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 a need for a new Pediatric Heart Transplant (PHT) program in Organ Transplant Service Area (OTSA) 3, and, if so, whether Certificate of Need (CON) Application No. 10518, filed by Orlando Health, Inc., d/b/a Arnold Palmer Medical Center (APMC), to establish a PHT program, satisfies the applicable statutory and rule review criteria for award of a CON to establish a PHT program at the Arnold Palmer Hospital for Children (APH).
Findings Of Fact Based upon the credibility of the witnesses and evidence presented at the final hearing and on the entire record of this proceeding, the following Findings of Fact are made: The Parties Orlando Health, Inc., d/b/a Arnold Palmer Medical Center OH was originally formed by two community physicians 100 years ago as a 20-bed hospital in downtown Orlando. Today, OH is a large not-for-profit healthcare system with more than 3,300 beds serving Central Florida and beyond. Comprised of nine wholly-owned or affiliated hospitals and rehabilitation centers, OH serves as the region’s only Level One Trauma Center and Pediatric Trauma Center, and is a statutory teaching hospital system offering graduate medical education and clinical research in both specialty and community hospitals. OH has been actively involved in clinical research since the beginning of its graduate medical education and residency programs in the 1950s. OH’s primary service area includes approximately 2.2 million people, with a greater service area of Central Florida, which encompasses more than three million people today and is rapidly growing. OH experiences about 100,000 inpatient admissions and 1.5 million ambulatory visits each year. OH has 24,000 employees, including 2,000 physicians and 8,000 nurses. OH has long been recognized as the safety net provider for the Central Florida region. APMC is comprised of two hospitals, APH and Winnie Palmer Hospital for Women and Babies (WPH). APMC was founded on the premise that the close integration of specialty inpatient pediatrics and obstetrics services improves quality and outcomes. APMC is the single largest acute care facility in the nation dedicated to women and children. APH has achieved national ranking as a Top 50 Children’s Hospital by U.S. News and World Report, based on quality data metrics that focus on process, structure, and outcomes, for the past eight consecutive years for key programs, including pediatric cardiology. Since 2015, APH has been the only pediatric hospital in Florida to receive the Top Hospital award from Leapfrog, an achievement based on evaluation of numerous quality metrics, including outcomes data over time. APH has been a Magnet-designated facility since 2013. APH’s primary service area covers 25 counties. APH’s pediatric trauma center and dedicated pediatric emergency department receive approximately 55,000 visits per year. The Heart Center at APH (the Heart Center) is nationally ranked among the top pediatric cardiac programs in the country for its outcomes in complex congenital heart surgery. Dr. William DeCampli, APH’s chief of Pediatric Cardiac Surgery, and Dr. David Nykanen, APH’s chief of Cardiology, serve as the medical directors of the Heart Center. Dr. DeCampli and Dr. Nykanen will continue to serve as the medical directors of the Heart Center following implementation of APH’s proposed PHT program. The Heart Center is on the third floor of APH in the “corner pocket” of the hospital. It is intentionally designed so that the pediatric cardiovascular intensive care unit (CVICU), cardiovascular operating suite, and cardiac catheterization suite are in close proximity to each other, to promote the integration of care between the units and to ensure the safe transition of pediatric patients. APH’s 20-bed CVICU is more advanced than the intensive care units of most pediatric cardiac programs across the country. APH established a freestanding dedicated CVICU in January 2005, and was one of the first in the nation to do so. APH CVICU clinical staff are dedicated to the CVICU and specifically trained to care for the special needs of pediatric cardiac patients. Unlike many other pediatric cardiac programs in the country, APH’s CVICU has 24/7/365 attending physician in- house coverage which leads to better access for patients and better outcomes. APH’s commitment to this continuous on-site physician presence reflects a standard that all pediatric cardiac programs aspire to, but few have achieved. APH has three employed pediatric cardiac anesthesiologists providing 24/7/365 in-house coverage, rare among pediatric cardiac programs. The specialty of pediatric cardiac anesthesia is distinct from the specialty of general pediatric anesthesia. Pediatric cardiac anesthesiologists specialize in the complex defects and anatomy of the cardiovascular system in patients with congenital heart disease (CHD) for whom anesthesia and sedation poses heightened risk. Pediatric cardiac anesthesiologists provide anesthesia for cardiac procedures as well as for any non-cardiac procedures the CHD patient may require. APH is the highest ranked program in Florida in outcomes for the most complex category of congenital heart surgery. In 2007, the Heart Center’s surgical team published more than three times the number of investigational papers than the state’s leading academic pediatric cardiac surgery program. Nationally, APH has the highest neonate population with the lowest mortality rate. APH has a state-of-the-art echocardiography (echo) program with the entire infrastructure necessary for PHT. Echo is essential at every stage of diagnosing, treating, and evaluating the response to therapies and interventions in pediatric cardiac care, including PHT. Dr. Riddle, an echocardiologist at APH, has extensive experience in diagnosing and evaluating complex congenital heart anomalies, including patients requiring PHT. APH’s echo program is comprised of multiple components: the facility, the equipment, the physicians, the sonographers, the protocols, and the quality. APH’s echo lab is the “mission control center” for the program, with four large screens that enable clinicians to watch and discuss echos as they are being performed, and to review echos in meticulous detail, sometimes spending hours looking at complex echos. APH’s culture is the tremendous differentiator among pediatric cardiac programs. APH’s goal is to know every aspect of a patient’s care and anatomy, and APH clinicians, with the full support of administration, spend significant time doing that. All APH sonographers are certified and APH has weekly didactic sessions for sonographers, along with quality improvement and quality review sessions. All APH echo readers are dedicated echo physicians, with extensive training, who also are involved in constant didactic lectures and immersion in quality improvement measures. APH’s director of echo, Dr. Craig Fleishman, is nationally recognized and serves as the chair of the Scientific Sessions of the American Society of Echocardiography, the national governing and education body for echo. APH is the only pediatric heart program in Central Florida to achieve accreditation from the American Society of Echocardiography in transthoracic, transesophageal, and fetal echo. APH is highly skilled at diagnosing complex congenital heart anomalies, including those in fetuses when the patient’s heart may be no larger than a grape. APH’s echo surgical correlations, in which the echo gradients are compared to actual measurements during surgery, are “phenomenal.” Similar correlations occur in coordination with the APH cardiac catheterization lab. APH has used printed 3D heart modeling, but printed 3D modeling includes only data obtained from a computerized tomography (CT) scan or magnetic resonance imaging (MRI) , and does not show all of the finer complex structures of the heart and valves; thus, it has limited utility in evaluating treatment options for complex CHD. However, APH is implementing a virtual reality 3D modeling system that combines data from echo, CT, and MRI data, and even surgical images, to create a complete virtual 3D model of the heart that includes the fine details, including valve attachments. Unlike a printed 3D model, which once cut open, no longer represents the heart and cannot be put back together for further evaluation, virtual 3D modeling enables clinicians to evaluate multiple potential interventions and observe responses and to repeat as many times as may be necessary, using the same model. APMC has a large maternal fetal medicine program staffed by seven employed perinatologists specializing in high- risk pregnancies. The program is expected to have 10 employed perinatologists by the end of 2018. Agency for Health Care Administration AHCA is the state health-planning agency charged with administration of the CON program as set forth in sections 408.31-408.0455, Florida Statutes. Context of the Arnold Palmer Application Approximately one in 100 babies are born with CHD. The majority of these disorders can be treated, at least initially, with reconstructive surgery. The earlier a congenital heart defect can be repaired, the better the chances the patient has to not only survive but to grow normally in infancy and thrive. However, some children with CHD have a severity level such that current methods of reconstructive surgery are not adequate to produce what might be called a cure. Treatment of such cases is called “palliation.” As a result of medical and surgical advances in palliation, children are now surviving complex CHD in numbers that previously were not thought possible. However, in the most severe cases, the palliation is fairly short-term. Many children who receive palliative surgery ultimately will progress to end-stage heart failure despite having had multiple operations and extensive medical management, as their heart will eventually begin to have decreased function due to the underlying anomaly. Prior to the advances in palliative care, many children born with complex CHD simply did not survive long enough to receive a PHT. Today, the number of children who face heart failure later in life, rather than earlier, is increasing. Successful palliation has resulted in significantly more CHD patients requiring PHT at age 10, 15, or 20, rather than as infants or young children. Another category of children requiring PHT are those who do not have CHD, but who have an acquired problem known as cardiomyopathy. Children with cardiomyopathy may present in heart failure at any time and at any age, having gone from a state of completely normal function--exercising, growing, doing well in school--to within two or three days having end stage heart failure. About half of these children recover with medication and intensive care--which APH does extremely well on a regular basis. But those who do not recover will require a PHT. Patients with CHD tend to be more medically and surgically complex and higher risk than patients with cardiomyopathy with respect to PHT. On a percentage basis, and because of advancements in palliation, there are more CHD patients and fewer cardiomyopathies in the teenage cohort requiring PHT today than there were 10 years ago. 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). 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). If approved, the proposed program at issue in this proceeding would be located in OTSA 3, which is comprised of Brevard, Indian River, Lake, Martin, Okeechobee, Orange, Osceola, Seminole, and Volusia Counties. Currently, there are no providers of PHT in OSTA 3. However, that does not mean that OTSA 3 residents lack access to these transplant services. In fact, the unrefuted evidence demonstrated that pediatric residents of OTSA 3 have received transplants at Shands, by way of example. At hearing, APMC agreed that OTSA 3 residents are accessing these services at existing providers in Florida, with APH referring a few of these patients on average to Shands every year for these services. 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 (aged 0-14) heart transplant discharges by year for the four existing Florida PHT programs during the reporting period from June 30, 2013, to June 30, 2017: HOSPITAL HEART TRANSPLANT FY 12/13 FY 13/14 FY 14/15 FY 15/16 FY 16/17 UF Health Shands Hospital 13 4 17 12 9 John Hopkins All Children’s Hospital 6 13 10 9 7 Memorial Regional Hospital 5 3 4 11 4 Jackson Memorial Hospital 1 2 1 3 1 TOTAL 25 22 32 35 21 The above historic data demonstrates that the incidence of PHT statewide is relatively rare and does fluctuate from program to program and from year to year. As seen above, only 21 PHTs were performed statewide during the 12-month period July 1, 2016, to June 30, 2017, for an average program volume of only 5.25 cases for the four existing programs. There are four existing and one CON-approved PHT programs in Florida. This is more than every state in the country except California, which also has five programs but more than double the pediatric population of Florida. And three of the California programs have a volume of five per year or less. Texas, another geographically large state with over 1.4 million more children than Florida, has only two centers. The number of PHTs is also impacted by a national shortage in donor hearts. Unfortunately, there are not enough donor hearts to meet the demand for pediatric heart patients in the United States. While the total number of PHTs in the United States increased between 2012 and 2015, it has more recently declined from 2015 to 2017. Based on population, the number of PHTs in Florida is higher than the national average. Thus, while fortunately its incidence is rare, Florida residents in need of PHT are currently able to access this life-saving procedure. Arnold Palmer’s “Readiness” to Implement a PHT Program APH has over 14 years of experience performing complex congenital heart surgery and has met the majority of the demand for complex pediatric cardiac surgery in Central Florida for the past 25 years. In that time, APH has performed thousands of heart operations and achieved extraordinary outcomes, which are most dramatically apparent in the highest acuity levels. APH is the largest pediatric cardiac surgical program in Central Florida. Because WPH and APH are regional centers of excellence for neonatal and pediatric cardiac care, APH has a large proportion of complex, single-ventricle patients in its existing pediatric cardiac program. In turn, approximately 70 percent of the patients who ultimately require PHT have complex, single-ventricle physiologies. In addition, APH is a regional referral center for patients presenting with cardiomyopathies that may require PHT services. APH voluntarily participates in the Society for Thoracic Surgeons (STS) National Congenital Heart Surgery Database (the “STS database”). The STS is the official organ for the collegial development of the field of thoracic and cardiac surgery, both adult and pediatric. There are over 75,000 physician and institutional members of the STS. The STS maintains the largest worldwide data collection of multiple variables and data points pertaining to every cardiac surgery performed by its members. The data is rigorously analyzed to measure the actual and risk-adjusted expected performance and quality of each member facility, and to support quality improvement projects, as well as original research in the field. The STS is a national organization, and its publishing arm, the Annals of Thoracic Surgery, is one of the top-ranked journals in the world. Once a year, the STS updates a running, four-year cumulative tally of outcomes for each participating institution in the country and publishes a one-page report summarizing the facility’s performance.1/ The STS stratifies cardiac surgical cases by “STAT” level, which is a measure of acuity, complexity and risk.2/ STAT 1 is the simplest kind of congenital heart defect that generally requires a straightforward surgical repair, while STAT 5 reflects complex, high-acuity, and high- risk conditions and surgeries. The STS public report contains four columns. The first lists the STAT levels. The second column lists the facility’s number of deaths divided by the number of patients operated on at that facility within the given STAT category. The third column, “Expected” reflects the STS’ expectation of mortality within the reporting institution’s program based on the relative acuity of the cases performed at that institution and if the reporting hospital performs consistent with the national average for that STAT level. The data in the third column reflects the very high acuity level of APH’s CHD patient population, i.e., the risk factors for the patient not surviving their congenital heart defect and surgery. The fourth column, “Observed/Expected” (the “O/E ratio”), divides the program’s actual mortality by its expected mortality. The O/E ratio is widely accepted as the standard metric for evaluating performance in pediatric cardiac programs because in contrast to reporting raw mortality, the STS O/E ratio is risk-adjusted using multivariable regression models which enable the STS to risk adjust each institution’s mortality and compare it against the national norm; i.e., to produce a model containing every case that every program did within the four-year time period measured. An O/E ratio of less than one means the facility is doing better than the overall STS database. For STAT 2 cases, APH’s O/E ratio is 0.58, meaning that APH has achieved close to one-half the mortality that STS expects APH to have for APH’s STAT 2 cases. Even more impressive, however, is APH’s STAT 5 O/E ratio of 0.24. The analysis conducted by the STS shows that, statistically speaking, a patient in the highest risk STAT 5 category has a four-fold less risk of dying after an operation at APH than at an average pediatric cardiac surgery program in the country. APH has consistently achieved outstanding outcomes in its pediatric cardiac program, on a national basis, for more than a decade. AHCA has recognized APH as first in the state for overall pediatric heart surgery mortality. Mechanical cardiopulmonary support or cardiac extracorporeal membrane oxygenation (ECMO) (referred to as “CPS” within the APH pediatric cardiac program) is a very short-term method of sustaining life when a patient has rapid onset end- stage heart failure.3/ To place a patient on CPS, the cardiac surgeon makes an incision in the base of the neck to expose the main artery to the brain and the main vein draining from the brain. The vessels are controlled by the surgeon and opened, and cannulas are inserted into the vessels and advanced into the heart, or if the chest is open, may be placed directly into the heart, then sutured into place and connected to a heart-lung machine. Often the procedure is done while a baby is sustaining a cardiac arrest. CPS is not the preferred intervention for patients in heart failure who require PHT. Complications from CPS develop exponentially with each 24 hours on the circuit. Thus, CPS can be a contraindication for PHT. Complications from CPS include bleeding from fresh suture lines in the heart, arteries, pericardium, or chest wall; bleeding in the brain, or at IV line locations; and clotting caused by the CPS lines, which can be devastating if the clot travels to the brain, kidneys, bowel, or heart. There also is significant risk in moving a patient on CPS. Particularly in neonates, the movement of a cannula by even a few millimeters can obstruct circulation, or cause thrombus or ventilator issues. CPS thus is not a sustainable method for bridging a patient to PHT, when the majority of patients face long periods on a waitlist. The proper method for bridging to PHT is the use of ventricular assist device (VAD) therapy, relatively recently approved for use in pediatric patients. A VAD is a device that does not mechanically process or oxygenate the blood, and does not require transfusion, and, thus, provides far more stable and longer-term maintenance of life while a patient waits for PHT. In contrast to CPS, which cannot safely be used more than a few days to, at most, two weeks, a heart failure patient may safely remain on a VAD for months in the hospital while they await a donor heart. The ability to implement VAD therapy enhances quality of care for patients and increases a patient’s eligibility for PHT. Currently, the standard of care is that hospitals that do not provide PHT should not provide VAD therapy. Consequently, patients at APH with rapid onset heart failure do not have access to VAD therapy and must be placed on CPS. There is no question that OH has built a mature, high quality pediatric cardiac program at APH over the past 14 years. The organization has the demonstrated experience and success in complex reconstructive heart surgery and medical management of patients with heart disease. With the additional staffing described below, APH would be able to successfully implement a PHT program, assuming need for such a program is demonstrated. The Arnold Palmer Application APMC is proposing to establish a PHT program in Orlando, which is located in OTSA 3. The application was conditioned on APMC promoting and fostering outreach activities for pediatric cardiology services, which will include the provision of pediatric general cardiology outpatient services at satellite locations within OTSA 3. This condition is not intended to include any outreach activities beyond establishing outpatient clinics in OTSA 3. There is currently no PHT provider in OTSA 3. There are, however, three providers of pediatric open-heart surgery and pediatric cardiac catheterization within the OTSA. APMC proposes that Dr. William DeCampli and Dr. David Nykanen, who currently staff its pediatric cardiac program, would also staff the proposed transplant program. However, neither has worked in a transplant program in over 14 years. APMC acknowledges its need to recruit additional nurses to staff the program. It also concedes that it might recruit nurses without transplant experience, who may need to obtain necessary training at a different facility. Additionally, APMC has not yet recruited a physician specializing in pediatric heart failure, which the applicant agrees is necessary to implement the program. At hearing, much of APMC’s case focused on its readiness and desire to offer a full spectrum of services to cardiac patients at its hospital. This is reflected in the testimony of Sharon Mawa, a nurse operations manager in APMC’s CVICU: And I feel Arnold Palmer is ready. We—it’s all encompassed. When you have a heart program, you—you want to do it all . . . . And the only piece that we are unable to provide, that we’re—that we haven’t been ready for, and I feel like we’re ready for now, is heart transplant. And I think to do a heart program well, you should be able to do all of it for that patient. However, as detailed further below, such arguments do not demonstrate community need for the proposed service, but instead represent an institutional desire to expand the facility’s service lines. A public hearing was held in Orlando on January 8, 2018, pertaining to APMC’s PHT application. APMC participated in support of the application at this hearing. About one year earlier, on January 10, 2017, a public hearing was held in Orlando pertaining to a CON application to establish a PHT program submitted by Nemours Children’s Hospital (Nemours), which is also located in Orlando. OH/APMC participated at that hearing in opposition to the Nemours application. OH/APMC submitted written opposition to the Nemours PHT program at that time, urging the Agency to deny Nemours’ proposal. OH/APMC’s 2017 opposition to the Nemours PHT application included argument related to access and need for the service in OTSA 3. OH/APMC’s written opposition to the proposed Nemours program included letters of opposition authored by Dr. DeCampli and Dr. Nykanen. In urging the denial of the Nemours’ PHT application, Dr. Nykanen told AHCA: For the past 14 years at Arnold Palmer Hospital for Children we have referred our patients requiring advanced heart failure management, including cardiac transplantation, predominantly to Shands Children’s Hospital. We have been the largest referral source of these patients in the region over the past decade. Many of our patients have had the opportunity to be evaluated as outpatients, which is always preferable. The management of this patient population is medically intense but surgery is rarely an emergency. The geographic proximity of Gainesville to our region is not a significant barrier with respect to transport from one facility to the other. The availability of organs for transplantation mandates the time from assessment to surgery which is measured in weeks to months. The Shands team has been readily accessible to us day or night and I am aware of no financial or programmatic barriers to providing this specialized care to our patients. We have been pleased with the outcomes achieved. (emphasis added). In December 2017, several months after opposing Nemours’ PHT proposal, APMC submitted its own PHT application to AHCA. UF Health Shands UF Health-Shands Hospital (Shands), as an existing provider of PHT in OTSA 1, participated extensively in this proceeding notwithstanding its acknowledged lack of standing to formally intervene.4/ Shands is located in Gainesville, Florida and is the sole provider of PHT in OTSA 1. OTSA 1 extends from Pensacola to Jacksonville, south to Gainesville and west to Hernando County. AHCA called numerous witnesses affiliated with Shands in its case-in-chief. The scope of the testimony presented by Shands-affiliated witnesses was circumscribed by Order dated June 18, 2018 (ruling on APMC’s motion in limine), that: At hearing, the Agency may present evidence that the needs of patients within OTSA 3 are being adequately served by providers located outside of OTSA 3, but may not present evidence regarding adverse impact on providers located outside of OTSA 3. Baycare of Se. Pasco, Inc. v. Ag. for Health Care Admin., Case No. 07-3482CON (Fla. DOAH Oct. 28, 2008; Fla. AHCA Jan. 7, 2009). Shands is located in Gainesville, Florida. Shands Children’s Hospital (SCH) is an embedded hospital within a larger academic health center. SCH has 202 beds and is held out to the public as a children’s hospital. SCH occupies multiple floors of the building in which it is located, and the children’s services are separated from the adult services. SCH has its own separate entrance and emergency department. SCH is nationally recognized by the U.S. News and World Report as one of the nation’s best children’s hospitals. SCH has its own leadership, including Dr. Shelley Collins, an associate professor of Pediatrics and the associate chief medical officer of SCH who was called as a witness by the Agency. As a comprehensive teaching and research institution, SCH has between 140 to 150 pediatric specialists who are credentialed. It has every pediatric subspecialty that exists and is also a pediatric trauma center. In the area of academics and training, SCH has over 180 faculty members and approximately 50 residents, and 25 to 30 fellows in addition to medical students. SCH has 72 Level II and III Neonatal Intensive Care Unit (NICU) beds. It also has a dedicated 24-bed pediatric intensive care unit, as well as a dedicated 23-bed pediatric cardiac intensive care unit, both of which are staffed 24/7 by pediatric intensive care physicians, pediatric intensive care nurses, and respiratory therapists. As a tertiary teaching hospital located in Gainesville, Shands is accustomed to caring for the needs of patients and families that come from other parts of the state or beyond. Jean Osbrach, a social work manager at Shands, testified for the Agency. Ms. Osbrach oversees the transplant social workers that provide services to the families of patients at SCH. Ms. Osbrach described how the transplant social workers interact with the families facing transplant from the outset of their connection with Shands. They help the families adjust to the child’s illness and deal with the crisis; they provide concrete services; and help the families by serving as navigators through the system. These social workers are part of the multi-disciplinary team of care, and they stay involved with these families for years. Shands is adept at helping families with the issues associated with receiving care away from their home cities. Shands has relationships with organizations that can help families that need financial support for items such as lodging, transportation, and gas. Shands has 20 to 25 apartments in close proximity to the hospital that are specifically available for families of transplant patients. Shands also coordinates with the nearby Ronald McDonald House to secure lodging for the families of out-of-town patients. Ms. Osbrach’s ability to empathize with these families is further amplified because her own daughter was seriously ill when she was younger. As Ms. Osbrach testified, while she was living in Gainesville, she searched out the best option for her child and decided that that was actually in Orlando. She did not hesitate to make those trips in order to get the highest level of care and expertise her child needed at that time. SCH accepts all patients, including pediatric heart transplant patients, regardless of their financial status or ability to pay. At final hearing, both Ms. Osbrach and Dr. Pietra testified at length about the different funding sources and other resources and assistance that are available to families from lower social economic circumstances that have a child who may need a transplant. SCH is affiliated with the Children’s Hospital Association, the Children’s Miracle Network, the March of Dimes, and the Ronald McDonald House Charities. Both Shands and APMC witnesses agreed that the quality of care rendered by SCH is excellent. ShandsCair Shands operates ShandsCair, a comprehensive emergency transport system. ShandsCair operates nine ground ambulances of different sizes, five helicopters, and one fixed wing jet aircraft. It owns all of the helicopters and ambulances so it never has to wait on a third-party vendor. ShandsCair performs approximately 7,000 ground and air transports a year. ShandsCair selects the “best of the best” to serve on its flight teams. ShandsCair has been a leader in innovation, implementing a number of state-of-the-art therapies during transport, such as inhaled nitrous oxide and hypothermic for neonates that are at high risk for brain injury. ShandsCair is one of just three programs in the country that owns an EC-155 helicopter, which is the largest helicopter used as an air ambulance. This helicopter is quite large, fast, and has a range of approximately 530 miles one way. This makes it easier to transport patients that require a significant amount of equipment, including those on ECMO. The EC-155 has room for multiple patients and the ability to transport patients on ventricular assist devices, ventilators, and other larger medical equipment. The Orlando area is well within the operational range of both ShandsCair’s ground and air transport assets. Transporting Pediatric Patients on ECMO In its CON application, one of the reasons APMC contended that its application should be approved is that it is too dangerous to transport patients on ECMO. Timothy Bantle, a certified respiratory therapist and the manager of the ECMO program at Shands, was called as a witness by the Agency. The ECMO program at Shands was established in 1991, and Shands has supported over 500 patients on ECMO. When Mr. Bantle began working in the Shands ECMO program in 2008, all ECMO patients at Shands were supported by an ECMO machine that utilized a roller head pump. In addition to the machine’s bulky size and weight, there was an inherent risk of the occlusion pressure causing a rupture. In 2014, Shands began using a newer, much smaller CARDIOHELP ECMO machine. In addition to weighing at most 20 pounds, the CARDIOHELP ECMO machine utilizes a centrifugal pump, instead of a roller head pump, which eliminates the risk of circuit ruptures. The technology in the CARDIOHELP ECMO machines is outstanding, and it is much easier to manage patients on the newer machines than the older machines. Shands now has nine of the newer and far more compact CARDIOHELP ECMO machines. Shands uses the CARDIOHELP ECMO machine for both veno-arterial (VA) and veno-venous (VV) ECMO and for every patient population, including infants. In the current fiscal year, Shands has had 67 patients on the CARDIOHELP ECMO machine. Shands has safely transported both adult and pediatric patients on ECMO. When transporting a patient on ECMO, the transport team includes a physician, an ECMO primer, a nurse, and a respiratory therapist. In addition to being highly trained, the transport team discusses the specifics of each patient en route, including discussing the situation with the referring doctor so they arrive fully prepared. Mr. Bantle persuasively testified that a properly trained team, using the newer CARDIOHELP ECMO machine, can transport these patients safely. ShandsCair has safely transported numerous pediatric patients on VA- and VV-ECMO by both ground and air, including pediatric heart transplant candidates. The newer CARDIOHELP ECMO equipment makes transport of ECMO patients much easier. ShandsCair has flown simultaneous, same day ECMO transports to the Grand Cayman Islands and to Miami. Transporting ECMO patients on the CARDIOHELP ECMO machine has become so routine that Dr. Weiss does not go on those flights. ShandsCair has also safely transported small infants on VA-ECMO, including a three-kilogram infant who was recently transported from Nemours on VA-ECMO, and after arrival at Shands was transitioned to a VAD and is now awaiting a heart transplant. The testimony of Dr. Weiss and Mr. Bantle regarding Shands’ ability to safely transport pediatric patients on ECMO was substantiated by the testimony of Drs. Fricker, Pietra, and Collins. The overwhelming evidence established that ShandsCair can safely transfer pediatric patients, including infants, on ECMO by both ground and by air. Shands’ Pediatric Heart Program The congenital heart program at Shands includes two pediatric heart surgeons, and a number of pediatric cardiologists, including Dr. Jay Fricker and Dr. Bill Pietra, both of whom testified for the Agency. Dr. Fricker did much of his early work and training at the Children’s Hospital of Pittsburgh, and came to the University of Florida in 1995. He is a professor and chief of the Division of Cardiology in the Department of Pediatrics. He is also the Gerold L. Schiebler Eminent Scholar Chair in Pediatric Cardiology at UF. He has been involved in the care of pediatric heart transplant patients his entire career. Dr. Bill Pietra received his medical training in Cincinnati and then went to Denver, specifically to do transplant training under Dr. Mach Boucek, who was one of the pioneers in pediatric infant transplant. He came to the University of Florida and Shands in August 2014, and he is now the medical director for the UF Health Congenital Heart Center. Shands performed its first PHT in 1986. Shands provides transplants to pediatric patients with both complex congenital conditions and cardiomyopathy patients. Shands takes the most difficult PHT cases, including those that other transplant centers will not take. PHT patients are referred to Shands from throughout the state, with many patients coming from central and north Florida. Every patient that is referred for transplant evaluation is seen and evaluated by Shands. While transplantation is not an elective service, it also is very rarely done on an emergent basis. Some conditions are diagnosed well in advance of the need for a transplant. It is not uncommon for a patient to be seen by a Shands physician for a number of years before needing a transplant. Pediatric transplant patients now survive much longer, and frequently well into adulthood. Unlike APH, Shands has the ability to continue to care for those patients as they transition from childhood to becoming adults. The Congenital Heart Center at Shands has a good relationship with APH. Physicians at APH have not only referred patients to Shands for transplant evaluation, they have also specifically recommended Shands to parents of children in need of a heart transplant. Shands operates a transplant clinic at Wolfson Children’s Hospital in Jacksonville. Approximately once a month a Shands transplant physician, a transplant coordinator, and nurses will go to Wolfson to evaluate patients with PHT issues. Wolfson personnel, such as ECHO techs and nurses, are also involved. Before APH filed its CON application, Dr. Pietra twice asked Dr. Nykanen about the possibility of Shands establishing a similar joint clinic at APH. Dr. Nykanen replied by stating he would need to confer with his colleagues, but never otherwise responded to these inquiries. Dr. Pietra testified that he would not be opposed to a joint venture clinic with APMC. Managed care companies are now a significant driver of where patients go for transplantation services. Managed care companies identify “centers of excellence” as their preferred providers for services such as pediatric heart transplantation. Shands is recognized by a majority of the major managed care companies that identify pediatric transplant programs as a center of excellence. In addition, the congenital heart surgery program at Shands has a three-star rating, which is the highest rating possible, and one that only 10 percent of such programs achieve. The quality of care provided by the PHT program at Shands is superb. The most recent Scientific Registry of Transplant Recipients data for Shands, for pediatric transplants performed between February 1, 2014, and December 31, 2016, is excellent. There is no credible evidence of record that any pediatric patient in OTSA 3 was denied access or unable to access an existing transplant program. To the contrary, the evidence established that UF Health Shands and ShandsCair are currently serving the needs of OTSA 3 residents who need a PHT. The APMC CON application was not predicated on any argument that a new program is needed because of poor quality care at any of the existing pediatric transplant programs in Florida. Rather, Dr. Nykanen, the co-director of The Heart Center at APH, testified that Shands provides outstanding medical care, and that he has been “happy with the care” received by the patients he has referred to Shands for PHT. At hearing, APMC witnesses suggested that the Shands program is unduly conservative in accepting donor hearts from beyond 500 miles, and may have some “capacity” issues in its pediatric cardiac intensive care unit (CICU). These statements, made by persons with no first-hand knowledge of the operations of the Shands program, are not persuasive. APMC called Cassandra Smith-Fields as an expert witness. Ms. Smith-Fields is the administrative director for the transplant program and dialysis services at Phoenix Children’s Hospital. Phoenix Children’s Hospital is the only PHT center in Arizona. Notably, two states bordering Arizona, Nevada and New Mexico, do not have PHT centers. Ms. Smith- Fields noted that the volume of transplants at Shands had recently declined from 18 to 11. However, in 2016, by volume, Phoenix Children’s Hospital was the second largest pediatric heart transplant center in the country with 24 transplants, but in 2017, its volume had dropped to 14. Ms. Smith-Fields agreed that “you have to always be careful drawing inferences from numbers that are low in any matter.” Ms. Smith-Fields testified that based upon her review of Scientific Registry of Transplant Recipients data for Shands, Shands did not appear to be aggressive in terms of accepting donor hearts beyond 500 miles. However, that criticism was based upon a one-year period when Shands’ PHT volume was lower than normal, and during which Shands was able to obtain donor hearts from within a 500-mile radius. Stephan Moore, director of the solid organ transplant and VAD programs at Shands, prepared an exhibit, which showed the location (by state and distance) of Shands donor hearts and lungs recovered from March 2, 2014, through March 18, 2018. This exhibit showed numerous trips by Shands beyond 500 miles to retrieve a donor organ, including trips to Texas, New Jersey, Illinois, and Ohio. During this four-year period, 27.6 percent of the organs recovered by Shands came from within Florida, and the remaining 72.3 percent were obtained from out of state. This data not only refutes Ms. Smith-Fields’ testimony on this issue, it also again illustrates why, due to the variability of PHT heart program volumes and availability of donor hearts, one should be extremely cautious in drawing conclusions based upon a single year of data. In addition, Dr. Pietra testified about the complexity of these cases and how an organ that might be acceptable for one patient would not be acceptable for another, for a host of reasons. Consequently, being conservative and cautious in choosing the right heart for each patient are good and important traits for a pediatric heart transplant program, particularly for one that wants the organ to work well for the patient long- term. Dr. Elise Riddle, a cardiologist practicing at APMC, testified that she was aware of instances when there had been a delay in obtaining a bed at Shands for a patient being referred for transplant services. However, Dr. Pietra testified that Shands has never refused a patient because a bed was not available, and that any delay would have been at most a matter of hours. In addition, Dr. Collins, who regularly reviews the throughput numbers of Shands CICU, testified that there was no need to expand the size of the unit. APMC did not question Dr. Collins about the unit’s occupancy rate, nor did it make any attempt to otherwise obtain that information. Dr. Riddle also testified that she had not been informed when a former patient had returned to the Orlando area following a successful PHT at Shands. However, Dr. Pietra testified at length about how Shands coordinates care with the patient’s primary care doctor and referring cardiologist post discharge, and works to develop a team to assist with follow care. Dr. Pietra testified: But we try to, again, develop a team and the team has to include like a local physician and usually a family practice or a pediatrician as the captain. If the patient’s got that, you feel a lot better about having a patient leave the local area and return to their hometown, as you say, so that they can be seen kind of in conjunction or collaboration with us in their hometown. If they have a referring cardiologist, that makes it that much easier sometimes to have a more sophisticated follow up done if needed. But again, the patient belongs to the transplant program in the long run, and so you are going to continue to offer them follow-up care basically for life. Since coming to Shands in August 2014, Dr. Pietra has updated many of the program’s protocols, including the protocols for immunosuppression, frequency of follow-up visits, and what is included in follow-up visits. Dr. Pietra has also initiated more written contracts between a prospective patient’s parents and the program, which make it very clear what the expectations are for the family. Two parents, one of whom lives in Clermont (one hour and 40 minute drive from Gainesville) and one of whom lives in Cocoa Beach (two hours and 35 minute drive from Gainesville) testified that their child had received a PHT at Shands in Gainesville, and that there were no issues with follow-up care for their children post-transplant. Volume/Outcome Relationship in Pediatric Heart Transplantation At the final hearing, experts for both sides agreed that there is a positive relationship between PHT volume and outcomes. In complex, highly specialized areas involving patients with rare diseases or conditions, volume provides experience not only for the surgeons but for the entire team. This is particularly true for pediatric heart transplantation, where higher volume keeps the entire team and ancillary staff functioning at a very high level. Both Dr. Pietra and Ms. Smith-Fields agreed that a minimum of 10 or more PHTs annually is a good standard for maintaining the proficiency of the entire transplant team. In Calendar Year 2017, there were only 32 PHTs in Florida. Both Dr. Pietra and Dr. Fricker