The Issue Whether this case presents "not normal circumstances" that lead to award to St. Anthony's Hospital, Inc., of a certificate of need for an Open Heart Surgery program?
Findings Of Fact The parties and existing programs in District 5. St. Anthony's Hospital, Inc., the applicant for CON No. 7418 (the subject of this proceeding), is a not-for-profit corporation. Its facility, St. Anthony's Hospital, at which the adult open heart surgery program would be operated if CON No. 7418 were granted, is a 427-bed licensed general community hospital providing adult acute medical services in surgery, psychiatry and obstetrics. Located south of Ulmerton Road in Pinellas County, (generally considered "South Pinellas County,") St. Anthony's also provides home health care, family medicine clinics, outreach education, health screening and occupational health. Also located in South Pinellas County are Bayfront Medical Center, All Children's Hospital, and Northside Hospital. Northside is not a party to this proceeding although it recently received approval for a CON to provide open heart surgery services. Northside is located 6-1/2 to 7 miles from St. Anthony's and provides services in the same service area. Bayfront Medical Center, Inc., is one of two intervenors in this proceeding. Its facility, Bayfront Medical Center is a 518-bed, acute care, not-for-profit hospital located within the limits of the city of St. Petersburg and 1.7 miles from St. Anthony's. It offers cardiac, cancer and emergency services as well as a Level II trauma center. Bayfront also maintains a large women's and children's program, a rehabilitation center and a neurology program. Its cardiology program includes adult and pediatric cardiac catheterization, angioplasty and open heart surgery. But the open heart surgery program is shared with All Children's Hospital. Pre-operative and post-operative patient care is Bayfront's responsibility. The actual surgery takes place on the premises of All Children's. All Children's Hospital is a research hospital affiliated with the University of South Florida College of Medicine. Most importantly, and certainly most pertinent to this case, it is a dedicated Class II pediatric specialty hospital, one of two pediatric specialty hospitals in Florida, and one of only 47 in the nation. It provides, therefore, primary, secondary and tertiary care for children, in addition to the open heart surgery services it provides adults. Its cardiac surgery program was grandfathered under CON law to begin children's cardiac surgery in 1975. At the time of the grandfathering, All Children's was asked by state officials to consider adult cardiac surgery services as well. The hospital trustees and medical staff agreed and began a combined pediatric/adult open heart surgery program in 1976. As explained, above, the adult program is shared with Bayfront. All Children's Hospital is not a party to this proceeding. Largo Medical Center, Inc.'s facility, Largo Medical Center is a 256- bed, acute-care hospital specializing in cardiology and open heart surgery. Largo, the other intervenor in the proceeding, is located in AHCA's District 5 but outside South Pinellas County, as are two other open heart surgery programs: a program at Morton F. Plant Hospital in Clearwater and a program at HCA Bayonet Point/Hudson Medical Center located in Hudson in Pasco County. Morton F. Plant Hospital and HCA Bayonet Point/Hudson Medical Center are not participants in this proceeding. The Agency for Health Care Administration is the single state agency authorized by Section 408.034(1), Florida Statutes, to issue or deny certificates of need, "written statements ... evidencing community need for a new ... health service [such as an adult inpatient cardiac catheterization program.]" Section 408.032(2), Florida Statutes. Standing of the Intervenors. Over half of Largo's open heart surgery patients originate from St. Anthony's defined service area and 35 percent from South Pinellas County. If St. Anthony's achieves its projected volume, Largo likely will lose 35 percent of its open heart surgery patients in the third year of operation. A loss of that number of patients will contribute to a substantial loss of revenue to Largo. As concerns Bayfront's standing to intervene in this proceeding, St. Anthony's purpose in seeking a CON for an open heart surgery program is to obtain authorization for a program to take the place of the All Children's/Bayfront adult open heart surgery program. As counsel for St. Anthony's made clear in oral representation during hearing, whether made clear from the face of St. Anthony's application or not, the application is a "replacement application for Bayfront/All Children's [open heart surgery program]." (Tr. 208.) Filing of the CON application Under cover of a certification of its authorized agent dated September 17, 1993, St. Anthony's Hospital, Inc., filed an application for Certificate of Need 7418 with the Agency for Health Care Administration. The application seeks expansion of existing cardiology services at St. Anthony's health care facility in Pinellas County to include an on-site program for adult open heart surgery. d . Background This is not the first time St. Anthony's has initiated proceedings to obtain a CON for open heart surgery. It has filed applications before because of its concern that South Pinellas County is not being served appropriately by the adult open heart services program shared by Bayfront Medical Center and All Children's Hospital. In the application in this case, St. Anthony's describes its previous attempts in this way: ... St. Anthony's has on eight occasions, since 1987, applied for a Certificate of Need to provide open heart surgery services. Each application has either been denied, or was withdrawn by St. Anthony's based on represent- ations St. Anthony's received that All Children's/Bayfront shared program was adequate and appropriate to meet the needs of south Pinellas adult open heart patients. St. Anthony's has historically deferred to All Children's so as not to unnecessarily duplicate services. St. Anthony's Ex. 1, p 27. In CON application 7396, filed July 14, 1993, All Children's Hospital requested AHCA to allow the hospital "to discontinue services to the adult cardiac surgery population effective June 30, 1994 ...". St. Anthony's Ex. No. 20, attachment at p.7. The reason for the request was that All Children's had experienced and projected to continue to experience growth in its pediatric surgery caseload. Since "All Children's mission and legal responsibility lies with Florida's children ... the [hospital's] obvious difficulty ... [was] how to continue dealing with a growing pediatric patient load with decreasing availability of facilities." Id. At the same time, although not increasing as rapidly as children's surgery, the growth of the caseload for adult open heart surgery, as of the summer of 1993, was continuing in St. Petersburg. As a licensed pediatric hospital, All Children's opined in CON Application 7396, [W]e are unable to expand the adult program in even a moderate fashion and are unable to provide the true continuum of adult cardiac care that adult cardiologists and surgeons believe to be needed in the community. Only an adult licensed hospital can provide those services and allow for future growth. Id., at 8. With regard to the growing pediatric patient load threatened by decreasing availability of facilities, the application projected, "a true crisis within one year in the surgery, SICU area if adjustments are not made to alleviate the situation." Id. The crisis, however, did not materialize. As of June 20, 1994, nearly one year after the filing of the withdrawal application, the President and Chief Executive Officer of All Children's Hospital was of the opinion that there was not a crisis in the care of pediatric patients. Nor was there a crisis in the care of adult open heart surgery patients. In fact, adult open heart surgery patients were receiving very high quality care within one year of the projection of crisis made in the application. The application to terminate the open heart surgery program was withdrawn prior to June 20, 1994. All Children's withdrew the application in response to wishes expressed in the community that the program be continued. Nonetheless, St. Anthony's viewed the representations made by All Children's in CON application 7396 to "impeach any continued suggestion by All Children's or Bayfront that the existing shared services agreement is a normal or appropriate setting for adult open heart services." St. Anthony's Ex. No. 1, pg. 27. It filed, therefore, the application that initiated this proceeding. Transfer Stress and Limitations of the All Chidren's/Bayfront OHS program. After pre-operative care at Bayfront, adult open heart surgery patients are transferred through an enclosed corridor connecting Bayfront to All Children's. The same corridor is used to transfer the patients back to Bayfront for appropriate post- operative care following the surgery and intensive care at All Children's. Patients typically suffer stress when being transferred from one institution to another. They certainly suffer "transfer stress" when being transferred from St. Anthony's to Bayfront for open heart surgery in the All Children's/Bayfront program, just as they would suffer stress in transfers from Bayfront to St. Anthony's were St. Anthony's application to be granted and were the St. Anthony program to take the place of the All Children's/Bayfront program. Typical transfer time, however, between Bayfront and All Children's is only about five minutes. Most patients do not realize they are going from one institution to another. Although the arrangement is less than ideal, it is doubtful that open heart surgery patients suffer stress due to the transfers from Bayfront to All Children's and back again. There are, however, some drawbacks with regard to angioplasty patients in the All Children's adult program. Ambulation of angioplasty patients cannot be appropriately observed postoperatively at All Children's because there are not telemetry facilities available at All Children's for observation. There are such facilities at Bayfront and the patients may be observed there post- operatively once out of the intensive care unit at All Children's. Carlos M. Estevez, M.D., is a cardiologist with St. Petersburg Medical Clinic with active privileges at St. Anthony's, Bayfront, All Children's and Edward White Hospital. Beds have been unavailable postoperatively for adult therapeutic anigoplasty patients of his on occasion at All Children's. The patients have been required to be transferred to Bayfront or back to St. Anthony's, with French sheaths in their groin, a less- than-ideal situation. Dr. Estevez' therapeutic anigoplasty patients requiring open heart backup at All Children's are typically discharged from All Children's after spending the night in the intensive care unit. For the average angioplasty patient, intensive care services are an overutilization of services. Dr. Estevez believes "crisis" would be a fair term to describe the current situation for his angioplasty patients in the All Children's/Bayfront program. Not Normal Circumstances Part of CON review is to look for factors the application shows to be "beyond the norm," or "any unusual circumstances." AHCA's interrogatory answer responded with regard to defining "not normal circumstances," in this way: There is no definition for "not normal circum- stances." In the absense (sic) of a projected numeric need pursuant to a fixed pool publication, an applicant may demonstrate valid need, justi- fiable evidence of situations or occurrences in a service area which are not accounted for such as access problems, which may support approval. St. Anthony's Ex. 7, p. 9. Circumstances of the All Children's/Bayfront Program. As a dedicated Class II pediatric specialty hospital, All Children's, alone, cannot provide the continuum of care needed by adult open heart surgery patients. Its provision of services, as stated above, is limited to surgery and postoperative intensive care. Other services in the continuum of care required by adult open heart surgery patients include admission to an emergency room, and pre-operative coronary care as well as post-operative care (other than intensive care) all the way through cardiac rehabilitation. The components of the continuum other than the actual surgery and post-op intensive care are provided by Bayfront and other hospitals. Despite All Children's inability to provide "continuum of care," by itself, to adult open heart surgery patients, the care provided the open heart surgery patient in the All Children's/Bayfront program is of high quality. All Children's physical site is limited for future growth both as to the adult open heart program and its pediatric programs. The physical outer limits of the hospital building are right on the property line, "all the way around. It has no room to expand." St. Anthony's Ex. No. 20. But for physical limitations, All Children's pediatric services would expand because the need for expansion in the pediatric program exists. The inability of the pediatric programs to expand compromises All Children's mission: pediatric care in a hospital dedicated to pediatrics. The adult open heart surgery program, if withdrawn, would free All Children's somewhat for further pediatric program growth both as to resources and space. But All Children's is no longer trying to withdraw from the program. All Children's board of trustees believes that only an adult licensed hospital can provide the continuum of care needed for adult open heart surgery patients and allow for future growth. Moreover, it is not possible to put together a competitive adult open heart pricing structure for the continuum of care that one hospital could provide when adult open heart surgery patients are being transferred from All Children's to and from other hospitals in order to provide the full continuum of care. AHCA's Response to the Application. AHCA's response to the application was denial based on a determination of no need to support the application. After review, AHCA determined that the application did not demonstrate that St. Anthony's could support sufficient volume even were the All Children's/Bayfront program to become non-operational. There was, however, an even more fundamental objection to granting the application on the part of the agency. As Elizabeth Dudek, Chief of the Certificate of Need and Budget Review sections of the agency, explained with regard to St. Anthony's premise that the application seeks to have its program "replace" the All Children's/Bayfront adult open heart surgery program, I don't understand that premise. I don't understand it because, one, the All Children's/ Bayfront program is still operational. There is no indication that the All Children's/Bayfront program has somehow indicated that it would relinquish its program volume to St. Anthony's. dditionally, ... by law they wouldn't be able to [accomplish a transfer] through the CON program, you can't transfer [or replace] a program ... Tr. 1534, ll. 2-12. Need. For those in need of open heart surgery services in South Pinellas County, there is another facility in South Pinellas County at which the services can be obtained: Northside. As for all of AHCA District 5, there are other facilities at which open heart surgery services are available. There is no evidence, despite the inability of the All Children's/Bayfront adult program to expand, that the needs of those requiring high quality open heart surgery services in South Pinellas County or AHCA District 5 are going unmet.
Findings Of Fact Galencare, Inc., d/b/a Northside Hospital ("Northside") and NME Hospitals, Inc., d/b/a Palms of Pasadena Hospital ("Palms") were litigants in administrative proceedings concerning the Agency For Health Care Administration's ("AHCA's") preliminary action on certificate of need applications. Northside moved to dismiss Palms' application based on defects in the corporate resolution. The resolution is as follows: RESOLVED, that the Corporation be and hereby is authorized to file a Letter of Intent and Certificate of Need Application for an adult open heart surgery program and the designation of three medical/surgical beds as a Coronary Intensive Care Unit as more specifically described by the proposed Letter of Intent attached hereto. RESOLVED, that the Corporation is hereby authorized to incur the expenditures necessary to accomplish the aforesaid proposed project. RESOLVED, that if the aforedescribed Certificate of Need is issued to the Corporation by the Agency for Health Care Administration, the Corporation shall accomplish the proposed project within the time allowed by law, and at or below the costs contained in the aforesaid Certificate of Need Application. RESOLVED, that the Corporation certifies that it shall appropriately license and immediately there- after operate the open heart surgery program. In its Motion, Northside claimed that the third and fourth clauses in the Resolution are defective, the third clause because it does not "certify" that the time and cost conditions will be met and the fourth for omitting "adult" to describe the proposed open heart surgery program. Northside relies on the language of the statute requiring that a resolution shall contain statements . . .authorizing the filing of the application described in the letter of intent; authorizing the applicant to incur the expenditures necessary to accomplish the proposed project; certifying that if issued a certificate, the applicant shall accomplish the proposed project within the time allowed by law and at or below the costs contained in the application; and certifying that the applicant shall license and operate the facility. Subsection 408.039(2)(c), Florida Statutes. Northside also relies on Rule 59C-1.008(1)(d), which is as follows: The resolution shall contain, verbatim, the requirements specified in paragraph 408.039 (2)(c), F.S., . . . Palms' filed the Motion For Sanctions against Northside on November 15, 1993, pursuant to Subsection 120.57(1)(b)5 for filing a frivolous motion for an improper purpose, needlessly increasing the cost of the litigation, with no legal basis. Northside's claims that the Resolution was defective were rejected in the Recommended Order of Dismissal of January 11, 1994, amended and corrected on January 26, 1994, and not discussed in AHCA's Final Order of March 15, 1994.
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.
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 Whether any of the applications of Oak Hill Hospital, Citrus Memorial Hospital, or Brooksville Regional Hospital for adult open heart surgery programs should be granted?
