibility to the largest local population are all factors in its favor vis-à-vis Brooksville Regional. In sum, Oak Hill is a hospital more ready and appropriate for an adult open heart surgery program than Brooksville. Alternatives As an alternative to its CON application, Oak Hill considered the possibility of seeking approval of a program to be shared with Bayonet Point. Learning that the Agency looks with disfavor on inter-district shared adult open heart surgery programs, Oak Hill decided to seek approval of a program independent of Bayonet Point but one that would rely on Bayonet Point's experience and expertise for development, implementation and operation. Bed Capacity Brooksville contends that Oak Hill lacks sufficient bed capacity to accommodate the implementation of an OHS program in conjunction with its projected-related increased admissions. Brooksville relied on an Oak Hill daily census document, focusing on the single month of January, arguing that the document reflected that Oak Hill exceeded its licensed bed capacity on 5 days that month. The licensed bed capacity, however, was not exceeded. Observation patients, who are not inpatients, and not properly included in the inpatient count, were included in the counts provided by Brooksville. Seasonal peaks in census during the winter months, particularly January, are common to all area hospitals. Similarly, all hospitals experience a higher census from Monday through Thursday, than on other days. Oak Hill has adequate capacity and flexibility to accommodate those rare occasional days during the year when the number of patients approaches its number of beds. Patients are sometimes hospitalized for "observation," and when so classified are expected to stay less than 24 hours. Typically, Oak Hill places such patients in a regular "licensed" bed, so long as such beds are available. There are other areas in the hospital suitable for observation patients, including: 12 currently unused and unlicensed beds adjacent to the cardiac cath recovery area; six beds in the ER holding area; eight beds in the ER Quick Care Unit; and additional beds in the same day surgery recovery area. Observation patients can be cared for appropriately in these other areas, a routine hospital practice. Peak season census is "a fact of life" for hospitals, including Oak Hill and Brooksville. Oak Hill has never been unable to treat patients due to peak season demands. January is the only month during the year when bed capacity presents a challenge at Oak Hill. If necessary, Oak Hill could coordinate patient admissions with Bayonet Point to ensure that all patients are appropriately accommodated. Oak Hill can successfully implement a quality OHS program with its current bed capacity. In fact, all parties have stipulated to Oak Hill's ability to do so. Moreover, should it actually come to pass in future years that Oak Hill's annual average occupancy exceeds 80 percent, it may add up to 20 licensed beds on a CON exempt basis. Brooksville Regional Factors favoring Brooksville over Oak Hill Bayonet Point is the dominant provider of OHS/angioplast to residents of Hernando County. As a non-HCA hospital, a Brooksville program (in contrast to one at Oak Hill) would enhance patient choice in Hernando County for hospitals and physicians, and would create an environment for price and managed care competition. Other health planning factors that support Brooksville Regional over Oak Hill are the locations of the two Hernando County hospitals and the ability of the two to transfer patients to Bayonet Point. Patient Choice and Competition Of the OHS/angioplasty services provided to Hernando County residents, Bayonet Point provides 94 percent, the highest county market share of any hospital that provides OHS services to residents of District 3. Indeed, it is the highest market share provided by any OHS provider in any one county in the state. The importance of patient choice and managed care competition has been acknowledged by all the parties to this proceeding. If Brooksville Regional's program were approved, Hernando County residents would have choice of access to a non- HCA hospital for open heart and angioplasty services and to physicians and surgeons other than those who practice at Bayonet Point. This would not be the case if Oak Hill's program was approved instead of Brooksville's. Price Competition Although Brooksville is not a "low-charge provider for cardiovascular services" (tr. 1347), approving Brooksville creates an environment and potential for price competition. A dominant provider in a marketplace has substantial power to control prices. Adding a new provider creates the motivation, if not the necessity, for that dominant provider to begin pricing competitively. A dominant provider controls prices more than hospitals in a competitive market. Bayonet Point's OHS charges illustrate this. Approving Brooksville's application creates an environment for potential price competition with Bayonet Point, whereas approving Oak Hill's application, whose charges are expected to be the same as Bayonet Point's, does not. Managed Care Contracting Just as competitive effects on pricing are reduced in an environment in which there is a dominant provider, so managed care contracting is also affected. Managed care competition depends not just on competition between managed care companies but also on payer alternative within a market. If a managed care company is forced to deal with one health care provider or hospital in a marketplace, its competitive options are reduced to the benefit of the hospital that enjoys dominance among hospitals. "[T]he power equation moves much more strongly in that type of environment towards the provider [the dominant hospital] and away from the managed care companies." (Tr. 1471). Managed care companies who insure Hernando County residents have no alternative when it comes to open heart surgery and angioplasty services but to deal with Bayonet Point. With a 94 percent share of the Hernando County residents in need of open heart and angioplasty services, there is virtually no competition for Bayonet Point in Hernando County. The managed care contracting for both Bayonet Pont and Oak Hill is done at HCA's West Florida Division office, not at the individual hospital level. Approving Oak Hill will not promote or provide competition for managed care. Approving Brooksville, on the other hand, will provide managed care competition over open heart and angioplasty services in Hernando County. Ability to Transfer Patients While transfers of Hernando County patients always produce some stress for the patient and are cumbersome as discussed above for the patient's loved ones, there is no evidence of transfer problems for Oak Hill that would rise to the level of "not normal" circumstances. Outcomes for patients transferred from Oak Hill to Bayonet Point on the basis of morbidity statistics, mortality statistics, length of stay, patient satisfaction, and family satisfaction are excellent. It is not surprising that sister hospitals situated as are Oak Hill and Bayonet Point would enjoy minimal transfer delays and access problems encountered when patients are transferred. Transfers between unaffiliated hospitals are not normally as smooth or efficient as between those that have some affiliation. Unlike Oak Hill's patients, Brooksville patients, for example, are never transported for OHS/angioplasy by Bayonet Point's private ambulance. Other than in emergency cases, Bayonet Point decides the date and manner when the patient will be transferred. But just as in the case of Oak Hill, there is no evidence of transfer problems between Brooksville Regional and Bayonet Point that would amount to an access problem at the level of "not normal" circumstances. Outmigration As detailed earlier, there is extensive outmigration of Hernando County residents to District 5 for open heart and angioplasty procedures. The outmigration pattern on its face is in favor of both applications of Oak Hill and Brooksville. The outmigration from Hernando County, however, is of minimal weight in this proceeding since Bayonet Point is so close to both Oak Hill and Brooksville. The patients at the two Hernando hospitals have good access to Bayonet Point, a facility that provides a high level of care to Hernando County residents in need of open heart surgery and angioplasty services. The relationship is inter-district so that it is true that there is outmigration from District 3. Outmigration statistics showing high outmigration from a district have provided weight to applications in other proceedings. They are of little value in this case. Location of the Two Hernando Hospitals Brooksville is located in the "dead center" (Tr. 1290) of Hernando County. With good access to Citrus County via Route 41, it is convenient to both Hernando County residents and some residents of Citrus County. It reasonably projects, therefore, that 90 percent of its open heart/angioplasty volume will be from Hernando County with the remaining 10 percent from Citrus. Oak Hill is located in southwest Hernando County, closer to Bayonet Point than Brooksville. Oak Hill's primary service area is substantially the same as that part of Bayonet Point's that is in Hernando County. Oak Hill does not propose to serve Citrus County. Brooksville, then, is more centrally located in Hernando County than Oak Hill and proposes to serve a larger area than Oak Hill. Financial Feasibility (long-term) Brooksville has operated profitably since its bankruptcy. In its 1999 fiscal year, the first year out of bankruptcy, Hernando HMA earned a profit of $3 million. In fiscal year 200, Brooksville's profit was $6 million. OHS programs are generally very profitable. There is no OHS program in Florida not generating a profit. Brooksville's projected expenses and revenues associated with the program are reasonable. Schedule 5 in the Brooksville application contains projected volumes for OHS/angioplasty. The payer mix and length of stay were based on 1998 actual data, the most recent data for a full year available. The projected volumes are reasonable. The projected volumes are converted to projected revenues on Schedule 7. These projections were based on actual 1998 charges generated for both Hernando and Citrus County residents since Brooksville proposes to serve both. These averages were then reasonably projected forward. Schedule 7 and the projected revenues are reasonable. These projected volumes and revenues account for all OHS procedures performed in Hernando and Citrus Counties in 1998 even though effective October 1, 1998, the DRG procedure codes for OHS procedures were materially redefined. Thus, when Brooksville's schedules were prepared using 1998 data, only 3 months of data were available using the new DRG codes. Brooksville opted to use the full year of data since using a full year's worth of data is preferable to only 3 months. Similarly, the DRGs for angioplasty both as to balloon and with stent were re-classified. Again, Brooksville opted to use the full year's worth of data. Brooksville's expert explained the decision to use the full year's worth of data and the effect of the DRG reclassification on Brooksville's approach, "We've captured all the revenues and expenses associated with these open heart procedures and just because the actual DRGs have changed, doesn't . . . impair the results because both revenues and expenses are captured in these projections." (Tr. 1651). Schedule 8 includes the projected expenses. It included the health manpower expenses from Schedule 6 and the project costs from Schedule 1. The remaining operating expenses were based upon the actual costs experienced by all District 3 OHS providers generated from a publicly-available data source, and then projected forward. As to these remaining operating costs, consideration of an average among many providers is far preferable to relying on just one provider. Schedule 8 was reasonably prepared. It accounts for all expense to be incurred for all types of OHS and angioplasty procedures. It is based on the best information available when these projections were prepared and are based on 12 months of actual data. Even if the projections of the schedules are not precise because of the re-classification of DRGs, they contain ample margins of error. Brooksville's financial break-even point is reached if it performs 199 OHS and 100 angioplasty procedures. This low break-even point provides additional confidence that the project is financially feasible. Brooksville demonstrated that its proposed program will be financially feasible.
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 that grants the application of Citrus Memorial (CON 9295) and denies the applications of Oak Hill (CON 9296 )and Brooksville Regional (CON 9298). DONE AND ENTERED this 4th day of October, 2001, in Tallahassee, Leon County, Florida. DAVID M. MALONEY Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 4th day of October, 2001. COPIES FURNISHED: Diane Grubbs, Agency Clerk Agency for Health Care Administration 2727 Mahan Drive Fort Knox Building Three, Suite 3431 Tallahassee, Florida 32308-5403 William Roberts, Acting General Counsel Agency for Health Care Administration 2727 Mahan Drive Fort Knox Building Three, Suite 3431 Tallahassee, Florida 32308-5403 Michael J. Cherniga, Esquire Seann M. Frazier, Esquire Greenberg Traurig, P.A. East College Avenue Post Office Box 1838 Tallahassee, Florida 32302-1838 Stephen A. Ecenia, Esquire Rutledge, Ecenia, Purnell and Hoffman, P.A. 215 South Monroe Street, Suite 420 Tallahassee, Florida 32302-0551 James C. Hauser, Esquire Metz, Hauser & Husband, P.A. 215 South Monroe Street, Suite 505 Post Office Box 10909 Tallahassee, Florida 32302 John F. Gilroy, III, Esquire Agency for Health Care Administration 2727 Mahan Drive Fort Knox Building Three, Suite 3431 Tallahassee, Florida 32308-5403
The Issue The issue in this case is whether Venice Hospital, Inc., (Venice) meets the statutory and rule criteria for a Certificate of Need (CON) to operate an open heart surgery program, and therefore, whether the Department of Health and Rehabilitative Services (Department) should approve its CON Application Number 5715.
Findings Of Fact The Parties 1. Venice is a 342 bed general hospital located in Venice, Florida, which is in south Sarasota County and is a part of the Department's Service District There are no subdistricts in District 8 for open heart surgery. The majority of patients served by Venice are from 50-55 years of age or older, and 22%-25% of patients admitted to Venice have a primary diagnosis of heart disease. If patients with heart disease as a secondary diagnosis are considered along with those who have this as their primary diagnosis, the total represents over 40% of all patients admitted at Venice. Of the cardiac catheterization patients treated at Venice in 1988, 78% were Medicare patients. Venice is a Medicaid provider, projecting 1.6% of its total revenue from Medicaid. It has a critical care center with 32 beds capable of invasive monitoring, multi-infusion of medications, pacemakers, Swans Ganz catheters, and care of post- catheterization patients. A separate 8-bed unit has been designated for use by open heart patients, with the same monitoring capability as the remainder of the unit. Memorial is an acute care hospital located in Sarasota, Florida, and is governed by the Sarasota County Public Hospital Board, which is elected to provide health care services to all residents of Sarasota County. It provides a full range of services, including an open heart surgery program, and is the largest provider of services to medically indigent and Medicaid patients in Sarasota County. Medical Center is a 208 bed not-for-profit hospital located in Punta Gorda, Florida, which has provided cardiac catheterization since 1985, and has been approved to initiate an open heart surgery program which is scheduled to open in late 1989. It has a 5% Medicaid payor mix. The primary service area for Medical Center is Charlotte County. Its secondary service area includes south Sarasota County. Both Memorial and Medical Center are also located in District 8, with Venice located between these facilities. Venice is approximately 35 miles to the north of Medical Center, and about 25 miles to the south of Memorial. There are two existing open heart programs in District 8, one at Memorial and the other at Southwest Regional Medical Center in Ft. Myers. In addition, there are two approved, but not yet operational, open heart programs, one at Medical Center and the other at Lee Memorial in Ft. Myers. The Department is the state agency which is responsible for administering Sections 381.701 through 381.715, Florida Statutes, the "Health Facility and Services Development Act", under which applications for Certificates of Need (CON) are filed, reviewed, and either granted or denied by the Department. The Application On or about September 27, 1988, Venice filed an application with the Department for a CON to implement an open heart surgery program at its hospital in Venice, Florida, with a capital expenditure of $665,500. This application was designated as CON Application Number 5715. The Department reviewed this application, and in October, 1988, forwarded an omissions letter to Venice. Venice responded to the omissions letter, and addressed not only the items noted by the Department in its omissions letter, but also provided additional materials, information, and corrections not requested in the omissions letter. Effective on November 14, 1988, the Department deemed Venice's application complete. A public hearing was held on this application at the request of Memorial on November 18, 1988. Thereafter, the Department reviewed and considered all material received from the applicant, as well as the information received at the public hearing, and prepared its State Agency Action Report (SAAR) noticing its intent to grant CON 5715. Memorial and Medical Center timely filed petitions to challenge the Department's notice of intent to issue this CON. Venice is relying upon its application which was deemed complete and reviewed by the Department in its SAAR, and not upon its original application that was filed prior to the omissions letter. Additionally, the applicant is not relying upon a "not normal circumstance" justification for its application, but rather urges that it meets the statutory and rule criteria for the issuance of this CON. The Department's CON Manual HRSM 235-1, dated October 1, 1988, is irrelevant to this proceeding since it has not been adopted by, or incorporated in, a rule, and was not applied in the batching cycle in which Venice's application was filed, or in the subsequent batch. It has not yet been applied to any hospital CON application. Therefore, the matters contained within this Manual concerning what is a permissible response to an omissions letter have not been considered. As part of its originally filed application, Venice included a document prepared by Ernst & Whinney entitled, "Audited Financial Statements and Other Financial Information, Venice Hospital, Inc., June 30, 1987." Through a clerical error in the copying process, page one of this twenty-four page document was omitted. At the time it filed its omissions response, Venice included this missing first page which is signed on behalf of Ernst & Whinney, and which states that the examinations contained therein were made in accordance with generally accepted auditing standards. It expresses the opinion that these financial statements present fairly the financial position of the applicant. An auditor's opinion letter is an essential part of the audited financial statement which must be included with the CON application. However, Venice provided this inadvertently missing page prior to its application being deemed complete. Thus, it was available to, and was reviewed by, the Department in the preparation of the SAAR on this application. Venice's application did raise concerns which it was seeking to address concerning availability and accessibility by addressing the current practice of transferring patients requiring open heart surgery to other facilities. Patient costs for such transport, as well as patient risk, inconvenience and comfort for the patient and family members, were all referenced in the application. Additionally, testimony at the public hearing held on November 18, 1988, which the Department considered in the preparation of its SAAR, dealt with concerns and problems arising from patient transport, including delay, risks to the patient from ambulance or helicopter transfers, and adverse effects which may occur on quality of care through this practice which is inconsistent with the concept of a continuum of care. The SAAR specifically notes that Venice contends its proposal will improve geographic access in its immediate service area, and that from July, 1987 through June, 1988, it transferred 144 of its cardiac patients from its facility for open heart surgery and an additional 125 were transferred for angioplasty procedures. The application did not specifically address or identify any adverse impact which its approval would have on existing providers. However, evidence on this issue is admissible at hearing since it is relevant to the issue of the standing of Memorial and Medical Center, and also because it is relevant to establish whether approval of this application would be consistent with statutory and rule review criteria, and provisions of the Local Health Plan that require assessment of any such impact. The SAAR notes that Venice did contend that approval of this CON will not affect the economy or quality of existing services in the District. Stipulations The parties stipulated that: The project is financially feasible in the short term; Venice has a record of providing quality care and this record is not an issue in this case; Other than for open heart services, other facilities are adequate and available to act as alternatives; The size and cost of construction for Venice's proposal are appropriate; Open heart surgery programs currently exist within a two hour drive time under average driving conditions for at least 90% of the District's population; The type and cost of equipment in the application are reasonable; If approved, Venice will provide the services required by Rule 10- 5.011(1)(f)3a and 3b, Florida Administrative Code, and does provide the services shown at paragraph 3c of said Rule. State Health Plan Objective 4.2 of the State Health Plan applicable to this application is to "maintain an average of 350 open heart surgery procedures per program in each district through 1990." (Emphasis Supplied.) The goal set forth in the State Plan relative to open heart surgery programs is to ensure the appropriate availability of such services at reasonable costs. Venice's application is not consistent with Objective 4.2. If Venice's application were to be approved, there would be five programs in the District. The number of procedures projected for 1990 is 1683, and if 1683 is divided by 5 programs, the result is an average of only 337 procedures per program. The two existing providers in District 8 are currently performing over 1600 procedures annually, and as is discussed below, it does not appear that Venice itself will be able to achieve an acceptable level of service at any time established by the record in this case. Approval of this application will also significantly and adversely impact the ability of the two approved programs to achieve an acceptable level of service. In the State Health Plan narrative, it is recognized that "quality of patient care is a primary concern in open heart surgery programs due to the potential consequences to the patient of poorly trained and/or skilled staff.11 In order to ensure quality, and in recognition of the relationship between the volume of open heart surgery procedures and quality, the State Plan references the Department's requirement, set forth by Rule, that a minimum of 200 adult procedures be performed within 3 years of initiation of an open heart program. The narrative also notes that a broad range of services must be provided to fulfill the requirements of an open heart surgery program. Venice's application is partially consistent with these narrative statements in the State Health Plan since the parties have stipulated that it has a record of providing quality care, and it offers a complete range of services with departments within the hospital where a broad range of diagnostic techniques and expertise are available. However, it was not established that a minimum of 200 adult open heart surgical procedures will be performed at Venice within three years of initiation of this program. Local Health Plan Even though an applicant does not include within its application every element in a Local Health Plan which is relevant to its application, the Department itself will look at the applicable Local Plan to determine if an application is consistent therewith. The applicable District 8 Health Plan recommends that "existing facilities should be afforded the opportunity for expansion before developing a new cardiac surgical center." However, if a numeric need for an additional program is shown, and if existing facilities do not seek to expand their existing programs to meet such need, an application for a new program would not be inconsistent with this portion of the Local Health Plan. Under the facts of this case where there are no competing applications from hospitals with existing open heart surgery programs, and where a numeric need for one additional program in District 8 is projected by the Department's need methodology, Venice's application is consistent with this recommendation. The Local Plan also recommends that preference be given to applications for new or expanded programs which clearly document the impact of the proposed new service on existing providers in the District and adjacent Districts. As found above, Venice did not specifically address any adverse impact its proposal would have on existing providers, and therefore, its application is not consistent with this recommendation. The Department's Need Methodology and the "35O Rule" Rule 10-5.011(1)(f)8, Florida Administrative Code, sets forth the Department's methodology for calculating the numeric need for additional open heart surgery programs It provides a formula by which the number of open heart procedures for the horizon year, in this case 1990, are to be estimated. Pursuant to the formula, there are projected to be 1683 open heart surgery procedures performed in 1990 in District 8. This number of projected procedures is then divided by 350 procedures in order to determine the number of programs which will be needed. See Rule l0-5.011(1)(f)11b. Using this methodology, the Department has identified the need for 4.8, rounded to 5, programs in the District in the horizon year. Since there are currently 2 existing and 2 approved programs in District 8, the Department and Venice have concluded that there is a projected numeric need for Venice's additional program in 1990. There is a direct relationship between the volume of open heart surgery procedures performed at a facility and the quality of care provided at such facility, with lower mortality rates generally at hospitals with higher volumes than those with low volumes. Therefore, in addition to its numeric need calculation, the Department has also developed a "350 standard" to address patient safety and quality of care concerns by ensuring that each existing and approved open heart surgery program achieves a volume sufficient to assure quality and efficiency prior to approval of a new program. Rule 10- 5.011(1)(f)11aI, Florida Administrative Code, prohibits the establishment of new open heart surgery programs unless: the service volume of each existing and approved open heart surgery program within the service area is operating at and is expected to continue to operate at a minimum of 350 adult open heart cases per year. Memorial and Medical Center urge an interpretation and application of the 350 standard in a manner which would require each existing and approved program to actually operate at the level of 350 cases per year. Since approved programs are not yet operational, and therefore cannot operate at the 350 level, they argue that the intent of this standard, as set forth in the above-cited Rule, is to preclude the approval of any additional programs while there are approved programs, or existing programs which are not meeting the 350 standard. To the contrary, the Department and Venice urge that the 350 standard be applied by averaging the actual number of cases at existing programs, and the number of cases which are reasonably projected to be performed at approved programs. Under this interpretation, as long as the average between cases which are performed at existing, and which are reasonably projected to be performed at approved programs exceeds 350, then the further approval of an additional program is not prohibited. Having considered the testimony and evidence presented by the parties, and in particular the testimony of Eugene Nelson and Elizabeth Dudek, which is found to be more credible, consistent, and reasonable than the testimony of Michael Carroll and Harold Luft, it is found that the Department's interpretation and application of the 350 standard is reasonable and consistent with the terms of Rule 10- 5.011(1)(f)11aI. It is also noted that if the interpretation urged by Memorial and Medical Center were to be followed, it is inexplicable how there could presently be two approved, but not operational, open heart programs in District 8. The Department has consistently applied this 350 standard since its adoption in 1983 by averaging caseloads at existing programs and reasonably projected caseloads for approved programs. To interpret this standard as urged by Memorial and Medical Center would impose a moratorium on new open heart surgery programs while there is an already approved, but not operational, program in a District, or while a newly operational program has not yet attained the 350 standard. There is no basis for this prohibitory interpretation which would not only reduce competition, but would also be inconsistent with sound health planning and the State Health Plan Objective 4.2, as discussed above. Quality of Care Venice is accredited by the Joint Commission on Accreditation of Health Care Facilities for special care units, and it has been stipulated that it has a record of providing quality care in its existing programs and departments. On average, hospitals performing greater than 200 open heart procedures per year have superior surgical outcomes than hospitals doing less than 200 procedures. Mortality rates are significantly lower at hospitals performing more than 200 procedures annually than at those performing less. It was established that there is a direct relationship between volume of open heart surgical procedures and quality of care at facilities with open heart surgery programs. Therefore, the existence of more open heart programs than are truly needed in an area may result in some existing programs not achieving sufficient volume to assure patient safety and quality of care. Certainly, not every hospital should have an open heart program, but as long as there is sufficient volume to assure quality, the competition among programs will encourage quality care, and result in an overall increase in the quality of care provided at all departments in a hospital with an open heart program. Rule 10-5.011(1)(f)5d, Florida Administrative Code, was adopted by the Department in order to set forth the minimum volume deemed necessary to assure quality of care, and provides, in part: There shall be a minimum of 200 adult open heart procedures performed annually, within 3 years after initiation of service, in any institution in which open