testified about how the statewide volume made it very difficult to justify approving a sixth program in the State, and that the proliferation of programs would result in most of the programs not able to achieve the 10 or more transplants per year goal. Indeed, during the 12-month period of July 1, 2016, through June 30, 2017, none of Florida’s four existing PHT programs met the minimum volume standard of 10 PHTs. In addition, PHT programs are measured based on outcomes, and a single fatality in a small program can be devastating to that hospital’s quality metrics. As such, small programs are often less willing to take more complicated patients. Ironically, adding more programs that dilute volumes may decrease rather than increase access because of the fear a small program might have for taking more complex patients. Johns Hopkins All Children’s Hospital Johns Hopkins All Children’s Hospital (JHACH) is located in St. Petersburg, OTSA 2, AHCA District 5. According to reported AHCA data, JHACH performed seven PHTs during the 12 months ending June 2017. Several APMC witnesses made references to possible issues with the PHT program at JHACH based upon newspaper articles they had read. Such articles are hearsay, were not specifically identified or discussed by any witness, and accordingly, cannot form the basis of any finding of fact. Only one of APMC’s witnesses, Dr. Riddle, had any personal knowledge about JHACH, and she has not worked there or been involved in the care of any patients there since February 2016. The only APMC witness who actually looked at any data for JHACH, Ms. Smith-Fields, testified that JHACH had no deaths on its waiting list, that it was aggressive in retrieving donor hearts beyond 500 miles, and that had transplanted two patients during the first four months of this calendar year. When the Centers for Medicare and Medicaid Services (CMS) identifies a program as having deficient outcomes, it will send a peer review team to thoroughly assess the program. If necessary, CMS will enter a systems improvement agreement, which may include the appointment of a quality administrator to help the program improve its operations. There was no evidence presented that CMS had taken any such steps with JHACH. As discussed above, it was uncontroverted that there is a positive correlation between volumes and outcomes, and that a minimum of 10 transplants a year is an important volume threshold in order to maintain a high-quality program. With Florida already having five existing and approved programs, it is currently not possible for all five programs to achieve 10 transplants a year. Approving a new program in the State based upon rumors about the status of an existing program would in all likelihood only reduce the average volume even further below the 10 transplants per year standard, and lead to poorer outcomes. AHCA’s Preliminary Decision Following AHCA’s review of APMC’s application, as well as consideration of comments made at the public hearing held on January 8, 2018, and written statements in support of and in opposition to the proposals, AHCA determined to preliminarily deny CON application 10518. AHCA’s decision was memorialized in a SAAR dated February 16, 2018. Marisol Fitch, supervisor of AHCA’s CON and commercial-managed care unit, testified for AHCA. Ms. Fitch testified that AHCA does not publish a numeric need for transplant programs, as it does for other categories of services and facilities. Rather, the onus is on the applicant to demonstrate need for the program. In addition to need methodologies presented by an applicant, AHCA also looks at availability and accessibility of services in the area to determine whether there is an access problem. Additionally, an applicant may attempt to demonstrate that “not normal” circumstances exist in the proposed service area sufficient to justify approval. Statutory Review Criteria Section 408.035(1), Florida Statutes, establishes the statutory review criteria applicable to CON Application No. 10518. The parties have stipulated that APMC’s CON application satisfies the criteria found in section 408.035(1)(f) and (h). The Agency believes that there is no need for the PHT program that APMC seeks to develop, because the needs of the children in the APMC service area are being met by other providers in the State, principally Shands and JHACH. Section 408.035(1)(a) and (b): The need for the health care facilities and health services being proposed, and the availability, quality of care, accessibility, and extent of utilization of existing health care facilities and health services in the district of the applicant. Florida Administrative Code Rule 59C-1.044(6)(b)5/ The criteria for the evaluation of CON applications, including applications for organ transplantation programs, are set forth at section 408.035 and rule 59C-1.044. However, neither the applicable statutes nor rules have a numeric need methodology that predicts future need for PHT programs. Thus, it is up to the applicant to demonstrate need in accordance with section 408.035 and rule 59C-1.044. There are four OTSAs in Florida, numbered OTSA 1 through OTSA 4. APMC is located in OSTA 3, which includes the following counties: Seminole, Orange, Osceola, Brevard, Indian River, Okeechobee, St. Lucie, Martin, Lake, and Volusia Counties. (See § 408.032(5), Fla. Stat; Fla. Admin. Code R. 59C-1.044(2)(f)3.). OTSA 3 also generally corresponds with the pediatric cardiac catheterization and open heart surgery service areas defined by AHCA rule. (See Fla. Admin. Code R. 59C- 1.032(2)(g) and 59C-1.033(2)(h)). Currently, there is no provider of PHT in OTSA 3, but there are three providers of pediatric cardiac catheterization and pediatric open-heart surgery: APH, Florida Hospital for Children, and Nemours. There are four existing providers and one approved provider of PHT services in Florida: Shands in OTSA 1; JHACH in OTSA 2; Jackson Memorial Hospital in OTSA 4; and Memorial Regional Hospital, d/b/a Joe DiMaggio’s Hospital in OTSA 4; and an approved program in OTSA 4, Nicklaus Children’s Hospital, which received final approval from AHCA in August 2017. APMC’s Need Methodology 1: Ratio of Pediatric Cardiac Surgery Volume to PHT Case Volume To quantify need for a new PHT program in AHCA District 7, OTSA 3, APMC presented two “need methodologies.” According to the applicant, there is an observed correlation between a PHT center’s volume of congenital heart surgery and its PHT case volume. It should be noted that consistent with the rest of the application--which was focused on APH’s capabilities rather than community need for the service--both methodologies were designed to support the assertion that APMC could potentially attain a volume of 12 transplants by year two of operation. While APMC’s ability to generate 12 transplant cases is pertinent under rule 59C-1.044(6)(b), it is not indicative of unmet community need for this service. For example, if APMC retains or diverts patients who would otherwise have had access to these services through an existing provider, then they may be improving convenience whilst failing to satisfy any unmet community need. The first numeric methodology advanced by APMC in support of its proposal relied on an assumed correlation or a ratio between open-heart surgery cases and PHTs performed by the four existing PHT programs in Florida for calendar year 2016. The applicant then assumed that it would perform the mean rate experienced by the existing programs, in its second year of operation. When applied to APMC’s forecasted cardiac surgeries during the second year of operation (167), it arrived at a projected PHT volume of 11.7 by year two of operation. There are several issues with this methodology. The 11.7 projection is still below the threshold 12 transplants required under rule 59C-1.044(6)(b). The methodology also relied on figures for the 0-17 age cohort. APMC did not apply either methodology considering only 0-14 age data.6/ Additionally, APMC failed to demonstrate that there is any statistically predictive link between the two variables. The data presented in APMC’s application suggests that the correlation is weak, at best. For example, Bates page 0053 of the application reports Shands as having performed 140 pediatric cardiac surgeries and 15 pediatric heart transplants in 2016, while Memorial Regional Hospital performed more surgeries at 170, but less than half the transplants at seven for the same year. While APMC attempts to control for this variability by utilizing averages, such variability itself calls the causal relationship into question. Indeed, APMC’s own cardiac surgeon did not believe cardiac surgery volume and PHT volume to be directly related. An additional problem with APMC’s first methodology is that many of the numbers relied upon to reach its calculated forecast of 11.7 appear to be inflated. The 7 percent average, which APMC applies to its own facility, is not an accurate reflection of the true average rate among the four existing centers for 2016. While the 2016 transplant volume used represented the statewide total, APMC considered only the cardiac surgery volume reported by these four centers. Stated differently, APMC calculated a ratio considering the entire universe of one variable but not the other. The actual total number of cardiac surgeries performed statewide for 2016 for aged 0-14 was 1,216, not 491, as utilized as the denominator in calculating the ratio. As Ms. Fitch testified, when one uses the 1,216 surgeries in the formula, the ratio would be roughly 2.8 percent, not the 6.9 percent used by APMC. Then, applying APMC’s proffered number of 167 cardiac surgeries as representing its facility, the forecast would be about five PHTs, not 11.7. APMC only considered the open-heart surgeries performed at the four PHT hospitals, but certainly, the PHT patients, if they had open-heart surgery at all, may have had such surgeries at other facilities. As a pediatric OHS provider, APH is itself a good example of this, having provided 99 pediatric open-heart surgeries in 2016 that were not considered in the denominator of the formula. APMC’s Need Methodology 2: Ratio of PHT Volume to Common Indicators for PHT. APMC’s second need methodology is based on the identification of the International Classification of Disease (ICD) ICD-10 codes that are the most common indicators for PHT, taking into account acuity and based on APH’s actual experience. Starting with an analysis of ICD-9 codes and updating to ICD-10 codes as the most currently available model, APMC attempted to correlate the ICD-10 codes with the incidence of PHT in Florida hospitals using data from the AHCA inpatient database. This analysis produced an average ratio of the “most frequent indicators” to PHT cases, of 0.187. APMC then identified the volume of patients within OTSA 3 discharged under the top “most frequent” ICD-10 code indicators for PHT. Applying a conversion rate of 0.100 to this potential pool of PHT patients results in a forecast of 8.2 potential PHT cases in year 1 of APH’s PHT program. Holding constant the baseline potential patient volume in OTSA 3 and applying a conversion rate of 0.180 to years two and three resulted in a forecast of 14.8 PHT cases in OTSA 3 in years two and three. As with the previous methodology, this methodology is rejected, both as being an unreasonable basis for forecasting 12 PHTs by year 2, and as not being indicative of community need in OTSA 3 for this service. APMC presented no evidence that a link between the identified diagnosis codes and an eventual PHT exists or is predictive for any individual or group of individuals. Indeed, its health planner admitted that no statistical analysis was undertaken to test the validity of a causal relationship between these variables. Further, it is unconvincing that the average performance of the four existing long-established transplant programs over three recent calendar years is a reliable predictor of the prospective future performance of a new program by its second year of operation. This methodology, similar to the first, examined the age-range 0-17, even though rule 59C- 1.044 defines a pediatric patient as one aged 0-14. In considering the numbers of patients who presented at the four hospitals with one of the selected ICD-10 codes compared to the number of transplants, APMC acknowledged the variability in the ratios among the years and between the providers. This is evident from a review of the figures in the chart on Bates page 0055 of the APMC application. For example, according to the table, from 2014 to 2015, the number of inpatients with one of the ICD-10 codes decreased by one at Shands, but the number of PHTs performed over this same period doubled from 10 to 20. Such variability in the ratios suggests that there is no predictive link, and that it is instead other variables that affect PHT volume. Additionally, while this methodology considers diagnoses of patients actually treated in the four transplant hospitals to come up with a ratio, it then relies on average ICD volume of three Orlando hospitals instead of its own volume, without explanation. If APMC applied the ratio to its own ICD-10 volume of 138, as appears on Bates page 0056, without adding the other hospitals, its projected transplant volume would be 24.8 by year two, which is higher than any existing provider in the state. Or, if APMC applied only its own average ICD-10 volume over 2014-2016 of 46, it would result in a projected volume of 8.3 transplants at year two. While APMC’s approach is the one that gets it closest to a projected case volume of 12, it appears arbitrary and lacks credibility. Pediatric Population Growth in OTSA 3. In its application, and at hearing, APMC repeatedly referenced the growing pediatric population in central Florida as a factor supporting approval of its application. For example, APMC pointed out that OTSA 3 experienced the fastest growth rate for the 0-17 age cohort among all of the OTSAs for 2014, 2015, and 2016, and has a very robust projected annual growth rate of 2.7 percent through 2022. Moreover, each of the 10 counties in OTSA 3 is projected to experience rapid growth in the pediatric population, with the most dramatic growth rates in Orange, Osceola, and St. Lucie counties, at 10.3 percent, 12.4 percent, and 9.0 percent respectively. While the projected growth of the pediatric population in OTSA 3 is significant, such growth does not, in itself, demonstrate unmet demand or need for the project. Any increased demand for PHT due to population growth was not quantified by APMC in its application or at hearing, as APMC elected not to utilize a population and use rate analysis as a need methodology. No evidence of population demographics was presented to substantiate APMC’s transplant volume projections. On this issue, the following exchange from Dr. Nykanen’s deposition is informative: Q. When you referred to population information, is it your position that population demographics or population changes are in part a reason for the need for this project? A. As the population of Central Florida and as the population of this district increases the demand for cardiac services increases. So to the extent that you are serving more people, then I would agree, yes, that’s part of the – that’s part of the equation. Is it the tipping point? No. We don’t – we didn’t – nowhere in my discussions with Dr. DeCampli or administration was there the thought that, hey, the population is growing here so we need to provide this service. I think that the – it was more a question of, our program has grown to such a position that we need to provide this service in order to be able to be a quality program offering what we believe to be quality care for our patients. The fact that there are more people here is really not driving the need for it. That doesn’t drive the need, but it just – it does state that there may be more demand. That’s kind of the way that I feel about that. The above exchange, besides downplaying population growth as a significant argument for a PHT program, also reiterates the theme of APMC’s application and entire case, which is a focus on APMC and its institutional desire to expand the services it can provide to its patients. Another argument made by APMC in its application and at hearing is that approval of its program could reduce outmigration of PHT patients. By definition, because there is no existing PHT program in OTSA 3, all patients leave OTSA 3 for this service. However, that alone does not establish need for a new program. As discussed herein, APMC has not demonstrated a sufficient need or an access problem that justifies approval of its application. Outmigration of Donor Hearts There are four Organ Procurement Organizations (OPOs) in Florida, geographically distributed so that there is one OPO centrally located in each of the four OTSAs. The OPO in OTSA 3 has done well in procuring donor hearts notwithstanding the lack of a PHT program in its region. The establishment of a PHT program within an OPO region is known to positively correlate with an increase in the number of donor hearts that the OPO is able to procure. The number of hearts procured in Florida varies annually. In 2016, Florida OPOs procured 30 donor organs. Over 50 percent of the hearts procured in Florida leave the state. However, donor hearts also migrate into the state. With regard to the outmigration of organs from Florida, APMC has suggested that since Florida is a net exporter of organs, this is an additional reason for approval. However, organs harvested in one state are commonly used in another. There is nothing unusual or negative about that fact. There is a national allocation system through the United Network for Organ Sharing (UNOS) and this sharing, as explained by Dr. Pietra, facilitates the best match for organs and patients. UNOS divides the country into regions for the purpose of allocation of donor organs, with Florida being one of six states in Region 3. The evidence of record did not establish that approval of the APMC application would result in the reduction of organs leaving Florida, or even that such would be a desirable result. APMC also argues that approving its application would increase the number of donor organs that are both procured and transplanted within Florida. Specifically, the applicant suggested that its proposed program would increase public awareness of the need for donor hearts; and, by doing so, increase the supply of donor hearts. However, no record evidence was produced in an effort to demonstrate that the proposed program would increase the supply of organs in Florida. In fact, an APH pediatric cardiologist testified that it is unlikely that adding the proposed PHT program would impact the availability or supply of organs. Rule 59C-1.044(6)(b) Volume Standards Rule 59C-1.044(6)(b) includes additional criteria that must be demonstrated by an applicant. Subsection (6)(b)4. provides that an application for PHT include documentation that the annual duplicated cardiac catheterization patient caseload was at or exceeded 200, and that the duplicated cardiac open heart surgery caseload was at or exceeded 125 for the calendar year preceding the CON application deadline. Cardiac programs in Florida report their open-heart surgery volumes quarterly to a local health council, and the Agency publishes the calendar year totals. In the applicable baseline calendar year of 2016, APH’s duplicated OHS case volume for patients aged 0-14 was 139 OHS cases, satisfying the minimum OHS volume requirement.7/8/ APH also met the catheterization volume threshold by performing 227 cardiac catheterizations for patients aged 0-14 in the baseline 2016 calendar year. Geographic Access There is no evidence of record that families living in Central Florida are currently being forced to travel unreasonable distances to obtain PHT services. Indeed, there are five existing or approved programs within the state, with at least two located very reasonably proximate to OTSA 3. There was agreement that patients that need a PHT are approaching the end-stage of cardiac function, and in the absence of a PHT will very likely die. Accordingly, it is reasonable to infer that the parents of a child living in central Florida and needing a PHT will travel to St. Petersburg, Gainesville, or OTSA 4 for transplant services rather than let their child die because the travel distance is too far. To the contrary, the evidence in this record, as well as common sense, is that families will go as far as necessary to save their child. The notion that there is some pent-up demand for PHT services among central Florida residents (especially when there is no evidence of a single instance of an OTSA 3 patient being turned down or unable to access a PHT) is without support in this record. The parents of two pediatric patients that received PHT at Shands testified on behalf of the Agency at the final hearing.9/ Their testimony substantiated AHCA’s position that residents of the greater Orlando area have reasonable access to PHT services. One of the testifying parents lives in Brevard County, which is directly east of Orlando. Her daughter likely had a heart defect since birth, but it was not diagnosed until she was six years old. That patient was asymptomatic at the time of diagnosis but deteriorated over a period of years. When she was first seen at Shands, her condition was not emergent and the family had the time and researched other prominent institutions, including Texas Children’s Hospital, Boston Children’s Hospital, Children’s Hospital of Pittsburgh, and the Mayo Clinic in Rochester, Minnesota. Their goal was to find a program that did a good volume of transplants with above average survival rates. After doing this research, they chose Shands. Their daughter received her heart transplant at Shands, is doing well, and is now considering where to go to college. This family did not find the distance to be a problem. This parent also persuasively spoke of her concerns about further diluting the volumes of the existing programs that could result from approval of a sixth PHT program in Florida. This parent also observed that because of the shortage of donors, adding more transplant centers does not necessarily mean there will be more PHTs performed. The other lay witness is the parent of a very young boy who went from appearing to be perfectly healthy to almost dying, and being placed on life support within a 24-hour period. This family lives in Clermont, which is near Orlando. Shortly after her son’s two-month old check-up, the witness took her son to the local hospital thinking he had a urinary tract infection. The hospital sent him to APH for evaluation. As soon as he arrived there, he went into respiratory distress. An echocardiogram was done and showed he had a severely enlarged heart. APH recommended that he be transferred to Shands. Before being transferred, the mother spoke with her sister who coincidentally is a nurse in Chicago who works on the transplant floor. She also highly recommended Shands. Her son was safely transported to Shands by ShandsCair just over 24 hours after being first admitted to APH. When they arrived at Shands, both Dr. Bleiweiss and Dr. Fricker gave the parents their cell numbers and were always there to answer any questions. The infant was placed on a Berlin heart machine until an appropriate donor heart became available. This patient was able to undergo a transplant approximately three weeks after admission, and also had an excellent outcome. This mother testified that the distance to Shands was not a problem, that the social workers and nurses were always available to help, and that follow-up care at Shands has not been an issue. In fact, the patient is now able to have his labs done in Orlando. It is also notable that this patient’s transfer was uneventful and that the patient had no difficulties in being immediately admitted to Shands’ CICU. It is clear from the testimony of these parents that nothing about having a gravely ill child is “convenient.” But it was also clear that for both of these families, having an experienced provider care for their child was much more important to them than geographic proximity. The following exchange summarizes how the young boy’s mother felt about the inconvenience of having to travel from Clermont to Gainesville: Q If you want to hypothetically encounter a family who expressed to you a concern that their child needed a transplant, they resided in Orlando or the Orlando area, but they were concerned about having to travel to Gainesville to receive that service, what would you say to them? A That’s where they need to be and that everything will fall in place, but the most important thing is the care that your child needs. While transplantation is not an elective service, it is not done on an emergent basis. As noted, the number of families affected is, quite fortunately, very small. While having a child with these issues is never “convenient,” the travel issues that might exist do not outweigh the weight of the evidence that fails to demonstrate a need for approval of the APMC application. The Orlando area, being centrally located in Florida, is reasonably accessible to all of the existing providers. Most appear to go to Shands, which is simply not a substantial distance away. The credible evidence is that families facing these issues are able to deal with the travel issues. The testimony of the two parents supports the Agency’s position that obtaining the best possible outcome for the child is the parents’ primary motivation in choosing a PHT program. Financial Access APMC asserts that approval of its proposed program will enhance financial access to care. APMC currently serves patients without regard to ability to pay and will extend these same policies to PHT recipients. APMC’s application indicates that Medicaid/Medicaid HMO will account for 26.8 percent of total patient days in years one and two of the proposal. Self- pay is expected to account for 9.0 percent of patient days in years one and two. However, there was no competent evidence of record that access to PHT services was being denied by any of the existing transplant providers because of a patient’s inability to pay. Not Normal Circumstances APMC alleged the existence of “not normal circumstances” in support of its application. They are categorized as “‘not normal’ circumstances relating to access to PHT for residents of OTSA 3,” and can be summarized as follows: APMC has the one of the largest NICUs under one roof in the country, resulting in a disproportionate volume of newborns at [APH] with complex forms of congenital heart disease; There are patients at APMC who are placed on ECMO or other heart-assist devices after surgery who are too sick to be transferred from APMC to another facility to receive transplant; Forcing patients to accept the high and potentially fatal risks of transport on ECMO presents a major access issue; Post-transplant follow-up care for patients is life-long and can be time- critical, and the ability to provide 24/7 rapid access to specialized transplant urgent care is medically optimal. The first argument related to the size of APMC’s NICU, does not speak to community need. Regardless of how many newborns APH sees, if the needs of these newborns are currently being met by existing programs, then it is difficult to see how this circumstance bears upon need or accessibility to this service. Additionally, to the extent that APMC suggests that the size of its NICU will correlate with a similarly large number of PHT patients, the proposition is unsupported by the record evidence. In fact, APMC admits that its pediatric cardiac surgery program is at the border of the lowest tercile of STS programs by volume. If APH’s NICU yields only a modest to medium cardiac surgery volume, there is no reason to conclude that this NICU will, by virtue of its size alone, yield a high PHT volume. Next, APMC argued that it has had patients who could have potentially benefitted from transplant but who did not receive such services due to their being too sick or otherwise unable to transfer. It is noteworthy that APMC did not identify these patients or provide data in any fashion to bolster this claim. The application referenced 33 NICU patients on ECMO in four years, but APMC conceded that most of these are babies on respiratory or “VV ECMO,” who eventually wean off. The application also references 11 CVICU patients placed on bypass at APMC in the last four years, but no testimony was presented as to the actual number of patients alleged to be unable to transfer. APMC did not maintain at hearing that any of its pediatric patients have died as a result of being unable to transfer to a transplant facility. In fact, any incidence of children being too sick or acute to transfer outside the OH system to a transplant facility appears to be a product of APH clinical decision-making about appropriateness for transplant referral, rather than that such patients were refused at a transplant center or could not have been transferred at an earlier time. At his deposition, Dr. Nykanen discussed the issue: I think that I do agree that patients— pediatric patients in Central Florida can get a heart transplant. And I have sent patients—my patients to Gainesville for a transplant because I felt at least in the patient’s [sic] that they’ve transplanted I can support that I’m doing the right thing for my patient. In answering that question, there are patients that I do not refer for transplant because I just feel that they are not a candidate for traveling for a transplant, medically a candidate for traveling without— for a transplant. So the term reasonable is—is it reasonably accessible. It is accessible, indeed, for the majority of the patients that I feel need a heart transplant. They can travel and get a transplant. However, for some patients it’s not an option for them. Either due to their medical complexity, risks that I consider with transport, and rarely family situation. APMC emphasized the risks of moving pediatric cardiac patients while on ECMO. However, as noted earlier, the credible testimony of witnesses presented by the Agency was that while there are always risks inherent with the treatment of critically ill children, with modern advancements in technology, these transports are done routinely and safely. It is also significant that while APMC cited various risks associated with ECMO transports and underscored the danger to the patient, no APMC witness could point to a single example of a patient that died due to complications with ECMO during a transport. The Agency in its preliminary decision noted that the application lacked any data illustrating mortality or negative outcomes related to pediatric ECMO transports, and no such evidence was forthcoming at hearing. APMC presented no evidence demonstrating that children of OTSA 3 who are transplanted at an existing provider are denied or otherwise unable to access follow-up care. The two mothers that testified for the Agency both stated that they have not had issues accessing follow-up care at Shands. APMC relies instead in its application on theoretical claims about emergent complications that could arise and the challenges of accessing a center. However, these arguments are unconvincing. Both parties agreed that transplant centers can and do work with a patient’s local providers so that patients can receive urgent medical care closer to home and then return to their transplant center as necessary. Dr. Pietra testified that Shands works with primary physicians and providers post- transplant. Shands has developed a thorough protocol for all of its patients, which includes frequent follow-ups. Additionally, Ms. Smith-Fields agreed that at her facility in Arizona (the only PHT provider in that state) the program coordinates with providers local to patients to ensure rapid acute care is accessible, if needed. APMC’s cardiologist, Dr. Riddle, testified that APH does provide acute care and other necessary care to children post-PHT, and that it competently does so. APMC maintained at hearing that post-transplant care is life-long, and that in the event of an emergent situation, immediate access is critical. However, the evidence indicates that existing transplant centers plan for these events. There are more frequent follow-up visits to a transplant center during the period immediately following the transplant. Both Dr. DeCampli and Dr. Riddle testified that organ rejection is more likely to occur during the first year after transplant. Additionally, diagnostic testing can often detect signs of rejection in advance, to allow a transplant center to respond before an acute episode occurs. Indeed, one of the functions of echocardiograms is to scan the heart and detect abnormalities or episodes of rejection. The record reflects that transplant centers, such as Shands, are capable of properly and safely monitoring these patients and dealing with issues of rejection. The evidence in this record does not support the proposition that geographic distance to existing centers is a barrier to patients receiving necessary follow-up care. Orlando Health’s Prior Position APMC’s claim that there is an accessibility issue or a need for PHT services in OTSA 3 is further undermined by its own contrary position on these issues just a few months prior to the submission of its application. In January 2017, OH and APH presented written opposition to Nemours Children’s Hospital’s attempt to establish a PHT program in Orlando. APH also presented oral argument from Drs. Nykanen and DeCampli in opposition to the proposed Nemours PHT program being approved by the Agency. The written statement of opposition, identified on its face to be on behalf of OH and APH for Children, unequivocally advanced the position that PHT services are not needed in OTSA 3, and that they are reasonably available to residents of the service area: Nothing supports the theory in the [Nemours] applications that the proposed services are unique or not otherwise available, or that there is a need for them among the population. * * * Specifically, CON application no. 10471 [Nemours’ PHT application] does not provide any facts that would lead the Agency to conclude that existing pediatric heart transplant services are not reasonably available to residents of the service area. For example, the data shown in CON application no. 10471, Exhibit 15, p. 75, does not reflect time travel distances; existing providers are within the typical two hour drive time standard accepted by health planning experts and the Agency for tertiary services. The personal letter authored by Dr. Nykanen and included as part of the APH opposition was unequivocal and specific in its conclusion that access to these services for residents of OTSA 3 is not a problem. Dr. Nykanen stood by his statement in this proceeding, testifying in his deposition: So we would—we would do anything for our child. I’d travel around the world, you know, halfway around the world if I thought that something would benefit my child. So geographic proximity in that sense probably doesn’t matter. And it doesn’t matter. If I’m an outpatient and I can get in my car and I can go to Gainesville. * * * And I don’t think that it—I honestly don’t think that a two-hour drive is that much of a barrier. It’s a pain and it’s inconvenient. * * * So I think what I intended with that statement and believe it to be true today is that if my child needed a transplant and I could travel to Gainesville and I could get there, I’ll do it, as a family. Is that an inconvenience, yes. Is it a huge barrier, probably not. Because if it, in the balance of things, meant that my child would survive or not, then I would do it. I’d go to London, England if I had to. APMC attempted to justify its prior position as mere concern about the inexperience of the Nemours cardiac program. However, this is contradicted by the record evidence in this case. Dr. Nykanen testified that, at the time of the Nemours public hearing, his expressed position was that there was not a need for PHT services in central Florida. The unambiguous statements by APMC opposing a local competitor’s attempt to establish the same health service that it now claims the children of central Florida need, further undermines the credibility of APMC’s current position, and underscores APMC’s focus on its own interests. The prior position taken by APMC with respect to need and accessibility in OTSA 3 was made with the intent that it be received and considered by the Agency in its decision on the Nemours application. AHCA witness, Marisol Fitch, found this clinical and health planning testimony to be persuasive, and APMC’s prior position that need and accessibility do not support approval of a new PHT program are in line with the record evidence. The glaring inconsistency in APMC’s past and current assertions calls into serious question the credibility of the general, theoretical, and unsubstantiated access problems that are alleged in APMC’s application. 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; 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; and Rule 59C-1.044(3-4). Quality in the delivery of health care is APMC’s first and foremost strategic imperative. APMC defines “quality” as the simultaneous achievement of excellence in three areas: patient outcomes, patient experience, and patient access. APMC is very deliberate in its approach to metric- driven performance in quality and safety. APMC is the highest- rated system in all of Central Florida within the CMS rating system, which analyzes data for 66 quality improvement metrics. Similarly, APMC is the highest ranked Truven-rated health care system in Central Florida, and is ranked first among the over 30 hospitals analyzed and ranked by Vizient Southeast. The metrics analyzed by these rating organizations include, but are not limited to, mortality rates, readmission rates, cost containment, patient experience scores, emergency department wait times, and infection rates. Through deliberate focus and a compulsive commitment to quality, the APH Heart Center has performed at the highest levels with respect to quality of care and patient outcomes for well over a decade. For its part, the Agency does not dispute that the applicant is a quality provider. However, AHCA does maintain that approval of an unneeded sixth provider of PHT services in Florida could lead to or correlate with negative patient outcomes. Given the relatively low PHT volumes statewide, and agreement that volume is positively correlated with quality and outcome in transplantation, splitting state volume among six providers could negatively impact the quality of this service, as it concerns the residents of OTSA 3 and Florida more broadly. This service is defined by Florida law as a tertiary service of limited concentration. Indeed, APMC agrees that there should not be a PHT program in every hospital, particularly since organs are a limited resource. APMC failed to credibly demonstrate that it would achieve the PHT volumes it projected unless it diverts significant volumes from other Florida providers. Approval of a new program will not create transplant patients that do not exist or are not currently able to reasonably access services. The applicant has not demonstrated that it will achieve volume sufficient to reasonably assure quality care. Rule 59C-1.044(4) requires that applicants meet certain staffing requirements, including: “The program shall employ a transplant physician, and a transplant surgeon, if applicable, as defined by the United Network for Organ Sharing (UNOS) June 1994.” The applicant concedes that it still needs to hire a transplant surgeon and a cardiologist specializing in heart failure, to staff the proposed program. While APH has had difficulty recruiting and retaining a bone marrow transplant physician to implement the bone marrow program approved in 2014, given its outstanding reputation for quality it is likely that APMC would ultimately be successful in recruiting a PHT surgeon and an advanced heart failure cardiologist. Section 408.035(1)(e): The extent to which the proposed services will enhance access to health care for residents of the service district. Approval of APMC’s proposed program would likely improve physical access to PHT services for the very few residents of OTSA 3 that need them. Generally speaking, adding an access point for a service will make that service more convenient and geographically proximate for some. However, given the rarity of PHTs, approval of the APMC program would not result in enhanced access for a significant number of patients. Moreover, there was no credible evidence presented at hearing that any resident of OTSA 3 that needed PHT services was unable to access those services at one of the existing PHT programs in Florida. Based upon persuasive record evidence, there is also clearly a positive relationship between PHT volume and outcomes. As with any complex endeavor, practice makes perfect. In this instance, maintaining a minimum PHT case volume provides experience to the clinicians involved and helps maintain proficiency. According to the credible testimony of Dr. Pietra, maintaining a volume of no fewer than 10 PHTs per year is critical, “because your relative risk for the next patient that you do is at its lowest” if you stay above that volume. The clear intent of the minimum volume requirement of 12 heart transplants per year contained in rule 59C- 1.044(6)(b)2. is to ensure a sufficient case volume to maintain the proficiency of the transplant surgeons and other clinicians involved in the surgical and post-surgical care of PHT patients. In the 12 months ending in June 2016, there were only 35 PHT’s performed in Florida. By the end of June 2017, that number had dropped to 21, with none of the four operational PHT programs meeting the 10-case minimum volume. And when the approved PHT program at Nicklaus Children’s Hospital becomes operational, the per-program volume of PHTs is likely to drop even further. Given the lack of demonstrated need for a sixth program, and low volume of PHT’s statewide, the undersigned is unable to recommend approval of the APMC program knowing that it would further dilute the pool of PHT patients, potentially adversely affecting the quality of care available at the existing programs. Adequate case volume is also important for teaching facilities, such as Shands, to benefit residents of all the OTSAs by being able to train the next generation of transplant physicians. There was no persuasive evidence of record that approval of APMC’s application would meaningfully and significantly enhance geographic access to transplant services in OTSA 3. The modest improvement in geographic access for the few patients that are to be served by the program is not significant enough to justify approval in the absence of demonstrated need. There is no evidence that approval of the APMC application will enhance financial access, or that patients are not currently able to access PHT services because of payor status. Section 408.035(1)(g): The extent to which the proposal will foster competition that promotes quality and cost- effectiveness. It is clear that establishing and maintaining a transplant program is expensive and entails a significant investment of resources. Given the limited pool of patients, the added expense of yet a sixth Florida program is not a cost- effective use of resources. Section 408.035(1)(i): The applicant’s past and proposed provision of health care services to Medicaid patients and the medically indigent. OH is the designated safety net provider for the Central Florida region. In 2016, OH provided approximately $437 million in unreimbursed charity care. OH’s commitment to provide health care services to its entire community without regard to ability to pay continues today. Fifty-five percent of the patients served by APH are Medicaid beneficiaries, and 5-7 percent are self-pay or uninsured. If approved, OH’s mission and role as a safety net provider would extend to its proposed PHT program.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a final order be entered denying CON Application No. 10518 filed by Orlando Health, Inc., d/b/a Arnold Palmer Medical Center. DONE AND ENTERED this 26th day of December, 2018, in Tallahassee, Leon County, Florida. S W. DAVID WATKINS Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 26th day of December, 2018.