Findings Of Fact District 3 Extended across the northern half of the state with a reach from central Florida to the Georgia line, District 3 is the largest in land area of the eleven health service planning districts created by the Florida Legislature. See Section 408.032(5), Florida Statutes. Sites of the three hospitals whose futures are at issue in this proceeding are in two of the sixteen District 3 counties: Citrus County and at the southern tip of the district, Hernando County. The three hospitals aspire to join the ranks of District 3's six existing providers of adult open heart surgery programs. Three of the existing providers are in Alachua County, all within the incorporated municipality of Gainesville: Shands at Alachua General Hospital, Shands at the University of Florida, and North Florida Regional Medical Center. Two of the existing providers are in Marion County: Munroe Regional Medical Center and Ocala Regional Medical Center. The sixth provider, opened in November of 1998 as the most recently approved by AHCA in the district, is in Lake County: the Leesburg Regional Medical Center. The CON status of the two Ocala providers is somewhat unusual. Located across the street from each other in downtown Ocala, they share virtually the same medical staff. Pursuant to a Stipulation and Settlement Agreement with the State of Florida, the two have offered adult open heart surgery services since 1987 under a single certificate of need issued for a joint program that reflects their proximity and identity of medical staff. The Agency's view of the arrangement has evolved over the years. It now holds the position that Munroe Regional and Ocala Regional operate independent programs. Accordingly, AHCA lists each as separate programs on its inventory of adult open heart services in District 3. Nonetheless, the two operate as a joint program pursuant to the Settlement Agreement and under state sanction reflected in the agreement, that is, they derive their authority to offer adult open heart surgery services from a single certificate of need. Other than a change of attitude by the Agency, there is nothing to detract from the status they have enjoyed since the agreement reached with the state in 1987: two hospitals operating a joint program under a single certificate of need. The three Gainesville providers all operated at an annual volume of less than 350 procedures during the reporting period that was most current at the time of the filing of the applications by the three competitors in this case. Those competitors are: Citrus Memorial, Oak Hill, and Brooksville Regional. Citrus Memorial, Oak Hill, Brooksville Regional Citrus Memorial Health Foundation, Inc., is a 171-bed, not-for-profit community hospital located in Inverness, Florida. HCA Health Services of Florida, Inc., d/b/a Oak Hill Hospital is a 204-bed hospital located in Oak Hill, Florida. Hernando HMA, Inc., d/b/a Brooksville Regional is a 91- bed hospital located in Brooksville, Florida. Hernando HMA, Inc. (the applicant for the program to be sited at Brooksville Regional) also operates a second campus under a single hospital license with Brooksville Regional. The 75-bed campus is in southern Hernando County in Spring Hill. Citrus and Hernando Counties Citrus Memorial is in Citrus County to the south of the cities of Gainesville and Ocala, the sites of five of the existing providers of adult open heart surgery in the district. Further south, Oak Hill and Brooksville Regional are in Hernando County. Although adjacent to each other along a boundary running east-west, the county line is a natural divide, north and south, with regard to service areas for open heart surgery. Substantially all Citrus County residents, including Citrus Memorial patients, receive open heart surgery and angioplasty services at one of the two Ocala providers to the north. In contrast, almost all Hernando County residents (94 percent) receive open heart services at Bayonet Point, a provider in Health Planning District 5 to the south of Hernando County. The neatness of this divide would be disrupted by the approval of the application of Brooksville Regional. Brooksville's application includes part of south Citrus County in its designated primary service area, an appropriate choice because of Brooksville Regional's location on Route 41 with good access to Citrus County. At present, however, the divide between north and south along the Citrus/Hernando boundary remains a Mason-Dixon line of open heart surgery service areas. During the year ended September 1999, for example, 408 Citrus County residents received open heart surgery in Florida. Of these, 85 percent received them in Ocala at one of the two providers there. During the same period, 618 Citrus County residents underwent angioplasty, with 89.7 percent of them going to the two Ocala providers. During the year ended March 1999, 698 Hernando County residents underwent open heart surgery at Florida Hospitals. Of the 663 residents of Oak Hill's primary service area, 94.3 percent received services at Bayonet Point in District 5. Similarly, of the 779 Oak Hill primary service area residents receiving angioplasty, 93.8 percent went south to Bayonet Point. Brooksville Regional projects that 10 percent of its OHS/angioplasty volume will be from Citrus County. Still, 90 percent of the volume is projected to be from Hernando County. Thus, even with the threat posed by Brooksville's application to the divide at the Citrus/Hernando boundary, the overwhelming percentage of Brooksville's patients will be from south of the Citrus-Hernando boundary. In sum, there is de minimis competition between would- be-provider Citrus Memorial and the providers to the north vis- a-vis would-be-providers Oak Hill and Brooksville Regional and the providers to the south in the arena of open heart surgery services needed by residents of the district. Bayonet Point Under the umbrella of HCA Health Services of Florida, Inc., Bayonet Point is a provider of open heart surgery services in Pasco County. Only thirty minutes by road from its sister HCA facility Oak Hill and 45 minutes from Brooksville Regional, Bayonet Point captures approximately 94 percent of the open heart surgery patients produced among the residents of Hernando County. Although its location is in a county that is only one county to the south of the two Hernando County hospitals, Bayonet Point is in a different health planning district. It is in District 5 on its northern edge. The residents of Hernando County who receive open heart surgery services at Bayonet Point, a premier provider of adult open heart surgery services in the state of Florida, are well served. Operating at far from capacity, the quality of its open heart program is excellent to the point of being outstanding. Position of the Parties re: "not normal" circumstances The Agency's Open Heart Surgery Rule, Rule 59C-1.033, Florida Administrative Code (the "Rule") establishes a need methodology and criteria applicable to review of certificate of need applications for the establishment of adult open heart surgery programs. The Rule also governs a hospital's ability to offer therapeutic cardiac catheterization interventional services (i.e., coronary angioplasty). Pursuant to Rule 50C- 1.032, Florida Administrative Code, a cardiac catheterization program that includes the provision of coronary angioplasty must be located within a hospital that provides open heart services. Applying the methodology of Rule 50C-1.033 (the "Rule"), AHCA determined that a "fixed need pool" of zero existed in District 3 for the July 2002 planning horizon. Calculation under the formula in the Rule produced a fixed need pool of one. Several District 3 programs, however, did not have an annual case volume of 350 or more procedures. The Rule's methodology requires that calculated numeric need be zeroed out whenever there are existing programs in a district with a sub- 350 annual volume. (See Section (7)(a)2., of the Rule.) As required, therefore, the Agency published a numeric need of zero for the applicable planning horizon. The determination of zero numeric need was not challenged and so became final. Their aspirations confronted with a numeric need of zero, Citrus Memorial, Oak Hill and Brooksville Regional, nonetheless, each filed applications seeking the establishment of adult open heart surgery programs. As evidenced by the Agency's initial decision to grant Citrus Memorial's application and by its change of position with regard to Oak Hill's application, the Agency is in agreement that "not normal" circumstances exist to justify granting the applications of both Citrus Memorial and Oak Hill. Thus, while the parties may differ as to the precise identification of those circumstances, all agree that there are circumstances that support the approval of at least one application (and perhaps two) for an adult open heart surgery in District 3 for the July 2002 planning horizon. It is undisputed that a new OHS program in Hernando County would have no effect on the three existing programs located in Gainesville that perform less than 350 procedures annually. This circumstance is a "not normal" circumstance, as previously found by the Agency. It allows an application's approval in the face of the Rule's dictate that the Agency will not normally approve an application when an existing provider falls below the 350 watermark. It is not, however, a circumstance that compels the award of a CON to any of the parties as in the case of "not normal" circumstances typically recognized by the Agency. (An example of such a circumstance would be an access problem for a specific population.) Rather, it is a circumstance that allows the Agency to overcome the zeroing-out effect of the Rule that demanded a fixed-need pool of zero. It is a circumstance that allows AHCA to award an adult open heart surgery CON to one of the Hernando County hospitals provided there is a demonstration of need. There are no typical "not normal" circumstances that support any of the applications. There are no geographic, economic or clinical access problems for the residents of the any of the primary service areas of the three applicants that rise to the level of "not normal" circumstances. Nor would granting the applications of any of the three support cost efficiencies. In the case of Oak Hill, moreover, granting its application would both reduce the operating efficiencies at Bayonet Point and increase the average operating cost per case at Bayonet Point. Approval of an application is not compelled by the "not normal" circumstance that exists in this case. The "not normal" circumstance simply clears the way for approval provided there is a demonstration of need. Stipulated Matters The parties stipulated that all applicants have a good record of providing quality of care and that all sections of the respective applications addressing that issue be admitted into evidence without further proof so as to establish record of quality of care. Accordingly, the parties stipulated that each application satisfies Section 408.035(1)(c) as to "the applicant's record in providing quality of care." The parties stipulated that, subject to proving their ability to generate the open heart surgery and angioplasty volumes projected in their respective applications, each applicant has the ability to provide adequate and reasonable quality of care for those proposed services. Accordingly, subject to the proof involving service volume levels, each application satisfies Section 408.035(1)(c) as the "ability of the applicant to provide quality of care . . .". The parties stipulated that all applicants have available and adequate resources, including health manpower, management personnel, and funds for capital and operating expenditures in order to implement and operate their proposed projects. Furthermore, they stipulated that all sections of their respective applications relating to those proposed projects and all sections of their respective applications relating to those issues were to be admitted into evidence without proof. Accordingly, all applications satisfy that portion of Section 408.035(1)(h), Florida Statutes (1999) related to the availability of resources. The parties stipulated that all applications satisfy, and no further proof is required to demonstrate, immediate financial feasibility as referenced in Section 408.035(1)(i), Florida Statutes (1999). The parties stipulated that the costs and methods of proposed construction, including schematic design, for each proposed project were not in dispute and were reasonable, and that all sections of each application related to those issues were to be admitted into evidence without further proof. (Stip., p.3.) Accordingly, each application satisfies Section 408.035(l)(m), Florida Statutes (1999). The parties stipulated that each application contained all documentation necessary to be deemed complete pursuant to the requirements of Section 408.037, except that Section 408.037(b)3. is still at issue regarding operational financial projections (including a detailed evaluation of the impact of the proposed project on the cost of other services provided by the applicant). The parties stipulated that each applicant satisfied all of the operational criteria set forth in the Rule (those operational criteria being encompassed in subsections 3, 4, and 5). Accordingly, it is undisputed that each applicant will have the support services, operational hours, open heart surgery team mobilization, accreditation, availability of health personnel necessary for the conduct of open heart surgery, and post- surgical follow-up care required by the Rule in order to operate an adult open heart surgery program. The Hernando County Hospitals Oak Hill Oak Hill is located on Highway 50, in the southern part of Hernando County, between the cities of Brooksville and Springhill. Oak Hill's licensed bed compliment includes 123 medical/surgical beds, 24 ICU beds, 50 telemetry beds, and 7 beds for obstetrics. Oak Hill provides an array of medical services and specialties, including: cardiology, internal medicine, critical care medicine, family practice, nephrology, pulmonary medicine, oncology/hematology, infectious disease treatment, neurology, pathology, endocrinology, gastroenterology, radiation oncology, and anesthesiology. Board certification is required to maintain privileges on the medical staff of Oak Hill. Oak Hill's six-story facility is situated on a large campus, and has been renovated over time so that the hospital's physical plant permits the provision of efficient care for patients. Oak Hills's surgery department has five operating rooms, plus a cystoscopy room. The department performs approximately 7,800 surgeries annually, a figure that demonstrates functional efficiency. Oak Hill is JCAHO accredited, with commendation. Recently named one of the nation's top 100 hospitals for stroke care by one organization, it has also received recognition for the excellence of its four intensive care units. Oak Hill's cancer program is the only one to have received full accreditation from the American College of Surgeons within a six-county contiguous area. Oak Hill recently expanded its emergency department and implemented a fast track program called Quick Care. The program is designed to treat lower acuity patients more rapidly. Gallup Organization surveys reflect a 98 percent patient satisfaction rate with the emergency department, the eighth best rate among the approximately 200 HCA-affiliated hospitals. During 1999, the emergency department treated 24,678 patients. During the same period, 376 patients presented to Oak Hill's emergency department with an acute myocardial infarction, and there were 258 such patients during the first eight months of 2000. Oak Hill operates a mature cardiology program with ten Board-certified cardiologists on staff. Eight of the ten perform diagnostic cardiac catheterizations in the hospital's cath laboratory. Oak Hill's program is active with regard to both invasive and non-invasive cardiology. The non-invasive cardiology laboratory offers a variety of services, including echocardiography, holter monitoring, stress testing, electrocardiography, and venous, arterial and carotid artery testing. The invasive cardiology laboratory has been providing inpatient and outpatient cardiac catheterization services since 1991. During calendar year 1999, Oak Hill saw 1,671 diagnostic cardiac catheterization procedures and transferred 619 cardiac patients to Bayonet Point, 258 for open heart surgery, 311 for angioplasty, and 50 patients for cardiac catheterization. The volume of catheterization procedures at Oak Hill has led to the construction of a second "cardiac cath" laboratory suite, scheduled for completion in May of 2001. The cath lab's medical director (Dr. Mowaffek Atfeh, the first interventional cardiologist in Hernando County) has served in that capacity since inception of the lab in 1991. The cath lab equipment is state-of-the-art. Oak Hill's cath lab provides excellent quality of care through its Board-certified cardiologists and the dedication and experience of its well- trained nursing and technical staff. Brooksville Regional Originally a 166-bed facility operated by Hernando County, 75 of the beds at Brooksville Regional were moved in 1991 to create a second facility at Spring Hill. A few years later, the facilities went into bankruptcy. The bankruptcy proceeding concluded in 1998, with operational control of both facilities being acquired by Hernando HMA, Inc. ("Hernando HMA"). The CON applicant for the adult open heart surgery program to be sited at Brooksville Regional, Hernando HMA is a wholly-owned subsidiary of Health Management and Associates, Inc. ("HMA"), a corporation located in Naples, Florida, and whose shares are traded publicly. Under the arrangement produced by the bankruptcy proceeding, Hernando County retained ownership of the buildings and the land. Hernando HMA, in turn, operates the facilities per a long-term lease with the County. Hernando HMA operates the Brooksville Regional and Spring Hill Campuses under a single hospital license issued by AHCA. The two campuses therefore share key administrative staff, including their chief executive officer. They share a single Medicare provider number and they have a common medical staff. HMA (Hernando HMA's parent) operates 38 hospitals throughout the country, many in the State of Florida. Among the 38 is Charlotte Regional Medical Center in Charlotte County, an existing provider of adult open heart surgery and recently recognized as one of the top 100 OHS programs in the country. Charlotte Regional will be able to assist Brooksville Regional with staff training and project implementation if its application is approved. An active participant in managed care contracting, Hernando HMA is committed to serving all payer groups, including Medicaid and indigent patients. It recently qualified as a Medicaid disproportionate share provider. It also serves patients without ability to pay. In fiscal year 2000, it provided $5 million of indigent care. Under the lease agreement Hernando HMA has with Hernando County, it must continue the same charity care policies as when the facilities were operated by the County. Hernando HMA must report annually to the County to show compliance with this charity care obligation. Also under the lease, Hernando HMA is obliged to invest $25 million in renovations and improvements to the two facilities over a 5-year period. About $10 million has already been invested. If the adult open heart surgery program is granted this would nearly satisfy the $25 million obligation. The County reserves to itself certain powers under the lease. For example, the County reserves the authority to pre- approve the discontinuation of any services currently offered at these facilities. Also, if Hernando HMA seeks to relocate either of the two, the County retains the authority whether to approve the relocation. The Spring Hill facility is located in the southwest portion of Hernando County, very near the Pasco County line. It is a general acute care facility, offering a full range of cardiology and other acute care services. Spring Hill was recently approved to add the tertiary service of Level II Neonatal Intensive Care. The Brooksville facility is located in the geographic center of Hernando County. Its service area is all of Hernando County and southern Citrus County. Brooksville is a full- service, general acute care facility. It offers services in cardiology, orthopedics, general surgery, pediatrics, ICU, telemetry, gynecology, and other acute services. Brooksville Regional has 91 acute care beds. Normally, the beds are used as 12 ICU beds, 24 telemetry beds, and 55 medical/surgical beds. During its peak annual period of occupancy, Brooksville has the capability to use up to 40 beds for telemetry purposes. The hospital has ample unused space and facilities associated with its 91 beds that resulted from the move of the 75 beds