heart surgery is performed for adults. Although Venice urges that it will be able to meet this threshold level within three years, it failed to establish by competent substantial evidence that it would actually attract the patients necessary to perform either the number of open heart procedures projected in its application, or this minimum number of 200 procedures required by the Department to assure quality of care in its third year of operation, given the current pattern of physician referrals in the area, its market share in relation to those of Memorial and Medical Center, and actual utilization levels for the existing District 8 programs at Memorial and Southwest Regional Medical Center, as is more fully discussed below. Without the assurance of sufficient volume to meet the 200 procedure threshold established by the Department by Rule, the validity of which is not at issue in this case, Venice has failed to show that it will be able to achieve and maintain a patient volume in its proposed program which will assure quality of care in its proposed open heart surgery program. Availability and Access While the addition of the Venice program would obviously increase the availability of services in the District, open heart surgery services are already reasonably available in District 8, especially in view of there being two approved programs which will become operational before 1990, the horizon year in this case, in addition to the two existing programs. The two hour travel time standard is already being met in District 8, as stipulated to by the parties. Geographic accessibility will not be appreciably or significantly increased by this proposal since Venice's facility lies approximately midway between Memorial and Medical, which are sixty miles apart. There is significant excess capacity in existing and approved open heart surgery programs in District 8 during most of the year, especially at Memorial. Therefore, there is ready access to, and availability of open heart surgery services to patients in the District. Venice did not establish that approval of its application would enhance access to open heart surgery services for the medically indigent. Despite its assertion in its application that its program would be available to the underserved, there is no definite commitment to serve charity care patients as a percentage of total patient days or of total revenue. Venice has proposed to serve Medicaid patients at the level of 1.5% of total patient days, but Medicaid patients are currently receiving services through existing programs at substantially higher levels of commitment. The applicant has reserved the right to refuse non-emergency care to indigents. While it was established that unstable patients who have to be transferred from one hospital to another face increased risks, and that members of the medical staff at Venice feel that there are unacceptable delays in transferring patients who need open heart surgery from Venice to other facilities due to an asserted lack of available beds, it was not shown that such delays have actually jeopardized the safety of patients or resulted in a reduction in the quality of care received by patients to an unacceptable level. A delay in transferring a patient from one facility to another of from 6 to 8 hours is reasonable, and in line with experience nationally. The anecdotal evidence presented by Venice on this point was not competent and substantial, and in fact shows that the number of delays exceeding 8 hours has increased only slightly from 1986 to 1988, a condition that may be addressed in any event when the two approved programs become operational. Additionally, the applicant never formally shared any concerns about transfer delays with existing facilities in an effort to reduce such delays or to document extreme cases of delay. Transfer delays are exacerbated by seasonal increases in population in District 8, but there continues to be a reasonable likelihood that patient transfers can be accommodated, even during seasonal population increases, without adverse impacts to patient care. However, a large majority of open heart surgery cases are non- emergency that can be scheduled for surgery within 6 to 48 hours after diagnosis without any compromise in patient care. Emergency patients are given priority, and there are sufficient available beds to accommodate emergency patients, regardless of seasonal delays. Recent studies have shown that even emergency patients benefit from a delay of up to 24 hours in order to stabilize their condition rather than rushing them to surgery. In any event, such seasonal delays do not establish that there is a lack of available beds in District 8 which would require the approval of this application, especially with two approved programs already in the District which will become operational by 1990. Alternatives Considered Venice did not fully explore alternatives, including less costly alternatives, to a new program at its facility, such as a joint or shared program with an existing provider. In fact, a consultant retained by Venice recommended on September 8, 1988, that Venice pursue a joint program with Memorial, but Venice never approached Memorial to ascertain if its administrators or medical staff would be interested in such a joint effort, even though these two hospitals have previously cooperated in providing joint services in obstetrics, shared nursing services, and jointly provided emergency services to the Town of North Port. Memorial previously loaned Venice 24 nursing full time equivalent positions (FTE) to fully staff a 35 bed unit at Venice during a critical nursing shortage. There are existing or approved open heart surgery programs at Tampa General Hospital, Manatee Memorial Hospital in Bradenton, Memorial, Medical Center, and Southwest Regional Medical Center in Ft. Myers. In addition, there are additional approved programs at HCA Blake Memorial Hospital in Bradenton and at Lee Memorial in Ft. Myers. Venice did not consider these existing and approved programs as alternatives to its proposed new program. It was not established that Venice has attempted, or proposed to establish a joint open heart surgery program with any of these facilities, or to secure staff privileges for its cardiologists at Memorial, or any of these other hospitals. Regionalization of health care services for open heart surgery patients is being encouraged and reviewed by the Medicare program. Under this concept, primary care hospitals would treat common diagnoses and offer common treatments, while regional referral hospitals would provide specialized care and offer more complex services referred to as tertiary level services. Open heart surgery is a specialized, tertiary care service. Venice did not consider regionalization or establish why it would not be appropriate in District 8. Personnel Availability and Costs There has been a long-term shortage of nurses, particularly in intensive care and open heart surgery, which even Venice's expert in nursing administration recognized and acknowledged. This shortage is present in Sarasota County not merely for nursing staff, but also for technical support staff, and is particularly acute in operating room and critical care personnel. While Venice does have nursing staff with open heart surgery experience, it would have to recruit additional nurses to fully staff this new program. It is not always possible to fill open heart surgery or critical care nursing positions with trained personnel. Memorial presently has 32 registered nursing vacancies, including 5 open heart surgery and 3 open heart critical care RN positions, despite a full-time nurse recruiter and an aggressive recruiting program. Because of this critical shortage, Memorial has been forced to use "traveler" or temporary nurses in its open heart surgery unit. In contrast to Venice's lack of actual experience in attracting and training open heart surgery and critical care nurses, Memorial established that in Sarasota County, it takes 6 to 8 months and costs $15,000 to $16,000 to train open heart surgery nurses, and 6 to 8 weeks to- train open heart critical care nurses. Venice will compete with Memorial and Medical Center in attracting open heart surgery nursing and technical staff. There has been a recent instance of a nurse leaving Venice to join Memorial, being trained as an open heart surgery nurse at Memorial, and then leaving to return to Venice. With the limited pool of available, trained open heart surgery nurses, and in view of the two approved open heart surgery programs in District 8 which need to be staffed and become operational prior to 1990, the implementation of the Venice program will have an adverse impact on the ability of existing and approved programs to attract and maintain trained open heart surgery nursing and technical staff, and can reasonably be expected to increase personnel costs for these providers. Venice proposes to add two cardiovascular surgeons to its medical staff prior to opening its open heart surgery program, and to retain a consulting firm to assist in recruiting these physicians. However, the consulting firm contacted by Venice has not agreed to accept this recruiting assignment. Memorial has been trying to recruit an additional open heart surgeon for over a year, without success. Venice has been trying to recruit a neurosurgeon, neurologist or cardiologist for almost a year, without success. It is, therefore, reasonable to infer that Venice will have difficulty recruiting two cardiovascular surgeons in less that one year. The salaries and benefits in Venice's application are generally reasonable, including the proposed salary for a perfusionist, although it did slightly underproject open heart surgery nursing salaries. However, its estimate of the number of additional positions, or FTE, which would be required throughout the hospital to accommodate the workload resulting from an open heart surgery program is incomplete. For example, an additional 3.5 FTE that would be needed for the clinical lab and donor center is not reflected in the application, although the costs associated therewith are included. Venice does have a record of successfully staffing critical care services, such as its open heart catheterization and thoracic surgery programs, without attracting staff from other hospitals in the District. It does propose to have a training program for open heart surgery personnel, and has an affiliation with nurse training programs at four universities. Financial Feasibility In its application, Venice projects that it will perform 125 open heart surgery procedures in its first year of operation, 175 in its second year, and 211 in its third year of operation. However, it is specifically found that these projections are not reasonable, based upon the testimony and evidence received. The testimony and exhibits prepared by Mark Richardson and Michael Carroll, who were accepted as experts in health planning, as well as the testimony offered by Rick Knapp, an expert in health care finance, was more credible and persuasive than, and outweighs the testimony and exhibits prepared by Eugene Nelson, an expert in health care planning, Dr. Henry W. Zaretsky, an expert in health care economics and planning, and Michael Rolph, who was accepted as an expert in health care finance and accounting. Initially, Venice relies upon the Department's Rule for determining the numeric need for additional programs, discussed above, and divides the Department's number of projected procedures in District 8 (1683) by 350 to arrive at the need for an additional program in 1990 by rounding 4.8 up to 5. However, Venice has conducted no analysis of market share or physician referral patterns to test the reliability of this projected need. Thus, this projection of numeric need is made in a vacuum, without any reference to the actual number of procedures already being performed, or actual market shares and referral patterns which are critical to an understanding of patient and physician preferences which have existed, and are likely to continue to be experienced, in the future. Venice's administration and members of its medical staff consider Memorial's open heart surgery program to be excellent and convenient to Venice's patients. It is unlikely that all five of Venice's cardiologists will refer all of their open heart surgery patients to Venice, and in fact, a member of Venice's medical staff who supports this application testified that he would only refer about half of his patients to Venice. Since most open heart patients are referred, and since there is no apparent dissatisfaction with the quality of Memorial's program, existing market share and referral patterns would likely continue and should have been considered in any meaningful analysis presented by the applicant. For the July, 1990 horizon in District 8, the Department's numeric need methodology projects that there will be 1683 open heart surgery procedures. With referral patterns in place and two existing providers with operational and well regarded programs, it is unlikely that Venice will have an automatic, equal share of the District's pool of open heart patients, or even that it will perform the 125 procedures in its first year, and 175 procedures shown on its pro forma for the second year of operation. In fact, the two existing providers, Memorial and Southwest Regional Medical Center, already performed 1637 procedures in 1988, leaving fewer than 50 procedures projected through the Department's numeric need methodology for the two already approved programs and Venice, if it were to be approved. Memorial has been performing over 600 procedures per year from 1986 through 1988, and has the capacity to perform up to 1,000 procedures annually. Thus, the existing and approved programs have more than sufficient capacity to absorb growth in open heart surgery volumes which are being projected. A second method Venice uses to justify its projected number of open heart procedures is to quantify the population of Venice's service area, and then apply the Department's open heart surgery use rate to that population. This assumes that virtually all of Sarasota County's population growth will occur in the south county area, which is an inaccurate assumption, and also assumes that Venice will capture all of the open heart surgeries in its service area, which is unreasonable given existing market shares and referral patterns. Memorial presently has a 42% market share of District 8 open heart surgery patients. To perform 200 procedures in its third year of operation, Venice would have to capture an 83% market share, and there is no basis to find that it would be successful in attracting this unreasonably high market share in its primary service area. In fact, Venice projects that it will only achieve a 45% and 61% market share in the first and second year of operation, respectively. Applying these percentages, Venice will perform 99 procedures in its first year, not 125, and 140 in its second year, not 175. It must be noted that Venice's consultant, which had recommended that it explore a joint or shared program with Memorial, had projected market shares of only 29% in the first year, 35% in the second year, and 45% in year three. Using these figures, Venice would only perform 63 procedures in its first year of operation, 81 in the second year, and 102 in the third. Given this level of operation in its second year of operation (81 procedures), the Venice program would lose $334,000 in its second year, and therefore, not be financially feasible. The third method used by the applicant to support its projection of the number of procedures it will perform, which is the basis of its assertion of financial feasibility, is based upon its assessment of cardiac catheterization volumes and applies a conversion factor to determine the number of open heart surgery procedures that will result. This analysis again assumes that it would receive a 100% market share, and does not take into account referral patterns and satisfaction with existing programs. In addition, while the growth of Venice's cardiac cath volume has stabilized, and may even be decreasing, this analysis incorrectly uses a l5%-16% annual growth rate in cardiac caths through 1990, which is unrealistic and not supported by the record. Venice relies upon the expert testimony of Eugene Nelson to establish that the use rate for open heart surgery has been increasing since 1985, and will continue to increase. The use rate increased over 53% between 1985 and 1988, and Nelson projects a continued 15.3% annual increase in the use rate through 1991. Under his projections the use rate per 100,000 population will be 235.79 in 1990, and 257.97 in 1991. Nelson's projected continued annual increase in the use rate of over 15%, and the use rates he projects for 1990 and 1991, are unreasonable. He has ignored the fact that annual increases in the use rate have been steadily decreasing from 17.5% between 1985 and 1986, to 13% between 1987 and 1988, as testified to be all health planners, and as even he acknowledged. Applying this decrease in the annual use rate increase, it would be increasing only 9% in 1990, and this would result in a total of 2108 procedures that could be projected to be performed in 1990. With the two existing programs in District 8 already performing 1600 procedures, a figure that will reasonably grow by 1990, there will be less than 444 procedures for the two already approved programs and Venice, if it were to be approved. Given this fact, which is even acknowledged by Venice, it is unlikely that Venice will be able to reach its projected number of cases in its first two years of operation in order to achieve financial feasibility. As recognized by Harold Urschel, Jr., M.D., who was called by Venice as an expert in cardiovascular surgery and open heart surgery programs, for the next five years open heart surgery volumes nationally will be "stable", although they "probably" will go up some. Open heart use rates have plateaued on a national level, with an average national use rate of l80~per 100,000 population. This use rate compares favorably with the Department's current use rate of 183 for District 8, and further questions the reasonableness of Nelson's projected use rates of almost 236 and 258 in 1990 and 1991, respectively. These use rates have stabilized and shown a marked decrease in their rates of increase due to the development of acceptable alternatives to open heart surgery, and close review of the necessity of this treatment by third party payors. As testified to by Nelson, there is a danger that an excess of open heart surgery programs in an area will exacerbate an already stabilized or flattened use rate, and may cause it to decline. He cited both the Miami and Jacksonville areas as examples of Districts in which there appear to be an excess of programs, with a resulting decline in the District's use rate, and inability of a substantial number of programs to even achieve the requisite level of 200 procedures per year to maintain quality of care. When it comes to open heart surgery programs, more is not necessarily better and may actually result in less, according to Nelson. Even applying Nelson's inflated use rate of 236 per 100,000 population in 1990 to the Venice service area population, the applicant will not achieve its projected number of procedures when the market share of 29% in 1990 predicted by Venice's consultant is considered. Applying its consultant's projected market shares, Venice will realize only 81 procedures in the first year, 98 in year two, and 126 procedures in the third year. Since Venice's pro forma bases its assessment of financial feasibility upon its projections of 125 procedures in year one, and 175 in year two, and since the applicant has not established the reasonableness of these projections, the long- term financial feasibility of this project has not been shown. Further, Venice has also failed to establish that it can reasonably be expected to achieve the level of 200 procedures in its third year, and therefore, it has also failed to show that it can achieve that minimum level which the Department, by Rule, requires to ensure quality of care. In other respects, the assumptions used by Venice in its pro forma are reasonable, including its 2% inflation factor for income, bad debt, payor mix and utilization by class of pay, projected charges, expenses, and depreciation. Effect on Competition and Costs There will not be a significant difference between the charges proposed by Venice and the actual charges at Memorial. The applicant projects that 80% of its open heart surgery will be reimbursed through Medicare, which reimburses on a fixed fee basis to which hospital charges have no direct relevance. Therefore, there would be no appreciable impact on costs in the health care community if this application is approved. As previously discussed, there would be greater competition among existing and approved programs in District 8 for trained open heart surgery and critical care nurses, which are in short supply. While Venice has projected open heart surgery nurses' salaries at a somewhat unrealistically low level, it can reasonably be expected that greater competition for trained personnel who are in short supply will eventually result in higher salaries and health care costs. If this application is approved, the cost to transport patients who require open heart surgery from Venice to another facility would be eliminated. This would mean that patients could avoid a $235 to $250 ambulance charge for transfer to Memorial, a $450 charge for ambulance transport to Tampa General, or a $1,000 to $1,300 helicopter charge for transport to Tampa General Hospital. This savings is not significant when compared to total charges for open heart surgery procedures. Impact on Existing and Approved Programs As discussed above, approval of the Venice application will adversely affect the ability of existing providers to attract and retain trained open heart surgery and critical care RNs due to the already existing shortage of personnel to fill these positions, and the fact that two already approved programs will become operational prior to Venice's program, if it were to be approved. Although Memorial has the capacity to perform 1,000 open heart surgery procedures annually, Venice's expert, Eugene Nelson, projects that if the Venice program is approved, Memorial will experience only a 12% growth between 1988 to 1991, and will only perform 771 cases in 1991. Curiously, he then concludes that this represents no impact on Memorial. The proposed primary service area for the Venice program and Memorial's primary service area completely overlap, and they are, therefore, competing for the same open heart surgery patients. Venice has been referring 85%-87% of its patients who require open heart surgery to Memorial. If Venice had its own open heart surgery program, the need for transfer and referral would be obviated. In the second year of operation, Venice projects on its pro forma that it will perform 175 cases. Using its own projection of 85%, 149 to 150 of these cases would have been transferred to Memorial, but for the Venice program. If the more realistic number of 81 procedures in the second year of operation for the Venice program is used, 69 cases which would have otherwise been transferred to Memorial would stay at Venice. Rick Knapp, who was accepted as an expert in health care finance, provided a reasonable estimate of financial impact upon Memorial, given these projected losses in patient referrals. He concluded that Memorial would experience a net income reduction of approximately $1.4 million if Venice's projection of 175 cases in its second year is correct, and Memorial lost 149 to 150 referrals. Even Michael Rolph, who was called as an expert in health care finance by Venice, testified that Memorial would loose $2 million in net revenue if it lost 100 open heart surgery patients. If the more realistic figure of 81 cases in the second year were used, there would also be a net income loss for Memorial, but more importantly for purposes of this case, it was established through Knapp's testimony that Venice's program would lose $334,000, and not be financially feasible. It is, of course, recognized that Memorial would still experience a growth in its absolute number of open heart procedures due to population increases and increases in the use rate. However, any such increase in the absolute number of procedures performed at Memorial through growth does not obviate the fact that the total number of procedures it would have performed will be significantly reduced by the loss of referrals from Venice, if this application is approved. This is particularly noteworthy given its excess capacity. Memorial's most recent annual gross income was $160 million, with an operating margin (profit) of between $3.5 and $3.9 million. Therefore, losses which would result from the Venice program would not threaten the financial viability of Memorial, but would be significant in terms of its open heart surgery program. Jerry Sommerville, an expert in hospital finance, estimated that 9% of Medical Center's open heart surgery cases would come from the Venice area, which is included in Medical Center's secondary service area. If these cases are lost to Medical Center with the opening of the Venice program, Medical Center's projected 150 cases in 1990 would be reduced by 13.5, and in 1991 its projection of 200 cases would be reduced by 18. These reductions would result in a net revenue loss for Medical Center of $254,000 with a gross marginal loss of $62,800 in 1990, and a net revenue loss of $329,500 with a gross marginal loss of $95,200 in 1991. This represents a significant reduction in income for this open heart surgery program in its first years of operation. Medical Center's most recent annual profit margin was approximately $1 million.
Recommendation Based upon the foregoing, it is recommended that the Department enter a Final Order which: (l) Denies Memorial's Motion for Summary Adjudication; Dismisses Medical Center as a party due to a lack of standing; and Denies Venice's CON Application Number 5715. DONE AND ENTERED this 28th day of September, 1989 in Tallahassee, Florida. DONALD D. CONN Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 Filed with the Clerk of the Division of Administrative Hearings this 28th day of September, 1989. APPENDIX (DOAH CASE NOS. 89-1412 & 89-1413) Rulings on the Petitioners' Proposed Findings of Fact: Adopted in Finding 6. Adopted in Findings 6, 17. Adopted in Finding 6. Adopted in Finding 9. Adopted in Findings 6, 9. Rejected as a conclusion of law. 7-8. Adopted in Finding 1. Adopted and Rejected in part in Finding 12. Adopted in Finding 15; Rejected in Finding 16. Adopted in Finding 17. Rejected in Finding 41, as otherwise as irrelevant. Adopted and Rejected in part in Findings 41, 42. Rejected as irrelevant. 15-18. Adopted and Rejected in part in Finding 42. 19. Adopted in Finding 43. 20-21. Rejected in Finding 43. Adopted in Finding 38. Adopted and Rejected in Finding 53. Adopted and Rejected in Finding 57. Rejected in Finding 57. Rejected in Finding 55. Adopted and Rejected in Findings 55, 56. Adopted in Finding 57. Rejected in Finding 57. Adopted and Rejected in Finding 57. Rejected as irrelevant. Adopted in Findings 12, 20 and 39; Rejected in Findings 53, 55 and 56. Adopted in part in Finding 27, but otherwise Rejected as unnecessary. Rejected as irrelevant and unnecessary. Rejected in Finding 44. Adopted in Finding 44. Adopted in Finding 37; Rejected in Findings 38-47. Rejected in Finding 41. Rejected in Finding 25. Rejected as irrelevant and unnecessary. Rejected in Finding 26. Adopted in Finding 21. Adopted in Finding 43. Adopted in Finding 34, but otherwise rejected as unnecessary. Rejected in Finding 24. Adopted in Finding 6. Adopted in Finding 11. Adopted in Finding 35. Adopted and Rejected in part in Findings 34, 35. 50-54. Adopted in Finding 48. 55-61. Adopted in Finding 11. Adopted in Finding 1. Adopted in Finding 31. Adopted and Rejected in part in Finding 35. Adopted in Finding 36; Rejected in Finding 35 and otherwise as irrelevant and unnecessary. Adopted in Finding 36; Rejected in Finding 33. Adopted in Finding 35. Rejected as cumulative and unnecessary. Adopted in Finding 36. Adopted in Finding 31. Adopted in Finding 6. Rejected as unnecessary. 73-75. Rejected in Finding 27 and otherwise as irrelevant. Adopted in Finding 27. Adopted in Finding 22. Rejected in Finding 27 and otherwise as unnecessary. Adopted in Finding 51. 80-81. Rejected in Findings 28, 29. 82-85. Rejected in Finding 49 and otherwise as irrelevant. 86. Rejected as not based on competent substantial evidence. 87-94. Rejected in Finding 49 and otherwise as irrelevant. 95. Adopted in Finding 22. 96-97. Rejected as irrelevant and unnecessary, and simply a summation of and argument on the evidence. 98. Adopted in Finding 11; Rejected in Finding 24. Rulings on the Respondents' Proposed Findings of Fact: Adopted in Finding 1. Adopted in Finding 6. Adopted in Finding 2. Adopted in Finding 3. Adopted and Rejected in part in Finding 17. Adopted in Finding 17. 7-9. Adopted in Finding 18. 10. Adopted in Findings 18, 22. 11-12. Adopted in Finding 22. 13-14. Rejected in Finding 20. 15-17. Rejected as irrelevant and unnecessary. 18. Adopted in Finding 18. 19. Adopted in Finding 22; Rejected in Finding 20. 20. Adopted in Finding 30. 21. Adopted in part in Finding 13, but otherwise Rejected as irrelevant and unnecessary. 22-23. Adopted in Findings 15, 16. 24. Adopted in Findings 4, 25. 25. Adopted in Findings 25, 39. 26. Adopted in Finding 26. 27-34. Adopted in Finding 27. 35. Adopted in Findings 22, 23 and 24. 36. Adopted in Findings 28, 29. 37. Rejected as unnecessary. 38-43. Adopted in Findings 28, 29. 44. Adopted in Findings 31, 32. 45. Rejected as unnecessary. 46-49. Adopted in Finding 34. 50. Adopted in Finding 24. 51. Adopted in Findings 24, 37. 52-55. Adopted in Finding 38. 56. Adopted in Finding 39. 57-61. Adopted in Finding 40. 62-64. Adopted in Finding 41. 65-66. Adopted in Findings 42, 43. 67. Adopted in Finding 44. 68-69. Adopted in Finding 46. 70. Adopted in Finding 47. 71. Rejected in Finding 48. 72. Adopted in Finding 40. 73. Adopted in Finding 47. 74-75. Adopted in Finding 49. 76. Adopted in Findings 55, 57. 77. Adopted in Findings 50, 52. 78. Adopted in Findings 31, 50 and 52. 79-82. Adopted in Finding 32. 83. Adopted in Findings 33, 50 and 52. 84. Adopted in Finding 33. 85. Adopted in Finding 32. 86-87. Adopted in Findings 33, 50 and 52. 88. Adopted in Findings 28, 29. 89. Adopted in Findings 24 through 27. 90. Adopted in Finding 6. 91-92. Rejected in Finding 7. 93. Adopted and Rejected in Finding 8. 94. Rejected in Finding 14 and otherwise as unnecessary. 95. Adopted in Findings 15, 16. 96. Rejected in Findings 14, 15. 97-99. Adopted and Rejected in Findings 12, 13. 100. Rejected in Finding 9. 101. Adopted in Findings 6, 9. COPIES FURNISHED: Theodore C. Eastmoore, Esquire A. Lamar Matthews, Jr., Esquire P. O. Box 3258 Sarasota, FL 33577 Robert A. Weiss, Esquire The Perkins House 118 North Gadsden Street Tallahassee, FL 32301 Charles A. Stampelos, Esquire P. O. Box 2174 Tallahassee, FL 32316 Richard A. Patterson, Esquire Fort Knox Executive Center 2727 Mahan Drive Tallahassee, FL 32308 Kenneth F. Hoffman, Esquire P. O. Box 6507 Tallahassee, FL 32314 R. S. Power, Agency Clerk 1323 Winewood Boulevard Tallahassee, FL 32399-0700 John Miller, General Counsel 1323 Winewood Boulevard Tallahassee, FL 32399-0700 Gregory Coler, Secretary 1323 Winewood Boulevard Tallahassee, FL 32399-0700
The Issue Whether the Certificate of Need application (CON 9239) of Galencare, Inc., d/b/a Brandon Regional Hospital ("Brandon") to establish an open heart surgery program at its hospital facility in Hillsborough County should be granted?