Findings Of Fact Application Process Humhosco is a wholly owned subsidiary of Humana, Inc. Humhosco owns Humana Hospital Brandon and other hospitals in Florida. The record does not disclose thee number of such hospitals or whether Humhosco owns other assets. On February 26, 1988, Humhosco submitted to HRS a letter of intent to apply for a certificate of need for open heart services at Humana Hospital Brandon. The letter of intent included a certificate dated February 26, 1988, authorizing Humhosco to file the application for the project estimated to cost nearly $2 million, making available "sufficient funds" for the project, certifying that Humhosco shall accomplish the project within the time allowable by law at or below the costs stated in the application, and certifying that Humhosco shall license and operate the facility. The certificate was signed by Alice F. Newton, as Secretary of Humana, Inc. She certified that the representations contained in the preceding paragraph were resolutions of the Board of Directors of Humana, Inc. approved on February 26, 1989. On or about March 14, 1988, Humhosco submitted to HRS an application for a certificate of need to install and operate an open heart center at Humana Hospital Brandon. The projected cost was about $1.9 million. The application included a certificate dated March 16, 1988, containing resolutions similar to those contained in the certificate of February 26, 1988. The certificate was again signed by Alice F. Newton, but this time in her capacity as Secretary of Humhosco. The resolutions, which were dated as of March 16, 1988, were adopted by the Board of Directors of Humhosco. The application contained no financial statement of Humhosco. Instead, the application contained an audited financial statement for "Humana Hospital- Brandon (a division of Humhosco, Inc., a wholly-owned subsidiary of Humana Inc.)." The financial statement, which was for fiscal year ending August 31, 1987, reflected an examination of the financial records of Humana Hospital Brandon, not Humhosco. The financial statement disclosed a shareholder's equity of about $24 million and net income of about $6.2 million based on net revenues of about $47 million and income before income taxes of about $12.2 million. The record does not explain the basis for a shareholder's equity in a division of the corporation in which it owns shares. However, nothing in the record suggests that the financial statement is mislabelled. The financial statement appears to reflect the operations and net worth of a division of Humhosco, not Humhosco itself. The financial statement is of little value in assessing the financial condition of Humhosco. Nothing in the record supports an inference that Humhosco's other hospitals, as well as any other operating assets that Humhosco might own, are profitable or, if unprofitable, whether their losses are exceeded by the profits of Humana Hospital Brandon. By letter dated April 14, 1988, HRS requested additional information from Humhosco. The letter requested, among other things, a financial statement for the prior year and an original certificate rather than a copy. HRS never commented on the fact that the certificate accompanying the letter of intent evidenced resolutions from the corporate parent of the applicant or that the financial statements were of a division of the applicant. By letter dated May 12, 1988, Humhosco responded to the above- described omissions letter. In its response, Humhosco provided the earlier financial statement, which was for Humana Hospital Brandon and not Humhosco. The letter did not include any material information regarding either certificate. By letter dated July 11, 1988, HRS informed Humhosco of its intent to issue Certificate of Need 5537 for the establishment of the open heart program described in the application. The accompanying State Agency Action Report, which was dated July 8, 1988, recommended that the certificate of need be issued in its entirety. The report stated that the need methodology described by Rule 10-5.011(1)(f) justified seven open heart programs in District VI, which has only six such programs, and the Humhosco proposal was in substantial compliance with all criteria. The Hospital Humana Hospital Brandon is a 220-bed general hospital in Brandon, which is in eastern Hillsborough County. Humana Hospital Brand on is fully accredited by the Joint Commission of the Accreditation of Health Care Organizations. The hospital, which is a Level II trauma center with eastern Hillsborough County as its catchment area, contains 16 intensive-care and cardiac-care beds and 35 progressive-care beds, in addition to its regular medical-surgery beds. The hospital offers a wide range of services, including medicine, pathology, anesthesiology, radiology, neurology, intensive care, and emergency care available at all times for cardiac emergencies. The hospital provides cardiac catheterization services through its cardiac catheterization lab and noninvasive cardiographics lab. Open heart surgery is cardiac surgery during which a cardiopulmonary bypass procedure is used. Cardiac catheterization is a diagnostic/therapeutic procedure used in connection with heart and circulatory conditions. Coronary angioplasty is the expansion of narrowed segments of the coronary vessels. The proposed open heart suite would be adjacent to the existing cardiac catheterization lab, and the two facilities would share the same recovery/support area. The proposed program would provide a wide range of procedures, including the repair or replacement of heart valves, repair of congenital heart defects, cardiac revascularization, repair or reconstruction of intrathoracic vessels, and the treatment of cardiac truama. The program would have the ability to implement and apply circulatory assist devices such as the intra- aortic balloon assist and prolonged cardiopulmonary partial bypass. Need District and State Health Plans The 1985 District VI Health Plan reports that most cardiac surgeries are open heart with the most common of these being coronary bypass surgery. The plan acknowledges that an important use of cardiac catheterization is evaluation for open heart surgery. According to the plan, open heart surgery, particularly coronary bypass surgery, has been controversial with respect to its risk- and cost- effectiveness and the fairness of its distribution among the entire population. Noting a decline in procedures in District VI from 1983 to 1984, the plan concluded that the application of the present rule methodology could exaggerate need if the decline continued. Otherwise, however, the proposed program satisfied the policies of the district plan broadly relating to need. The State Health Plan stated that an inverse relationship exists between the volume of open heart procedures and surgical death rates. The state plan added, however, that no clear agreement exists as to the minimum number of procedures necessary to maintain staff skills. The plan endorsed the rule requiring that a new program project a minimum of 200 procedures annually within three years of opening. The State Health Plan reported the controversy concerning the efficacy of open heart procedures, at least at their current rate. The plan concluded that further study would be required before the issue could be resolved. The plan stated that new types of cardiac catheterization procedures may replace some open heart surgery, "while necessitating the availability of open heart programs on standby basis within the same facility." The plan also anticipated a reduction in the rate of open heart surgery with the introduction of new procedures, such as balloon angioplasty, clot-dissolving substances, and calcium blockers. The plan noted the recommendations of two groups that cardiac catheterization laboratories be located only in facilities providing open heart surgery. The plan suggested that catheterization laboratories without connected open heart programs would suffer lower utilization rates than catheterization laboratories with open heart programs. The State Health Plan concluded by establishing an objective "to maintain an average of 350 open heart surgery procedures per program in each district through 1990." HRS Rules Rule 10-5.011(1)(f), Florida Administrative Code, sets forth the HRS numeric need methodology. Rule 10-5.011(1)(f)8 provides a formula to estimate the number of open heart procedures for the horizon year, which, in this case, is 1990. Rule 10-5.011(1)(f)11 prohibits the approval of new open heart programs unless certain conditions are met, including satisfying the requirement of Rule 10-5.011(1)(f)5.d that 200 procedures annually be performed within three years after commencement of the service. The proposed open heart program would generate a minimum of 200 adult open heart procedures annually within three years after commencement. Ultimately, the program could handle as many as 500 procedures annually. Under the formula contained in Rule 10-5.011(1)(f)8, the estimated number of open heart procedures in District VI is 2555 in 1990, which is when the proposed program would become operational. The projected population of District VI on January 1, 1990, is 1,563,354 persons. For the 12-month period ending two months prior to the deadline for letters of intent for the subject batching cycle, the use rate per 100,000 persons in District VI was 163.45. This figure is based on a population of 1,469,572 persons residing in District VI as of July 1, 1987, and 2402 open heart procedures performed during calendar year 1987. (The number of procedures includes 1050 procedures performed at Tampa General for the one-year period ending September 30, 1987, rather than calendar year 1987.) Rule 10-5.001(1)(f)11.b requires that the projected number of procedures in 1990 be divided by 350 in order to generate the number of programs needed to exist in 1990. The result of this calculation is that seven open heart programs are needed in District VI. That means that there is a net need for one program because there are presently six existing and approved open heart programs in District VI. However, Rule 10-5.011(1)(f)11.a.I prohibits the approval of any new open heart programs unless "each existing and approved" program is "operating at" and "expected to continue to operate at" a minimum of 350 adult open heart cases annually. The meaning of this rule is unclear, and HRS apparently interprets it merely to require that all existing programs average 350 procedures annually at the time of determination of the actual use rate. Another interpretation of the rule is that each existing and each approved program must be operating at the requisite rate before new programs could be approved. This interpretation is impractical because approved programs that are not yet in operation are not operating at any rate. If the intent of the rule were to prohibit the establishment of more than one open heart program at a time, HRS could have simply stated as much. The most likely interpretation is one that addresses the universally recognized relationship between volume of open heart procedures (up to a certain level) and patient mortality. The rule requires that each existing and approved facility in the district be operating at 350 procedures annually before new open heart programs are licensed. The rule does not authorize averaging the total number of procedures among the licensed facilities in a district. The inverse relationship between the number of procedures and surgical deaths is not dependent upon an average number of procedures performed in a geographical area. The safety of an open heart patient is dependent upon the actual number of open heart procedures being performed at the hospital that he or she has selected for open heart surgery. The presence in District VI of a hospital performing 1400 open heart procedures annually is of no relevance to the patient who has unwittingly selected a hospital in the same district that performs only, say, 50 such procedures annually. The six existing and approved open heart programs in District VI are identified below by facility, location, and numbers of procedures in 1987 and the first six months of 1988. Facility County 1987/1988 Procedures Tampa General Hillsborough 1050/714 St. Joseph's Hillsborough 887/514 University Community Hillsborough 0/0 Manatee Memorial Manatee 0/70 L. W. Blake Manatee 0/0 Lakeland Regional Polk 465/292 TOTAL DISTRICT VI PROCEDURES--1987 2402/1590 The 1988 procedures for Manatee Memorial cover the period of February, when the program became operational, through June. The State Agency Action Report indicates that Manatee Memorial is an approved but not yet existing program, although the program had already accounted for 70 procedures by the time of the report. The reason for this apparent discrepancy is that HRS uses the 1987 data used for calculating the use rate when determining the status of other programs. HRS offered little explanation of why it used 1987 data for determining in 1988 whether other programs were existing. Rule 10-5.011(1)(f), Florida Administrative Code, which covers open heart programs, does not define "approved and existing programs" or establish the time at which the status of a program should be determined. However, given the critical role of patient safety in the licensing process, the rule does not justify the reference to obsolete data. The Manatee Memorial open heart program was existing and approved at the time of the letter of intent and application of Humhosco and the State Agency Action Report. It was not then operating at 350 open heart procedures annually. Its approximate annualized rate of 168 procedures is materially below even the annual rate of 200 procedures often cited as the minimum number at which the mortality rate levels out. Additionally, there was no evidence that Manatee Memorial would attain such a volume of open heart procedures. Conclusions Regarding Need According to the numeric need methodology, exclusive of Rule 10- 5.011(1)(f)11.a.I, District VI could support an additional open heart program. Although in the long run the rate of open heart procedures may decrease for the reasons set forth above, the rate of such procedures will probably increase at least through 1990 and probably several years thereafter. For reasons set forth elsewhere in this recommended order, the Humana Hospital Brandon program would successfully satisfy this need. However, the requirement of Rule 10-5.011(1)(f)11.a.I has not been met, and thus need under the rule does not exist. Of the six current open heart programs in District VI, three performed no procedures in 1987. During the first six months of 1988, one of these three programs became operational, but the other two had yet to perform their first procedure. Although the first-year rate of procedures at Manatee Memorial was not insubstantial, the program is not operating at and expected to continue to operate at the minimum annual rate of 350 procedures set forth in the rule. The likelihood of the Manatee Memorial program attaining such a rate is especially difficult to predict in view of the unknown consequences of the initiation of another open heart program in Manatee County and another elsewhere in District VI. On balance, the proposed program at Humana Hospital Brandon is not needed or authorized due to the existing volume of procedures at Manatee Memorial as of the time of the application and approval and the adverse effect of reduced volumes upon patient safety. Rule 10-5.011(1)(f)11.a.I makes it clear that District VI needs time to absorb the recently approved open heart programs before a new one should be established. Quality of Care Humhosco has the ability to provide high quality of care and has done so in the past. An open heart program at Humana Hospital Brandon would improve the quality of care at the hospital. The new program would have limited effect upon the hospital's trauma services due to the limited number of trauma-related open heart procedures. However, the new program would complement the cardiac catheterization lab at the hospital. The addition of an open heart program would permit Humhosco to add cardiac angioplasty services in the cardiac catheterization lab at the hospital. Continuity of care and patient safety and convenience would be enhanced by the establishment of an open heart program at Humana Hospital Brandon. Strong physician support exists for an open heart program at Humana Hospital Brandon. Many existing staff persons already have the necessary skills and experience to participate in the open heart program. The staff includes 10 cardiovascular surgeons certified by the Medical Board of Thoracic Surgery or board-eligible for certification and three board-certified or board-eligible anesthesiologists trained in open heart surgery. Humhosco would add the additional staff needed to operate the proposed program. Humana Hospital Brandon has the capacity to accommodate the projected patient volume from the open heart program. Service Accessiblity Rule 10-5.011(1)(f)4.a provides that open heart programs shall be available within a maximum automobile travel time of two hours under average conditions for at least 90% of the district's population. The two-hour standard reflects the fact that open heart surgery is a tertiary service that is ordinarily performed on a scheduled rather than emergency basis. Hillsborough County is the largest county within District VI. The growth rate of eastern Hillsborough is higher than the growth rate of the remainder of the county. No open heart program is presently located in eastern Hillsborough County. A program at Humana Hospital Brandon would reduce the travel time for the persons living in eastern Hillsborough County. However, the two-hour standard is presently met in District VI, and the improvement in geographical access resulting from the establishment of a program at Humana Hospital Brandon is not substantial. The proposed program would satisfy the requirements of Rule 10- 5.011(1)(f)4.b and c regarding hours of operation and waiting periods. Humhosco has projected for the open heart program a payor mix of 55% Medicare, 2% Medicaid, and 5% indigent. If these projections were realized, Humhosco would achieve the objective of making open heart surgery available to these classifications of patients. Humhosco's record of serving these patient classifications at Humana Hospital Brandon suggests that these projected goals would be achieved. Financial Feasibility The immediate financial feasibility of the proposed project is good. The source of construction funds is a reasonable mix of 25% equity and 75% debt. The borrowed funds will come from Humana, Inc., which has ample resources to make a loan of this magnitude. The terms are 10 years at 12% with 120 equal monthly payments of $20,575.89 principal and interest. The availability of the equity portion of construction costs, which amounts to a little over $475,000, is uncertain due to the lack of information concerning the financial condition of the applicant. It is unlikely, however, that the unavailability of any or all of these funds would interfere with the project. Humana, Inc. has in any event committed by resolution to make available to the applicant sufficient funds to accomplish the project. The long-term financial feasibility of the proposed project is good. Even after total interest payments of about $168,000 and $158,000 in the first two years of operation, Humhosco projects, based on reasonable assumptions, that the open heart program would produce after-tax income of about $250,000 on first-year gross revenues of about $6.2 million and $345,000 on second-year gross revenues of about $7 million. Cost Effectiveness The implementation of an open heart program at Humana Hospital Brandon would encourage competition among health care providers of open heart services. Humhosco projects the average charge per open heart admission when the program would open in 1990 to be $29,000. This figure is about $3600 less than the average charge per open heart admission at Tampa General in 1987 and compares favorably with the charges of other providers in the area. In the long term, the effect of an open heart program at Humana Hospital Brandon could have an adverse effect on cost effectiveness if the program at Tampa General lost substantial volume due to the presence of this competition. Tampa General is a major provider of medical services to the medically indigent. Although publicly supported, Tampa General expends more on indigent-related costs than it receives in public funds for the medically indigent. Tampa General therefore must subsidize its unreimbursed indigent services with revenues from paying patients. In 1980, after a period of serious financial strains, Tampa General commenced a modernization program to attract paying patients. The program, together with a $160 million bond issue and new marketing efforts, has significantly improved the financial condition of the hospital. The approval in the past of new open heart programs in the area has coincided with the reduction of open heart procedures at Tampa General. In fiscal year ending 1983, Tampa General performed 1671 procedures. The following year, during which St. Joseph's began performing open heart surgery, Tampa General performed 878 procedures. In fiscal year ending 1985, Tampa General performed 802 procedures. The following two years, during which no new programs became operational, Tampa General performed 1050 and 1428 (projected) procedures, respectively. Undoubtedly, a new open heart program at Humana Hospital Brandon would have some effect on existing programs, including that at Tampa General. However, the record does not support a finding that the establishment of an open heart program at Humana Hospital Brandon would have a more lasting effect upon the program at Tampa General than did the other programs established in recent years. Other Factors The record does not demonstrate that there are less costly, more efficient, or more appropriate alternatives to the in-patient services proposed in the subject application. With one exception, existing in-patient facilities providing open heart services are being used in an appropriate and efficient manner. The exception is that there is nothing in the record to suggest that the open heart programs at Manatee Memorial, University Community, and L. W. Blake are being utilized efficiently. To the contrary, the only program in existence at the time of the application was not operating at the optimal minimum level. The costs and methods of proposed construction are reasonable and appropriate. There is nothing in the record to suggest that practical alternatives exist to the construction program contemplated by Humhosco. Open heart patients will not experience serious problems in obtaining in-patient care if the proposed application is not approved. There is nothing in the record to suggest that joint, cooperative, or shared resources could be used to provide the open heart services for which Humhosco has applied. The proposed program would not have any significant effect on research and educational facilities or health professional training programs.
Recommendation Based on the foregoing, it is RECOMMENDED that a Final Order be entered dismissing the petition of University Community Hospital in Case No. 88-4366 on the grounds that it dismissed its petition, and denying the application of Humhosco for Certificate of Need 5537. DONE and ENTERED this 18th day of April, 1989, in Tallahassee, Florida. ROBERT E. MEALE Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, FL 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 18th day of April, 1989. APPENDIX Treatment Accorded proposed Findings of Humhosco and HRS 1-29. Adopted or adopted in substance. 30. Rejected as against greater weight of the evidence to the extent that the requirement of 350 procedures at each facility is part of the numeric need methodology. 31 and 33. Adopted in substance. However, the resulting determination of need or no need is tentative. Rule 10-5.011(1)(f)11 provides a general prohibition against the establishment of programs under normal circumstances even though, under the other portions of the rules, there would otherwise be a numeric need. 32. Adopted. Rejected as legal argument. To the extent factual, rejected as against the greater weight of the evidence. Adopted in substance. Rejected as unnecessary. 37-38. Rejected as subordinate. Adopted in substance at least as to the maintenance or slight increase of the present use rate for the immediate future. This fact does not justify a deviation from the rule requirement of the historic use rate, which in any event would justify another program. Nor does this fact justify a not normal condition for the reasons set forth in the recommended order. It should be noted that Humhosco did not offer evidence to this effect at the hearing for either of these improper purposes. This fact is only relevant in assessing the impact of the establishment of the proposed project upon existing providers, especially Tampa General and, to a lesser extent due to the greater amount of speculation involved, the new providers such as Manatee Memorial. Rejected as unsupported by the greater weight of the evidence. An increase in the number of programs has historically been accompanied by an increase in the number of procedures. It is conjecture whether or to what degree the addition of programs caused such an increase. 41-45. Adopted in substance. 46-48. Rejected as subordinate. 49-52. Adopted or adopted in substance. 53-55 and 60. Rejected as legal argument. 56-58 and 61. Adopted or adopted in substance. 59. Rejected as recitation of evidence. 62-64. Rejected as subordinate. 65. Rejected as legal argument. 66-69. Adopted. 70 and 72. Rejected as unsupported by the greater weight of the evidence. 71. Rejected as irrelevant. 73-76. Rejected as subordinate. Concerning the "overcrowded" conditions at Tampa General, the evidence showed only that the Tampa General program was, at times, quite busy, but not overutilized. The periodic high level activity at Tampa General is subordinate to the findings in the recommended order concerning the limited impact upon Tampa General of the approval of the proposed project. 77. Adopted in substance. 78-82. Rejected as subordinate. 83. Adopted in substance. 84-86. Rejected -as subordinate. Rejected as unsupported by the greater weight of the evidence. The proposed payor mix is reasonable insofar as providing access to the medically indigent and Medicaid patients. The record is unclear, however, that the approval of the application would improve the existing access of such patients to open heart services. Adopted in substance. 89 and 91. Rejected as subordinate. 90. Adopted, except that the last sentence is rejected to the extent that it suggests that Humhosco's commitment to financial access is greater than the commitment of existing providers. 92-94. Adopted. 95-96. Rejected as irrelevant. A hospital has no financial strength. A lender or investor assesses the legal entity that owns or operates the hospital. The net worth and profitability of the hospital may have a material impact on the net worth and profitability of the owner or operator of the hospital. However, it is impossible to make that determination without assessing the assets, liabilities, profits, and losses of the legal entity and not simply one of its assets. The immediate financial feasibility may be inferred by the activity of Humana, Inc. with respect to the proposed project. Rejected as legal argument. Adopted in substance. 99-100 and 108. Adopted. 101-107. Rejected as subordinate and cumulative. 109 and 123. Rejected as legal argument. 111-122. Adopted in substance. 123. Rejected as legal argument. and 126. Adopted. and 127-128. Rejected as subordinate. Adopted in substance. Rejected as cumulative. 131-133. Rejected as cumulative and, for the purpose offered, irrelevant. 134-137. Adopted in substance. 138-150. Rejected as subordinate. Treatment of Proposed Findings of Tampa General 1-3. Adopted. Rejected as legal argument and, as to the policy of HRS, irrelevant insofar as such policy might deviate from the clear requirements of the statute. First two sentence rejected as legal argument. Remainder adopted. 6-7. Rejected as legal argument except that last sentence of Paragraph 7 is adopted. First two sentences adopted. Remainder rejected as irrelevant. Adopted in substance. 10-11. Adopted. 12. Rejected as legal argument and, to the extent factual, against the greater weight of the evidence. 13-14. Adopted in substance. 15-16. Rejected as unnecessary. 17. Rejected as against the greater weight of the evidence. 18-20. Adopted in substance. Adopted insofar as Humhosco provides quality cardiac care services at Humana Hospital Brandon without an open heart program. Remainder rejected as against the greater weight of the evidence. Rejected insofar as the proposed finding suggests that a slight improvement in geographic accessibility should, as a matter of law, be ignored in this case. Adopted in substance if, like the proposed finding in Paragraph 19 concerning trauma-center status, this proposed finding means only that the slight improvement in geographic accessibility is alone insufficient to justify granting the certificate of need. Rejected as subordinate. 24-25. Rejected as recitation of evidence and subordinate. Rejected as unsupported by the greater weight of the evidence. Adopted. 28-29. Adopted in substance. Rejected as irrelevant given the interpretation adopted in the recommended order concerning the meaning of Rule 10-5.011(1)(f)11.a.I. Adopted in substance. 32-33. Rejected as unsupported by the greater weight of the evidence. 34. Rejected as subordinate. 35-40. Rejected as unsupported by the greater weight of the evidence. 41-42. Rejected as unsupported by the greater weight of the evidence and subordinate. Treatment Accorded proposed Findings of St. Joseph's 1-4. Adopted or adopted in substance. First sentence adopted except that the tax status of Humhosco as a "holding company" is rejected as a legal conclusion, irrelevant, and unsupported by the greater weight of the evidence. Second sentence adopted. Third sentence rejected as irrelevant. Third sentence rejected as a legal conclusion, irrelevant, and unsupported by the greater weight of the evidence, although it appears to be true that the identities of the persons occupying the named positions are the same between the two companies. Last sentence rejected as irrelevant. Adopted. Rejected as irrelevant. Adopted. Rejected as irrelevant. 10-13. Rejected as legal argument and unnecessary, given the finding in the recommended order that, even ignoring the additional beds that have been approved at Humana Hospital Brandon, the hospital is not overutilized. 14-15 and 17 and 19. Rejected as legal argument. 16. Rejected as subordinate. 18. Adopted in part and rejected in part. The existence of a cardiac catheterization lab does not mandate the authorization of an open heart program. However, the record in this case supports the finding that the addition of an open heart program would complement existing services in the cardiac catheterization lab, and nothing in the law prohibits the consideration of such a factor. 20-21. Rejected as irrelevant. See Paragraph 18 above. Rejected as irrelevant. Rejected as legal argument. Rejected as unsupported by the evidence. 25-26. Rejected as subordinate to the finding contained in the recommended order that the status as a trauma center is not a significant factor in considering the subject application. 27-28. Rejected as legal argument. 29-30. Adopted in substance. 31-33. Rejected as recitation of evidence. 34. Rejected as against the greater weight of the evidence. 35-39. Rejected as subordinate. 40. Adopted in substance. 41-49. Rejected as subordinate. 50. Rejected as irrelevant. 51-52. Rejected as against the greater weight of the evidence. 53-55. Rejected as subordinate. 56. Rejected as legal argument. 57-58. Rejected as recitation of testimony. Rejected as legal argument. Adopted. 61-69. Rejected as unnecessary. Rejected as legal argument. Adopted except that the last sentence is rejected as legal argument. Rejected as legal argument. Rejected as recitation of testimony. Rejected as legal argument. Adopted in substance. 76-78. Rejected as recitation of evidence. COPIES FURNISHED: Ivan Wood, Esquire Sam Power Wood, Lucksinger & Epstein Clerk Four Houston Center Department of Health and 1221 Lamar, Suite 1440 Rehabilitative Services Houston, TX 77010 1323 Winewood Boulevard Tallahassee, FL 32399-0700 John Radey, Esquire Elizabeth McArthur, Esquire Gregory L. Coler Aurell, Fons, Radey & Hinkle Secretary Post Office Drawer 11307 Department of Health and Tallahassee, FL 32302 Rehabilitative Services Tallahassee, FL 32399-0700 Cynthia S. Tunnicliff, Esquire Carlton, Fields, Ward, Emmanuel, Smith & Cutler, P.A. John Miller Drawer 190 General Counsel Tallahassee, FL 32302 Department of Health and Rehabilitative Services 1323 Winewood Boulevard John Rodriguez, Esquire Tallahassee, FL 32399-0700 Assistant General Counsel 2727 Mahan Drive Fort Knox Executive Center Tallahassee, FL 32308 James C. Hauser, Esquire Joy Thomas, Esquire Messer, Vickers, Caparello, French and Madsen, P.A. Post Office Box 1876 Tallahassee, FL 32302 =================================================================
The Issue Whether there is need for a new Pediatric Heart Transplant and/or Pediatric Heart and Lung Transplant program in Organ Transplant Service Area (OTSA) 3; and, if so, whether Certificate of Need (CON) Application No. 10471 (heart) and/or 10472 (heart and lung), filed by The Nemours Foundation, d/b/a Nemours Children’s Hospital (Nemours or NCH), to establish a Pediatric Heart Transplant and/or Pediatric Heart and Lung Transplant program, satisfy the applicable statutory and rule review criteria for award of a CON.
Findings Of Fact Based upon the demeanor and credibility of the witnesses and other evidence presented at the final hearing and on the entire record of this proceeding, the following Findings of Fact are made: The Parties The Applicant, Nemours Nemours Children’s Hospital is a licensed Class II specialty children’s hospital located in Orange County, Health Planning District 7, Subdistrict 7-2, OTSA 3, which is owned and operated by The Nemours Foundation. Nemours is licensed for 100 beds, including 73 acute care, nine comprehensive medical rehabilitation, two Level II neonatal intensive care unit (NICU), and 16 Level III NICU beds, and is a licensed provider of pediatric inpatient cardiac catheterization and pediatric open-heart surgery. As the primary beneficiary of the Alfred I. duPont Testamentary Trust established in the will of Alfred duPont, the Foundation was incorporated in Florida in 1936. The Foundation set out to provide children and families medical care and services, its mission being “[t]o provide leadership, institutions, and services to restore and improve the health of children through care and programs not readily available, with one high standard of quality and distinction regardless of the recipient’s financial status.” Foundation assets reached $5.5 billion, by the end of 2015. The Foundation has funded $1.5 billion of care to Florida’s pediatric population through subspecialty pediatric services, research, education, and advocacy. Nemours has established a pediatric care presence throughout the State of Florida. Nemours operates over 40 outpatient clinics throughout Florida that offer primary care, specialty care, urgent care, and cardiac care services to pediatric patients in central Florida, Jacksonville, and the panhandle region. Nemours also provides hospital care to pediatric inpatients at Nemours Children’s Hospital in Orlando, as well as through affiliations with Wolfson’s Children’s Hospital in Jacksonville, West Florida Hospital in Pensacola, and numerous hospital partners in central Florida. The resources Nemours offers in the greater Orlando area are especially significant with 17 Primary Care Clinics, five Urgent Care Clinics, 10 Specialty Care Clinics, nine Nemours Hospital partners, and, of course, NCH itself. These clinics are located throughout OTSA 3 where Nemours determined access to pediatric care was lacking, including Orlando, Melbourne, Daytona Beach, Titusville, Kissimmee, Lake Mary, and Sanford, as well as neighboring Lakeland. The clinics are fully staffed with hundreds of Nemours-employed physicians who live in the clinic communities. Through these satellite locations, as well as the Nemours CareConnect telemedicine platform, Nemours is able to bring access to its world-class subspecialists located at NCH to children throughout the State of Florida who otherwise would not have access to such care. Nemours was established to provide state of the art medical care to children through its integrated model. Nemours’ development has been and continues to be driven by its mission and objective to be a top-tier, world-class pediatric healthcare system. NCH is the first completely new “green field” children’s hospital in the United States in over 40 years, allowing Nemours to integrate cutting-edge technology and a patient-centered approach throughout. Nemours has created a unique integrated model of care that addresses the needs of the child across the whole continuum, connecting policy and prevention, to the highest levels of specialized care for the most complex pediatric patients. From its inception, Nemours envisioned the development of a comprehensive cardiothoracic transplant program as proposed by the CON applications at issue in this proceeding. NCH is located in the Lake Nona area, just east of downtown Orlando in a development known as Medical City. Medical City is comprised of a new VA Hospital, the University of Central Florida (UCF) College of Medicine and School of Biomedical Sciences, the University of Florida (UF) Research and Academic Center, the Sanford Burnham Medical Research Institute, and a CON-approved hospital, which is a joint venture between UCF and AHCA, which will serve as UCF’s teaching hospital. Medical City is intended to bring together life scientists and research that uses extraordinarily advanced technology. Co- location in an integrated environment allows providers and innovators of healthcare, “the brightest minds,” so to speak, to interact and to share ideas to advance healthcare and wellness efforts. Agency for Health Care Administration AHCA is the state health-planning agency that is charged with administration of the CON program as set forth in sections 408.031-408.0455, Florida Statutes. Context of the Nemours Applications Pursuant to Florida Administrative Code Rule 59C-1.044, AHCA requires applicants to obtain separate CONs for the establishment of each adult or pediatric organ transplantation program, including: heart, kidney, liver, bone marrow, lung, lung and heart, pancreas and islet cells, and intestine transplantations. “Transplantation” is “the surgical grafting or implanting in its entirety or in part one or more tissues or organs taken from another person.” Fla. Admin. Code R. 59A-3.065. Heart transplantation, lung transplantation, and heart/lung transplantation are all defined by rule 59C-1.002(41) as “tertiary health services,” meaning “a health service which, due to its high level of intensity, complexity, specialized or limited applicability, and cost, should be limited to, and concentrated in, a limited number of hospitals to ensure the quality, availability, and cost effectiveness of such service.” AHCA rules define a “pediatric patient” as “a patient under the age of 15 years.” Fla. Admin. Code R. 59C-1.044(2)(c). AHCA rules divide Florida into four OTSAs, corresponding generally with the northern, western central, eastern central, and southern regions of the state. Fla. Admin. Code R. 59C-1.044(2)(f). The programs at issue in this proceeding will be located in OTSA 3, which is comprised of Brevard, Indian River, Lake, Martin, Okeechobee, Orange, Osceola, Seminole, and Volusia Counties. Currently, there are no providers of PHT in OTSA 3, and there are no approved PHLT programs statewide. The incidence of PHT in Florida, as compared to other types of solid organ transplants, is relatively small. The chart below sets forth the number of pediatric (ages 0-14) heart transplant discharges by year for the four existing Florida PHT programs during Calendar Years (CY) 2013 through 2016, and the 12-month period ending June 2017: HOSPITAL HEART TRANSPLANT CY 2013 CY 2014 CY 2015 CY 2016 12 MONTHS ENDING JUNE 2017 All Children’s Hospital 7 14 9 8 7 UF Health Shands Hospital 6 8 15 15 9 Memorial Regional Hospital 5 5 5 7 4 Jackson Health System 2 2 1 4 1 Total 20 29 30 34 21 The above historic data demonstrates that the incidence of PHT statewide is relatively rare, and does fluctuate from program to program and from year to year. As can be seen, the most recent available 12-month data reflects that only 21 PHTs were performed during that time, for an average program volume of only 5.25 cases. Florida has more existing and approved PHT programs than every other state in the country except California, which has more than double the pediatric population of Florida. And like Florida, two of the California programs are extremely low- volume programs. Additionally, evidence regarding the number of PHLT patients demonstrated just how rare this procedure is. From 2013 to 2016, there was an annual average of only four PHLTs nationally, with only one actual transplant on a Floridian. Nemours’ health planner stated that although Nemours projected in its application that it would perform one heart/lung procedure each year, it is a “very low-volume service,” and Nemours in actuality expects that there will be years with zero volume of PHLT. The CON Applications Nemours filed its applications for heart transplantation, heart/lung transplantation, and lung transplantation in the second Other Beds and Programs Batching Cycle of 2016. Nemours is proposing the development of a comprehensive cardiothoracic transplant program, which will be the only such program in Florida. This will be achieved by combining three types of transplant services (heart, lung, and heart/lung) in one comprehensive cardiothoracic transplant program. Each application was conditioned on the development of all three transplantation programs. Nemours is located in OTSA 3, where there is currently no PHT provider, PLT provider, or PHLT provider. There are, however, three providers of pediatric open-heart surgery and pediatric cardiac catheterization, and a large, growing pediatric population. Unlike any other facility in Florida, the Nemours Cardiac Center (Cardiac Center) is uniquely organized to treat all forms of congenital heart disease. The Cardiac Center employs a “programmatic approach” to offer the most beneficial environment and the finest care available for pediatric patients. The Cardiac Center, physically located at NCH, throughout Florida, is organized as a single Department of Cardiovascular Services to house Cardiac Surgery, Cardiac Anesthesia, Cardiac Intensive Care Unit (ICU), and Cardiology. Cardiac Center physicians throughout Florida are organized as a single entity with the goal of providing the highest quality, patient-centered care to all patients without the usual barriers created by the departmental “silos.” The entire Cardiac Center clinical team, including nurses and physicians, is dedicated solely to the special challenges of congenital heart abnormalities and makes the care of children with heart disease the life’s work of team members. The fully integrated organizational structure permits the team to take shared responsibility for all aspects of the delivery of quality care to these pediatric patients from admission to discharge. The Cardiac Center holds weekly patient consensus conferences, where all providers, including physicians, nurses, and the patients’ caregivers, participate in case reviews of all inpatients and those patients scheduled for surgery or catheterization. The Cardiac Center is “state of the art” with a designated cardiovascular operating room, a designated cardiovascular lab that includes an electrophysiology lab, and a dedicated comprehensive care unit. In addition, The Foundation has furthered the commitment to the Cardiac Center by funding an additional $35 million expansion to the sixth floor of NCH, adding an additional 31 inpatient beds, an additional operating room, and a comprehensive cardiovascular intensive care unit. Dr. Peter D. Wearden joined Nemours in 2015 as the chief of cardiac surgery, chair of the Department of Cardiovascular Services, and director of the Cardiac Center at Nemours. Dr. Wearden will serve as director of the Comprehensive Cardiothoracic Transplant Program at Nemours and will be instrumental in the development and implementation of the program. Dr. Wearden was recruited from the Children's Hospital of Pittsburgh (CHP), where he served as the surgical director of Heart, Lung, and Heart/Lung Transplantation. He was also the director of the Mechanical Cardiopulmonary Support and Artificial Heart Program. CHP rose to a US News and World Report top 10 program during Dr. Wearden’s tenure. CHP is at the forefront of organ transplantation and is where the first pediatric heart/lung transplantation was performed. Dr. Wearden is a trained cardiothoracic surgeon who completed fellowships in both cardiothoracic surgery (University of Pittsburgh) and Pediatric and Congenital Heart Surgery (Hospital for Sick Children, Toronto, Canada). He is certified by the American Board of Thoracic Surgery and holds additional qualifications in Congenital Heart Surgery from that organization. In his tenure as a board-certified pediatric transplant specialist, he has participated in over 200 pediatric cardiothoracic transplantations, of which he was the lead surgeon in over 70. In addition, he has procured over $20 million in National Institutes of Health research funding since 2004 specific to the development of artificial hearts and lungs for children and their implementation as a live-saving bridge to transplantation. Dr. Wearden was a member of the clinical team that presented to the Food and Drug Administration (FDA) panel for approval of the Berlin Heart, the only FDA-approved pediatric heart ventricular assist device (VAD)1/ currently available, and he proctored the first pediatric artificial heart implantation in Japan in 2012. A VAD is referred to as “bridge to transplant” in pediatric patients because the device enables a patient on a waiting list for a donated heart to survive but is a device on which a child could not live out his or her life. Both utilization of VADs and heart transplantation procedures are in the “portfolio of surgical interventions” that can save the life of a child with heart failure. Dr. Wearden is an international leader in the research and development of VADs. Victor Morell, an eminent cardiac surgeon and chief of Pediatric Cardiac Surgery at CHP, testified that Dr. Wearden’s presence in Orlando alone and the work that he will be able to do with VADs and a PHT program will likely save lives. Many of the physicians that comprise the Nemours Cardiac Center transplant team not only have significant transplant experience, but also have experience performing transplants together. These physicians came with Dr. Wearden from CHP, were trained by Dr. Wearden, or otherwise worked with Dr. Wearden at some point in their careers. The physicians recruited to the Nemours transplantation team were trained at or hail from among the most prestigious programs in the country. For example, Dr. Kimberly Baker, a cardiac intensivist, was trained by Dr. Wearden in the CHP ICU. Dr. Constantinos Chrysostomou, Nemours’ director of cardiac intensive care, worked with Dr. Wearden at CHP, and has experience starting the pediatric ICU in Los Angeles at Cedar Sinai Hospital. Dr. Steven Lichtenstein, chief of cardiac anesthesia, held the same position at CHP for 12 years before he was recruited to Nemours. Dr. Karen Bender, a cardiac anesthesiologist, was recruited by Dr. Wearden from the Children’s Hospital of Philadelphia – one of the leading programs in the country. Dr. Michael Bingler, a cardiac interventionalist, was at