to create the Spring Hill campus. Brooksville Regional offers full scope cardiology services and technologies, including diagnostic cardiac catheterization. Just as in the case of Oak Hill, the cardiac cath lab is state-of-the-art. The only cardiac services not offered at the hospital are open heart surgery and angioplasty. The quality of cardiology and related services at Brooksville Regional are excellent. The equipment, the nursing staff, the allied health professional staff, and the technology support services are very good. The medical staff is broad- based and highly qualified. Brooksville Regional offers substantial educational and training programs for its nursing staff and other personnel on staff. Brooksville Regional routinely treats patients in need of OHS or angioplasty services. Nearly 400 patients per year receive a diagnostic cardiac cath at Brooksville Regional and are then transferred for open heart surgery or angioplasty. The vast majority of these patients are transferred to Bayonet Point, about 45 minutes away. In addition to transfers of patients following diagnostic catheterization, Brooksville Regional transfers about 120 patients per year to Bayonet Point who have not had such services. These patients fall into two categories: (1) high- risk patients, and (2) persons presenting at Brooksville's emergency room in need of angioplasty or open heart surgery. The Proposals Citrus Memorial By its application, Citrus Memorial proposes to establish a program that will provide adult open heart surgery and angioplasty services. There is no dispute that Citrus Memorial has the ability to provide adequate and reasonable quality of care for the proposed project (just as per the stipulation of the parties, there is no dispute that all of the applicants have such ability.) There is also no dispute that each applicant, including Citrus Memorial, will have all of the staff, equipment and other resources necessary to implement and support adult open heart surgery and angioplasty services. The ability to provide high quality care stems, in part, from Citrus Memorial's contract with the Ocala Heart Institute. Under the contract the Institute will provide supervision of the implementation and ongoing operations of the Citrus Memorial program. This supervision will be provided under the leadership of the president of the Institute, cardiovascular surgeon Michael J. Carmichael, M.D. The contract between Citrus Memorial and the Ocala Heart Institute is exclusive. Citrus Memorial will not extend medical staff privileges to any cardiovascular surgeon not affiliated with the Ocala Heart Institute unless approved by the Institute. The Ocala Heart Institute (whose physician members include not only cardiovascular surgeons, but also cardiovascular anesthesiologists and invasive cardiologists) has similar exclusive contracts for the operation of adult open heart surgery programs at Monroe Regional Medical Center and at Ocala Regional Medical Center and at Leesburg Regional Medical Center. At these three hospitals, the Institute's physicians have consistently produced excellent outcomes. The Ocala Heart Institute produces these results not just through the skills of its physicians but also through the use of the same clinical protocols at each hospital governing the provision of open heart surgery. Citrus Memorial proposes to follow identical protocols at its facility. Excellent open heart surgery outcomes for the Institute's physicians are also the product of standardized facility design, equipment and supplies. The standardization of design, equipment, supplies, and protocols has the added benefit of clinical efficiencies that reduce costs and shorten lengths of stay. Beyond supervision of the initial implementation of the program, the Ocala Heart Institute will provide the medical directorship for Citrus Memorial's program. In cooperation with Munroe Regional, the directorship's 24-hour-a-day, 7-days-a-week coverage of the program will include scheduled case, emergency case, and backup coverage by cardiovascular surgeons, cardiovascular anesthesiologists, perfusionists, and interventional cardiologists. The Ocala Heart Institute will provide education and training to Citrus Memorial's medical staff and other hospital personnel as appropriate. The Institute's obligations will include continually working to improve the quality of, and maintain a reasonable cost associated with, the medical care furnished to Citrus Memorial's open heart surgery and angioplasty patients, consistent with recognized standards of medical practice in the field of cardiovascular surgery. The contract with the Ocala Heart Institute ensures to the extent possible that Citrus Memorial will have a high- quality adult open heart surgery program. Oak Hill Through approval of its application to establish an adult open heart surgery program at its facility, Oak Hill hopes Hernando County residents who now must travel outside the county to receive open heart and angioplasty services will be better served. In particular, Oak Hill hopes to provide these services to the residents of the six zip code area that comprise its primary service area ("PSA"). Containing 75 percent of the county's population, Oak Hill's PSA also encompasses the county's concentration of recent growth. Oak Hill's administration is committed to the proposal contained in its application. It has the support of the hospital's Board of Trustees and medical staff. Not surprisingly, the proposal enjoys a measure of popularity in the county. A petition in support of a program at Oak Hill drew 7,628 signatures from residents of Hernando County. This popularity is based in the fact that residents now must leave District 3 (albeit Bayonet Point in District 5 is close to Oak Hill and closer for many residents of south Hernando County) to receive open heart and angioplasty services. The number of affected residents is substantial. In 1999, for example, over 600 cardiac patients were transferred by ambulance from Oak Hill to Bayonet Point. A greater number of patients traveled on a scheduled basis to Bayonet Point for cardiac care. The vast majority of Hernando County residents and Oak Hill primary service area residents in need of OHS services receive them at Regional Medical Center-Bayonet Point. HCA Health Services of Florida, a subsidiary of HCA-The Healthcare Company ("HCA") holds the Bayonet Point license. It also is the licensee of Oak Hill and other hospitals in Florida including North Florida Regional and Ocala Regional. Bayonet Point (Regional Medical Center-Bayonet Point) is an acute care hospital in Hudson. Hudson is in Pasco County, the county immediately to the south of Hernando County. Although in a separate health planning district (District 5), Bayonet Point is relatively close to Oak Hill, 17 miles to the south. Bayonet Point's open heart surgery program experiences the fourth highest case volume in the state. The program is recognized as one of the top two programs in the state. It enjoys a national reputation. For example in July of 1999, it was ranked 50th in the nation in cardiology and heart surgery in U.S. News and World Report's list of "America's Best Hospitals." Oak Hill, as a sister hospital of Bayonet Point under the aegis of HCA, plans to develop its program in cooperation with Bayonet Point and its cardiovascular surgeons so as to bring the high quality program at Bayonet Point to Oak Hill's community and patients. A prospective operational plan for the adult open heart surgery program has been initiated by Oak Hill with assistance from Bayonet Point. Oak Hill, unlike Citrus Memorial, did not present evidence concerning the specific duties to be imposed on each physician group under contract. Nor did Oak Hill present evidence as to whether and how those groups would create and implement the type of standardization of protocols, facility design, equipment, and supplies that Citrus Memorial's program will rely upon for high quality and reduced costs. Nonetheless, it can be expected that the cooperation of Oak Hill and Bayonet Point, as sister HCA hospitals, will continue through the development and implementation of appropriate staff training, policies, procedures and protocols in the establishment of a high quality program at Oak Hill. Oak Hill's achieved volume in its open heart surgery program, if approved, will be at the direct expense of Bayonet Point. Its approval will increase the operating costs per case at Bayonet Point. Patients transferred from Oak Hill to Bayonet Point for OHS and angioplasty receive excellent outcomes. Patients are transferred to Bayonet Point for OHS and angioplasty smoothly and without delay particularly because Bayonet Point operates a private ambulance system for the transport of cardiac patients to its hospital. Two groups of cardiovascular surgeons are the exclusive cardiovascular/thoracic surgeons at Bayonet Point. Although, at present, there are no capacity constraints at Bayonet Point, both groups support a program at Oak Hill and are committed to participate in an open heart surgery program at Oak Hill. If approved, Oak Hill will enter similar exclusive contracts with the two groups. Raymond Waters, M.D., a cardiovascular surgeon, heads one of the groups. He has performed open heart surgery at Bayonet Point since its inception and is largely responsible for the development of the surgery protocols used there. Dr. Waters has consulting privileges at Oak Hill. In addition to consulting there, Dr. Waters presents medical education programs at Oak Hill. Forty to 50 percent of Dr. Waters' patients come from Hernando County and Oak Hill Hospital. Dr. Waters and his group strongly support initiation of an open heart surgery ("OHS") program at Oak Hill. Their support is based, in part, on the excellence of the institution, including its physical structure, cath labs, intensive care units, nursing staff, medical staff, and the state of its cardiology program. Dr. Waters and his group are prepared to assist in the development of an open heart surgery program at Oak Hill, and to assure appropriate surgery coverage. Oak Hill will create a Heart Center at the hospital to house its OHS program. All diagnostic and invasive cardiac services will be located in one area of the hospital to ensure efficient patient flow and access to support services. The center will occupy existing space to be renovated and newly constructed space on the first floor of the facility. Two new cardiovascular surgery suites, with all support spaces necessary, will be constructed, along with an eight-bed cardiovascular intensive care unit. The hospital's two state- of-the-art cardiac catheterization laboratory suites are available for diagnostic procedures and angioplasty procedures. A large waiting area and cardiac education/therapy room will also be constructed. Open heart surgery patients will progress from the OR to the new CVICU for the first 24-28 hours after surgery. From the CVICU, the patient will be admitted to a thirty-bed telemetry monitored progressive care unit, located on the second floor. Currently a 38-bed medical/surgical unit, thirty of the beds will remain as PCU beds. Eight beds will be relocated to create the CVICU. The PCU will provide continued care, education and discharge planning for post open heart surgery and angioplasty patients. Oak Hill will also implement a comprehensive cardiac rehabilitation program for both inpatients and outpatients. Brooksville Regional Like Oak Hill, part of the purpose of the Brooksville Regional proposal is to provide more convenient OHS and angioplasty services to Hernando County residents in need of them, 94 percent of whom now travel to Bayonet Point in Pasco County for such services. In addition to proposing improvements in patient convenience and access, Brooksville Regional sees its application as increasing patient choice and competition in the delivery of the services. Indeed, patient choice and competition for the benefit of patients, physicians and payers of hospital services are the cornerstone of Brooksville Regional's application. There is support for the proposed program from the community and from physicians. For example, Dr. Jose Augustine, a cardiologist and Chief of the Medical Staff at Oak Hill since 1997, wrote a letter of support for an open heart program at Brooksville Regional. Although he believes Hernando County would be better served by a program at Oak Hill, he wrote the letter for Brooksville Regional because, "if Oak Hill didn't get it, [he] wanted the program to be here in Hernando County." (Oak Hill No. 12, p. 43.) Consistent with his position, Dr. Augustine finds Brooksville Regional to be an appropriate facility in which to locate an open heart program and he would do all he could to support such a program including providing support from his cardiology group and encouraging support other physicians. But Brooksville Regional offered no evidence regarding the identity of its cardiovascular surgeons. Hernando HMA proposes to construct a state-of-the-art building of 19,500 square feet at Brooksville Regional to house its OHS program. Two OHS operating rooms will be built. Eight CVICU beds will be used for the program, to be converted from other licensed beds. A second cath lab will be added. The total project cost is nearly $12 million. Brooksville Regional proposes to serve all of Hernando County. In addition, 10 percent of its volume is expected to come from Citrus County. Brooksville Regional commits to serving all payer groups with the vast majority projected to be Medicare, Medicare HMO/PPO and non-Medicare managed care. Brooksville lists two specific CON conditions in its application. First, it commits to over 2 percent for charity care and 1.6 percent for Medicaid. Second, it commits to establishing the OHS program at Brooksville's existing facility, located at 55 Ponce de Leon Boulevard in the City of Brooksville. The second of these two was reaffirmed unequivocally at hearing when Brooksville introduced testimony that if Brooksville's CON application is approved, its OHS program will be located at Brooksville's existing facility. Need In Common One "not normal" circumstance exist that supports all three applications: the lack of effect any approval will have on the sub-350 performers in the district. Which, if any, of the three applicants should be awarded an adult open heart surgery program, therefore, is determined on the basis of need and that determination is to be made in the context of comparative review. Benefits of Increased Blood Flow Lack of blood flow to the heart caused by narrowed arteries or blood clots during a heart attack, results in a loss heart of muscle. The longer the blood flow is disrupted or diminished, the more heart muscle is lost. The more heart muscle lost, the more likely the patient will either die or, should the patient survive, suffer a severe reduction in the quality of life. The key to prevent the loss of heart muscle in a heart attack is to restore blood flow to the heart through a process of revascularization as quickly as possible. Cardiovascular surgeons and cardiologists make reference to this phenomenon through the maxim, "time is muscle." The faster revascularization is accomplished the better the outcome for the patient. Those who treat heart attack patients seek to restore blood flow within a half hour of the onset of the attack. Revascularization within such a time frame maximizes the chance of reducing permanent damage to the heart muscle from which the patient cannot recover. Achievement of revascularization between 30 minutes and 90 minutes of the attack results in some damage. Beyond 90 minutes, significant permanent damage resulting in death or severe reduction in quality of life is likely. The three primary treatment modalities available to a patient suffering from a heart attack are: 1) thrombolytics; 2) angioplasty and 3) open heart surgery. Thrombolytic therapy is the standard of care for the initial attempt to treat a heart attack. Thrombolytic therapy is the administration of medication, typically tissue plasminogen ("TPA") to dissolve blood clots. Administered intravenously, the thrombolytic begins working within minutes in an attempt to dissolve the clot causing the heart attack and, therefore, to prevent or halt damage to the heart muscle. Thrombolytic therapies are successful in restoring blood flow to the affected heart muscle about 60 to 75 percent of the time. In the event it is not successful or the patient is not appropriate for the therapy, the patient is usually referred for primary angioplasty, a therapeutic cardiac catheterization procedure. Cardiac catheterization is a medical procedure requiring the passage of a catheter into one or more cardiac chambers with or without coronary arteriograms, for the purpose of diagnosing congenital or acquired cardiovascular diseases, and includes the injection of contrast medium into the coronary arteries to find vessel blockage. See Rule 59C-1.032(2)(a), Florida Administrative Code. Primary angioplasty is defined as a therapeutic cardiac catheterization procedure in which a balloon-tipped catheter inflated at the point of obstruction is used to dilate narrowed segments of coronary arteries in order to restore blood flow to the heart muscle. Rule 59C-1.032(2)(b), Florida Administrative Code. More often now, in the wake of cardiac care advances, a "stent" is also placed in the re-opened artery. A stent is a wire cylinder or a metal mesh-sleeve wrapped around the balloon during an angioplasty procedure. The stent attaches itself to the walls of the blocked artery when the balloon is inflated, acting much like a reinforced conduit through which blood flow is restored. Its advantage over stentless angioplasty is improved blood flow to the heart and a reduction in the likelihood that the artery will collapse in the future. In other words, a stent may prevent substantial re-occlusion. The development of stent technology has led to dramatically increased angioplasty procedure volumes in recent years and the trend is continuing. Based on mortality rates, studies suggest that immediate angioplasty, rather than thrombolytic treatment, is the preferred treatment for revascularization. When thrombolytic therapy is inappropriate or fails and a patient is determined to be not a candidate for angioplasty, the patient is referred for open heart surgery. Under the Open Heart Surgery Rule, Rule 59C-1.032, Florida Administrative Code, a cardiac catheterization program that includes the provision of angioplasty must be located within a hospital that also provides open heart surgery services. Open heart surgery is a necessary backup in the event of complications during the angioplasty. The residents of Citrus Memorial's primary service area (and those of Oak Hill's and Brooksville Regional's), therefore, do not have immediate access (that is access to a hospital in their county of residence) to not just open heart surgery services but to angioplasty services as well. In addition to increased benefits to the residents of the proposed service areas, much of the need in this case is based on a demonstration of geographic access problems. For example, population concentration and historical utilization of open heart surgery services in the district demonstrate that the open heart surgery programs in the district are maldistributed. At the same time, the Bayonet Point program's service by virtue of both superior quality and proximity to Hernando County ameliorates the effect of the maldistribution of the programs intra-district particularly with regard to the residents of Hernando County. The four southernmost of the 16 counties in the district (Citrus, Hernando, Sumter and Lake) account for approximately 41 percent of the total adult population and 53.5 percent of the population aged 65 and over within District 3 as a whole. The super majority of aged 65 and over population in these counties is of great significance since that population is the primary base of those in need of adult open heart surgery and angioplasty. This same base accounts for 57 percent of the total annual open heart surgeries performed on district residents. For District 3 as a whole, 27 percent of the adult population is aged 65 and older. In comparison, 38.2 percent of Citrus County residents fall within that age cohort, 37.2 percent of Hernando County residents and 33.3 percent of residents in Lake and Sumter Counties combined fall within that age cohort. In contrast, in the northern part of the district, the counties closest to the three Gainesville open heart surgery programs (Columbia, Hamilton, Suwanee, Alachua, Bradford, Dixie, Gilchrist, Lafayette, Levy, and Union) contain a combined basis of 32.4 percent and Putnam County contains 24.7 percent of the District 3 population aged 65 and over. The overall District 3 open heart surgery use rate (number of surgeries per 1,000 population age 15 and over) is 3.47. Yet, the combined use rate