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 Whether there is need for a new Pediatric Heart Transplant program in Organ Transplant Service Area (OTSA), 4 and, if so, whether Certificate of Need (CON) Application No. 10421, filed by Variety Children’s Hospital, d/b/a Nicklaus Children’s Hospital (NCH,) to establish a Pediatric Heart Transplant program, satisfies the applicable statutory and rule review criteria for award of a CON to establish a Pediatric Heart Transplant program at NCH.
Findings Of Fact Based upon the demeanor and credibility of the witnesses and other evidence presented at the final hearing and on the entire record of this proceeding, the following Findings of Fact are made: The Parties The Applicant, NCH NCH, formerly Miami Children's Hospital, was established in 1950 by Variety Club International. NCH is South Florida’s only licensed specialty hospital exclusively for children, with more than 650 attending physicians and 130 pediatric subspecialists. NCH has 289 licensed beds, of which 218 are acute care, 20 are child psychiatric, 21 are Level II neonatal intensive care unit (NICU), and 30 are Level 3 NICU. NCH is part of the Miami Children’s Health System, a not- for-profit corporation. NCH does not deliver any babies. Thus, many children that have been treated at NCH have been referred to NCH based upon its excellent reputation in the community. NCH is continually recruiting additional physicians in order to expand the pediatric subspecialty coverage it is able to offer. Dr. Leonard Feld, the President of Pediatric Specialists of America (NCH’s employed physician group), came to NCH a little over a year ago, after a distinguished clinical and administrative career involving pediatric kidney transplant. He was drawn to NCH because of the depth and breadth of the existing medical staff and the administration’s commitment to advance the field of pediatric medicine through innovation and subspecialization. Dr. Feld is responsible for ensuring NCH’s quality of care from a medical perspective. He is confident NCH will implement a world-class PHT program if its CON is approved. NCH has several nationally-recognized subspecialty programs, including eight programs listed by U.S. News and World Report as Top 50 Programs, and two Top 10 Programs. NCH’s pediatric cardiac surgery program is currently ranked 40th by U.S. News and World Report, but this number is artificially suppressed because NCH does not provide heart transplants. NCH is the highest ranked cardiac program on the U.S. News and World Report ranking that does not have a PHT program. NCH is a leader in clinical research, with its staff being published in over 800 medical journals in the last half dozen years, over 200 ongoing clinical trials, and 49 active cardiac studies. NCH’s Accreditation Council for Graduate Medical Education (ACGME) accredited pediatric residency and fellowship program is the largest in the southeastern United States, and has a 95-percent, first-time Board pass rate, which is a testament to its quality. NCH is focused on providing pediatric patients in Miami-Dade County with the right care, in the right setting, at the right time. To this end, NCH has expanded its urgent and ambulatory care centers throughout Miami-Dade County to ensure that patients have convenient access to pediatric outpatient and subspecialty care. NCH is a world-renowned, international heart center. NCH’s cardiac team has cared for children from 39 countries and has performed 4,643 open-heart operations since 1995, more than any other program in Florida. NCH has invested hundreds of millions of dollars in creating a telehealth program to allow access to pediatric subspecialists in areas where subspecialists are in short supply. NCH’s transport team, which consists of six ambulances and two helicopters owned by NCH and additional contracted transports, such as fixed wing aircraft, transports approximately 3,000 children per year. Recently, the transport team received the field’s most prestigious honor when it was named the Association of Air Medical Services’ Neonatal Transport Team of the Year. NCH has established relationships with Lee Memorial Health System, in Lee County, and Jupiter Medical Center, in Palm Beach County. These relationships will create access portals for transplant if NCH’s CON application is approved. NCH’s excellent reputation and excellent outcomes have made it the largest pediatric cardiac surgery program in the state, performing 25 percent of all pediatric cardiac surgeries in Florida. In OTSA 4 and Miami-Dade County, NCH is the overwhelming provider of choice, performing 62.2 percent of the pediatric cardiac surgeries in OTSA 4 and 72.7 percent of those in Miami-Dade County. It is noteworthy that the pediatric cardiac surgery program at NCH has a higher surgical volume than any of the four existing Florida PHT centers. NCH is on the forefront of technology and innovation. NCH physicians have pioneered surgical techniques and developed pediatric surgery tools and equipment used throughout the industry. NCH also has found innovative ways to use existing technology to improve care. For example, NCH uses social media to improve communication between families and caregivers, uses 3D printed hearts and virtual reality to better plan surgeries, posts real-time outcomes on the Internet for transparency, and photographs and digitally records every cardiac surgery to eliminate guesswork in the event of future surgeries on the same patient. NCH’s cardiac programs operate on the most challenging cases, including, in some instances, when other providers have determined the patient was inoperable and terminal. In 2016, NCH opened a six-story, state-of-the-art advanced pediatric intensive care tower. Technical advances located in the new tower include an intraoperative MRI, which allows the physicians to take an MRI without moving the patient from the operating room table, and one of the most advanced cardiac catheterization laboratories in the country, which allows NCH to perform pediatric heart catheterizations that cannot be performed in other hospitals. NCH has a robust pediatric cardiology physician team, including 14 pediatric cardiologists, five pediatric cardiac intensivists, and three pediatric cardiac surgeons. Either during training or prior to coming to NCH most, if not all, of these physicians have had experience working in hospitals with pediatric transplant programs, and all of them are currently exposed to patients at NCH that are candidates for heart transplant. NCH’s Chief of Pediatric Medicine, Dr. Redmond Burke, is a Harvard-trained pediatric cardiac surgeon who has been instrumental in many advances in pediatric cardiac surgery. He performed the first endoscopic cardiac surgery and the first casual ring division. He invented the venous pole circuit, a less invasive, less traumatic form of cardiopulmonary bypass, and he also invented the first portable extracorporeal membrane oxygenation (ECMO) machine to transport critically ill patients to NCH for care. Dr. Burke has been a pioneer in pediatric cardiac surgery technology. Dr. Hannan, another one of NCH’s pediatric cardiac surgeons, also trained at Harvard Medical School. He has performed approximately 2,000 open-heart operations at NCH. He was part of the team that created the Society of Thoracic Surgeons (STS) database reporting program, revolutionizing outcome monitoring in pediatric cardiac surgery. Recently, NCH recruited a third pediatric cardiac surgeon, Dr. Kristine Guleserian, who is one of the highest volume pediatric heart transplant surgeons in the country. Dr. Guleserian trained at Harvard Medical School. Dr. Guleserian is a world-renowned pediatric heart transplant and cardiac surgeon. In 2006, she performed the world’s youngest surviving combined heart/liver transplant on a three-year-old girl. She has performed 133 pediatric cardiac transplants, including transplant on one of the smallest pediatric patients to ever receive an artificial heart. Dr. Guleserian serves on numerous boards and committees dedicated to improving and advancing the field of pediatric cardiac surgery and heart transplant. Beyond its pediatric cardiac surgeons, NCH has developed the infrastructure of a world-class pediatric cardiac program, including several physicians who are nationally recognized industry leaders in their subspecialties. For example, Dr. Cecilio Lopez is one of the foremost experts in the country in echocardiography. He is currently on the Board of Directors for the American Society of Echocardiography, International Society for the Nomenclature of Pediatric and Congenital Heart Disease, and the Intersocietal Accreditation Commission, and is also the immediate past President of the Society of Pediatric Echo. Dr. John Rhodes is the former director of the cardiac catheterization lab at the world- renowned PHT program at Duke Children’s Hospital and Health Center. He is currently involved in cutting-edge clinical trials that involve the closing of large atrial septal defects and transcatheter valve replacement. Dr. Rhodes’ involvement in all major pediatric cardiac trials allows him to provide his patients with treatment options that other hospitals cannot. Finally, Dr. Anthony Rossi was one the first and is one of the most experienced pediatric cardiac intensivists in the country, and was instrumental in developing the concept of using a dedicated pediatric cardiac intensive care unit (CICU). In addition to the physicians already on staff, NCH has plans to recruit two additional pediatric cardiac intensivists and a pediatric cardiac heart failure specialist. The Intervenor, Jackson Jackson is the public safety net hospital system for Miami-Dade County and has been in existence since 1918. Its mission is centered on a mandate to treat all Miami-Dade County residents regardless of their ability to pay. Its main campus, Jackson Memorial Hospital, includes the Holtz Children’s Hospital (Holtz) and the Women’s Hospital. Pediatric cardiac services provided by Jackson, via Holtz, include PHT and pediatric heart failure, as well as cardiac surgery and cardiology services. Holtz provides services for patients 21 years of age and under through its affiliation with the University of Miami, which provides physician services to JMH. Holtz cares for patients with all types of diseases, including, but not limited to, chronic illness; congenital heart disease; cardiology; cardiovascular, liver, kidney and intestinal disease; burn; trauma; neurology; and solid organ and bone marrow transplantation. Holtz has 373 beds, including 60 Level II NICU beds and 66 Level III NICU beds. The NICU at Holtz cares for the most complex infants, high-risk patients, and births. In addition, Holtz has a 30-bed pediatric intensive care unit (PICU) consisting of individual, separate patient rooms, fully equipped and capable of treating critically ill children. The PICU cares for pediatric pre- and post-operative transplant, cardiac, burn, trauma, and surgical patients, among others. Patients in the PICU have highly acute conditions, frequently requiring ventilator support, ECMO support for cardiac patients, and access to subspecialty care. PICU nursing for the most critical patients is provided on a one-to-one ratio. Adjacent to the PICU on the same floor are two pediatric operating rooms, the pediatric cardiac catheterization laboratory, and the transplant unit. Patients are assigned to the transplant unit based on the type of organ transplanted and the patient’s acuity. Holtz has dedicated pediatric and neonatal pharmacies. Pharmacy, nursing, rehabilitation, and dietary services are provided by specialists in pediatrics and neonatology. Holtz offers a wide variety of child life services, including diversionary techniques to alleviate pain and promote child development and therapies to provide a sense of normalcy in the lives of pediatric patients cared for at Holtz. In addition, Holtz provides pediatric palliative care through its Pedi Pals program which provides care for pediatric patients who are critically ill and have frequent hospitalizations or care needs at home. Services include pain management, bereavement services, and pastoral care as needed or indicated by families. Holtz also provides a Prescribed Pediatric Extended Care program (PPEC) that offers day care type services for children with complex medical conditions, including cardiac patients. This allows the patients’ parents and caregivers the ability to work while their children are cared for in a medically supervised setting. JMH’s transplant program has been in operation for over 45 years. Holtz and JMH provide a wide range of solid organ transplantation in conjunction with the Miami Transplant Institute (MTI) and the University of Miami (UM). MTI is a joint program between JMH and UM, employing nearly 300 people and 40 physicians dedicated to transplantation. It is the third largest transplant program, and the second largest pediatric transplant program, in the United States. In the past year, MTI performed over 420 adult and over 70 pediatric solid organ transplants, all at JMH. Pediatric transplant programs at JMH include heart, kidney, pancreas, kidney/pancreas, liver, lung, intestinal, and multi-visceral. JMH also performs bone marrow transplants. Due to the scope of both pediatric and adult solid organ transplant services offered at JMH, pediatric patients are easily transitioned into adult services for uninterrupted treatment at JMH. PHT recipients will require lifelong care and follow up, frequently retransplantation, and adult services as they age. The cardiothoracic surgery program at JMH has existed for over 50 years. It is multidisciplinary, caring for both children and adults with heart, lung, and mediastinal disease and includes a robust transplant and assistive device program. The program has a team of cardiothoracic surgeons, four of whom have PHT experience. Dr. Eliot Rosenkranz is JMH’s primary pediatric heart transplant surgeon. He has been at JMH since 2000. The PHT team also includes Dr. Matthias Loebe and Dr. Nicolas Brozzi, who both have extensive experience in transplanting solid organ pediatric patients, teenagers, and young adults, and who provide support to Dr. Rosenkranz, whenever needed. JMH has a heart failure program that includes a multidisciplinary team of physicians, nurses, therapists, and other providers who review the best modalities to treat and medically manage patients with heart failure. In addition to cardiology services, the heart failure program includes the cardiac transplant service. JMH’s pediatric heart failure program, led by Dr. Paolo Rusconi, was only the eighth program in the U.S. to be accredited by the Health Care Colloquium, and the only program in Florida to receive such designation for programs demonstrating quality in heart failure patient management. Other cardiac-related services provided at JMH include interventional cardiology, under the direction of Dr. Satinder Sandhu; echocardiography and non-invasive imaging; electrophysiology, diagnostic pediatric and cardiothoracic radiology; and general cardiology. Agency for Health Care Administration AHCA is the state health planning agency that is charged with administration of the CON program as set forth in sections 408.031-408.0455, Florida Statutes. Context of the PHT Application Pursuant to Florida Administrative Code Rule 59C- 1.044, AHCA requires applicants to obtain separate CONs for the establishment of each adult or pediatric organ transplantation program, including: heart, kidney, liver, bone marrow, lung, lung and heart, pancreas and islet cells, and intestine transplantations. “Transplantation” is “the surgical grafting or implanting in its entirety or in part one or more tissues or organs taken from another person.” Fla. Admin. Code R. 59A- 3.065. “Heart transplantation” is defined by rule 59C- 1.002(41) as a “tertiary health service,” meaning “a health service which, due to its high level of intensity, complexity, specialized or limited applicability, and cost, should be limited to, and concentrated in, a limited number of hospitals to ensure the quality, availability, and cost effectiveness of such service.” AHCA rules define a “pediatric patient” as “a patient under the age of 15 years.” Fla. Admin. Code R. 59C-1.044(2)(c). However, the United Network for Organ Sharing (UNOS), which regulates, monitors, and reports organ transplant and procurement data, defines pediatric patients as the age group 0–17. The STS, which reports risk-adjusted cardiac surgery data, also defines pediatric patients as the ages 0–17. As a practical matter, none of the clinicians that testified for either party limited their definition of pediatric patients to ages 0–15. Heart transplantation is considered a last resort for patients with end-stage heart disease who may have no other medical or surgical therapies available. Typically, persons listed for heart transplantation have a life expectancy of less than one year. These patients often have significant limitations of their activity and lifestyle prior to transplantation. At hearing, the cardiologists who testified agreed that whenever possible, PHT should be delayed as long as medically possible, since transplanted hearts typically have a limited, yet greatly variable period of viability, ranging from under a year to possibly decades. However, in any event, retransplantation is frequently necessary. The two most common causes of end-stage heart disease requiring a transplant in children are cardiomyopathy, which is a progressive deterioration of the function of the heart muscle, and congenital heart defects that are not amenable to further surgical correction. The conditions that require heart transplantation in children are different across age cohorts (and from adults). Infants or neonates requiring transplantation typically have congenital heart defects that require surgical intervention relatively soon after birth. These conditions are typically dealt with anywhere from infancy to seven or eight years of age. With the older pediatric age group (eight years of age to adolescence), the indications for transplant are different. Many children are perfectly healthy until then, and then contract a serious illness, such as viral cardiomyopathy. In this condition, the heart enlarges and children develop restrictive cardiomyopathy, leading to sudden heart failure or progressive decline of their function, ultimately requiring a transplant. ECMO, also known as extracorporeal life support (ECLS), is an extracorporeal technique of providing both cardiac and respiratory support to persons whose heart and lungs are unable to provide an adequate amount of gas exchange to sustain life. Generally it is only used in the later treatment of a person with heart or lung failure as it is solely a life- sustaining intervention. Congress, through the National Organ Transplant Act, established the Organ Procurement Transplant Network (OPTN) to manage a national list of organ donors and available organs, along with the collection of data regarding organ transplant. OPTN administers these duties through a contract with UNOS. Patients exhibiting symptoms of possible heart failure are referred to the heart failure team for initial evaluation. The evaluation includes assessment of the patient’s medical history and anatomy, imaging, and review of alternative treatments to transplantation by various medical specialists. Because the goal recognized by most physicians is to delay or avoid PHT, in many cases, patients are not listed for PHT or may be removed from the waitlist when continued medical management or other palliative surgical intervention is proper. If PHT is required, patients and their parents will meet with the PHT surgeon to discuss the procedure. All information from the assessment is reviewed by the multidisciplinary transplant review committee, which includes pertinent medical and surgical specialists, social workers, financial counselors, and other members necessary for decision- making. Upon approval by the transplant committee, and consent from the patient’s family, patients are listed with UNOS according to severity of disease, how soon the patient will require a new organ, and the expectation of their survival without a new organ. Donor information, including donor location/region, blood type, age, donor size, and other factors that are used to identify potential organ matches, is provided by the donor hospital to the organ procurement agency. When a potential match is identified, the recipient hospital with the highest priority patient is provided the donor information or provided an “offer.” At that time, the recipient hospital reviews the donor information to confirm whether the organ is appropriate for the matched recipient. In some infrequent circumstances, a donor is not appropriate due to both the condition of the donor and the condition of the recipient. If the donor is appropriate, the process for the transplant procedure begins. AHCA rules divide Florida into four OTSAs, corresponding generally with the northern, western central, eastern central, and southern regions of the state. Fla. Admin. Code R. 59C-1.044(2)(f). The program at issue in this proceeding will be located in OTSA 4, which is comprised of Broward, Collier, Miami-Dade, Monroe, and Palm Beach Counties. For purposes of CON review, Florida is divided into 11 health planning districts. § 408.032(5), Fla. Stat. The CON at issue in this proceeding will be in District 11. Currently, there are two providers of PHT in OTSA 4: DiMaggio and Jackson. As discussed below, historically Jackson’s PHT volumes have been extremely low. Jackson is located in District 11. DiMaggio is located in District 10. In addition to these two programs, there are only two other PHT providers in Florida: UF Health Shands Hospital (Shands), located in Gainesville, OTSA 1, District 3; and Johns Hopkins All Children’s Hospital (All Children’s) located in St. Petersburg, OTSA 2, District 5. The incidence of PHT in Florida, as compared to other types of solid organ transplants, is relatively small. The chart below sets forth the number of pediatric (ages 0-17) heart transplant discharges by year for the four Florida PHT programs during Calendar Years (CY) 2013 through 2015: HOSPITAL HEART TRANSPLANT CY 2013 CY 2014 CY 2015 All Children’s Hospital 7 14 9 UF Health Shands Hospital 6 8 9 Memorial Regional Hospital 5 5 5 Jackson Health System 2 2 1 Total 20 29 30 History and Utilization of Existing Providers of PHT in OTSA 4 The Jackson Program At JMH, the surgical component of a PHT is a small piece of a very complex process. The critical components of the PHT process, managed by the cardiology and heart failure team at JMH, include timely referral for transplant, heart failure and transplant evaluation, pre- and post-operative transplant care (inpatient and outpatient), heart transplantation, and lifelong immunosuppression management. JMH is approved by OPTN and UNOS to provide PHT. JMH’s adult and PHT programs are certified by the Centers for Medicare and Medicaid Services (CMS) under a single certification. Certification with CMS requires OPTN membership and regulation compliance. Jackson has a long history of running extremely low- volume pediatric and adult transplant programs, and has had a series of regulatory violations stemming from its failure to support and grow its adult and pediatric transplant programs, the consequence of which includes being under a federal Medicare/Medicaid System Improvement Agreement. For several years, Jackson was unable to meet the Children’s Medical Services’ volume thresholds for a pediatric cardiac program, resulting in the program being placed on probation. The evidence demonstrated that currently and historically, Jackson has not performed 90 “on-pump” (heart/lung bypass) pediatric heart surgeries on an annual basis. Jackson’s transplant volume for young children, infants, and neonates is nearly nonexistent. Jackson has not done a transplant on a patient under 30 days of age since 1998. Since 2007, Jackson has done no transplants on patients aged one to five. In the past six years, Jackson has only done five transplants on patients under 10 years of age. Unlike NCH, Jackson is concentrated on providing cardiac surgery primarily to adults. In CY 2015, JMH had 37 pediatric (age 0-17) cardiac surgery cases, representing only 3.9 percent of its total cases. By contrast, during the same period NCH had 201 pediatric cardiac surgery cases, representing 21.2 percent of its total cases. The difference in focus between JMH and NCH is even more pronounced when it comes to cardiac surgeries on neonates. In 2016, NCH did 200 on-pump pediatric cardiac surgeries, of which 52 were performed on neonates, meaning neonates accounted for 26 percent of NCH’s on-pump cases. During the same period, Jackson only performed 42 on-pump cases, of which only seven were neonates, meaning neonates only accounted for 16 percent of Jackson’s on-pump cases. Jackson is also performing about two times the national average in terms of the percentage of its cases that are performed on adult patients. Performing pediatric cardiac surgery on neonates is typically more complex than performing congenital heart defect surgery on adult patients. Jackson only has one pediatric cardiac surgeon. Jackson advised Children’s Medical Services it intended to recruit a second pediatric surgeon in 2012, but this did not occur. Jackson’s low cardiac surgery and transplant volumes make it difficult, if not impossible, for it to recruit a highly skilled pediatric cardiac and transplant surgeon. Dr. Rosenkranz testified that there is no need to recruit a second pediatric heart surgeon. Jackson and NCH treat very different universes of patients. Jackson has not performed a PHT on a Miami-Dade County resident in the last three years; whereas, NCH performs 73 percent of the pediatric cardiac heart surgeries for Miami- Dade County residents and expects a significant percentage of its transplant cases to come from this patient population. Jackson concentrates predominantly on pediatric cardiomyopathy cases. NCH is more focused on pediatric congenital heart defects and anticipates these patients will represent a significant portion of its transplant patients. Jackson’s patients tend to be older patients, whereas a significant percentage of NCH’s patients are neonates and infants. In pediatric cardiac surgery, 25 percent of NCH patients are neonates (under 30 days), and 30 percent are infants (31 days to one year). Jackson has not done a transplant on a neonate since 1988. In fact, Jackson has only performed three transplants on infants and no transplants on any patients between one and five years old since 2008. Jackson tends to be risk averse, whereas NCH treats the most complex patients. For example, Jackson has not had a single transplant patient on ECMO, whereas, based upon NCH’s 20 years of historical data, it expects to have a pool of approximately 10 patients a year on ECMO that may benefit from transplant. In August 2011, AHCA sent JMH a letter advising JMH that it had abandoned both its pediatric heart and pediatric lung transplant programs due to not performing a single pediatric heart or lung transplant for over twelve consecutive months in 2010. The letter, addressed to JMH’s President and CEO, stated: Re: Abandonment of Pediatric Heart Transplant Program Dear Mr. Migoya: In the course of our regular data collection and analysis responsibilities, Agency staff has confirmed that your pediatric heart transplant program has been idle, i.e. no transplants have been performed, for a period in excess of 12 consecutive months, from January 2010 through December 2010. Accordingly, pursuant to Certificate of Need rule sections 59C-1.002(41)(a),59C-1.004(1}, 59C-1.0085(5), and 59C-1.020 Florida Administrative Code, and section 408.036(1), Florida Statutes, the re-establishment of a pediatric heart transplant program in the future will require a new certificate of need. The program will be removed from the Agency's inventory of authorized transplant programs. Within 14 days of receipt of this letter, please advise this Agency if the above findings are inaccurate. Should you have any questions regarding this request, please contact Steve Love of my office at (850)412- 4345. Sincerely, /S/ Jeffrey N. Gregg, Chief Bureau of Health Facility Regulation (NCH Ex. 46). Following receipt of the above letter, JMH drafted a response in which JMH did not take issue with the accuracy of the data cited in AHCA’s letter. Rather, JMH’s letter recited the reasons for its low PHT volume, including “low regional volumes, financial challenges in the system resulting in bad publicity, and intense competition from a new start-up program . . . .” It is unclear whether the draft response was ever sent to AHCA, however, no witness at hearing disputed the accuracy of the data contained in AHCA’s letter. AHCA’s representative, Marisol Fitch, testified that the letter did not revoke or rescind JMH’s CON, which is evidenced by the fact that AHCA did not notify JMH of its right to dispute a revocation or rescission pursuant to chapter 120, Florida Statutes. Ms. Fitch further advised that there was no final order revoking JMH’s CON, nor had it ever been voluntarily surrendered by JMH. Either of these actions would have been required to delete services from the program inventory. According to AHCA, JMH has an active PHT program, is currently listed in AHCA’s inventory of PHT programs, and at no time has AHCA taken further steps to terminate JMH’s PHT license. At hearing, and again in its PRO, JMH objected to the legal status of its PHT program being placed at issue in this proceeding. JMH is correct that this proceeding is not concerned with the validity of JMH’s PHT license, however, consideration of the past volumes of PHT being provided at JMH and AHCA’s documentation of periods of time when no PHTs were provided, is relevant to the statutory review criteria to be applied to the NCH application. The DiMaggio Program DiMaggio is also licensed to perform PHT services within OTSA 4. DiMaggio is part of the Memorial Healthcare System (Memorial) in Broward County, Florida. DiMaggio offers pediatric and adult congenital heart surgery and PHT. DiMaggio also offers a heart failure program that includes both medical management and surgical services. Adult heart transplant is also offered by Memorial on the same campus. DiMaggio received its CON for PHT services in 2009 and received UNOS approval in 2010, performing its first transplant in December 2010. DiMaggio has provided PHT related services and heart failure management since that time. DiMaggio’s PHT surgeon is Dr. Frank Scholl and its pediatric heart failure program is led by Dr. Maryanne Chrisant. During CY 2013 through CY 2015, Memorial performed five PHTs each year. The Proposed NCH Program As noted, NCH proposes to establish a PHT program on its hospital campus in Miami, OTSA 4, District 11. Due to its robust pediatric