Mercy Children’s Hospital in Kansas City for eight years. Dr. Adam Lowry of the Nemours cardiac intensive care center previously trained at both Texas Children’s Hospital (the number one program in the country) and Stanford. The 11 physicians that comprise the Cardiac Center’s Cardiothoracic Physician Team have collectively participated in 1,146 cardiothoracic transplantations. These physicians came to Nemours to care for the most acute, critically ill patients, including those requiring PHT. In addition to the physician team, the expertise and skill of the non-physician staff in the catheterization lab, the operating room, and the cardiac ICU are crucial to a successful program. Dr. Dawn Tucker is the administrative director of NCH’s Cardiac Center and heads the nursing staff for NCH’s Cardiac Center, which includes 23 registered nurses with transplant experience. Dr. Tucker holds a doctorate of Nursing Practice and was formerly the director of the Heart Center at Mercy Children’s Hospital in Kansas City, where she oversaw the initiation of a PHT program. The average years of experience for total nursing care in cardiac units across the nation is two years. The average years of experience in the Nemours Cardiac Center is eight years. Medical literature shows the greater the years of nursing staff experience, the lower the mortality and morbidity rates. The nursing staff at Nemours, moreover, has extensive experience in dealing not only with pediatric cardiac patients, but with pediatric heart transplants as well. The Cardiac Center’s cardiothoracic nursing staff has over 220 years of collective cardiothoracic transplant experience. Nemours operates a “simulation center” that allows the Cardiac Center to simulate any type of cardiac procedure on a model patient before performing that procedure on an actual patient. The model patient’s “heart” is produced using a three- dimensional printer that creates a replica of the heart based on MRI’s or other medical digital imaging equipment. These replica hearts are printed on-site, using the only FDA-approved software for such use, and are ready for use in the simulation center within a day after medical imaging. Nemours Cardiac Center currently performs what the Society of Thoracic Surgeons has coined “STAT 5” cardiac procedures. STAT 5 cardiac procedures are the most complex; STAT 1 procedures are the least complex. A PHT is a STAT 4 procedure. Since Dr. Wearden’s arrival at the Nemours Cardiac Center, there have been no patient mortalities. The uncontroverted evidence established that Nemours has assembled a high-quality, experienced, and unquestionably capable team of physicians and advanced practitioners for its cardiothoracic transplantation programs and is capable of performing the services proposed in its applications at a high level. UF Health Shands While not a party to this proceeding,2/ UF Health Shands’ (Shands) presence at the final hearing was pervasive. AHCA called numerous witnesses affiliated with Shands in its case-in-chief. The scope of the testimony presented by Shands- affiliated witnesses was circumscribed by Order dated December 13, 2017 (ruling on NCH’s motion in limine) that: At hearing, the Agency may present evidence that the needs of patients within OTSA 3 are being adequately served by providers located outside of OTSA 3, but may not present evidence regarding adverse impact on providers located outside of OTSA 3. Baycare of Se. Pasco, Inc. v. Ag. for Health Care Admin., Case No. 07-3482CON (Fla. DOAH Oct. 28, 2008; Fla. AHCA Jan. 7, 2009). UF Health Shands Hospital is located in Gainesville, Florida. UF Health Shands Children’s Hospital is an embedded hospital within a larger hospital complex. Shands Children’s Hospital has 200 beds and is held out to the public as a children’s hospital. The children’s hospital has 72 Level II and III NICU beds. Unlike Nemours, Shands offers obstetrical services such that babies are delivered at Shands. It also has a dedicated pediatric intensive care unit (PICU) as well as a dedicated pediatric cardiac intensive care unit. The Shands Children’s Hospital has its own separate emergency room and occupies four floors of the building in which it is located. It is separated from the adult services. Shands Children’s Hospital is nationally recognized by U.S. News & World Report as one of the nation’s best children’s hospitals. The children’s hospital has its own leadership, including Dr. Shelley Collins, an associate professor of pediatrics and the associate chief medical officer. As a comprehensive teaching and research institution, Shands Children’s Hospital has virtually every pediatric subspecialty that exists and is also a pediatric trauma center. The children’s hospital typically has 45 to 50 physician residents and 25 to 30 fellows along with medical students. Over $139 million has been awarded to Shands for research activities. As a teaching hospital, Shands is accustomed to caring for the needs of patients and families that come from other parts of the state or beyond. Jean Osbrach, a social work manager at Shands, testified for AHCA. Ms. Osbrach oversees the transplant social workers that provide services to the families with patients at Shands Children’s Hospital. Ms. Osbrach described how the transplant social workers interact with the families facing transplant from the outset of their connection with Shands. They help the families adjust to the child’s illness and deal with the crisis; they provide concrete services; and these social workers help the families by serving as navigators through the system. These social workers are part of the multidisciplinary team of care, and they stay involved with these families for years. Shands is adept at helping families with the issues associated with getting care away from their home cities. Shands has apartments specifically available in close proximity to the children’s hospital and relationships with organizations that can help families that need some financial support for items such as lodging, transportation, and gas. Ms. Osbrach’s ability to empathize with these families is further enhanced because her own daughter was seriously ill when she was younger. Ms. Osbrach testified that, while she was living in Gainesville, she searched out the best options for her child and decided that it was actually in Orlando. Despite the travel distance, she did not hesitate to make those trips in order to get the care her child needed at that time. The Shands Children’s Hospital is affiliated with the Children’s Hospital Association, the Children’s Miracle Network, the March of Dimes, and the Ronald McDonald House Charities. Shands operates ShandsCair, a comprehensive emergency transport system. ShandsCair operates nine ground ambulances of different sizes, five helicopters, and one fixed-wing jet aircraft. ShandsCair does over 7,000 transports a year, including a range of NICU and other pediatric transports. ShandsCair is one of the few services in the country that owns an EC-155 helicopter, which is the largest helicopter used as an air ambulance. This makes it easier to transport patients that require a lot of equipment, including those on extracorporeal membrane oxygenation (ECMO). Patients on ECMO can be safely transported by ground and by air by ShandsCair. Shandscair serves as a first responder and also provides facility-to- facility transport. It has been a leader in innovation. The congenital heart program at Shands includes two pediatric heart surgeons, as well as pediatric cardiologists Dr. Jay Fricker and Dr. Bill Pietra, both of whom testified for AHCA. Dr. Fricker did much of his early work and training at the Children’s Hospital of Pittsburgh, and came to the University of Florida in 1995. He is a professor and chief of the Division of Cardiology in the Department of Pediatrics at Shands. He is also the Gerold L. Schiebler Eminent Scholar Chair in Pediatric Cardiology at UF. He has been involved in the care of pediatric heart transplant patients his entire career. Dr. Bill Pietra received his medical training in Cincinnati and did his early work at several children’s hospitals in Colorado. He came to the University of Florida and Shands in July 2014 and is now the medical director, UF Health Congenital Heart Center. Shands performed its first pediatric heart transplant in 1986. Shands treats the full range of patients with heart disease and performs heart transplants on patients, from infants through adults, with complex congenital heart disease. Shands provides transplants to pediatric patients with both congenital heart defects and acquired heart disease (cardiomyopathy). Shands will accept the most difficult cases, including those that other institutions will not take. Data presented by AHCA dating back to the beginning of 2014 demonstrate that Shands has successfully transplanted numerous patients that were less than six months old at the time of transplantation. This data also demonstrates that Shands serves all of central and north Florida, as well as patients that choose to come to Shands from other states. PHT patients now survive much longer than in the past, and in many cases, well into adulthood. Because Shands cares for both adult and pediatric patients, it has the ability to continue to care for PHT patients as they transition from childhood to adulthood. Managed care companies are now a significant driver of where patients go for transplantation services. Many managed- care companies identify “centers of excellence” as their preferred providers for services such as PHT. Shands is recognized by the three major managed-care companies that identify transplant programs as a center of excellence for PHT services. AHCA’s Preliminary Decision Following AHCA’s review of Nemours’s applications, as well as consideration of comments made at the public hearing held on January 10, 2017, and written statements in support of and in opposition to the proposals, AHCA determined to preliminarily deny the PHT and PHLT applications, and to approve the PLT application. AHCA’s decision was memorialized in three separate SAARs, all dated February 17, 2017. Marisol Fitch, supervisor of AHCA’s CON and commercial-managed care unit, testified for AHCA. Ms. Fitch testified that AHCA does not publish a numeric need for transplant programs, as it does for other categories of services and facilities. Rather, the onus is on the applicant to demonstrate need for the program based on whatever methodology they choose to present to AHCA. In addition to the applicant’s need methodology, AHCA also looks at availability and accessibility of service in the area to determine whether there is an access problem. Finally, an applicant may attempt to demonstrate that “not normal” circumstances exist in its proposed service area sufficient to justify approval. Statutory Review Criteria Section 408.035(1) establishes the statutory review criteria applicable to CON Applications 10471 and 10472. The parties have stipulated that each CON application satisfies the criteria found in section 408.035(1), (d), (f), and (h), Florida Statutes. The only criteria at issue essentially relate to need and access. However, the Agency maintains that section 408.035(1)(c) is in dispute to the extent that center transplant volume as a result of Nemours’ approval would lead to or correlate with negative patient outcomes. AHCA believes that there is no need for the PHT or PHLT programs that Nemours seeks to develop because the needs of the children in the Nemours service area are being met by other providers in the state, principally Shands and Johns Hopkins All Children’s Hospital. Section 408.035(1)(a) and (b): The need for the health care facilities and health services being proposed; and the availability, quality of care, accessibility, and extent of utilization of existing health care facilities and health services in the district of the applicant. Florida Administrative Code Rule 59C-1.044(6)(b).3/ The criteria for the evaluation of CON applications, including applications for organ transplantation programs, are set forth at section 408.035 and rule 59C-1.044. However, neither the applicable statutes nor rules have a numeric need methodology that predicts future need for PHT or PHLT programs. Thus, it is up to the applicant to demonstrate need in accordance with rule 59C-1.044. There are four OTSAs in Florida, numbered OTSA 1 through OTSA 4. NCH is located in OSTA 3, which includes the following counties: Seminole, Orange, Osceola, Brevard, Indian River, Okeechobee, St. Lucie, Martin, Lake, and Volusia. (See § 408.032(5), Fla. Stat; Fla. Admin. Code R. 59C- 01.044(2)(f)3.) OTSA 3 also generally corresponds with the pediatric cardiac catheterization and open-heart surgery service areas defined by AHCA rule. (See Fla. Admin. Code R. 59C- 1.032(2)(g) and 59C-1.033(2)(h)). Currently, there is no provider of PHT in OTSA 3, but there are three providers of pediatric cardiac catheterization and pediatric open-heart surgery: Orlando Health Arnold Palmer Hospital for Children; Florida Hospital for Children; and Nemours. There are no licensed providers of PHLT anywhere in the State of Florida. There are four existing providers and one approved provider of PHT services in Florida: UF Shands in OTSA 1; Johns Hopkins All Children’s Hospital in OTSA 2; Jackson Memorial Hospital in OSTA 4; and Memorial Regional Hospital, d/b/a Joe DiMaggio’s Hospital in OTSA 4; and a third approved program in OTSA 4, Nicklaus Children’s Hospital, which received final approval from AHCA in August 2017. As noted above, there is no fixed-need pool published for PHT, PHLT, or PLT programs. Alternatively, AHCA follows rule 59C-1.008(2)(e)2., which requires consideration of population demographics and dynamics; availability, utilization and quality of like services in the district, subdistrict, or both; medical treatment trends; and market conditions. To quantify the need for a new PHT program in District 7, OTSA 3, Nemours created and presented a methodology that started with the statewide use rate in its projected first year. Then for the second year, Nemours aggressively increased the use rate to the highest rate in any of the other transplant service areas in the state. Then, in an even more aggressive (and unreasonable) assumption, Nemours projected that it would essentially capture all of the cases in OTSA 3 by the second year of the program. In its application, the assumptions resulted in a projection that Nemours would do four transplants in the first year of operation and eight in the second. These projections fall short of the rule requirement that the applicant project a minimum of 12 transplants per year by the second year of operation. Fla. Admin. Code R. 59C-1.044(6)(b)2. At hearing, Nemours updated (increased) those first and second year projections to 7 and 13 cases, respectively. However, these updated projections included one child, aged 15 to 17, in year one, and two in year two. There are several reasons these projections lack credibility. First, as noted, Nemours assumed a near- 100 percent market share based on the highest use rate in the state by just year two. Second, when Nemours prepared its update, it used the most recent calendar year data. However, this was not the most current data. Calendar Year 2016 reflected 34 cases statewide, but that number had dropped to 21 for the most recent 12-month period available at the time of the hearing. Use of this most recent 12-month data would have significantly decreased the Nemours PHT volume projections. In addition, the projection of 13 cases by year two would place Nemours at a higher PHT case volume than three of the four established programs in the state, and would be at a level that is nearly equivalent to the much more established Shands program. This is not credible, especially considering that Nemours also admitted at hearing that only two OTSA 3 residents received pediatric heart transplants in 2016. The existence of unmet need cannot be based solely on the absence of an existing service in the proposed service area. Fla. Admin. Code R. 59C-1.008(2)(e)3. While Nemours’ own health planner agreed that the absence of a PHT program in OTSA 3 is not itself a basis for finding need, Nemours nevertheless argues that this rule is inapplicable in this proceeding because the title to this subsection of the rule is “Comparative Review” and a portion of this subsection addresses competing applications in the same cycle. As detailed further in the Conclusions of Law section herein, this interpretation is unconvincing and rejected. AHCA interprets this rule provision to apply to those batched applications submitted without the submission of a competing application in the same batching cycle, as with Nemours in this proceeding. Nemours initiated its cardiac catheterization and cardiac surgery program in June/July 2016. In its PHT application, Nemours projected that it would meet or exceed the rule minimum required volumes of 200 cardiac catheterizations and 125 open-heart surgery cases by the end of 2017. Actual volumes achieved by Nemours in CY 2017 were 97 open-heart cases and 196 cardiac catheterizations. The incidence of PHLT is extremely low. During the four calendar years, 2013 through 2016, there were only 16 PHLT transplants performed nationwide. Only one Florida resident received a PHLT during that four-year period, and that was performed in Massachusetts. Also during that four-year period, only three Florida residents were registered for PHLT. There is no evidence in this record as to why two of the three registered Florida residents did not obtain a PHLT. Based on the national use rate for PHLTs from CY 2013 through CY 2016, Nemours projects that it will perform an average of one PHLT per year. Nemours acknowledges that due to the extremely low incidence of PHLTs, there may be some years that no PHLTs are performed at Nemours. Geographic Access There is no evidence of record that families living in central Florida are currently being forced to travel unreasonable distances to obtain PHT services. Indeed, there are five existing or approved programs within the state, with at least two located very reasonably proximate to OTSA 3. According to the analysis of travel distances for PHT patients living in OTSA 3 contained in the Nemours application (Exhibit 15), only some residents located in Brevard and Indian River Counties are not within 120 miles of an existing PHT program. There was agreement that patients that need a PHT are approaching the end-stage of cardiac function, and in the absence of a PHT will very likely die. Accordingly, it is reasonable to infer that the parents of a child living in central Florida and needing a PHT will travel to St. Petersburg or Gainesville for transplant services rather than let their child die because the travel distance is too far. To the contrary, the evidence in this record from witnesses on both sides, as well as common sense, is that families will go as far as necessary to save their child. The notion that there is some pent-up demand for PHT services among central Florida residents (especially when there is no evidence of a single OTSA 3 patient being turned down or unable to access a PHT) is without support in this record. The parents of four pediatric patients testified at the final hearing. Two testified for Nemours. The other two testified for AHCA and were parents of children that received PHTs at Shands. One of the Nemours witnesses was the parent of a child that has not received a transplant. The other received transplant services at Johns Hopkins All Children’s Hospital in St. Petersburg. The parents of the two Shands patients were representative of the two broad categories of PHT patients. One was a patient with a congenital heart defect that lives in Cocoa Beach (Brevard County). The patient likely had the heart defect since birth, but it was not diagnosed until she was six years old. That patient was asymptomatic at the time of diagnosis but deteriorated over a period of years. While she was first seen at Shands, the family had the time and researched other prominent institutions, including Texas Children’s Hospital, Boston Children’s Hospital, Children’s Hospital of Pittsburgh, and the Mayo Clinic in Rochester, Minnesota. They did this because, like all of the parents that testified, they “would have gone to the ends of the earth” to save their child. This family researched the volumes and experience of the programs they considered and looked for what they felt was the best program for their child, and ultimately chose Shands. It was clear that they felt Shands was the right choice. Their daughter received her heart transplant at Shands, is doing well, and is now considering what college to attend. Additionally, this family did not find the two hours and 35 minute travel time from their home in Brevard County to Shands to be an impediment, and actually consider Shands as being relatively close to their home. This testimony supports the obvious truism that obtaining the best possible outcome for a sick child is the paramount goal of any parent. The other parent witness called by AHCA has a daughter that, on Christmas Eve in 2008, went from perfectly healthy to near death and being placed on life support within a 24-hour period. As opposed to a congenital heart defect, this patient had cardiomyopathy. This family lives in Windermere, a suburb of Orlando. She acquired a virus that attacked her heart. She was initially treated at Arnold Palmer Children’s Hospital where she had to be placed on ECMO. From there, she was safely airlifted to Shands while still on ECMO where, upon arrival, the receiving team of physicians informed the family that she was one of the most critically ill children they had ever seen. After an 11-hour open-heart surgery, a Berlin Heart was successfully implanted and kept her alive for four months until an appropriate donor heart became available. This patient also had an excellent outcome and is now a student at the University of Florida. The following exchange summarizes how the child’s mother felt about the inconvenience of having to travel from the Orlando area to Gainesville: Q If a family in Orlando told you, or in your city of residence told you that their child was critically ill and they were worried about having to travel and potentially spend time in Gainesville to get care, what would you tell them? A Well, I would tell them to just take it a day at a time and – when your child is critically ill, convenience never really comes into your mind. What comes into your mind is how do I help my child live. And so you will go anywhere. And it’s just an hour and a half, it just doesn’t matter. When you are talking about saving your child, it means nothing. It literally means nothing. It is clear from the testimony of these two parents that nothing about having a gravely ill child is “convenient.” It creates great stress, but it was also clear that having an experienced provider was more important than just geographic proximity. The mothers of the two Shands patients persuasively spoke of their concerns about further diluting the volumes of the existing programs that could result from approval of a sixth pediatric heart transplant program in Florida, particularly when there are two other programs that are not that far from the Orlando area.4/ While transplantation is not an elective service, it is not done on an emergent basis. As noted, the number of families affected is, quite fortunately, very small. While having a child with these issues is never “convenient,” the travel issues that might exist do not outweigh the weight of the evidence that fails to demonstrate a need for approval of either application. The Orlando area, being centrally located in Florida, is reasonably accessible to all of the existing providers. Most appear to go to Shands, which is simply not a substantial distance away. The credible evidence is that families facing these issues are able to deal with the travel inconvenience. In addition, Nemours presented evidence regarding the various locations at which they provide services, ranging from Pensacola to Port St. Lucie. Clearly, Nemours sees itself as providing some cardiac services to patients in these locations, but it would also suggest that patients seen at these locations may be referred to NCH for transplant services, which would mean that some patients would be bypassing closer facilities. As observed by AHCA, for Nemours to posit that it is appropriate for patients to travel from Pensacola or Jacksonville to Orlando while asserting that it is not acceptable for patients in Orlando to go to Gainesville or St. Petersburg is an illogical inconsistency. Financial Access Nemours asserts that approval of its proposed programs will enhance financial access to care. Nemours currently serves patients without regard to ability to pay and will extend these same policies to transplant recipients. Approximately half of Nemours’ projected PHTs are to be provided to Medicaid recipients, the other half to commercially insured patients.5/ However, there was no competent evidence of record that access to PHT or PHLT services was being denied by any of the existing transplant providers because of a patient’s inability to pay. Transplant Rates at Shands In its need methodology, Nemours utilized the use rate from OTSA 1 where Shands is located because it is the highest use rate in the state. Despite this, Nemours then asserted that Shands is not performing as many PHTs as it could or should. The Nemours CON applications are not predicated on any argument that their proposed programs are needed because of poor quality care at any of the existing pediatric transplant programs in Florida. Indeed, Dr. Wearden stated his belief that Shands provides good quality care in its transplant programs, and he respects the Shands lead surgeon, Dr. Mark Bleiweis. As evidence of his respect for the Shands PHT program, Dr. Wearden has referred several transplant patients to Dr. Bleiweis at Shands. Despite that position, Nemours argued that the Shands program is unduly conservative and cautious in its organ selection and may have some “capacity” issues due to a few cited instances of apparent surgeon unavailability. These assertions, made by Nemours witnesses with no first-hand knowledge of the operations of the Shands program, are not persuasive. With regard to whether the Shands program is unduly “cautious,” “conservative,” or “picky,” Nemours relied on a document produced by Shands in discovery. Nemours also relied on data reported by Shands to the Scientific Registry of Transplant Recipients (SRTR). The data included a list of all of the organs offered to Shands since the beginning of 2015, the sequencing of the offer of that organ to Shands, whether the organ was transplanted at Shands or elsewhere, the primary and secondary reasons the organ was refused (if refused) and other information. The SRTR exhibit demonstrates that a high number of the organs that are offered are not acceptable for transplant on patients waitlisted at Shands. It also shows that organs that are accepted may have to be examined by many different centers before being deemed potentially acceptable. This demonstrates the extensive level of complexity, nuance, and clinical judgment involved in the decision to accept an organ for transplant in a pediatric patient. Indeed, Dr. Wearden agreed that the decision by a program to accept or turn down an organ involves both clinical expertise and judgment, and that there are many reasons an organ might be turned down, which helps explain why the transplanted percentage of total organs offered nationally is on average, so small. Dr. Wearden chose a few examples of organs that were not taken by Shands to express an opinion that Shands may be unduly conservative in its organ selection. However, this assertion was credibly refuted by Dr. Pietra, a transplant cardiologist and the medical director of the UF Health Congenital Heart Center. Dr. Pietra discussed the complexity of these cases and how simply looking at the SRTR data does not provide enough information to reach Dr. Wearden’s conclusion. An organ that might be acceptable for one patient would not be acceptable for another for a host of reasons. Many more organs are rejected by transplant centers than are accepted. Dr. Pietra credibly opined that being conservative and cautious are important traits for a transplant surgeon, particularly for one that wants the accepted organ to work well for the patient long-term. That does not mean that Shands is rejecting organs when it should have taken them, nor does the SRTR data support the proposition that the Nemours program should be approved because its program may have accepted an organ for a particular patient that Shands might have rejected. Nemours also argues that Shands performs PHTs at a rate lower than the region and the country, and that this should mitigate for the approval of another program. This assertion is predicated on waitlist information reported in the SRTR data. Patients that are placed on the waitlist have different status designations, depending on the severity of their condition. That status may change, up or down, over time. Due to the shortage of organs, until a patient reaches status 1A, he or she is unlikely to be offered an organ. The evidence reflected that Shands puts patients on the PHT organ waitlist at a time earlier than the moment they require the transplant surgery under what is called the “pediatric prerogative.” This helps those patients maintain their status on the list but does not result in organs being provided to less severely ill patients to the detriment of those in greater need. Further, the record evidence supports the finding that Shands waitlists patients because the clinical determination has been made that the child will ultimately require a transplant. This was corroborated by the parent of a Shands PHT patient who testified that when her daughter was placed on the waitlist, Dr. Fricker concluded at that time that her daughter would ultimately need a PHT, even though she was placed on a lower status initially, and it was a few years before the transplant occurred. Transplant surgeon Dr. Victor Morell, of the Children’s Hospital of Pittsburgh, testified that he waitlists his PHT patients not only when they need the procedure performed immediately, but rather when, in his clinical judgment, he determines the patient will ultimately need a PHT. This testimony supports the finding that there is nothing clinically unusual or inappropriate about how the Shands program waitlists patients. Shands realizes that its philosophy, which is contemplated within and permitted under the United Network for Organ Sharing (UNOS) rules, makes its statistics, both in terms of percent of patients transplanted and waitlist mortality, look worse. While Shands’ waitlist mortality may be higher than expected as reflected in the SRTR data, it is still significantly lower than in the UNOS region or the United States. Shands advocates for its patients by their waitlist practices because it believes it helps secure the best outcomes for its patients. It does not indicate need for a new PHT program. Nemours also suggests that there may be a “capacity” problem at Shands because the organ rejection information provided by Shands shows that, during the 3-year period of CY 2015 through CY 2017, there were seven entries showing as either a primary or secondary reason for organ rejection that the surgeon was unavailable. However, this included both adult and pediatric hearts, and further investigation revealed that in only four instances were there potential PHT recipients at Shands. Of those four hearts that were rejected, two were not accepted by any PHT provider, and the two that were accepted were placed with adult transplant patients, not PHT patients. Shands has two PHT transplant surgeons. In very few instances at Shands, an organ was offered but not accepted because the surgeon was not available for one of several reasons. In one instance, there was another transplant scheduled. A surgeon could be ill, could be gone, or may have just completed another long surgery and be too fatigued to safely perform another. Like Shands, Nemours also has two experienced PHT surgeons. Although Dr. Wearden believes that Nemours would endeavor to not reject an organ for this reason, this ambition ignores reality. He cannot guarantee that the same could not or would not happen at Nemours for the same reasons it occasionally occurs at Shands. As explained by Dr. Pietra, when there are only small to medium volume programs, there is not likely to be a sufficient number of surgeons such that this scenario can be avoided entirely. Not Normal Circumstances In both its heart and heart/lung applications, Nemours articulated the following “not normal circumstances” in seeking approval: Florida does not have any approved pediatric heart/lung transplant programs. Florida's only two approved pediatric lung transplant programs have not performed any lung transplant programs in the last two reporting years according to AHCA reporting data. Significantly, there are no pediatric heart transplant or lung transplant programs in AHCA's Organ Transplant Service Area OTSA 3 in which NCH is located-an area of the State with one the fastest growing and youngest populations. Florida has no other pediatric comprehensive, multi-organ thoracic transplant program. Florida has no other pediatric comprehensive, multi-organ thoracic transplant program that is part of a pediatric specific integrated delivery system such as Nemours offers. NCH offers a unique, dedicated model of cardiothoracic care developed at its Alfred I. duPont Hospital for Children (AIDHC) in Wilmington, Delaware and implemented upon the opening of the program at NCH. The key and differentiating element of this Model of Care is a unified team of cardiac clinical and administrative professionals who serve children with cardiac problems in dedicated facilities (the "Cardiac Team"). The Cardiac Team only cares for children with cardiac diagnoses. As such, the Cardiac Team of anesthesiologists, surgeons, cardiologists, nurses, and other support personnel do not "float" to other hospital floors or departments as in a typical hospital setting. This dedicated model of cardiac care allows the Cardiac Team to develop highly specialized knowledge and relationships to provide the best treatment protocols for patients with cardiac conditions. NCH has developed state-of-the art facilities and innovative clinical pathways for the care of the most complex pediatric thoracic patients. NCH has and will bring new opportunities for research in pediatric cardiology, cardiac surgery, and pulmonary medicine, particularly clinical translational and basic research into the linkages between childhood obesity and cardiac conditions. Nemours operates a regional network of clinics in Florida, with primary locations in Pensacola, Jacksonville, and Orlando, that will operate in partnership with NCH for the appropriate regional referral of patients in Florida for pediatric thoracic care. NCH can reduce the out-migration of pediatric, thoracic transplant patients from OTSA 3 to other parts of the State as well as the out-migration of these patients to other out-of-state transplant programs. Similarly, NCH will reduce the outmigration of organs donated in Florida to other states ensuring that Florida recipient patients are first priority for organs donated in Florida. NCH has in place the infrastructure, facilities, and resources to seamlessly add thoracic transplant services to its existing comprehensive cardiac surgery program. Additional needed staff are already being recruited to this program. As a result, the project has minimal incremental cost that will need to be incurred. Total project costs are, therefore, estimated to be $715,425.00. In addition, according to Nemours, an additional “not normal” circumstance has emerged since the filing of the applications: the approval of Nemours’ PLT application in the absence of a PHT program at the facility, which it contends is “a very unusual situation.” Noteworthy about these purported reasons for approval are that: (1) none of them are specifically directed at a unique circumstance relating to a need for another PHT program; and (2) most of them are either a recitation of the fact that there is no existing program in the service area or are about Nemours’ capability to provide these services. They are not directed at whether there is a need for its proposed programs. In fact, the main thrust of Nemours’ case was directed at proof regarding its capabilities. But the flaw in this theme is best demonstrated in the testimony of Dawn Tucker, the last witness called by Nemours. Ms. Tucker is the cardiac program administrative director for Nemours. When asked why she supported the proposed program, she talked about the experience of the team, a desire to care for sick patients, an organization (Nemours) that financially supports the program, and the network of centers that Nemours has in Florida. These factors address why Nemours “wants” these CONs. None of them addresses the threshold issue of whether there is a “need” for these programs in OTSA 3. More specifically, the first, third, and fourth bullet points are all based on the absence of a program in OTSA 3. By rule, that is not a basis for establishing need. Fla. Admin. Code R. 59C-1.009(2)(e)3. AHCA appropriately rejected the absence of a program in OTSA 3 as the sole basis upon which need for the proposed projects could be established. The second bullet point relates to the pediatric lung transplant application that is not at issue in this matter. The fifth and sixth bullet points relate to the Nemours integrated model of care. But again, this does not address whether there is a need for the proposed programs. The fact that Nemours has an employed-physician model is not unique or “not normal.” AHCA considered the information regarding the model of care and correctly noted that the model of care does not itself enhance access or improve outcomes. It should be noted that Shands’ doctors are employed by the University of Florida. In addition, the reliance on this model does not guarantee a robust program. This bullet point references the much older and more established Alfred I. duPont Hospital for Children in Wilmington, Delaware, that is touted as the model for Nemours. Nemours presented evidence relating to its more established hospital in Delaware that also provides PHT services. However, the PHT program at duPont is a low-volume program, performing only one PHT in 2016. None of the managed- care companies that recognize Shands as a center of excellence also recognizes the duPont Hospital as such. One of the companies--Lifetrac--acknowledges duPont as a “supplemental” program, whereas Shands is one of its “select” programs. This demonstrates that simply having the financial resources of the duPont Foundation or the model of care used by that organization does not guarantee high volumes or success. The “not normal circumstance” bullet points regarding Nemours’ facilities, research, and other infrastructure similarly do not demonstrate need. Otherwise, a hospital could obtain a CON for a new program by spending the money in advance and then demanding approval based upon those expenditures. AHCA recognized that Nemours had recruited some very qualified clinicians, but correctly noted that that does not create or evidence need for the proposed programs. The remaining bullet point asserts that approval of the PHT and PHLT programs could reduce outmigration of both patients and organs. By definition, because neither of these transplant programs exists in OTSA 3, all patients leave OTSA 3 for these services. Again, that alone does not establish need, nor is it automatically a “not normal” circumstance. As discussed herein, Nemours has not demonstrated a sufficient need or an access problem that justifies approval of either application. With regard to the outmigration of organs from Florida, Nemours has argued that Florida is a net exporter of organs and that this is a “not normal” circumstance justifying approval of its application. However, organs harvested in one state are commonly used in another. There is nothing unusual or negative about that fact. Indeed, Dr. Wearden agreed that in his experience, this is a common occurrence. There is a national allocation system through UNOS and this sharing, as explained by Dr. Pietra, facilitates the best match for organs and patients. UNOS divides the country into regions for the purpose of allocation of donor organs, with Florida being one of six states in Region 3. The evidence of record did not establish that approval of the Nemours applications would result in the reduction of organs leaving Florida, or even that such would be a desirable result. Nemours also argued at hearing that approving their applications would increase the number of donor organs that are procured and transplanted in Florida. Nemours suggested that its programs would increase public awareness and implied that it would accept organs for future patients that surgeons at other programs turn down. However, these arguments are purely conjectural and are rejected. No record evidence exists which demonstrates that a Nemours program would increase the supply of organs in Florida. Indeed, Nemours presented no such relevant data or statistical evidence in its applications to demonstrate that this will occur. Finally, Nemours argues that its PHT and PHLT applications should be approved because it does not make sense for AHCA to have approved the PLT program but denied the other two applications. Nemours goes on to note that while there are hospitals in the country that do PHTs but not PLTs, there are no hospitals that do lungs but not hearts. Regardless of whether that is true, Florida law separates these three services into separate CON applications, which are reviewed independently. The wisdom of the rule is not at issue in this proceeding. Regardless of any overlap in the skill sets required to perform these procedures, approval of the pediatric lung transplant application does not determine need for pediatric heart or pediatric heart/lung programs. Nemours failed to establish that “not normal” circumstances currently exist that would warrant approval of either the PHT or PHLT programs. Nor did Nemours credibly demonstrate any other indicators of need for its proposed programs. Section 408.035(1)(c): The ability of the applicant to provide quality of care and the applicant’s record of providing quality of care. The parties stipulated that Nemours is a quality provider. However, AHCA maintains that this criterion is in dispute to the extent that center transplant volume as a result of Nemours’ approval would lead to or correlate with negative patient outcomes. Nemours failed to demonstrate that it would achieve the volumes it projected unless it takes significant volumes from other Florida providers.6/ Approval of Nemours will not create transplant patients that do not exist or are not currently able to reasonably access services. While Nemours has assembled a team of professionals with varying levels of transplant experience, it has not been demonstrated that it will achieve volume sufficient to reasonably assure quality care.7/ Section 408.035(1)(e): The extent to which the proposed services will enhance access to health care for residents of the service district. Approval of the Nemours PHT and PHLT programs would unquestionably improve geographic access to those services for the very few residents of OTSA 3 that need them. However, given the extreme rarity of pediatric heart and heart/lung transplants, approval of the Nemours programs would not result in enhanced access for a significant number of patients. Moreover, there was no credible non-hearsay evidence presented at hearing that any resident of OTSA 3 that needed PHT or PHLT services was unable to access those services at one of the existing PHT programs in Florida or, for PHLT, at a facility elsewhere. Based upon persuasive evidence at hearing, there is also clearly a positive relationship between volume and outcomes. As with any complex endeavor, practice makes perfect. In this instance, maintaining a minimum PHT case volume provides experience to the clinicians involved and helps maintain proficiency. According to the credible testimony of Dr. Pietra, programs should perform no fewer than 10 PHTs per year. “If you can stay above 10, then your program is going to be exercised at a minimum amount to keep everybody sort of at a peak performance.” The clear intent of the minimum volume requirement of 12 heart transplants per year contained in rule 59C- 1.044(6)(b)2. is to ensure a sufficient case volume to maintain the proficiency of the transplant surgeons and other clinicians involved in the surgical and post-surgical care of PHT patients. In addition, pediatric transplant programs are measured statistically based on outcomes, such as mortality and morbidity. Because of this, the loss of even one patient in a small program can be devastating to that hospital’s mortality statistics. As such, small programs may become less willing to take more complicated patients. In a perverse sort of way, adding more programs that dilute volumes may decrease, rather than increase, access because of the fear a small program might have for taking more complex patients. Adequate case volume is also important for teaching facilities, such as Shands, to benefit residents of all the OTSAs by being able to train the next generation of transplant physicians. The mothers of the two Shands patients that testified made note of the complexity of their daughters’ conditions and how their cases were used for training purposes. There was no persuasive evidence of record that approval of the Nemours applications would meaningfully and significantly enhance geographic access to transplant services in OTSA 3. The modest improvement in geographic access for the few patients that are to be served by the two programs is not significant enough to justify approval in the absence of demonstrated need. There is no evidence that approval of the Nemours applications will enhance financial access nor that patients are not currently able to access PHT or PHLT services because of payor status. Section 408.035(1)(g): The extent to which the proposal will foster competition that promotes quality and cost- effectiveness. It is clear that establishing and maintaining a transplant program is expensive. Given the limited pool of patients, the added expense of yet a sixth Florida program is not a cost-effective use of resources. This criterion also relates to the Nemours position that AHCA should approve the PHT and PHLT applications simply because the PLT application was approved, and it would not be cost-effective for Nemours unless the PHT and PHLT applications were also approved. However, each of these applications must rise or fall on its own merit. As of the hearing, Nemours had not yet implemented its PLT program. Given the absence of need for either the PHT or PHLT programs, the cost-effective solution might be for Nemours to reconsider implementation of the PLT program. 408.035(1)(i): The applicant’s past and proposed provision of health care services to Medicaid patients and the medically indigent. AHCA agreed at hearing that Nemours satisfies section 408.035(1)(i). Nonetheless, Nemours provides a very high level of Medicaid services, and projects a high-level volume related to Medicaid patients and charity care patients. As noted, approximately half of the PHTs projected by Nemours will be performed on Medicaid patients. Conformance with this criterion would mitigate toward approval had there been persuasive evidence that Medicaid and medically indigent patients are currently being denied access to PHT and PHLT services. However, no such evidence was presented.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a final order be entered denying CON Application Nos. 10471 and 10472 filed by The Nemours Foundation, d/b/a Nemours Children’s Hospital. DONE AND ENTERED this 31st day of July, 2018, in Tallahassee, Leon County, Florida. S W. DAVID WATKINS Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 31st day of July, 2018.