for Columbia, Hamilton, and Suwanee Counties is 1.96, the combined use rate for Alachua, Bradford, Dixie, Gilchrist, Lafayette, Levy, and Union Counties is 1.55, and the Putnam County use rate is 2.05. More specifically, the northern county use rates are significantly below the use rates for the remainder of District 3 counties. Marion County is 4.12. Citrus County is at 4.26. Hernando County is at 6.41. Lake and Sumter Counties are at 4.31. Transfers Drive time is but one component of the total time necessary to effectuate a patient transfer. Additional time is consumed in making transfer and admission arrangements with the receiving hospital, awaiting arrival of an ambulance to begin transport, and preparing and transferring the patient into and out of the ambulance. Time delays that necessarily accompany hospital-to-hospital transfers can be critical, clinically. The fact that a facility-to-facility transfer is required means that the patient is at relatively high risk. Otherwise, the patient would be sent home and electively scheduled later. The need to travel outside the community carries other adverse consequences for patients and their families. Continuity of care is disrupted when patients cannot receive hospital visits from their regular and trusted physicians. Separation from these physicians increases stress and anxiety for many patients, and patients heal better with lower levels of stress and anxiety. Further, most OHS patients are elderly, and travel by their spouses to another community to visit is stressful and difficult at best, sometimes impossible. The elderly loved ones of the patient also tend to have health problems and, even when able, the drive to the hospital is stressful. District 3 Out-migration A high volume of OHS patients leave District 3 for OHS services. During the year ended March 1999, there were a total of 3,520 District 3 residents discharged from Florida hospitals following OHS. Only 2,428 of those OHS cases were reported by hospitals located within District 3. An outmigration rate of 31 percent, on its face, is indicative of a district geographic access problem. The problem is mitigated, however, by an understanding that most of the outmigration is of Hernando County residents who are able to travel or are transferred to Bayonet Point, a provider within 30 to 45 minutes driving time from the two Hernando County applicants in this proceeding. Citrus Memorial Volume Projections and Financial Feasibility Citrus Memorial reasonably projects an open heart surgery case volume of 266 for the first year of operation, 313 for the second year, and 361 for the third year. Citrus Memorial reasonably projects an angioplasty case volume of 409 for the first year of operation, 481 for the second year, and 554 for the third year. The Citrus Memorial program is financially feasible in the long term. It will generate approximately $1 million in not-for-profit income by the end of the second year of operation ($327,609 from open heart surgery cases, and $651,323 from angioplasty cases). Increased Access in Citrus County The two Ocala hospitals are approximately 30 miles from Citrus Memorial. With traffic, the normal driving time from Citrus Memorial to the hospitals is 60 minutes. The driving time from Oak Hill to Bayonet Point is normally 29 minutes or about half the time it takes to get from Citrus Memorial to one of the Ocala providers. The drive time from Brooksville Regional to Bayonet Point is approximately 45 minutes, 25 percent faster than the driving time from Citrus Memorial to the Ocala hospitals. Myocardial infarction patients for whom thrombolytic therapy is inappropriate or ineffective who present to the emergency room at Citrus Memorial, on average, therefore, are exposed to greater risk of significant heart muscle damage than those who present to the emergency rooms at either Oak Hill or Brooksville Regional. The delay in transfer for a Citrus Memorial patient in need of angioplasty or open heart surgery can be compounded by the ambulance system in Citrus County. There are only 7 ambulances in the system. If one is out of the county, the provider of ambulance services will not allow another to leave the county until the first has returned. Citrus Memorial presented medical records of 17 cases in which transfers took more than an hour and in some cases more than 3 hours from when arrangements for transfers were first made. There was no testimony to explain the meaning of the records. Despite the status of the records as admissible under exceptions to the hearsay rule and therefore the ability to rely on them for the truth of the matters asserted therein, the lack of expert testimony diminishes the value of the records. For example in the first case, the patient presented at the emergency room on June 14, 1999. Treatment reduced the patient's chest pain. In other words, thrombolytics appeared to be beneficial. The patient was admitted to the coronary care unit after a diagnosis of unstable angina, and cardiac catheterization was ordered. On June 15, the next day, at about 11:40 a.m., "just prior to going down to Cath Lab, patient developed severe chest pain." (Citrus Memorial Ex. 16, p. 1017.) Following additional treatment, the chest pains were observed half an hour later to be "better." (Id.) Several hours later, at 1:45 p.m., that day, transfer to Ocala Regional was ordered. (Id., p. 1043). The patient's progress notes show that the transfer took place at 3:45 p.m., two hours after the order for transfer was entered. Whether rapid transfer was required or not is questionable since the patient appears to have been stabilized and had responded to thrombolytics and other therapy. In contrast, the second of the 17 cases is of a patient whose "risk of mortality [was] . . . close to 100%." The physician's notes indicate that at 1:10 p.m. on August 8, 1999, "emergency cardiac cath [was] indicated [with] a view toward revascularization." (Citrus Memorial Ex. 16, p. 1093). The same notes indicate after discussion between the physician and the patient and his spouse "that transfer itself is risky, but that risk of mortality [if he remained at Citrus Memorial] . . . is close to 100 percent." Although these same notes show that at 1:10 p.m., the patient's transfer had been accepted by the provider of open heart surgery, it was not until 3:30 p.m., that the "Ocala team" (id., at 1113) was shown to be present at Citrus Memorial and not until 3:45 p.m., that the patient was "transferred to Ocala." (Id.) Given the maxim that "time is muscle," it may be assumed that the 2-hour and 45- minute delay in transfer from the moment the patient was accepted for transfer until it occurred and the ensuing time thereafter for the drive to Ocala contributed to significant negative health consequences to the patient. Whatever the value of the 17 sets of medical records, they demonstrate that transfers from Citrus Memorial on occasion take up time that is outside the 30-minute and 90-minute timeframes for avoiding significant damage to heart muscle or minimizing such damage to heart attack patients for whom angioplasty or open heart surgery procedures is indicated. Citrus Memorial also presented twenty sets of records from which the "emergent" nature of the need for angioplasty or open heart intervention was more apparent from the face of the records than in the 17 cases. (Compare Citrus Memorial Ex. No. 16 to No. 17). These records reveal transport delays in some cases, lack of immediate bed ability at the Ocala hospitals in others, and in some cases both transport delays and lack of bed availability. In 16 of the cases, it took over 90 minutes for the patient to reach the receiving hospital and in 13 of the cases, it took 2 hours or more. It would be of significant benefit to some of those who present to Citrus Memorial's emergency room with myocardial infarctions to have access to open heart surgery services on site should thrombolytic therapy be inappropriate or prove ineffective. Other Access Factors Besides time considerations, there are other factors that provide comparisons related to access by Citrus Memorial service area residents on the one hand and Hernando County residents to be served by either Oak Hill or Brooksville Regional on the other. Among the other factors relied on by Citrus Memorial to advance its application is a comparison of use rate. The use rate per 1,000 population aged 15 and over for Hernando County is 6.08, compared to 4.13 for Citrus County. "[B]y definition" (tr. 458), the use rates show need in Hernando County greater than in Citrus County. But the use rates could indicate an access problem financially or geographically. In the end, there are a lot of components that make up the use rate. One is obviously the age of the population and underlying heart disease, two, . . . is the physician practice patterns in the county. [S]tudies . . . show that [in] two equivalent populations, . . . one with a very conservative medical community that . . . hospitalizes more frequently . . . [versus] another . . . where the physicians hospitalize less frequently for the same situation or who use a medical approach versus a surgical approach. (Id.) While there may be one possible explanation for the lower use rate in Citrus County than in Hernando County that favors Citrus Memorial, a comparison of use rates on the state of this record is not in Citrus Memorial's favor. Other factors favor Citrus Memorial. In support of its open heart surgery and angioplasty volumes, for example, Citrus Memorial reasonably projects an 80 percent market share for such services from its primary service areas. In contrast, Oak Hill projected a much lower market share from its primary service area: 58 percent. The lower market share projection by Oak Hill is due to the proximity of the Bayonet Point program to Hernando County. The difference in the two projections reveals greater demand for improved access in Citrus County than in Hernando County. This same point is revealed by projected county outmigration. Statewide data reveals that the introduction of open heart surgery services within a county causes a county resident generally to stay in the county for those services. Yet with a new program in Hernando County, Bayonet Point is still projected reasonably to capture one-half of the open heart surgeries and angioplasties performed on Hernando County residents, further support for the notion that Hernando County residents have adequate access to open heart surgery services through Bayonet Point's program. As to angioplasty demand, Oak Hill projected an angioplasty/open heart surgery ratio of 1.3. Citrus Memorial's ratio is 1.5. Geographic access limitations also adversely affect continuity of care. To have open heart surgery performed at another hospital, the patient will have to travel for pre- operative, operative, and post-operative follow-up services and duplication of tests. This lack of continuity of care often results in the patient's primary and specialty care physicians not following the patient and not being involved with all phases of care. In assessing travel time and access issues for open heart surgery and angioplasty services, travel time and distance present not only potential hardship to the patient, but also to the patient's family and friends who accompany and visit the patient. These issues are of particular significance to elderly persons (be they the patient, family member or friend) who do not drive and must rely on others for transport. Financial Access - Indigent Care Consistent with its mission as a community not-for- profit hospital, Citrus Memorial will accept any patient who comes to the hospital regardless of ability to pay. In 1999, Citrus Memorial provided approximately $4.9 million in charity care, representing 3.6 percent of its gross revenues. Citrus County provided Citrus Memorial with $1.2 million dollars in subsidization, part of which was allotted to capital construction and maintenance, part of which was allotted to charity care. Subtracting all $1.2 million, as if all had been earmarked for charity care, from the charity care, the dollar amount of Citrus Memorial's out-of-pocket charity care substantially exceeds the dollars for the same period provided by Oak Hill ($1.3 million) and by Brooksville Regional ($935,000). The percentage of gross revenue devoted to charity care is also highest for Citrus Memorial; Brooksville Regional's is 1.1 percent and tellingly, Oak Hill's, at 0.6 percent is less than one-quarter of Citrus Memorial's percentage of out-of- pocket charity care. "[C]learly Citrus has a much stronger charity care credential than does either Oak Hill or Brooksville Regional." (Tr. 241). But this credential does not carry over into the open heart surgery arena. As a condition to its CON, Citrus Memorial committed to a minimum 2.0 percent of total open heart surgery patient days to Medicaid/charity patients. The difference between Citrus Memorial's commitment and that of Oak Hill's and Brooksville Regional's, both standing at 1.5 percent, is not nearly as dramatic as past performance in charity care for all services. The difference in the comparison of Citrus Memorial to the other applicants between past overall charity care and commitment to future open heart services for Medicaid and charity care is explained by the population that receives open heart and angioplasty services. That population is dominated by those over 65 who are covered by Medicare. Competition Citrus Memorial's current charges for cardiology services are significantly lower than comparable charges at Oak Hill or Brooksville Regional. A comparison of the eight cardiology-related DRGs that typically have high volume utilization reveals that Oak Hill's gross charges are 62 percent greater than Citrus Memorial's gross charges. A comparison of gross charges is not of great value, however, even though there are some payers that pay billed charges such as "self-pay" and indemnity insurance. When managed care payments are a function of gross charges then such a comparison is of more value. On a net revenue per case basis for those DRGs, Oak Hill's net revenues are 10 percent greater than Citrus Memorial's. A 10 percent difference in net revenues, a much narrower difference than the difference in gross charges, is significant. Furthermore, it is not surprising to see such a narrowing since most of the utilization is covered by Medicare which makes a fixed payment to the provider. A comparison of projections in the applications reveals that Oak Hill's gross revenue per open heart surgery cases will be 164 percent greater than Citrus Memorial's gross revenue per such case. Oak Hill's net revenue per open heart surgery case will be 32 percent greater than Citrus Memorial's net revenue per such case. A comparison of projections in the applications also reveals that Oak Hill's gross revenue per angioplasty case will be 74 percent greater than Citrus Memorial's and that Oak Hill's net revenues per angioplasty case will be 13 percent greater than Citrus Memorial's. If a program is established at Oak Hill, there will be a hospital within District 3 with a new open heart surgery program. But what Oak Hill, under the umbrellas of HCA, proposes to do in reality is to take a quarter of the volume from [Bayonet Point, a] premier facility to set up in a sense a satellite operation at a facility . . . 16 miles away . . . [when] those patients already have an established practice of going to the premier tertiary facility . . . [ and when the two enjoy] a very strong positive relationship. (Tr. 1434). Such an arrangement will do little to nothing to enhance competition. Comparing Citrus Memorial and Brooksville Regional gross revenues on the basis of the same cardiology-related DRGs reveals that Brooksville's gross charges are 83 percent greater than Citrus Memorial's charges. A comparison of projections in the applications reveals that Brooksville Regional's gross revenue per open heart surgery case will be 147 percent greater than Citrus Memorial's and the Brooksville's net revenue per open heart surgery case will be 45 percent greater than Citrus Memorial's. A comparison of projections in the applications reveals that Brooksville's gross revenue per angioplasty case will be 36 percent greater than Citrus Memorial's and that Brooksville's net revenue per angioplasty case will be 7 percent lower than Citrus Memorial's. Impact of a Citrus Memorial Program on Existing Providers Citrus Memorial reasonably projected that by the third year of operation, a Citrus Memorial program will take away 100 cases from Ocala Regional. In 1999 Ocala Regional had an open heart surgery volume of 401 cases. In 2000, its annual volume was 18 cases more, 419. This is a decline from both the immediately prior two-year period, 1997 to 1998 and the two-year period before that of 1995 to 1996. The volume decline for the two-year period 1999 to 2000 compared to the previous two-year period, 1997 to 1998 is not at all surprising because of "two big factors." (Tr. 97). First, in 1997 and 1998, Ocala Regional was used as a training site for the development of Leesburg Regional's open heart surgery program that opened in December of 1998. In essence, Ocala Regional enjoyed an increase in the volume of cases in 1997 and 1998 when compared to previous years and a spike in volume when compared to both previous and subsequent two-year periods because of the 1997-98 short-term "windfall.) (Id.) Second, Ocala Regional was a Columbia-owned facility. In 1999 and thereafter, "Columbia developed a lot of bad publicity because of some federal investigations that were going on of the Columbia system." (Id.) The publicity negatively affected the hospital's open heart surgery volume in 1999 and 2000. The second factor also helps to explain why Ocala Regional's volume in 1999 and 2000 was lower than in 1995 and 1996. There are other factors, as well, that help explain the lower volume in 1999 and 2000 than in 1995 and 1996. In any event if impact to Ocala Regional, alone, were to be considered for purposes of the prohibition in Rule 59C- 1.033(7)(c), that a new program will not normally be approved if approval would reduce 12-month volume at an existing program below 350, then the impact might result in veto by rule of approval of a program at Citrus Memorial. But Ocala Regional is but one hospital under a single certificate of need shared with another hospital across the street from its facility: Munroe Regional. Annualization for 1999 of discharge data for the 12 months ending September 30, 1999 shows that Munroe Regional enjoyed a volume of 770 cases. There is no danger that the program carried out by Ocala Regional and Munroe Regional jointly under a single certificate of need will fall below 350 procedures annually should Citrus Memorial be approved. Oak Hill Need for Rapid Interventional Therapies and Transfers A high number of residents of Oak Hill's proposed service area present to its emergency room with myocardial infarctions. Many of them would benefit from prompt interventional therapies currently made available to them at Bayonet Point. Over 600 patients annually, almost two patients every day, must be transferred by ambulance from Oak Hill to Bayonet Point for cardiac care. A significant number of them would benefit from interventional therapy more rapidly available. The travel time from Oak Hill to Bayonet Point is the least amount of time, however, of the travel time from any of the three applicants in this proceeding to the nearest existing open heart provider; Brooksville Regional to Bayonet Point or Citrus Memorial to one of the Ocala providers. The extent of the benefit, therefore, is difficult to quantify and is, most likely, minimal. As with the other two applicants, thrombolytic therapy is the only method of revascularization currently available to Oak Hill's patients because Oak Hill is precluded by Agency rule and clinical standards from offering angioplasty without on-site open heart surgery backup. The percentage of MI patients who are ineligible for thrombolytic therapy, coupled with the percentages of patients for whom thrombolytic therapy is ineffective, are extremely significant given the high number of MI patients presenting to Oak Hill's emergency room. During 1998, 418 patients presented to Oak Hill's ER with an MI, and 376 MI patients presented in 1999. During the first eight months of 2000, 255 MI patients presented to Oak Hill's ER, an annualized rate of 384. Conservatively, thrombolytic therapy is not effective for at least 10 percent of patients suffering from an acute MI, either because patients are ineligible to receive the treatment or the treatment fails to clear the blockage. Accordingly, it may be conservatively projected that at least 104 patients who presented to Oak Hill's ER between 1998 and August 2000 (10 percent of 1049) suffering an MI were in need of angioplasty intervention for which open heart surgery backup is required. Most