cardiac program, NCH already has most of the infrastructure in place to support the transplant program. NCH has a staff of pediatric cardiac physicians with expertise in caring for patients with end-stage diseases requiring transplants, clinical staff and nurses with experience caring for chronically ill children and families, nutritionists, respiratory therapists, social workers, psychologists, and psychiatrists. The NCH staff and physicians are available on a 24-hour basis at NCH’s dedicated cardiac intensive care unit. NCH also has educational and training opportunities available for staff, patients, and families. NCH has a very well trained and experienced nursing staff, many with advanced certifications and specialized pediatric training. NCH has an excellent nurse training program in place to grow the skills of its nursing staff. NCH has been an American Nurses Credentialing Center (ANCC) Magnet Program institution for three consecutive years, a statistic only seven percent of hospitals across the country have been able to achieve. NCH uses cardiac-dedicated nurses to care for its cardiac patients, and only uses dedicated cardiac advanced registered nurse practitioners to care for post-surgical cardiac patients in its dedicated CICU. NCH’s dedicated CICU has recently been relocated to the new advanced pediatric intensive care tower. There are distinct advantages to having a dedicated CICU when it comes to caring for complex cardiac patients, including transplant patients. It allows NCH to have extremely seasoned physician cardiac intensivists, cardiac nurse practitioners, cardiac nurses, and other support staff such as dieticians and social workers, who treat a high volume of pediatric cardiac surgery patients and understand their unique issues and complications. The constant exposure to complex cardiac patients allows NCH’s team to recognize complications sooner and react quicker, resulting in better care and shorter lengths of stay. In contrast to NCH’s dedicated pediatric CICU, Jackson does not have a dedicated CICU. Heart transplant patients are placed in the same ICU as all other pediatric critical care patients. The cardiac surgeons at NCH use innovative technology to improve their patients’ outcomes and reduce patients’ length of stay in the hospital. One way NCH has earned its reputation for excellence is by operating on the toughest cases. NCH is the place where patients turn when other hospitals refuse to operate because the case is too complex. NCH is willing to take “hits” to its mortality/morbidity statistics to give the sickest patients a chance to live. Despite having the highest volume of pediatric cardiac surgeries in Florida, NCH cannot perform PHT on its patients. These patients and their families must choose to continue alternative treatment at NCH, or be transferred away from their team who has been caring for them through the events that led up to the transplant, which often includes multiple prior heart surgeries. It is difficult on patients and families to lose continuity of care at this stage in their disease process. While Jackson raised some criticisms of NCH not having an adult cardiac program for continuity of care after patients reach adulthood, the evidence shows the largest and best pediatric heart programs in the United States are often located in pediatric-only programs, with no immediately available adult programs. Dr. Rhodes and Dr. Guleserian testified that even at places like Duke and Texas Children’s that have adult programs, the two programs are completely separate. Moreover, NCH has a relationship with the Cleveland Clinic to transition patients when they need an adult program. Dr. Rhodes also refuted JMH’s claim that there needed to be a back-up adult interventional cardiologist on-site to run a quality interventional program. This is contrary to the Society of Cardiac Angiography and Intervention’s recommendation. Further, Dr. Rhodes performs catheterizations on adults and has this training should it be necessary. There are also other adult interventional cardiologists on staff at NCH. Jackson also argued NCH’s program would be inferior because NCH does not offer other solid organ transplant services. However, as Dr. Guleserian explained, kidney and liver transplants are very different than heart transplants. Even in hospitals where both heart and other solid organ transplants are offered, the heart program is separated because it is unique. Heart transplant patients are much more similar to cardiac surgery patients than other solid organ transplant patients. Dr. Guleserian does not endorse comingling heart transplant patients with other solid organ transplant patients. After evaluating NCH’s existing cardiac infrastructure, Cassandra Smith-Fields, accepted as an expert in transplant program development and operation, concluded that NCH had everything necessary to establish a PHT program, with the exception of recruiting a heart failure specialist. Ms. Smith- Field’s expert opinion, which is credited, and is based on 32 years of professional experience working in transplant programs, is that NCH will be able to implement a high-quality PHT program. AHCA’s Preliminary Decision Following AHCA’s review of NCH’s application, as well as Jackson’s written Letter of Opposition, AHCA determined to preliminarily deny the application. The Agency’s decision was memorialized in a SAAR, dated February 19, 2016. The SAAR is mostly a restatement of the information presented in the NCH application. There is only one paragraph in the entire document that purports to explain why the Agency chose to preliminarily deny the application: The Agency indicates that OTSA 4 has relatively low but stable pediatric heart transplant volume for the four-year period ending June 30, 2015 and no outmigration for the 12-month period ending June 30, 2015, therefore it is reasonable to conclude that a third provider in OTSA 4 would likely reduce already relatively low volumes at the existing pediatric heart transplantation provides in OTSA 4. Marisol Fitch, supervisor of AHCA’s CON and commercial-managed care unit, testified for the Agency. Ms. Fitch testified that AHCA does not publish a numeric need for transplant programs, as it does for other categories of services and facilities. Rather, the onus is on the applicant to demonstrate need for the program “based on whatever methodology that they present to the Agency for our analysis.” In addition to the applicant’s need methodology, “we (AHCA) look at availability and accessibility of service in the area to determine whether there is an access problem.” With respect to whether NCH had demonstrated need for its PHT program, Ms. Fitch testified: The Agency did not feel that the applicant demonstrated need for the project in organ transplant area four. We did not find that there was an underserved population or that there were financial issues at stake or a quality issue, and so we did not feel that the applicant demonstrated that need for the project was produced within the four corners of the application. Statutory Review Criteria Section 408.035(1)(a): The need for the health care facilities and health services being proposed. The statutory criteria for the evaluation of CON applications, including applications for organ transplantation programs, are set forth at section 408.035, Florida Statutes, and rule 59C-1.044. However, neither the applicable statutes nor rules have a numeric need methodology that predicts future need for PHT programs. Thus, it is up to the applicant to demonstrate need in accordance with rule 59C-1.044. To quantify the need for a new PHT program in District 11, NCH used the two need methodologies described in detail below. Methodology 1: Ratio of Transplants to Cardiac Surgeries NCH’s first need methodology evaluates the ratio of PHT volume at the four existing Florida transplant centers to the volume of pediatric cardiac surgeries. It then applies this ratio to NCH’s cardiac surgery volume to determine the internal demand for this service at NCH. There is a positive correlation between the number of pediatric cardiac surgeries and the number of PHTs. The more pediatric cardiac surgeries a hospital performs, the more need there will be for PHTs. Conversely, low-volume pediatric cardiac surgery providers, such as Jackson, are also low-volume PHT providers. Using data from STS and UNOS, NCH determined that during CY 2014: All Children’s Hospital performed 146 cardiac surgeries and 14 transplants for a percentage of 9.6%; UF Health Shands Hospital performed 84 cardiac surgeries and 8 transplants for a percentage of 9.5%; Memorial Regional Hospital performed 61 cardiac surgeries and 5 transplants for a percentage of 6.0%; and Jackson performed 55 cardiac surgeries and 2 transplants for a percentage of 3.6%. The above data strongly suggests there is a correlation between the number of pediatric cardiac surgeries performed and the number of transplants performed. This correlation is supported by AHCA’s rule 59C-1.044(6)(b)4., which sets forth minimum volume thresholds for pediatric cardiac surgeries (125) and cardiac catheterizations (200), and with data reflecting that nationally, PHT programs are located in hospitals with the largest pediatric cardiac surgery programs. To forecast pediatric cardiac surgical volume in OTSA 4, NCH used AHCA’s CY 2014 discharge rates for OTSA 4 residents and applied those to the forecasted pediatric population for each of the planning years. This resulted in a forecast of 259 pediatric cardiac surgeries for the 12-month period ending June 30, 2018, increasing to 261 cases during the 12 months ending June 30, 2020. Using CY 2014 AHCA data, NCH then determined that it had a 62.2 percent market share of all pediatric cardiac surgeries performed in OTSA 4 on OTSA 4 patients. Applying this market share to the forecasted surgeries, NCH determined that it would perform 161 pediatric cardiac surgeries on OTSA 4 residents during the 12 months ending on June 30, 2018; 162 during the 12 months ending on June 30, 2019; and 163 during the 12 months ending on June 30, 2020, i.e., more than any other provider is currently performing. NCH assumed a 25 percent in-migration percentage, and provided a conservative ramping-up ratio of three percent PHT to cardiac surgery for the 12-month period ending June 30, 2018; six percent for the 12-month period ending June 30, 2019; and seven percent for the 12-month period ending June 30, 2020. The assumption used is significantly lower than All Children’s or Shands’ ratios, despite the fact that NCH is forecasted to have significantly more pediatric cardiac surgeries than either of those two hospitals. Applying these conservative assumptions, NCH could reasonably expect to perform six PHTs for the 12-month period ending June 30, 2018; 14 for the 12-month period ending June 30, 2019; and 15 for the 12-month period ending June 30, 2020. Jackson criticized NCH’s surgical ratio analysis, pointing out that AHCA defines pediatric as 0-14, not 0-17. However, as discussed above, STS and UNOS define pediatric as 0-17. Thus, the use of this age group is appropriate when considering the likely patients to be served. Moreover, the difference in the results using 0-14 data, versus 0-17 data, is de minimus. As a result of Jackson’s criticisms, NCH’s health care planner re-ran her analysis using 0-14 AHCA data. This resulted in almost the same outcome, with six PHTs projected for the 12-month period ending June 30, 2018; 13 for the 12-month period ending June 30, 2019; and 15 for the 12-month period ending June 30, 2020. Jackson’s argument that there is no positive correlation between the number of pediatric cardiac surgeries performed and the number of PHTs likely to accrue from that surgical volume is rejected. While there is a not a specific ratio, or “magic” number which can be reliably applied to each institution, there is a range within which the ratio of cardiac surgery to PHTs will fall. According to Dr. Gulesarian, whose testimony is credited, for any particular institution, that ratio will likely vary from year to year depending upon a number of variables, most importantly, the complexity of the cardiac surgeries being performed. Specifically, the more complex and higher risk the surgeries, the more likely a heart transplant will be necessary. Methodology 2: Ratio of Transplant Volume to Common Indicators NCH’s second need methodology evaluates the most common indications for PHTs and compares that to the cases by hospital and resident origin to determine the need for a PHT program at NCH. To do this, NCH’s health care planner worked with NCH’s physicians to compile a list of the 24 most common indicators for PHT, and to determine their corresponding International Classification of Disease, 9th Revision (ICD-9) codes. Using AHCA data, NCH then determined that in 2014, there were 499 pediatric cases in Florida with the target ICD-9 codes. NCH had the most cases with 121, constituting 24.2 percent of all cases in Florida. The second greatest, All Children’s, only had 66, constituting 13.2 percent. In OTSA 4, for the years 2012–2014, NCH had a total of 296 patients with these common indicators, accounting for 55.6 percent of the volume for all OTSA 4 hospitals. Notably, the two existing PHT providers in OTSA 4, Jackson and DiMaggio, only had volumes of 51 and 125, respectively, during this same time period. Combined, these two hospitals still had a significantly lower volume of the targeted ICD-9 codes than did NCH. Using AHCA data, NCH then determined that, from 2012 through 2014, an average of 11.2 percent of patients at the four existing transplant hospitals that had a primary diagnosis of one of the identified ICD-9 codes received a transplant. Using just 2014 data, this average was 15.2 percent. This increase was due to DiMaggio, which opened in 2010, increasing from 3.4 percent in 2012 to over 11 percent in 2014. Using NCH’s market share in OTSA 4 and the population forecasts, NCH was able to determine its forecasted volume of patients with these common indicators. NCH then applied a very conservative ramping up ratio of ICD-9 volume to PHTs of five percent in 2018, eight percent in 2019, and 10 percent in 2020 to forecast the number of PHTs NCH could expect. When the above ratios are applied to the expected ICD-9 volumes, the result is six PHTs for the 12-month period ending June 30, 2018; 11 for the 12-month period ending June 30, 2019; and 13 for the 12-month period ending June 30, 2020. At hearing, Jackson criticized NCH’s common indicators methodology, pointing out variability where All Children’s volume of common indicators only went from 64 to 66 between 2013 to 2014, yet the number of transplants doubled from seven to 14. However, as Ms. Greenberg explained, NCH looked at multiyear trends, not a single point in time. A single point in time may have large fluctuations due to things like what occurred at All Children’s: the head pediatric cardiology surgeon left, which shifted patients from All Children’s to Shands. A change in surgery personnel was one of the factors identified by Dr. Gulesarian as potentially affecting PHT volumes. Criticism was also raised regarding NCH’s use of ICD-9, instead of the newer ICD-10, codes because the conversion resulted in the inclusion of certain indicators, e.g., Eisenmenger Syndrome, Coronary Artery Disease, and Ehlers-Danlos Syndrome, as being among the list of most common indicators for heart transplant. NCH’s planner demonstrated that any differences due to