Findings Of Fact District 6 District 6 is one of eleven health service planning districts in Florida set up by the "Health Facility and Services Development Act," Sections 408.031-408.045, Florida Statutes. See Section 408.031, Florida Statutes. The district is comprised of five counties: Hillsborough, Manatee, Polk, Hardee, and Highlands. Section 408.032(5), Florida Statutes. Of the five counties, three have providers of adult open heart surgery services: Hillsborough with three providers, Manatee with two, and Polk with one. There are in District 6 at present, therefore, a total of six existing providers. Existing Providers Hillsborough County The three providers of open heart surgery services ("OHS") in Hillsborough County are Florida Health Sciences Center, Inc., d/b/a Tampa General Hospital ("Tampa General"), St. Joseph's Hospital, Inc. ("St. Joseph's"), and University Community Hospital, Inc., d/b/a University Community Hospital ("UCH"). For the most part, Interstate 75 runs in a northerly and southerly direction dividing Hillsborough County roughly in half. If the interstate is considered to be a line dividing the eastern half of the county from the western, all three existing providers are in the western half of the county within the incorporated area of the county's major population center, the City of Tampa. Tampa General Opened approximately a century ago, Tampa General has been at its present location in the City of Tampa on Davis Island at the north end of Tampa Bay since 1927. The mission of Tampa General is three-fold. First, it provides a range of care (from simple to complex) for the west central region of the state. Second, it supports both the teaching and research activities of the University of South Florida College of Medicine. Finally and perhaps most importantly, it serves as the "health care safety net" for the people of Hillsborough County. Evidence of its status as the safety net for those its serves is its Case Mix Index for Medicare patients: 2.01. At such a level, "the case mix at Tampa General is one of the highest in the nation in Medicare population." (Tr. 2452). In keeping with its mission of being the county's health care safety net, Tampa General is a full-service acute care hospital. It also provides services unique to the county and the Tampa Bay area: a Level I trauma center, a regional burn center and adult solid organ transplant programs. Tampa General is licensed for 877 beds. Of these, 723 are for acute care, 31 are designated skilled nursing beds, 59 are comprehensive rehabilitation beds, 22 are psychiatry beds, and 42 are neonatal intensive care beds (18 Level II and 24 Level III). Of the 723 acute care beds, 160 are set aside for cardiac care, although they may be occupied from time-to-time by non-cardiac care patients. Tampa General is a statutory teaching hospital. It has an affiliation with the University of South Florida College of Medicine. It offers 13 residency programs, serving approximately 200 medical residents. Tampa General offers diagnostic and interventional cardiac catheterization services in four laboratories dedicated to such services. It has four operating rooms dedicated to open heart surgery. The range of open heart surgery services provided by Tampa General includes heart transplants. Care of the open heart patient immediately after surgery is in a dedicated cardiovascular intensive care unit of 18 beds. Following stay in the intensive care unit, the patient is cared for in either a 10-bed intermediate care unit or a 30- bed telemetry unit. Tampa General's full-service open heart surgery program provides high quality of care. St. Joseph's Founded by the Franciscan Sisters of Allegheny, New York, St. Joseph's is an acute care hospital located on Martin Luther King Boulevard in an "inner city kind of area" (Tr. 1586) of the City of Tampa near the geographic center of Hillsborough County. On the hospital campus sit three separate buildings: the main hospital, consisting of 559 beds; across the street, St. Joseph's Women's Hospital, a 197-bed facility dedicated to the care of women; and, opened in 1998, Tampa Children's Hospital, a 120-bed free-standing facility that offers pediatric services and Level II and Level III neonatal intensive care services. In addition to the women's and pediatric facilities, and consistent with the full-service nature of the hospital, St. Joseph's provides behavioral health and oncology services, and most pertinent to this proceeding, open heart surgery and related cardiovascular services. Designated as a Level 2 trauma center, St. Joseph's has a large and active emergency department. There were 90,211 visits to the Emergency Room in 1999, alone. Of the patients admitted annually, fifty-five percent are admitted through the Emergency Room. The formal mission of St. Joseph's organization is to take care of and improve the health of the community it serves. Another aspect of the mission passed down from its religious founders is to take care of the "marginalized, . . . the people that in many senses cannot take care of themselves, [those to whom] society has . . . closed [its] eyes . . .". (Tr. 1584). In keeping with its mission, it is St. Joseph's policy to provide care to anyone who seeks its hospital services without regard to ability to pay. In 1999, the hospital provided $33 million in charity care, as that term is defined by AHCA. In total, St. Joseph's provided $121 million in unfunded care during the same year. Not surprisingly, St. Joseph's is also a disproportionate Medicaid provider. The only hospital in the district that provides both adult and pediatric open heart surgery services, St. Joseph's has three dedicated OHS surgical suites, a 14-bed unit dedicated to cardiovascular intensive care for its adult OHS patients, a 12-bed coronary care unit and 86 progressive care beds, all with telemetry capability. St. Joseph's provides high quality of care in its OHS. UCH University Community Hospital, Inc., is a private, not-for-profit corporation. It operates two hospital facilities: the main hospital ("UCH") a 431-bed hospital on Fletcher Avenue in north Tampa, and a second 120-bed hospital in Carrollwood. UCH is accredited by the JCAHO "with commendation," the highest rating available. It provides patient care regardless of ability to pay. UCH's cardiac surgery program is called the "Pepin Heart & Vascular Institute," after Art Pepin, "a 14-year heart transplant recipient [and] . . . the oldest heart transplant recipient in the nation alive today." (Tr. 2841). A Temple Terrace resident, Mr. Pepin also helped to fund the start of the institute. Its service area for tertiary services, including OHS, includes all of Hillsborough County, and extends into south Pasco County and Polk County. The Pepin Institute has excellent facilities and equipment. It has three dedicated OHS operating suites, three fully-equipped "state-of-the-art" cardiac catheterization laboratories equipped with special PTCA or angioplasty devices, and several cardiology care units specifically for OHS/PTCA services. Immediately following surgery, OHS patients go to a dedicated 8-bed cardiovascular intensive care unit. From there patients proceed to a dedicated 20-bed progressive care unit ("PCU"), comprised of all private rooms. There is also a 24-bed PCU dedicated to PTCA patients. There is another 22-bed interventional unit that serves as an overflow unit for patients receiving PTCA or cardiac catheterization. UCH has a 22-bed medical cardiology unit for chest pain observation, congestive heart failure, and other cardiac disorders. Staffing these units requires about 110 experienced, full-time employees. UCH has a special "chest pain" Emergency Room with specially-trained cardiac nurses and defined protocols for the treatment of chest pain and heart attacks. UCH offers a free van service for its UCH patients and their families that operates around the clock. As in the case of the other two existing providers of OHS services in Hillsborough Counties, UCH provides a full range of cardiovascular services at high quality. Manatee County The two existing providers of adult open heart surgery services in Manatee County are Manatee Memorial Hospital, Inc., and Blake Medical Center, Inc. Neither are parties in this proceeding. Although Manatee Memorial filed a petition for formal administrative hearing seeking to overturn the preliminary decision of the Agency, the petition was withdrawn before the case reached hearing. Polk County The existing provider of adult open heart surgery services in Polk County is Lakeland Regional Medical Center, Inc. ("Lakeland"). Licensed for 851 beds, Lakeland is a large, not-for- profit, tertiary regional hospital. In 1999, Lakeland admitted approximately 30,000 patients. In fiscal 1999, there were about 105,000 visits to Lakeland's Emergency Room. Lakeland provides a wide range of acute care services, including OHS and diagnostic and therapeutic cardiac catheterization. It draws its OHS patients from the Lakeland urban area, the rest of Polk County, eastern Hillsborough County (particularly from Plant City), and some of the surrounding counties. Lakeland has a high quality OHS program that provides high quality of care to its patients. It has two dedicated OHS surgical suites and a third surgical suite equipped and ready for OHS procedures on an as-needed basis. Its volume for the last few years has been relatively flat. Lakeland offers interventional radiology services, a trauma center, a high-risk obstetrics service, oncology, neonatal intensive care, pediatric intensive care, radiation therapy, alcohol and chemical dependency, and behavioral sciences services. Lakeland treats all patients without regard to their ability to pay, and provides a substantial amount of charity care, amounting in fiscal year 1999 to $20 million. The Applicant Brandon Regional Hospital ("Brandon") is a 255-bed hospital located in Brandon, Florida, an unincorporated area of Hillsborough County east of Interstate 75. Included among Brandon's 255 beds are 218 acute care beds, 15 hospital-based skilled nursing unit beds, 14 tertiary Level II neonatal intensive care unit ("NICU") beds, and 8 tertiary Level III NICU beds. Brandon offers a wide array of medical specialties and services to its patients including cardiology; internal medicine; critical care medicine; family practice; nephrology; pulmonary medicine; oncology/hematology; infectious disease; neurology; psychiatry; endocrinology; gastroenterology; physical medicine; rehabilitation; radiation oncology; pathology; respiratory therapy; and anesthesiology. Brandon operates a mature cardiology program which includes inpatient diagnostic cardiac catheterization, outpatient diagnostic cardiac catheterization, electrocardiography, stress testing, and echocardiography. The Brandon medical staff includes 22 Board-certified cardiologists who practice both interventional and invasive cardiology. Board certification is a prerequisite to maintaining cardiology staff privileges at Brandon. Brandon's inpatient diagnostic cardiac catheterization program was initiated in 1989 and has performed in excess of 800 inpatient diagnostic cardiac catheterization procedures per year since 1996. Brandon's daily census has increased from 159 to 187 for the period 1997 to 1999 commensurate with the burgeoning population growth in Brandon's primary service area. Brandon's Emergency Room is the third busiest in Hillsborough County and has more visits than Tampa General's Emergency Room. From 1997- 1999, Brandon's Emergency Room visits increased from 43,000 to 53,000 per year and at the time of hearing were expected to increase an additional 5-6 percent during the year 2000. Brandon has also recently expanded many services to accommodate the growing health care needs of the Brandon community. For example, Brandon doubled the square footage of its Emergency Room and added 17 treatment rooms. It has also implemented an outpatient diagnostic and rehabilitation center, increased the number of labor, delivery and recovery suites, and created a high-risk ante-partum observation unit. Brandon was recently approved for 5 additional tertiary Level II NICU beds and 3 additional tertiary Level III NICU beds which increased Brandon's Level II/III NICU bed complement to 22 beds. Brandon is a Level 5 hospital within HCA's internal ranking system, which is the company's highest facility level in terms of service, revenue, and patient service area population. Brandon has been ranked as one of the Nation's top 100 hospitals by HCIA/Mercer, Inc., based on Brandon's clinical and financial performance. The Proposal On September 15, 1999, Brandon submitted to AHCA CON Application 9239, its third application for an open heart surgery program in the past few years. (CON 9085 and 9169, the two earlier applications, were both denied.) The second of the three, CON 9169, sought approval on the basis of the same two "not normal" circumstances alleged by Brandon to justify approval in this proceeding. CON 9239 addresses the Agency's January 2002 planning horizon. Brandon proposes to construct two dedicated cardiovascular operating rooms ("CV-OR"), a six-bed dedicated cardiovascular intensive care unit ("CVICU"), a pump room and sterile prep room all located in close proximity on Brandon's first floor. The costs, methods of construction, and design of Brandon's proposed CV-OR, CVICU, pump room, and sterile prep room are reasonable. As a condition of CON approval, Brandon will contribute $100,000 per year for five years to the Hillsborough County Health Care Program for use in providing health care to the homeless, indigent, and other needy residents of Hillsborough County. The administration at Brandon is committed to establishing an adult open heart surgery program. The proposal is supported by the medical and nursing staff. It is also supported by the Brandon community. The Brandon Community in East Hillsborough County Brandon, Florida, is a large unincorporated community in Hillsborough County, east of Interstate 75. The Brandon area is one of the fastest growing in the state. In the last ten years alone, the area's population has increased from approximately 90,000 to 160,000. An incorporated Brandon municipality (depending on the boundaries of the incorporation) has the potential to be the eighth largest city in Florida. The Brandon community's population is projected to further increase by at least 50,000 over the next five to ten years. Brandon Regional Hospital's primary service area not only encompasses the Brandon community, but further extends throughout Hillsborough County to a populous of nearly 285,000 persons. The population of Brandon's primary service area is projected to increase to 309,000 by the year 2004, of which approximately 32,000 are anticipated to be over the age of 65, making Brandon's population "young" relative to much of the rest of the State. The community of Brandon has attracted several new large housing developments which are likely to accelerate its projected growth. According to the Hillsborough County City- County Planning Commission, six of the eleven largest subdivisions of single-family homes permitted in 1998 are located nearby. For example, the infrastructure is in place for an 8,000-acre housing development east of Brandon which consists of 7,500 homes and is projected to bring in 30,000 people over the next 5-10 years. Two other large housing developments will bring an additional 5,000-10,000 persons to the Brandon area. The community of Brandon is also an attractive area for relocating businesses. Recent additions to the Brandon area include, among others, CitiGroup Corporation, Atlantic Lucent Technologies, Household Finance, Ford Motor Credit, and Progressive Insurance. CitiGroup Corporation alone supplemented the area's population with approximately 5,000 persons. The community of Brandon has experienced growth in the development of health care facilities with 5 new assisted living facilities and one additional assisted living facility under construction. The average age of the residents of these facilities is much higher than of the Brandon area as a whole. Existing Providers' Distance from Brandon's PSA Brandon's primary service area ("PSA") is comprised of 12 zip code areas "in and around Brandon, essentially eastern Hillsborough County." (Tr. 1071). Using the center of each zip code in Brandon's primary service area as the location for each resident of the zip code area, the residents of Brandon's PSA are an average of 15 miles from Tampa General, 16.4 miles from St. Joseph's, 17.3 miles from UCH and 24.6 miles from Lakeland Regional Medical Center. In contrast, they are only 7.7 miles from Brandon Regional Hospital. Using the same methodology, the residents of Brandon's PSA are an average of more than 40 miles from Blake Medical Center (44.9 miles) and Manatee Memorial (41 miles). Numeric Need Publication Rule 59C-1.033, Florida Administrative Code (the "Open Heart Surgery Program Rule" or the "Rule") specifies a methodology for determining numeric need for new open heart surgery programs in health planning districts. The methodology is set forth in section (7) of the Rule. Part of the methodology is a formula. See subsection (b) of Section (7) of the Rule. Using the formula, the Agency calculated numeric need in the District for the January 2002 Planning Horizon. The calculation yielded a result of 3.27 additional programs needed to serve the District by January 1, 2002. But calculation of numeric need under the formula is not all that is entailed in the complete methodology for determining numeric need. Numeric need is also determined by taking other factors into consideration. The Agency is to determine net need based on the formula "[p]rovided that the provisions of paragraphs (7)(a) and (7) (c) do not apply." Rule 59C-1.033(b), Florida Administrative Code. Paragraph (7)(a) states, "[a] new adult open heart surgery program shall not normally be approved in the district" if the following condition (among others) exists: 2. One or more of the operational adult open heart surgery programs in the district that were operational for at least 12 months as of 3 months prior to the beginning date of the quarter of the publication of the fixed need pool performed less than 350 adult open heart surgery operations during the 12 months ending 3 months prior to the beginning date of the quarter of the publication of the fixed need pool; . . . Rule 59C-1.033(7)(a), Florida Administrative Code. Both Blake Medical Center and Manatee Memorial Hospital in Manatee County were operational and performed less that 350 adult open heart surgery operations in the qualifying time periods described by subparagraph (7)(a)2., of the Rule. (Blake reported 221 open heart admissions for the 12-month period ending March 31, 1999; Manatee Memorial for the same period reported 319). Because of the sub-350 volume of the two providers, the Rule's methodology yielded a numeric need of "0" new open heart surgery programs in District 6 for the January 2002 Planning Horizon. In other words, the numeric need of 3.27 determined by calculation pursuant to the formula prior to consideration of the programs described in (7)(a)2.1, was "zeroed out" by operation of the Rule. Accordingly, a numeric need of zero for the district in the applicable planning horizon was published on behalf of the Agency in the January 29, 1999, issue of the Florida Administrative Weekly. No Impact on Manatee County Providers In 1998, only one resident of Brandon's PSA received an open heart surgery procedure in Manatee County. For the same period only two residents from Brandon's PSA received an angioplasty procedure in Manatee County. These three residents received the services at Manatee Memorial. Of the two Manatee County programs, Manatee Memorial consistently has a higher volume of open heart surgery cases and according to the latest data available at the time of hearing has "hit the mark" (Tr. 1546) of 350 procedures annually. Very few residents from other District 6 counties receive cardiac services in Manatee County. Similarly, very few Manatee county residents migrate from Manatee County to another District 6 hospital to receive cardiac services. In 1998, only 19 of a total 1,209 combined open heart and angioplasty procedures performed at either Blake or Manatee Memorial originated in the other District 6 counties and only two were from the Brandon area. Among the 6,739 Manatee County residents discharged from a Florida hospital in calendar year 1998 following any cardiovascular procedure (MDC-5), only 58(0.9 percent) utilized one of the other providers in District 6, and none were discharged from Brandon. Among the 643 open heart surgeries performed on Manatee County residents in 1998, only 17 cases were seen at one of the District 6 open heart programs outside of Manatee County. There is, therefore, practically no patient exchange between Manatee County and the remainder of the District. In sum, there is virtually no cardiac patient overlap between Manatee County and Brandon's primary service area. The development of an open heart surgery program at Brandon will have no appreciable or meaningful impact on the Manatee County providers. CON 9169 In CON 9169, Brandon applied for an open heart surgery program on the basis of special circumstances due to no impact on low volume providers in Manatee County. The application was denied by AHCA. The State Agency Action Report ("SAAR") on CON 9169, dated June 17, 1999, in a section of the SAAR denominated "Special Circumstances," found the application to demonstrate "that a program at Brandon would not impact the two Manatee hospitals . . .". (UCH Ex. No. 6, p. 5). The "Special Circumstances" section of the SAAR on CON 9169, however, does not conclude that the lack of impact constitutes special circumstances. In follow-up to the finding of the application's demonstration of no impact to the Manatee County, the SAAR turned to impact on the non-Manatee County providers in District The SAAR on CON 9169 states, "it is apparent that a new program in Brandon would impact existing providers [those in Hillsborough and Polk Counties] in the absence of significant open heart surgery growth." Id. In reference to Brandon's argument in support of special circumstances based on the lack of impact to the Manatee County providers, the CON 9169 SAAR states: [T]he applicant notes the open heart need formula should be applied to District 6 excluding Manatee County, which would result in the need for several programs. This argument ignores the provision of the rule that specifies that the need cannot exceed one. (UCH No. 6, p. 7). The Special Circumstances Section of the SAAR on CON 9169 does not deal directly with whether lack of impact to the Manatee County providers is a special circumstance justifying one additional program. Instead, the Agency disposes of Brandon's argument in the "Summary" section of the SAAR. There AHCA found Brandon's special circumstances argument to fail because "no impact on low volume providers" is not among those special circumstances traditionally or previously recognized in case law and by the Agency: To demonstrate need under special circumstances, the applicant should demonstrate one or more of the following reasons: access problems to open heart surgery; capacity limits of existing providers; denial of access based on payment source or lack thereof; patients are seeking care outside the district for service; improvement of care to underserved population groups; and/or cost savings to the consumer. The applicant did not provide any documentation in support of these reasons. (UCH No. 6, p. 29). Following reference to the Agency's publication of zero need in District 6, moreover, the SAAR reiterated that [t]he implementation of another program in Hillsborough County is expected to significantly [a]ffect existing programs, in particular Tampa General Hospital, an important indigent care provider. (Id.) Typical "not normal circumstances" that support approval of a new program were described at hearing by one health planner as consisting of a significant "gap" in the current health care delivery system of that service. Typical Not Normal Circumstances Just as in CON 9169, none of the typical "not normal" circumstances" recognized in case law and with which the Agency has previous experience are present in this case. The six existing OHS programs in District 6 have unused capacity, are available, and are adequate to meet the projected OHS demand in District 6, in Hillsborough County ("County"), and in Brandon's proposed primary service area ("PSA"). All three County OHS providers are less than 17 miles from Brandon. There are, therefore, no major service geographic gaps in the availability of OHS services. Existing providers in District 6 have unused capacity to meet OHS projected demand in January 2002. OHS volume for District 6 will increase by only 179 surgeries. This is modest growth, and can easily be absorbed by the existing providers. In fact, existing OHS providers have previously handled more volume than what is projected for 2002. In 1995, 3,313 OHS procedures were generated at the six OHS programs. Yet, only 3,245 procedures are projected for 2002. The demand in 1995 was greater than what is projected for 2002. Neither population growth nor demographic characteristics of Brandon's PSA demonstrate that existing programs cannot meet demand. The greatest users of OHS services are the elderly. In 1999, the percentage in District 6 was similar to the Florida average; 18.25 percent for District 6, 18.38 percent for the state. The elderly percentage in Hillsborough County was less: 13.21 percent. The elderly component in Brandon's PSA was less still: 10.44 percent. In 2004, about 18.5 percent of Florida and District 6 residents are projected to be elderly. In contrast, only 10.5 percent of PSA residents are expected to be elderly. Brandon's PSA is "one of the younger defined population segments that you could find in the State of Florida" (Tr. 2892) and likely to remain so. Brandon's PSA will experience limited growth in OHS volume. Between 1999 - 2002, OHS volume will grow by only 36. The annual growth thereafter is only 13 surgeries. This is "very modest" growth and is among the "lowest numbers" of incremental growth in the State. Existing OHS providers can easily absorb this minimal growth. Brandon's PSA, is not an underserved area . . . there is excellent access to existing providers and . . . the market in this service area is already quite competitive. There is not a single competitor that dominates. In fact, the four existing providers [in Hillsborough and Polk Counties] compete quite vigorously. (Tr. 2897). Existing OHS programs in District 6 provide very good quality of care. The surgeons at the programs are excellent. Dr. Gandhi, testifying in support of Brandon's application, testified that he was very comfortable in referring his patients for OHS services to St. Joseph and Tampa General, having, in fact, been comfortable with his father having had OHS at Tampa General. Likewise, Dr. Vijay and his group, also supporters of the Brandon application, split time between Bayonet Point and Tampa General. Dr. Vijay is very proud to be associated with the OHS program at Tampa General. Lakeland also operates a high quality OHS program. In its application, Brandon did not challenge the quality of care at the existing OHS programs in District 6. Nor did Brandon at hearing advance as reasons for supporting its application, capacity constraints, inability of existing providers to absorb incremental growth in OHS volume or failure of existing providers to meet the needs of the residents of Brandon's primary service area. The Agency, in its preliminary decision on the application, agreed that typical "not normal" circumstances in this case are not present. Included among these circumstances are those related to lack of "geographic access." The Agency's OHS Rule includes a geographic access standard of two hours. It is undisputed that all District 6 residents have access to OHS services at multiple OHS providers in the District and outside the District within two hours. The travel time from Brandon to UCH or Tampa General, moreover, is usually less than 30 minutes anytime during the day, including peak travel time. Travel time from Brandon to St. Joseph's is about 30 minutes. There are times, however, when travel time exceeds 30 minutes. There have been incidents when traffic congestion has prevented emergency transport of Brandon patients suffering myocardial infarcts from reaching nearby