Findings Of Fact General On October 15, 1986 Plantation General Hospital (Plantation) filed an application to establish adult and pediatric open heart surgery programs and a pediatric cardiac catheterization program. On October 16, 1986 North Broward Medical Center filed an application to establish an open heart surgery program. Both applications were denied by the Department of Health and Rehabilitative Services for reasons stated in its state agency action report issued on February 27, 1986. Both North Broward Medical Center and Plantation sought formal proceedings on their applications. North Ridge General Hospital, Memorial Hospital, Holy Cross Hospital and Florida Medical Center intervened in the proceedings. North Broward Medical Center updated its application on September 1, 1986. Plantation General Hospital updated its application on September 29, 1986, and deleted the pediatric open heart and pediatric cardiac catherization portions of the application. The Parties North Broward Medical Center (North Broward) is a 419-bed acute care hospital in Pompano Beach owned by the North Broward Hospital District (District), a special taxing district created by the Legislature to provide hospital services to residents of the northern two-thirds of Broward County. The District operates a multi-hospital system. The other hospitals, are Broward General Medical Center (Broward General), a 715-bed acute care hospital in east central Broward County, Imperial Point Medical Center, a 200-bed acute care hospital, and Coral Springs Medical Center, a 200-bed acute care hospital which opened in early 1987. The District has a single medical staff for all four hospitals. North Broward offers many cardiac services, including cardiac catheterization and some cardiac surgery procedures. Its catheterization lab opened in January, 1986. The lab will perform between 350 and 400 catheterizations during its first year. Broward General, the largest of the District hospitals, has a full cardiology program including a catheterization lab in which not only diagnostic catheterizations are performed, but also therapeutic catheterizations, (including balloon angioplasties) and has an open heart surgery program. It is not a party to this case. Plantation is a 264-bed full service general medical surgical hospital in Plantation, Florida. It offers many cardiac services, including diagnostic cardiac catheterization. It began its catheterization services in April, 1985 and in the first eight months performed 300 catheterizations. Approximately 500 catheterizations were performed its first year. South Broward Hospital District is the special taxing district created to provide hospital services to residents of the southern one-third of Broward County. It owns a single hospital, Memorial Hospital. Memorial is a 737-bed tertiary care hospital. It began operating an open heart surgery program in 1983 and provides a complete range of cardiac services, excluding heart transplants. Holy Cross Hospital is a 597-bed not-for-profit acute care hospital sponsored by the Sisters of Mercy, an order of nuns based in Pittsburg, Pennsylvania. It provides cardiac services including open heart surgery, but not including heart transplants. Its open heart surgery program began in 1976. North Ridge General Hospital is a 395-bed acute care hospital located in Fort Lauderdale. It offers full cardiac services excluding heart transplants; 34 percent of its hospital admissions are cardiac related. It has had an open heart surgery program for 11 years. Florida Medical Center is a 459-bed acute care hospital located in Fort Lauderdale approximately three and one half miles from Plantation. It provides a broad range of cardiac surgery excluding transplants and was the first open heart surgery program in Broward, opening in December, 1974. II. Statutory Criteria For Evaluating The Application Under Section 381.494(6)(c), Florida Statutes. Consistency with the State Health Plan and Local Health Plan. Section 381.494(6)(c)1. Florida Statutes. The State Health Plan specifically addresses both cardiac catheterization services and open heart surgery. The plan recognizes a large body of research demonstrating a relationship between the number of procedures performed and surgical death rates; programs with low volume have higher mortality. One of the plan objectives is to maintain an average of 350 open heart surgery procedures per program in each district through 1990. The State Plan recognizes it is not advisable to open cardiac catheterization units in a facility which does not provide open heart surgery, and that "consideration" should be given to applications for open heart surgery facilities which provide cardiac catheterization. The State Plan does not state or imply, however, that every facility with a catheterization program should also have open heart surgery. The State Plan specifically recognizes there is support within medicine for cardiac catheterization labs not associated with open heart surgery programs. Florida currently has a significant number of hospitals with catheterization programs which do not perform open heart surgery. Neither the State nor Local Health Plans link approval of open heart surgery programs at a facility to the number of catheterizations being done at an institution. The District X (Broward County) Health Plan for 1985 states that each existing open heart surgery program must be performing at least 350 cases annually before additional programs will be considered. The parties have stipulated that each existing and approved open heart surgery program in Broward County is not currently operating at 350 open heart surgery cases per year. The District X Health Plan concludes that accessibility to either catheterization or open heart surgery is not a problem for residents of District X. The District plan recommends that "[N]ew cardiac catheterization or cardiac surgery programs should not be approved unless they meet or exceed the standards and criteria set forth by HRS." The plan does not specify circumstances which the Local Health Council identifies as justifying a departure from those standards. Nowhere in the District X Health Plan's examination of available cardiac services is evaluation based on anything other than a district-wide basis. The Local Health Council has neither adopted subdistricts for cardiac services nor manifested through its plan any indication that new cardiac services should be examined on anything less than a district-wide basis. Division of the county north and south or east and west should not be done in determining the need for open heart surgery in Broward; the county should be looked at as a unit. Plantation has argued that there are different medical communities in the east and west portions of Broward County and that physician referral patterns are such that State Road 441 is a dividing line between east and west medical communities. It maintains that Florida Medical Center is the only open heart provider located in the west, and thus operates almost without competition in western Broward, and without competitive stimulus to affect cost or quality of service. In the absence of sub-districting by the Local Health Council, ad hoc balkanization of the county is inappropriate. Neither of the applications satisfy the criteria of the Local Health Plan. Insofar as Rule 10-5.0ll(1)(f)7., Florida Administrative Code, requires applications to be consistent with the Local Health Plan and the State Health Plan, both applications failed to meet that portion of the rule. Availability, Utilization, Geographic Accessibility and Economic Accessibility Of Facilities In The District. Section 381.494(6)(c)2., Florida Statutes. As to service accessibility, open heart services are available within two hours under average travel conditions for at least 90 percent of the District X population. The Local Health Council has found that accessibility does not present a problem to the residents of District X. Open heart surgery is available to patients in Broward County, including indigents who are able to receive treatment at Broward General without regard to ability to pay. As to utilization, none of the five existing providers of open heart surgery in Broward operates at capacity. North Ridge can easily handle 150 more open heart surgery cases per year with its current staffing. Broward General is working 4 hours per day 4 days a week to do 230 open heart surgeries. Holy Cross performs only 235 procedures per year in its two operating rooms dedicated to open heart surgery. Florida Medical Center performs about 400 open heart surgeries in its two dedicated operating rooms. Memorial Hospital can handle twice its 1986 rate of 355 open heart procedures without difficulty. The record as a whole indicates there is currently substantial excess capacity in the existing open heart surgery programs in District X. This will continue through the planning horizon. While there may be occasional scheduling problems at any of the 5 current providers of open heart surgery at times of peak demand, these anecdotal problems do not support a finding that open heart surgery is inaccessible or that current providers are overutilized. North Broward failed to demonstrate that there is any concentration of hispanic migrant workers in northwest Broward in need of open heart surgery services that are not receiving them and which it, as a tax supported institution, would serve. There is no issue as to the applicants' ability to meet the standard enacted in Rule 10-5.011(1)(f)(3), Florida Administrative Code, which implements Section 381.494(6)(c) 2., Florida Statutes. Quality of Care Section 381.494(6)(c)3., Florida Statutes Additional open heart programs would reduce the number of procedures done in the existing programs and thereby affect quality of care, for an open heart surgical team needs to perform a considerable number of procedures to remain proficient. Efficiency and communication among the entire surgical team is important to lower operating time and time under anesthesia. The team consists of the surgeon, an assistant surgeon, surgical nurses, the pump profusionist, the anesthesiologist, the hospital intensive care unit, the monitoring units, and physical and respiratory therapy units. In 1986 North Ridge performed about 600 open heart procedures. Florida Medical Center performed about 404; Memorial performed approximately 355, Broward General Medical Center performed 235, and Holy Cross performed 235. All provide high quality care. Holy Cross Hospital and Broward General Medical Center have not reached the 350 procedure volume required by Rule 10-5.011(1)(f)11. (I), Florida Administrative Code. Memorial and Florida Medical Center are just over the 350 procedure volume set in the rule and will drop below that number if Plantation is approved, which would degrade the quality of care at those institutions. Economies And Improvement In Services Derived From Shared Health Care Resources Section 381.494(6)(c)51 Florida Statutes. Plantation did not contend that its proposal would result in economies and improvements from joint, cooperative, or shared health care resources. North Broward proposes to share the same open heart surgical team that is now being using by Broward General, a larger hospital owned by the North Broward Hospital District. North Broward has no contract with the surgeons at Broward General to insure that they will staff its open heart surgery program if it is approved. If the volume of open heart surgery at North Broward grows to occupy its current open heart surgeons full time, additional surgeons can be added to the group of surgeons who serve Broward General. A witness for North Broward testified that this would still constitute a shared service program. Such an elastic definition of a "shared service", based on whether all surgeons are in a group practice together rather than on whether actual procedures are done together, is useless. National Health Planning Guidelines published in the Federal Register on March 28, 1978 state than an open heart surgery program should reach 200 cases within three years in order to be cost effective and to have a high level of care, and that additional programs should not be approved unless all existing programs have reached the level of 350 cases per program. 43 Fed.Reg. 13048. These standards are generally incorporated in Rule 10-5.011(1)(f) governing open heart surgery programs. The federal regulation also states that in special circumstances, a shared surgical team may perform fewer than 200 cases if they are performing open heart surgery in more than one institution; in such cases procedures at each institution may be aggregated to reach the 200 case level. The Federal Register states "In some areas open heart surgical teams, including surgeons and specialized technologists, are utilizing more than one institution. For these institutions the guidelines may be applied to the combined number of open heart procedures performed by the surgical team where an adjustment is justifiable in line with Section 121.6(B) and promotes more cost effective use of available facilities and support personnel. In such cases, in order to maintain quality care a minimum of 75 open heart procedures at any institution is advisable. . . ." 43 Fed. Reg. 13048 Section 121.6(B) states that adjustments may be made by local health systems agencies (now local health councils) to the standards set in the Federal guidelines for important reasons, e.g. increased cost of care for a substantial number of patients in the area if the guidelines are followed, or if residents of the service area do not have access to necessary health services. Special circumstances which have justified the use of a shared surgical team under the federal guidelines have been to provide indigent care, geographic accessibility, trauma service, or to meet the needs of a teaching hospital. While special circumstances may justify the use of a shared team, a shared team is not a special circumstance in and of itself. A reading of the entire portion of the federal guidelines dealing with shared surgical teams leads to the conclusion that the circumstances in which those guidelines authorize the use of shared surgical teams to operate open heart surgery programs that would not otherwise meet the National guidelines are not present. North Broward's proposal to use a shared open heart surgical team with Broward General does not enhance its application. The Extent To Which The Proposed Services Will Be Accessible To All Residents Of The Service District. Section 381.494(6)(c)8., Florida Statutes The parties stipulated that the Petitioners' meet the considerations of criteria 8 regarding health manpower, management personnel and funds for capital and operating expenditures, and that the other portions of subsection 8 are inapplicable, except for the clause concerning the extent to which the proposed services are accessible to all residents of the service district. The proposed services at North Broward would be economically accessible to the residents of the service district. North Broward serves patients without regard to their financial resources. It currently cares for indigents in its cardiac catheterization laboratory. Its filings with the Hospital Cost Containment Board for 1987 budget 19.5 percent of its charges as unpaid because rendered to indigents. The budget also projects Medicaid deductions as 5.2 percent of total revenue. By comparison, North Ridge and Holy Cross project 0 percent Medicaid deductions in their 1987 budgets. North Ridge projects only 3.7 percent and Holy Cross 4.5 percent for uncompensated indigent care. Florida Medical Center's performance shows only 0.1 percent Medicaid and 6.1 percent uncompensated care, which includes bad debt. None of the current open heart surgery providers which are privately owned has a particularly good record in providing access to indigents. On the other hand, indigents generally do not significantly utilize open heart surgical services. Plantation's current Medicaid utilization approximates 2 percent. There is no indication that Plantation's proposal will significantly enhance economic accessibility of open heart surgery services to indigents in District X. It has given no undertaking that it will provide any particular level of service to indigents. While Plantation will accept patients when a physician with staff privileges chooses to admit the patient, there is no showing that physicians at Plantation have any significant indigent patient load. Probable Impact Of The Proposed Projects On The Cost Of Providing Open Heart Surgery Services. Section 381.494(6)(c) 12., Florida Statutes There is no need in the district for a new program and the approval of additional programs will have an adverse economic impact on existing providers by diluting the number of procedures now being performed by existing programs. For example, Plantation is physically near Florida Medical Center. Much of the cardiac surgery and therapeutic catheterization (angioplasty) performed on patients who receive diagnostic catheterization at Plantation is now being done at Florida Medical Center. Patients who have diagnostic catheterization usually have their open heart surgery or angioplasty at the hospital where their catheterization was performed. Thus if Plantation receives approval for its open heart surgery program, most of those patients who receive cardiac catheterizations at Plantation would have their angioplasty or open heart surgery done there rather than at Florida Medical Center. Florida Medical Center has not attached a particular dollar loss figure to the impact of the approval of Plantation's open heart surgery program. Approval of the Plantation program will result in a pre-tax income decrement to North Ridge of approximately $416,000 in the 12 months ending December 31, 1989. Memorial Hospital would probably lose $690,000 in net revenue if Plantation is approved. Holy Cross would lose about 15 percent of its heart patients. II. Factual Findings Concerning The Rule Criteria Against Which The Application Must Be Evaluated Rule Hethodology. Rule 10-5.011(f)8. The parties have stipulated that applied on a District-wide basis, the formula set in Rule 10-5.011(f)8., using the 1984 or 1985 District X open heart surgery use rate applied to the 1987 population forecast for Broward County by the Governor's Office results in an average of less than 350 procedures annually for the existing providers in Broward County. Moreover, each existing and approved open heart surgery program in Broward is not currently operating at 350 open heart surgery cases per year. According to the evidence from the Department of Health and Rehabilitative Services, the methodology shows need for 4.4 open heart programs in Broward County. HRS Exhibit 1. Minimum Service Volume For Existing Applicants, Rule 10-5.011(1)(f)ll. Florida Administrative Code. The rule also requires that the service volume of each existing and approved open heart program be at least 350 adult open heart surgery cases per year. Holy Cross and Broward Medical Center have not reached the 350 minimum service volume in 1986. Memorial and Florida Medical Center just reached that level in 1986. The Abnormal Circumstance Exception Rule 10-5.011(1)(f)2., Florida Statutes The rules of the Department of Health and Rehabilitative Services provides that the "Department will not normally approve applications for new open heart surgery programs in any service area unless the conditions of sub- paragraphs 8. and 11. . . . are met". As shown in the discussion above, those sub-paragraphs are not met by the applications and unless an abnormal situation prevails in Broward County, the applications should be denied. Service Accessibility Rule 10-5.011(1)(f)4., Florida Administrative Code The parties stipulated that each of the Petitioners meets the requirements of service accessibility involving travel time, hours of operation and waiting. The only issue remaining is the criterion dealing with underserved population groups. There is no persuasive evidence that there are any underserved population groups in Broward County, i.e. Medicare, Medicaid or indigent patients. Broward General has additional capacity to serve such patients. Service Quality Rule 10-5.011(1)(f) 5., Florida Administrative Code The parties stipulated that Petitioners' applications meet the criteria of this rule, except as logistically affected by North Broward's shared surgical concept, and the applicant's ability to achieve a minimum service volume. The application of North Broward meets the rule criteria insofar as having an adequate number of appropriately trained personnel for the program. The problem is that with the shared surgical team it is physically impossible for the team to be in two hospitals at the same time. Both applicants would achieve the necessary volume of 200 procedures within 3 years. Cost Effectiveness Rule 10-5.011(1)(f)6., Florida Administrative Code The parties stipulated that both applicants' proposed equipment lists and costs are not in dispute. The charges to be made for open heart surgery at Plantation and North Broward would be comparable with charges established by similar institutions in the service area. Mere competition, given five existing providers, would insure this. There is, however, a less costly alternative to the institution at Plantation and North Broward of open heart surgery programs: Further use of the existing programs which do not meet the minimum 350 procedure service level required by Rule 10-5.011(1)(f)11., Florida Administrative Code. The cost effectiveness component of Rule 10-5.011(1)(f)6. has not been met by either applicant.
Recommendation The applications of North Broward Medical Center and Plantation General Hospital for approval of open heart surgery programs should be denied. DONE and ORDERED this 6th day of August, 1987, in Tallahassee, Florida. WILLIAM R. DORSEY, JR. Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 6th day of August, 1987. APPENDIX TO RECOMMENDED ORDER, CASE NO. 86-1535, 86-1536 Rulings on the Joint Proposals of the Applicants: 1-6. Covered in Findings of Fact 1-3. 7-10. To the extent appropriate, covered in Finding of Fact 4. Rejected as unnecessary. Rejected as a conclusion, not a finding. Rejected for the reasons stated in Finding of Fact 10. Rejected because to the extent that the State Plan speaks of maintaining an average of 300 open heart surgery procedures, it is inconsistent with the portion of Rule 10-5.11(1)(f)1l. a. (I) which requires each program to have a volume of 350. Rejected for the reasons stated in Findings of Fact 10- 12. Rejected because to the extent that the State Plan speaks of maintaining an average of 300 open heart surgery procedures, it is inconsistent with the portion of Rule 10-5.11(1)(f)11. a. (I) which requires each program to have a volume of 350. Covered in Finding of Fact 41. Covered in Finding of Fact 32. Covered in Finding of Fact 40. Rejected because whether the "350" standard relates to economic efficiency or other issues it still applies, and is not met. The allegation that Holy Cross has not met the standard due to its own constraints is rejected. Rejected because the concept of a shared surgical team is rejected. See Findings of Fact 30-33 and 40. Rejected as unnecessary. Rejected as unnecessary because existing providers do not perform 350 procedures per year as the rule requires. Rejected because Holy Cross performed 235 procedures. See Finding of Fact 21. Rejected as unnecessary and irrelevant. 25-30. Rejected because the attempt to use a use rate other than that prescribed in Rule 10-5.011(1)(f)8. is improper. 31-34. The evidence that other providers have operational constraints which impede expansion of the number of procedures at their facilities are unpersuasive. 35-37. Covered in Finding of Fact 35. Covered in Finding of Fact 35. This attempt to create a subdistrict for open heart services is rejected as inconsistent with the Local Health Plan. Covered in Finding of Fact 18. Rejected as legal interpretation not a fact. Rejected as legal interpretation not a fact. Rejected as unnecessary. Subparagraph 11. of the rule does not speak in terms of averages. This finding is rejected. To the extent HRS may have, in the past, used averages rather than absolute numbers, that was a misapplication of the rule. Rejected because the contention concerning operational constraints of Holy Cross is rejected as unpersuasive. Rejected as unnecessary. 47-53. Rejected because although the applicants can meet the 200 procedure minimum service volume they cannot meet the other requirements of subparagraph 11, rendering further findings on minimum service volume unnecessary and subordinate. 54-61. Rejected because although cardiologists would prefer to have open heart surgery available so that they can also provide therapeutic catheterizations, they are not necessary for operation of a diagnostic catheterization laboratory. See Finding of Fact 11. 62-71. Covered in Finding of Fact 35 and 36. 72. The necessary findings concerning shared services are made in Findings of Fact 30-33. The additional information in these proposals is unnecessary. 79-83. Covered in Finding of Fact 41, to the extent necessary. 84-164. The findings concerning lack of adverse impact on intervenors are generally rejected. The approval of additional programs will necessarily have the effect of diluting the number of procedures performed by existing providers, which has an adverse financial impact on them. The losses the opponents will experience are not especially significant, in the sense that they would cause existing providers to cease providing open heart surgery services. The factor is not so significant in the balancing to justify the extensive proposed findings made by the applicants, which are therefore rejected as subordinate and unnecessary. Ruling on Proposals of the Department of Health and Rehabilitative Services: The Proposed Recommended Order submitted by the Department of Health and Rehabilitative Services is quite brief. All of the proposals have essentially been adopted in the Recommended Order. Rulings on the Proposed Findings of Florida Medical Center: Covered in introductory paragraph. Covered in statement of issue. 3-5. Covered in Finding of Fact 1. 6. Rejected as unnecessary because capital costs are not an issue. 7-8. Covered in Finding of Fact 1. 9. Covered in Finding of Fact 8. 10. Covered in Finding of Fact 1. 11-13. Rejected as unnecessary. 14. Covered in Finding of Fact 4. 15. Rejected as unnecessary. 16-17. Covered in Finding of Fact 4. 18. Rejected as unnecessary. 19. Discussed in Conclusion of Law 12. 20-24. Rejected as unnecessary. 25-27. Covered in Finding of Fact 8. 28. Rejected as subordinate. 29. Covered in Finding of Fact 8. 30-31. Rejected as unnecessary. 32. Covered in Finding of Fact 37. 33-41. Rejected as unnecessary. 42-43. Covered in Finding of Fact 9. 44. Rejected as unnecessary. 45. Covered in Finding of Fact 9. 46. Covered in Finding of Fact 10. 47-48. Covered in Finding of Fact 11. 49. Covered in Finding of Fact 12. Covered in Finding of Fact 13. Covered in Finding of Fact 14. Covered in Finding of Fact 15. Covered in Finding of Fact 16. Covered in Finding of Fact 17. Covered in Finding of Fact 18. 56-58. Rejected as cumulative. Rejected as unnecessary. Rejected because testimony of East-West communities is legally irrelevant. 61-62. Rejected as unnecessary. Rejected as irrelevant. Rejected as unnecessary. 65-66. Rejected as subordinate and cumulative. Covered in Finding of Fact 22. Rejected as unnecessary. 69-70. Subordinate to Finding of Fact 27. 71-75. Covered in Finding of Fact 22. 76-77. Rejected as unnecessary. Covered in Finding of Fact 27. Implicitly dealt with in Finding of Fact 21. Rejected as unnecessary. Covered in Finding of Fact 40. 82-84. Rejected as unnecessary. 85. Covered in Finding of Fact 29. 86-87. Covered in Finding of Fact 36. 88-109. Covered in Finding of Fact 37 to the extent necessary. 110-119. Rejected because Section 381.494(6)(d) does not apply because the project does not reach the capital expenditure threshhold of $600,000. 120. Covered in Finding of Fact 38. 121-124. Covered in Conclusions of Law. Covered in Finding of Fact 20. To the extent necessary, covered in Finding of Fact 36. Covered in Finding of Fact 36. 128-129. Covered in Finding of Fact 41. Covered in Finding of Fact 19. Rejected as unnecessary. Covered in Conclusion of Law 10. 133-141. Rejected as unnecessary. Covered in Finding of Fact 37. Rejected as not constituting a Finding of Fact. Rejected as irrelevant whether HRS practice reflects what is found in the rule or not, HRS is required to follow its rules. Rejected as subordinate. Covered in Finding of Fact 36. Rejected as subordinate. 148-150. Rejected as unnecessary. 151. Covered in Finding of Fact 36. Rulings on Findings by North Ridge: Covered in Finding of Fact 1. Covered in Findings of Fact 9, 13 and 16. Covered in Findings of Fact 13 and 33. Covered in Finding of Fact 7 to the extent necessary. Covered in Finding of Fact 27 to the extent necessary. Covered in Finding of Fact 21 to the extent necessary. 7-8. Rejected as unnecessary. 9. Covered in Findings of Fact 25 and 26. 10-11. Rejected as unnecessary. Covered in Finding of Fact 5 to the extent necessary. Covered in Findings of Fact 6 and 21, to the extent necessary. Covered in Findings of Fact 8 and 21. Covered in Finding of Fact 30 to the extent necessary. 16-17. Rejected as unnecessary. Covered in Finding of Fact 30. Covered in Finding of Fact 31. 20-26. Rejected as unnecessary. 27. Implicitly adopted in Finding of Fact 31. 28-30. Rejected as unnecessary. Covered in Findings of Fact 2 and 23. Rejected as unnecessary. Rejected as unnecessary. This is governed by Rule 10- 5.011(1)(f). Rejected as unnecessary. To the extent appropriate, covered in Finding of Fact 37. 36-43. Covered in Finding of Fact 37. The specific impact of the opening of the North Broward Program in North Ridge has not been determined by the Hearing Officer because it is unnecessary to do so. An additional program will dilute the number of procedures already being provided, which clearly will have a negative financial impact on North Ridge. 44-47. To the extent necessary, covered in Findings of Fact 32 and 33. 48-50. Rejected as unnecessary. Rejected because the shared surgical team concept has been rejected as the basis for the Certificate of Need, economic access is already adequate, demographic factors do not require a new program and rate of increase in utilization in Broward is not relevant because the rule requires a specific use rate. Rejected as a recounting of contentions and is not a Finding of Fact. Rulings on Holy Cross Hospital and South Broward Hospital District: Covered in Finding of Fact 36. Rejected as subordinate. Covered in Finding of Fact 37. Covered in "Stipulation concerning applicable statutes." Rejected as a Conclusion of Law, not a Finding of Fact. Rejected as a statement of position, not a Finding of Fact. Covered in Finding of Fact 2. Covered in Finding of Fact 4. Covered in Finding of Fact 5. Covered in Finding of Fact 6. Covered in Finding of Fact 8. Covered in Finding of Fact 7. Rejected as a statement of law, not a Finding of Fact. Covered in Finding of Fact 20. Covered in Findings of Fact 23 and 35. Rejected as unnecessary. Covered in Finding of Fact 36. Rejected as unnecessary. 19-20. Rejected as cumulative. 21. Rejected as unnecessary. 22-25. Covered in Finding of Fact 21. 26-27. Rejected as unnecessary. Rejected as a statement of law, not a Finding of Fact. Covered in Finding of Fact 21. Covered in Findings of Fact 37 and 28. Rejected as unnecessary. Covered in Finding of Fact 9. Covered in Finding of Fact 25. 34-35. Covered in Finding of Fact 26. 36-37. Rejected as unnecessary. Rejected as a statement of a position, not a Finding of Fact. Rejected for the reasons proposal 38 was rejected. Covered in Conclusion of Law 10. Rejected as unnecessary. Covered in Conclusion of Law 10. 43-46. Rejected as unnecessary. 47. To the extent appropriate, covered in Findings of Fact 10 and 11. 48-50. Rejected as unnecessary. 51-52. Covered in Finding of Fact 9. Covered in Finding of Fact 10. Covered in Finding of Fact 11. Covered in Finding of Fact 15. Covered in Finding of Fact 14. 57-58. Covered in Finding of Fact 18. 59-69. Rejected as unnecessary. 70-107. Covered in Finding of Fact 37. COPIES FURNISHED: Ronald K. Kolins, Esquire Post Office Box 3888 West Palm Beach, Florida 33402 John Parker, Esquire J. Marbury Rainer, Esquire John Rue, Esquire 1200 Carnegie Building 133 Carnegie Way Atlanta, Georgia 30303 R. Bruce McKibben, Jr., Esquire Department of Health and Rehabilitative Services 1323 Winewood Boulevard Building One, Room 407 Tallahassee, Florida 32399-0700 Kenneth F. Hoffman, Esquire Eleanor Joseph, Esquire Oertel & Hoffman, P.A. Post Office Box 6507 Tallahassee, Florida 32314-6507 Steve Ecenia, Esquire Post Office Drawer 1838 Tallahassee, Florida 32301 Eric B. Tilton, Esquire Kenneth D. Kranz, Esquire Post Office Drawer 550 Tallahassee, Florida 32302 Gregory L. Coler, Secretary Department of Health and Rehabilitative Services 1323 Winewood Boulevard Building One, Room 407 Tallahassee, Florida 32399-0700 Sam Power, Clerk Department of Health and Rehabilitative Services 1323 Winewood Boulevard Building One, Room 407 Tallahassee, Florida 32399-0700 John Miller, Acting General Counsel Department of Health and Rehabilitative Services 1323 Winewood Boulevard Building One, Room 407 Tallahassee, Florida 32399-0700
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 This proceeding concerns applications for certificates of need (CON) for open heart surgery programs at Central Florida Regional Hospital and Winter Park Memorial Hospital. It must be determined whether those applications meet applicable statute and rule criteria and should be approved by the Department of Health and Rehabilitative Services. By stipulation, filed on June 20, 1989, the parties agree that the following criteria have either been met or are not at issue in this proceeding: Section 381.705(1)(c), F.S., regarding quality of care, only as to the applicants' record of providing quality of care in currently existing programs, and not as to the provision of open heart services. Section 381.705(1)(f), F.S., regarding the need for special equipment and services in the district which are not reasonably and economically accessible in adjoining areas. Section 381.705(1)(j), F.S., regarding the special needs and circumstances of health maintenance organizations. Section 381.705(2)(e), F.S., regarding nursing home beds. Rule 10-5.O11(1)(f)3.c., F.A.C., regarding the applicants' ability to provide a specified range of services in the facility if granted their certificates of need.