the inclusion of these ICD-10 codes was de minimus or nonexistent. Thus, even had the newer codes been used, they would not have materially affected the volume projections for the proposed PHT program. Jackson is correct that both need methodologies put forth by NCH are “institution specific,” and are better characterized as an internal demand analysis than as a need methodology. Neither method identifies either an unserved population or an access issue. Rather, they project a volume of patients NCH anticipates would be available to receive a PHT at NCH if approved. Section 408.035(1)(b): The availability, quality of care, accessibility, and extent of utilization of existing health care facilities and health services in the service district of the applicant. Section 408.035(1)(e): The extent to which the proposed services will enhance access to health care for residents of the service district. Disparity in Use Rates OTSA 4 represents 32 percent of Florida’s pediatric population. The five-county OTSA is home to more than 1.3 million residents age 17 and under. Yet, despite having approximately one-third of the pediatric population, OTSA 4 only provides one-tenth of the state’s PHTs. The chart below presents the PHT use rates in Florida by OTSA for CY 2013 through CY 2015: 1 10.1 11.2 13.3 11.6 2 10.7 5.8 8.6 8.4 3 9.6 15.4 9.3 11.4 4 3.9 3.1 3.1 3.3 Statewide 8.2 8.1 8.0 8.1 Average Use Rates per 1,000,000, Age 0 to 17 OSTA CY2013 CY2014 CY2015 3-Yr Avg (NCH Ex. 75). As can be seen from the above, the three-year average use rate in OTSA 4 (CY 2013 through CY 2015) is 3.3 percent, compared to OTSA 1 at 11.6 percent, OTSA 2 at 8.4 percent, and OTSA 3 at 11.4 percent for the same time period. There was no evidence that there was anything unique about the pediatric patients in Miami-Dade County to justify this disparity in PHT use rates. To the contrary, Dr. Rosenkranz conceded that he did not know of anything that would justify any disparity in the use rate in OTSA 4, and he would expect it to match the rest of Florida: Q. . . . So for those counties in OTA 4, from a clinical perspective, are you aware of anything unique about those counties that would make the prevalence of pediatric heart disease or heart malfunctions that result in transplant any different than any other parts of Florida? A. Nothing that I'm aware of. Q. You would expect it to be similar to other parts of Florida, correct? A. Yes, I would. (NCH Ex. 176; pp. 25). Dr. Rhodes similarly testified there was no clinical reason for the relatively low use rate in South Florida, other than the fact that the largest pediatric cardiac surgery provider in the state (NCH), which is doing 25 percent of the pediatric cardiac surgeries in the state, does not have a PHT program. Dr. Feld echoed these opinions and testified that if NCH’s CON application is approved, with the addition of Dr. Guleserian, NCH will be able to rectify the disparate use rate. Ms. Greenberg testified that the PHT use rate data shows a disparity that would indicate that residents of OTSA 4 have an access issue to PHT because many children are going without the service. On cross-examination, however, she conceded that patients who leave OTSA 4 in order to receive a PHT could also at least partially explain the disparity. But in either case, she concluded, whether it was lack of service or due to out migration, the low use rate indicated an access issue in OTSA 4. The most convincing explanation for the disparate use rate came from Cassandra Smith-Fields who testified that the use rate disparity has resulted from the PHT programs being placed in the wrong hospitals. This opinion was echoed by Dr. Rhodes, who cited data showing that transplant programs across the nation were usually located at high-volume pediatric surgery providers. NCH presented compelling data based upon its sheer volume of pediatric cardiac surgeries that approving NCH’s PHT application will have a substantial impact in resolving the current disparity in PHT use rates. As noted previously, NCH performs 25 percent of all pediatric cardiac surgeries in Florida, 62.2 percent of those performed in OTSA 4, and 72.7 percent of those done in Miami-Dade County. Inability to Transfer NCH Patients on ECMO Several NCH cardiologists testified there are a significant number of their patients that are simply too sick to be transferred from NCH to another facility to receive a PHT. Many of these patients do not even get listed for a heart transplant since they likely would not survive the necessary transfer. Dr. Burke provided 20 years of data showing 275 post- surgical pediatric heart patients that had been placed on ECMO after surgery. One hundred and forty-seven of those children died. While he could not opine as to exactly which of those patients’ lives could have been saved if NCH had been able to offer them a PHT, he testified that each of those children were a potential candidate for a PHT in order to have a chance to save their lives. Dr. Rossi explained the difficulties of moving patients on ECMO. Patients must be chemically paralyzed while on ECMO, because the slightest movement of the patient can cause the cannula to shift, potentially resulting in death. The risk of moving ECMO patients is so serious that when a patient is going to be taken off ECMO, the operation is performed at the patient’s bedside because it is too risky to even move the patient down the hall to the operating room. Dr. Rossi explained that the only time one would ever transport a patient on ECMO is when not moving the patient would result in certain death. Despite NCH’s award-winning transport team, its experience with patients transported on ECMO is that two-thirds of the patients die during the transport. Multiple NCH physicians discussed the inherent dangers of just moving a patient on ECMO down the hall for procedures. While some patients are too sick to transport, they may yet be appropriate candidates for PHT. Approximately five percent of Dr. Guleserian’s transplant patients have been patients transplanted while on ECMO. Ms. Smith-Fields testified that in her program, when there is a high-risk pediatric surgery taking place, the patient will often be pre-cleared as a PHT patient so that if the surgery is not a success, the patient can be supported on ECMO and immediately listed for transplant without any processing delays. While NCH did pioneer a portable ECMO machine to transfer patients on ECMO, it has only been used to bring patients to NCH. Those patients were certain to die if they were not transported on ECMO, and one-third of them lived because of those transports. However, when that risk is contrasted with the risk of transporting NCH patients on ECMO to be listed for PHT, the risk of transport is greater than the risk of waiting to see if the patient recovers on ECMO. Approximately half of NCH’s cardiac surgery patients who go on ECMO after a failed surgery survive. It would not be advisable to take the risk of transport on ECMO because the odds of the patient dying are increased. Credible testimony established that there are significant risks to a patient being transported while on ECMO. Thus, even assuming that transporting a patient on ECMO from NCH to a transplant facility was an option, forcing a patient to accept the high, and potentially fatal, risks of this transport presents a major access issue. Organ Out-migration from OTSA 4 The evidence did not establish that there is currently significant out-migration of PHT patients from OTSA 4 or Miami-Dade to other Florida or out-of-state PHT programs. Considering the risks inherent in transport discussed above, this is not surprising. However, there is a demonstrated out- migration of donor hearts from Florida. During CY 2010 through August 2015, there were 205 pediatric hearts recovered throughout Florida. In 2014, specifically, there were 38 hearts recovered and 29 pediatric heart transplants performed the same year. Because there were more hearts recovered than transplanted in the state, Florida is a net exporter of donor pediatric hearts. At hearing, Jackson asserted that its low volume of PHTs was caused by the lack of viable pediatric hearts to be transplanted in OTSA 4. However, this argument was inconsistent with the SRTR data showing approximately 25 percent of the adult and pediatric donor hearts harvested in Florida in 2015 (41 hearts) were being sent out of state, many to children’s hospitals. The data also reflects that OTSA 4 is a net exporter of donor hearts. To the extent there is any merit to Jackson’s claim about the lack of viable pediatric hearts, however, the evidence also showed that adding PHT programs to an area increases the number of hearts procured in that region. This is known as the “push/pull phenomenon.” As explained by Ms. Smith-Field, the push/pull phenomenon results when the presence of transplant centers within a given donor service area “pushes” the designated organ procurement organizations to a better job of procuring organs. Quality of Jackson’s PHT Program Based upon persuasive evidence presented at hearing, there is a strong positive correlation between the number of pediatric cardiac surgeries a hospital performs and its PHT volumes. Not surprisingly, nationally PHT programs are almost universally located in the hospitals with the highest volume of pediatric cardiac surgery. For procedures such as cardiac surgery, the number of procedures performed directly correlates to the quality of the outcomes. Generally speaking, surgeons and facilities with higher volumes experience higher quality. This volume-outcome relationship is expressly recognized by AHCA in several of its CON rules which require minimum projected volumes, including organ transplantation. Jackson has struggled with low pediatric cardiac surgery volumes since at least 2012, when it was unable to meet the Children’s Medical Services pediatric cardiac volume requirements and was placed on probationary status. The compelling evidence showed that in both its pediatric cardiac surgery program and its PHT program, Jackson has been a chronically low-volume provider. Indeed, it was undisputed that Jackson has the lowest PHT volume in the state. Jackson’s PHT waitlist activity indicates continued low volume. Ms. Smith-Fields compared Jackson’s waitlist additions to her program’s experiences and concluded Jackson’s waitlist additions are not indicative of an active program: And so the other thing I guess that really stood out for me when I looked at this was how many patients were put on the waitlist? So this says that they added two patients to the waitlist in 2014. That's telling me that's not a very active program. In my own program in 2015, where we did 15 transplants, we put 24 candidates on the list that year. Lucille Packard did 20 transplants last year, they put 32. So I just run the ratios, if I put two patients on the list, I am only expecting to do one or two transplants, that's going to keep you being a very small program. Several NCH physicians discussed the correlation between volume and quality, and expressed concerns that Jackson’s PHT program was just too low volume for them to feel comfortable recommending patients go there. Ms. Smith-Fields examined Jackson’s PHT scorecards and had several concerns about the quality of Jackson’s PHT program, including: Jackson taking too long to waitlist patients; having patients on the waiting list too long; and putting patients on inactive status for unusually long periods of time. She agreed that risk aversion is a common phenomenon in small transplant programs. Jackson unconvincingly attempted to explain its perennially low PHT volumes by suggesting that Dr. Rusconi was better at medically managing patients to avoid transplant. In response, Dr. Guleserian testified that all PHT programs do everything they can to medically manage their patients in an effort to avoid transplantation. According to Dr. Guleserian, to believe that Jackson has found some magic formula to avoid transplantation, but is somehow hiding this secretly away from the rest of the transplant world, is not plausible. She explained that she sits on various national committees and boards dedicated to PHT, and if such an approach had been developed with those kinds of results, she would be aware of it. Moreover, there is no evidence of record to suggest that all four Florida PHT programs do not have heart failure programs at least as robust and successful as Jackson’s program. Jackson’s contention that its low PHT volume is the product of a particularly successful heart failure program is not credible. While it is undisputed that PHT should be considered the intervention of last resort, the evidence also established that for some children, there is no alternative to PHT. This is reflected by the fact that in CY 2015 a total of 30 PHTs were performed in the four Florida PHT programs. Whatever the reason(s) for its consistently low PHT volumes, the fact remains that during CY 2010 through CY 2015, Jackson performed a total of only seven PHTs, by far the lowest volume of any of the PHT providers in the state. During this same period of time, the other three Florida PHT programs performed a combined total of 121 PHTs. Given the well- documented relationship between volume and outcome of surgical procedures, Jackson’s low PHT volume alone raises legitimate quality of care concerns. Adverse Impact on Jackson and DiMaggio The evidence demonstrated NCH only rarely refers PHT candidates to Jackson and DiMaggio. Jackson only presented evidence of one potential transfer patient it claimed was referred by NCH in the last several years. However, no specific referring cardiologist was identified, no NCH witnesses corroborated the referral, and no records were produced to corroborate the referral was from NCH. NCH presented evidence of two of its patients that sought transplant at Jackson. One of these patients died without being listed for transplant (despite at least one of the cardiologists at Jackson fighting to get the patient either listed or transferred to Shands), and the other patient ultimately received their transplant at Shands. The consistent testimony from NCH physicians was that they are hesitant to refer PHT patients to Jackson because of its low volume and other perceived quality issues. This is particularly concerning since NCH’s patients represent 60 percent of the pediatric cardiac surgeries performed in OTSA 4, and many of these patients have congenital heart defects that will eventually result in them requiring a PHT. Jackson argued that NCH referring its patients to Shands and All Children’s, rather than Jackson, was the reason why Jackson had been unable to grow its transplant program. Some Jackson witnesses intimated NCH was intentionally sabotaging Jackson’s program by not referring its patients because of prior fallings-out between the hospitals and their physicians. While the evidence showed there had been several failed attempts for NCH and Jackson to work collaboratively with pediatric cardiac patients, it did not show that this was the reason why NCH physicians rarely refer patients to Jackson. Rather, the lack of referrals was based upon quality concerns. Indeed, credible testimony established that NCH physicians are advising their patients about the correlation between volume and quality as documented in the medical literature, resulting in those PHT candidates, who have the financial means and clinical ability to travel, choosing to pursue their PHTs at higher- volume programs. Given, NCH’s