open heart surgery providers within the 30 minutes by ground ambulance. Delays in travel are not a problem in most OHS cases. In the great majority, procedures are elective and scheduled in advance. OHS procedures are routinely scheduled days, if not weeks, after determining that the procedure is necessary. This high percentage of elective procedures is attributed to better management of patients, better technology, and improved stabilizing medications. The advent of drugs such as thrombolytic therapy, calcium channel blockers, beta blockers, and anti-platelet medications have vastly improved stabilization of patients who present at Emergency Rooms with myocardial infarctions. In its application, Brandon did not raise outmigration as a not-normal circumstance to support its proposal and with good reason. Hillsborough County residents generally do not leave District 6 for OHS. In fact, over 96 percent of County residents receive OHS services at a District 6 provider. Lack of out-migration shows two significant facts: (a) existing OHS programs are perceived to be reasonably accessible; and (2) County residents are satisfied with the quality of OHS services they receive in the County. This 96 percent retention rate is even more impressive considering there are many OHS programs and options available to County residents within a two-hour travel time. In contrast, there are two low-volume OHS providers in Manatee County, one of them being Blake. Unlike Hillsborough County residents, only 78 percent of Manatee County residents remain in District 6 for OHS services. Such outmigration shows that these residents prefer to bypass closer programs, and travel further distances, to receive OHS services at high-volume facility in District 8, which they regard as offering a higher quality of service. In its Application, Brandon does not raise economic access as a "not normal" circumstance. In fact, Brandon concedes that the demand for OHS services by Medicaid and indigent patients is very limited because Brandon's PSA is an affluent area. Brandon does not "condition" its application on serving a specific number or percentage of Medicaid or indigent patients. There are no financial barriers to accessing OHS services in District 6. All OHS providers in Hillsborough County and LRMC provide services to Medicaid and indigent patients, as needed. Approving Brandon is not needed to improve service or care to Medicaid or indigent patient populations. Tampa General is the "safety net" provider for health care services to all County residents. Tampa General is an OHS provider geographically accessible to Brandon's PSA. Tampa General actively services the PSA now for OHS. Brandon did not demonstrate cost savings to the patient population of its PSA if it were approved. Approving Brandon is not needed to improve cost savings to the patient population. Brandon based its OHS and PTCA charges on the average charge for PSA residents who are serviced at the existing OHS providers. While that approach is acceptable, Brandon does not propose a charge structure which is uniquely advantageous for patients. Restated, patients would not financially benefit if Brandon were approved. Tertiary Service Open Heart Surgery is defined as a tertiary service by rule. A "tertiary health service" is defined in Section 408.032(17), Florida Statutes, as follows: 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. As a tertiary service, OHS is necessarily a referral service. Most hospitals, lacking OHS capability, transfer their patients to providers of the service. One might expect providers of open heart surgery in Florida in light of OHS' status as a tertiary service to be limited to regional centers of excellence. The reality of the six hospitals that provide open heart surgery services in District 6 defies this health-planning expectation. While each of the six provides OHS services of high quality, they are not "regional" centers since all are in the same health planning district. Rather than each being a regional center, the six together comprise more localized providers that are dispersed throughout a region, quite the opposite of a center for an entire region. Brandon's Allegations of Special Circumstances. Brandon presents two special circumstances for approval of its application. The first is that consideration of the low-volume Manatee County providers should not operate to "zero out" the numeric need calculated by the formula. The second relates to transfers and occasional problems with transfers for Brandon patients in need of emergency open heart services. "Time is Muscle" Lack of blood flow to the heart during a myocardial infarction ("MI") results in loss of myocardium (heart muscle). The longer the blood flow is disrupted or diminished, the more myocardium is lost. The more myocardium lost, the more likely the patient will die or, should the patient survive, suffer severe reduction in quality of life. The key to good patient outcome when a patient is experiencing an acute MI is prompt evaluation and rapid treatment upon presentation at the hospital. Restoration of blood flow to the heart (revascularization) is the goal of the treating physician once it is recognized that a patient is suffering an MI. If revascularization is not commenced within 2 hours of the onset of an acute MI, an MI patient's potential for recovery is greatly diminished. The need for prompt revascularization for a patient suffering an MI is summed up in the phrase "time is muscle," a phrase accepted as a maxim by cardiologists and cardiothoracic surgeons. Recent advances in modern medicine and technology have improved the ability to stabilize and treat patients with acute MIs and other cardiac traumas. The three primary treatment modalities available to a patient suffering from an MI are: 1) thrombolytics; 2) angioplasty and stent placement; and, 3) open heart surgery. Because of the advancement of the effectiveness of thrombolytics, thrombolytic therapy has become the standard of care for treating MIs. Thrombolytic therapy is the administration of medication to dissolve blood clots. Administered intravenously, thrombolytic medication begins working within minutes to dissolve the clot causing the acute MI and therefore halt the damage done by an MI to myocardium. The protocols to administer thrombolysis are similar among hospitals. If a patient presents with chest pain and the E.R. physician identifies evidence of an active heart attack, thrombolysis is normally administered. If the E.R. physician is uncertain, a cardiologist is quickly contacted to evaluate the patient. Achieving good outcomes in cases of myocardial infarctions requires prompt consultation with the patient, competent clinical assessment, and quick administration of appropriate treatment. The ability to timely evaluate patient conditions for MI, and timely administer thrombolytic therapy, is measured and evaluated nationally by the National Registry of Myocardial Infarction. The National Registry makes the measurement according to a standard known as "door-to-needle" time. This standard measures the time between the patient's presentation at the E.R. and the time the patient is initially administered thrombolytic medication by injection intravenously. Patients often begin to respond to thrombolysis within 10-15 minutes. Consistent with the maxim, "time is muscle," the shorter the door-to-needle time, the better the chance of the patient's successful recovery. The effectiveness of thrombolysis continues to increase. For example, the advent of a drug called Reapro blocks platelet activity, and has increased the efficacy rate of thrombolysis to at least 85 percent. As one would expect, then, thrombolytic therapy is the primary method of revascularization available to patients at Brandon. Due to the lack of open heart surgery backup, moreover, Brandon is precluded by Agency rule from offering angioplasty in all but the most extreme cases: those in which it is determined that a patient will not survive a transfer. While Brandon has protocols, authority, and equipment to perform angioplasty when a patient is not expected to survive a transfer, physicians are reluctant to perform angioplasty without open heart backup because of complications that can develop that require open heart surgery. Angioplasty, therefore, is not usually a treatment modality available to the MI patient at Brandon. Although the care of choice for MI treatment, thrombolytics are not always effective. To the knowledge of the cardiologists who testified in this proceeding, there is not published data on the percentage of patients for whom thrombolytics are not effective. But from the cardiologists who offered their opinions on the percentage in the proceeding, it can be safely found that the percentage is at least 10 percent. Thrombolytics are not ordered for these patients because they are inappropriate in the patients' individual cases. Among the contraindications for thrombolytics are bleeding disorders, recent surgery, high blood pressure, and gastrointestinal bleeding. Of the patients ineligible for thrombolytics, a subset, approximately half, are also ineligible for angioplasty. The other half are eligible for angioplasty. Under the most conservative projections, then at least 1 in 20 patients suffering an MI would benefit from timely angioplasty intervention for which open heart surgery back-up is required in all but the rarest of cases. In 1997, 351 people presented to Brandon's Emergency Room suffering from an acute MI. In 1998, the number of MIs increased to 427. In 1999, 428 patients presented to Brandon's Emergency Room suffering from an acute MI. At least 120 (10 percent) of the total 1206 MI patients presenting to Brandon's Emergency Room from 1997 to 1999 would have been ineligible for thrombolytics as a means of revascularization. Of these, half would have been ineligible for angioplasty while the other half would have been eligible. Sixty, therefore, is the minimum number of patients from 1997 to 1999 who would have benefited from angioplasty at Brandon using the most conservative estimate. Transfers of Emergency Patients Those patients who presented at Brandon's Emergency Room with acute MI and who could not be stabilized with thrombolytic therapy had to be transferred to one of the nearby providers of open heart surgery. In 1998, Brandon transferred an additional 190 patients who did not receive a diagnostic catheterization procedure at Brandon for either angioplasty or open heart surgery. For the first 9 months of 1999, 114 such transfers were made. Thus, in 1998 alone, Brandon transferred a total of 516 cardiac patients to existing providers for the provision of angioplasty or open heart surgery, more than any other provider in the District. In 1999, Brandon made 497 such transfers. Not all of these were emergency transfers, of course. But in the three years between 1997 and 1999 at least 60 patients were in need of emergency transfers who would benefit from angioplasty with open heart backup. Of those Brandon patients determined to be in need of urgent angioplasty or open heart surgery, all must be transferred to existing providers either by ambulance or by helicopter. Ambulance transfer is accomplished through ambulances maintained by the Hillsborough County Fire Department. Due to the cardiac patient's acuity level, ambulance transfer of such patients necessitates the use of ambulances equipped with Advanced Life Support Systems (ALS) in order to monitor the patient's heart functions and to treat the patient should the patient's condition deteriorate. Hillsborough County operates 18 ambulances. All have ALS capability. Patients with less serious medical problems are sometimes transported by private ambulances equipped with Basic Life Support Systems (BLS) that lack the equipment to appropriately care for the cardiac patient. But, private ambulances are not an option to transport critically ill cardiac patients because they are only equipped with BLS capability. Private ambulances, moreover, do not make interfacility transports of cardiac patients between Hillsborough County hospitals. There are many demands on the ambulance transfer system in Hillsborough County. Hillsborough County's 18 ALS ambulances cover in excess of 960 square miles. Of these 18 ambulances, only three routinely operate within the Brandon area. Hillsborough County ambulances respond to 911 calls before requests for interfacility transfers of cardiac patients and are extremely busy responding to automobile accidents, especially when it rains. As a result, Hillsborough County ambulances are not always available on a timely basis when needed to perform an interfacility transfer of a cardiac patient. At times, due to inordinate delay caused by traffic congestion, inter-facility ambulance transport, even if the ambulance is appropriately equipped, is not an option for cardiac patients urgently in need of angioplasty or open heart surgery. It has happened, for example, that an ambulance has appeared at the hospital 8 hours after a request for transport. Some cardiac surgeons will not utilize ground transport as a means of transporting urgent open heart and angioplasty cases. Expeditious helicopter transport in Hillsborough County is available as an alternative to ground transport. But, it too, from time-to-time, is problematic for patients in urgent need of angioplasty or open heart surgery. Tampa General operates two helicopters through AeroMed, only one of which is located in Hillsborough County. AeroMed's two helicopters are not exclusively devoted to cardiac patients. They are also utilized for the transfer of emergency medical and trauma patients, further taxing the availability of AeroMed helicopters to transfer patients in need of immediate open heart surgery or angioplasty. BayCare operates the only other helicopter transport service serving Hillsborough County. BayCare maintains several helicopters, only one of which is located in Hillsborough County at St. Joseph's. BayCare helicopters are not equipped with intra-aortic balloon pump capability, thereby limiting their use in transporting the more complicated cardiac patients. Helicopter transport is not only a traumatic experience for the patient, but time consuming. Once a request has been made by Brandon to transport a patient in need of urgent intervention, it routinely takes two and a half hours, with instances of up to four hours, to effectuate a helicopter transfer. At the patient's beside, AeroMed personnel must remove the patient's existing monitors, IVS, and drips, and refit the patient with AeroMed's equipment in preparation for flight. In more complicated cases requiring the use of an intra-aortic balloon pump, the patient's balloon pump placed at Brandon must be removed and substituted with the balloon pump utilized by AeroMed. Further delays may be experienced at the receiving facility. The national average of the time from presentation to commencement of the procedure is reported to be two hours. In most instances at UCH, it is probably 90 minutes although "[t]here are of course instances where it would be much faster . . .". (Tr. 3212). On the other hand, there are additional delays from time-to-time. "[P]erhaps the longest circumstance would be when all the labs are full . . . or . . . even worse . . . if all the staff has just left for the day and they are almost home, to then turn them around and bring them all back." (Id.) Specific Cases Involving Transfers Delays in the transfer process were detailed at hearing by Brandon cardiologists with regard to specific Brandon patients. In cases in which "time is muscle," delay is critical except for one subset of such cases: that in which, no matter what procedure is available and no matter how timely that procedure can be provided, the patient cannot be saved. Craig Randall Martin, M.D., Board-certified in Internal Medicine and Cardiovascular Disease, and an expert in cardiology, wrote to AHCA in support of the application by detailing two "examples of patients who were in an extreme situation that required emergent, immediate intervention . . . [intervention that could not be provided] at Brandon Hospital." (Tr. 408). One of these concerned a man in his early sixties who was a patient at Brandon the night and morning of October 13 and 14, 1998. It represents one of the rare cases in which an emergency angioplasty was performed at Brandon even though the hospital does not have open heart backup. The patient had presented to the Emergency Room at approximately 11:00 p.m., on October 13 with complaints of chest pain. Although the patient had a history of prior infarctions, PTCA procedures, and onset diabetes, was obese, a smoker and had suffered a stroke, initial evaluation, including EKG and blood tests, did not reveal an MI. The patient was observed and treated for what was probably angina. With the subsiding of the chest pain, he was appropriately admitted at 2:30 a.m. to a non- intensive cardiac telemetry bed in the hospital. At 3:00 a.m., he was observed to be stable. A few hours or so later, the patient developed severe chest pain. The telemetry unit indicated a very slow heart rate. Transferred to the intensive care unit, his blood pressure was observed to be very low. Aware of the seriousness of the patient's condition, hospital personnel called Dr. Martin. Dr. Martin arrived on the scene and determined the patient to be in cardiogenic shock, an extreme situation. In such a state, a patient has a survival rate of 15 to 20 percent, unless revascularization occurs promptly. If revascularization is timely, the survival rate doubles to 40 percent. Coincident with the cardiogenic shock, the patient was suffering a complete heart block with a number of blood clots in the right coronary artery. The patient's condition, to say the least, was grave. Dr. Martin described the action taken at Brandon: . . . I immediately called in the cardiac catheterization team and moved the patient to the catheterization laboratory. * * * Somewhere around 7:30 in the morning, I put a temporary pacemaker in, performed a diagnostic catheterization that showed that one of his arteries was completely clotted. He, even with the pacemaker giving him an adequate heart rate, and even with the use of intravenous medication for his blood pressure, . . . was still in cardiogenic shock. * * * And I placed an intra-aortic balloon pump . . ., a special pump that fits in the aorta and pumps in synchrony with the heart and supports the blood pressure and circulation of the muscle. That still did not alleviate the situation . . . an excellent indication to do a salvage angioplasty on this patient. I performed the angioplasty. It was not completely successful. The patient had a respiratory arrest. He required intubation, required to be put on a ventilator for support. And it became apparent to me that I did not have the means to save this patient at [Brandon]. I put a call to the . . . cardiac surgeon of choice . . . . [Because the surgeon was on vacation], [h]is associate [who happened to be in the operating room at UCH] called me back immediately . . . and said ["]Yes, I'll take your patient. Send him to me immediately, I will postpone my current case in order to take care of your patient.["] At that point, we called for helicopter transport, and there were great delays in obtaining [the] transport. The patient was finally transferred to University Community Hospital, had surgery, was unsuccessful and died later that afternoon. (Tr. 409-412). By great delays in the transport, Dr. Martin referred to inability to obtain prompt helicopter transport. University Community Hospital, the receiving hospital, was not able to find a helicopter. Dr. Martin, therefore, requested Tampa General (a third hospital uninvolved from the point of being either the transferring or the receiving hospital) to send one of its two helicopters to transfer the patient from Brandon to UCH. Dr. Martin described Tampa General's response: They balked. And I did not know they balked until an hour later. And I promptly called them back, got that person on the telephone, we had a heated discussion. And after that person checked with their supervisor, the helicopter was finally sent. There was at least an hour-and-a-half delay in obtaining a helicopter transport on this patient that particular morning that was unnecessary. And that is critical when you have a patient in this condition. (Tr. 413, emphasis supplied.) In the case of this patient, however, the delay in the transport from Brandon to the UCH cardiovascular surgery table, in all likelihood, was not critical to outcome. During the emergency angioplasty procedure at Brandon, some of the clot causing the infarction was dislodged. It moved so as to create a "no-flow state down the right coronary artery. In other words, . . ., it cut off[] the microcirculation . . . [so that] there is no place for the blood . . . to get out of the artery. And that's a devastating, deadly problem." (Tr. 2721). This "embolization, an unfortunate happenstance [at times] with angioplasty", id., probably sealed the patient's fate, that is, death. It is very likely that the patient with or without surgery, timely or not, would not have survived cardiogenic shock, complete heart block, and the circumstance of no circulation in the right coronary artery that occurred during the angioplasty procedure. Adithy Kumar Gandhi, M.D., is Board-certified in Internal Medicine and Cardiology. Employed by the Brandon Cardiology Group, a three-member group in Brandon, Dr. Gandhi was accepted as an expert in the field of cardiology in this proceeding. Dr. Gandhi testified about two patients in whose cases delays occurred in transferring them to St. Joseph’s. He also testified about a third case in which it took two hours to transfer the patient by helicopter to Tampa General. The first case involves an elderly woman. She had multiple-risk factors for coronary disease including a family history of cardiac disease and a personal history of “chest pain.” (Tr. 2299). The patient presented at Brandon’s Emergency Room on March 17, 1999 at around 2:30 p.m. Seen by the E.R. physician about 30 minutes later, she was placed in a monitored telemetry bed. She was determined to be stable. During the next two days, despite family and personal history pointing to a potentially serious situation, the patient refused to submit to cardiac catheterization at Brandon as recommended by Dr. Gandhi. She maintained her refusal despite results from a stress test that showed abnormal left ventricular systolic function. Finally, on March 20, after a meeting with family members and Dr. Gandhi, the patient consented to the cath procedure. The procedure was scheduled for March 22. During the procedure, it was discovered that a major artery of the heart was 80 percent blocked. This condition is known as the “widow-maker,” because the prognosis for the patient is so poor. Dr. Gandhi determined that “the patient needed open heart surgery and . . . to be transferred immediately to a tertiary hospital.” (Tr. 2305-6). He described that action he took to obtain an immediate transfer as follows: I talked to the surgeon up at St. Joseph’s and I informed him I have had difficulties transferring patients to St. Joseph’s the same day. [I asked him to] do me a favor and transfer the patient out of Brandon Hospital as soon as possible by helicopter. The surgeon promised me that he would take care of that. (Tr. 2261). The assurance, however, failed. The patient was not transferred that day. That night, while still at Brandon, complications developed for the patient. The complications demanded that an intra-aortic balloon pump be inserted in order to increase the blood flow to the heart. After Dr. Gandhi’s partner inserted the pump, he, too, contacted the surgeon at St. Joseph’s to arrange an immediate transfer for open heart surgery. But the patient was not transferred until early the next morning. Dr. Gandhi’s frustration at the delay for this critically ill patient in need of immediate open heart surgery is evident from the following testimony: So the patient had approximately 18 hours of delay of getting to the hospital with bypass capabilities even though the surgeon knew that she had a widow-maker, he had promised me that he would make those transfer arrangements, even though St. Joseph’s Hospital knew that the patient needed to be transferred, even though I was promised that the patient would be at a tertiary hospital for bypass capabilities. (Tr. 2262). Rod Randall, M.D., is a cardiologist whose practice is primarily at St. Joseph’s. He had active privileges at Brandon until 1998 when he “switched to courtesy privileges,” (Tr. 1735) at Brandon. He reviewed the medical records of the first patient about whom Dr. Gandhi testified. A review of the patient’s medical records disclosed no adverse outcome due to the patient’s transfer. To the contrary, the patient was reasonably stable at the time of transfer. Nonetheless, it would have been in the patient’s best interest to have been transferred prior to the catheterization procedure at Brandon. As Dr. Randall explained, [W]e typically cath people that we feel are going to have a probability of coronary artery disease. That is, you don’t tend to cath someone that [for whom] you don’t expect to find disease . . . . If you are going to cath this patient, [who] is in a higher risk category being an elderly female with . . . diminished injection fraction . . . why put the patient through two procedures. I would have to do a diagnostic catheterization at one center and do some type of intervention at another center. So, I would opt to transfer that patient to a tertiary care center and do the diagnostic catheterization there. (Tr. 1764, 1765). Furthermore, regardless of what procedure had been performed, the significant left main blockage that existed prior to the patient’s presentation at Brandon E.R. meant that the likely outcome would be death. The second of the patients Dr. Gandhi transferred to St. Joseph’s was a 74-year-old woman. Dr. Gandhi performed “a heart catheterization at 5:00 on Friday.” (Tr. 2267). The cath revealed a 90 percent blockage of the major artery of the heart, another widow-maker. Again, Dr. Gandhi recommended bypass surgery and contacted a surgeon at St. Joseph’s. The transfer, however, was not immediate. “Finally, at approximately 11:00 the patient went to St. Joseph’s Hospital. That night she was operated on . . . ”. (Tr. 2267). If Brandon had had open heart surgery capability, “[t]hat would have increased her chances of survival.” No competent evidence was admitted that showed the outcome, however, and as Dr. Randall pointed out, the medical records of the patient do not reveal the outcome. The patient who was transferred to Tampa General (the third of Dr. Ghandhi's patients) had presented at Brandon’s ER on February 15, 2000. Fifty-six years old and a heavy smoker with a family history of heart disease, she complained of severe chest pain. She received thrombolysis and was stabilized. She had presented with a myocardial infarction but it was complicated by congestive heart failure. After waiting three days for the myocardial infarction to subside, Dr. Gandhi performed cardiac catheterization. The patient “was surviving on only one blood vessel in the heart, the other two vessels were 100 percent blocked. She arrested on the table.” (Tr. 2271). After Dr. Gandhi revived her, he made arrangements for her transfer by helicopter. The transfer was done by helicopter for two reasons: traffic problems and because she had an intra-aortic balloon pump and there are a limited number of ambulances with intra- aortic balloon pump maintenance capability. If Brandon had had the ability to conduct open heart surgery, the patient would have had a better likelihood of successful outcome: “the surgeon would have taken the patient straight to the operating room. That patient would not have had a second arrest as she did at Tampa General.” (Tr. 2273). Marc Bloom, M.D., is a cardiothoracic surgeon. He performs open-heart surgery at UCH, where he is the chief of cardiac surgery. He reviewed the records of this 54-year-old woman. The records reflect that, in fact, upon presentation at Brandon’s E.R., the patient’s heart failure was very serious: She had an echocardiogram done that . . . showed a 20 percent ejection fraction . . . I mean when you talk severe, this would be classified as a severe cardiac compromise with this 20 percent ejection fraction. (Tr. 2712). Once stabilized, the patient should have been transferred for cardiac catheterization to a hospital with open- heart surgery instead of having cardiac cath at Brandon. It is true that delay in the transfer once arrangements were made was a problem. The greater problem for the patient, however, was in her management at Brandon. It was very likely that open heart surgery would be required in her case. She should have been transferred prior to the catheterization as soon as became known the degree to which her heart was compromised, that is, once the results of the echocardiogram were known. Adam J. Cohen, M.D., is a cardiologist with Diagnostic Consultative Cardiology, a group located in Brandon that provides cardiology services in Hillsborough County. Dr. Cohen provided evidence of five patients who presented at Brandon and whose treatments were delayed because of the need for a transfer. The first of these patients was a 76-year old male who presented to Brandon’s ER on April 6, 1999. Dr. Cohen considered him to be suffering “a complicated myocardial infarction.” (Brandon Ex. 45, p. 43) Cardiac catheterization conducted by Dr. Cohen showed “severe multi-vessel coronary disease, cardiogenic shock, severely impaired [left ventricular] function for which an intra-aortic balloon pump was placed . . .”