Findings Of Fact The Parties Applicant, Central Florida Regional Hospital (CFRH) is a 226-bed private, for profit hospital in Sanford, Seminole County Florida. CFRH was a county-owned hospital until 1980, when it was purchased by Central Florida Regional Hospital, Inc., a wholly-owned subsidiary of Hospital Corporation of America (HCA). CFRH currently provides a wide range of diagnostic and treatment services, including cardiology, neurology surgery, special imaging, and nuclear cardiology. Its in-patient cardiac catheterization services were initiated in April, 1988. Applicant, Winter Park Memorial Hospital (WPMH), is a 301-bed acute care, not-for-profit hospital located in Winter Park, Orange County, Florida. It was opened in 1955, and is governed by a board of directors comprised of business and civic leaders in the central Florida area. WPMH also currently offers diagnostic cardiac catheterizations services with medical/surgical, pediatric/obstetric, and a broad range of outpatient services. The Department of Health and Rehabilitative Services (HRS) is the agency responsible for administering sections 381.701 through 381.715. F.S., the "Health Facility and Services Development Act", the statute describing the certificate of need (CON) process. Petitioner, Humana of Florida, Inc., is the corporate owner of Humana Hospital Lucerne (Humana), a 267-bed hospital facility in downtown Orlando, Orange County, Florida. Along with its broad range of existing services, Humana provides open heart surgery and a full range of diagnostic and therapeutic cardiac catheterizations. It maintains two operating rooms (ORs) dedicated for open heart surgery. Petitioner, Adventist Health Systems/Sunbelt, Inc. is the corporate owner and licensee of a number of hospitals, including Florida Hospital. Florida Hospital is a private not-for-profit tertiary care hospital with over 1100 beds on three campuses in central Florida: Orlando, Apopka, and Altamonte Springs. Florida Hospital's open heart surgery program, the largest in HRS District 7, and one of the largest in the southeast United States, is conducted at the Orlando facility in Orange County. It has four ORs dedicated to open heart surgery. Florida Hospital has an active cardiac catheterization program with a full range of diagnostic and therapeutic procedures, such as angioplasty and valvuloplasty. The Applications CFRH proposes to add its open heart surgery program at a total cost of $4,322,702.00, including construction costs, equipment and financing costs. CFRH intends to start with a single furnished OR and with shelled-in space for a second OR. These and a recovery area will be located on the first floor adjacent to the existing surgical department. Twelve existing general medical/surgery beds will be converted to intensive care beds on the second floor, accessible by means of an elevator dedicated to the exclusive use of open heart surgery patients. CFRH's primary service area is described as north Seminole and southwest Volusia counties, an area containing no other open heart surgery programs. It anticipates it will draw its open heart surgery patients primarily from that service area, and projects 200 surgeries by the end of the first year, with 288 surgeries during the second year. WPMH proposes to add two dedicated ORs and related operating suite rooms for open heart surgery, at a cost of $1,470,000.00. One of the ORs will be kept available for emergency open heart surgery cases. The application does not include additional intensive care or critical care unit beds. Because it is slowly phasing in additional progressive care beds, the applicant anticipates that the current bottleneck created by patients waiting to leave critical care to go to progressive care, will be relieved by the time the open heart surgery program generates a demand for critical care and intensive care beds. Like CFRH, WPMH claims a relatively local primary service area, east Orange and south Seminole Counties, and proposes that its open heart surgery program will serve that same area. WPMH projects a case load of 117 open heart surgery patients the first year, 173 the second year, and is confident that it will meet the minimum requirement of 200 adult open heart procedures annually by the end of the third year of service. Neither CFRH nor WPMH are projecting pediatric open heart surgery. Numeric Need and the "350 Standard" HRS Rule 10-5.011(1)(f)8., Florida Administrative Code, provides the formula for determining a threshold numeric need for open heart surgery programs in a service area, defined for purposes of the rule as the entire HRS district. District 7 is comprised of Orange, Seminole, Osceola, and Brevard Counties, on Florida's east central coast. The formula is stated as follows: 8. Need Determination. The need for open heart surgery programs in a service area shall be determined by computing the projected number of open heart surgical procedures in the service area. The following formula shall be used in this determination: Nx - Uc X Px Where: Nx = Number of open heart procedures projected for Year X; Uc = Actual use rate (number of procedures per hundred thousand population) in the service area for the 12 month period beginning 14 months prior to the Letter of Intent deadline for the batching cycle; Px = Projected population in the service area in Year X; and, Year X = The year in which the proposed open heart surgery program would initiate service, but not more than two years into the future. Elizabeth Dudek is a health facilities and services consultant supervisor in HRS' Office of Regulation and Health Facilities. She was the Department's authorized representative at the hearing and was qualified, without objection, as an expert in health planning. The State Agency Action Report (SAAR), reflecting HRS' review of the CON proposals, applies the formula above as explained by Ms. Dudek. The planning horizon for the project under consideration is July, 1990, which, based on data from the Executive Office of the Governor, has a projected population of 1,492,327. The use rate of 202.53 per hundred thousand population for District 7 was derived from volume data provided by the local health council and from population data from the Executive Office of the Governor. The result of the formula is a projected number of 3022 procedures in the planning horizon. While the rule does not specify what is done with this figure, HRS looks to the 350 minimum number of procedures required in subsection 11. of the rule and divides 350 into the projected number of procedures, to derive a theoretical number of programs which could operate in the district. HRS found a need for 8.6 programs, rounded to 9. Since District 7 has four existing programs, this meant that 5 additional programs could be approved. HRS approved three, the two applicant parties in this proceedings and Wuesthoff, in central Brevard County. There is little, if any, dispute with HRS' application of its rule to this point. The parties do vigorously dispute the application of the following portions of Rule 10-5.011(1)(f), F.A.C.: 11.a. There shall be no additional open heart surgery programs established 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 surgery cases per year or 130 pediatric heart cases per year, and, the conditions specified in Sub- subparagraph 5.6., above, will be met by the proposed program. b. No additional open heart surgery programs shall be approved which would reduce the volume of existing open heart surgery facilities below 350 open heart procedures annually for adults and 130 pediatric heart procedures annually, 75 of which are open heart. The volume of procedures performed at existing programs during the period, July 1987 to June 1988, was: Florida Hospital-Orlando 1612 Holmes Regional 333 Humana Lucerne 440 Orlando Regional 368 2753 At the time of this batching cycle, there were only "existing" and no "approved" (not yet operating) programs in District 7. Holmes Regional did not meet the 350 minimum, as reflected above. HRS, however, has consistently and over a period of years, interpreted the requirement of 11.a (I) to be that an average of 350 cases be performed by existing and approved programs, not that each program actually perform that minimum, annually. Under this interpretation, which assumes that all programs have equal capacity, there are sufficient procedures being generated in the district to allow for the existing programs to average over 688 procedures. Quality of Care Part of the rationale for the 350 minimum procedures per year is the widely-accepted view that mortality rates are lower when an open heart program experiences volume at a minimum level of 200-350 procedures annually. Dr. Harold Luft is a professor of Health Economics employed at the University of California in San Francisco, who has conducted extensive research into the correlation between volume of open heart surgery cases and quality of care. In his findings published in the Journal of the American Medical Association in 1987, in-house deaths were 5.2%, 3.9%, 4.1% and 3.1% in facilities conducting 20-100, 101-200, 201-350, and more than 350 annual operations, respectively. A strong correlation was also found between volume and "poor outcome", defined as patients who either died in the hospital or who stayed beyond 15 days in the hospital (the 90th percentile post operative length of stay). Poor outcomes occurred in 21.7%, 15.5%, 11.8% and 12% of the patients in facilities performing 20-100, 101-200, 201- 350, and more than 350 annual procedures, respectively. The correlations are even more dramatic for patients who received non-scheduled ("emergency") surgery, ranging from 7.7% deaths in hospitals performing less than 100 operations, to 4.6% deaths in hospitals performing more than 350 operations annually, and from 27.9% poor outcomes in the lowest volume hospitals to 16.3% poor outcomes in the highest volume hospital. Both applicants argue the advantages of having the open heart surgery in-house to avoid the trauma of transfer of an emergency patient from their facility to another existing open heart surgery program. Dr. Luft's study cited above suggests that, despite the trauma of transfer, an unscheduled case might still expect a better outcome in a higher volume facility. While it is sometimes necessary to transfer a patient from one hospital to another for coronary angioplasty or open heart surgery, those patients are most frequently medically stable and have been scheduled for the procedure. Where a patient in need of a diagnostic cardiac catheterization has a history placing him in a high risk category, the patient will generally be referred at the outset to a facility with full service back-up to avoid the chance of an emergency transfer. Emergency cases are rare in open heart surgery, and when they have occurred, they have been accommodated at existing programs, with little, if any, delay. The applicants presented ample hypothetical examples of elderly heart patients anxiously enduring emergency transfers by helicopter or ambulance with dangling IV tubes, balloon pumps or other support devices. No actual data was presented as to how many cases are transferred in this manner or to the mortality rates attributable to such transfers. Florida Hospital enjoys an excellent reputation for the quality of its large open heart surgery program. It regularly draws patients from areas beyond the boundaries of district 7. No evidence was produced to suggest that the other existing programs are of questionable quality. Quality of care in the district will not be enhanced by approval of these applications. Access: Geographic and Economic Rule 10-5.011(1)(f)4.a., F.A.C. requires that open heart surgery be available within a maximum automobile travel time of two hours under average travel conditions for at least 90% of a service area's population. It is uncontroverted that this standard is met by existing providers. The average driving time from Florida Hospital to CFRH is 29 minutes, and from Florida Hospital to WPMH is just over 15 minutes. Although CFRH would be the only program in Seminole County, the population is concentrated at the lower end of the county, closer to Orlando and closer to Florida Hospital than to CFRH at the northeast end of the county. It would undoubtedly be convenient for patients and their physicians to be able to administer and receive all medical services in a neighborhood center, but no one is suggesting that every community hospital should have an open heart surgery program. Open heart surgery and its associated services are expensive. These services are not used by many indigent or Medicaid patients and no data is available regarding the level of need by this group or the impediments to access. WPMH has a reputation of providing low cost medical services and CFRH has a commendable history of commitment to public health, but the numbers of medicaid patients and indigents proposed to be served do not alone-weigh in favor of approval of their applications. Availability of Staff A single seven-physician, open heart surgery group performs virtually all of the open heart surgery in District 7, at Orlando Regional Medical Center (ORMC), Humana and Florida Hospital. The group has also committed to providing services at Winter Haven Hospital, an applicant in District 6; Wuesthoff; and CFRH and WPMH. In addition to surgery, the group provides in-house back up to facilities performing coronary angioplasty in their catheterization labs. When new programs come on line the open heart surgeon must spend substantial time training and working with the new surgery team at the hospital. This would further strain a busy practice. There are already delays at existing facilities in obtaining back-up surgery coverage. The group has stated that it will expand, if the new programs are approved, but it is unreasonable to assume that the expansion will be timed to fully accommodate existing demand and the demand of three new programs. The shortage of critical care unit nurses nationwide and in central Florida, is widely acknowledged, and Dr. Meredith Scott, an eminent cardiac surgeon otherwise enthusiastically supporting the new programs, cautions that the dilution of a pool of highly qualified nurses detracts from his support. When hospitals are unable to recruit sufficient nursing staff they are left with reliance on temporary agency personnel, a less preferable alternative in terms of costs and quality of care. Financial Feasibility Both applicants have the funds required for capital expenditures and start-up costs. CFRH's parent corporation, HCA, has committed that it will fund the project costs and has the resources to do so. The interest expenses allocated by HCA are appropriately included in the applicant's pro forma projection of revenue and expenses. The pro formas of both applicants, reflecting no more than a best guess, are reasonable. To the extent that expenses are understated, the charges will no doubt be adjusted, and they will also rise in the event that use rates do not reach expectations. Open heart surgery is a highly profitable health care service. Competition/Need/Impact on Existing Programs District 7 has four existing providers and a fifth approved provider, Wuesthoff, for a total of 11 dedicated ORs for open heart surgery, ranging from 4 at Florida Hospital to one at Holmes. Competition in the market already actively exists and was not a notable factor in HRS' decision to approve the applications. Wuesthoff's projected average charge for the first year at $30,400.00 is $4-5,000.00 less than that projected by WPMH and CFRH. A single OR has a capacity of 500 cases per year. HRS Rule 1O- 5.O11(1)(f)3.d, F.A.C. requires that each open heart surgery program be able to provide 500 operations per year. Same programs, as Holmes, and as CFRH's proposed program, have only one OR, evidencing acceptance of that capacity principle. Eleven existing and approved ORs translate into a capacity of 5500 cases. The horizon year volume is projected at a mere 3,022 cases. Assuming, for argument's sake, and as proposed by the applicants, that the need methodology of Rule 10- 5.O11(1)(f)8., F.A.C. under-states utilization rates and, therefore, need; or that the number of "cases" should be more properly adjusted by a multiplier to derive the number of "procedures"; ample capacity still exists. In the period of July 1987 through June 1988, existing providers performed 2753 surgeries. The projected 3,022 cases will generate 269 additional surgeries - enough to support Wuesthoff, the approved provider, (assuming no increase by existing providers) - but inadequate to justify the approval of two additional programs in the same cycle. It is obvious from the above that the applicants, in order to achieve their projected utilizations, will draw heavily from existing providers. At 1589 cases in 1988, (more than half the cases performed that year in District 7), Florida Hospital is a leviathan, a mega-center. Approximately half of its patients come from counties outside of District 7. Among the in- district patients, substantial numbers of referrals are from CFRH and WPMH. In a 13-month period ending in April 1989, CFRH referred 82 open heart surgery cases to Florida Hospital and one case to Humana. In 1987 and 1988, WPMH referred 70 and 84 open heart surgery patients, respectively, to Florida Hospital and 4 and 5 patients to Humana Hospital. Whether population growth or increased utilization rates will make up those losses is a matter of conjecture. Utilization rates have remained relatively stable since 1983, gaining 13 cases per thousand in that period, from 196 in 1983, to 209 in 1988. New technology is making it possible to avoid open heart surgery by removing obstructions from the heart vessel, rather than bypassing them. Ultrasound and laser techniques are being tested, and drug treatments and more efficient use of balloon angioplasty are reducing the incident of by-pass operations. Consequently, it is the sicker patients who receive the more invasive open heart surgery. And, typically, the sicker patients are referred to the larger, longer- established programs, driving up their costs when the new programs are able to skim the more profitable cases. Size alone does not cushion the impact on a facility such as Florida Hospital. The cardiology program accounts for one-third of its revenue. It helps support a research center and extensive education programs . Loss of revenue will effect these programs, as they, rather than direct services to patients, will be cut to the detriment of the health care community at large. Impact on Humana and the other smaller facilities is likely to be more direct. Humana's open heart surgery program was set back recently when a group of cardiologists left its staff in a dispute over administration. Volume has dropped and Humana reasonably projects 250 surgeries or less in 1991 and 1992 if WPMH and CFRH are approved. Both Humana and ORMC lost volume and market share when Holmes began to operate, since these facilities rely heavily on in-district patients. Like Florida Hospital, Humana derives one-third of its revenue from its cardiology program. State and Local Health Plans Both applications are consistent with the State Health Plan's objective of maintaining an average of procedures per open heart surgery program in the district, although as demonstrated above, actual maintenance of such an average would decimate the program at Florida Hospital. The plan's primary goal of ensuring the availability and accessibility of open heart services is not advanced by these applications. The most current State Plan is dated 1985-87; it is effective through 1987. Although widely referred to in CON proceedings because of statutory and rule requirements for consistency, the utility of an out-of-date plan for health planning purposes is questionable. The District 7 local health plan, approved by the local health council in June 1988, is internally inconsistent. It provides: District VII existing open heart programs appear to be performing well both from the standpoint of volume efficiency and quality, and clearly, there is sufficient, accessible capacity in these programs to handle additional growth. Consider, too, that new open heart programs are being developed in surrounding districts, and these programs, once operational, will begin to draw back their local patient bases from this district's open heart providers. Lately, as angioplasty, laser and drug technology evolve, there is little doubt that the percentage of patients requiring open heart surgery to correct blockage problems will drop. In view of these aforementioned facts, the approval of any additional open heart programs in District VII is discouraged. (Florida Hospital Exhibit #9, P. AC- 45.) emphasis added. At the same time, the plan provides four recommendations for tertiary services, including open heart surgery: specifically, that priority be given to CON applications from teaching hospitals or regional health care centers (defined as non-teaching hospitals) of at least 300 acute-care beds, that priority be given to applicants which commit to serve patients regardless of ability to pay, that applications be reviewed on a districtwide or regional basis, and that review priority be given to open heart surgery applicants which provide clear documentation of the impact of their proposal on other similar service providers in the district and in adjourning districts serving the same geographical area. (Florida Hospital Exhibit #9, P. 11-67) As discussed above, these recommendations are only marginally met by the applicants, if at all, and CFRH is clearly not a regional health center. "Balancing the Criteria" and Summary of Findings Additional open heart surgery programs are not needed in District 7. The expenditure of approximately $5.8 million in construction and start-up costs, the dilution of scarce staffing resources, the real potential that existing programs will suffer substantial financial losses, the real risk that declining volume at existing programs will lead to poorer quality of care or that the new programs will fail to achieve their hoped for volume, are not outweighed by enhanced convenience to patients, their families and physicians. Access to good quality open heart surgery is not currently a problem and, as advocated by Dr. Ron Luke, the more prudent health planning course would be to wait to see what happens in the district with the additional two open heart surgery operating rooms at Wuesthoff.
Recommendation Based on the foregoing, it is hereby, RECOMMENDED: That a final order be issued denying CON number 5695 for Winter Park Memorial Hospital and number 5696 for Central Florida Regional Hospital. DONE AND RECOMMENDED this 12th day of December, 1989, in Tallahassee, Leon County, Florida. MARY CLARK 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 12th day of December, 1989. APPENDIX The following constitute rulings on the findings of fact proposed by each party: CENTRAL FLORIDA REGIONAL HOSPITAL This party's proposal includes 68 separately numbered lengthy paragraphs combining argument with multiple findings. The arguments are well articulated and well organized. However, the format makes it impossible to accord a paragraph by paragraph ruling. The description of the parties, the description of HRS' application of its rule and the conclusions regarding financial feasibility of the CFRH application are accepted generally and substantially, or in summary form, have been adopted in this recommended order. Otherwise, the findings are rejected as unnecessary, immaterial or contrary to the weight of evidence. WINTER PARK MEMORIAL HOSPITAL Adopted in paragraph 2. Addressed in the Preliminary Statement. Adopted in paragraph 2. 4-6. Rejected as unnecessary. 7. Adopted in Statement of the Issues. 8-10. Rejected as unnecessary. Adopted in paragraph 9. Rejected as unnecessary. 13-17. Adopted generally in paragraph 9. 18 and 19. Rejected as unnecessary. 20-31. The current staffing at the facility and the level of staffing projected as necessary for the open heart program are not materially at issue. The issue is whether necessary staffing will be available and whether competition for existing staff will impact costs and quality of care. Rejected as contrary to the weight of evidence. See 20-31, above. Rejected as contrary to the evidence. There are delays in getting back-up surgery teams. The description of the group and its commitment is adopted in paragraph 30. That quality of care will not be affected was not established by the weight of evidence. 36-38. Rejected as unnecessary. 39-47. Adopted generally in paragraphs 34 and 35, except as to the finding that there is sufficient growth to assure 200 cases in the third year for all three applicants. This is rejected as contrary to the evidence. 48 and 49. Rejected as unnecessary. 50. Rejected as contrary to the weight of evidence. 51-53. Addressed in paragraph 23, otherwise rejected as immaterial. 54-58. Addressed in paragraph 28, otherwise rejected as immaterial. Adopted in substance in paragraph 29. Adopted in paragraph 14. 61 and 62. Adopted in paragraph 12. 63. Adopted in paragraph 14. 64 and 65. Rejected as unnecessary. 66. Adopted in paragraphs 16 and 17, except that the application meets the requirements of the rules, only as applied by HRS. 67-83. Rejected generally as contrary to the weight of evidence or immaterial. 84. Rejected as argument. 85-89. Rejected as immaterial or argument. 90. The comparison of Florida Hospital's mortality rate to that of Ormand Beach Hospital's is immaterial. There is no analysis of case mix and even Dr. Luft concedes that there may be isolated examples of high mortality rates with high volume or low rates in a low volume hospital. 91-93. Rejected as unnecessary or unsupported by the weight of evidence. Rejected as unnecessary. That the application meets the objectives of the local health plan is rejected as contrary to the evidence. The remaining portion of the paragraph is subordinate Rejected as unnecessary. Adopted in cart in paragraph 44, otherwise rejected as contrary to the evidence. Rejected as cumulative and unnecessary. 99-115. Rejected as unnecessary. That competition already exists is adopted in paragraph 36 otherwise rejected as unnecessary. Rejected as contrary to the evidence. THE DEPARTMENT OF HRS 1-3. Addressed in Preliminary Statement. 4 and 5. Adopted in substance in paragraph 12. 6-8. Adopted in paragraph 14. 9. Adopted in paragraph 45. 10 and 11. Rejected as unnecessary. Rejected as contrary to the weight of evidence. Adopted, as to the "averaging" method, in paragraph 44, otherwise rejected as unnecessary. Rejected as contrary to the weight of evidence, except as to the finding regarding drive time, which is adopted in paragraph 26. The quality of care stipulation is addressed in the statement of issues. The remaining finding regarding 200 procedures within 3 years is rejected as contrary to the weight of evidence. 16 and 17. Adopted, as to financial feasibility, in paragraphs 34 and 35, otherwise rejected as contrary to the weight of evidence. 18. Rejected as contrary to the weight of evidence. 19 and 20. Rejected as immaterial or unnecessary. HUMANA OF FLORIDA, INC. Adopted in substance in paragraph 9. Rejected as unnecessary. The original lack of pro forma is addressed in conclusions of law. Rejected as unnecessary. Adopted in paragraphs 6 & 7. 5 and 6. Adopted in Preliminary Statement. Adopted in paragraphs 14 & 16. Rejected as unnecessary. Adopted in Preliminary Statement. 10-12. Adopted in paragraph 4. Rejected as unnecessary. Rejected as subordinate. Adopted in substance in paragraph 30. 16 and 17. Adopted in paragraph 46. Adopted in paragraph 15. Adopted in paragraph 19. 20 and 21. Rejected as unnecessary. 22. Adopted in paragraph 14 and in conclusions of law. 23-25. Rejected as unnecessary. 26 and 27. Adopted in paragraph 38. Adopted in paragraph 37. Adopted in substance in paragraph 46. 30 and 31. Adopted in substance in paragraphs 26 and 27. 32-35. Rejected as unnecessary. 36. Adopted in substance in paragraph 41. 37 and 38. Rejected as unnecessary. 39 and 40. Adopted in paragraph 46. 41-44. Rejected as cumulative and unnecessary. 45-49. Adopted in substance in paragraphs 44 and 45. 50 -60. Rejected as contrary to the weight of evidence or unnecessary. 61-63. Adopted in substance in paragraph 36. 64-70. Rejected as cumulative or unnecessary. 71. Adopted in paragraph 24. 72 and 73. Adopted in paragraph 25. 74. Adopted in paragraph 19. 75-77. Rejected as unnecessary. 78-82. Adopted in substance in paragraphs 30-32. 83 and 84. Adopted in paragraph 33. 85-90. Rejected as unnecessary, except as adopted in paragraph 22. 91-1OO. Rejected as unnecessary. Adopted in paragraph 29. Rejected as unnecessary. 109-123. Rejected as contrary to the weight of evidence. 124-125. Rejected as unnecessary. 126-134. Adopted in summary in paragraph 43. 135-138. Rejected as cumulative. 139-143. Rejected as contrary, to the weight of evidence or unnecessary. FLORIDA HOSPITAL Adopted in paragraphs 1 & 2. Adopted in paragraph 4. Adopted in paragraph 5. Adopted in paragraph 16. 5-12. Rejected as unnecessary. Adopted in paragraph 12. Adopted in paragraph 14. Addressed in Preliminary Statement. Adopted in paragraph 17. Adopted in paragraph 38. Rejected as unnecessary. Adopted in paragraph 41. 20 and 21. Rejected as unnecessary. 22 and 23. Adopted in paragraph 45. Rejected as unnecessary. Adopted in paragraph 19. Adopted in paragraph 20. Rejected as cumulative and unnecessary. Adopted in paragraph 26. Adopted in paragraph 27. Adopted in paragraph 22. 31 and 33. Rejected as unnecessary. 34-39. Rejected as argument or unsupported by the record. 40. Adopted in summary in paragraph 33. 41 -46. Rejected as unnecessary. Rejected as immaterial. Rejected as contrary to the evidence or immaterial. Addressed in Conclusions of Law. Adopted in paragraph 39. 51-57. Rejected as unnecessary. 58-76. Impact is addressed in summary in paragraphs 42 and 43. 77. Adopted in paragraph 30. Adopted in paragraph 29. Rejected as unnecessary. COPIES FURNISHED: Jeffery A. Boone, Esquire Robert T. Klingbeil, Jr., Esquire P.O. Box 1596 Venice, FL 34284 James C. Hauser, Esquire P.O. Box 1876 Tallahassee, FL 32302 Richard A. Patterson, Esquire Ft. Knox Executive Center 2727 Mahan Drive Tallahassee, FL 32308 John Radey, Esquire Elizabeth McArthur, Esquire Monroe Park Tower Suite 1000 Tallahassee, FL 32314 Kenneth F. Hoffman, Esquire 2700 Blairstone Road Tallahassee, FL 32314 Gregory L. Coler, Secretary Dept. of Health and Rehabilitative Services 1323 Winewood Blvd. Tallahassee, FL 32399-0700 John Miller, General Counsel Dept. of Health and Rehabilitative Services 1323 Winewood Blvd. Tallahassee, FL 32399-0700 R. S. Power, Agency Clerk Dept. of Health and Rehabilitative Services 1323 Winewood Blvd. 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
The Issue The central issues in these cases are: As to case no. 89-1293--whether Indian River Memorial Hospital (Indian River) meets the statutory and rule criteria for a certificate of need (CON) to operate an inpatient cardiac catheterization laboratory, and therefore, whether the Department of Health and Rehabilitative Services (Department) should approve CON application number 5726. This application is opposed by Lawnwood Medical Center, Inc. (Lawnwood). As to case no. 89-1294--whether Lawnwood meets the statutory and rule criteria for a CON to operate an open heart surgery program and an inpatient cardiac catheterization laboratory, and therefore, whether the Department should approve CON application number 5729. Indian River opposes the proposed approval of Lawnwood's inpatient cardiac catheterization laboratory in case no. 89-1295. St. Mary's Hospital, Inc. (St. Mary's) opposes the proposed approval of the inpatient cardiac catheterization laboratory in case no. 89-1297.
Findings Of Fact Based upon the testimony of the witnesses and the documentary evidence received at the hearing, the following findings of fact are made: The Parties Indian River is a private, not-for-profit hospital which is operated pursuant to a lease between itself and the Indian River Hospital District, a special tax district. Indian River is located in Vero Beach, Indian River County, Florida, and has 347 licensed beds of which 293 are medical-surgery beds, with 18 intensive care and critical care beds. Ad valorem tax monies support indigent care for Indian River County residents. Lawnwood is a 335 bed acute care hospital located in Fort Pierce, St. Lucie County, Florida. Lawnwood is owned and operated by Lawnwood Medical Center, Inc., a wholly-owned subsidiary of Hospital Corporation of America (HCA). Lawnwood has an established outpatient catheterization laboratory located in a free-standing building on the hospital grounds. St. Mary's is an acute care hospital located in West Palm Beach, Palm Beach County, Florida. St. Mary's has an established inpatient catheterization laboratory program. The Department is the state agency responsible for administering those sections of Chapter 381, Florida Statutes, which govern the review process under which applications for CONs are either granted or denied. Indian River, Lawnwood, and St. Mary's are located within the Department's District IX. The geographical boundaries for District IX encompass Indian River, St. Lucie, Martin, Okeechobee, and Palm Beach Counties. With the exception of Martin Memorial Hospital (whose entitlement to inpatient cardiac cath is disputed by Lawnwood), all existing providers of inpatient catheterization services are located in Palm Beach County. The Applications On August 25, 1988, Indian River submitted a letter of intent to advise the Department of its plan to construct a cardiac catheterization laboratory within the hospital and to establish an inpatient cardiac cath program. The proposal set forth in that letter made reference to Indiarn River's patients who are generally routed to hospitals located in another district for cardiac cath services. The application submitted by Indian River on August 26, 1988, estimated that the capital expenditure of the project, $1,779,750, would provide for the construction of a second floor addition to the hospital which would accomodate the new laboratory. The application alleged that, in the majority of cases, residents of Indian River County in need of cardiac catheterization are sent out of district for such services. On October 13, 1988, the Department responded to Indian River's application by listing omissions from the proposal which the Department required in order to complete its review. This "omissions letter" specified that Indian River was to update its application utilizing the "new rule" for cardiac cath. The responses to the omissions were to be provided by November 14, 1988. Indian River timely responded to the omissions letter on November 9, 1988. The Department deemed Indian River's application to establish an inpatient cardiac cath laboratory complete effective November 14, 1988. On August 26, 1988, Lawnwood submitted a letter of intent to the Department to announce its intention to establish a cardiac cath and open heart surgery program. Lawnwood sought to be included in the application group for which the deadline was September 28, 1988. The timeline for this group required applications to be complete by November 14, 1988. Agency action on the applications submitted in the September, 1988 batch was scheduled for January 13, 1989. Lawnwood's application was received and reviewed by the Department. The omissions letter which outlined approximately six questions requiring further elaboration was issued on October 13, 1988. Lawnwood's omissions response was timely provided on November 14, 1988. The Department deemed Lawnwood's application for an inpatient cardiac cath laboratory and an open heart program complete effective November 14, 1988. Inpatient cardiac catheterization is not currently available in Indian River and St. Lucie Counties. As a result, potential patients residing in these counties are geographically isolated from the existing District IX providers of the same services. State Agency Action Report On January 20, 1989, the Department issued its State Agency Action Report (SAAR) which recommended the approval of an inpatient cardiac cath program for Lawnwood. The portion of Lawnwood's application which sought a CON for an open heart program was denied. The SAAR evaluated the applicants based upon the following criteria: Section 381.705, Florida Statutes; Rule 10-5.011, Florida Administrative Code; and the 1988 District IX Health Plan (DHP). The Health Plans Pertinent to these proceedings are the following portions of the DHP: B. In planning for the specialized services of cardiac catheterization laboratories and open heart surgical services, District IX, in its entirety, shall be the subdistrict. * * * Priority shall be given to area facilities for specialized services which can show a commitment to, or an historical record of, service to Medicaid/Indigent, Handicapped and Underserved population groups. * * * Priority shall be given to Certificate of Need applicants who propose to have both inpatient cardiac catheterization services and open heart surgical services in the same facility. However, should it become evident, at any time, that there is a need for one service and not for both services, then an applicant would not be expected to have to apply for both. The State Health Plan (SHP) sets a goal of ensuring the appropriate availability of cardiac catheterization and open heart surgery services at a reasonable cost. In pursuit of that goal two objectives are specified: Objective 4.1.: To maintain an average of 600 cardiac catheterization procedures per laboratory in each district through 1990. * * * Objective 4.2.: To maintain an average of 350 open heart surgery procedures per program in each district through 1990. The "Old Rule" Need determination for cardiac catheterization capacity under the version of Rule 10-5.011, Florida Administrative Code, which was effective on April, 1988, provided for a calculation whereby the number of catheterization procedures for the projected year equaled the actual use rate (number of procedures per hundred thousand population) in the service area for the 12 month period beginning 14 months prior to the letter of intent deadline (the batching group) multiplied by the projected population in the service area for the projected year. The projected year was the year in which the proposed cardiac cath laboratory would initiate service (not more than two years into the future). The "old rule" further provided that no additional cardiac cath laboratories would be established in a service area unless the average number of caths performed per year by the existing and approved laboratories were greated than 600. This volume level contemplated inpatient and outpatient procedures. Consequently, applications for proposed cardiac cath laboratories may not be approved if they would reduce the average volume of procedures performed below 600. The Department did not publish a fixed need pool for this batch of applicants under the "old rule." The Department's goal under the "old rule" provided that it will not normally approve applications for new cardiac catheterization laboratories unless additional need is indicated based upon the calculations explained above. The number of cardiac cath procedures performed in District IX during the relevant time period was 4765. The population during the use rate period was 1,151,929. The historic use rate is therefore 413.65 per 100,000 population. The projected population for the planning horizon is 1,259,178. The projected use for the period is 5208.6. That number divided by 600 yields a total need for the planning period of 8.68 cath laboratories for this District. Applying the Department's historical practice of rounding the number to the nearest whole number establishes a need for 9 cardiac cath laboratories. By subtracting the existing cath laboratories (Boca Raton, JFK, St. Mary's, Palm Beach Gardens, and Delray) results in a need for an additional 4 cardiac cath laboratories. Pursuant to the "old rule," both applicants in this case have established numeric need for their proposed program. The "New Rule" The need formula expressed in the "new rule" is as follows: NN=PCCPV - ACCPV - APP Where: NN is the annual net program volume need in the service planning area projected 2 years into the future for the respective planning horizon. Net need projections are calculated twice a year. The planning horizon for applications submitted between January 1 and June 30, shall be July of the year subsequent to the following calendar year. The planning horizon for applications submitted between July 1 and December 31, shall be January of the year 2 years subsequent to the following calendar year. PCCPV is the projected adult cardiac catheterization program volume which equals the actual adult cardiac catheterization program volume rate (ACCPV) per thousand adult population 15 years and over for the most recent 12 month period available to the department 3 weeks prior to publication of the fixed need pool, multiplied by the projected adult population 15 years of age and over 2 years into the future for the respective planning horizon. The population projections shall be based on the most recent population projections available from the Executive Office of the Governor which are available to the department 3 weeks prior to the fixed need pool publication. ACCPV equals the actual adult cardiac catheterization program volume for the most recent 12-month period for which data are available to the department 3 weeks prior to the publication of the fixed need pool. APP is the projected program volume for approved programs. The projected program volume for each approved program shall be 300 admissions. The Department did not publish a fixed need pool for this batch under the "new rule." The projected program volume contemplates 300 admissions which relate to inpatient procedures. In addition to the formula set forth above, the "new rule" provides that the actual outmigration from one service planning area to another shall be considered in the review of a CON application. In this case, the actual number of cardiac cath procedures for District IX is understated. The actual number utilized by the Department in the evaluation of these applicants failed to consider the outmigration of patients residing in Indian River County who travelled out of the district for services. The actual number of Indian River patients who travelled out of the District for cardiac catheterization during the period was understated by at least 500. Prior to the evaluation of these applicants, neither the Department nor the applicants had data to calculate the outmigration for cardiac cath services from District IX. That it was occurring was obvious--there were no inpatient facilities in the northern counties. Further, the established referral patterns suggest that patients in the northern counties preferred the outside facilities which were geographically closer than existing programs within District IX. However, no study quantifying the number of residents receiving services elsewhere had been performed. Regardless of the net need calculated under the "new rule" formula above, the rule further provides that no additional cardiac catheterization programs shall normally be granted unless ACCPV, divided by the number of operational programs for the service planning area, is at or exceeds a program volume of 300 patient admissions. Utilizing the most conservative ACCPV (4133) divided by the number of operational programs (5) would yield an average program volume well in excess of 300. In that instance, the average volume per program would be 827. That assessment assumes a translation of "admissions" to equal "procedures." In contrast, utilizing the 600 figure set forth in the SHP, yields a program need for 7 facilities. That figure confirms that two additional cardiac catheterization programs would be appropriate and adequately supported by District use. In reaching this conclusion, the cardiac catheterization program located at Martin Memorial Hospital has not been included in the number of existing programs. The program at Martin was reportedly approved in the settlement of a prior batch CON case. As such, it may not reduce the number of facilities calculated in this case under the pertinent rule. Based upon the "new rule," both of these applicants have established numeric need for their proposed program. The number of projected procedures (4565) divided by 600 further establishes a need for 7 programs. Open Heart Need Pursuant to the Rule 10-5.011, Florida Administrative Code, the need for open heart surgery programs is determined by computing the projected number of open heart surgical procedures in the service area for a projected year. That number equals the actual use rate (number of procedures per hundred thousand population) in the service area for the 12 month period beginning 14 months prior to the letter of intent multiplied by the projected population in the service area for the year in which the proposed open heart surgery program would initiate service (not more than two years into the future). Based upon the open heart need formula there is no numeric need for additional open heart surgery programs in District IX. Further, the approval of an additional open heart program would reduce the average volume of existing open heart surgery facilities to below 350 open heart procedures annually. The Department will not normally approve applications for new open heart surgery programs in any district unless there is a finding of numeric need coupled with a finding that the additional program will not reduce the volume of existing providers below 350. Not Normal Circumstances Reviewed There are three open heart programs currently operating in District IX (Palm Beach Gardens, Delray, and JFK). All of these programs are located within Palm Beach County which is south of Lawnwood's service area. The closest of these programs (Palm Beach Gardens) is approximately 44.3 miles from Lawnwood. Another open heart program which is located outside of District IX, Holmes Regional Medical Center (located in Brevard County to the north), is approximately 49.8 miles from Lawnwood. Not normal circumstances warranting the approval of an open heart program require a showing of financial, programmatic or geographical conditions which establish that residents of the given service area are unable to access the service. In this case, District IX must be examined and considered as a whole. It is inappropriate to "subdistrict" for purposes of reviewing not normal circumstances. While a number of the residents of the northern counties do avail themselves of services outside of District IX, the basis for that outmigration may be the physicians' established referral patterns, patient preference, or the provider's reputation in the medical community for quality care. Open heart services are available and accessible to all residents of District IX. Consequently, no persuasive not normal circumstances have been established. Ouality of Care Indian River and Lawnwood are properly accredited and have established records of providing quality care in their existing programs and departments. Lawnwood's outpatient cardiac catheterization laboratory has operated without question to its quality of care. Since neither applicant currently provides open heart services, it is anticipated that both will operate their inpatient cardiac cath laboratories in accordance with a transfer agreement for emergency patients. Such agreement could provide for the relocation of patients to a hospital authorized to provide open heart surgery. By rule, the receiving hospital must be located within 30 minutes travel time by emergency vehicle to the inpatient cath facility. In this case, Indian River intends to transfer emergency patients to Holmes Regional Medical Center, a hospital currently authorized to provide open heart surgery services. That hospital is within 30 minutes emergency travel time of Indian River. Lawnwood also proposes to transfer emergency patients to Holmes Regional Medical Center. In order to meet the 30 minute travel time criteria, transfer in this instance must be by helicopter. Lawnwood intends to meet this requirement by agreement with Holmes. Holmes has four pilots, two mechanics, one full-time helicopter, and one backup helicopter to provide this service. By helicopter, the travel time from Lawnwood to Holmes is within 30 minutes. Availability and Access With the addition of the programs at Indian River and Lawnwood, residents in the northern counties of District IX will have an increased access to inpatient cardiac cath. This geographic accessibility will lessen the outmigration for these services by providing more convenient, locally situated programs. It is anticipated that local programs will reduce patient anxiety incidental to the travel associated with attaining the services. Further, when considered in connection with the outpatient programs (existing at Lawnwood and planned for Indian River), a significant volume of cath procedures will be performed without requiring travel to adjacent counties/hospitals. Increased volume will improve the efficiency and skill of personnel administering the procedures. Since the service areas for Indian River and Lawnwood have not, historically, conflicted, it is anticipated that patients of each facility will access their respective hospital for the service required. Personnel Availability and Costs The staffing, training and costs of providing same proposed by Indian River and Lawnwood are reasonable and adequate to fully support inpatient cardiac cath laboratories. Both hospitals have established procedures to monitor and to provide for quality assurance in connection with the services to be performed. Additionally, both have ongoing educational training to enhance their programs. Both hospitals have a cardiologist or other appropriately credentialed physician on staff to anchor the cardiac cath team. Financial Feasibility There are sufficient procedures anticipated to be performed by these hospitals to assure a level of utilization which will provide for the financial feasibility of the inpatient cardiac cath programs. Indian River currently refers approximately 500 cardiac cath procedures to facilities outside District IX. Lawnwood has commenced an aggressive outpatient progrom. With the availability of extending that program (in Lawnwood's case) and recapturing its referrals (in Indian River's case), both of these hospitals should have no financial difficulty in establishing their inpatient programs. Effect on Competition and Costs There should be no appreciable impact on costs or competition in the health care community within District IX if these applications for cardiac cath are approved. While there will be a decline in the service utilization of other facilities outside the district when referrals cease, there is no data from which it must be concluded that such decrease will adversely affect the health care community as a whole. Further, the increased service availability within District IX should not affect competition or costs since historically these facilities do not compete for patients. Similarly, since the potential patients do not currently utilize existing and approved programs (for the most part) within District IX, the approval of these applications for inpatient cardiac cath will not adversely affect the ability of existing providers to attract and retain the personnel or patients for their programs. In the case of Lawnwood's proposal for open heart, such program would, however, detract from the existing providers. Since, on average, the existing providers are not operating at appropriate levels, the creation of an additional provider would significantly affect the existing programs' abilities to attract patients. Theoretically, the existing providers should have the first opportunity to secure outmigrating patients. This would assure that their programs develop and retain a volume to assure quality of care. Indigent Care As stated previously, Indian River is a tax-supported hospital which pledges tax revenues to provide health care for the indigent. It is anticipated that such practice will continue and that those residents of Indian River County who are unable to afford inpatient cardiac cath services will obtain indigent care according to Indian River's historical record. Lawnwood's historical record for providing indigent care (as supported by its outpatient cardiac cath data) is less than exemplary. It is anticipated that as a conditon upon the issuance of the CON, Lawnwood will be required to provide a minimum of 2 percent of the total annual visits to Medicaid patients and a minimum of 3 percent of total annual visits o medically indigent/charity care patients. Those amounts are an appropriate commitment to assist the medically needy within Lawnwood's service area. Miscellaneous Criteria The applicants did not propose the operation of joint, cooperative, or shared health care resources. The applicants did not predicate need for their requested service on the need for research and educational facilities. The special needs and circumstances of health maintainance organizations was not at issue. The parties stipulated as to the reasonableness of the costs and methods for construction of the proposed facilities. Both hospitals intend to construct new laboratories. The costs associated with Indian River's proposed construction are less than those proposed by Lawnwood.