dominant market position and quality concerns, these referral patterns do not appear likely to change. The greater weight of the evidence established that approval of the NCH PHT program would have minimal, if any, impact on the volume of PHTs being performed at Jackson. For the same reasons identified with respect to Jackson, approval of the NCH program will likely have minimal, if any, impact on the volume of PHTs performed at DiMaggio. Section 408.035(1)(c): The ability of the applicant to provide quality of care and the applicant’s record of providing quality of care. NCH has a demonstrated record of providing quality cardiac services to its patients. NCH’s cardiology and heart surgery program is ranked 40th in the United States by U.S. News and World Report. In addition, NCH has more pediatric programs ranked among “America’s Best” by U.S. News and World Report than any other hospital in Florida. NCH’s dedicated CICU, staffed with a dedicated cardiac team, will be able to provide high quality care for PHT patients. NCH’s cardiac nursing staff has an average of 12 years’ experience caring for heart patients. NCH’s cardiac physicians are all highly qualified, with decades of experience. Jackson alleged quality deficiencies related to NCH’s staffing, clinical review committee, protocols and procedures, laboratory and pathology services, and staff and patient family educational programs. However, none of these alleged deficiencies persuasively shed doubt on NCH’s ability to provide excellent quality of care to its PHT patients. Section 408.035(1)(d): The availability of resources, including health personnel, management personnel, and funds for capital and operating expenditures, for project accomplishment and operation. Short Term Financial Feasibility The parties stipulated to NCH’s ability to initially fund the project. Availability of Health and Management Personnel NCH’s existing management personnel will oversee the proposed project. Given the relatively small size of the project, the existing management staff is more than capable of overseeing and managing this additional program. Based upon its PHT volume projections, which are credible, NCH is expecting its average daily census (ADC) of cardiac patients to increase by only one to two patients a day as a result of the PHT program. NCH currently has a dedicated cardiac clinical staff of 16 to 20 registered nurses, nurse practitioners, and technicians who are more than capable of handling the projected increase in ADC. In addition, NCH currently has eight registered nurses and four advanced nurse practitioners that have dedicated heart transplant experience. Upon approval of the program, NCH will ensure that all staff is properly trained and educated prior to the implementation of the PHT program. This includes the training to prepare both a nutritionist and a transplant coordinator. With the successful recruitment of Dr. Guleserian, who has performed 133 pediatric heart transplants, NCH’s surgeons and other physicians are more than capable of staffing the PHT program. NCH will not have any difficulty recruiting a high- quality heart failure specialist given NCH’s reputation, cardiac surgery volumes and market shares, and reputable physician team already in place. Section 408.035(1)(f): The immediate and long-term financial feasibility of the proposal. As noted, the parties stipulated that NCH has the financial ability to fund the proposed program. As to long-term financial feasibility, NCH has $586 million in net assets with a net operating income of $100 million per year. NCH is well-positioned to absorb any potential losses that the PHT program might incur, and is dedicated to maintaining the program, regardless of profit or loss, due to its commitment to meeting the needs of the community. NCH has a history of funding financially unprofitable programs when there is a critical need for them in the community. An example is NCH’s LifeFlight program, which generates no profit for NCH and, in fact, operates at a $3 million per year loss. Jackson raised issues regarding errors in NCH’s financial schedules attached to the CON application. Ms. Greenberg incorrectly included a full-time physician’s salary in the financial schedule, at the wrong amount. Physicians are not employed directly by NCH and should not have been included. Ms. Greenberg’s third-year financial projection, while correctly listing staffing costs as a line item, failed to include that cost in the final total. However, correcting for these minor errors shows that this program will still be profitable. It is also worth noting that when AHCA is evaluating transplant programs, it looks at the financial health of the entire applicant, not just the program under CON review in a vacuum. As Ms. Fitch explained: THE COURT: Okay. I have heard testimony today, and you may have heard it as well, from Mr. Balsano regarding an addition error that apparently existed on the NCH pro formas. You have testified that the Agency found the project to be financially feasible in the long-term. At the time the Agency made that determination, had that addition error been revealed to the Agency? THE WITNESS: Not that I know of. But I will say, in terms of the Agency, typically we don’t see that transplant programs are necessarily profitable on their own. We do look at the entire system to determine whether a facility can maintain a program. We have seen a number of programs come in that, on their own, are not financially feasible but in an entire health system, it is a feasible feat for an application. So I heard Mr. Balsano’s testimony, and while I think that’s a significant addition error, I don’t know that that would have necessarily changed the review. I don’t want to speak for the financial analysis unit, but I have seen programs that on their own are not financially feasible but the Agency determines that the health system can support it, based on their total system. Given the overall financial strength of NCH, and its commitment to continue to fund the PHT program regardless of its profitability, the long-term financial feasibility of the program is not in question. Section 408.035(1)(g): The extent to which the proposal will foster competition that promotes quality and cost- effectiveness. As detailed above, there is an unexplained use rate disparity between Miami-Dade County, OTSA 4, and the rest of the state with regard to PHT. This disparity is a strong indicator that there is an access issue for residents of District 11. The evidence established that Jackson has not performed a PHT on any Miami-Dade County resident in the past three years. The access issue is particularly pronounced for complex cases, both because Jackson appears to be reluctant to list and transplant complex cases, and because a significant population of critically ill children cannot be safely transferred from NCH to Jackson. Approval of NCH’s application will provide residents of District 11 and OTSA 4 access to a high-volume, high-quality cardiac program for PHT, something they do not have access to now. There is no question that approval of the NCH program will foster competition. As Dr. Burke testified, in his experience approval of a new PHT provider serves as a stimulus to existing providers. There is also little question that once established, the NCH program will be high-volume, particularly relative to the volumes of PHT being done at Jackson and DiMaggio. Section 408.035(1)(g): The costs and methods of the proposed construction, including the costs and methods of energy provision and the availability of alternative, less costly, or more effective methods of construction. NCH did not propose construction for this project. This criterion is not in dispute. Section 408.035(1)(g): The applicant’s past and proposed provision of health care services to Medicaid patients and the medically indigent. NCH has a long history of providing health services to Medicaid patients and the medically indigent. In CY 2013 and CY 2014 NCH provided $2,327,848 and $1,193,660 in charity care, respectively, representing 2.1 and 2.5 percent of its net patient revenue. NCH provided $106,941,948 in conventional Medicaid and $134,616,815 to patients under Medicaid Managed Care in CY 2014. NCH's projects that annually, over 60 percent of the PHT patient days will be Medicaid. This payor mix is based on NCH’s complex cardiac patient payor mix, and is reasonable. NCH has and will continue to provide health care services to Medicaid patients and the medically indigent. Inasmuch as the majority of pediatric patients qualify for Medicaid, and NCH has a history of providing care to Medicaid patients and the medically indigent, both Jackson and AHCA concede the proposal’s compliance with this criterion is not in dispute.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a final order be entered approving CON Application No. 10421 filed by Variety Children’s Hospital, d/b/a Nicklaus Children’s Hospital, subject to the conditions contained in the applications. DONE AND ENTERED this 15th day of May, 2017, in Tallahassee, Leon County, Florida. S W. DAVID WATKINS Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 15th day of May, 2017. COPIES FURNISHED: Richard Joseph Saliba, Esquire Kevin Michael Marker, Esquire Agency for Health Care Administration Mail Stop 3 2727 Mahan Drive Tallahassee, Florida 32308 (eServed) Geoffrey D. Smith, Esquire Susan Crystal Smith, Esquire Stephen B. Burch, Esquire Smith & Associates Suite 202 1499 South Harbor City Boulevard Melbourne, Florida 32901 (eServed) Thomas Francis Panza, Esquire Panza, Maurer, & Maynard, P.A. Suite 905 2400 East Commercial Boulevard Fort Lauderdale, Florida 33308 (eServed) Elizabeth L. Pedersen, Esquire Panza, Maurer & Maynard, P.A. Suite 905 2400 East Commercial Boulevard Fort Lauderdale, Florida 33308 (eServed) Paul C. Buckley, Esquire Panza, Maurer & Maynard, P.A. Suite 905 2400 East Commercial Boulevard Fort Lauderdale, Florida 33308 (eServed) Angelina Gonzalez, Esquire Panza, Maurer, & Maynard, P.A. Suite 905 2400 East Commercial Boulevard Fort Lauderdale, Florida 33308 (eServed) Christopher Charles Kokoruda, Esquire Eugene Shy, Jr., Esquire Laure E. Wade, Esquire Miami-Dade County West Wing, Suite 109 1611 Northwest 12th Avenue Miami, Florida 33136 (eServed) Abigail Price-Williams, Esquire Miami-Dade County West Wing, Suite 109 1611 Northwest 12th Avenue Miami, Florida 33136 Richard J. Shoop, Agency Clerk Agency for Health Care Administration 2727 Mahan Drive, Mail Stop 3 Tallahassee, Florida 32308 (eServed) Justin Senior, Secretary Agency for Health Care Administration 2727 Mahan Drive, Mail Stop 1 Tallahassee, Florida 32308 (eServed) Stuart Williams, General Counsel Agency for Health Care Administration 2727 Mahan Drive, Mail Stop 3 Tallahassee, Florida 32308 (eServed) Shena L. Grantham, Esquire Agency for Health Care Administration 2727 Mahan Drive, Mail Stop 3 Tallahassee, Florida 32308 (eServed) Thomas M. Hoeler, Esquire Agency for Health Care Administration 2727 Mahan Drive, Mail Stop 3 Tallahassee, Florida 32308 (eServed)
Findings Of Fact Petitioner's application for licensure by endorsement was filed November 30, 1993. By order dated August 10, 1994, Respondent denied Petitioner's application on the basis of Petitioner's "less than favorable evaluation" from Robert Packer Hospital; Petitioner's failure "to list training at Wilson Memorial Regional Medical Hospital" on the application; Petitioner's termination from the Wilson Memorial Regional Medical Center training program due to "academic and behavioral problems"; and Petitioner's inability to "practice with skill and safety." Petitioner's first post graduate training was a three year residency program in internal medicine at Robert Packer Hospital in Sayre, Pennsylvania. Petitioner participated in that program during the period 1984-85, and received an overall evaluation denominated as "Recommend with some Reservation" from Fredrick D. Rose, M.D. at Robert Packer Hospital. The only lower evaluation that could have been received, as denoted on the evaluation form, was a "Cannot Recommend." There were two evaluation ratings higher than that rating received by Petitioner, "Recommend as Qualified and Competent" and "Recommend as Outstanding Applicant." Subsequent to his evaluation, Petitioner was not offered a contract permitting him to continue for a second year in the three year program. Respondent's application form, completed and submitted by Petitioner, required that Petitioner set forth a chronological listing of all postgraduate training (including internship, residency, and fellowship) from date of graduation to the present. Directions on the application required the applicant to "[a]ccount for all time from date of graduation medical school to present. DO NOT LEAVE OUT ANY TIME". Petitioner responded by listing training at Robert Packer Hospital in the specialty of internal medicine for the time period of July 1, 1984 to July 1, 1985. Petitioner did not list on the application, or his curriculum vitae (CV) which was attached to the application, his participation in postgraduate training at Wilson Regional Memorial Medical Center (Wilson Memorial) in the specialty of family medicine from July 1989 to June 1990. By letter to the Board of Medicine dated January 1, 1994, Petitioner stated that the omission of training at Wilson Memorial had occurred in an effort to avoid "more delay in the application process." In an appearance before the Board of Medicine's credentials committee on July 8, 1994, Petitioner testified under oath that he lied on his application when he omitted disclosing the Wilson Memorial training program on the application, and that he did so because "it looked bad" since he had not finished the program. He also testified to the committee that he did not think the Wilson Memorial residency program was relevant to the application since he did not receive "any kind of credit" for the program. To the contrary, Petitioner received eight months credit for his participation in the Wilson Memorial residency program, a 12 month program. As established by his testimony at the final hearing, Petitioner was aware that failure to list all training on the application would jeopardize his ability to obtain a license. The application also required that Petitioner list in chronological order from date of graduation to present, all practice experience and/or employment. Petitioner responded on the application with the written notation "see CV [curriculum vitae]." Petitioner's CV, submitted with the application, represented that he was an "ER attending" during the period 1989-90 at St. Joseph's Hospital in Elmira, New York, and was working full time there. Petitioner further testified to the Board of Medicine's credentials committee meeting on July 8, 1994, that his preparation of the CV was "half- hearted" and that "it [the document] wouldn't contribute anything." Petitioner's CV concludes with his handwritten certification that the document is "true and accurate." During Petitioner's participation in the residency program at Wilson Memorial, he moonlighted as an emergency room physician at St. Joseph's Hospital. While on call as a resident, Petitioner either paid other residents to cover his duties at Wilson Memorial, or he called in sick in order to be available for work at St. Joseph's Hospital. As established by Petitioner's testimony at the final hearing, the ability to be accurate and truthful reflects on the ability to practice medicine with skill and safety.