. (Id.) During the placement of the pump, the patient stopped breathing and lost pulse. He was intubated and stabilized. A helicopter transfer was requested. There was only one helicopter equipped to conduct the transfer. Unfortunately, “the same day . . . there was a mass casualty event within the City of Tampa when the Gannet Power Plant blew up . . .”. (Brandon Ex. 45, p. 44). An appropriate helicopter could not be secured. Dr. Cohen did not learn of the unavailability of helicopter transport for an hour after the request was made. Eventually, the patient was transferred by ambulance to UCH. There, he received angioplasty and “stenting of the right coronary artery times two.” (Id., at p. 47.) After a slow recovery, he was discharged on April 19. In light of the patient’s complex cardiac condition, he received a good outcome. This patient is an example of another patient who should have been transferred sooner from Brandon since Brandon does not have open heart surgery capability. The second of Dr. Cohen’s patients presented at Brandon’s E.R. at 10:30 p.m. on June 14, 1999. He was 64 years old with no risk factors for coronary disease other than high blood pressure. He was evaluated and diagnosed with “a large and acute myocardial infarction” Two hours later, the therapy was considered a failure because there was no evidence that the area of the heart that was blocked had been reperfused. Dr. Cohen recommended transfer to UCH for a salvage angioplasty. The call for a helicopter was made at 12:58 a.m. (early the morning of June 15) and the helicopter arrived 40 minutes later. At UCH, the patient received angioplasty procedure and stenting of two coronary arteries. He suffered “[m]oderately impaired heart function, which is reflective of myocardial damage.” (Brandon Ex. 45, p. 58). If salvage angioplasty with open heart backup had been available at Brandon, the patient would have received it much more quickly and timely. Whether the damage done to the patient’s heart during the episode could have been avoided by prompt angioplasty at Brandon is something Dr. Cohen did not know. As he put it, “I will never know, nor will anyone else know.” (Brandon Ex. 45, p. 60). The patient later developed cardiogenic shock and repeated ventricular tachycardia, requiring numerous medical interventions. Because of the interventions and mechanical trauma, he required surgery for repair of his right femoral artery. The patient recently showed an injection fraction of 45 percent below the minimum for normal of 50 percent. The third patient was a 51-year-old male who had undergone bypass surgery 19 years earlier. After persistent recurrent anginal symptoms with shortness of breath and diaphoresis, he presented at Brandon’s E.R. at 1:00 p.m. complaining of heavy chest pain. Thrombolytic therapy was commenced. Dr. Cohen described what followed: [H]he had an episode of heart block, ventricular fibrillation, losing consciousness, for which he received ACLS efforts, being defibrillated, shocked, times three, numerous medications, to convert him to sinus rhythm. He was placed on IV anti- arrhythmics consisting of amiodarone. The repeat EKG showed a worsening of progression of his EKG changes one hour after the initiation of the TPA. Based on that information, his clinical scenario and his previous history, I advised him to be transferred to University Hospital for a salvage angioplasty. (Brandon Ex. 45, p. 62). Transfer was requested at 1:55 p.m. The patient departed Brandon by helicopter at 2:20 p.m. The patient received the angioplasty at UCH. Asked how the patient would have benefited from angioplasty at Brandon without having to have been transferred, Dr. Cohen answered: In a more timely fashion, he would have received an angioplasty to the culprit lesion involved. There would have been much less occlusive time of that artery and thereby, by inference, there would have been greater salvage of myocardium that had been at risk. (Brandon Ex. 45, p. 65). The patient, having had bypass surgery in his early thirties, had a reduced life expectancy and impaired heart function before his presentation at Brandon in June of 1999. The time taken for the transfer of the patient to UCH was not inordinate. The transfer was accomplished with relative and expected dispatch. Nonetheless, the delay between realization at Brandon of the need for a salvage angioplasty and actual receipt of the procedure after a transfer to UCH increased the potential for lost myocardium. The lack of open heart services at Brandon resulted in reduced life expectancy for a patient whose life expectancy already had been diminished by the early onset of heart disease. The fourth patient of Dr. Cohen’s presented to Brandon’s E.R. at 8:30, the morning of August 29, 1999. A fifty-four-year-old male, he had been having chest pain for a month and had ignored it. An EKG showed a complete heart block with atrial fibrillation and change consistent with acute myocardial infarction. Thrombolytic therapy was administered. He continued to have symptoms including increased episodes of ventricular arrhythmias. He required dopamine for blood pressure support due to his clinical instability and the lack of effectiveness of the thrombolytics. The patient refused a transfer and catheterization at first. Ultimately, he was convinced to undergo an angioplasty. The patient was transferred by helicopter to UCH. The patient was having a “giant ventricular infarct . . . a very difficult situation to take care of . . . and the majority of [such] patients succumb to [the] disease . . .”. (Tr. 2703). The cardiologist was unable to open the blockage via angioplasty. Dr. Bloom was called in but the patient refused surgical intervention. After interaction with his family the patient consented. Dr. Bloom conducted open heart surgery. The patient had a difficult post-operative course with arrythmias because “[h]e had so much dead heart in his right ventricle . . .”. (Id.) The patient received an excellent outcome in that he was seen in Dr. Bloom’s office with 40 percent injection fraction. Dr. Bloom “was just amazed to see him back in the office . . . and amazed that this man is alive.” (Tr. 2704). Most of the delay in receiving treatment was due to the patient’s reluctance to undergo angioplasty and then open heart surgery. The fifth patient of Dr. Cohen’s presented at Brandon’s E.R. on March 22, 2000. He was 44 years old with no prior cardiac history but with numerous risk factors. He had a sudden onset of chest discomfort. Lab values showed an elevation consistent with myocardial injury. He also had an abnormal EKG. Dr. Cohen performed a cardiac cath on March 23, 2000. The procedure showed a totally occluded left anterior descending artery, one of the three major arteries serving the heart. Had open heart capability been available at Brandon, he would have undergone angioplasty and stenting immediately. As it was, the patient had to be transferred to UCH. A transfer was requested at 10:25 that morning and the patient left Brandon’s cath lab at 11:53. Daniel D. Lorch, M.D., is a specialist in pulmonary medicine who was accepted as an expert in internal medicine, pulmonary medicine and critical care medicine, consistent with his practice in a “five-man pulmonary internal medicine critical care group.” (Brandon Ex. 42, p. 4). Dr. Lorch produced medical records for one patient that he testified about during his deposition. The patient had presented to Brandon’s E.R. with an MI. He was transferred to UCH by helicopter for care. Dr. Lorch supports Brandon’s application. As he put it during his deposition: [Brandon] is an extremely busy community hospital and we are in a very rapidly growing area. The hospital is quite busy and we have a large number of cardiac patients here and it is not infrequently that a situation comes up where there are acute cardiac events that need to be transferred out. (Brandon Ex. 42, p. 20). Transfers Following Diagnostic Cardiac Catheterization Brandon transfers a high number cardiac patients for the provision of angioplasty or open heart surgery in addition to those transferred under emergency conditions. In 1996, Brandon performed 828 diagnostic cardiac catheterization procedures. Of this number, 170 patients were transferred to existing providers for open heart surgery and 170 patients for angioplasty. In 1997, Brandon performed 863 diagnostic catheterizations of which 180 were transferred for open heart surgery and 159 for angioplasty. During 1998, 165 patients were transferred for open heart surgery and 161 for angioplasty out of 816 diagnostic catheterization procedures. For the first nine months of 1999, Brandon performed 639 diagnostic catheterizations of which 102 were transferred to existing providers for open heart surgery and 112 for angioplasty. A significant number of patients are transferred from Brandon for open heart surgery services. These transfers are consistent with the norm in Florida. After all, open heart surgery is a tertiary service. Patients are routinely transferred from most Florida hospitals to tertiary hospitals for OHS and PCTA. The large majority of Florida hospitals do not have OHS programs; yet, these hospitals receive patients who need OHS or PTCA. Transfers, although the norm, are not without consequence for some patients who are candidates for OHS or PCTA. If Brandon had open heart and angioplasty capability, many of the 1220 patients determined to be in need of angioplasty or open heart surgery following a diagnostic catheterization procedure at Brandon could have received these procedures at Brandon, thereby avoiding the inevitable delay and stress occasioned by transfer. Moreover, diagnostic catheterizations and angioplasties are often performed sequentially. Therefore, Brandon patients determined to be in need of angioplasty following a diagnostic catheterization would have had access to immediate angioplasty during the same procedure thus reducing the likelihood of a less than optimal outcome as the result of an additional delay for transfer. Adverse Impact on Existing Providers Competition There is active competition and available patient choices now in Brandon's PSA. As described, there are many OHS programs currently accessible to and substantially serving Brandon's PSA. There is substantial competition now among OHS providers so as to provide choices to PSA residents. There are no financial benefits or cost savings accruing to the patient population if Brandon is approved. Brandon does not propose lower charges than the existing OHS providers. Balanced Budget Act The Balanced Budget Act of 1997 has had a profound negative financial impact on hospitals throughout the country. The Act resulted in a significant reduction in the amount of Medicare payments made to hospitals for services rendered to Medicare recipients. During the first five years of the Act's implementation, Florida hospitals will experience a $3.6 billion reduction in Medicare revenues. Lakeland will receive $17 million less, St.Joseph's will receive $44 million less, and Tampa General will receive $53 million less. The impact of the Act has placed most hospitals in vulnerable financial positions. It has seriously affected the bottom line of all hospitals. Large urban teaching hospitals, such as TGH, have felt the greatest negative impact, due to the Act's impact on disproportionate share reimbursement and graduate medical education payment. The Act's impact upon Petitioners render them materially more vulnerable to the loss of OHS/PTCA revenues to Brandon than they would have been in the absence of the Act. Adverse Impact on Tampa General Tampa General is the "safety net provider" for Hillsborough County. Tampa General is a Medicaid disproportionate share provider. In fiscal year 1999, the hospital provided $58 million in charity care, as that term is defined by AHCA. Tampa General plays a unique, essential role in Hillsborough County and throughout West Central Florida in terms of provision of health care. Its regional role is of particular importance with respect to Level I trauma services, provision of burn care, specialized Level III neonatal and perinatal intensive care services, and adult organ transplant services. These services are not available elsewhere in western or central Florida. In fiscal year 1999, Tampa General experienced a net loss of $12.6 million in providing the services referenced above. It is obligated under contract with the State of Florida to continue to provide those services. Tampa General is a statutory teaching hospital. In fiscal year 1999, it provided unfunded graduate medical education in the amount of $19 million. Since 1998, Tampa General has consistently experienced losses resulting from its operations, as follows: FY 1998-$29 million, FY 1999-$27 million; FY 2000 (5 months)-$10 million. The hospital’s financial condition is not the result of material mismanagement. Rather, its financial condition is a function of its substantial provision of charity and Medicaid services, the impact of the Act, reduced managed care revenues, and significant increases in expense. Tampa General’s essential role in the community and its distressed financial condition have not gone unnoticed. The Greater Tampa Chamber of Commerce established in February of 2000 an Emergency Task Force to assess the hospital's role in the community, and the need for supplemental funding to enable it to maintain its financial viability. Tampa General requires supplemental funding on a continuing basis in order to begin to restore it to a position of financial stability, while continuing to provide essential community services, indigent care, and graduate medical education. It will require ongoing supplemental funding of $20- 25 million annually to avoid triggering the default provision under its bond covenants. As of the close of hearing, the 2000 session of the Florida Legislature had adjourned. The Legislature appropriated approximately $22.9 million for Tampa General. It is, of course, uncertain as to what funding, if any, the Legislature will appropriate to the hospital in future years, as the terms which constitute the appropriations must be revisited by the Legislature on an annual basis. Tampa General has prepared internal financial projections for its fiscal years 2000-2002. It projects annual operating losses, as follows: FY 2000-$20.1 million; FY 2001- $20.6 million; FY 2002-$31.9 million. While its projections anticipate certain "strategic initiatives" that will enhance its financial condition, including continued supplemental legislative funding, the success and/or availability of those initiatives are not "guaranteed" to be successful. If the Brandon program is approved, Tampa General will lose 93 OHS cases and 107 angioplasty cases during Brandon's second year of operation. That loss of cases will result in a $1.4 million annual reduction in TGH's net income, a material adverse impact given Tampa General’s financial condition. OHS services provide a positive contribution to Tampa General's financial operations. Those services constitute a core piece of Tampa General's business. The anticipated loss of income resulting from Brandon's program pose a threat to the hospital’s ability to provide essential community services. Adverse Impact on UCH UCH operated at a financial break-even in its fiscal year 1999. In the first five months of its fiscal year 2000, the hospital has experienced a small loss. This financial distress is primarily attributed to less Medicare reimbursement due to the Act and less reimbursement from managed care. UCH's reimbursement for OHS services provides a good example of the financial challenges facing hospitals. In 1999, UCH's net income per OHS case was reduced 33 percent from 1998. Also in 1999, UCH received OHS reimbursement of only 32 percent of its charges. UCH would be substantially and adversely impacted by approval of Brandon's proposal. As described, UCH currently is a substantial provider of OHS and angioplasty services to residents of Brandon's PSA. There are many cardiologists on staff at Brandon who also actively practice at UCH. UCH is very accessible from Brandon's PSA. UCH reasonably projects to lose the following volumes in the first three years of operation of the proposed program: a loss of 78-93 OHS procedures, a loss of 24-39 balloon angioplasties, and a loss of 97-115 stent angioplasties. Converting this volume loss to financial terms, UCH will suffer the following financial losses as a direct and immediate result of Brandon being approved: about $1.1 million in the first year, and about $1.2 million in the second year, and about $1.3 million in the third year. As stated, UCH is currently operating at about a financial break-even point. The impact of the Balanced Budget Act, reduced managed care reimbursement, and UCH's commitment to serve all patients regardless of ability to pay has a profound negative financial impact on UCH. A recurring loss of more than $1 million dollars per year due to Brandon's new program will cause substantial and adverse impact on UCH. Adverse Impact on St. Joseph’s If Brandon's application is approved, St. Joseph’s will lose 47 OHS cases and 105 PTCA cases during Brandon's second year. That loss of cases will result in a $732,000 annual reduction in SJH's net income. That loss represents a material impact to SJH. Between 1997 and 2000, St. Joseph’s has experienced a pattern of significant deterioration in its financial performance. Its net revenue per adjusted admission had been reduced by 12 percent, while its costs have increased significantly. St. Joseph's net income from operations has deteriorated as follows: FYE 6/30/97-$31 million; FYE 12/31/98- $24 million; FYE 12/31/99-$13.8 million. A net operating income of $13.8 million is not much money relative to St Joseph's size, the age of its physical plant, and its need for capital to maintain and improve its facilities in order to remain competitive. St. Joseph’s offers a number of health care services to the community for which it does not receive reimbursement. Unreimbursed services include providing hospital admissions and services to patients of a free clinic staffed by volunteer members of SJH's medical staff, free immunization programs to low-income children, and a parish nurse program, among others. St. Joseph’s evaluates such programs annually to determine whether it has the financial resources to continue to offer them. During the past two years, the hospital has been forced to eliminate two of its free community programs, due to its deteriorating financial condition. St. Joseph’s anticipates that it will have to eliminate additional unreimbursed community services if it experiences an annual reduction in net income of $730,000. Adverse Impact to LRMC The approval of Brandon will have an impact on Lakeland. Lakeland will suffer a financial loss of about $253,000 annually. This projection is based on calculated contribution margins of OHS and PTCA/stent procedures performed at the hospital. A loss of $253,000 per year is a material loss at Lakeland, particularly in light of its slim operating margin and the very substantial losses it has experienced and will continue to experience as a result of the Balanced Budget Act of 1997. In addition to the projected loss of OHS and other procedures based upon Brandon's application, Lakeland may experience additional lost cases from areas such as Bartow and Mulberry from which it draws patients to its open heart/cardiology program. Lakeland will also suffer material adverse impacts to its OHS program due to the negative effect of Brandon's program on its ability to recruit and retain nurses and other highly skilled employees needed to staff its program. The approval of Brandon will also result in higher costs at existing providers such as Lakeland as they seek to compete for a limited pool of experienced people by responding to sign-on bonuses and by reliance on extensive temporary nursing agencies and pools. Nursing Staff/Recruitment The staffing patterns and salaries for Brandon's projected 40.1 full-time equivalent employees to staff its open heart surgery program are reasonable and appropriate. Filling the positions will not be without some difficulty. There is a shortage for skilled nursing and other personnel needed for OHS programs nationally, in Florida and in District 6. The shortage has been felt in Hillsborough County. For example, it has become increasingly difficult to fill vacancies that occur in critical nursing positions in the coronary intensive care unit and in telemetry units at Tampa General. Tampa General's expenses for nursing positions have "increased tremendously." (Tr. 2622). To keep its program going, the hospital has hired "travelers . . . short-term employment, registered nurses that come from different agencies, . . . with [the hospital] a minimum of 12 weeks." (Tr. 2622). In fact, all hospitals in the Tampa Bay area utilize pool staff and contract staff to fill vacancies that appear from time-to- time. Use of contract staff has not diminished quality of care at the hospitals, although "they would not be assigned to the sickest patients." (Tr. 2176). Another technique for dealing with the shortage is to have existing full-time staff work overtime at overtime pay rates. St. Joseph's and Lakeland have done so. As a result, they have substantially exceeded their budgeted salary expenses in recent months. It will be difficult for Brandon to hire surgical RNs, other open heart surgery personnel and critical care nurses necessary to staff its OHS program. The difficulty, however, is not insurmountable. To meet the difficulty, Brandon will move members of its present staff with cardiac and open heart experience into its open heart program. It will also train some existing personnel in conjunction with the staff and personnel at Bayonet Point. In addition to drawing on the existing pool of nurses, Brandon can utilize HCA's internal nationwide staffing data base to transfer staff from other HCA facilities to staff Brandon's open heart program. Approximately 18 percent of the nurses hired at Brandon already come from other HCA facilities. The nursing shortage has been in existence for about a decade. During this time, other open heart programs have come on line and have been able to staff the programs adequately. Lakeland, in District 6, has demonstrated its ability to recruit and train open heart surgery personnel. Brandon, itself, has been successful, despite the on- going shortage, in appropriately staffing its recent additions of tertiary level NICU beds, an expanded Emergency Room, labor and delivery and recovery suites, and new high-risk, ante-partum observation unit. Brandon has begun to offer sign-on bonuses to compete for experienced nurses. Several employees who staff the Lakeland, UCH and Tampa General programs live in Brandon. These bonuses are temptations for them to leave the programs for Brandon. Other highly skilled, experienced individuals who already work at existing programs may be lost to Brandon's program as well simply as the natural result of the addition of a new program. In the end, Brandon will be able to staff its program, but it will make it more difficult for all of the programs in Hillsborough County and for Lakeland to meet their staffing needs as well as producing a financial impact on existing providers. Financial Feasibility Short-Term Brandon needs $4.2 million to fund implementation of the program. Its parent corporation, HCA will provide financing of up to $4.5 million for implementation. The $4.2 million in start-up costs projected by Brandon does not include the cost of a second cath lab or the costs to upgrade the equipment in the existing cath lab. Itemization of the funds necessary for improvement of the existing cath lab and the addition of the second cath lab were not included in Brandon's pro formas. It is the Agency's position that addition of a cath lab (and by inference, upgrade to an existing lab) requires only a letter of exemption as projects separate from an open heart surgery program even when proposed in support of the program. (See UCH No. 7, p. 83). The position is not inconsistent with cardiac catheterization programs as subject to requirements in law separate from those to which an open heart surgery program is subject. Brandon, through HCA, has the ability to fund the start-up costs of the project. It is financially feasible in the short-term. Long-Term Open heart surgery programs (inclusive of angioplasty and stent procedures, as well as other open heart surgery procedures) generally are very profitable. They are among the most profitable of programs conducted by hospitals. Brandon's projected charges for open heart, angioplasty, and stent procedures are based on the average charges to patients residing in Brandon's PSA inflated at 2 percent per year. The inflation rate is consistent with HCFA's August 1, 2000, Rule implementing a 2.3 percent Medicare reimbursement increase. Brandon's projected payor mix is reasonably based on the existing open heart, angioplasty, and stent patients within its PSA. Brandon also estimated conservatively that it would collect only 45 to 50 percent of its charges from third-party payors. To determine expenses, Brandon utilized Bayonet Point's accounting system. It provided a level of detail that could not be obtained otherwise. "For patients within Brandon's primary service area, . . . that information is not provided by existing providers in the area that's available for any public consumption." (Tr. 1002). While perhaps the most detailed data available, Bayonet Point data was far from an ideal model for Brandon. Bayonet Point performs about 1,500 OHS cases per year. It achieves economies of scale that will not be achievable at Brandon in the foreseeable future. There is a relationship between volume and cost efficiency. The higher the volume, the greater the cost efficiency. Brandon's volume is projected to be much lower than Bayonet Point's. To make up for the imperfection of use of Bayonet Point as an "expenses" proxy, Brandon's financial expert in opining that the project was feasible in the long-term, considered two factors with regard to expenses. First, it included its projected $1.8 million in salary expenses as a separate line item over and above the salary expenses contained in the Bayonet Point data. (This amounted to a "double" counting of salary expenses.) Second, it recognized HCA's ability to obtain competitive pricing with respect to equipment and services for its affiliated hospitals, Brandon being one of them. Brandon projected utilization of 249 and 279 cases in its second and third year of operations. These projections are reasonable. (See the testimony of Mr. Balsano on rebuttal and Brandon Ex. 74). Comparison of Agency Action in CONs 9169 and 9239 Brandon's application in this case, CON 9239, was filed within a six-month period of the filing of an earlier application, CON 9169. The Agency found the two applications to be similar. Indeed, the facts and circumstances at issue in the two applications other than the updating of the financial and volume numbers are similar. So is the argument made in favor of the applications. Yet, the first application was denied by the Agency while the second received preliminary approval. The difference in the Agency's action taken on the later application (the one with which this case is concerned), i.e., approval, versus the action taken on the earlier, denial, was explained by Scott Hopes, the Chief of the Bureau of Certificate of Need at the time the later application was considered: The [later] Brandon application . . ., which is what we're addressing here today, included more substantial information from providers, both cardiologists, internists, family practitioners and surgeons with specific case examples by patient age [and] other demographics, the diagnoses, outcomes, how delays impacted outcomes, what permanent impact those adverse outcomes left the patient in, where earlier . . . there weren't as many specifics. (Tr. 1536, 1537). A comparison of the application in CON 9169 and the record in this case bears out Mr. Hopes' assessment that there is a significant difference between the two applications. Comparison of the Agency Action with the District 9 Application During the same batching cycle in which CON 9239 was considered, five open heart surgery applications were considered from health care providers in District 9. Unlike Brandon's application, these were all denied. In the District 9 SAAR, the Agency found that transfers are an inherent part of OHS as a tertiary service. The Agency concluded that, "[O]pen heart surgery is a tertiary service and patients are routinely transferred between hospitals for this procedure." (UCH Ex. 7, pp. 51-54). In particular, the Agency recognized Boca Raton's claim that it had provided "extensive discussion of the quality implications of attempting to deal with cardiac emergencies through transfer to other facilities." (UCH Ex. 7, p. 52). Unlike the specific information referred to by Mr. Hopes in his testimony quoted, above, however, the foundation for Boca Raton's argument is a 1999 study published in the periodical Circulation, entitled "Relationship Between Delay in Performing Direct Coronary Angioplasty and Early Clinical Outcomes." (UCH Ex. 7, p. 21). This publication was cited by the Agency in its SAAR on the application in this case. Nonetheless, a fundamental difference remains between this case and the District 9 applications, including Boca Raton's. The application in this case is distinguished by the specific information to which Mr. Hopes alluded in his testimony, quoted above.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a final order be entered granting the application of Galencare, Inc., d/b/a Brandon Regional Hospital for open heart surgery, CON 9239. DONE AND ENTERED this 30th day of March, 2001, in Tallahassee, Leon County, Florida. DAVID M. MALONEY Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 30th day of March, 2001. COPIES FURNISHED: Sam Power, Agency Clerk Agency for Health Care Administration 2727 Mahan Drive Building 3, Suite 3431 Tallahassee, Florida 32308-5403 Julie Gallagher, General Counsel Agency for Health Care Administration 2727 Mahan Drive Building 3, Suite 3431 Tallahassee, Florida 32308-5403 Richard A. Patterson, Esquire Agency for Health Care Administration 2727 Mahan Drive Building 3, Suite 3431 Tallahassee, Florida 32308-5403 Stephen A. Ecenia, Esquire R. David Prescott, Esquire Thomas W. Konrad, Esquire Rutledge, Ecenia, Purnell & Hoffman, P.A. 215 North Monroe Street, Suite 420 Post Office Box 551 Tallahassee, Florida 32302-0551 James C. Hauser, Esquire Metz, Hauser & Husband, P.A. 215 South Monroe Street, Suite 505 Post Office Box 10909 Tallahassee, Florida 32302 John H. Parker, Jr., Esquire Jonathan L. Rue, Esquire Sarah E. Evans, Esquire Parker, Hudson, Rainer & Dobbs 1500 Marquis Two Tower 285 Peachtree Center Avenue, Northeast Atlanta, Georgia 30303 Robert A. Weiss, Esquire Karen A. Putnal, Esquire Parker, Hudson, Rainer & Dobbs, LLP The Perkins House, Suite 200 118 North Monroe Street Tallahassee, Florida 32301