patients are diagnosed as in need of OHS or angioplasty as a result of undergoing a diagnostic cardiac catheterization. Oak Hill performs an extremely high volume of cardiac cath procedures for a hospital that lacks an OHS program. In 1999, for example, it performed 1,641 cardiac catheterizations. This is a higher volume than experienced by any of six hospitals during the year prior to which they recently implemented new OHS programs. If Oak Hill had an OHS program, most of the patients at Oak Hill determined to be in need of angioplasty or OHS could receive those procedures at Oak Hill. Such an arrangement would avoid the inevitable delay and stress occasioned by a transfer to Bayonet Point or elsewhere. Furthermore, if Oak Hill had an OHS program then those patients in need of diagnostic cardiac catheterization and angioplasty sequentially would have immediate access to the interventional procedure. The need is underscored for those patients presenting to Oak Hill's ER with myocardical infarctions who do not respond to thrombolytics because, as stated earlier in this order, access to angioplasty within 30 minutes of onset is ideal. Oak Hill transfers an extremely high number of cardiac patients for angioplasty and open heart surgery. In 1999, Oak Hill transferred 258 patients to Bayonet Point for open heart surgery, and 311 for angioplasty/stent procedures. Of course, most OHS patients are scheduled on an elective basis for surgery, rather than being transferred between hospitals, as is evident from the fact that during the 12-month period ending March 1999, 698 Hernando County residents underwent OHS. For now, Oak Hill patients determined to be in need of urgent angioplasty or open heart surgery must be transferred by ambulance to an OHS provider which for the vast majority of patients is Bayonet Point. Approximately 17 miles south, the average drive time to Bayonet Point from Oak Hill is 30 minutes but it can take longer when on occasion there is traffic congestion. Once the transfer is achieved and patient receives the required procedure, the drive can be difficult for the patient's family and loved ones. Community members often express to physicians and hospital staff their support and desire for an OHS program at Oak Hill. Many believe travel outside Hernando County for those services is cumbersome for loved ones who are important to the patient's healing process. The community support and demand for these services is evidenced by the 7,628 resident signatures on petitions in support of Oak Hill's efforts to obtain approval for an OHS program. While a program at Oak Hill would be more convenient, Oak Hill did not demonstrate a transfer problem that would rise to the level of "not normal" circumstances. Because of Oak Hill's relationship with Bayonet Point, Bayonet Point's proximity and excess capacity, coupled with the high quality of the program at Bayonet Point, Oak Hill's case is more in the nature of seeking a satellite. As one expert put it at hearing, [Oak Hill] is, in fact, a satellite. And my question is, [']What's the wisdom of doing that if you don't have the problems that normally are being addressed when you grant approval of a program?['] In other words, if you don't have transfer issues [that rise to the level of "not normal" circumstances], if you don't have access issues, if you're not achieving any price competition, if it's not particularly cost effective, why would you [approve Oak Hill]? (Tr. 1537-38). Oak Hill's Projected Utilization Oak Hill projected a range of 316 to 348 OHS cases during its first year, and by its third year a range of between 333 and 366 cases. Those volumes are sufficient to ensure excellent quality of care from the beginning of the program, particularly with the involvement of the Bayonet Point surgeons. Oak Hill defined its primary service area (PSA) for OHS based on historic MDC-5 cardiology related diagnosis discharges from its hospital. For the 12-month period ended March 1999, over 90 percent of Oak Hill's MDC-5 discharges were residents of six zip codes, all in the vicinity of Oak Hill Hospital and within Hernando County. Accordingly, that area was chosen as the PSA for projecting OHS utilization. Out-of-PSA residents accounted for only 8.9 percent of Oak Hill's MDC-5 discharges, and of these, 1.5 percent were out-of-state patients, and 4.9 percent were residents from other parts of District 3. For the year ending ("YE") March 1999, Oak Hill had an MDC-5 market share of 40.9 percent within its PSA, without excluding angioplasty, stent, and OHS cases. If angioplasty, stent, and OHS cases are excluded, Oak Hill's PSA market share was 52.7 percent. In order to project OHS service demand, Oak Hill examined the population projections for 1999 and 2004 for District 3, and for Oak Hill's PSA. The analysis was based on age-specific resident populations and use rates, to serve as a contrast to the Agency's projections. The numeric need formula in the OHS Rule utilizes a facility based use rate derived by totaling all of the reported OHS cases performed by hospitals within a District during a given time period, and then dividing those cases by the adult population aged 15 and over. While a facility-based use rate measures utilization in those District hospitals, however, it does not measure out-migration. Nor does it reflect the residence of the patients receiving those services. On the other hand, a resident-based use rate identifies where patients needing OHS actually come from, and permits development of age specific use rates. For example, the resident-based use rates reflects that the southern portion of District 3 has a much higher concentration of elderly persons than does the northern portion of the District, and reveals extremely high migration out of the District for OHS services. Oak Hill's PSA is more elderly than the District 3 population as a whole. In 1999, 32.8 percent of the Oak Hill PSA population was aged 65 or over, as opposed to only 21.5 percent for District 3 as a whole, with similar results projected for the population in 2004, the projected third year of operation of Oak Hill's program. Based on the district-wide use rate resulting from the OHS Rule need methodology, Hernando County would be expected to generate 276 OHS cases in the planning horizon of July 2002 (use rate of 2.3 per 1000 adult population). Application of this OHS Rule use rate to Hernando County clearly understates need if resources to meet the need are considered within the isolation of the boundaries of District 3. For example, the OHS Rule based projection of 276 OHS cases in 2002, is far below the actual 664 Hernando County resident OHS discharges during YE March 1998, and the 698 OHS cases during YE March 1999. While the facility-based district-wide use rate was 2.3, the Hernando County resident-based use rate was 6.45 per 1000 population. The fact of increasing use rates with age is demonstrated by the Hernando County resident use rate of 6.95 for ages 55-64, increasing to 12.01 for ages 65-74, and increasing again to 14.95 for age 75 and over. But focusing on Hernando County use rates within District 3 ignores the reality of the proximity of an excellent program at Bayonet Point. Oak Hill reasonably projected OHS demand in its PSA by examining the age-specific use rates of residents in the southern portion of District 3, which experienced an overall use rate of 4.55 for the year ending March 1999. Those age-specific use rates were then applied to the age-specific population forecast for each of the three horizon years of 2002 through 2004, resulting in an expected PSA demand for OHS of 547 cases in 2002, 561 cases in 2003, and 575 cases in 2004. Those projections are conservative given that 663 actual open heart surgeries were reported among PSA residents during the YE March 1999. The same methodology was used to project angioplasty service demand in the PSA, resulting in an expected demand ranging from 721 cases in 2002 to 758 cases in 2004. Oak Hill then projected its expected OHS case volume by assuming that its first year OHS market share within its PSA would be the same as its MDC-5 market share, being 52.7 percent. Oak Hill next assumed that by the third-year operation its market share would increase to equal its current cardiac cath PSA market share of 57.9 percent. It further assumed that it would have a non-PSA draw of 8.9 percent, which is equal to its current non-PSA MDC-5 market share. Oak Hill reasonably expects that 91.1 percent of its OHS cases would come from within its six zip code PSA, with the remaining 8.9 percent expected to come from outside that area. Oak Hill then projected an expected range of OHS discharges during its first three years of operation by using both a low estimate and a high estimate. The resulting utilization projections reflect a low range of 316 OHS cases in 2002, 324 cases in 2003, and 333 cases in 2004. The high range estimate for the same years respectively would be: 348, 357, and 366 cases. The same methodology was used to project angioplasty cases, resulting in the following low range: 417 cases in 2002; 428 in 2003; and 438 in 2004. The expected high range for the same respective years would be: 458, 470, and 482. Oak Hill's OHS and angioplasty utilization projections are reasonable. Long-term Financial Feasibility Long-term financial feasibility is defined as a demonstration that the project will achieve and maintain financial self-sufficiency over time. Oak Hill's projected gross charges were based on Bayonet Point's charge structure. The projected payer mix was based on Oak Hill's cardiac cath experience. Projected net reimbursement by payor source was based on Oak Hill's experience for Medicare, Medicaid, and contractual adjustment history. Oak Hill's expenses were projected on a DRG specific basis using information generated by the cost accounting system at Bayonet Point. The use of Bayonet Point's expense experience is a reasonable proxy for a number of reasons. Its patient base is comprised of patients who are reasonably expected to be the base of Oak Hill's patients. Management there is similar to what it will be at an Oak Hill program. And, as stated so often, the two facilities are relatively close in location. To account for differences between Bayonet Point's expenses and Oak Hill's project costs, interest and depreciation, adjustments were made by Oak Hill as reflected in its application. As a means of compensating for fixed costs differentials between the two hospitals, Oak Hill added its salary costs projected in Schedule 6 to the salary expenses already included in Bayonet Point's costs. (Schedule 6 nursing, administration, housekeeping, and ancillary labor costs exceeded $3 million in the first year of operations.) This counting of two sets of salary expenses offsets any economies of scale cost differential that may exist between the OHS programs at Bayonet Point and Oak Hill. A reasonable 3 percent annual inflation factor was applied to both projected charges and costs. The reasonableness of Oak Hill's overall approach is supported by Citrus Memorial's use of a substantially similar pro forma methodology in modeling its proposed program on Munroe Regional Medical Center. Oak Hill reasonably projects a profit of $1.38 million in the first year of operation, and that profitability will increase as the case volumes grow thereafter. An Oak Hill program will cost Bayonet Point (a sister HCA hospital) patients and may diminish the corporate profits of the two hospital's parent corporation, HCA Health Services of Florida, Inc. It is clear from the parent's most recent audited financial statements, however, that it has ability to absorb a lower level of profit from Bayonet Point without jeopardizing the financial viability of Oak Hill. Brooksville Regional argues that the financial impact to Bayonet Point of an Oak Hill program demonstrates that the Oak Hill application is nothing more than a preemptive move to stifle competition. Oak Hill, in turn, characterizes its proposal as a sound business judgement to compete with non-HCA hospitals in District 3. Whatever characterization is applied to the Oak Hill proposal, it is clear that it is financially feasible in the long term. Other Statistics The AHCA population estimates for January 1, 1999, show a Hernando County population of 108,687 and a Citrus County population of 98,912. The same data sources show the "age 65 and over" population (the "elderly") in Hernando to be 40,440 and in Citrus to be 37,822. During the year 2000, there were 2,545 more people aged 65 and over in Hernando County than in Citrus County. By the year 2005, the difference is expected to be 3.005. The total change in the elderly population between 2000 and 2005 is projected to be 4,109 in Citrus County and 4,614 in Hernando County. Generally, the older the population, the older the OHS use rate. Comparatively, then, Hernando County has the larger population to be served both now, and in all probability, in the foreseeable future. Oak Hill has the largest cardiology program among the applicants. For the 12-month period ending September 1999, MDC- 5 discharges were 1,130 at Brooksville Regional, 2,077 at Citrus Memorial and 2,812 at Oak Hill. The combined Brooksville and Spring Hill Regional Hospital MDC-5 case volume of 2,238 is below Oak Hill's MDC case volume for the same period. Oak Hill is the largest cardiac cath provider among the applicants. For the 12-month period ending September 2000, Citrus Memorial reported 646 cardiac catheterization procedures and Brooksville Regional reported 812. Oak Hill reported 1,404 such procedures, only sixty shy of a volume double the combined volume at the other two applicants. The level of ischemic heart disease in an area is indicative of the level of open heart surgery needed by residents of the area. The number of ischemic heart disease cases by county during the 12-month period ending September 1999 were: 1,038 for Alachua; 1,978 for Citrus; 2,816 for Marion; and, Hernando, 3,336. During the 12-month period ending September 1999, 657 Hernando County residents underwent OHS at Florida hospitals, while only 408 residents of Citrus County did so. Similarly, 948 Hernando County residents had angioplasty, while only 617 Citrus County residents underwent angioplasty. For the year ending June 30, 1999, the Citrus County OHS use rate was 4.26 per 1,000 population, substantially lower than the Hernando County use rate of 6.41. A comparison of the use rates for the year ending September 30, 1999, again shows Hernando County's use rate to be higher: 4.13 for Citrus, 6.08 for Hernando. Hernando County also experiences a higher cardiovascular mortality rate than does Citrus County. During 1998, the age-adjusted cardiovascular mortality rate per 100,000 population for Citrus was 330.88 and 347.40 for Hernando. During 1999, those mortality rates were 304.64 in Citrus and 313.35 in Hernando (consistent with the decline between 1998 and 1999 for the state as a whole). The Hernando mortality rates greater than Citrus County's indicate a greater prevalence of heart disease in Hernando County than in Citrus County. Most importantly, during 1999, Oak Hill transferred 619 patients to Bayonet Point for cardiac intervention - 258 for open heart surgery, 311 for angioplasty/stent, and 50 for cardiac cath. Brooksville Regional transferred a combined 383 patients after diagnostic cardiac catheterization to other hospitals for either angioplasty or OHS. Brooksville Regional has 91 licensed beds, Citrus Memorial has 171 beds and Oak Hill has 204 beds. Although with Spring Hill one could view Brooksville Regional as "two hospital systems with 166 beds under common ownership and control" (Tr. 1544), at 91 beds, Brooksville would become the smallest OHS program in the state in terms of licensed bed capacity, Hospitals of less than 100 beds are not typically of a size to accommodate an OHS program. There might be dedicated cardiovascular hospitals of 100 beds or less with capability to support an open heart surgery program, but "open heart surgical services in [a general, surgical-medical hospital of less than beds] would overwhelm the hospital as far as the utilization of services." (Tr. 126). Oak Hill's physical plant, hospital size, number of beds, medical staff size, number of cardiologists, cath lab capacity, number of cath procedures, number of admissions, and facility accessibility to the largest local population are all factors in its favor vis-à-vis Brooksville Regional. In sum, Oak Hill is a hospital more ready and appropriate for an adult open heart surgery program than Brooksville. Alternatives As an alternative to its CON application, Oak Hill considered the possibility of seeking approval of a program to be shared with Bayonet Point. Learning that the Agency looks with disfavor on inter-district shared adult open heart surgery programs, Oak Hill decided to seek approval of a program independent of Bayonet Point but one that would rely on Bayonet Point's experience and expertise for development, implementation and operation. Bed Capacity Brooksville contends that Oak Hill lacks sufficient bed capacity to accommodate the implementation of an OHS program in conjunction with its projected-related increased admissions. Brooksville relied on an Oak Hill daily census document, focusing on the single month of January, arguing that the document reflected that Oak Hill exceeded its licensed bed capacity on 5 days that month. The licensed bed capacity, however, was not exceeded. Observation patients, who are not inpatients, and not properly included in the inpatient count, were included in the counts provided by Brooksville. Seasonal peaks in census during the winter months, particularly January, are common to all area hospitals. Similarly, all hospitals experience a higher census from Monday through Thursday, than on other days. Oak Hill has adequate capacity and flexibility to accommodate those rare occasional days during the year when the number of patients approaches its number of beds. Patients are sometimes hospitalized for "observation," and when so classified are expected to stay less than 24 hours. Typically, Oak Hill places such patients in a regular "licensed" bed, so long as such beds are available. There are other areas in the hospital suitable for observation patients, including: 12 currently unused and unlicensed beds adjacent to the cardiac cath recovery area; six beds in the ER holding area; eight beds in the ER Quick Care Unit; and additional beds in the same day surgery recovery area. Observation patients can be cared for appropriately in these other areas, a routine hospital practice. Peak season census is "a fact of life" for hospitals, including Oak Hill and Brooksville. Oak Hill has never been unable to treat patients due to peak season demands. January is the only month during the year when bed capacity presents a challenge at Oak Hill. If necessary, Oak Hill could coordinate patient admissions with Bayonet Point to ensure that all patients are appropriately accommodated. Oak Hill can successfully implement a quality OHS program with its current bed capacity. In fact, all parties have stipulated to Oak Hill's ability to do so. Moreover, should it actually come to pass in future years that Oak Hill's annual average occupancy exceeds 80 percent, it may add up to 20 licensed beds on a CON exempt basis. Brooksville Regional Factors favoring Brooksville over Oak Hill Bayonet Point is the dominant provider of OHS/angioplast to residents of Hernando County. As a non-HCA hospital, a Brooksville program (in contrast to one at Oak Hill) would enhance patient choice in Hernando County for hospitals and physicians, and would create an environment for price and managed care competition. Other health planning factors that support Brooksville Regional over Oak Hill are the locations of the two Hernando County hospitals and the ability of the two to transfer patients to Bayonet Point. Patient Choice and Competition Of the OHS/angioplasty services provided to Hernando County residents, Bayonet Point provides 94 percent, the highest county market share of any hospital that provides OHS services to residents of District 3. Indeed, it is the highest market share provided by any OHS provider in any one county in the state. The importance of patient choice and managed care competition has been acknowledged by all the parties to this proceeding. If Brooksville Regional's program were approved, Hernando County residents would have choice of access to a non- HCA hospital for open heart and angioplasty services and to physicians and surgeons other than those who practice at Bayonet Point. This would not be the case if Oak Hill's program was approved instead of Brooksville's. Price Competition Although Brooksville is not a "low-charge provider for cardiovascular services" (tr. 1347), approving Brooksville creates an environment and potential for price competition. A dominant provider in a marketplace has