Recommendation Based on the foregoing, it is hereby RECOMMENDED that a Final Order be entered denying Petitioner's application. DONE and ENTERED this 19th day of August, 1996, in Tallahassee, Leon County, Florida. DON W. DAVIS, 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 19th day of August, 1996. APPENDIX The following constitutes my specific rulings, in accordance with Section 120.59, Florida Statutes, on findings of fact submitted by the parties. Petitioner's Proposed Findings. 1.-5. Rejected, unnecessary to result reached. Adopted generally. Incorporated by reference. 8.-10. Subordinate to HO findings. 11.-12. Adopted, not verbatim. 13.-14. Not supported by weight of the evidence. 15. Rejected, unnecessary. 16.-19. Subordinate to HO findings. 20.-23. Rejected, relevance. 24.-26. Rejected, subordinate. Respondent's Proposed Findings. 1.-7. Adopted, but not verbatim. 8. Rejected, unnecessary to result. COPIES FURNISHED: Robert S. Cohen, Esquire Pennington & Haben Post Office Box 10095 Tallahassee, Florida 32302-2095 Allen R. Grossman, Esquire Department of Legal Affairs The Capitol, Plaza Level 01 Tallahassee, Florida 32399-1050 Jerome Hoffman, Esquire Agency for Health Care Administration 2727 Mahan Drive Tallahassee, Florida 32308-5403 Dr. Marm Harris, Executive Director Board of Medicine Agency for Health Care Administration 1940 North Monroe Street Tallahassee, Florida 32399-0750
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 Based upon all of the evidence, the following findings of fact are determined: Petitioner, Lakeland Regional Medical Center (LRMC), is a 897-bed private, not-for-profit, general acute care hospital located at 1324 Lakeland Hills Boulevard, Lakeland, Florida. It is considered a major regional referral hospital and provides a wide range of tertiary services, including open heart surgery. The facility is located in District 6 and is one of six facilities in the district having an existing open heart surgery program. Respondent, Department of Health and Rehabilitative Services (HRS), 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. On September 26, 1988 intervenor, Winter Haven Hospital, Inc. (WHH), filed with HRS an application for a CON seeking authority to establish an open heart surgery program at its facility in Winter Haven, Florida. After reviewing the application, on February 3, 1989, HRS published notice of its intent to issue the requested CON. If approved, this program would be in competition with similar programs operated by LRMC and intervenor, Hillsborough County Hospital Authority d/b/a Tampa General Hospital (TGH). Those two parties have initiated formal proceedings in Case Nos. 89-1286 and 89-1287 to contest the proposed grant of authority. Intervenor, Venice Hospital, Inc. (Venice), has a pending application for authority to establish an open heart surgery program in a separate administrative proceeding and has intervened in opposition to LRMC's rule challenge. It is noted that LRMC, WHH and TGH are located in District 6 while Venice is located in an adjoining, but separate, district. All parties have standing in this proceeding. In order for HRS to grant a certificate of need, it is necessary for an applicant to satisfy all relevant rule and statutory criteria. In this vein, the agency has promulgated Rule 10-5.011(1)(f), Florida Administrative Code (1987), which contains certain criteria pertaining to open heart surgery programs. That rule provides in relevant part as follows: (f)2. Departmental Goal. The Department will consider applications for open heart surgery programs in context with applicable statutory and rule criteria. The Department will not normally approve applications for new open heart surgery programs in any service area unless the conditions of Sub-paragraphs 8. and 11., below, are met. * * * 11.a. There shall be no additional open heart surgery programs established unless: (1) 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, (Emphasis added) * * * The requirements of this rule, which are unambiguous, and other pertinent statutory and rule criteria, are to be applied by HRS to all applicants, including WHH, during the CON review process. Although the rule itself is not being challenged by LRMC, subparagraph 11.a. of the rule is at the heart of this controversy. Petitioner and TGH contend that the clear language of the rule requires that, absent the existence of not normal circumstances, HRS may not award a CON unless each existing and approved open heart surgery program in the service area is operating at and is expected to continue to operate at 350 procedures per year. Because there are now six approved and existing open heart surgery programs in the district, petitioner argues that the rule mandates that, before a new program can be authorized, each of the six programs must meet the required level of 350 procedures per year. They contend further that the particular policy applied by HRS to WHH's application is not apparent on the face of rule 10-5.011(1)(f)2. and thus it constitutes an unpromulgated rule. In preliminarily approving WHH's application, HRS admits that it used a so-called averaging policy which it agrees may be described in the following manner: HRS has formulated and is applying in reviews of Certificate of Need ("CON") applications for new open heart surgery services a policy of general applicability that is uniformly and consistently applied, which calls for the averaging of the utilization of existing and approved adult open heart surgery programs in the applicable service area, and which deems subparagraph 11.a.(I) of Rule 10-5.011(1)(f), Fla. Admin. Code, to be met if the average utilization of all such existing and approved programs in that service area is at least 350 cases (the "Averaging Policy"). Pursuant to its Averaging Policy, HRS will approve a CON application for a new adult open heart surgery program under Rule 10- 5.011(1)(f), Fla. Admin. Code, even if each existing and approved program in the proposed service area is not operating at a minimum of 350 adult cases per year, and even if no "not normal" circumstances are presented in the application or found to exist in the State agency Action Report. Stated another way, HRS deemed subparagraph 11.a. to have been met in WHH's case because, after dividing the total number of procedures performed district wide by the number of existing and approved programs, there were an average number of procedures in excess of 350 for each program in the district. It used this averaging process even though two programs were not operational at the time the review process took place, and only two (LRMC and TGH) of the six programs had actually performed more than 350 procedures during the specified time period being measured. 1/ Thus, the averaging policy used by HRS allows approval of a CON application for open heart surgery even if only some programs in a district, rather than each, have the required 350 case volume. The averaging technique has not been reduced to writing in a memorandum, manual or agency policy directive, and it has not been formally adopted as a rule. In this regard, HRS, but not WHH and Venice, has admitted that the policy is indeed a rule. The results of applying that "rule" are contained in the state agency action report issued by HRS and made a part of this record. HRS has consistently and uniformly applied this averaging technique in every open heart surgery case except one since the rule was adopted in substantially its present form on February 14, 1983. 2/ It has been applied without discretion by those HRS personnel who have the responsibility of administering the CON law and regulations. The proponents of the averaging policy argued first that the language in subparagraph 11.a. authorized its use. However, nothing in the language of the existing rule expressly refers to an averaging process. They also contended that when other provisions within the rule are read, the use of the policy becomes apparent. More particularly, they pointed to subsection (7) of the rule which requires that the provision of open heart surgery be consistent with the state health plan. That plan provides in part that one of its objectives is to maintain an average volume of 350 procedures at all programs in the state. However, the state health plan is not mentioned in subparagraph 11.a., subsection (7) does not track or mirror the averaging technique, and the same subsection does not alert the user of the rule to the fact that an averaging process will be applied.
Findings Of Fact The following is a statement of the facts taken verbatim from the Memorandum of Law in Opposition To Motion For Summary Recommended Order: The following facts are either evident from documents before the hearing officer, the authenticity of which are not disputed, or are contained in the Affidavit of Mr. Fitzgerald. On February 11, 1994, a board of directors meeting was held. The board that met is the governing body of Catholic Health Services, Inc. and also the governing body of Catholic Hospice of Broward, Inc. Fitzgerald Affidavit. On the day the meeting was held, Catholic Health Services, Inc. existed as a corporation. Catholic Hospice of Broward, Inc., however, did not exist on February 11, 1994; rather the Articles of Incorporation had been prepared and were on the desk of Archbishop McCarthy awaiting his signature. Among the items for the board to decide at that meeting was whether Catholic Hospice of Broward, Inc. should be formed as a Florida corporation to apply for a certificate of need for a new hospice program in Broward County. If the board decided against filing a certificate of need application, it would not be necessary to form this new corporation. The minutes of the board meeting reflect that: Included in the agenda package is a secretary's Certificate indicating that the Board authorizes the filing of the application for CON and authorizes the expenditures necessary in the pursuit and completion of this project and operation of Catholic Hospice of Broward, Inc. Also included is a draft of the Letter of Intent which would need to be filed no later than February 22, 1994, subject to the Archbishop's approval of the Articles of Incorporation. * * * A motion was then made by Fr. Whittaker to approve, pending the Archbishop's signature on the Articles of Incorporation, the filing of a Certificate of Need to establish a hospice in Broward county; seconded by Ralph Lawson, all were in favor. Msgr. Walsh abstained from the vote. Although not expressly reflected in the minutes, this board action was not to be effective until the applicant corporation, Catholic Hospice of Broward, Inc. existed. Fitzgerald Affidavit. The Articles of Incorporation were to be filed immediately upon being signed by the Archbishop. 1/ The February 11, 1994 board minutes were not drafted, or crafted, for purposes of scrutiny under a hot light by AHCA, or perhaps other interest, to support an attempt to defeat the company's certificate of need. Nor were they drafted to address every conceivable argument that could be advanced concerning letter of intent or resolution requirements of the statute or rules. Fitzgerald Affidavit. Following the February 11, 1994 board meeting, Archbishop McCarthy signed the Articles of Incorporation on February 16, 1994.2 The articles were filed at the Secretary of State on February 18, 1994.3 That same day, Brother Paul Johnson, Secretary of the new corporation, signed the Resolution "enacted on February 18, 1994" consistent with the board's direction that the Resolution not be effective until the corporation was formed.4 Subsequently, the letter of intent and Resolution were timely filed on or before February 22, 1994. . . . Catholic Hospice asserts that a second, redundant board meeting, following the filing of the articles of incorporation would have been unnecessary and superfluous. No subsequent action has been taken to ratify the resolution of February 11, 1994. AHCA argues that the resolution is void because the directors had no power to act on February 11, 1994, on behalf of a corporation which did not exist until the articles of incorporation were filed on February 18, 1994. Subsequently, in March 1994, Catholic Hospice filed its application for certificate of need number 7690, which was the subject of its February 22nd letter of intent.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the certificate of need application, number 7690, filed by Catholic Hospice, Inc., be denied. DONE AND ENTERED this 2nd day of June, 1995, in Tallahassee, Leon County, Florida. ELEANOR M. HUNTER Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 2nd day of June, 1995. COPIES FURNISHED: Richard Patterson, Esquire Senior Attorney Agency for Health Care Administration 325 John Knox Road, Suite 301 Tallahassee, Florida 32303-4131 Paul H. Amundsen, Esquire AMUNDSEN & MOORE 502 East Park Avenue Tallahassee, Florida 32301 R. S. Power, Agency Clerk Agency for Health Care Administration Atrium Building, Suite 301 325 John Knox Road Tallahassee, Florida 32303 Jerome W. Hoffman General Counsel Agency For Health Care Administration The Atrium, Suite 301 325 John Knox Road Tallahassee, Florida 32303
The Issue The issues are whether Respondent withdrew controlled substances from the narcotics dispensing system and failed to document the administration or wastage of those substances; if yes, whether this conduct fails to conform to minimum acceptable standards of prevailing nursing practice; and, if yes, what penalty should be imposed on Respondent's license as a registered nurse.