Recommendation Based upon the foregoing findings of fact and conclusions of law, it is RECOMMENDED that the Department of Health and Rehabilitative Services enter a final oider approving the certificate of need applications filed by Indian River Memorial Hospital and Lawnwood Regional Medical Center to establish inpatient cardiac catheterization laboratories. It is further recommended that Lawnwood's application to establish an open heart surgery program be denied. DONE AND ENTERED this 28th day of March, 1990, in Tallahassee, Leon County, Florida. Joyous D. Parrish Hearing Officer Division of Administrative Hearings 1230 Apalachee Parkway Tallahassee, Florida 32301 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 28th day of March, 1990. Appendix to Case Nos. 89-1293 et seq. RULINGS ON THE PROPOSED FINDINGS OF FACT SUBMITTED BY INDIAN RIVER: Paragraphs 1 through 16 are accepted. With regard to paragraph 17, it is accepted that Indian River physicians have established referral patterns outside of District IX for inpatient and outpatient cath procedures. To the extent that Indian River's application and response to the omissions letter made reference to this phenomenon, it is accepted that such activities were properly placed at issue in these proceedings. As to the calculations expressed in paragraph 17, no formal study was performed by any party to accurately quantify the number of procedures performed outside District IX on residents of Indian River and St. Lucie Counties. It is accepted that Dr. Celano and his partner performed outpatient procedures cn approximately 200 patients. It is further accepted that another 300 procedures were performed on Indian River residents at Holmes or Florida Hospital. Consequently, the utilization rate has been significantly understated. The total volume of which is unknown except as addressed herein, paragraph 17 is rejected as speculation or unsupported by the record in this cause. The first three sentences of paragraph 18 are accepted. The last sentence is rejected as speculation. With regard to paragraph 19, it is accepted that referrals to other hospitals can cause patient anxiety due to waits or transfer difficulties. Otherwise rejected as comment, argument, recitation of testimony or unnecessary. Paragraphs 20 and 21 are accepted. Paragraph 22 is rejected as irrelevant. Paragraph 23 is accepted. Paragraph 24 is rejected as speculation unsupported by the weight of the evidence or irrelevant. Paragraph 25 is accepted. Paragraph 26 is accepted. Paragraph 27 is accepted. Paragraph 28 is accepted. To the extent that the "new rule" requires consideration of inmigration and outmigration, paragraph 29 is accepted. That data became available subsequent to the finding that these applications were complete is irrelevant. Since no data quantifying outmigration/inmigration was available, the rule read as a whole must dictate whether the applicants have established numeric need. The applicants and the Department knew of the outmigration, consequently, reading the rule as a whole establishes that the existing providers are performing an ample number of procedures to guarantee their continued success and that an additional two programs are warranted. See response to paragraph 29 above regarding paragraph 30. Paragraph 31 is rejected as argument--see response to paragraph 29 and findings reached in paragraphs related to "new rule." Paragraph 32 is rejected as argument, comment or unnecessary. Paragraphs 33 through 41 are accepted. With regard to paragraphs 42 through 80, except as noted by findings of fact related to the applicants and the assessment of their proposals, such paragraphs are unnecessary (need for two programs has been established), argument, irrelevant (as to allegations regarding Lawnwood's open heart proposal), or contrary to the weight of competent evidence. RULINGS ON THE PROPOSED FINDINGS OF FACT SUBMITTED BY LAWNWOOD: Paragraphs 1 through 7 are accepted. With regard to paragraph 8, it is accepted that currently Indian River does not have an outpatient cardiac cath program; however, regardless of the outcome of this proceeding, Indian River will establish an outpatient facility. Paragraphs 9 and 10 are accepted. Paragraph 11 is accepted but is unnecessary since it does not provide a fact related to the conclusions reached in this order. Except as accepted in the findings of fact related to the "old rule," paragraphs 12 through 15 are rejected as contrary to the weight of the evidence. In theory, Lawnwood's proposed findings correctly state how the "old rule" should be applied. The actual numbers differ slightly with the findings reached in the recommended order. Except as accepted in the findings of fact related to the "new rule," paragraphs 16 through 20 are rejected as contrary to the weight of the evidence. In theory, Lawnwood's proposed findings correctly state how the "new rule" should be applied. The actual numbers and conclusions differ slightly with the findings reached in the recommended order. Paragraph 21 is accepted. Except as accepted in the findings of fact related to open heart need, paragraphs 22 and 23 are rejected as unsupported by the weight of the evidence, argument, or irrelevant. Paragraph 24 is accepted. Paragraphs 25 through 28 are accepted. Paragraph 29 is rejected as contrary to the weight of competent evidence, irrelevant (an out of district provider would not have standing to oppose the request), or argument. Paragraph 30 is accepted to the extent that it states Martin's inpatient cath program located in Martin County has improved accessibility; however, that program did not exist when these applications were filed and evaluated by the Department otherwise rejected as irrelevant. Paragraph 31 is rejected as contrary to the weight of the evidence or irrelevant. Paragraph 32 is rejected as contrary to the weight of the evidence related to open heart. Open heart facilities are available and accessible for District IX residents. Transfers to open heart facilities under emergency circumstances after cardiac cath procedures would be the exception and not the rule. Paragraphs 33 and 34 are rejected as irrelevant to the issue of open heart. While outmigration is to be considered in determining need for cardiac cath under the "new rule," such outmigration does not establish inaccessibility for open heart services. Paragraphs 35 through 41 are rejected as contrary to the weight of the evidence, contrary to the appropriate rule application, or irrelevant. Paragraphs 42 (deleting open heart) through 44 are accepted. With regard to paragraph 45, the program located at Martin has not been considered in the evaluation of these applicants since approval for that program occurred after this batch closed. Paragraph 46 is accepted. Paragraph 47 is rejected as irrelevant. Paragraph 48 is rejected as irrelevant. Paragraph 49 is rejected as irrelevant. Paragraphs 50 and 51 are rejected as argument or contrary to the weight of the evidence. Paragraph 52 is accepted. Paragraph 53 is accepted. Paragraph 54 is rejected as irrelevant. Paragraph 55 is accepted. Paragraph 56 is rejected as contrary to the weight of the evidence. Paragraphs 57 through 61 are rejected as contrary to the weight of the evidence. Paragraph 62 is accepted. Paragraphs 63 through 80 are accepted. Paragraph 81 is rejected as contrary to the weight of the evidence. Paragraphs 82 through 85 (related only to cardiac oath) are accepted. Related to the allegations foil open heart, such paragraphs are rejected as contrary to the weight of the evidence or irrelevant. Paragraphs 86 through 90 are accepted. Paragraphs 90 through 96 are accepted only as to representations of facility and staffing it is agreed Lawnwood will have. Otherwise, assumption that volume of surgical cases will exist is rejected as contrary to the weight of the evidence. Paragraphs 97 through 105 are accepted. With regard to paragraph 106, it is accepted that the term emergency vehicle includes helicopter; otherwise, rejected as a conclusion of law. Paragraph 107 is rejected as argument. Paragraph 108 is rejected as argument or contrary to the weight of the evidence. RULINGS ON THE PROPOSED FINDINGS OF FACT SUBMITTED BY THE DEPARTMENT: Paragraphs 1 through 3 are accepted. The conclusion reached in paragraph 4 is rejected as contrary to the weight of the evidence. Paragraph 5 is accepted. The conclusion reached in paragraph 6 is rejected as contrary to the weight of the evidence. Paragraph 7 is accepted. Paragraph 8 is accepted. Paragraph 9 is rejected as to the conclusion reached regarding the cardiac cath program as contrary to the weight of the evidence. With regard to the conclusion reached regarding the open heart program, the paragraph is accepted. Paragraphs 10 through 13 are accepted. Paragraph 14 is rejected as irrelevant. Paragraphs 15 through 16 are accepted. Paragraph 17 is rejected as argument. Paragraph 18 is rejected as argument, contrary to the weight of the evidence, or irrelevant. Paragraph 19 is accepted. Paragraph 20 is rejected as irrelevant. Paragraph 21 is rejected as irrelevant. Paragraph 22 is accepted. Paragraph 23 is rejected as contrary to the weight of the evidence, irrelevant or multiple facts. Paragraphs 24 through 25 are accepted. Paragraph 26 is rejected as comment, argument, or irrelevant. Paragraphs 27 and 28 are accepted. Paragraph 29 is rejected as argument. Paragraph 30 is rejected as repetitive or argument. The second sentence of paragraph 31 is accepted; otherwise, the paragraph is rejected as irrelevant. Paragraph 32 is accepted. Paragraph 33 is accepted. Paragraph 34 is rejected as contrary to the weight of the evidence. Paragraph 35 is accepted. Paragraph 36 is accepted. Paragraph 37 is accepted. Paragraph 38 is rejected as contrary to the weight of the evidence. Paragraph 39 is accepted. With the substitution of the word "maintenance," paragraph 40 is accepted. Paragraph 41 is accepted. Paragraphs 42 through 47, with the exception of the conclusion that only one cath program is needed (that conclusion is contrary to the weight of the evidence), are accepted. Paragraph 48 is rejected as irrelevant. Paragraph 49 is accepted. RULINGS ON THE PROPOSED FINDINGS OF FACT SUBMITTED BY ST. MARY'S: Paragraph 1 is accepted. The first two sentences of paragraph 2 are accepted. The balance of the paragraph is rejected as unsupported by the record. The first two sentences of paragraph 3 are rejected as contrary to the weight of the evidence. The last sentence is accepted. The first sentence of paragraph 4 is accepted. The balance of the paragraph is rejected as argument. It is accepted that Lawnwood does not have a significant history in connection with the outpatient cath facility. Paragraph 5 is rejected as argument. Paragraph 6 is rejected as irrelevant. Paragraphs 7 through 18 are rejected as argument, irrelevant, contrary to the weight of the evidence or recitation of testimony. The first sentence of paragraph 19 is accepted. The balance of the paragraph is rejected as argument, contrary to the weight of the evidence, or irrelevant. Paragraph 20 is rejected as irrelevant. Paragraph 21 is accepted but is irrelevant. Paragraph 22 is rejected as irrelevant. Paragraph 23 is rejected as recitation of testimony. Paragraph 24 is rejected as irrelevant. Paragraph 25 is rejected as irrelevant. The first sentence of paragraph 26 is accepted. The balance is rejected as argument or conclusion of law. Paragraphs 27 and 28 are rejected as argument. Paragraph 29 is accepted. The first sentence of paragraph 30 is accepted. The balance of the paragraph is rejected as argument. Paragraph 31 is rejected as contrary to the weight of the evidence. Paragraph 32 is rejected as argument. Paragraph 33 is rejected as argument. Paragraph 34 is accepted. Paragraph 35 is rejected as argument. Paragraph 36 is rejected as argument. Paragraph 37 is accepted. Paragraphs 38 and 39 are accepted. Paragraph 40 is rejected as irrelevant. COPIES FURNISHED: Kenneth F. Hoffman Oertel, Hoffman, Fernandez & Cole, P.A. 2700 Blair Stone Road Post Office Box 6507 Tallahassee, Florida 32314-6507 John Radey Jeffrey L. Frehn Aurell, Radey, Hinkle & Thomas 101 North Monroe Street Suite 1000, Monroe Park Tower Post Office Box 11307 Tallahassee, Florida 32302 David Watkins Patricia A. Renovitch Oertel, Hoffman, Fernandez & Cole, P.A. 2700 Blair Stone Road Post Office Box 6507 Tallahassee, Florida 32314-6507 Lesley Mendelson Senior Attorney Department of Health and Rehabilitative Services Ft. Knox Executive Center 2727 Mahan Drive, Suite 103 Tallahassee, Florida 32308 Sam Power Agency Clerk Department of Health and Rehabilitative Services 1323 Winewood Boulevard Tallahassee, Florida 32399-0700 John Miller General Counsel Department of Health and Rehabilitative Services 1323 Winewood Boulevard Tallahassee, Florida 32399-0700 =================================================================
The Issue At issue in these proceedings is whether there exists a need for a new open heart surgery program in HRS District IX and, if so, whether the applications of St. Mary's Hospital, Inc. (St. Mary's), Boca Raton Community Hospital, Inc. (Boca), and Martin Memorial Hospital Association, Inc. (Martin), or any of them, for a certificate of need to establish such a program should be approved.
Findings Of Fact Case status In September 1989, Boca Raton Community Hospital, Inc. (Boca), St. Mary's Hospital, Inc. (St. Mary's), and Martin Memorial Hospital Association, Inc. (Martin), filed timely applications with the Department of Health and Rehabilitative Services (Department or HRS) for a certificate of need (CON) to establish a new open heart surgery program in HRS District IX. That district is comprised of Palm Beach, Martin, St. Lucie, Indian River, and Okeechobee Counties. Boca's and Martin's applications sought authorization to establish an adult open heart surgery program, whereas St. Mary's application sought authorization to establish an adult and pediatric open heart surgery program. On January 26, 1990, the Department published notice in the Florida Administrative Weekly of its intent to grant Boca's application, and to deny the applications of St. Mary's and Martin. St. Mary's and Martin filed timely protests to the Department's proposed action, and three existing providers of open heart surgery services in the district, NME Hospitals, Inc., d/b/a Delray Community Hospital (Delray), JFK Medical Center, Inc. (JFK), and AMI/Palm Beach Gardens Medical Center, Inc. (Palm Beach Gardens), timely protested the Department's intention to grant Boca's application or intervened to oppose the approval of any new open heart surgery program in the district. The applicants Boca, a 394-bed not-for-profit community hospital, is the southernmost hospital in Palm Beach County and HRS District IX, being located in Boca Raton, Florida, just two miles north of the Broward County/HRS District X line. It was established in the 1960's, and is a comprehensive hospital providing adult cardiac catheterization services, as well as most services available in an acute care facility, with the exception of a designated psychiatric unit, burn unit, and neonatal intensive care. During the period of April 1988 through March 1989, Boca performed 656 adult inpatient cardiac catheterizations, and referred 192 patients for open heart surgery between July 1988 and June 1989. By its application, Boca proposes to establish an adult open heart surgery program to enhance its cardiology services. Boca's primary service area covers a radius of approximately ten miles around the hospital, and it routinely serves patients from Boynton Beach, Palm Beach County, on the north to Pompano Beach, Broward County, on the south. Presently, three providers of open heart surgery services are located proximate to Boca: approximately 11 miles north of Boca, an average drive time of 17 minutes, is Delray, a current provider of open heart surgery services in District IX; approximately 21 miles north of Boca, an average drive time of 32 minutes, is JFK, a current provider of open heart surgery services in District IX; and approximately 15 miles south of Boca, an average drive time of 19 minutes, is North Ridge General Hospital (North Ridge), a current provider of open heart surgery services in District X and the recipient of the vast majority of referrals for open heart services from Boca. St. Mary's, a 378-bed not-for-profit community hospital located in West Palm Beach, Florida, is owned by the Franciscian Sisters of Allegheny, and has served the community for more than 50 years. In addition to the full range of medical surgical services, St. Mary's offers obstetrics, a Regional Perinatal Intensive Care Center (RPICC) -- levels II and III, blood bank, dialysis center, substance abuse center, hospice center, free-standing cancer clinic, adult inpatient cardiac catheterization laboratory, and children's medical services clinic. Upon the opening of its 40-bed psychiatric center, which is currently under construction, St. Mary's will be the largest hospital in District IX. During the period of April 1988 through March 1989, St. Mary's performed 254 adult inpatient cardiac catheterziations. By its application, St. Mary's proposes to enhance its existing services by establishing an adult and pediatric open heart surgery program. Currently, there are no pediatric open heart surgery programs in District IX. There are, however, two current providers of adult open heart surgery services located in Palm Beach County and proximate to St. Mary's: approximately 6 miles north of St. Mary's is Palm Beach Gardens, and approximately 11 miles south of St. Mary's is JFK. Martin, a 336-bed not-for-profit community hospital established in 1939, is located in Stuart, Martin County, Florida. As with the other applicants, Martin offers a full range of acute care services, as well as adult inpatient cardiac catheterization services, a non-invasive cardiology laboratory, and cardiac rehabilitation and support services for cardiac patients and their families. No significant data is, however, available on Martin's adult inpatient cardiac catheterization program since it is a new service. By its application, Martin proposes to establish an adult open heart surgery program. Currently, there are no open heart surgery programs located in the four northern counties of District IX (Martin, St. Lucie, Indian River, and Okeechobee Counties), and Martin is currently the only hospital located in those four counties that provides in-patient cardiac catheterization services. Accordingly, to access open heart surgery services within the district, residents of the northern four counties must avail themselves of the current programs existent in Palm Beach County. The protestants As heretofore noted, open heart surgery services are currently available at three facilities within District IX; Delray, JFK and Palm Beach Gardens, each of which is located in Palm Beach County. Delray is a 211-bed acute care hospital, sited in the southern portion of Palm Beach County, and located in Delray Beach, Florida. It is a comprehensive hospital providing all services normally available in an acute care facility, with the exception of obstetrics, pediatrics and radiation ontology, and is part of a larger medical campus, operated by the same parent company, that includes a 60-bed inpatient rehabilitation hospital that is physically attached to Delray, a 120-bed psychiatric hospital, and a 120-bed skilled nursing facility. In addition to its other services, Delray provides inpatient cardiac catheterization services and has, since 1986, provided adult open heart surgery services. With a recent addition, Delray has two dedicated open heart operating rooms (ORs) and one back up, as well as three separate intensive care units for coronary care, medical intensive care and surgical intensive care. For calendar year 1989 Delray reported to the local health counsel that it performed 338 open heart cases. Delray is located approximately 11 miles north of Boca, an average drive time of approximately 17 minutes. Between Delray and Boca, there is more than a 50 percent overlap in the medical staffs of the two hospitals, and almost 70 percent overlap in the areas of cardiology and internal medicine. Considering the overlap in the facilities' service areas, it is reasonable to conclude that if Boca's application is approved Delray would lose 122 open heart and 84 angioplasty cares in Boca's first year of operation and 130 open heart and 93 angioplasty cases in Boca's second year of operation. Such losses would translate into a after-tax income loss to Delray of approximately $645,000 in the first year of operation alone. Such loss of revenue and patients could adversely impact Delray's existing program. JFK is a 369-bed community hospital located in Atlantis, Florida; a small town just south of West Palm Beach. It provides a full range of medical- surgical services, with the exception of OB-GYN and nursery services, including cardiac, cancer, orthopedic, and medical/surgical intensive care and coronary care. It established its inpatient cardiac catheterization and open heart surgery program in February 1987, and currently has ten operating rooms, two of which are devoted exclusively to open heart surgery, and a 16-bed cardiac care unit (CCU), 10 beds of which are dedicated to open heart patients. For calendar year 1989, JFK reported to the local health council that it performed 262 open heart cases. As sited, JFK is located just south of West Palm Beach and within 10 miles of St. Mary's. Currently, there is an 83 percent overlap in the MDC-5 service areas (the service area closest to the open heart surgery program) of St. Mary's and JFK, and a substantial overlap between cardiologists on the staffs of both facilities. During the period of January 1988 - May 1990, 43 percent of the patients St. Mary's referred for open heart and angioplasty services were referred to JFK. Assuming St. Mary's could achieve the volumes it projected in its application, it is reasonable to assume that JFK would lose 75 open heart and 83 angioplasty cases in St. Mary's first year of operation, and 91 open heart and 100 angioplasty cases in St. Mary's second year of operation. Such lose in the first year of St. Mary's operation would translate into a net reduction of $1,200,000 in JFK's income. Such loss of revenue and patients could adversely impact JFK's existing program. Palm Beach Gardens is a 205-bed acute care hospital sited in north Palm Beach County. It provides inpatient cardiac catheterization services and has, since 1983, provided open heart surgery services. Currently, Palm Beach Gardens maintains two operating rooms dedicated to open heart surgery, and has a third operating room available for open heart surgery should the demand arise. For calendar year 1989, Palm Beach Gardens was the largest provider of open heart surgery services in the district, having reported to the local health council that it performed 491 open heart cases. Palm Beach Gardens is located approximately 10 miles south of the Palm Beach County/Martin County line or a straight line distance of approximately 25 miles south of Martin and approximately 10 miles north of St. Mary's. During the period of July 1988 - June 1989, 229 residents of St. Mary's primary service area had open heart surgery at Palm Beach Gardens, and 142 residents of Martin's primary service area obtained such services at that facility. If Martin's proposal is approved and its utilization projections realized, Palm Beach Gardens would lose approximately 84 cases in year one of Martin's operation and 101 cases in year two. Such losses in year two would translate into a $1,400,000 pretax reduction in Palm Beach Gardens' net revenues. Such reduction in revenues and patients was not, however, considering Palm Beach Garden's financial condition and open heart surgery volume, shown to have any significant adverse impact to Palm Beach Gardens, or any identifiable program within its facility. Likewise, should St. Mary's application be approved, volumes at Palm Beach Gardens would not be reduced below optimal levels, and it would not suffer any significant adverse impact to existing programs. The parties' stipulation The parties have agreed that the following facts are admitted: Boca, St. Mary's, and Martin Memorial timely filed their Letters of Intent and CON applications at issue in this proceeding. Further, the parties stipulate that the Letter of Intent complied with all statutory and rule requirements. The construction costs of $100,000 as set forth in Table 25 of St. Mary's application is a reasonable construction costs estimate for the renovation of one special procedures room to perform open heart surgery as proposed in St. Mary's schematic plans. The parties admit that adult open heart surgery services are currently available within a maximum automobile travel time of two hours under average travel conditions for at least 90 percent of HRS Service District IX's population. This stipulation is not meant to preclude other relevant evidence regarding travel times within or without District IX. All existing providers of open heart surgery in District IX are JCAHO accredited; all applicants in this proceeding are JCAHO accredited. Each of the applicants, if approved, have the ability to implement and apply circulatory assist devices such as intra-aortic balloon assist and prolonged cardiopulmonary partial bypass for adult open heart surgery. Each of the applicants, if approved, will be capable of fulfilling the requirements of an adult open heart surgery program to provide the following services: medicine, for example, cardiology, hematology, nephrology, pulmonary medicine and infectious diseases; pathology, for example, anatomical, clinical, blood bank and coagulation lab; anesthesiology, including respiratory therapy; radiology, for example, diagnostic nuclear medicine lab; neurology; adult cardiac catheterization laboratory services; non-invasive cardiographics lab, for example, electrocardiography including cardiographics lab, for example, electrocardiography including exercise stress testing, and echocardiography; intensive care; and emergency care available 24 hours per day for cardiac emergencies. This stipulation relates only to the provision of medical services, not that the applicants have sufficient capacity to provide those services in connection with an open heart surgery program. The redesignation of acute care beds from medical/surgical beds to any type of critical care unit beds, except for neonatal intensive care beds, does not require a certificate of need unless the hospital incurs a capital expenditure in excess of the capital expenditure threshold in accomplishing this redesignation. The Department's open heart surgery and methodology and the "fixed need" pool. On August 11, 1989, the Department, pursuant to Rule 10-5.008(2)(a), Florida Administrative Code, published notice of the fixed need pool for open heart surgery programs for the July 1992 planning horizon in the Florida Administrative Weekly. Pertinent to this case, such notice established a net need for zero new adult open heart surgery programs in District IX. There was, however, no publication of any fixed need pool for pediatric open heart surgery. Following publication of the fixed need pool, the Department received protests contending that its calculation of net need was erroneous. Upon review, the Department concluded that its initial calculation was in error, and on September 1, 1989, the Department published a notice of correction in the Florida Administrative Weekly, and established a new net need for one open heart surgery program in District IX. On September 5, 1989, St. Mary's challenged the Department's corrected need assessment, claiming the Department had underestimated the need in District IX for adult open heart surgery services, and on September 8, 1989, Palm Beach Gardens challenged the Department's assessment, claiming the Department had overestimated the need for open heart services in the district. These challenges were forwarded by the Department to the Division of Administrative Hearings, along with a request for the assignment of a hearing officer to conduct all necessary proceedings required under law. Pertinent to the derivation of the fixed need pool, the Department has established by rule an adult and pediatric open heart surgery methodology that must normally be satisfied before any new open heart surgery programs will be approved. That methodology, codified in Rule 10-5.011(1)(f), Florida Administrative Code, forms the premise for the Department's calculation of net need in the instant case. Pertinent to this case, Rule 10-5.011(1)(f), Florida Administrative Code, provides: 2. Departmental Goal. The Department will consider applications for open heart surgery programs in context with applicable statutory and rule criteria. The Department will not normally approve applications for new open heart surgery programs in any service area unless the conditions of Sub-paragraphs 8. and 11., below are met. * * * 8. Need Determination. The need for open heart surgery programs in a service area shall be determined by computing the pro- jected number of open heart surgical pro- cedures in the service area. The following formula shall be used in this determination: Nx = Uc X Px Where: Nx = Number of open heart procedures projected for year X; Uc = Actual use rate (number of procedures per hundred thousand popu- lation) in the service area for the 12 month period beginning 14 months prior to the Letter of Intent deadline for the batching cycle; Px = Projected population in the service area in Year X; and Year X = The year in which the proposed open heart surgery program would initiate service, but not more than two years into the future. * * * 11.a. There shall be no additional open heart surgery programs established 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 surgery cases per year or 130 pediatric heart cases per year; and, the conditions specified in Sub-paragraph 5.d., above, will be met by the proposed program. No additional open heart surgery programs shall be approved which would reduce the volume of existing open heart surgery facilities below 350 open heart procedures annually for adults and 130 pediatric heart procedures annually, 75 of which are open heart. Sub-subparagraph 5d, referenced in subparagraph 11a(II), provides: Minimum Service Volume. 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. There shall be a minimum of 100 pediatric heart operations annually, within 3 years of initiation of service, in any insti- tution in which pediatric open heart surgery is performed, of which at least 50 shall be open heart surgery. Essentially, the subject methodology contemplates that three conditions must be satisfied before an application for a new adult open heart surgery program in the district would normally be approved: (1) a calculated net numeric need under the Department's mathematical methodology; (2) a determination that "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 open heart surgery cases per year"; and (3) a demonstration that the applicant could perform "a minimum of 200 open heart procedures (cases) annually within 3 years after service is initiated." The first two conditions are utilized by the Department to initially establish the fixed need pool for open heart surgery services. The third condition is, by rule, related to an applicant's ability to provide quality care, and will be discussed infra. As a threshold for calculating need, and the fixed need pool, the Department's mathematical need methodology contains the formula for deriving the gross number of open heart surgical cases anticipated two years into the future. This methodology is based on the actual use rate in the district for the 12- month period beginning 14 months prior to the letter of intent deadline for the batching cycle. The number of cases is then divided by 350, which is consistent with the minimum service volume mandates of subparagraph 11 of the rule, to derive an actual gross need for open heart surgery programs at the horizon year. Existing and approved programs are then substracted to determine if there is a net need for a new open heart surgery program. While there was some dispute among the parties as to what the appropriate underlying data was to drive the Department's numerical need methodology, the parties agreed and the proof demonstrated a fractional need greater than .5, under the formula. 1/ The second step in establishing a need for open heart surgery programs, and the fixed need pool, is a determination, as required by subparagraph 11(2)I of the rule, of whether "each existing and approved open heart surgery program within the service areas is operating at and is expected to continue to operate at 350 adult open heart surgery cases per year." Here, based on the data available to the Department when it established the fixed need pool, the three existing providers had operated at the following case levels for the preceding year: Palm Beach Gardens - 494 cases; Delray - 328 cases; and JFK - 275 cases. Consequently two of the three existing providers were not operating at 350 cases per year. 2/ Based on the foregoing data, the Department initially published a net need for zero new open heart surgery programs in District IX. However, following the receipt of protests to the fixed need pool it had established, the Department, based on the same data, concluded its initial decision was erroneous, and published a notice of correction which established a net need for one new open heart surgery program in the district. This decision was timely challenged. The Department's ultimate decision to publish a need for one new program was based on two factors. First, the Department had historically rounded the numerical need up where fractional need, as calculated by its methodology, was .5 or higher. Second, although of questionable validity at the time, the Department had for several years "interpreted" the 350 case level, referred to in subparagraph (11) of the rule, to require that the average of the existing programs be at 350 before a new program would be approved, as opposed to the literal rule requirement that "each existing and approved open heart surgery program ... [be] ... operating at ... a minimum of 350 adult open heart surgery cases per year." Accordingly, with differing views then pending in the Department, it elected to recalculate the utilization level by applying the averaging approach, as opposed to applying the rule as written which it had done in initially determining zero need, and therefore published a corrected need for one new program. On January 23, 1990, the Department issued final orders in three cases, each of which involved CON applications for open heart surgery services filed in the September 1988 batching cycle, Hillsborough County Hospital Authority v. Department of Health and Rehabilitative Services, 12 FALR 785 (1990), Humana of Florida, Inc. v. Department of Health and Rehabilitative Services, 12 FALR 823 (1990), and Mease Health Care v. Department of Health and Rehabilitative Services, 12 FALR 853 (1990). In each final order the Department's Secretary stated, with regard to the Department's averaging interpretation, that: I conclude that the rule should be applied as written and that numeric need should be found only where each existing and approved open heart surgery program within the service district is operating at a minimum level of 350 open heart cases per year .... I am not unmindful that the conclusion reached here departs from an established practice of interpreting subparagraph 11 of the need rule by averaging the number of cases done by the existing providers and finding subparagraph 11 to be satisfied if the average was 350 cases or more. As previously stated, I am now satisfied that application of the rule as written is more consistent with sound health planning .... Consequently, the averaging practice that resulted in the Department's corrected notice of need for the September 1989 batching cycle at issue in this case was specifically rejected by the Department as being contrary to the rule as written before it published its notice of intent to grant Boca's application. Even though the corrected need published by the Department was erroneous, as being derived contrary to the express language of the rule methodology, the Department and the applicants contend that such error is not subject to correction in this case because of the Department's fixed need pool rule and the Department's incipient policy regarding when it will correct errors in a fixed need pool that has already been published. Such contentions are, however, unpersuasive as a matter of law, discussed infra, and as not supported by any compelling proof. The Department's fixed need pool rule, codified at Rule 10- 5.008(2)(a), Florida Administrative Code, provides: Publication of Fixed Need Pools. The depart- ment shall publish in the Florida Administra- tive Weekly, at least 15 days prior to the letter of intent deadline for a particular batching cycle the fixed need pools for the applicable planning horizon specified for each service ... These batching cycle specific fixed need pools shall not be changed or adjusted in the future regardless of any future changes in need methodologies, popu- lation estimates, bed inventories, or other factors which would lead to different projections of need, if retroactively applied. In this case there has been no change in the Department's need methodology that leads to a different projection of need, as proscribed by the fixed need pool, but, rather, an identified failure of the Department to properly apply its rule when it assessed need. While the Department may have consistently misapplied its rule in the past, such consistency does not cloth it past action with any propriety where, as here, such action is properly challenged or, stated differently, because the rule was misapplied in the past does not lead to the conclusion that its proper application constitutes a change in need methodologies. Accordingly, it is found that the fixed need pool rule does not, under the circumstances of this case, preclude correction of the need established through the Department's publication of its notice of correction. 3/ The Department and the applicants also contend that the Department's policy on how it will treat corrections to a fixed need pool that has already been published, and errors in a published fixed need pool which are discovered after the cycle has begun, precludes any correction of the need published for this batching cycle. Pertinent to this point, the Department points to its policy, which was published in the Florida Administrative Weekly contemporaneously with its initial assessment of zero need, that provides: Any person who identifies any error in the fixed need pool numbers must advise the agency of the error within ten (10) days of publica- tion 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 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. Any other adjustments will be made in the first cycle subsequent to identification of the error including those errors identified through administrative hearings or final judicial review. Any person whose substantial interest is affected by this action and who timely advised the agency of any error in the action has a right to request an administrative hearing pursuant to Section 120.57, Florida Statutes. In order to request a proceeding under Section 120.57, Florida Statutes, your request for an administrative hearing must state with specifi- city which issues of material fact or law are in dispute. All requests for hearings shall be made to the Department of Health and Rehab- ilitative Services and must be filed with the agency clerk at 1323 Winewood Blvd. Building 1, Room 407, Tallahassee, Florida 32301. All requests for hearings must be filed with the agency clerk within 30 days of this publication or the right to a hearing is waived. According to the Department, its policy is to correct computational errors in the fixed need pool only if they are brought to its attention during the grace period which is triggered by the filing of a letter of intent, and if there is sufficient time to publish a corrected fixed need pool prior to the CON application deadline so that all potential competing providers will have notice of the changes. Errors brought to the Department's attention after the grace period will only be considered in the development of the subsequent batching cycle's fixed need pool, regardless of the nature or magnitude of the error. Errors brought to the Department's attention during the grace period, but not reviewed by the Department until after the grace period would only be corrected for subsequent batches. Errors identified in administrative hearings or upon judicial review, even though predicated upon a timely notice of error to the Department, would be corrected in subsequent batches, but not for the batch in which the error occurred. The Department's enunciated rational for the foregoing policy is to instill "predictability" in the CON process, which it suggests promotes competition and affords the Department an opportunity to select from a broader field the best qualified applicants to "meet the need." Such rationale lacks, however, any reasonable basis in fact where, as here, there is no need to be met, and affronts sound health planning principles. The 350 minimum procedure level established for existing providers, before a new program can be approved, is an important threshold bearing on quality of care. In this regard, it has been demonstrated that there is a direct relationship between volume of procedures and mortality, with better results being obtained at facilities operating at a minimum level of 200-350 procedures annually. Accordingly, precision in assessing the need for new open heart surgery programs is crucial to assure that any new program could reasonably be expected to achieve a sufficient level of service, and to assure that the level of service provided by existing facilities would not fall below the optimum threshold. The Department's policy ignores this relationship, would recognize a need where none exists and thereby adversely impact existing programs, and would impinge on future planning horizons. As importantly, the Department's policy would supplant its own rule methodology for calculating need, and render illusory any decision based on a balanced review of statutory criteria. Accordingly, it is concluded that the Department has failed to explicate its policy choice in the instant case, and that numeric need under the Department's methodology is a viable issue in these proceedings. The need for the services being proposed in relationship to the district plan and state health plan. Applicable to this case is the 1989 Florida State Health Plan, which contains the following preferences to be considered in comparing applications for open heart surgery programs: Preference shall be given to applicants estab- lishing new open heart surgery programs in larger counties in which the percentage of elderly is higher than the statewide average and the total population exceeds 100,000. Preference for new open heart surgery programs shall be given to applicants clearly demonstra- ting an ability to perform more than 350 adult procedures annually within three years of initiating the program. Quality of care has been demonstrated to be directly related to volume; thus, facilities are expected to perform a minimum of 350 adult procedures annually. Preference shall be given to applicants who will improve access to open heart surgery for persons who are currently seeking the service outside of their HRS district. This will improve accessibility and reduce travel time for the residents in the district. Preference shall be given to an applicant with a history of providing a disproportionate share of charity care and Medicaid patient days in the respective acute care subdistrict. Qualifying hospitals shall meet Medicaid disproportionate share hospital criteria. Priority should be given to an applicant who provides services to all persons, regardless of their ability to pay. Preference shall be given to an applicant that can offer a service at the least expense yet maintain high quality of care standards. The physical plant of larger facilities can usually accommodate the required operating and recovery room specifications with lower capital expendi- tures than smaller facilities. Larger facilities also have a greater pool of the specialized personnel needed for open heart surgical procedures. Preference shall be given to an applicant that performs percutaneous transluminal angioplasty, streptokinase, or other innovative techniques as alternatives to surgery for low-risk patients. The applicant shall include in its application a protocol regarding the selection of patients for surgery or alternative non-surgical therapeutic cardiac procedures. All three applications are reasonably consistent with the state health plan's preference for establishing open heart surgery programs in counties in which the percentage of elderly is higher than the statewide average and the total population exceeds 100,000. In 1989, Palm Beach County had a population of 873,347, 23.4 percent of which were age 65 and over, which was higher than the statewide average of 17.9 percent. The next most populous counties in the district fell within Martin's primary service area, and were St. Lucie County, with a population of 142,440, 18.3 percent of which were age 65 and over, and Martin County, with a population of 96,336, 25.1 percent of which were age 65 and over. In all, the northern four counties had a population of 360,644, 21.2 percent of which were age 65 and over. The state health plan also accords a preference to applicants who clearly demonstrate an ability to perform more than 350 adult procedures within three years of initiating the program. Of the three applicants, Boca is in the best position to achieve the preference based on the number of diagnostic cardiac caths performed at this facility, and the number of patients it has referred for open heart surgery. Comparatively, Martin and St. Mary's are unlikely to achieve such level of service within three years of initiating a program. The third objective of the state health plan accords a preference for the applicant that will more clearly improve access to open heart surgery for persons who are currently seeking the service outside the district. Currently, while there is no access problem in the district, it is apparent that many district residents leave the district for open heart surgery. During the period of July 1988 - June 1989, open heart procedures were performed on 782 people residing in Boca's primary service area. Of those, 316 received treatment in a District IX facility, 383 received treatment in a District X (Broward County) facility, and the balance received treatment elsewhere, but predominately in Dade County (District XI). While there was a substantial outmigration from Boca's primary service area for open heart services, the vast majority of such outmigration, 325 people, was serviced at North Ridge, a mere fifteen mile/nineteen minute trip from the Boca area. With regard to St. Mary's primary service area, the proof demonstrated that during the same period 566 people sought open heart services, with 455 of those people receiving treatment within District IX. Of the 111 who sought service outside the district, 41 received treatment in Broward County and 61 received treatment in Dade County. Finally, with regard to Martin's primary service area, 316 people sought open heart services, with 148 of those people receiving treatment within the district. Of the 168 who sought service outside the district, 90 received treatment in Broward County, 29 in District VII hospitals, and 39 in Dade County. As heretofore noted, access is not a problem within District IX. However, to the extent this preference seeks to address the issue of outmigration, the proof demonstrates that Martin is the superior applicant. Clearly, the 15 mile/19 minute trip from the Boca area to North Ridge is not a barrier to access, and the number of people from St. Mary's primary service area seeking services outside the district are small in comparison to the other applicants. The residents of Martin's primary service area who seek treatment outside the district are, however, disproportionately large when one considers the aggregate travel time they incur when accessing services in the Orlando or Melbourn areas, or Dade and Broward Counties. The fourth objective of the state health plan accords a preference for the applicant with a history of providing a disproportionate share of charity care and Medicaid patient days in the district. Among the applicants, St. Mary's is the only disproportionate share provider and provides the largest number of Medicaid patient days in the district. As between Boca and Martin, the proof demonstrates that Martin is more committed to, and has historically been a greater provider of, care to the medically indigent. The fifth objective of the state health plan accords a preference to the applicant that can offer a service at the least expense yet maintain high quality of care standards. Here, each of the applicants are large facilities, with demonstrated commitments to maintaining high quality of care standards. Martin has, however, demonstrated that it can offer the proposed service at the least expense. 