substantial power to control prices. Adding a new provider creates the motivation, if not the necessity, for that dominant provider to begin pricing competitively. A dominant provider controls prices more than hospitals in a competitive market. Bayonet Point's OHS charges illustrate this. Approving Brooksville's application creates an environment for potential price competition with Bayonet Point, whereas approving Oak Hill's application, whose charges are expected to be the same as Bayonet Point's, does not. Managed Care Contracting Just as competitive effects on pricing are reduced in an environment in which there is a dominant provider, so managed care contracting is also affected. Managed care competition depends not just on competition between managed care companies but also on payer alternative within a market. If a managed care company is forced to deal with one health care provider or hospital in a marketplace, its competitive options are reduced to the benefit of the hospital that enjoys dominance among hospitals. "[T]he power equation moves much more strongly in that type of environment towards the provider [the dominant hospital] and away from the managed care companies." (Tr. 1471). Managed care companies who insure Hernando County residents have no alternative when it comes to open heart surgery and angioplasty services but to deal with Bayonet Point. With a 94 percent share of the Hernando County residents in need of open heart and angioplasty services, there is virtually no competition for Bayonet Point in Hernando County. The managed care contracting for both Bayonet Pont and Oak Hill is done at HCA's West Florida Division office, not at the individual hospital level. Approving Oak Hill will not promote or provide competition for managed care. Approving Brooksville, on the other hand, will provide managed care competition over open heart and angioplasty services in Hernando County. Ability to Transfer Patients While transfers of Hernando County patients always produce some stress for the patient and are cumbersome as discussed above for the patient's loved ones, there is no evidence of transfer problems for Oak Hill that would rise to the level of "not normal" circumstances. Outcomes for patients transferred from Oak Hill to Bayonet Point on the basis of morbidity statistics, mortality statistics, length of stay, patient satisfaction, and family satisfaction are excellent. It is not surprising that sister hospitals situated as are Oak Hill and Bayonet Point would enjoy minimal transfer delays and access problems encountered when patients are transferred. Transfers between unaffiliated hospitals are not normally as smooth or efficient as between those that have some affiliation. Unlike Oak Hill's patients, Brooksville patients, for example, are never transported for OHS/angioplasy by Bayonet Point's private ambulance. Other than in emergency cases, Bayonet Point decides the date and manner when the patient will be transferred. But just as in the case of Oak Hill, there is no evidence of transfer problems between Brooksville Regional and Bayonet Point that would amount to an access problem at the level of "not normal" circumstances. Outmigration As detailed earlier, there is extensive outmigration of Hernando County residents to District 5 for open heart and angioplasty procedures. The outmigration pattern on its face is in favor of both applications of Oak Hill and Brooksville. The outmigration from Hernando County, however, is of minimal weight in this proceeding since Bayonet Point is so close to both Oak Hill and Brooksville. The patients at the two Hernando hospitals have good access to Bayonet Point, a facility that provides a high level of care to Hernando County residents in need of open heart surgery and angioplasty services. The relationship is inter-district so that it is true that there is outmigration from District 3. Outmigration statistics showing high outmigration from a district have provided weight to applications in other proceedings. They are of little value in this case. Location of the Two Hernando Hospitals Brooksville is located in the "dead center" (Tr. 1290) of Hernando County. With good access to Citrus County via Route 41, it is convenient to both Hernando County residents and some residents of Citrus County. It reasonably projects, therefore, that 90 percent of its open heart/angioplasty volume will be from Hernando County with the remaining 10 percent from Citrus. Oak Hill is located in southwest Hernando County, closer to Bayonet Point than Brooksville. Oak Hill's primary service area is substantially the same as that part of Bayonet Point's that is in Hernando County. Oak Hill does not propose to serve Citrus County. Brooksville, then, is more centrally located in Hernando County than Oak Hill and proposes to serve a larger area than Oak Hill. Financial Feasibility (long-term) Brooksville has operated profitably since its bankruptcy. In its 1999 fiscal year, the first year out of bankruptcy, Hernando HMA earned a profit of $3 million. In fiscal year 200, Brooksville's profit was $6 million. OHS programs are generally very profitable. There is no OHS program in Florida not generating a profit. Brooksville's projected expenses and revenues associated with the program are reasonable. Schedule 5 in the Brooksville application contains projected volumes for OHS/angioplasty. The payer mix and length of stay were based on 1998 actual data, the most recent data for a full year available. The projected volumes are reasonable. The projected volumes are converted to projected revenues on Schedule 7. These projections were based on actual 1998 charges generated for both Hernando and Citrus County residents since Brooksville proposes to serve both. These averages were then reasonably projected forward. Schedule 7 and the projected revenues are reasonable. These projected volumes and revenues account for all OHS procedures performed in Hernando and Citrus Counties in 1998 even though effective October 1, 1998, the DRG procedure codes for OHS procedures were materially redefined. Thus, when Brooksville's schedules were prepared using 1998 data, only 3 months of data were available using the new DRG codes. Brooksville opted to use the full year of data since using a full year's worth of data is preferable to only 3 months. Similarly, the DRGs for angioplasty both as to balloon and with stent were re-classified. Again, Brooksville opted to use the full year's worth of data. Brooksville's expert explained the decision to use the full year's worth of data and the effect of the DRG reclassification on Brooksville's approach, "We've captured all the revenues and expenses associated with these open heart procedures and just because the actual DRGs have changed, doesn't . . . impair the results because both revenues and expenses are captured in these projections." (Tr. 1651). Schedule 8 includes the projected expenses. It included the health manpower expenses from Schedule 6 and the project costs from Schedule 1. The remaining operating expenses were based upon the actual costs experienced by all District 3 OHS providers generated from a publicly-available data source, and then projected forward. As to these remaining operating costs, consideration of an average among many providers is far preferable to relying on just one provider. Schedule 8 was reasonably prepared. It accounts for all expense to be incurred for all types of OHS and angioplasty procedures. It is based on the best information available when these projections were prepared and are based on 12 months of actual data. Even if the projections of the schedules are not precise because of the re-classification of DRGs, they contain ample margins of error. Brooksville's financial break-even point is reached if it performs 199 OHS and 100 angioplasty procedures. This low break-even point provides additional confidence that the project is financially feasible. Brooksville demonstrated that its proposed program will be financially feasible.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Agency for Health Care Administration enter a final order that grants the application of Citrus Memorial (CON 9295) and denies the applications of Oak Hill (CON 9296 )and Brooksville Regional (CON 9298). DONE AND ENTERED this 4th day of October, 2001, in Tallahassee, Leon County, Florida. DAVID M. MALONEY Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 4th day of October, 2001. COPIES FURNISHED: Diane Grubbs, Agency Clerk Agency for Health Care Administration 2727 Mahan Drive Fort Knox Building Three, Suite 3431 Tallahassee, Florida 32308-5403 William Roberts, Acting General Counsel Agency for Health Care Administration 2727 Mahan Drive Fort Knox Building Three, Suite 3431 Tallahassee, Florida 32308-5403 Michael J. Cherniga, Esquire Seann M. Frazier, Esquire Greenberg Traurig, P.A. East College Avenue Post Office Box 1838 Tallahassee, Florida 32302-1838 Stephen A. Ecenia, Esquire Rutledge, Ecenia, Purnell and Hoffman, P.A. 215 South Monroe Street, Suite 420 Tallahassee, Florida 32302-0551 James C. Hauser, Esquire Metz, Hauser & Husband, P.A. 215 South Monroe Street, Suite 505 Post Office Box 10909 Tallahassee, Florida 32302 John F. Gilroy, III, Esquire Agency for Health Care Administration 2727 Mahan Drive Fort Knox Building Three, Suite 3431 Tallahassee, Florida 32308-5403
The Issue The issues for determination in this case are whether the following statement was made by Respondent, AGENCY FOR HEALTH CARE ADMINISTRATION; whether the statement violates the provisions of Section 120.535, Florida Statutes; whether the statement constitutes a declaratory statement under Section 120.565, Florida Statutes; whether Petitioner, ALL CHILDREN'S HOSPITAL, INC., has standing to maintain this action; and whether Petitioner is entitled to attorney's fees and costs. The alleged agency statement which is at issue in this case is: The Agency for Health Care Administration takes the position that a shared service agreement may be modified, without prior approval of the Agency, as long as each party continues to contribute something to the program, and the shared service contract remains consistent with the provisions of Rule 59C-1.0085(4), Florida Administrative Code. In addition, the Agency takes the position that modifications to a shared service agreement do not require prior review and approval by the Agency.
Findings Of Fact Petitioner, ALL CHILDREN'S HOSPITAL, INC. (hereinafter ALL CHILDREN'S), is a medical facility located in St. Petersburg, Florida, which provides pediatric hospital care. Respondent, AGENCY FOR HEALTH CARE ADMINISTRATION (AHCA), is the agency of the State of Florida vested with statutory authority to issue, revoke or deny certificates of need in accordance with the statewide and district health plans. Intervenor, BAYFRONT MEDICAL CENTER (BAYFRONT), is an acute care hospital located in St. Petersburg, Florida. ALL CHILDREN'S and BAYFRONT are located adjacent to each other and are connected by a thirty-yard tunnel. In 1969, ALL CHILDREN'S began operation of a pediatric cardiac catheterization program. ALL CHILDREN'S pediatric cardiac catheterization program existed prior to the statutory requirement for a certificate of need to provide such service. Neither AHCA, nor its predecessor agency, Florida Department of Health and Rehabilitative Services, issued a certificate of need for ALL CHILDREN'S cardiac catheterization program. Since 1969, ALL CHILDREN'S has expended at least $500,000 on upgrading the cardiac catheterization program. Since 1970, ALL CHILDREN'S has operated a pediatric open heart surgery program. ALL CHILDREN'S open heart surgery program existed prior to the statutory requirement for issuance of a certificate of need to perform such service. Neither AHCA, nor its predecessor agency, Florida Department of Health and Rehabilitative Services (HRS), issued a certificate of need for ALL CHILDREN'S open heart surgery program. By letter dated May 13, 1974, HRS specifically advised ALL CHILDREN'S that modifications to the ALL CHILDREN'S open heart surgery program were not subject to agency approval. In May of 1973, ALL CHILDREN'S and BAYFRONT entered into a shared service agreement to provide adult cardiac catheterization services. In accordance with the shared service agreement, the actual catheterizations are performed in the physical plant of ALL CHILDREN'S and with equipment located on the ALL CHILDREN'S campus. BAYFRONT contributed to the adult cardiac catheterization shared service program by providing, inter alia, patients, management, medical personnel, and pre- and postoperative care. Beginning in 1975, BAYFRONT has also provided adult open heart surgery services through a joint program with ALL CHILDREN'S with the actual surgeries being performed at the physical plant on ALL CHILDREN'S campus. BAYFRONT contributed to the adult open heart surgery shared service by providing, inter alia, patients, management, medical personnel, and pre- and postoperative care. The shared service agreement between ALL CHILDREN'S and BAYFRONT to provide adult cardiac catheterization and open heart surgical services was in existence prior to the statutory requirement for a certificate of need to perform such services. Neither AHCA, nor its predecessor agency, Florida Department of health and Rehabilitative Services, issued a certificate of need to provide such services. The cardiac catheterization and open heart surgery program operated by ALL CHILDREN'S and BAYFRONT was "grandfathered" in because the program existed prior to the certificate of need requirement. Because no certificate of need was issued to ALL CHILDREN'S and BAYFRONT for its shared adult cardiac service program, no conditions have been imposed by AHCA on the operation of the program. "Conditions" placed on certificates of need are important predicates to agency approval and typically regulate specific issues relating to the operation of the program and the provision of the service such as access, location, and provision of the service to Medicaid recipients. The ALL CHILDREN'S and BAYFRONT cardiac shared services program is the only "grandfathered in" shared service arrangement in Florida, and is the only shared service arrangement operating without a certificate of need in Florida. An open heart surgery program is shared by Marion Community Hospital and Munroe Regional Medical Center in Ocala, Florida. The Marion/Munroe program operates pursuant to a certificate of need issued by AHCA. On December 22, 1995, AHCA published a notice of its intent to approve a certificate of need for a shared pediatric cardiac catheterization program between Baptist Hospital and University Medical Center in Duval County, Florida. BAYFRONT has applied for, but has not yet been issued, a certificate of need to perform cardiac catheterization services independent of the shared services arrangement with ALL CHILDREN'S. The agency receives hundreds of inquiries each year requesting information and guidance from health care providers regarding the certificate of need application process and other requirements of the certificate of need program. On more than one occasion ALL CHILDREN'S and BAYFRONT have inquired either orally or in letters to the agency regarding whether certain changes in their adult cardiac shared services program would require agency approval through a certificate of need application. In response to a 1990 written inquiry from ALL CHILDREN'S and BAYFRONT regarding modifications to the shared services agreement, the agency (then HRS) by letter dated September 18, 1990, stated in pertinent part that "the alterations you propose still constitute shared services." The agency response went on to state that it is therefore "...determined that they (the proposed changes) have not altered the original intent." On January 31, 1991, Rule 59C-1.0085(4), Florida Administrative Code, governing shared service arrangements in project-specific certificate of need applications was promulgated. The rule provides: Shared service arrangement: Any application for a project involving a shared service arrangement is subject to a batched review where the health service being proposed is not currently provided by any of the applicants or an expedited review where the health service being proposed is currently provided by one of the applicants. The following factors are considered when reviewing applications for shared services where none of the applicants are currently authorized to provide the service: Each applicant jointly applying for a new health service must be a party to a formal written legal agreement. Certificate of Need approval for the shared service will authorize the applicants to provide the new health service as specified in the original application. Certificate of Need approval for the shared service shall not be construed as entitling each applicant to independently offer the new health service. Authority for any party to offer the service exists only as long as the parties participate in the provision of the shared service. Any of the parties providing a shared service may seek to dissolve the arrangement. This action is subject to review as a termina- tion of service. If termination is approved by the agency, all parties to the original shared service give up their rights to provide the service. Parties seeking to provide the service independently in the future must submit applications in the next applicable review cycle and compete for the service with all other applicants. All applicable statutory and rule criteria are met. The following factors are considered when reviewing applications for shared services when one of the applicants has the service: A shared services contract occurs when two or more providers enter into a contractual arrangement to jointly offer an existing or approved health care service. A shared services contract must be written and legal in nature. These include legal partnerships, contractual agreements, recognition of the provision of a shared service by a governmental payor, or a similar documented arrangement. Each of the parties to the shared services contract must contribute something to the agreement including but not limited to facilities, equipment, patients, management or funding. For the duration of a shared services contract, none of the entities involved has the right or authority to offer the service in the absence of the contractual arrangement except the entity which originally was authorized to provide the service. A shared services contract is not transferable. New parties to the original agreement constitute a new contract and require a new Certificate of Need. A shared services contract may encom- pass any existing or approved health care service. The following items will be evaluated in reviewing shared services contracts: The demonstrated savings in capital equipment and related expenditures; The health system impact of sharing services, including effects on access and availability, continuity and quality of care; and, Other applicable statutory review criteria. Dissolution of a shared services contract is subject to review as a termination of service. If termination is approved, the entity(ies) authorized to provide the service prior to the contract retains the right to continue the service. All other parties to the contract who seek to provide the service in their own right must request the service as a new health service and are subject to full Certificate of Need review as a new health service. All statutory and rule criteria are met. By letter dated October 22, 1993, ALL CHILDREN'S and BAYFRONT inquired again of the agency regarding modifications of the adult inpatient cardiac shared service program. AHCA did not respond to the 1993 inquiry, and AHCA ultimately considered the inquiry withdrawn. By letter dated February 24, 1995, BAYFRONT made further inquiry of the agency, and requested agency confirmation of the following statement: The purpose of this letter is to confirm our understanding that the Agency for Health Care Administration ("Agency") takes the position that the shared services agreement between Bayfront and All Children's may be modified, without prior approval of the Agency, as long as each party continues to contribute something to the program, and that the shared services contract remains consistent with the provisions of Rule 59C-1.0085(4) F.A.C. By letter dated March 16, 1995, the agency made the following reply to BAYFRONT from which this proceeding arose: The purpose of this letter is to confirm your understanding of this agency's position with reference to the reviewability of a modifica- tion of the shared services agreement between Bayfront Medical Center and All Children's Hospital set forth in your February 24, 1995 letter.
The Issue The issue is whether Winter Haven Hospital, Inc.`s application for a certificate of need to establish an open heart surgery program at its health care facility in Winter Haven, Florida should be granted.