Findings Of Fact St. Mary's Hospital, Inc. ("St. Mary's"), is a certificate of need ("CON") applicant for an adult open heart surgery program in Department of Health and Rehabilitative Services ("HRS"), District IX. The Agency for Health Care Administration ("AHCA") is the state agency responsible for the administration of CON laws. Intervenor, Martin Memorial Hospital Association, Inc., d/b/a Martin Memorial Medical Center ("Martin Memorial") has standing to intervene as a CON applicant for an open heart surgery program in HRS District IX. Intervenors, JFK Medical Center, Inc., ("JFK") and Palm Beach Gardens Community Hospital, Inc., d/b/a Palm Beach Gardens Medical Center ("Palm Beach Gardens") have standing to intervene as existing providers of open heart surgery services in HRS District IX. AHCA published a net need projection for zero additional adult open heart surgery programs in HRS District IX, with the following notice: Any person who identifies any error in the fixed need pool numbers must advise the agency of the error within ten (10) days of publication of the number. If the agency concurs in the error, the fixed need pool number will be adjusted prior to or during the grace period for this cycle. Failure to notify the agency of the error during this ten day time period will result in no adjustment to the fixed need pool number for this cycle and a waiver of the person's right to raise the error at subsequent proceedings. See, Volume 18, Number 32, Florida Admiministrative Weekly, at page 4501 (August 7, 1992). By letter dated August 14, 1992, St. Mary's notified AHCA that it believed an error had been made in the fixed need pool projection for adult open heart surgery programs in HRS District IX. This letter was hand delivered to AHCA on August 14, 1992, within the ten days required by the fixed need pool publication. All of the parties to this proceeding agree with St. Mary's that the numeric need formula in Rule 10-5.033(7), Florida Administrative Code (subsequently, renumbered as Rule 59C-1.033(7), showed a need for one additional adult open heart surgery program in District IX, except that AHCA determined that the provisions of subsection 7(a)2. were not met. St. Mary's letter also asserted that there was evidence that all existing adult open heart surgery providers performed in excess of 350 adult open heart surgery operations during the applicable base period calendar year 1991. The minimum of 350 operations in each existing program is an additional prerequisite to the publication of need for a new open heart surgery program in subsection 7(a)2. of Rule 59C-1.033, which the parties refer to as a "default" provision. The default provision is invoked in this case because JFK reported fewer than 350 operations. The subsection provides that a new adult open heart surgery program will not normally be approved if: One or more of the operational adult open heart surgery programs in the district that were operational for at least 12 months as of 6 months prior to the beginning date of the quarter of the publication of the fixed need pool performed less than 350 adult open heart surgery operations during the 12 months ending 6 months prior to the beginning date of the quarter of the publication of the fixed need pool. (Emphasis added). In its letter of August 14, 1992, St. Mary's stated that: According to the information provided by JFK to the local health council JFK performed 347 adult open heart surgery operations during the applicable base period (calendar year 1991). Notwithstanding the data reported by JFK to the local health council, data obtained from the Health Care Cost Containment Board for the same 12 month period reflects a total of 356 adult open heart surgery discharges from JFK. All parties agree that for calendar year 1991, JFK Medical Center, Inc. ("JFK"), reported a total of 356 discharges within DRG's 104 through 108 to Florida's Health Care Cost Containment Board and, for the same period of time, JFK reported 347 adult open heart surgery operations to the Treasure Coast Health Council, Inc. Based on the data provided by JFK to the HCCB, St. Mary's requests that AHCA enter a final order finding that there is a need for one additional open heart surgery program in District IX in the September, 1992 review cycle. The determinative factual issue, in this proceeding, is whether the term "discharge" is equivalent to the term "operation" and, if it is, should the HCCB data be accepted as more reliable than the Health Council data. The term "open heart surgery operation" is defined by Rule 59C- 1.033(2)(g), Florida Administrative Code, to mean: Surgery assisted by a heart-lung by-pass machine that is used to treat conditions such as congenital heart defects, heart and coronary artery diseases, including replacement of heart valves, cardiac vascularization, and cardiac trauma. One open heart surgery operation equals one patient admission to the operating room. Open heart surgery operations are classified under the following diagnostic related groups (DRGs): DRGs 104, 105, 106, 107, 108, and 110. (Emphasis added). The definition of "open heart surgery operation" was also considered in Humhosco, Inc. v. Department of Health and Rehabilitative Services, 14 FALR 245 (DOAH 1991). The hearing officer found that: [D]iagnostic related groups, or "DRGs," are a health service classification system used by the Medicare System. The existing rule does not include the reference to DRG classifications. Some confusion had been expressed by applicants as to whether certain organ transplant operations which utilized a bypass machine during the operation should be reported as open heart operations or as organ transplantation operations. The amendment was intended to clarify that only when the operation utilizes the bypass machine and falls within one of the enumerated categories should it be considered an open heart surgery operation. The inclusion of the listed DRGs was meant to clarify the existing definition by limiting the DRG categories within which open heart surgery services may be classified. There is no dispute that the primary factor in defining an open heart surgery procedure is the use of a heart-lung machine. Florida Hospital argued that the proposed definition is ambiguous and vague because not all procedures which fit into the listed DRG categories necessarily involve open heart surgery. Florida Hospital's fear that the new language would seem to indicate that each procedure falling into the listed DRGs qualifies as an open heart surgery operation is unfounded. While the provision could have been written in a simpler and clearer manner, the definition adequately conveys the intent that the use of a heart-lung bypass machine is an essential element to classify an operation as open-heart surgery. Humhosco, supra, at 255. (Emphasis added).
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Agency for Health Care Administration enter a final order determining that the fixed need pool publication, dated August 7, 1992, for Department of Health and Rehabilitative Services District IX for the July 1994 planning horizon is accurate. DONE and ENTERED this 22nd day of December, 1992, at Tallahassee, Florida. ELEANOR M. HUNTER Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 22nd day of December, 1992. APPENDIX Both parties have submitted Proposed Recommended Orders. The following constitutes my rulings on the proposed findings of fact submitted by the parties. The Petitioner's Proposed Findings of Fact Proposed Finding Paragraph Number in the Findings of Fact of Fact Number in the Recommended Order Where Accepted or Reason for Rejection. Accepted in Findings of Fact 5 and 6. Subordinate to Findings of Fact 13. Accepted in Findings of Fact 11, conclusion rejected in Findings of Fact 13-15. Accepted in Findings of Fact 15, conclusion rejected in Conclusions of Law 18-19. Rejected in Conclusions of Law 17-19. Rejected in Findings of Fact 13-15. Accepted in Conclusions of Law 1. Accepted in Findings of Fact 7 and 9. Accepted in Findings of Fact 7 and 9. Accepted, in part, and rejected, in part in Findings of Fact 10 and 11. Rejected in Findings of Fact 11 and 13-15. The Respondent's Proposed Findings of Fact Proposed Finding Paragraph Number in the Findings of Fact of Fact Number in the Recommended Order Where Accepted or Reason for Rejection. Accepted in Findings of Fact 5. Accepted in Findings of Fact 5. Accepted in Findings of Fact 6. Preliminary Statement Accepted in Preliminary Statement. Accepted in Preliminary Statement. Accepted in Preliminary Statement. Accepted in Preliminary Statement. Accepted in Preliminary Statement. Accepted in Findings of Fact 7 and 9. Accepted in Findings of Fact 10 and 11. Accepted in relevant part in Findings of Fact 4. Subordinate to Findings of Fact 9 and 11. Subordinate to Findings of Fact 7. Subordinate to Findings of Fact 12. Subordinate to Findings of Fact 12. Subordinate to Findings of Fact 12. Subordinate to Finding of Fact 11. Accepted in Conclusions of Law 17. Accepted in Findings of Fact 13-15. Accepted in Findings of Fact 13-15. COPIES FURNISHED: W. David Watkins, Esquire Oertel, Hoffman, Fernandez & Cole, P.A. 2700 Blair Stone Road Tallahassee, Florida 32301 Lesley Mendelson, Esquire Agency for Health Care Administration 2727 Mahan Drive Tallahassee, Florida 32308 Byron B. Mathews, Jr., Esquire 201 S. Biscayne Boulevard Suite 2200 Miami, Florida 33131 Gerald M. Cohen, P.A. Steel Hector & Davis 4000 Southeast Financial Center Miami, Florida 33131-2398 Robert A. Weiss, Esquire John M. Knight, Esquire Parker, Hudson, Rainer & Dobbs The Perkins House 118 N. Gadsden Street Tallahassee, Florida 32301 Sam Power, Agency Clerk Agency for Health Care Administration The Atrium, Suite 301 325 John Knox Road Tallahassee, Florida 32303 Harold D. Lewis, General Counsel Agency for Health Care Administration The Atrium, Suite 301 325 John Knox Road Tallahassee, Florida 32303
The Issue Whether there is need for a new Pediatric Heart Transplant program in Organ Transplant Service Area (OTSA), 4 and, if so, whether Certificate of Need (CON) Application No. 10421, filed by Variety Children’s Hospital, d/b/a Nicklaus Children’s Hospital (NCH,) to establish a Pediatric Heart Transplant program, satisfies the applicable statutory and rule review criteria for award of a CON to establish a Pediatric Heart Transplant program at NCH.
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, NCH NCH, formerly Miami Children's Hospital, was established in 1950 by Variety Club International. NCH is South Florida’s only licensed specialty hospital exclusively for children, with more than 650 attending physicians and 130 pediatric subspecialists. NCH has 289 licensed beds, of which 218 are acute care, 20 are child psychiatric, 21 are Level II neonatal intensive care unit (NICU), and 30 are Level 3 NICU. NCH is part of the Miami Children’s Health System, a not- for-profit corporation. NCH does not deliver any babies. Thus, many children that have been treated at NCH have been referred to NCH based upon its excellent reputation in the community. NCH is continually recruiting additional physicians in order to expand the pediatric subspecialty coverage it is able to offer. Dr. Leonard Feld, the President of Pediatric Specialists of America (NCH’s employed physician group), came to NCH a little over a year ago, after a distinguished clinical and administrative career involving pediatric kidney transplant. He was drawn to NCH because of the depth and breadth of the existing medical staff and the administration’s commitment to advance the field of pediatric medicine through innovation and subspecialization. Dr. Feld is responsible for ensuring NCH’s quality of care from a medical perspective. He is confident NCH will implement a world-class PHT program if its CON is approved. NCH has several nationally-recognized subspecialty programs, including eight programs listed by U.S. News and World Report as Top 50 Programs, and two Top 10 Programs. NCH’s pediatric cardiac surgery program is currently ranked 40th by U.S. News and World Report, but this number is artificially suppressed because NCH does not provide heart transplants. NCH is the highest ranked cardiac program on the U.S. News and World Report ranking that does not have a PHT program. NCH is a leader in clinical research, with its staff being published in over 800 medical journals in the last half dozen years, over 200 ongoing clinical trials, and 49 active cardiac studies. NCH’s Accreditation Council for Graduate Medical Education (ACGME) accredited pediatric residency and fellowship program is the largest in the southeastern United States, and has a 95-percent, first-time Board pass rate, which is a testament to its quality. NCH is focused on providing pediatric patients in Miami-Dade County with the right care, in the right setting, at the right time. To this end, NCH has expanded its urgent and ambulatory care centers throughout Miami-Dade County to ensure that patients have convenient access to pediatric outpatient and subspecialty care. NCH is a world-renowned, international heart center. NCH’s cardiac team has cared for children from 39 countries and has performed 4,643 open-heart operations since 1995, more than any other program in Florida. NCH has invested hundreds of millions of dollars in creating a telehealth program to allow access to pediatric subspecialists in areas where subspecialists are in short supply. NCH’s transport team, which consists of six ambulances and two helicopters owned by NCH and additional contracted transports, such as fixed wing aircraft, transports approximately 3,000 children per year. Recently, the transport team received the field’s most prestigious honor when it was named the Association of Air Medical Services’ Neonatal Transport Team of the Year. NCH has established relationships with Lee Memorial Health System, in Lee County, and Jupiter Medical Center, in Palm Beach County. These relationships will create access portals for transplant if NCH’s CON application is approved. NCH’s excellent reputation and excellent outcomes have made it the largest pediatric cardiac surgery program in the state, performing 25 percent of all pediatric cardiac surgeries in Florida. In OTSA 4 and Miami-Dade County, NCH is the overwhelming provider of choice, performing 62.2 percent of the pediatric cardiac surgeries in OTSA 4 and 72.7 percent of those in Miami-Dade County. It is noteworthy that the pediatric cardiac surgery program at NCH has a higher surgical volume than any of the four existing Florida PHT centers. NCH is on the forefront of technology and innovation. NCH physicians have pioneered surgical techniques and developed pediatric surgery tools and equipment used throughout the industry. NCH also has found innovative ways to use existing technology to improve care. For example, NCH uses social media to improve communication between families and caregivers, uses 3D printed hearts and virtual reality to better plan surgeries, posts real-time outcomes on the Internet for transparency, and photographs and digitally records every cardiac surgery to eliminate guesswork in the event of future surgeries on the same patient. NCH’s cardiac programs operate on the most challenging cases, including, in some instances, when other providers have determined the patient was inoperable and terminal. In 2016, NCH opened a six-story, state-of-the-art advanced pediatric intensive care tower. Technical advances located in the new tower include an intraoperative MRI, which allows the physicians to take an MRI without moving the patient from the operating room table, and one of the most advanced cardiac catheterization laboratories in the country, which allows NCH to perform pediatric heart catheterizations that cannot be performed in other hospitals. NCH has a robust pediatric cardiology physician team, including 14 pediatric cardiologists, five pediatric cardiac intensivists, and three pediatric cardiac surgeons. Either during training or prior to coming to NCH most, if not all, of these physicians have had experience working in hospitals with pediatric transplant programs, and all of them are currently exposed to patients at NCH that are candidates for heart transplant. NCH’s Chief of Pediatric Medicine, Dr. Redmond Burke, is a Harvard-trained pediatric cardiac surgeon who has been instrumental in many advances in pediatric cardiac surgery. He performed the first endoscopic cardiac surgery and the first casual ring division. He invented the venous pole circuit, a less invasive, less traumatic form of cardiopulmonary bypass, and he also invented the first portable extracorporeal membrane oxygenation (ECMO) machine to transport critically ill patients to NCH for care. Dr. Burke has been a pioneer in pediatric cardiac surgery technology. Dr. Hannan, another one of NCH’s pediatric cardiac surgeons, also trained at Harvard Medical School. He has performed approximately 2,000 open-heart operations at NCH. He was part of the team that created the Society of Thoracic Surgeons (STS) database reporting program, revolutionizing outcome monitoring in pediatric cardiac surgery. Recently, NCH recruited a third pediatric cardiac surgeon, Dr. Kristine Guleserian, who is one of the highest volume pediatric heart transplant surgeons in the country. Dr. Guleserian trained at Harvard Medical School. Dr. Guleserian is a world-renowned pediatric heart transplant and cardiac surgeon. In 2006, she performed the world’s youngest surviving combined heart/liver transplant on a three-year-old girl. She has performed 133 pediatric cardiac transplants, including transplant on one of the smallest pediatric patients to ever receive an artificial heart. Dr. Guleserian serves on numerous boards and committees dedicated to improving and advancing the field of pediatric cardiac surgery and heart transplant. Beyond its pediatric cardiac surgeons, NCH has developed the infrastructure of a world-class pediatric cardiac program, including several physicians who are nationally recognized industry leaders in their subspecialties. For example, Dr. Cecilio Lopez is one of the foremost experts in the country in echocardiography. He is currently on the Board of Directors for the American Society of Echocardiography, International Society for the Nomenclature of Pediatric and Congenital Heart Disease, and the Intersocietal Accreditation Commission, and is also the immediate past President of the Society of Pediatric Echo. Dr. John Rhodes is the former director of the cardiac catheterization lab at the world- renowned PHT program at Duke Children’s Hospital and Health Center. He is currently involved in cutting-edge clinical trials that involve the closing of large atrial septal defects and transcatheter valve replacement. Dr. Rhodes’ involvement in all major pediatric cardiac trials allows him to provide his patients with treatment options that other hospitals cannot. Finally, Dr. Anthony Rossi was one the first and is one of the most experienced pediatric cardiac intensivists in the country, and was instrumental in developing the concept of using a dedicated pediatric cardiac intensive care unit (CICU). In addition to the physicians already on staff, NCH has plans to recruit two additional pediatric cardiac intensivists and a pediatric cardiac heart failure specialist. The Intervenor, Jackson Jackson is the public safety net hospital system for Miami-Dade County and has been in existence since 1918. Its mission is centered on a mandate to treat all Miami-Dade County residents regardless of their ability to pay. Its main campus, Jackson Memorial Hospital, includes the Holtz Children’s Hospital (Holtz) and the Women’s Hospital. Pediatric cardiac services provided by Jackson, via Holtz, include PHT and pediatric heart failure, as well as cardiac surgery and cardiology services. Holtz provides services for patients 21 years of age and under through its affiliation with the University of Miami, which provides physician services to JMH. Holtz cares for patients with all types of diseases, including, but not limited to, chronic illness; congenital heart disease; cardiology; cardiovascular, liver, kidney and intestinal disease; burn; trauma; neurology; and solid organ and bone marrow transplantation. Holtz has 373 beds, including 60 Level II NICU beds and 66 Level III NICU beds. The NICU at Holtz cares for the most complex infants, high-risk patients, and births. In addition, Holtz has a 30-bed pediatric intensive care unit (PICU) consisting of individual, separate patient rooms, fully equipped and capable of treating critically ill children. The PICU cares for pediatric pre- and post-operative transplant, cardiac, burn, trauma, and surgical patients, among others. Patients in the PICU have highly acute conditions, frequently requiring ventilator support, ECMO support for cardiac patients, and access to subspecialty care. PICU nursing for the most critical patients is provided on a one-to-one ratio. Adjacent to the PICU on the same floor are two pediatric operating rooms, the pediatric cardiac catheterization laboratory, and the transplant unit. Patients are assigned to the transplant unit based on the type of organ transplanted and the patient’s acuity. Holtz has dedicated pediatric and neonatal pharmacies. Pharmacy, nursing, rehabilitation, and dietary services are provided by specialists in pediatrics and neonatology. Holtz offers a wide variety of child life services, including diversionary techniques to alleviate pain and promote child development and therapies to provide a sense of normalcy in the lives of pediatric patients cared for at Holtz. In addition, Holtz provides pediatric palliative care through its Pedi Pals program which provides care for pediatric patients who are critically ill and have frequent hospitalizations or care needs at home. Services include pain management, bereavement services, and pastoral care as needed or indicated by families. Holtz also provides a Prescribed Pediatric Extended Care program (PPEC) that offers day care type services for children with complex medical conditions, including cardiac patients. This allows the patients’ parents and caregivers the ability to work while their children are cared for in a medically supervised setting. JMH’s transplant program has been in operation for over 45 years. Holtz and JMH provide a wide range of solid organ transplantation in conjunction with the Miami Transplant Institute (MTI) and the University of Miami (UM). MTI is a joint program between JMH and UM, employing nearly 300 people and 40 physicians dedicated to transplantation. It is the third largest transplant program, and the second largest pediatric transplant program, in the United States. In the past year, MTI performed over 420 adult and over 70 pediatric solid organ transplants, all at JMH. Pediatric transplant programs at JMH include heart, kidney, pancreas, kidney/pancreas, liver, lung, intestinal, and multi-visceral. JMH also performs bone marrow transplants. Due to the scope of both pediatric and adult solid organ transplant services offered at JMH, pediatric patients are easily transitioned into adult services for uninterrupted treatment at JMH. PHT recipients will require lifelong care and follow up, frequently retransplantation, and adult services as they age. The cardiothoracic surgery program at JMH has existed for over 50 years. It is multidisciplinary, caring for both children and adults with heart, lung, and mediastinal disease and includes a robust transplant and assistive device program. The program has a team of cardiothoracic surgeons, four of whom have PHT experience. Dr. Eliot Rosenkranz is JMH’s primary pediatric heart transplant surgeon. He has been at JMH since 2000. The PHT team also includes Dr. Matthias Loebe and Dr. Nicolas Brozzi, who both have extensive experience in transplanting solid organ pediatric patients, teenagers, and young adults, and who provide support to Dr. Rosenkranz, whenever needed. JMH has a heart failure program that includes a multidisciplinary team of physicians, nurses, therapists, and other providers who review the best modalities to treat and medically manage patients with heart failure. In addition to cardiology services, the heart failure program includes the cardiac transplant service. JMH’s pediatric heart failure program, led by Dr. Paolo Rusconi, was only the eighth program in the U.S. to be accredited by the Health Care Colloquium, and the only program in Florida to receive such designation for programs demonstrating quality in heart failure patient management. Other cardiac-related services provided at JMH include interventional cardiology, under the direction of Dr. Satinder Sandhu; echocardiography and non-invasive imaging; electrophysiology, diagnostic pediatric and cardiothoracic radiology; and general cardiology. 