Findings Of Fact The Department is the state agency charged with regulating the practice of nursing in the State of Florida. Respondent Marla Gunderson ("Respondent") is, and has been at all times material hereto, a licensed registered nurse in the State of Florida, having been issued license number 2832622 by the Florida Board of Nursing in 1994. Respondent was employed by Lee Memorial Health Care System Rehabilitation Hospital ("Lee Memorial") as a registered nurse from about January 29, 2001, until about March 22, 2001. During the first three or four weeks of Respondent's employment, she participated in a full-time training program through Lee Memorial's education department. A part of this training included training in the administration of medications to patients. After completing the three or four-week training program, Respondent began working directly with patients. From about mid-February 2001 through early-March 2001, Respondent had no problems with documenting the administration of medications to patients. Some time in or near the middle of March 2001, Melanie Simmons, R.N. ("Simmons"), Lee Memorial's Nursing Supervisor, received a complaint from the night nurse following Respondent's shift. The complaint alleged that a patient's wife reported that the pain medication her husband was given by Respondent was not the Codeine that had been ordered by the physician. Pursuant to Lee Memorial's policies and procedures, Simmons conducted an investigation into the allegations of the above-referenced complaint regarding the Respondent. Lee Memorial's policies and procedures set out a specific method for conducting investigations regarding the administration of medications to patients. First, the physician's orders are checked to see what medications have been ordered for the patient. Next, the Pyxis records are pulled to determine if and when medications were withdrawn for administration to patients. The Pyxis system is a computerized medication delivery system. Each nurse has an assigned user code and a password, which must be entered before medication can be withdrawn from the Pyxis system. Then, medication administration records (MARs), the documents used by nurses to record the administration of medications to patients, are checked to verify whether the nurse documented the administration of the medications to the patients for whom they were withdrawn. Finally, the Patient Focus Notes, the forms used by nurses to document non-routinely administered medications, are also checked to determine if, when, and why a medication was given to a patient. If after comparing the physician's orders, Pyxis records, MARs, and Patient Focus Notes, it is determined that medications were not properly administered or documented, the nurse making the errors is advised of the discrepancy and given an opportunity to review the documentation and explain any inconsistencies. Simmons' investigation, which included comparing the physician's orders, Pyxis records, MARs and Patient Focus Notes, revealed discrepancies in medications withdrawn by Respondent and the MARs of the three patients under her care. The time period covered by the investigation was March 12 through March 17, 2001. Of the six days included in the investigation period, Simmons determined that all the discrepancies had occurred on one day, March 13, 2001. Nurses are required to record the kind and amount of medication that they administer to patients. This information should be recorded at or near the time the medication is administered. It is the policy of Lee Memorial that should a nurse not administer the medication or the entire amount of the medication dispensed under his or her password, that nurse should have another nurse witness the disposal of the medication. The nurse who serves as a witness to the disposal of medication would then enter his or her identification number in the Pyxis. As a result of that entry, the nurse who observed the disposal of the medication would be listed on the Pyxis report as a witness to the disposal of the medication not administered to patients. Such excess medication is termed waste or wastage. The physician's order for Patient F.R. indicated that the patient could have 1 to 2 Percocet tablets, to be administered by mouth, as needed every 3 to 4 hours. On March 13, 2001, at 14:06 Respondent withdrew 2 Percocet tablets for Patient F.R. However, there was no documentation in the patient's MAR, focus notes, and other records which indicated that Respondent administered the Percocet tablets to Patient F.R. The physician's order for Patient G.D. indicated that 1 to 2 Percocet tablets could be administered to the patient by mouth as needed every 4 to 6 hours. On March 13, 2001, at 11:18 Respondent withdrew 2 Percocet tablets and on that same day at 17:16, Respondent withdrew another 2 Percocet tablets for Patient G.D. However, there was no documentation in the patient's MAR, focus notes, or any other records which indicated that Respondent administered the Percocet tablets to Patient G.D. The physician's order for Patient T.G. indicated that 1 to 1.5 Lortab/Vicodin tablets could be administered to the patient by mouth as needed every 4 to 6 hours. On March 13, 2001, Respondent withdrew 2 Lortab/Vicodin tablets for Patient T.G. However, Respondent failed to document on the patient's MAR, focus notes, or other records that the medication had been administered to Patient T.G. With regard to the above-referenced medications withdrawn by Respondent on March 13, 2001, there is no documentation that any of the medications were wasted. All the medications listed in paragraphs 13, 14, and 15 are narcotics or controlled substances. Because Respondent did not document the patients' MARs or focus notes after she withdrew the medications, there was no way to determine whether the medications were actually administered to the patients. Proper documentation is very important because the notations made on patient records inform nurses on subsequent shifts if and when medications have been administered to the patients as well as the kind and amount of medications that have been administered. Without such documentation, the nurses taking over the subsequent shifts have no way of knowing whether medication has been administered, making it possible for affected patients to be overmedicated. Respondent has been a registered nurse since 1994 and knows or should have known the importance of documenting the administration of medications to patients. Respondent does not dispute that she did not document the administration and/or wastage of the narcotics or controlled substance she withdrew from the Pyxis system on March 13, 2001, for the patients identified in paragraphs 13, 14, and 15. Moreover, Respondent provided no definitive explanation as to why she did not properly document the records. According to Respondent, she "could have been busy, called away, [or] got distracted." Following Simmons' investigation of Respondent relating to the withdrawal and/or administration of medications, Respondent agreed to submit to a drug test. The results of the drug test were negative. Prior to being employed by Lee Memorial, all of Respondent's previous experience as an R.N. had been in long- term care. Except for the complaint which is the subject of this proceeding, there have been no complaints against Respondent's registered nurse's license.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department of Health enter a Final Order (1) imposing an administrative fine of $250; (2) requiring Respondent to remit the Agency's costs in prosecuting this case; (3) requiring Respondent to complete a continuing education course, approved by the Board of Nursing, in the area administration and documentation of medications; and (4) suspending Respondent's nursing license for two years. DONE AND ENTERED this 1st day of April, 2002, in Tallahassee, Leon County, Florida. CAROLYN S. HOLIFIELD 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 1st day of April, 2002. COPIES FURNISHED: Reginald D. Dixon, Esquire Agency for Health Care Administration General Counsel's Office-Practitioner Regulation Post Office Box 14229 2727 Mahan Drive Tallahassee, Florida 32317-4229 Marla Gunderson 1807 Northeast 26 Terrace Cape Coral, Florida 33909 Ruth R. Stiehl, Ph.D., R.N. Executive Director Board of Nursing Department of Health 4080 Woodcock Drive, Suite 202 Jacksonville, Florida 32207-2714 Mr. R. S. Power, Agency Clerk Department of Health 4052 Bald Cypress Way, Bin A02 Tallahassee, Florida 32399-1701 William W. Large, General Counsel Department of Health 4052 Bald Cypress Way, Bin A02 Tallahassee, Florida 32399-1701
Findings Of Fact Petitioner, Peter P. McKeown, is a graduate of the University of Queensland Medical School in Brisbane, Australia. He holds the degrees of Bachelor of Medicine and Bachelor of Surgery. Doctorates of Medicine, under the British system, are reserved for specialists. Nonetheless, the medical training Petitioner received equates to that leading up to the award of the degree of Doctor of Medicine in the United States, and he is a physician and licensed as such in several states. He has completed residencies in general and thoracic surgery in Australia and the United States and has taken advanced training in cardiovascular and thoracic surgery at Emory University. Immediately before coming to the University of South Florida, (USF), Dr. McKeown was an Assistant Professor of Surgery at the University of Washington. In mid to late 1988, Dr. McKeown responded to an advertisement USF had placed in the Journal of the American Medical Association seeking applicants qualified for appointment at the Associate Professor level "... to join the Department of Surgery at the University of South Florida College of Medicine as the Chief of Cardiothoracic Surgery." He was selected for the position and joined the faculty effective May 1, 1989. All the correspondence leading up to Petitioner's joining the University faculty referred not only to his appointment as Associate Professor but also his assignment as Chief of the Cardiothoracic Surgery Division. Only the actual state employment contract described his employment exclusively as Associate Professor and made no mention of the Chief position. Under these circumstances, Petitioner did not gain any proprietory interest in the position of Chief of the Cardiothoracic Surgery Division. Dr. McKeown held the position of Chief of the Cardiothoracic Surgery Division until April, 1994, when, as a result of a decision made by the Chairman of the school's Department of Surgery, he was replaced as Chief and that position was filled, on a temporary basis, by the Department Chair. Petitioner claims that when he arrived at USF to assume the directorship, an administrative position, he saw an opportunity to develop the position into something significant. He contends he would not have come to USF unless he was to be the Chief of the Division as there was no appeal to him in a position as a general faculty member. He wanted an opportunity to budget, hire people, and develop plans and programs, and in order to advance in academic medicine, one must, at some point, hold an administrative position. Apparently the Department of Surgery had experienced a rapid turnover in faculty. It is not clear whether this caused or was the result of a dispute with administrators and medical staff at Tampa General Hospital, (TGH), where much of the clinical medical school activity is carried on. However, the program was recognized as being weak in cardiothoracic surgery, and this condition offered Petitioner the challenge he wanted. In his five years as Chief, Petitioner increased both the number and quality of personnel and revenues considerably. He developed affiliations with several foreign universities and recruited qualified people, built up the laboratory, secured more grants, developed a program of continuing medical education and raised the examination scores of the school's graduates. He opened new clinical programs and built up both billings and collections to the point where the program revenues were increased at least 2 to 5 times. By 1992- 1993, the Division was making money and generating a surplus and still used clinic funds to support research. During his tenure as Chief of the Division, Petitioner served under two Department of Surgery chairmen. The first was Dr. Connar, the individual who recruited him; and the incumbent is Dr. Carey, the individual who removed him. Petitioner asserts that at no time during his tenure in the position of Chief of the Cardiothoracic Surgery Division was he ever told, by either Department Chairman, that his performance was unsatisfactory. All Division heads within the Department were, from time to time, counseled about personnel costs, and Petitioner admits he had some differences with Dr. Carey about that subject and some other financial aspects of the job, but nothing different than anywhere else in academia. Petitioner was removed by Dr. Carey based in part upon his alleged inability to get along with people. Though he claims this is not true, he admits to three areas of conflict. The first related to his objection to transplants being accomplished by unqualified surgeons which, he alleges, Dr. Carey permitted to further his own ends. The second related to the pediatric heart transplant program for which Petitioner supported one candidate as chair and Dr. Carey supported another. The third related to Petitioner's reluctance to hire a physician whom Dr. Carey wanted to hire but to whom Petitioner purportedly objected. Of the three areas of dispute, only the first two came before his removal, but he contends at no time was he advised his position was a problem for the Department. By the same token, none of Petitioner's annual performance ratings reflected any University dissatisfaction with his performance. At no time was he ever rated unsatisfactory in any performance area; and prior to his removal, he had no indication his position as Chief of the Division was in jeopardy. Dr. Carey indicates he did counsel with Petitioner often regarding his attitude but did not rate him down because he hoped the situation would improve. Dr. McKeown was called to meet with Dr. Carey in his office on April 12, 1994. At that meeting, Dr. Carey was very agitated. He brought up the "Norman" incident and indicated he was going to remove Petitioner as Chief of the Division. Dr. McKeown admits to having made an inappropriate comment regarding Dr. Norman, another physician, to a resident in the operating room while performing an operation. He also admits that it was wrong to do this and apologized to Dr. Norman both orally and in writing shortly thereafter. Dr. Norman accepted his apology and Petitioner asserts that after his removal, Dr. Norman called him and assured him he, Norman, had not prompted the removal action. Dr. Norman did not testify at the hearing. Dr. Carey removed Petitioner from his position as Chief because of the comments he had made regarding Dr. Norman. Almost immediately after the meeting was concluded, Dr. Carey announced in writing his assumption of the Chief's position, in which position he remained until he hired Dr. Robinson as Chief in April, 1995. Petitioner found out that Carey's threat to remove him had been carried out the following day when his nurse told him his removal had been announced at the Moffett Cancer Center. He thereafter heard other reports of his removal from other sources, and based on what had happened, concluded his removal was intended to be and constituted a disciplinary action for his comment regarding Dr. Norman. He was not advised in advance of Carey's intention to impose discipline nor given an opportunity to defend himself before the action was taken. He claims he was not given any reason for his removal before or at the time of his dismissal. It is found, however, that the removal was not disciplinary action but an administrative change in Division leadership. Dr. McKeown at first did nothing about his removal, believing it would blow over. However, after he heard his removal had been publicized, he called several University officials, including a Vice-President, the General Counsel and the Provost, to see how the matter could be handled. He claims he either got no response to his inquiries or was told it was a Medical College problem. He then met with the Dean of the College