Findings Of Fact Based upon all of the evidence, the following findings of fact are determined: Background On September 26, 1988 respondent/applicant, Winter Haven Hospital, Inc. (WHH), filed its application for a certificate of need (CON) with respondent Department of Health and Rehabilitative Services (HRS), seeking authorization to establish an adult open heart surgery program at its facility located at 200 Avenue F, Northeast, Winter Haven, Florida. According to the application, WHH proposed to implement an open heart surgery program in an existing operating room with a project expenditure of $714,000. After reviewing the application, HRS found certain items to be either incomplete or missing and requested WHH to furnish such data by November 20, 1988. After such items were timely submitted, HRS deemed the application to be complete on November 14, 1988. A further review of the application followed, and, despite noting at least ten deficiencies in the application, HRS issued its state agency action report and letter of intent to grant the application on January 13, 1989. This preliminary action was followed by a notice of intention to grant the CON published in the Florida Administrative Weekly on February 3, 1989. After notice of HRS's preliminary decision was published, petitioner, Hillsborough County Hospital Authority d/b/a Tampa General Hospital (TGH), a 947-bed acute care hospital located at Davis Island, Tampa, Florida, filed a petition for formal hearing challenging the proposed agency action. A similar petition was also filed by petitioner, Lakeland Regional Medical Center (LRMC), a 897-bed acute care hospital in Lakeland, Florida. Both petitioners contended that WHH's request, if approved, would adversely affect their existing open heart surgery programs in contravention of state law and agency rules. The parties have stipulated to the standing of petitioners. The Omissions Process When WHH filed its application with HRS on September 26, 1988, it inadvertently failed to submit (a) one page of the balance sheet of the financial statements and (b) the opinion letter of the certified public accounting firm that prepared the financial statements. During the initial review of the application, HRS noted that the financial statements were incomplete and requested WHH to file such data during the so-called omissions process. This process is authorized by statute and rule and affords an applicant the opportunity to supply missing or incomplete information after the initial application has been filed. Pursuant to HRS's request, WHH supplied the two missing documents, and other requested information, by the specified due date. After receipt of this data, the agency deemed the application to be complete. According to agency personnel, when the application was filed HRS had a policy of permitting this type of information to be routinely filed during the omissions process. Shortly thereafter, HRS changed its policy and required complete financial statements to be filed with the initial application. If complete financial statements were not initially filed, the application was deemed to be incomplete and rejected without further review or opportunity to supply the missing data. However, this policy was recently ended, and the agency has now reverted to the policy in effect at the time WHH filed its application. Thus, the filing of such data by WHH during the omissions process was consistent with then existing agency policy as well as HRS's governing rules and statutes. The Parties The Department of Health and Rehabilitative Services is the state agency charged with the responsibility of administering the Health Facility and Services Development Act, also known as the Certificate of Need (CON) law. In this proceeding, and consistent with its proposed agency action, HRS supported WHH's application. Winter Haven Hospital, Inc. is a non-profit community hospital licensed for 579 long-term and psychiatric beds. Of that total, 259 are designated as medical/surgical beds while 36 are classified as intensive care unit (ICU) beds. Established more than fifty years ago, WHH has two campuses, a 160-member medical staff with a broad range of medical specialties, and provides all major medical services with the exception of open heart surgery, comprehensive burn treatment, and Level III neonatal intensive care. In August 1988 WHH opened a cardiac catherization laboratory with the intention of later adding an open heart surgery unit. The facility treats Medicaid and Medicare patients and indigents and has contracts with local health management and preferred provider organizations and other groups. Although not disclosed in the letter of intent, WHH is a subsidiary corporation of Mid-Florida Medical Services, Inc., a holding company for WHH and various other affiliated entities. Hillsborough County Hospital Authority is a public agency created in 1980 by the Florida Legislature for the express purpose of operating Tampa General Hospital. Licensed for 947 beds, the facility serves as a major teaching and tertiary referral hospital providing a complete range of services twenty four hours per day, including open heart surgery. In addition, TGH is the primary teaching hospital for the University of South Florida medical school. By law, TGH is required to provide indigent care. Lakeland Regional Medical Center operates a large, regional referral acute care facility at 1324 Lakeland Hills Boulevard, Lakeland, Florida. Of its licensed 897 beds, approximately 700 are licensed medical/surgical and ICU beds. LRMC has historically provided a wide range of acute care services, including open heart surgery and diagnostic and therapeutic cardiac catherization, and is a major tertiary referral center. According to Health Care Cost Containment Board data, LRMC treats twice as many patients, including those acutely ill, as does WHH and has a substantially larger operating budget. District 6 Open Heart Programs The facilities of WHH, LRMC and TGH are located in district 6, a geographic area composed of Hillsborough, Polk, Manatee, Hardee and Highlands Counties and artificially created by HRS for, among other things, the purpose of determining need for new or additional health facilities within that area, including open heart surgery programs. In addition to TGH and LRMC, there are four other existing adult open heart surgery programs in district 6. These include St. Joseph's Hospital in Tampa, a well established program, and Manatee Memorial Hospital (Bradenton), L. W. Blake Hospital (Bradenton) and University Community Hospital (Tampa). The latter three programs opened in February 1988, March 1989 and June 1989, respectively. None have intervened in this proceeding. When WHH's application was reviewed, a seventh open heart surgery program within the district (Humana- Brandon) had been preliminarily approved, but that approval was subsequently withdrawn. Therefore, for purposes of this proceeding, Humana- Brandon will not be considered as an existing or approved program. According to the state agency action report made a part of this record, the programs and number of open heart procedures performed during the twelve month period ending June 30, 1988 were as follows: Program Procedures St. Joseph's 933 TGH 1230 University Community Hospital 0 L. W. Blake 0 Manatee Memorial 70 LRMC 503 Total 2736 For the twelve months ending September 30, 1988, there were 2,672 procedures performed by district 6 programs, or a decline of 64 procedures when compared to the total performed during the year ending June 30, 1988. Of that amount, 1614 procedures were performed on district 6 residents while 1058 procedures were performed on non-district 6 residents. The latter number included 541 residents from district 5 of whom 473 were Pasco County residents. The service area of TGH's open heart surgery program encompasses a nine-county area with a range of seventy miles. It receives 42% of its open heart patients from district 6, with 34% from Hillsborough County and 5% from Polk County. As to the patients from outside district 6, TGH receives 33% from district 5 and 14% from district 3. Approximately 75% of LRMC'$ open heart surgery patients are Polk County residents. Indeed, of 496 Polk County residents having open heart surgery during the year ending September 30, 1988, approximately 73% of those residents had surgery at LRMC. The remainder used facilities outside the county, such as TGH. In 1986 approximately 200 patients came to LRMC from locations outside of the City of Lakeland but within Polk County, and some 67 cases per year have been referred by WHH to LRMC. The service area of WHH is not as clearcut. In its application, WHH designated all of Polk County as its primary service area, and Highlands and Hardee Counties as the secondary service area for its proposed program. However, in its answers to interrogatories, WHH represented that its primary service area was eastern Polk County. At hearing, the service area was redesignated as eastern Polk County, Hardee County and Highlands County. Since over 90% of WHH's patients reside in Polk County, it is found that Polk County is its primary service area. For the year ending September 30, 1988 one hundred twenty-five residents of Highlands County had open heart surgery. Only 8% used LRMC while 74% went to a facility in Orlando. For the same time period, sixteen Hardee County residents had open heart surgery, of whom approximately 63% used LRMC's facility. Applicable Statutory and Rule Criteria By prehearing stipulations the parties agreed that, except for the criteria contained in Subsections 381.705(1)(g), (j), and (2)(e), Florida Statutes (Supp. 1988), all other relevant statutory criteria must be satisfied. These include subsections 381.705(1)(a)-(f), (h) and (i), (k)-(n), and (2)(a)- (d). 1/ In addition, the criteria in Rule 10-5.011(1)(f), Florida Administrative Code (1987) are in issue. Of special concern in this proceeding is the appropriate manner in which to satisfy the requirements of subpart 11.a.(I) of the rule. To demonstrate compliance or noncompliance with the criteria, the parties presented a number of expert witnesses. As might be expected, the testimony on this issue is sharply conflicting. In resolving these conflicts, the undersigned has accepted the more credible and persuasive testimony on the issue, and that testimony is embodied in the findings below. Subsection 381.705(1)(a), F. S. - The first statutory criterion requires that HRS consider "the need for the health care facilities and services . . . being proposed in relation to the applicable district plan arA state health plan." In this regard, the parties have offered into evidence copies of the relevant portions of the two plans. The 1988 District VI Health Plan has application in this proceeding. That plan requires, among other things, that (a) all existing programs in a particular service area must be operating at 350 procedures per year, (b) the proposed unit must be able to reach a level of 200 procedures within three years, and (c) the proposed program cannot reduce the average utilization in the applicant's service area below 350 procedures per year. In addition, the plan expresses a preference for applicants which have an historical commitment to the provision of indigent care and those hospitals with documented status as major regional referral centers. Finally, the plan expresses a preference for applicants from subdistricts not having existing and/or approved programs. Notwithstanding WHH's contention that the foregoing objectives apply only to comparatively reviewed applications, it is found that these objectives must be taken into account in determining whether the proposal is consistent with the plan. The evidence reflects that not all of the existing programs in the service area are operating at 350 procedures per year. Indeed, University Community Hospital, L. W. Blake and Manatee Memorial Hospital are operating at substantially below that number. The record also indicates that the applicant has not reasonably demonstrated that it will reach a level of 200 procedures within three years. Further, unless 700 procedures per year can be generated by LRMC and WHH, which is highly questionable, the requirement that the new program not reduce average utilization in the applicant's service area (Polk County) below 350 will not be met. As to the requirement that an applicant have a historical commitment to the provision of indigent care, WHH's historical commitment, while substantially less than some providers such as TGH, is marginally sufficient to satisfy this requirement. Next, even though the district is not apportioned into subdistricts for the purpose of determining open heart surgery program need, it is noted that WHH's proposed facility would lie within fifteen miles of LRMC. Finally, WHH is considered a community hospital rather than a major regional referral center and thus it falls short on that objective. Even if WHH was a step above a community hospital, it must still be recognized that open heart surgery is a specialized tertiary service which should be regionalized and performed in a limited number of institutions. Therefore, it is found that the proposal is inconsistent with the local health plan. Chapters 4 and 5 of the state health plan contain various objectives and goals for specialized services such as open heart surgery programs. Goal 1 of chapter 4 of the plan establishes an objective of developing "acute-care resources in quantity and mix which appropriately meet population needs in the most cost-efficient manner." Goal 4 of chapter 5 provides an objective of insuring "the appropriate availability of cardiac catherization and open-heart services at a reasonable cost." In addition, objective 4.2 of chapter 5 provides that its goal is "to maintain an average of 350 open heart surgery procedures per program in each district through 1990." The parties have not relied upon or cited any other applicable portions of the state plan. Since the existing programs within the district are not operating at capacity, the approval of the application would be inconsistent with goal 1 of chapter 4 which provides that acute-care resources should be developed in the most cost-efficient manner. The evidence further supports a finding that as to goal 4 of chapter 5, the approval of another program within the district will drive up costs at existing programs. The bases for this finding is set forth in findings of fact 43-46. Thus, the proposal is inconsistent with the plan in this respect. Finally, the proposal is found to be consistent with objective 4.2 of chapter 5 since an average utilization of 350 procedures per program should be maintained through 1990 even with the addition of a new program. Given the above two shortcomings, it is found that the proposal is inconsistent with the state plan. Subsections 381.705(1)(b), (2)(a),(b) and (d), F.S.- These criteria require that HRS consider the "availability, quality of care, efficiency, appropriateness, accessibility, extent of utilization, and adequacy of like and existing health care services and hospices in the service district of the applicant," whether less costly and more efficient and appropriate services are available, and whether patients will experience "serious problems in obtaining inpatient care of the type proposed, in the absence of the proposed new service." To put these criteria in perspective, it is noted that when the application was reviewed by HRS, there were four existing open heart surgery programs within the district. At time of hearing, two other approved programs had commenced operations. The areas with highest population densities, such as Lakeland, Tampa and Bradenton, all have open heart programs in the vicinity. Thus, the existing programs in the district are geographically distributed consistent with the relative population distribution within the district. There are no programs in either Hardee or Highlands Counties, but they have a very small population base. Indeed, HRS acknowledged in the state agency action report that a new program at WHH would not enhance access to residents of those two counties. According to traffic engineering studies introduced into evidence, open heart surgery services currently are available to 90% of the population of district 6 within a two hour drive time, as required by subparagraph 4.a. of rule 10- 5.011(1)(f). The City of Lakeland is only fifteen miles, or thirty minutes drive time, from Winter Haven. Therefore, the addition of a new program in Winter Haven will not materially enhance geographic accessibility. Further, there is no demonstrated accessibility problem by residents of the district. The existing facilities in the district have sufficient excess capacity to perform additional open heart surgery cases. This projected growth can be accommodated without any additional capital expenditures. Indeed, greater utilization of the existing programs would be a less costly alternative to the establishment of a new program at WHH. Also, there is no evidence that cardiac patients in the district will experience serious problems in obtaining open heart surgery services in the absence of a program at WHH. Therefore, it is found that the applicant has failed to show that the existing programs are inadequate or unavailable, that residents have an accessibility problem to existing facilities, that the quality of care, efficiency, utilization and appropriateness of other programs are less than satisfactory, that less costly, more efficient alternatives are not available, that patients will experience a serious problem in obtaining care in the absence of the proposed new service, or that existing facilities are being used in an inappropriate or inefficient manner. Subsections 381.705(1)(c) and (h), F.S. - These two criteria go hand in hand and require HRS to consider "the ability of the applicant to provide quality of care and the applicant's record of providing quality of care," and whether the applicant has sufficient resources, including manpower, to accomplish and operate the project. Petitioners suggest that WHH will be unable to offer adequate quality of care because the new program will not attract a sufficient number of patients and because of a lack of adequate planning. They also contend that WHH will not be able to recruit and hire the necessary personnel to support its program. To ensure quality of care, WHH intends to enter into a contract with The Watson Clinic in Lakeland to provide a surgical team. Since those physicians are performing surgeries at LRMC, WHH proposes that the team would split its time between the two facilities. The team now performs more than 500 procedures per year at LRMC. Thus, WHH asserts that the team can easily maintain its proficiency even if it does not meet its projected level of procedures. For that matter, WHH points to a suggested standard by the American College of Surgeons (ACS) that 150 procedures per year is a reasonable standard, a goal that WHH obviously believes it can reach. It goes on to contend that the surgical team, and not the hospital, performs the procedure, and that as long as the combined efforts of the surgical team surpasses the 500 threshold, the quality of care will be maintained. As to the resources and manpower needed to accomplish the project, WHH projected in its application the need to hire two scrub technicians, two registered nurses and one perfusionist for a single surgical team in one operating room. However, it projected no incremental staffing needs for additional ICU nurses or technicians. The applicant concedes it may "encounter some difficulty in hiring the necessary personnel" for its program but points to a good track record in hiring other personnel and the fact that the perfusionist may be provided by the surgical team from The Watson Clinic. It further posits that aside from the five positions, it is unlikely that any other personnel must be hired. This is because it already has some experienced personnel in the employ of the hospital who can be transferred to the open heart surgery program and others can be readily trained. The evidence establishes the fact that there is a direct relationship between the volume of open heart surgery performed at a hospital and the quality care afforded open heart surgery patients. In other words, as the volume of cases increases, mortality rates generally decrease. As demonstrated in studies introduced by LRMC witness Luft, hospitals performing between 20 and 100 coronary artery bypass graft procedures per year had a risk adjusted mortality rate of 5.2%. This rate decreased to 4.1% for hospitals with annual volumes of between 201 and 350 procedures, and dropped even farther for facilities performing in excess of 350 procedures per year. This measure has proven to be accurate at LRMC, for as the volume at the hospital has increased, mortality has decreased. The above statistics are accepted as being a more reliable measure than the ACS standard of 150 procedures per year suggested by WHH. The more credible evidence reflects that WHH will not be able to perform 200 adult open heart surgery procedures annually within three years of initiating its program. This level could only be achieved if WHH gains a substantial share of Highland County's market. However, the vast majority of Highland patients are currently migrating out of the district to a church sponsored facility in Orlando. This suggests that these patients are motivated by factors other than proximity since they are already bypassing the closest facility, LRMC. In addition, LRMC's cardiovasular surgeons, who WHH plans to use, receive no referrals from that county, and only 4% of LRMC's total hospital discharges come from that county. Further, there is no evidence that WHH would be able to change existing referral patterns. Finally, although WHH projected 164 procedures in its first year, 206 the second year and a minimum of 200 by year three, it made no credible market share analysis to support those projections. Indeed, existing use rates of Polk County residents, which are another good indication of the future demand for a new service, belie