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 PHT Application Pursuant to Florida Administrative Code Rule 59C- 1.044, AHCA requires applicants to obtain separate CONs for the establishment of each adult or pediatric organ transplantation program, including: heart, kidney, liver, bone marrow, lung, lung and heart, pancreas and islet cells, and intestine transplantations. “Transplantation” is “the surgical grafting or implanting in its entirety or in part one or more tissues or organs taken from another person.” Fla. Admin. Code R. 59A- 3.065. “Heart transplantation” is defined by rule 59C- 1.002(41) as a “tertiary health service,” meaning “a health service which, due to its high level of intensity, complexity, specialized or limited applicability, and cost, should be limited to, and concentrated in, a limited number of hospitals to ensure the quality, availability, and cost effectiveness of such service.” AHCA rules define a “pediatric patient” as “a patient under the age of 15 years.” Fla. Admin. Code R. 59C-1.044(2)(c). However, the United Network for Organ Sharing (UNOS), which regulates, monitors, and reports organ transplant and procurement data, defines pediatric patients as the age group 0–17. The STS, which reports risk-adjusted cardiac surgery data, also defines pediatric patients as the ages 0–17. As a practical matter, none of the clinicians that testified for either party limited their definition of pediatric patients to ages 0–15. Heart transplantation is considered a last resort for patients with end-stage heart disease who may have no other medical or surgical therapies available. Typically, persons listed for heart transplantation have a life expectancy of less than one year. These patients often have significant limitations of their activity and lifestyle prior to transplantation. At hearing, the cardiologists who testified agreed that whenever possible, PHT should be delayed as long as medically possible, since transplanted hearts typically have a limited, yet greatly variable period of viability, ranging from under a year to possibly decades. However, in any event, retransplantation is frequently necessary. The two most common causes of end-stage heart disease requiring a transplant in children are cardiomyopathy, which is a progressive deterioration of the function of the heart muscle, and congenital heart defects that are not amenable to further surgical correction. The conditions that require heart transplantation in children are different across age cohorts (and from adults). Infants or neonates requiring transplantation typically have congenital heart defects that require surgical intervention relatively soon after birth. These conditions are typically dealt with anywhere from infancy to seven or eight years of age. With the older pediatric age group (eight years of age to adolescence), the indications for transplant are different. Many children are perfectly healthy until then, and then contract a serious illness, such as viral cardiomyopathy. In this condition, the heart enlarges and children develop restrictive cardiomyopathy, leading to sudden heart failure or progressive decline of their function, ultimately requiring a transplant. ECMO, also known as extracorporeal life support (ECLS), is an extracorporeal technique of providing both cardiac and respiratory support to persons whose heart and lungs are unable to provide an adequate amount of gas exchange to sustain life. Generally it is only used in the later treatment of a person with heart or lung failure as it is solely a life- sustaining intervention. Congress, through the National Organ Transplant Act, established the Organ Procurement Transplant Network (OPTN) to manage a national list of organ donors and available organs, along with the collection of data regarding organ transplant. OPTN administers these duties through a contract with UNOS. Patients exhibiting symptoms of possible heart failure are referred to the heart failure team for initial evaluation. The evaluation includes assessment of the patient’s medical history and anatomy, imaging, and review of alternative treatments to transplantation by various medical specialists. Because the goal recognized by most physicians is to delay or avoid PHT, in many cases, patients are not listed for PHT or may be removed from the waitlist when continued medical management or other palliative surgical intervention is proper. If PHT is required, patients and their parents will meet with the PHT surgeon to discuss the procedure. All information from the assessment is reviewed by the multidisciplinary transplant review committee, which includes pertinent medical and surgical specialists, social workers, financial counselors, and other members necessary for decision- making. Upon approval by the transplant committee, and consent from the patient’s family, patients are listed with UNOS according to severity of disease, how soon the patient will require a new organ, and the expectation of their survival without a new organ. Donor information, including donor location/region, blood type, age, donor size, and other factors that are used to identify potential organ matches, is provided by the donor hospital to the organ procurement agency. When a potential match is identified, the recipient hospital with the highest priority patient is provided the donor information or provided an “offer.” At that time, the recipient hospital reviews the donor information to confirm whether the organ is appropriate for the matched recipient. In some infrequent circumstances, a donor is not appropriate due to both the condition of the donor and the condition of the recipient. If the donor is appropriate, the process for the transplant procedure begins. 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 program at issue in this proceeding will be located in OTSA 4, which is comprised of Broward, Collier, Miami-Dade, Monroe, and Palm Beach Counties. For purposes of CON review, Florida is divided into 11 health planning districts. § 408.032(5), Fla. Stat. The CON at issue in this proceeding will be in District 11. Currently, there are two providers of PHT in OTSA 4: DiMaggio and Jackson. As discussed below, historically Jackson’s PHT volumes have been extremely low. Jackson is located in District 11. DiMaggio is located in District 10. In addition to these two programs, there are only two other PHT providers in Florida: UF Health Shands Hospital (Shands), located in Gainesville, OTSA 1, District 3; and Johns Hopkins All Children’s Hospital (All Children’s) located in St. Petersburg, OTSA 2, District 5. 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 0-17) heart transplant discharges by year for the four Florida PHT programs during Calendar Years (CY) 2013 through 2015: HOSPITAL HEART TRANSPLANT CY 2013 CY 2014 CY 2015 All Children’s Hospital 7 14 9 UF Health Shands Hospital 6 8 9 Memorial Regional Hospital 5 5 5 Jackson Health System 2 2 1 Total 20 29 30 History and Utilization of Existing Providers of PHT in OTSA 4 The Jackson Program At JMH, the surgical component of a PHT is a small piece of a very complex process. The critical components of the PHT process, managed by the cardiology and heart failure team at JMH, include timely referral for transplant, heart failure and transplant evaluation, pre- and post-operative transplant care (inpatient and outpatient), heart transplantation, and lifelong immunosuppression management. JMH is approved by OPTN and UNOS to provide PHT. JMH’s adult and PHT programs are certified by the Centers for Medicare and Medicaid Services (CMS) under a single certification. Certification with CMS requires OPTN membership and regulation compliance. Jackson has a long history of running extremely low- volume pediatric and adult transplant programs, and has had a series of regulatory violations stemming from its failure to support and grow its adult and pediatric transplant programs, the consequence of which includes being under a federal Medicare/Medicaid System Improvement Agreement. For several years, Jackson was unable to meet the Children’s Medical Services’ volume thresholds for a pediatric cardiac program, resulting in the program being placed on probation. The evidence demonstrated that currently and historically, Jackson has not performed 90 “on-pump” (heart/lung bypass) pediatric heart surgeries on an annual basis. Jackson’s transplant volume for young children, infants, and neonates is nearly nonexistent. Jackson has not done a transplant on a patient under 30 days of age since 1998. Since 2007, Jackson has done no transplants on patients aged one to five. In the past six years, Jackson has only done five transplants on patients under 10 years of age. Unlike NCH, Jackson is concentrated on providing cardiac surgery primarily to adults. In CY 2015, JMH had 37 pediatric (age 0-17) cardiac surgery cases, representing only 3.9 percent of its total cases. By contrast, during the same period NCH had 201 pediatric cardiac surgery cases, representing 21.2 percent of its total cases. The difference in focus between JMH and NCH is even more pronounced when it comes to cardiac surgeries on neonates. In 2016, NCH did 200 on-pump pediatric cardiac surgeries, of which 52 were performed on neonates, meaning neonates accounted for 26 percent of NCH’s on-pump cases. During the same period, Jackson only performed 42 on-pump cases, of which only seven were neonates, meaning neonates only accounted for 16 percent of Jackson’s on-pump cases. Jackson is also performing about two times the national average in terms of the percentage of its cases that are performed on adult patients. Performing pediatric cardiac surgery on neonates is typically more complex than performing congenital heart defect surgery on adult patients. Jackson only has one pediatric cardiac surgeon. Jackson advised Children’s Medical Services it intended to recruit a second pediatric surgeon in 2012, but this did not occur. Jackson’s low cardiac surgery and transplant volumes make it difficult, if not impossible, for it to recruit a highly skilled pediatric cardiac and transplant surgeon. Dr. Rosenkranz testified that there is no need to recruit a second pediatric heart surgeon. Jackson and NCH treat very different universes of patients. Jackson has not performed a PHT on a Miami-Dade County resident in the last three years; whereas, NCH performs 73 percent of the pediatric cardiac heart surgeries for Miami- Dade County residents and expects a significant percentage of its transplant cases to come from this patient population. Jackson concentrates predominantly on pediatric cardiomyopathy cases. NCH is more focused on pediatric congenital heart defects and anticipates these patients will represent a significant portion of its transplant patients. Jackson’s patients tend to be older patients, whereas a significant percentage of NCH’s patients are neonates and infants. In pediatric cardiac surgery, 25 percent of NCH patients are neonates (under 30 days), and 30 percent are infants (31 days to one year). Jackson has not done a transplant on a neonate since 1988. In fact, Jackson has only performed three transplants on infants and no transplants on any patients between one and five years old since 2008. Jackson tends to be risk averse, whereas NCH treats the most complex patients. For example, Jackson has not had a single transplant patient on ECMO, whereas, based upon NCH’s 20 years of historical data, it expects to have a pool of approximately 10 patients a year on ECMO that may benefit from transplant. In August 2011, AHCA sent JMH a letter advising JMH that it had abandoned both its pediatric heart and pediatric lung transplant programs due to not performing a single pediatric heart or lung transplant for over twelve consecutive months in 2010. The letter, addressed to JMH’s President and CEO, stated: Re: Abandonment of Pediatric Heart Transplant Program Dear Mr. Migoya: In the course of our regular data collection and analysis responsibilities, Agency staff has confirmed that your pediatric heart transplant program has been idle, i.e. no transplants have been performed, for a period in excess of 12 consecutive months, from January 2010 through December 2010. Accordingly, pursuant to Certificate of Need rule sections 59C-1.002(41)(a),59C-1.004(1}, 59C-1.0085(5), and 59C-1.020 Florida Administrative Code, and section 408.036(1), Florida Statutes, the re-establishment of a pediatric heart transplant program in the future will require a new certificate of need. The program will be removed from the Agency's inventory of authorized transplant programs. Within 14 days of receipt of this letter, please advise this Agency if the above findings are inaccurate. Should you have any questions regarding this request, please contact Steve Love of my office at (850)412- 4345. Sincerely, /S/ Jeffrey N. Gregg, Chief Bureau of Health Facility Regulation (NCH Ex. 46). Following receipt of the above letter, JMH drafted a response in which JMH did not take issue with the accuracy of the data cited in AHCA’s letter. Rather, JMH’s letter recited the reasons for its low PHT volume, including “low regional volumes, financial challenges in the system resulting in bad publicity, and intense competition from a new start-up program . . . .” It is unclear whether the draft response was ever sent to AHCA, however, no witness at hearing disputed the accuracy of the data contained in AHCA’s letter. AHCA’s representative, Marisol Fitch, testified that the letter did not revoke or rescind JMH’s CON, which is evidenced by the fact that AHCA did not notify JMH of its right to dispute a revocation or rescission pursuant to chapter 120, Florida Statutes. Ms. Fitch further advised that there was no final order revoking JMH’s CON, nor had it ever been voluntarily surrendered by JMH. Either of these actions would have been required to delete services from the program inventory. According to AHCA, JMH has an active PHT program, is currently listed in AHCA’s inventory of PHT programs, and at no time has AHCA taken further steps to terminate JMH’s PHT license. At hearing, and again in its PRO, JMH objected to the legal status of its PHT program being placed at issue in this proceeding. JMH is correct that this proceeding is not concerned with the validity of JMH’s PHT license, however, consideration of the past volumes of PHT being provided at JMH and AHCA’s documentation of periods of time when no PHTs were provided, is relevant to the statutory review criteria to be applied to the NCH application. The DiMaggio Program DiMaggio is also licensed to perform PHT services within OTSA 4. DiMaggio is part of the Memorial Healthcare System (Memorial) in Broward County, Florida. DiMaggio offers pediatric and adult congenital heart surgery and PHT. DiMaggio also offers a heart failure program that includes both medical management and surgical services. Adult heart transplant is also offered by Memorial on the same campus. DiMaggio received its CON for PHT services in 2009 and received UNOS approval in 2010, performing its first transplant in December 2010. DiMaggio has provided PHT related services and heart failure management since that time. DiMaggio’s PHT surgeon is Dr. Frank Scholl and its pediatric heart failure program is led by Dr. Maryanne Chrisant. During CY 2013 through CY 2015, Memorial performed five PHTs each year. The Proposed NCH Program As noted, NCH proposes to establish a PHT program on its hospital campus in Miami, OTSA 4, District 11. Due to its robust pediatric cardiac program, NCH already has most of the infrastructure in place to support the transplant program. NCH has a staff of pediatric cardiac physicians with expertise in caring for patients with end-stage diseases requiring transplants, clinical staff and nurses with experience caring for chronically ill children and families, nutritionists, respiratory therapists, social workers, psychologists, and psychiatrists. The NCH staff and physicians are available on a 24-hour basis at NCH’s dedicated cardiac intensive care unit. NCH also has educational and training opportunities available for staff, patients, and families. NCH has a very well trained and experienced nursing staff, many with advanced certifications and specialized pediatric training. NCH has an excellent nurse training program in place to grow the skills of its nursing staff. NCH has been an American Nurses Credentialing Center (ANCC) Magnet Program institution for three consecutive years, a statistic only seven percent of hospitals across the country have been able to achieve. NCH uses cardiac-dedicated nurses to care for its cardiac patients, and only uses dedicated cardiac advanced registered nurse practitioners to care for post-surgical cardiac patients in its dedicated CICU. NCH’s dedicated CICU has recently been relocated to the new advanced pediatric intensive care tower. There are distinct advantages to having a dedicated CICU when it comes to caring for complex cardiac patients, including transplant patients. It allows NCH to have extremely seasoned physician cardiac intensivists, cardiac nurse practitioners, cardiac nurses, and other support staff such as dieticians and social workers, who treat a high volume of pediatric cardiac surgery patients and understand their unique issues and complications. The constant exposure to complex cardiac patients allows NCH’s team to recognize complications sooner and react quicker, resulting in better care and shorter lengths of stay. In contrast to NCH’s dedicated pediatric CICU, Jackson does not have a dedicated CICU. Heart transplant patients are placed in the same ICU as all other pediatric critical care patients. The cardiac surgeons at NCH use innovative technology to improve their patients’ outcomes and reduce patients’ length of stay in the hospital. One way NCH has earned its reputation for excellence is by operating on the toughest cases. NCH is the place where patients turn when other hospitals refuse to operate because the case is too complex. NCH is willing to take “hits” to its mortality/morbidity statistics to give the sickest patients a chance to live. Despite having the highest volume of pediatric cardiac surgeries in Florida, NCH cannot perform PHT on its patients. These patients and their families must choose to continue alternative treatment at NCH, or be transferred away from their team who has been caring for them through the events that led up to the transplant, which often includes multiple prior heart surgeries. It is difficult on patients and families to lose continuity of care at this stage in their disease process. While Jackson raised some criticisms of NCH not having an adult cardiac program for continuity of care after patients reach adulthood, the evidence shows the largest and best pediatric heart programs in the United States are often located in pediatric-only programs, with no immediately available adult programs. Dr. Rhodes and Dr. Guleserian testified that even at places like Duke and Texas Children’s that have adult programs, the two programs are completely separate. Moreover, NCH has a relationship with the Cleveland Clinic to transition patients when they need an adult program. Dr. Rhodes also refuted JMH’s claim that there needed to be a back-up adult interventional cardiologist on-site to run a quality interventional program. This is contrary to the Society of Cardiac Angiography and Intervention’s recommendation. Further, Dr. Rhodes performs catheterizations on adults and has this training should it be necessary. There are also other adult interventional cardiologists on staff at NCH. Jackson also argued NCH’s program would be inferior because NCH does not offer other solid organ transplant services. However, as Dr. Guleserian explained, kidney and liver transplants are very different than heart transplants. Even in hospitals where both heart and other solid organ transplants are offered, the heart program is separated because it is unique. Heart transplant patients are much more similar to cardiac surgery patients than other solid organ transplant patients. Dr. Guleserian does not endorse comingling heart transplant patients with other solid organ transplant patients. After evaluating NCH’s existing cardiac infrastructure, Cassandra Smith-Fields, accepted as an expert in transplant program development and operation, concluded that NCH had everything necessary to establish a PHT program, with the exception of recruiting a heart failure specialist. Ms. Smith- Field’s expert opinion, which is credited, and is based on 32 years of professional experience working in transplant programs, is that NCH will be able to implement a high-quality PHT program. AHCA’s Preliminary Decision Following AHCA’s review of NCH’s application, as well as Jackson’s written Letter of Opposition, AHCA determined to preliminarily deny the application. The Agency’s decision was memorialized in a SAAR, dated February 19, 2016. The SAAR is mostly a restatement of the information presented in the NCH application. There is only one paragraph in the entire document that purports to explain why the Agency chose to preliminarily deny the application: The Agency indicates that OTSA 4 has relatively low but stable pediatric heart transplant volume for the four-year period ending June 30, 2015 and no outmigration for the 12-month period ending June 30, 2015, therefore it is reasonable to conclude that a third provider in OTSA 4 would likely reduce already relatively low volumes at the existing pediatric heart transplantation provides in OTSA 4. Marisol Fitch, supervisor of AHCA’s CON and commercial-managed care unit, testified for the Agency. 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 that they present to the Agency for our analysis.” In addition to the applicant’s need methodology, “we (AHCA) look at availability and accessibility of service in the area to determine whether there is an access problem.” With respect to whether NCH had demonstrated need for its PHT program, Ms. Fitch testified: The Agency did not feel that the applicant demonstrated need for the project in organ transplant area four. We did not find that there was an underserved population or that there were financial issues at stake or a quality issue, and so we did not feel that the applicant demonstrated that need for the project was produced within the four corners of the application. Statutory Review Criteria Section 408.035(1)(a): The need for the health care facilities and health services being proposed. The statutory criteria for the evaluation of CON applications, including applications for organ transplantation programs, are set forth at section 408.035, Florida Statutes, and rule 59C-1.044. However, neither the applicable statutes nor rules have a numeric need methodology that predicts future need for PHT programs. Thus, it is up to the applicant to demonstrate need in accordance with rule 59C-1.044. To quantify the need for a new PHT program in District 11, NCH used the two need methodologies described in detail below. Methodology 1: Ratio of Transplants to Cardiac Surgeries NCH’s first need methodology evaluates the ratio of PHT volume at the four existing Florida transplant centers to the volume of pediatric cardiac surgeries. It then applies this ratio to NCH’s cardiac surgery volume to determine the internal demand for this service at NCH. There is a positive correlation between the number of pediatric cardiac surgeries and the number of PHTs. The more pediatric cardiac surgeries a hospital performs, the more need there will be for PHTs. Conversely, low-volume pediatric cardiac surgery providers, such as Jackson, are also low-volume PHT providers. Using data from STS and UNOS, NCH determined that during CY 2014: All Children’s Hospital performed 146 cardiac surgeries and 14 transplants for a percentage of 9.6%; UF Health Shands Hospital performed 84 cardiac surgeries and 8 transplants for a percentage of 9.5%; Memorial Regional Hospital performed 61 cardiac surgeries and 5 transplants for a percentage of 6.0%; and Jackson performed 55 cardiac surgeries and 2 transplants for a percentage of 3.6%. The above data strongly suggests there is a correlation between the number of pediatric cardiac surgeries performed and the number of transplants performed. This correlation is supported by AHCA’s rule 59C-1.044(6)(b)4., which sets forth minimum volume thresholds for pediatric cardiac surgeries (125) and cardiac catheterizations (200), and with data reflecting that nationally, PHT programs are located in hospitals with the largest pediatric cardiac surgery programs. To forecast pediatric cardiac surgical volume in OTSA 4, NCH used AHCA’s CY 2014 discharge rates for OTSA 4 residents and applied those to the forecasted pediatric population for each of the planning years. This resulted in a forecast of 259 pediatric cardiac surgeries for the 12-month period ending June 30, 2018, increasing to 261 cases during the 12 months ending June 30, 2020. Using CY 2014 AHCA data, NCH then determined that it had a 62.2 percent market share of all pediatric cardiac surgeries performed in OTSA 4 on OTSA 4 patients. Applying this market share to the forecasted surgeries, NCH determined that it would perform 161 pediatric cardiac surgeries on OTSA 4 residents during the 12 months ending on June 30, 2018; 162 during the 12 months ending on June 30, 2019; and 163 during the 12 months ending on June 30, 2020, i.e., more than any other provider is currently performing. NCH assumed a 25 percent in-migration percentage, and provided a conservative ramping-up ratio of three percent PHT to cardiac surgery for the 12-month period ending June 30, 2018; six percent for the 12-month period ending June 30, 2019; and seven percent for the 12-month period ending June 30, 2020. The assumption used is significantly lower than All Children’s or Shands’ ratios, despite the fact that NCH is forecasted to have significantly more pediatric cardiac surgeries than either of those two hospitals. Applying these conservative assumptions, NCH could reasonably expect to perform six PHTs for the 12-month period ending June 30, 2018; 14 for the 12-month period ending June 30, 2019; and 15 for the 12-month period ending June 30, 2020. Jackson criticized NCH’s surgical ratio analysis, pointing out that AHCA defines pediatric as 0-14, not 0-17. However, as discussed above, STS and UNOS define pediatric as 0-17. Thus, the use of this age group is appropriate when considering the likely patients to be served. Moreover, the difference in the results using 0-14 data, versus 0-17 data, is de minimus. As a result of Jackson’s criticisms, NCH’s health care planner re-ran her analysis using 0-14 AHCA data. This resulted in almost the same outcome, with six PHTs projected for the 12-month period ending June 30, 2018; 13 for the 12-month period ending June 30, 2019; and 15 for the 12-month period ending June 30, 2020. Jackson’s argument that there is no positive correlation between the number of pediatric cardiac surgeries performed and the number of PHTs likely to accrue from that surgical volume is rejected. While there is a not a specific ratio, or “magic” number which can be reliably applied to each institution, there is a range within which the ratio of cardiac surgery to PHTs will fall. According to Dr. Gulesarian, whose testimony is credited, for any particular institution, that ratio will likely vary from year to year depending upon a number of variables, most importantly, the complexity of the cardiac surgeries being performed. Specifically, the more complex and higher risk the surgeries, the more likely a heart transplant will be necessary. Methodology 2: Ratio of Transplant Volume to Common Indicators NCH’s second need methodology evaluates the most common indications for PHTs and compares that to the cases by hospital and resident origin to determine the need for a PHT program at NCH. To do this, NCH’s health care planner worked with NCH’s physicians to compile a list of the 24 most common indicators for PHT, and to determine their corresponding International Classification of Disease, 9th Revision (ICD-9) codes. Using AHCA data, NCH then determined that in 2014, there were 499 pediatric cases in Florida with the target ICD-9 codes. NCH had the most cases with 121, constituting 24.2 percent of all cases in Florida. The second greatest, All Children’s, only had 66, constituting 13.2 percent. In OTSA 4, for the years 2012–2014, NCH had a total of 296 patients with these common indicators, accounting for 55.6 percent of the volume for all OTSA 4 hospitals. Notably, the two existing PHT providers in OTSA 4, Jackson and DiMaggio, only had volumes of 51 and 