4/ The last objective of the state health plan accords a preference to the applicant that will perform percutaneous transluminal angioplasty, strepokinase, or other innovative techniques as alternatives to surgery. Here, all applicants propose to offer such services. District IX's 1988 Health Plan was in effect at the time the CON applications were at issue in this case were filed; however, that plan had not been adopted as a rule. Accordingly, such plan is not pertinent to this proceeding. Venice Hospital, Inc. v. Department of Health and Rehabilitative Services, Case Nos. 90-2383R, et seg., (DOAH 1990). The availability, quality of care, efficiency, appropriateness, accessibility, extent of utilization, and adequacy of like and existing health care services in the district. Open heart surgery is a specialized, tertiary health care service. A tertiary health service is defined by Section 381.702(20), Florida Statutes, as: ... a health service which, due to its high level of intensity, complexity, specialized or limited applicability, and cost, should be limited to, and concentrated in, a limited number of hospitals to ensure the quality, availability, and cost-effectiveness of such service.... As a tertiary service, planning for open heart surgery services is done on a regional basis and concentrated in a limited number of hospitals to insure the quality, availability and cost effectiveness of the program. Essentially, the concept of regionalization creates a distinction between hospitals; some hospitals offer routine acute care services, while special high risk services are concentrated in a limited number of hospitals. Encompassed within such concept is the expectation that patients will be transferred from one facility to another to obtain tertiary care services. As a touchstone for assessing need within a service district, the Department has adopted the open heart surgery need methodology, discussed supra, that must normally be satisfied before a new open heart surgery program will be approved. Under that methodology, further need for adult open heart surgery programs is determined based on the projected increase in the number of open heart surgery procedures two years into the future and the open heart surgery volume of existing providers. The rule provides that, regardless of the projected growth in the number of open heart procedures, no additional adult open heart programs are granted unless each existing adult open heart program performs a minimum of 350 procedures annually. Application of the rule methodology to the facts of this case projects a growth in the projected number of open heart procedures sufficient to support a fractional need greater than .5, which the Department reasonably rounded to 1. However, two of the existing three providers were not performing a minimum of 350 procedures annually. Therefore, there is no need under the Department's methodology for a new open heart surgery program in District IX. While no need under the Department's methodology, the applicants have advanced several factors which they contend reflect negatively on the availability, quality of care, efficiency, appropriateness, accessibility, extent of utilization or adequacy of existing open heart programs in the district, and which they suggest warrant a finding of need based on special or not normal circumstances. Foremost among the factors pressed by the applicants as indicitive of an abnormal circumstance is the high number of District IX residents who seek open heart surgery services outside the district; referred to in this case as outmigration. Outmigration is, however, simply an observation of patient flow patterns and does not, in and of itself, constitute an abnormal circumstance that would demonstrate need in the district. Rather, to demonstrate a not normal circumstance, such outmigration must be demonstrated to be a consequence of some failing of existing programs, i.e., accessibility or quality of care, to be pertinent to any abnormal need assessment. 5/ In this case, there is no such failing in the existing programs. The three existing adult open heart surgery programs in the district are currently available to 90 percent of the population of the district within a maximum automobile travel time of two hours. Under such circumstances there is no geographic access problem within the district. Moreover, only Martin would actually enhance accessibility, were it a problem, because the residents of the four northern counties it proposes to serve must currently travel to Palm Beach County to access services within the district. In contrast, Boca is within approximately 30 minutes travel time of two existing providers in the district and an additional provider in District X. Likewise, St. Mary's is located less than 10 miles from two of the existing providers in the district. As with geographic access, there is likewise no economic access problem in the district. While the Medicaid use rate within the district for calendar year 1989 was .1 percent, well below the statewide average of approximately 2 percent, such raw statistic does not demonstrate that there is a Medicaid access problem in the district. To persuasively demonstrate such fact from use statistics would require a demonstration that Palm Beach County's use rate was significantly lower than counties with similar demographics. Here, there was no such showing. Moreover, St. Mary's, the largest provider of Medicaid services in the district, was only shown to have transferred three Medicaid patients for open heart or angioplasty services from January 1988, through May 1990. Finally, each of the existing providers have contracted with the Palm Beach County Health Care District to provide care to indigent patients, and have not refused service to anyone regardless of their ability to pay. Accordingly, it is concluded that there is no economic access problem within the district. With two of the three existing providers operating below 350 procedures when this cycle commenced, there is clearly excess capacity within the district when one considers the fact that a single operating room has the capacity to handle at least 500 cases annually. In reaching this conclusion, the applicants' assertion that delays may have been encountered in gaining admission to some facilities during the season because of a lack of critical care beds has not been overlooked. However, any such delays were not reasonably quantified in terms of number or duration, and were not shown to be significant. As importantly, existing facilities have increased their critical care bed capacity, and can increase it further by merely redesignating acute care beds from medical/surgical beds to any type of critical care beds needed as the exigency arises. Although two of the three existing providers offer relatively new programs, the proof is compelling that each provides a quality surgical and post surgical open heart surgery program, appropriately staffed, and that there is no want of quality care within the district. The use of agency nurses, as suggested by one applicant, was not persuasively demonstrated to reflect adversely on quality of care. Succinctly, simply because one is an agency nurse does not suggest substandard performance, and the use of agency nurses, as needed, to staff a facility does not, of itself, aversely impact patient care. Here, the staffs of existing facilities are appropriately trained and supervised, and offer their patients a quality program. While there is certainly a significant outmigration from the district for open heart surgery services, such outmigration was not shown to be related to any infirmity in existing programs. Rather, such outmigration is most reasonably attributable to physicians' established referral patterns or patient preference. 6/ Finally, regarding special circumstances, St. Mary's suggests that its designation as a trauma center and the lack of pediatric open heart services to 90 percent of the population within a maximum automobile travel time of two hours warrant approval of its application. Such suggestions are, however, not supported by compelling proof. While it is true that St. Mary's has been selected by the Palm Beach County Health Care District, along with Delray, for designation as a Level II trauma center, such designation has not been contractually finalized and St. Mary's has not applied for such designation with the Department. As importantly, on October 1, 1990, a new law regarding trauma centers became effective which will reopen the county trauma center designation process, and require facilities to be designated by the state as trauma centers. Under such circumstances, it is speculative whether St. Mary's will become a trauma center, and until such event actually occurs such factor is not significant to these proceedings. St. Mary's quest for a pediatric open heart surgery program is premised on special circumstances, not numeric need, and finds it basis on the fact that no pediatric open heart surgery program exists in the district and that such pediatric services are not available to 90 percent of the population within two hours travel time. While such may be the case, St. Mary's application, on balance, fails to support such an award for a number of reasons. First, St. Mary's application projects that it will perform 10 pediatric open heart surgery cases in its first year of operation, and 20 in its second year of operation. It contains no projection for the third year of operation, but St. Mary's consultant, Michael Schwartz, opined that St. Mary's would perform 50 pediatric open heart surgery cases by the third year based on his belief that St. Mary's would capture 80 to 100 percent of the potential pediatric referrals from District IX and the northern portion of District X. Mr. Schwartz's opinions are not, however, credible. During the period July 1, 1988 to June 30, 1989, there were 40 pediatric open heart surgery cases performed on patients residing throughout District IX, with 22 receiving treatment at Jackson Memorial (Dade County), 14 at Miami Children's Hospital, and 4 at Shands in Gainesville. During the same period, there were 24 open heart pediatric patients in northern District X, an area equi-distant in travel time from the Miami facilities and St. Mary's, with 15 receiving treatment at Jackson Memorial, 8 at Miami Children's Hospital and 1 at Shands. Each of these facilities are either teaching hospitals or specialty pediatric hospitals, are among the top four facilities in the state that perform over 100 pediatric open heart surgery cases each year, and each enjoys an excellent reputation for providing quality pediatric care. Given existent referral patterns and the quality of existing pediatric programs, it is improbable that St. Mary's could reach its projected utilization for years one and two, much less attain a level of 50 pediatric open heart surgery cases during its third year of operation. In 1994, the third year of St. Mary's program, there would be approximately 53 pediatric open heart surgery cases performed on patients residing throughout District IX. To attain a level of 50 cases in its third year, St. Mary's would have to attract almost 100 percent of all cases arising within the district, an improbable occurrence. Equally improbable is St. Mary's ability to penetrate the pediatric open heart surgery market in northern Broward County, an area defined by Mr. Schwartz as being equi-distant in travel time from the Miami facilities and St. Mary's, given existent referral patterns and physicians' satisfaction with existing programs. In sum, the proof demonstrates that St. Mary's could not reasonably be expected to perform 50 pediatric open heart surgery cases within three years of initiating service. In addition to its inability to generate sufficient volume to maintain service quality in a pediatric open heart surgery program, St. Mary's also lacks a pediatric cardiac cath program which is required of any facility proposing pediatric open heart surgery services. Notably, with regard to pediatric cardiac services, Rule 10-5.011(1)(e), which relates to cardiac catheterization services, and Rule 10-5.011(1)(f), which relates to open heart services, are mutually dependent. The cardiac catheterization rule, as it relates to pediatrics, provides: 6. Coordination of Services. * * * Pediatric cardiac catheterization programs must be located in a hospital in which pediatric open heart surgery is being performed. * * * 8. Need Determination. * * * f. Pediatric cardiac catheterization programs shall be established on a regional basis. A new pediatric cardiac catheterization program shall not normally be approved unless the numbers of live births in the service planning area, minus the number of existing and approved programs multiplied by 30,000, is at or exceeds 30,000. (Emphasis added) Also pertinent to this issue, the open heart surgery rule provides: 3. Service Availability. * * * c. The following services must be provided in the health care facility within which the open heart surgery program is located and must be capable of fulfilling the requirements of an open heart surgery program: * * * (VI) Cardiac catheterization laboratory.... The Department reasonably interprets the foregoing provisions as mandating that a pediatric cardiac catheterization program or pediatric open heart surgery program may not be approved independent of the other but, rather, they must coexist. Since the proof is clear that St. Mary's only operates and is only approved by the Department to operate an adult cardiac cath program, and it has not applied for a pediatric cardiac cath program, its proposal is deficient. 7/ In view of the foregoing, it is concluded that, while pediatric open heart services are not currently available within District IX and are not available to 90 percent of the population within two hours travel time, that St. Mary's application to initiate such services should be denied. It is further found that the provisions of the open heart surgery rule relating to the two- hour access standard, which does not specifically state whether such standard applies to adult, pediatric or both, is not applicable to pediatrics. Rather, the Department interprets such rule provision to apply only to adult programs, because such standard is not necessarily pertinent to pediatric open heart surgery since it is more specialized or tertiary in nature than adult open heart surgery programs. Given the close relationship between the cardiac cath rule and the open heart surgery rule, the Department's position is reasonable. In this regard, the cardiac cath rule establishes a travel standard for adult programs, but not pediatric. Rather, it provides for establishment of such programs on a "regional basis," and provides that a new pediatric cardiac cath program should not normally be approved unless the number of live births exceeds 30,000. Here, there were only 16,500 live births in District IX in 1988, a number that is insufficient to warrant a pediatric cardiac cath program. Given such fact, and the relationship between the two rules, the Department's interpretation is reasonable and the two-hour travel time standard does not apply to pediatric open heart surgery. Finally, as to adult open heart surgery services, it is concluded that there exist no special circumstances within the district that would warrant approval of a new open heart surgery program, and that existing facilities are providing appropriate quality care that is accessible to all residents of the district regardless of their ability to pay. The ability of the applicant to provide quality of care and the applicant's record of providing quality of care. Each of the applicants in this case has established an excellent record for providing quality care to their patients, and would be generally expected to provide high quality care for open heart surgery patients notwithstanding some failings in their applications. During the course of the proceeding, some protestants contended that because an applicant failed to detail some particular item of equipment essential to an open heart program, that such failing reflected adversely on their ability to provide quality care. While such could be the case in the abstract, it does not, where, as here, the applicants have sound records, with a demonstrated ability to attract quality personnel to staff their programs. Such failings are, however, germane to the feasibility of the applicant's proposals, discussed infra. Other failings pointed to by the protestants, included: St. Mary's proposal to utilize a call team composed of nurses who customarily assist at thoracic surgery and to recover its open heart patients in a mixed intensive care unit; St. Mary's inability to achieve a 200 and 350 case level per year; Martin's inability to achieve a 350 case level per year; and Martin's failure to document in its application the manner in which it could rapidly mobilize an open heart surgery team 24-hours a day, or how it would treat emergency patients within a two-hour period. Again, considering the quality of the applicants, and the quality personnel they will attract, as well as the parties' stipulation, these failings are minor and do not reflect adversely on their proposals with but one exception. 8/ The only significant factor presented that could bear on an applicant's ability to provide quality care is its ability to achieve optimal utilization levels. In this regard, it has been demonstrated that a relationship exists between the volume of open heart surgical procedures performed at a hospital and the quality of care rendered at those facilities, as measured by patient outcomes. Overall, facilities performing more than 350 cases per year experienced the lowest in-hospital death rate, with those performing more than 200 cases per year being next in line. Pertinent to this issue, the Department has adopted Rule 10-5.011(f)5, Florida Administrative Code, which addresses service quality for open heart surgery programs. That rule, as heretofore noted under the findings related to the Department's need methodology, requires that a minimum of 200 adult open heart surgery cases be performed annually within 3 years of initiating the service, and that at least 50 pediatric open heart surgery cases be performed within 3 years of initiating such service. Here, St. Mary's has failed to demonstrate that it can achieve such level of utilization, and its ability to offer a quality program is therefore suspect. As importantly, Rule 10- 5.011(f)11.a.(II) precludes the approval of St. Mary's application under such circumstances. Boca and Martin could reasonably expect to perform at least 200 cases within 3 years. The need in the service district of the applicant for special equipment and services which are not reasonably and economically accessible in adjoining areas, and the needs and circumstances of those entities which provide a substantial portion of their services or resources to individuals not residing in the service district in which the entities are located. As heretofore noted, North Ridge is located in northern Broward County, a mere 15 mile/19 minute drive time from Boca. North Ridge is a 395-bed hospital that provides all services with the exception of obstetric and radiation therapy, and has for 15 years provided open heart surgery services. It currently has two cardiac catheterization laboratories, and two dedicated and two backup open heart operating rooms. At an average of 750 cases per year, over the last few years, North Ridge has additional capacity, and could comfortably accommodate 1,000 cases per year. North Ridge's primary service area is, and has been for sometime, northern Broward County and southern Palm Beach County, although prior to the initiation of other services in Palm Beach County it serviced the entire area. North Ridge markets extensively in southern Palm Beach County, has follow-up activities for its Palm Beach County residents, and has strong ties with the physician community in southern Palm Beach County. Accordingly, North Ridge has an established presence in southern Palm Beach County, with approximately 30-40 percent of its patients coming from that area. North Ridge's mortality statistics, along with its utilization and reputation, mark it as an excellent facility with a quality open heart surgery program. Moreover, its charges for open heart surgery services are significantly below those of Palm Beach County facilities, as well as those proposed by Boca. North Ridge's location makes it easily accessible to the patients of southern Palm Beach County, and physicians have not experienced any significant problems gaining access to that facility. Moreover, Boca's patients have been accorded first priority at North Ridge. With new technology and the development of various drug therapies, it is extremely rare for a patient to have such an urgent need for open heart surgery that transportation becomes a significant issue. When urgently needed, North Ridge, as well as Delray, can adequately serve the needs of southern Palm Beach County. In sum, there is a viable alternative for residents of southern Palm Beach County to Boca's application, and that is their continued referral to North Ridge. That program is easily accessible, reasonably priced, and historically sound. On the other hand, to approve Boca's application would significantly adversely impact North Ridge, since their service areas in southern Palm Beach County and northern Broward County overlap in most material respects. The availability of resources, including health manpower, management personnel, and funds for capital and operating expenditures, for project accomplishment and operations. Each applicant has demonstrated that it either has or can obtain all resources, including health manpower, management personnel and funds for capital and operating expenditures. Boca and Martin each have the funds on hand for project accomplishment, and St. Mary's has demonstrated its ability to acquire such funds through donations, as needed, for project accomplishment. Each applicant is a quality provider of acute care services, and has demonstrated through its existing programs its ability to attract and retain appropriate management and health manpower for project accomplishment, notwithstanding the current nursing shortage being experienced locally and nationally. Accordingly, while the cost of skilled personnel to staff their open heart surgery programs may exceed their initial estimates in some cases, any of the applicants should be able to appropriately staff their program through the use of existing staff, national or local recruitment, or a combination thereof. While each applicant has adequate resources, the viability of Boca's application has been challenged based on its failure to provide a complete list of all capital projects in its application, as required by Section 381.707(2)(a), Florida Statutes. In this regard, the proof demonstrates that the only item listed in its application was for an "expansion/upgrade" of the physical plant at a proposed cost of $6.2 million. That information was an accurate financial description of that project at the time, but did not include other items relating to other construction and equipment purchases to which Boca was committed. In this regard, as of September 1989, Boca had committed itself to an additional $1,261,400 for projects relating to its 1989 fiscal year and $1,380,039 for projects relating to its 1990 fiscal year, for a total of $2,641,439. All of these items will be capitalized by Boca, and it could have provided a list or summary of such projects at the time of filing its application in September 1989. Boca's failure to do so, failed to comply with section 381.707(2)(a), and prevented the Department from having a complete picture of Boca's financial resources to complete the project. The extent to which the proposed services will be accessible to all residents of the service district, and the applicant's past and proposed provision of health care service to Medicaid patients and the medically indigent. Of the proposed programs, only those advanced by St. Mary's and Martin would be reasonably accessible to all residents of the service district. In this regard, the geography and population densities of the district demonstrate that Palm Beach County, at 1,993 square miles, is the single most populous county in the district, with a 1989 population of 873,347. The northern four counties are geographically larger than Palm Beach County, at 2,404 square miles, and contained a 1989 population of 360,664, nearly one-third of the total population of the district. The most dense population in the northern four counties is the Martin County/Port St. Lucie area. The district itself measures 100 miles in length, north to south, in a straight line. Martin is located approximately 60 miles from the southern boarder of the district, St. Mary's is approximately 30 miles, and Boca is 2.1 miles Considering Boca's geographic location, it would not be readily accessible to all residents of the district. Martin and St. Mary's are, on the other hand, sited such that they could, geographically, address the needs of the district as a whole. However, St. Mary's, like Boca, is proximate to a number of open heart surgery providers and would not improve geographic accessibility within the district, as would Martin. Further bearing on the issue of accessibility, is the applicants' commitment to service Medicaid and the medically indigent. In this regard, the proof demonstrates that Boca has not been an historic provider of Medicaid or indigent care, and for its fiscal 1989 dedicated less than 1 percent of its total admissions to Medicaid and indigent care. On the other hand, St. Mary's patient mix has included 15 percent Medicaid and 5 percent indigent, and it is the highest Medicaid provider in the district. Martin has, although to a lesser degree than St. Mary's, also demonstrated a commitment to the underserved by historically serving 5 1/2 percent Medicaid and indigent patients. In its application, Boca "committed" to provide at least 2 percent of gross revenue generated by the open heart surgery program for the provision of charity or indigent care on an annual basis. Considering Boca's nominal historic commitment to indigent care, its location in an affluent area of Palm Beach County, and its closed staff, Boca could not reasonably achieve such level of care, and would not increase accessibility for underserved groups. Comparatively, St. Mary's and, to a lesser extent, Martin, would increase accessibility for underserved groups should the need exist. Here, St. Mary's has projected that 7 percent of its total patient days will be devoted to Medicaid patients and 3 percent to indigent patients, and Martin has projected 5 percent Medicaid and indigent. The costs and methods of the proposed construction. In its application, Boca estimated a total project cost of $7,499,856 to construct and equip a new addition to house its open heart surgery program. That figure included a $6,147,900 construction fund and $783,056 for equipment costs to complete the two operating suites, recovery areas and ten-bed surgical intensive care unit proposed. Its estimates were, however, deficient. Boca's equipment budget, as it appeared in its application, was prepared by an individual who had no expertise in this area, and was deficient in terms of the actual equipment listed and its cost. To properly equip and furnish the two operating room suites, recovery room areas and a ten-bed surgical intensive care unit proposed by Boca would require an expenditure in excess of $1,690,000. Adding necessary instrumentation and a backup pump could add an additional $50-60,000. At hearing, Boca sought to minimize the significance of its underestimation by offering the testimony of an expert in medical equipment planning, cost estimating and procurement. That expert, Richard Drinkwine, was most credible and found, upon review of the Boca proposal that it was wanting in both equipment and cost. In his opinion a more reasonable cost to purchase moverable equipment would be $1,027,267, and a reasonable estimate for the furniture needs of Boca would be $92,257. This estimate was based on the assumption that Boca would not initially equip its second operating room, exam rooms or recovery rooms. To do so, would add an additional cost of $411,329 (movable and fixed equipment) for the second operating room and $160,000 to equip the recovery areas. Adding needed instrumentation and a back up pump would bring Boca's equipment costs to over $1,740,000. 9/ While Boca underestimated its equipment costs, the proof demonstrates that its construction estimate of $6,147,900 was overstated. The major factor which accounts for the overstatement by Boca in its application was an over estimate of the cost to construct the first floor of its addition, which is a covered parking area. In fact, Boca will be able to construct its proposed addition for approximately $5,226,397, or $921,503 less than it estimated in its application. Although Boca could realize a significant savings on construction costs, and those savings would be adequate to almost offset the deficiencies in its equipment budget, the restructuring of its application at this time is not appropriate under the Department's Rule 10-5.010(2)(b). Notably, while the total cost figures might be the same, the additional equipment that is needed to equip Boca's program, and that was omitted from its application, is significant. In addition to Boca's failure to demonstrate the reasonableness of its cost proposal, it is also found that Boca's proposal is oversized and overpriced to meet any demands Boca could reasonably expect to fulfill at any time in the foreseeable future. First, each of the two operating rooms proposed by Boca are over 1,100 square feet in size. Such size is more than twice the size reasonably needed to accommodate open heart surgery. Second, areas in the central core and lounges are also larger then needed. More significantly, Boca is proposing a four-bed recovery area and ten dedicated SICU beds. Even assuming there is a need for an additional open heart surgery program in the district, Boca could never reasonably expect to capture sufficient market share to justify the capital expenditure necessary to warrant a 10-bed SICU. Ten SICU beds could handle between 900 and 1400 open heart patients in a year. There are no programs anywhere in South Florida, no matter how mature or well respected, that have achieved utilization close to that level, and it is not reasonable for Boca to expect to achieve such volumes. Significantly, a portion of the capital cost for Boca's project would, under the present system, be passed along to the federal government by the capital cost pass through. By this mechanism, over $3,500,000 of Boca's project would ultimately be reimbursed to the hospital in the form of Medicare payments. Compared to Boca's cost proposal, St. Mary's is modest. Here, the schematics submitted by St. Mary's with its application and omissions response depict the existing surgical suites at St. Mary's and the minor renovations necessary to convert an existing room into the proposed open heart surgery suite. As proposed, St. Mary's program would have a dedicated open heart surgery suite, as well as a backup operating room. Recovery would be accommodated in its existing 16-bed ICU. In its application, St. Mary's estimated a maximum project cost of $850,000 to remodel its existing facility and equip its proposed open heart surgery program. That figure included up to $100,000 for remodeling costs, and up to $700,000 for equipment costs. St. Mary's estimates are reasonable and cost effective whether its program is dedicated to adult and pediatric open heart surgery service or simply adult services. Significantly, the equipment needed to perform open heart surgery on adults and pediatrics is the same except for some special instruments. That cost, at less than $25,000, is nominal and does not affect the reasonableness of St. Mary's estimates. As proposed in its application, Martin would construct 2,800 square feet of new space at its facility for the purpose of implementing an open heart surgery program. The location of the project is the hospital's first floor adjacent to both the cardiac catheterization laboratory and the existing surgical suites. This location will provide rapid access for cardiac catheterization emergencies requiring open heart intervention and will share common areas with the existing surgical suites, minimizing additional construction and project cost. It is also proximate to a 9-bed surgical intensive care unit. Of the eight existing operating rooms at Martin, two are large enough to serve as backup open heart operating rooms in the event of an emergency, but Martin has not proposed to establish, or budgeted the necessary equipment to establish, a backup operating room. Martin, like St. Mary's, proposes a modest expenditure, compared to Boca, for the initiation of its open heart surgery program. In this regard, Martin's application estimates its total project cost at $1,239,029. That figure includes a total construction cost budget of $796,669, and an equipment budget at $375,360. Martin's costs and methods of proposed construction are reasonable. While the proof demonstrates that approximately $411,000 is a reasonable cost to equip an open heart surgery suite, it also demonstrated that Martin currently has on hand some necessary equipment, such as cell-savers and heating-cooling machines. Under such circumstances, Martin could reasonably equip its program within its $375,360 budget. It could not, however, equip a backup operating room within such budget, and without a backup operating room could not reasonably expect to be able to handle 500 open heart cases a year, as required by rule 10-5.011(f)3d, given the need to back up its cardiac cath program. The immediate and long-term financial feasibility of the proposal. To assess the financial feasibility of the project, Boca's pro forma of income and expense, contained within its application, projects 192 patients during the first year of operation of its open heart surgery program and 211 patients during the second year. Projected charges for both years are based on $55,430 for DRG 104 and $41,942 for DRG 106 with an average length of stay of 10 days. Payor class mix is estimated to be as follows: Medicare 70 percent, Medicaid 0 percent (nominal), insurance 25 percent, other 3 percent, and indigent 2 percent. Net revenue over expenses for year one is projected to be $1,303,312, and for year two to be $1,597,959. Boca's proposed charges, utilization levels, and payor mix are reasonable. However, its pro forma contained unreasonable assumptions regarding average length of stay, total deductions and expenses. 10/ At hearing, Boca made no effort to defend the unreasonable assumptions it had presented to the Department through the pro forma contained in its application. Rather, conceding the unreasonableness of its assumptions, it sought to minimize their import through the testimony of Rufus Harris, an expert in health care finance and accounting. Such objective was not, however, attained. Mr. Harris, employed during the course of these proceedings, actually prepared a completely new pro forma for the Boca program. That pro forma significantly changed Boca's average length of stay from 10 to 16 days; significantly reduced the number of full time equivalents (FTEs) in open heart surgery, recovery and the surgical intensive care unit (SIC) from 39.3 to 24.1; increased the number of support FTEs from 25 to 30 or 32; increased the cost per FTE in the open heart surgery program by $800; increased the cost for each support FTE by $14,000; included the indigent care assessment ($68,000), utility cost ($108,000) and malpractice insurance cost ($17,000) that had been omitted from the application; increased the supply cost by $618,000; and reduced deductions from revenue by $186,000. But for the charges, utilization levels, and payor mix, Mr. Harris' pro forma is a complete revision of Boca's application pro forma, and demonstrates that such pro forma was not based on reasonable assumptions. Although not based on reasonable assumptions, Mr. Harris opined that such failing is not material since Boca's pro forma, like his pro forma, calculated a profit. Mr. Harris' opinion is rejected. The bottom line profit he derived was based on a substantial change in Boca's proposed program. Such slight of hand does not address the financial feasibility of the program Boca proposed in its application. Boca's proposal, developed through the testimony of its construction, equipment and financial experts, bears little resemblance to its initial application, and must be rejected as an impermissible amendment. Boca's application proposed two operating rooms. As such, Boca could facially handle at least 500 open heart surgery cases per year. As amended, with one operating room, Boca could not reasonably expect to attain such level of operations, given the need to back up its cardiac catheterization program, contrary to Rule 10- 5.011(1)(f)3d. As proposed, Boca's open heart surgery program would include recovery areas and a 10-bed SICU, fully staffed. As amended, the SICU would be staffed with one FTE and other staffing substantially reduced. Through downsizing, Boca would presume to significantly alter its proposal, and thereby demonstrate the reasonableness of its cost and financial feasibility projections. Such was not, however, the proposal submitted to the Department for review, and it cannot be permitted, at this stage of the proceedings, to amend its proposal in such material respects. Accordingly, based on the record, Boca has failed to demonstrate the financial feasibility of its proposal. 11/ St. Mary's pro forma of income and expenses projects 200 adult and 10 pediatric open heart surgery cases during its first year of operation, and 240 adult and 20 pediatric during its second year of operation. Separate pro formas describe the adult and pediatric parts of St. Mary's proposal. Actual charges proposed by St. Mary's will vary by DRG, as will average length of stay. The weighted average charges are, however, projected to be $38,000 for adult services and $43,025 for pediatric services during its first year of operation, and $39,900 for adult services and $45,176 for pediatric services during its second year of operation, based on a 10 day average length of stay. Payor class mix for adults is estimated as follows: Medicare 50 percent, Medicaid 7 percent, self pay/commercial 40 percent, and indigent 3 percent. Payor class mix for pediatrics is estimated to be as follows: Medicare 0 percent, Medicaid 50 percent, self pay/commercial 40 percent, and indigent 10 percent. Net revenue over expenses for its adult program is projected, on an incremental cost basis, to be $2,297,566 for year one, and $2,885,102 for year two. Net revenue for its pediatric program is projected, on an incremental cost basis, to be $62,326 for year one, and $224,797 for year two. St. Mary's proposed charges, average length of stay, utilization levels, payor mix, as well as its assumptions regarding total deductions and expenses are not reasonable. St. Mary's proposed charges were not shown to be reasonably achievable. Rather, where, as here, a facility's charge structure is based on consumption of services, the increased costs associated with an open heart program, discussed infra, would translate into significantly higher charges than those proposed by St. Mary's. St. Mary's application contains no data to reasonably support its conclusions that it will achieve 200 adult cases in year one and 240 adult cases in year two, nor did the proof it offered at hearing demonstrate such potential. Rather, the persuasive proof demonstrated that St. Mary's could not reasonably expect to attract more than 80 adult open heart cases in its first year of operation, and that it would not even be able to attract 200 open heart cases during its third year of operation. Notably, the area St. Mary's proposes to serve is currently adequately served by two open heart surgery programs. St. Mary's pro forma contains several other serious flaws. First, its gross patient revenues are driven by an average length of stay of 10 days. Such assumption is unreasonable, and St. Mary's could more reasonably expect an average length of stay of 15-17 days, with significantly higher expenses associated with the greater consumption of resources occasioned by such increased length of stay. Second, St. Mary's payor mix is significantly understated for Medicare. Here, the proof demonstrates that St. Mary's could reasonably expect to achieve a 68-70 percent Medicare utilization rate, as opposed to the 50 percent it projected. Such increase would significantly reduce its self pay/commercial, assuming its Medicaid and indigent utilization levels are to be accorded any credence, and significantly increase its deductions from revenue. Third, St. Mary's pro forma significantly understated expenses, primarily with regard to supplies and FTEs. Had St. Mary's reasonably calculated its average length of stay at 15-17 days, its expenses for supplies and FTEs would have been substantially higher. Additionally, St. Mary's application only addresses the need to tap incremental FTEs in the nursing area, whereas initation of an open heart program would have a tremendous impact on all services in the hospital, such as lab, pharmacy and social services, with attendant higher costs. Based on the opinion of Richard Cascio, an expert in health care finance, which is credited, St. Mary's proposal is not financially feasible in the long term. 12/ Regarding St. Mary's pediatric open heart program, the proof, as heretofore found, fails to support is utilization projection of 10 cases in year one and 20 cases in year two. Therefore, St. Mary's has failed to demonstrate the long term financial feasibility of that program operated, as proposed, concurrently with an adult program. As a stand alone program, neither St. Mary's application nor the proof at hearing reasonably address such a prospect. However, since the pediatric program was not shown to be financially feasible with the adult program bearing a significant portion of operating expenses, it must also be concluded that the pediatric program would not be financially feasible were it to carry all operating expenses. Martin's pro forma of income and expenses is predicated upon 148 adult open heart surgery cases during its first year of operation, and 195 cases during its second year of operation. Actual charges proposed by Martin will vary by DRG, as will average length of stay. Projected average charges are, however, projected to be $41,000 during its first year of operation and $43,080 during its second year of operation, based on a 15.7 day average length of stay. Payor class mix is estimated as follows: Medicare 63.0 percent, Medicaid 2.5 percent, private pay/commercial insurance 32.5 percent, and free care 2 percent. Net revenue over expenses is projected to be $260,000 for year one and $337,000 for year two. Martin's utilization levels, proposed charges, payor mix, and average length of stay are reasonable. Martin's pro forma did, however, contain some unreasonable assumptions regarding expenses, primarily staffing costs. 13/ Martin's pro forma estimates staffing costs based on the manpower requirements (FTEs) and salaries set forth in Table 11 of its application. It further calculates fringe benefits at 20 percent of salaries. Notably, however, the number of people needed to staff a program at a given FTE level is significantly higher than the raw FTE number. Accordingly, since Martin projected its salary expense and fringe benefits based on FTE's, its expenses associated with those items are understated. Further, the salaries Martin proposed in Table 11 for its operating room nurses are entry level salaries and Martin could not reasonably expect to recruit experienced open heart surgery personnel at such rates. Nor is its projected salary for a perfusionist, at $59,551 reasonable. A more reasonable figure would be in excess of $75,000. Even though the proof offered in opposition to Martin's application did demonstrate that Martin's assumptions regarding salary expenses were understated, it failed to demonstrate that Martin could not meet current market demands and still be profitable. Rather, Martin's proposal, while generating a lower bottom line, will still be profitable if such increased expenses are considered, and it is financially feasible in the long term. While each of the applicant's have demonstrated the immediate financial feasibility of their projects, by demonstrating the availability of funds for project accomplishment and operation, only Martin has demonstrated the long term financial feasibility of its proposal. Other criteria bearing on capital expenditure proposals for the provision of new health services to inpatients. In cases of capital expenditure proposals for the provision of new health services to inpatients, Section 381.705(2), Florida Statutes, requires that the Department reference each of the following in its findings of fact: That less costly, more efficient, or more appropriate alternatives to such inpatient services are not available and the development of such alternatives has been studied and found not practicable. That existing inpatient facilities pro- viding inpatient services similar to those proposed are being used in an appropriate and efficient manner. In the case of new construction, that alternatives to new construction, for example, modernization or sharing arrangements, have been considered and have been implemented to the maximum extent practicable. That patients will experience serious problems in obtaining inpatient care of the type proposed, in the absence of the proposed new service. In the instant case, none of the foregoing criteria can be answered in the affirmative. Rather, the proof demonstrates that less costly, more efficient or more appropriate alternatives currently exist through increased utilization of existing facilities. It further demonstrates that two of the existing three providers have not yet attained a 350 case per year level of operation, and that their services are therefore not yet being used at an appropriate level. Existing utilization levels and capacity further demonstrate that patients will not experience any serious problems in accessing such services. Finally, the applicants further failed to demonstrate that they had considered alternatives to new construction and had implemented them to the maximum extent possible. In the case of all applicants' there is no proof of any effort to initiate sharing arrangements. On the matter of Boca's complaints regarding delays experienced in effecting patient transfers by ambulance, as well as the inadequacy of such ambulances and their breakdowns, it offered no proof that it had investigated other ambulance services or its ability to operate its own service and found them impractable. Notably, such services are an item over which Boca has significant control, and its failure to investigate alternatives in this regard evidences the insignificance of any such problem. The criteria on balance. In evaluating the applications at issue in this proceeding, none of the criteria established by Section 381.705, Florida Statutes, or Rule 10- 5.011(1)(f), Florida Administrative Code, has been overlooked. The applicants' failure to demonstrate need, either numeric or not normal circumstances, as well as their failure to demonstrate compliance with Section 381.705(2), Florida Statutes, is, however, dispositive of their applications, and such failure is not outweighed by any other or combination of any other criteria. Further, even were the fixed need pool accorded the deference suggested by the Department, the other indicators of need subsumed within other criteria would dispel such illusion, and again compel the conclusion that there is no need in this case. Had numeric need been demonstrated, and the need requirements encompassed within section 381.705(2) satisfied, the proof would still fail to support an award to Boca or St. Mary's. Rather, among the competing applicants, Martin was shown to best satisfy the pertinent review criteria on balance and would, under such circumstances, be the favored applicant.
Recommendation Based on the foregoing findings of fact and conclusions of law, it is recommended that a final order be entered denying the applications of Boca, St. Mary's and Martin for a certificate of need to establish an open heart surgery program in District IX. RECOMMENDED in Tallahassee, Leon County, Florida, this 15th day of March 1991. WILLIAM J. KENDRICK 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 15th day of March 1991.