WHH's projections and suggest that only 30 additional open heart surgery cases will be generated in 1990 beyond current volumes. This is consistent with the fact that LRMC has experienced the smallest growth in open heart surgery volume of any district 6 program over the last three years. It is noted that HRS projects a growth in volume of less than 200 cases by 1990 for the entire district with much of that growth being accounted for at the new programs. A more credible and reasonable projection shows that by 1993 there will be 2,700 open heart procedures available for the six existing facilities in district 6, which is only 28 procedures more than performed by the four operational programs in district 6 during the year ending September 30, 1988. It should be noted here that WHH's recently initiated cardiology program has been facing slow growth, market saturation and potential decline. All parties recognize the critical shortage of nursing personnel that exists nationally, and particularly in the areas of cardiovascular surgery and intensive care. Even today, LRMC has a number of nursing vacancies, including vacancies in its intensive care unit, despite having a full time recruiter and an aggressive recruiting program. Thus, LRMC's fear of losing skilled personnel to WHH should the application be granted are well-founded, particularly since it has lost staff to WHH in the past. In addition, qualified perfusionists are extremely difficult to hire. Indeed, The Watson Clinic has been attempting, unsuccessfully, to hire an additional perfusionist for the LRMC program for almost a year. Current salaries for a perfusionist range from $70,000 to as high as $100,000 per year. This contrasts with the unrealistic projection of WHH that it could hire a perfusionist for $40,000 per year. A back-up open heart surgery operating room fully equipped and staffed will be necessary in order for WHH to assure patient safety and to be able to provide angioplasties. Additional ICU space is also required. Because WHH has made no provision for an additional operating room or ICU space, and the necessary related staffing, it is apparent that WHH has not adequately planned and demonstrated the intensive care capacity necessary to serve open heart surgery patients. The applicant must have more than one surgical team so as to allow for vacations, sick days, 24-hour coverage, and emergencies. However, table 11 of the application reflects that WHH intends to provide for only one assembled surgical team. With the proposed limitation of one operating room and one surgical team, WHH would not be able to handle emergency cases that arise during normal hours when a scheduled procedure is in progress. It should be noted here that The Watson Clinic now employs only three cardiovascular surgeons. One of those surgeons is leaving, and the clinic has been attempting, unsucessfully so far, to recruit another surgeon. Until a replacement is recruited, the clinic will have only two surgeons who ostensibly would work at both WHH and LRMC if the application was approved. The application does not provide for the additional intensive care staff necessary to care for 200 open heart patients per year. A 1:1 patient to nurse ratio for the first twenty-four hours following surgery is desirable. Even if WHH utilized a less desirable 2:1 ratio, at least four additional intensive care nurses would be required to handle the incremental patient load. During the start-up period for a new open heart surgery program, a hospital cannot be expected to perform the number of cases necessary to achieve the desired low mortality rates. This reality has been taken into acount by HRS by giving new programs three years in which to reach the 200 procedure threshold. Even with this grace period, the evidence supports a finding that WHH will not be able to reach that threshold within the required three year time period. Given this fact, and the shortcomings in applicant's planning for staff and equipment, it is found that WHH has failed to demonstrate that it can ensure the requisite quality of care required by the law. It is further found that applicant has failed to demonstrate that it will have the necessary resources, including manpower, to accomplish and operate the project. Subsections 381.705(1)(d) and (2)(c), F.S. - These criteria require a consideration of alternatives, including sharing arrangements, to the proposal under review. Except for existing facilities, there are no alternatives to open heart surgery. In this regard, HRS determined that "less costly alternatives to the proposal would be greater utilization of the existing open heart surgery programs in District VI." As noted in finding of fact 27, the existing facilities have sufficient excess capacity to handle the projected growth in the district. Although LRMC has offered to explore a cooperative, shared open heart surgery program with the applicant, WHH officials have so far declined. The Watson Clinic, from which the surgical team will be obtained, has also indicated a willingness to support such an arrangement. In light of WHH's unwillingness to consider this alternative, it is found that the statutory criteria have not been ftet. Subsection 381.705(1)(i), F.S. - An applicant for a CON is required to demonstrate the short and long-term financial feasiblility of the project. In this case, the long-term financial feasibility of the project is dependent in large measure upon the reasonableness of WHH's projections. The pro forma financial projections contained in the application are flawed and unreliable. This was borne out by WHH's own financial expert who rejected four of the five assumptions underlying the pro formas. To overcome these deficiencies, at hearing WHH's expert offered a new financial analysis which was substantially different than the pro formas submitted with the application and reviewed by HRS prior to deeming the application complete. As such, the new analysis constituted an impermissible amendment to the application. Even if it was not construed to be an amendment to the application, the projected utilization of 206 procedures by the second year of operation, and upon which the financial projections are premised, was not supported by the evidence. Because of this, it is found that applicant has not demonstrated that the project is financially feasible in the long term. Subsection 381.705(1)(1), F. S. - This criterion requires HRS to consider the "probable impact of the proposed project on the costs of providing health services proposed by the applicant". The statute also speaks of competition and its effect on the ability of the applicant's competitors to promote quality assurance and cost-effectiveness. Initially, it is noted that in recent years there has been increasing competition for open heart patients in district 6. This is because three new programs have recently become operational. In addition, a new program was just authorized in Pasco County which will reduce the inflow of Pasco County residents into district 6. Most of the Pasco County patients were utilizing the facility of TGH. The authorization of another program will inevitably draw patients from the existing facilities and the expected loss will serve to increase costs both to patients and hospitals. Although WHH intends to charge lower fees for open heart patients than do LRMC and TGH, HRS concedes that this would not likely have the effect of causing those providers to decrease their charges. At the same time, the competition between LRMC and WHH for the skilled personnel necessary to operate an open heart surgery program would have the effect of driving up costs at both institutions. If approved, the application would directly and adversely impact LRMC. This is because approximately 75% of LRMC's open heart patients are residents of Polk County. The historical overall hospital primary Service area of WHH, which is projected by WHH to mirror the primary service area of its open heart surgery program, directly overlaps LRMC'S primary service area for open heart surgery. In addition, cardiologists and surgeons at LRMC currently receive referrals of surgical, angioplasty and diagnostic cardiac catherization cases from Winter Haven physicians, and those referrals will likely be reduced with the approval of a new program at WHH. This is supported by the fact that when WHH opened its cardiac catherization laboratory in August 1988, LRMC experienced a substantial drop in cases referred from Winter Haven physicians. Further, if WHH achieves its projected level of 206 cases by the second year of operation, LRMC would likely lose 133 open heart referrals and 128 angioplasty cases. This in turn would result in an annual financial loss of $1,652,640 for LRMC. If the number of procedures reached 350, LRMC could likely lose 226 cases per year, a number that WHH's own expert conceded was reasonable given the fact that some 200 patients per year come to LRMC from points outside of Lakeland but within Polk County. Given LRMC's declining operating margins in recent years, and a projected operating margin of only $300,000 in 1990, LRMC would be forced into a deficit position thereby adversely impacting its current level of services, quality of care and ability to provide indigent care. Tampa General Hospital's indigent load is substantial, and for the current fiscal year it anticipates providing $45 million worth of indigent care net of any reimbursement. Indeed, approximately 43% of TGH's patients are in the medically needy category, and it projects a deficit in 1990 of $4.3 million. To offset these losses, TGH relies on revenues from paying patients, of which the open heart surgery program is a major source. In 1988, this source provided 15% of its net patient services revenue. The approval of a program at WHH would further reduce the availability of open heart patients to TGH. If a new program caused only a 10% loss of open heart surgery patients, TGH's gross service revenue would decrease by over $4 million per year. Even the 5% to 6% loss that WHH predicts will occur would equate to a not insubstantial sixty-two patients per year. Accordingly, it is found that the introduction of a new program at WHH would have an adverse impact on TGH, although not as profound as on LRMC. Subsection 381.705(1)(n), F. S. - This subsection requires HRS to consider the applicant's past and proposed provision of health care services to Medicaid patients and the medically indigent. Recent data indicates that only 2.7% of WHH's total patient days were Medicaid days. Also, its total charity uncompensated care was $410,176. When the Hill-Burton compulsory contribution is excluded, WHH's net voluntary indigent and uncompensated care was only $133,950, which was two-tenths of one percent of gross revenue for the year. This contrasts with TGH's total uncompensated care in 1987 of 4.5% of gross revenue. According to Health Care Cost Containment Board data for 1988, WHH's total uncompensated care was approximately one-tenth the amount incurred by LRMC during the same time period. Also, the applicant has had a policy of requiring major surgery patients to demonstrate financial capability before being admitted. Even so, WHH has represented to HRS that it intends to dedicate 2% of open heart services to Medicaid patients which is comparable to the level historically reported by existing providers in the district. Given this representation, which was not contradicted, it is found that the application is in compliance with this criterion. The remaining statutory criteria - Petitioners have not seriously contested WHH's ability to satisfy the remaining statutory criteria. It is specifically found that the remaining relevant statutory criteria have been satisfied. To the extent the rule criteria, except rule 10-5.011(1)(f), apply, they are also deemed to have been satisfied but only where the comparable statutory criteria have been met. Rule 10-5.011(1)(f), F. A. C. - This rule sets forth additional criteria against which applications for open heart surgery programs are evaluated. Of some significance is the admonition in subparagraph 2. which states that "(t)he Department will not normally approve applications for open heart surgery programs in any service area unless the conditions of Sub- paragraphs 8. and 11., below, are met." Since WHH does not rely on "not normal" circumstances, a major controversy has arisen over the manner in which MRS has deemed subpart 11.a.(I) to have been satisfied. To determine the numeric need for new programs within a service area, HRS utilized the formula embodied in subparagraph 8. of the rule. Under this formula, a use rate was calculated for the service district based upon the number of open heart surgery procedures per 100,000 population for the year ending June 30, 1988. The use rate was then applied to the projected population for the horizon year of 1990, the year the program is expected to begin. This calculation produced a projected number of 2,914 procedures for 1990. After dividing that number by 350, MRS determined that 8.3 programs were needed in the district by 1990. Since the district already has six existing or approved programs, which must be subtracted from the projected need, the formula produced a net need of two additional programs. According to MRS's expert, the formula calculation merely provides an opportunity, and not a requirement, for MRS to approve an additional program since the applicant's conformity with other rule and statutory criteria must also be considered. It should be noted that the rule projects a need on a district-wide basis and has no provision for projecting the number of cases within various geographic areas of the district such as the service area defined in WMM's application. In this regard, WHH made no claim that it would attact patients from anywhere in district 6 other than Polk, Mardee and Highlands Counties. Subparagraph 11. of the rule reads in part as follows: There shall be no additional open heart surgery programs unless: the service volume of each existing and approved open heart surgery program within the service area is operating at and is expected to operate at a minimum of 350 adult open heart surgery cases per year . the conditions specified in Sub- paragraph 5.4, 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 surgery procedures annually for adults . . . The above rule was adopted in substantially its present form in February 1983. Under the plain language in subparagraph 11.a., even if a numeric need is shown, a new program shall not be established unless each existing and approved program within the district is operating at and is expected to operate at a minimum of 350 procedures per year. The agency's expert acknowledged that the plain language of the rule requires that each existing and approved program be operating at the 350 threshold before a new program may be approved. She also acknowledged that if the words "and approved" were not in subpart 11.a.(I), the agency would interpret the provision in the manner suggested by petitioners. Nonetheless, HRS interprets the rule as requiring that each existing and approved program must in the future maintain an average of 350 procedures if a new program is approved. No determination is made as to whether the existing programs are currently averaging 350 procedures annually. According to HRS's expert, this interpretation is based upon a reading of the entire subparagraph 11. Applicant's expert, who was formerly in charge of HRS's CON program, also supported the agency's practice of "averaging" and concluded that subparagraph authorized this interpretation. Even so, the word "averaging" is not found in any provision within subparagraph 11. In addition, the proponents of the averaging policy rely upon another portion of the rule to support their position. More specifically, they rely heavily upon subparagraph 7. of the same rule which provides that "(t)he provision of open heart surgery in the service area shall be consistent with the needs reflected in the local health plan and the Florida State Health Plan." One objective of the state health plan is to maintain an average of 350 procedures per program in the district through 1990. It is noted, however, that the state health plan applicable to this proceeding was adopted more than two years after the rule in question became effective, and thus could not have supported HRS's interpretation during the rule's first two years of operation. Moreover, that objective is directly at odds with the provisions in subpart 11.a.(I). Finally, the proponents argue that if the rule is interpreted in the manner suggested by LMRC and TGH, a new program could never be authorized if a district had an approved program since an approved program is not yet operational and obviously could not achieve the 350 threshold. They argue that such a construction would be illogical and absurd. However, it is noted that the rule provides that a new program can be authorized by HRS if not normal circumstances are shown even if the 350 threshold is not being satisfied. Indeed, HRS has granted at least three open heart CONs based on not normal circumstances. In November 1982 HRS was in the process of considering changes to the rules pertaining to CON applications for both cardiac catherization laboratories and open heart surgery programs. In response to a staff suggestion, HRS amended its cardiac catherization laboratory rule by changing the existing utilization provisions to require that an average of 600 adult catherizations be used as a utilization threshold for the review of applications rather than a requirement that each laboratory in the district be performing 500 adult catherizations. This amendment was made because HRS recognized that by using the word "average", the authorization of new laboratories would "not be impeded by a few or even one laboratory which is operating below the required minimum". In contrast, however, HRS chose not to amend its open heart rule to make a corresponding change. This was perhaps due to the fact that HRS initially interpreted the open heart rule to mean what it literally says and early on denied at least one application because each existing program in the service district was not performing 350 or more procedures per year. Expert testimony established good health planning reasons why the rule should be applied as written and why the incipient policy being used by HRS is improper. Given the undisputed relationship between the quality of an open heart surgery program and its volume, it is gold health planning to allow newly approved providers to become operational and reach the 350 procedure level as soon as possible and before new programs are authorized. If the 350 averaging procedure was used, new programs could be approved even though there were existing programs in the area, as here, maintaining an annual volume substantially below 350 procedures. The inevitable result would be to drive down the utilization in most or all of the programs. Indeed, HRS undertook no formal analysis in this proceeding to determine if the approval of a new program would force the utilization rate of any existing provider below the 350 threshold. In the absence of not normal circumstances, it is found that the provisions of subpart 11.a.(I) have not been met. Amendments or Updates? At issue in this proceeding is the admissibility of certain information proffered by WHH at hearing which was not contained in the original application. This includes (a) certain pro forma financial projections and (b) proposed changes to the staffing and equipment. These are discussed in greater detail below. It should be noted here that any changes to facilities, beds or staffing outlined in the application would be a "significant" amendment to the proposal from a health planning perspective as it would change the projected costs of the operation in both the long-term and short-term. Moreover, HRS's expert agreed that WHH is bound by the projections in the application and omissions response. The original application contained pro forma financial projections to justify the financial feasibility of the project. This is the same "detailed financial projection" that is statutorily required to be filed with the application. At hearing, WHH introduced into evidence, subject to petitioners' objections, new pro formas to demonstrate that the program would be financially feasible. This new analysis was substantially different than the pro formas submitted to HRS by WHH and was not reviewed by HRS prior to deeming the application complete. In the application reviewed by HRS, WHH represented that it intended to hire five additional personnel, including two scrub technicians, two registered nurses, and one perfusionist for a single surgical team. At hearing, WHH presented several proposed changes in its staffing and equipment plans. First, WHH suggested that The Watson Clinic would supply the perfusionist and certain other personnel for its surgical team, although it projected no costs for those personnel. Secondly, WHH suggested it could equip and staff a back-up operating room and could train surgical and ICU nurses currently employed at WHH to become proficient in the care of open heart patients, rather than hiring additional nurses. Again, no additional costs were submitted with these new proposals. These changes were not reviewed by HRS prior to deeming the application complete. The applicant was made aware that its proposal did not provide for adequate facilities, beds, or staffing prior to the filing of its application. This advice was conveyed to WHH by its own consultant in September 1988. For whatever reason, at that time WHH chose not to adopt the more costly recommendation of its consultant.
Recommendation Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED that the application of Winter Haven Hospital, Inc. for a certificate of need to authorize the establishment of an open heart surgery program be DENIED. DONE and ORDERED this 7th day of December, 1989, in Tallahassee, Leon County, Florida. DONALD R. ALEXANDER 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 7th day of December, 1989.