125, respectively, during this same time period. Combined, these two hospitals still had a significantly lower volume of the targeted ICD-9 codes than did NCH. Using AHCA data, NCH then determined that, from 2012 through 2014, an average of 11.2 percent of patients at the four existing transplant hospitals that had a primary diagnosis of one of the identified ICD-9 codes received a transplant. Using just 2014 data, this average was 15.2 percent. This increase was due to DiMaggio, which opened in 2010, increasing from 3.4 percent in 2012 to over 11 percent in 2014. Using NCH’s market share in OTSA 4 and the population forecasts, NCH was able to determine its forecasted volume of patients with these common indicators. NCH then applied a very conservative ramping up ratio of ICD-9 volume to PHTs of five percent in 2018, eight percent in 2019, and 10 percent in 2020 to forecast the number of PHTs NCH could expect. When the above ratios are applied to the expected ICD-9 volumes, the result is six PHTs for the 12-month period ending June 30, 2018; 11 for the 12-month period ending June 30, 2019; and 13 for the 12-month period ending June 30, 2020. At hearing, Jackson criticized NCH’s common indicators methodology, pointing out variability where All Children’s volume of common indicators only went from 64 to 66 between 2013 to 2014, yet the number of transplants doubled from seven to 14. However, as Ms. Greenberg explained, NCH looked at multiyear trends, not a single point in time. A single point in time may have large fluctuations due to things like what occurred at All Children’s: the head pediatric cardiology surgeon left, which shifted patients from All Children’s to Shands. A change in surgery personnel was one of the factors identified by Dr. Gulesarian as potentially affecting PHT volumes. Criticism was also raised regarding NCH’s use of ICD-9, instead of the newer ICD-10, codes because the conversion resulted in the inclusion of certain indicators, e.g., Eisenmenger Syndrome, Coronary Artery Disease, and Ehlers-Danlos Syndrome, as being among the list of most common indicators for heart transplant. NCH’s planner demonstrated that any differences due to the inclusion of these ICD-10 codes was de minimus or nonexistent. Thus, even had the newer codes been used, they would not have materially affected the volume projections for the proposed PHT program. Jackson is correct that both need methodologies put forth by NCH are “institution specific,” and are better characterized as an internal demand analysis than as a need methodology. Neither method identifies either an unserved population or an access issue. Rather, they project a volume of patients NCH anticipates would be available to receive a PHT at NCH if approved. Section 408.035(1)(b): The availability, quality of care, accessibility, and extent of utilization of existing health care facilities and health services in the service district of the applicant. Section 408.035(1)(e): The extent to which the proposed services will enhance access to health care for residents of the service district. Disparity in Use Rates OTSA 4 represents 32 percent of Florida’s pediatric population. The five-county OTSA is home to more than 1.3 million residents age 17 and under. Yet, despite having approximately one-third of the pediatric population, OTSA 4 only provides one-tenth of the state’s PHTs. The chart below presents the PHT use rates in Florida by OTSA for CY 2013 through CY 2015: 1 10.1 11.2 13.3 11.6 2 10.7 5.8 8.6 8.4 3 9.6 15.4 9.3 11.4 4 3.9 3.1 3.1 3.3 Statewide 8.2 8.1 8.0 8.1 Average Use Rates per 1,000,000, Age 0 to 17 OSTA CY2013 CY2014 CY2015 3-Yr Avg (NCH Ex. 75). As can be seen from the above, the three-year average use rate in OTSA 4 (CY 2013 through CY 2015) is 3.3 percent, compared to OTSA 1 at 11.6 percent, OTSA 2 at 8.4 percent, and OTSA 3 at 11.4 percent for the same time period. There was no evidence that there was anything unique about the pediatric patients in Miami-Dade County to justify this disparity in PHT use rates. To the contrary, Dr. Rosenkranz conceded that he did not know of anything that would justify any disparity in the use rate in OTSA 4, and he would expect it to match the rest of Florida: Q. . . . So for those counties in OTA 4, from a clinical perspective, are you aware of anything unique about those counties that would make the prevalence of pediatric heart disease or heart malfunctions that result in transplant any different than any other parts of Florida? A. Nothing that I'm aware of. Q. You would expect it to be similar to other parts of Florida, correct? A. Yes, I would. (NCH Ex. 176; pp. 25). Dr. Rhodes similarly testified there was no clinical reason for the relatively low use rate in South Florida, other than the fact that the largest pediatric cardiac surgery provider in the state (NCH), which is doing 25 percent of the pediatric cardiac surgeries in the state, does not have a PHT program. Dr. Feld echoed these opinions and testified that if NCH’s CON application is approved, with the addition of Dr. Guleserian, NCH will be able to rectify the disparate use rate. Ms. Greenberg testified that the PHT use rate data shows a disparity that would indicate that residents of OTSA 4 have an access issue to PHT because many children are going without the service. On cross-examination, however, she conceded that patients who leave OTSA 4 in order to receive a PHT could also at least partially explain the disparity. But in either case, she concluded, whether it was lack of service or due to out migration, the low use rate indicated an access issue in OTSA 4. The most convincing explanation for the disparate use rate came from Cassandra Smith-Fields who testified that the use rate disparity has resulted from the PHT programs being placed in the wrong hospitals. This opinion was echoed by Dr. Rhodes, who cited data showing that transplant programs across the nation were usually located at high-volume pediatric surgery providers. NCH presented compelling data based upon its sheer volume of pediatric cardiac surgeries that approving NCH’s PHT application will have a substantial impact in resolving the current disparity in PHT use rates. As noted previously, NCH performs 25 percent of all pediatric cardiac surgeries in Florida, 62.2 percent of those performed in OTSA 4, and 72.7 percent of those done in Miami-Dade County. Inability to Transfer NCH Patients on ECMO Several NCH cardiologists testified there are a significant number of their patients that are simply too sick to be transferred from NCH to another facility to receive a PHT. Many of these patients do not even get listed for a heart transplant since they likely would not survive the necessary transfer. Dr. Burke provided 20 years of data showing 275 post- surgical pediatric heart patients that had been placed on ECMO after surgery. One hundred and forty-seven of those children died. While he could not opine as to exactly which of those patients’ lives could have been saved if NCH had been able to offer them a PHT, he testified that each of those children were a potential candidate for a PHT in order to have a chance to save their lives. Dr. Rossi explained the difficulties of moving patients on ECMO. Patients must be chemically paralyzed while on ECMO, because the slightest movement of the patient can cause the cannula to shift, potentially resulting in death. The risk of moving ECMO patients is so serious that when a patient is going to be taken off ECMO, the operation is performed at the patient’s bedside because it is too risky to even move the patient down the hall to the operating room. Dr. Rossi explained that the only time one would ever transport a patient on ECMO is when not moving the patient would result in certain death. Despite NCH’s award-winning transport team, its experience with patients transported on ECMO is that two-thirds of the patients die during the transport. Multiple NCH physicians discussed the inherent dangers of just moving a patient on ECMO down the hall for procedures. While some patients are too sick to transport, they may yet be appropriate candidates for PHT. Approximately five percent of Dr. Guleserian’s transplant patients have been patients transplanted while on ECMO. Ms. Smith-Fields testified that in her program, when there is a high-risk pediatric surgery taking place, the patient will often be pre-cleared as a PHT patient so that if the surgery is not a success, the patient can be supported on ECMO and immediately listed for transplant without any processing delays. While NCH did pioneer a portable ECMO machine to transfer patients on ECMO, it has only been used to bring patients to NCH. Those patients were certain to die if they were not transported on ECMO, and one-third of them lived because of those transports. However, when that risk is contrasted with the risk of transporting NCH patients on ECMO to be listed for PHT, the risk of transport is greater than the risk of waiting to see if the patient recovers on ECMO. Approximately half of NCH’s cardiac surgery patients who go on ECMO after a failed surgery survive. It would not be advisable to take the risk of transport on ECMO because the odds of the patient dying are increased. Credible testimony established that there are significant risks to a patient being transported while on ECMO. Thus, even assuming that transporting a patient on ECMO from NCH to a transplant facility was an option, forcing a patient to accept the high, and potentially fatal, risks of this transport presents a major access issue. Organ Out-migration from OTSA 4 The evidence did not establish that there is currently significant out-migration of PHT patients from OTSA 4 or Miami-Dade to other Florida or out-of-state PHT programs. Considering the risks inherent in transport discussed above, this is not surprising. However, there is a demonstrated out- migration of donor hearts from Florida. During CY 2010 through August 2015, there were 205 pediatric hearts recovered throughout Florida. In 2014, specifically, there were 38 hearts recovered and 29 pediatric heart transplants performed the same year. Because there were more hearts recovered than transplanted in the state, Florida is a net exporter of donor pediatric hearts. At hearing, Jackson asserted that its low volume of PHTs was caused by the lack of viable pediatric hearts to be transplanted in OTSA 4. However, this argument was inconsistent with the SRTR data showing approximately 25 percent of the adult and pediatric donor hearts harvested in Florida in 2015 (41 hearts) were being sent out of state, many to children’s hospitals. The data also reflects that OTSA 4 is a net exporter of donor hearts. To the extent there is any merit to Jackson’s claim about the lack of viable pediatric hearts, however, the evidence also showed that adding PHT programs to an area increases the number of hearts procured in that region. This is known as the “push/pull phenomenon.” As explained by Ms. Smith-Field, the push/pull phenomenon results when the presence of transplant centers within a given donor service area “pushes” the designated organ procurement organizations to a better job of procuring organs. Quality of Jackson’s PHT Program Based upon persuasive evidence presented at hearing, there is a strong positive correlation between the number of pediatric cardiac surgeries a hospital performs and its PHT volumes. Not surprisingly, nationally PHT programs are almost universally located in the hospitals with the highest volume of pediatric cardiac surgery. For procedures such as cardiac surgery, the number of procedures performed directly correlates to the quality of the outcomes. Generally speaking, surgeons and facilities with higher volumes experience higher quality. This volume-outcome relationship is expressly recognized by AHCA in several of its CON rules which require minimum projected volumes, including organ transplantation. Jackson has struggled with low pediatric cardiac surgery volumes since at least 2012, when it was unable to meet the Children’s Medical Services pediatric cardiac volume requirements and was placed on probationary status. The compelling evidence showed that in both its pediatric cardiac surgery program and its PHT program, Jackson has been a chronically low-volume provider. Indeed, it was undisputed that Jackson has the lowest PHT volume in the state. Jackson’s PHT waitlist activity indicates continued low volume. Ms. Smith-Fields compared Jackson’s waitlist additions to her program’s experiences and concluded Jackson’s waitlist additions are not indicative of an active program: And so the other thing I guess that really stood out for me when I looked at this was how many patients were put on the waitlist? So this says that they added two patients to the waitlist in 2014. That's telling me that's not a very active program. In my own program in 2015, where we did 15 transplants, we put 24 candidates on the list that year. Lucille Packard did 20 transplants last year, they put 32. So I just run the ratios, if I put two patients on the list, I am only expecting to do one or two transplants, that's going to keep you being a very small program. Several NCH physicians discussed the correlation between volume and quality, and expressed concerns that Jackson’s PHT program was just too low volume for them to feel comfortable recommending patients go there. Ms. Smith-Fields examined Jackson’s PHT scorecards and had several concerns about the quality of Jackson’s PHT program, including: Jackson taking too long to waitlist patients; having patients on the waiting list too long; and putting patients on inactive status for unusually long periods of time. She agreed that risk aversion is a common phenomenon in small transplant programs. Jackson unconvincingly attempted to explain its perennially low PHT volumes by suggesting that Dr. Rusconi was better at medically managing patients to avoid transplant. In response, Dr. Guleserian testified that all PHT programs do everything they can to medically manage their patients in an effort to avoid transplantation. According to Dr. Guleserian, to believe that Jackson has found some magic formula to avoid transplantation, but is somehow hiding this secretly away from the rest of the transplant world, is not plausible. She explained that she sits on various national committees and boards dedicated to PHT, and if such an approach had been developed with those kinds of results, she would be aware of it. Moreover, there is no evidence of record to suggest that all four Florida PHT programs do not have heart failure programs at least as robust and successful as Jackson’s program. Jackson’s contention that its low PHT volume is the product of a particularly successful heart failure program is not credible. While it is undisputed that PHT should be considered the intervention of last resort, the evidence also established that for some children, there is no alternative to PHT. This is reflected by the fact that in CY 2015 a total of 30 PHTs were performed in the four Florida PHT programs. Whatever the reason(s) for its consistently low PHT volumes, the fact remains that during CY 2010 through CY 2015, Jackson performed a total of only seven PHTs, by far the lowest volume of any of the PHT providers in the state. During this same period of time, the other three Florida PHT programs performed a combined total of 121 PHTs. Given the well- documented relationship between volume and outcome of surgical procedures, Jackson’s low PHT volume alone raises legitimate quality of care concerns. Adverse Impact on Jackson and DiMaggio The evidence demonstrated NCH only rarely refers PHT candidates to Jackson and DiMaggio. Jackson only presented evidence of one potential transfer patient it claimed was referred by NCH in the last several years. However, no specific referring cardiologist was identified, no NCH witnesses corroborated the referral, and no records were produced to corroborate the referral was from NCH. NCH presented evidence of two of its patients that sought transplant at Jackson. One of these patients died without being listed for transplant (despite at least one of the cardiologists at Jackson fighting to get the patient either listed or transferred to Shands), and the other patient ultimately received their transplant at Shands. The consistent testimony from NCH physicians was that they are hesitant to refer PHT patients to Jackson because of its low volume and other perceived quality issues. This is particularly concerning since NCH’s patients represent 60 percent of the pediatric cardiac surgeries performed in OTSA 4, and many of these patients have congenital heart defects that will eventually result in them requiring a PHT. Jackson argued that NCH referring its patients to Shands and All Children’s, rather than Jackson, was the reason why Jackson had been unable to grow its transplant program. Some Jackson witnesses intimated NCH was intentionally sabotaging Jackson’s program by not referring its patients because of prior fallings-out between the hospitals and their physicians. While the evidence showed there had been several failed attempts for NCH and Jackson to work collaboratively with pediatric cardiac patients, it did not show that this was the reason why NCH physicians rarely refer patients to Jackson. Rather, the lack of referrals was based upon quality concerns. Indeed, credible testimony established that NCH physicians are advising their patients about the correlation between volume and quality as documented in the medical literature, resulting in those PHT candidates, who have the financial means and clinical ability to travel, choosing to pursue their PHTs at higher- volume programs. Given, NCH’s dominant market position and quality concerns, these referral patterns do not appear likely to change. The greater weight of the evidence established that approval of the NCH PHT program would have minimal, if any, impact on the volume of PHTs being performed at Jackson. For the same reasons identified with respect to Jackson, approval of the NCH program will likely have minimal, if any, impact on the volume of PHTs performed at DiMaggio. 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. NCH has a demonstrated record of providing quality cardiac services to its patients. NCH’s cardiology and heart surgery program is ranked 40th in the United States by U.S. News and World Report. In addition, NCH has more pediatric programs ranked among “America’s Best” by U.S. News and World Report than any other hospital in Florida. NCH’s dedicated CICU, staffed with a dedicated cardiac team, will be able to provide high quality care for PHT patients. NCH’s cardiac nursing staff has an average of 12 years’ experience caring for heart patients. NCH’s cardiac physicians are all highly qualified, with decades of experience. Jackson alleged quality deficiencies related to NCH’s staffing, clinical review committee, protocols and procedures, laboratory and pathology services, and staff and patient family educational programs. However, none of these alleged deficiencies persuasively shed doubt on NCH’s ability to provide excellent quality of care to its PHT patients. Section 408.035(1)(d): The availability of resources, including health personnel, management personnel, and funds for capital and operating expenditures, for project accomplishment and operation. Short Term Financial Feasibility The parties stipulated to NCH’s ability to initially fund the project. Availability of Health and Management Personnel NCH’s existing management personnel will oversee the proposed project. Given the relatively small size of the project, the existing management staff is more than capable of overseeing and managing this additional program. Based upon its PHT volume projections, which are credible, NCH is expecting its average daily census (ADC) of cardiac patients to increase by only one to two patients a day as a result of the PHT program. NCH currently has a dedicated cardiac clinical staff of 16 to 20 registered nurses, nurse practitioners, and technicians who are more than capable of handling the projected increase in ADC. In addition, NCH currently has eight registered nurses and four advanced nurse practitioners that have dedicated heart transplant experience. Upon approval of the program, NCH will ensure that all staff is properly trained and educated prior to the implementation of the PHT program. This includes the training to prepare both a nutritionist and a transplant coordinator. With the successful recruitment of Dr. Guleserian, who has performed 133 pediatric heart transplants, NCH’s surgeons and other physicians are more than capable of staffing the PHT program. NCH will not have any difficulty recruiting a high- quality heart failure specialist given NCH’s reputation, cardiac surgery volumes and market shares, and reputable physician team already in place. Section 408.035(1)(f): The immediate and long-term financial feasibility of the proposal. As noted, the parties stipulated that NCH has the financial ability to fund the proposed program. As to long-term financial feasibility, NCH has $586 million in net assets with a net operating income of $100 million per year. NCH is well-positioned to absorb any potential losses that the PHT program might incur, and is dedicated to maintaining the program, regardless of profit or loss, due to its commitment to meeting the needs of the community. NCH has a history of funding financially unprofitable programs when there is a critical need for them in the community. An example is NCH’s LifeFlight program, which generates no profit for NCH and, in fact, operates at a $3 million per year loss. Jackson raised issues regarding errors in NCH’s financial schedules attached to the CON application. Ms. Greenberg incorrectly included a full-time physician’s salary in the financial schedule, at the wrong amount. Physicians are not employed directly by NCH and should not have been included. Ms. Greenberg’s third-year financial projection, while correctly listing staffing costs as a line item, failed to include that cost in the final total. However, correcting for these minor errors shows that this program will still be profitable. It is also worth noting that when AHCA is evaluating transplant programs, it looks at the financial health of the entire applicant, not just the program under CON review in a vacuum. As Ms. Fitch explained: THE COURT: Okay. I have heard testimony today, and you may have heard it as well, from Mr. Balsano regarding an addition error that apparently existed on the NCH pro formas. You have testified that the Agency found the project to be financially feasible in the long-term. At the time the Agency made that determination, had that addition error been revealed to the Agency? THE WITNESS: Not that I know of. But I will say, in terms of the Agency, typically we don’t see that transplant programs are necessarily profitable on their own. We do look at the entire system to determine whether a facility can maintain a program. We have seen a number of programs come in that, on their own, are not financially feasible but in an entire health system, it is a feasible feat for an application. So I heard Mr. Balsano’s testimony, and while I think that’s a significant addition error, I don’t know that that would have necessarily changed the review. I don’t want to speak for the financial analysis unit, but I have seen programs that on their own are not financially feasible but the Agency determines that the health system can support it, based on their total system. Given the overall financial strength of NCH, and its commitment to continue to fund the PHT program regardless of its profitability, the long-term financial feasibility of the program is not in question. Section 408.035(1)(g): The extent to which the proposal will foster competition that promotes quality and cost- effectiveness. As detailed above, there is an unexplained use rate disparity between Miami-Dade County, OTSA 4, and the rest of the state with regard to PHT. This disparity is a strong indicator that there is an access issue for residents of District 11. The evidence established that Jackson has not performed a PHT on any Miami-Dade County resident in the past three years. The access issue is particularly pronounced for complex cases, both because Jackson appears to be reluctant to list and transplant complex cases, and because a significant population of critically ill children cannot be safely transferred from NCH to Jackson. Approval of NCH’s application will provide residents of District 11 and OTSA 4 access to a high-volume, high-quality cardiac program for PHT, something they do not have access to now. There is no question that approval of the NCH program will foster competition. As Dr. Burke testified, in his experience approval of a new PHT provider serves as a stimulus to existing providers. There is also little question that once established, the NCH program will be high-volume, particularly relative to the volumes of PHT being done at Jackson and DiMaggio. Section 408.035(1)(g): The costs and methods of the proposed construction, including the costs and methods of energy provision and the availability of alternative, less costly, or more effective methods of construction. NCH did not propose construction for this project. This criterion is not in dispute. Section 408.035(1)(g): The applicant’s past and proposed provision of health care services to Medicaid patients and the medically indigent. NCH has a long history of providing health services to Medicaid patients and the medically indigent. In CY 2013 and CY 2014 NCH provided $2,327,848 and $1,193,660 in charity care, respectively, representing 2.1 and 2.5 percent of its net patient revenue. NCH provided $106,941,948 in conventional Medicaid and $134,616,815 to patients under Medicaid Managed Care in CY 2014. NCH's projects that annually, over 60 percent of the PHT patient days will be Medicaid. This payor mix is based on NCH’s complex cardiac patient payor mix, and is reasonable. NCH has and will continue to provide health care services to Medicaid patients and the medically indigent. Inasmuch as the majority of pediatric patients qualify for Medicaid, and NCH has a history of providing care to Medicaid patients and the medically indigent, both Jackson and AHCA concede the proposal’s compliance with this criterion is not in dispute.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a final order be entered approving CON Application No. 10421 filed by Variety Children’s Hospital, d/b/a Nicklaus Children’s Hospital, subject to the conditions contained in the applications. DONE AND ENTERED this 15th day of May, 2017, 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 15th day of May, 2017. COPIES FURNISHED: Richard Joseph Saliba, Esquire Kevin Michael Marker, Esquire Agency for Health Care Administration Mail Stop 3 2727 Mahan Drive Tallahassee, Florida 32308 (eServed) Geoffrey D. Smith, Esquire Susan Crystal Smith, Esquire Stephen B. Burch, Esquire Smith & Associates Suite 202 1499 South Harbor City Boulevard Melbourne, Florida 32901 (eServed) Thomas Francis Panza, Esquire Panza, Maurer, & Maynard, P.A. Suite 905 2400 East Commercial Boulevard Fort Lauderdale, Florida 33308 (eServed) Elizabeth L. Pedersen, Esquire Panza, Maurer & Maynard, P.A. Suite 905 2400 East Commercial Boulevard Fort Lauderdale, Florida 33308 (eServed) Paul C. Buckley, Esquire Panza, Maurer & Maynard, P.A. Suite 905 2400 East Commercial Boulevard Fort Lauderdale, Florida 33308 (eServed) Angelina Gonzalez, Esquire Panza, Maurer, & Maynard, P.A. Suite 905 2400 East Commercial Boulevard Fort Lauderdale, Florida 33308 (eServed) Christopher Charles Kokoruda, Esquire Eugene Shy, Jr., Esquire Laure E. Wade, Esquire Miami-Dade County West Wing, Suite 109 1611 Northwest 12th Avenue Miami, Florida 33136 (eServed) Abigail Price-Williams, Esquire Miami-Dade County West Wing, Suite 109 1611 Northwest 12th Avenue Miami, Florida 33136 Richard J. Shoop, Agency Clerk Agency for Health Care Administration 2727 Mahan Drive, Mail Stop 3 Tallahassee, Florida 32308 (eServed) Justin Senior, Secretary Agency for Health Care Administration 2727 Mahan Drive, Mail Stop 1 Tallahassee, Florida 32308 (eServed) Stuart Williams, General Counsel Agency for Health Care Administration 2727 Mahan Drive, Mail Stop 3 Tallahassee, Florida 32308 (eServed) Shena L. Grantham, Esquire Agency for Health Care Administration 2727 Mahan Drive, Mail Stop 3 Tallahassee, Florida 32308 (eServed) Thomas M. Hoeler, Esquire Agency for Health Care Administration 2727 Mahan Drive, Mail Stop 3 Tallahassee, Florida 32308 (eServed)