of Medicine who indicated he could do nothing. After he was removed as Division Chief, Petitioner's salary remained the same as did his supplement from his practice. He claims, however, his removal has had an adverse effect on his reputation in the medical and academic communities. It is his belief that people now feel something is wrong with him. Dr. Carey's blunt announcement of his assumption of the Chief's position, without any reasons being given for that move or credit being given to Petitioner for his past accomplishments has had an impact on his ability to work effectively. After his removal, he received calls from all over the world from people wanting to know what had happened. The removal has, he claims, also made it more difficult for him to get grants and has, thereby, adversely impacted his ability to do productive research. In addition, his removal made it difficult for him to carry out his academic duties. His specialty is still presented in student rotations, only in a different place in the medical curriculum. Dr. McKeown has sought reinstatement to the administrative position of Chief of the Division. He is of the opinion that Dr. Carey's action in removing him from his position as Division Chief was capricious and damaging to the University as well as to his career. Petitioner admits he could have been less confrontational in the performance of his duties as Division Chief, but he knows of no complaints about him from TGH, All Children's Hospital or the VA Hospital. There are, however, letters in the files of the Department Chairman which indicate some dissatisfaction with Petitioner's relationships in some quarters and, as seen below, there were signs of dissatisfaction from both TGH and All Children's Hospitals. Petitioner admits he may have been somewhat overbearing or abrasive, but neither his alleged inability to properly steward finances nor his alleged inability to get along with people were mentioned to him at the time of dismissal or before. After Dr. Carey assumed the Chairmanship of the Department of Surgery in July, 1990, he saw Dr. McKeown frequently on an official basis at first. A Chief, as Petitioner was, has many and varied functions such as administration, teaching, fiscal, research, clinic administration and the like. People skills are important because of the necessary interface with colleagues, faculty, administrators and the public. When Dr. Carey came to USF, Dr. McKeown had not been in place very long, and the Division of Cardiothoracic Surgery was not doing well financially. There were contract negotiations going on with the VA Hospital which were not going well, at least partly because, Dr. Carey asserts, Dr. McKeown had made some major unacceptable demands. As a result, Dr. Carey stepped in, along with Dr. Benke, who was very effective in dealing with the VA, and as a result, an agreement was reached which resulted in somewhere between $275,000 and $300,000 per year coming in which put the Division in the black. Dr. Carey recalls other instances indicating Dr. McKeown's inability to get along with others. One related to the relationship with TGH previously mentioned. TGH had made a decision to use a particular physician as head of its transplant program because, allegedly, Dr. McKeown had so angered private heart patients they would not let him be appointed even though Dr. McKeown was Dr. Carey's choice. As it turned out, Dr. Carey convinced the TGH Director and another physician to agree to a plan whereby Dr. McKeown would be head of the program 50 percent of the time. This would have been good for the University, but Dr. McKeown refused indicating that if he could not be in charge all of the time, he would not be in charge at all. Another incident relates to All Children's Hospital. That institution wanted to initiate a pediatric heart transplant program and a meeting was set up to which Dr. McKeown was invited. Petitioner so infuriated the community surgeons attending that meeting they would not work with him, and without his, Carey's, efforts, Dr. Carey claims the program was doomed to failure. As a result, Carey asked Dr. Nevitsky to help get the program started. This gave the USF an opportunity to participate in the program, but when Nevitsky left, they lost it. Still another example, according to Dr. Carey, is the fact that some surgeons on staff have called to complain about Dr. McKeown's attitude and unwillingness to compromise and negotiate and about his demands for service and staff, all of which creates friction among the hospital staff. A few days before Dr. Carey removed Petitioner as Chief, he spoke with the Dean of the College of Medicine, a Vice-president of the University, and others who would be impacted, about his concern regarding the Cardiothoracic Surgery Division and, in fact, he had had discussions with other officials even before that time. Long before making his decision to remove Petitioner, Carey spoke of his consideration of possibly shifting the emphasis within the Division to non-cardiac thoracic surgery in place of the cardiac program which Dr. Carey felt was not very successful. He believed the program did not do enough procedures to support the medical school affiliation. Dr. Carey chose to dismiss Dr. McKeown as Chief of the Division on April 12, 1994, after learning of McKeown's destructive attack on another surgeon before a junior physician in a public place, an operating room, (the Norman incident). He notes that over the years there was a building concern regarding Dr. McKeown's abilities as an administrator, and this incident with Dr. Norman was the last straw. Dr. Carey had received complaints about Petitioner from other physicians, all of which he discussed with Dr. McKeown. Finally, with the Norman incident, it became abundantly clear that Dr. McKeown's capabilities as a leader had diminished to the point where a change was necessary. Before he dismissed Petitioner, and during the investigation which led up to the dismissal, Dr. Carey admits, he did not give Dr. McKeown any opportunity to give any input to the decision. By the time Carey met with McKeown on April 12, 1994, his mind was made up. The Norman incident was demonstrative of what Carey perceived as McKeown's lack of supervisory ability, and it was that factor which led Carey to the ultimate decision to remove McKeown. He felt it necessary to act then and not leave Dr. McKeown in place during the search for a replacement. Petitioner cites alleged comments made by Carey to others that he would have relieved anyone for doing what Petitioner did in the Norman incident. Dr. Carey cannot recall having made such a statement. He claims he considered disciplinary action against Petitioner for the Norman comments but decided against it. However, it was the last in a series of incidents which caused him to question the propriety of McKeown's placement in the Chief's position, and which ultimately cemented his decision to replace him. Dr. Carey met with Dr. McKeown several times before the dismissal and counseled him about administrative deficiencies in his performance, but he never told Dr. McKeown that unless he improved, he would be dismissed. This is consistent with Petitioner's testimony that he was not warned of his shortcomings or of the administration's dissatisfaction with his performance. Disagreements in conversations between superior and subordinate, meant by the former to be corrective in nature, are not always taken as such by the latter. Dr. Carey did not document any of this in Dr. McKeown's personnel files but put some of the information he received by way of communications from others in the files. These are the letters submitted by the University, pursuant to agreement of the parties, subsequent to the hearing. They contributed to Carey's increasing concern about Dr. McKeown's ability to lead the Division. At no time, however, though he questioned Dr. McKeown's leadership, did Dr. Carey ever question his good faith and sincerity, nor does he do so now. When he finally decided action was necessary, on April 12, 1994, Dr. Carey wrote a memorandum to the Medical College faculty concerning his assumption of the position as Chief of the Cardiothoracic Surgery Division. He also advised Dr. McKeown of his removal. Dr. Carey remained in the Chief's position, holding that title in an administrative capacity and not from a clinical standpoint, for approximately one year, intending to stay in the position only until he could find a fully qualified thoracic surgeon to take the job. After Carey removed Petitioner, he was contacted by the Medical College Dean who asked that he get with McKeown and try to work something out. He thereafter offered Dr. McKeown the position of Chief of the cardiac section of the Division but McKeown declined. Dr. Carey also, on April 26, 1994, wrote to TGH recommending that Dr. McKeown be allowed to have more impact on the hospital's transplant program, pointing out that the change in McKeown's position at the University was occasioned by a need for a change in leadership. According to Dr. Tennyson J. Wright, Associate Provost of the University, disciplinary action against nonunion faculty members is governed by Rule 6C4-10.009, F.A.C., and requires notice of proposed action be given before such disciplinary action is taken. The contract which Dr. McKeown holds and has held since the inception of his tenure at the University, is a standard USF/State University System contract. It reflects Petitioner was hired as an Associate Professor, which is one of the three types of personnel classifications used within the system. These are faculty, administration and support. Petitioner's contract does not refer to his holding the Division Chief position and it is not supposed to. Such a position is an administrative appointment within a Department and a working title used to define the holder's duties, and service in such a position is at the pleasure of the Department Chair. Appointment to or removal from a Chief position is an administrative assignment. The position of Department Chairperson, on the other hand is a separate position and subclassification within the University classification system and is different.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is, therefore: RECOMMENDED that Petitioner, Peter P. McKeown's, grievance against the University of South Florida School of Medicine arising from his removal as Chief, Cardiothoracic Surgery Division in the Department of Surgery be denied. DONE AND ENTERED this 19th day of January, 1996, in Tallahassee, Florida. ARNOLD H. POLLOCK, 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 19th day of January, 1996. APPENDIX TO RECOMMENDED ORDER IN CASE NO. 95-1832 The following constitutes my specific rulings pursuant to Section 120.59(2), Florida Statutes, on all of the Proposed Findings of Fact submitted by the parties to this case. FOR THE PETITIONER: 1. - 7. Accepted and incorporated herein. Though the documents in question refer to appointment, in actuality the personnel action was an appointment to the faculty with an administrative assignment to the position of Director of the Division. & 10. Accepted. 11. & 12. Accepted and incorporated herein. 13. & 14. Accepted and incorporated herein. - 19. Accepted and incorporate herein. Accepted and incorporated herein. Accepted. Rejected as inconsistent with the better evidence of record. Accepted. Accepted and incorporated herein. Rejected as inconsistent with the better evidence of record. & 27. Accepted. & 29. Accepted and incorporated herein. Accepted. Accepted and incorporated herein. 32. - 34. First sentence accepted. Second sentence rejected as inconsistent with the better evidence of record. 35. - 37. Accepted. 38. Rejected as argument. 39. Accepted. FOR THE RESPONDENT: - 9. Accepted and incorporated herein. Accepted. - 14. Accepted and incorporated herein. 15. & 16. Accepted and incorporated herein. COPIES FURNISHED: Benjamin H. Hill, III, Esquire William C. Guerrant, Jr., Esquire Danelle Dykes, Esquire Hill, Ward & Henderson, P.A. Post Office Box 2231 Tampa, Florida 33601 Thomas M. Gonzalez, Esquire Thompson, Sizemore & Gonzalez 109 North Brush Street, Suite 200 Post Office Box 639 Tampa, Florida 33601 Olga J. Joanow, Esquire University of South Florida 4202 East Fowler Avenue, ADM 250 Tampa, Florida 33620 Noreen Segrest, Esquire General Counsel University of South Florida 4202 East Fowler Avenue, ADM 250 Tampa, Florida 33620-6250
Conclusions Competent substantial evidence supports the conclusion that Adrian Fuentes disabilities are the result of the failure to deliver him before his mother loss amniotic fluid, or up to an estimated 12 hours earlier. An earlier delivery was the standard of care expected in a case of IUGR. His permanent and severe disabilities were directly and proximately caused by the failure of SBHD employees to handle an ultrasound report expeditiously as directed and as their policy provided. ATTORNEYS’ FEES AND LOBBYISTS’ FEES: In compliance with s. 768.28(8), F.S., but not with Section 3 of this claim bill, Claimant's attorneys' fees are set at 25 percent. There is no lobbyist for the bill at this time. As of October 9, 2007, the attorneys reported having incurred costs of $115,246.02 for representing the Claimant. The Claimants entered into an agreement to pay attorneys’ fees and costs. RECOMMENDATIONS: For the reasons set forth in this report, I recommend that Senate Bill 60 (2008) be reported FAVORABLY. Respectfully submitted, Eleanor M. Hunter Senate Special Master cc: Senator Jeremy Ring Representative Evan Jenne Faye Blanton, Secretary of the Senate House Committee on Constitution and Civil Law Tom Thomas, House Special Master Counsel of Record
The Issue The issue for determination is whether an agency statement, and criteria used in support of the statement, constitute a rule under Subsection 120.52(16), Florida Statutes (1993), whether the statement and criteria have been adopted as a rule pursuant to Section 120.54, Florida Statutes (1993), and whether the statement and criteria violate Subsection 120.535(1), Florida Statutes (1993).
Findings Of Fact Sacred Heart initiated this proceeding by filing a Petition alleging that, in reviewing the Baptist application, AHCA developed a statement which violates the provisions of Section 120.535(1), Florida Statutes, because the statement should have been promulgated as a rule. The statement, as described by Sacred Heart, is as follows: The Agency may, in its discretion, approve a CON application to establish an adult open heart surgery program notwithstanding findings by it that: 1) Need is not indicated pursuant to Florida Administrative Code Rule 59C-1.033(7)(c), i.e., approval of a new program will reduce the 12 month total to an existing adult open heart surgery program in the district below 350 open heart surgery operations; (2) the applicable fixed need pool for adult open heart surgery programs in the District is zero; and, (3) the application failed to demonstrate "not normal" circumstances justifying the approval of its application. By contrast, Rule 59C-1.033(7)(c) establishes the formula for determining numeric need and also provides: (c) Regardless of whether need for a new adult open heart surgery program is shown in paragraph (b) above, a new adult open heart surgery program will not normally be approved for a district if the approval would reduce the 12 month total at an existing adult open heart surgery program in the district below 350 open heart surgery opera- tions. . . . In reaching the preliminary decision to approve the Baptist application, various AHCA staff considered and discussed the facts presented, and the merits of the Baptist application. Dr. James T. Howell, the AHCA Division Director for Health Policy and Cost Containment, made the decision to approve the Baptist open heart surgery CON, because of Baptist's substantial, active, sophisticated cardiology program, its status as a high disproportionate share provider, its size, and because the results of the numeric need calculation and the formula for determining the reduced volume at existing providers were close to that required by rule. In February, 1993, after the numeric need publication and prior to the filing of the application at issue in this case, Dr. Howell, Albert Granger, and Robert Sharpe of AHCA met with the Mayor of Pensacola who is also Senior Vice President of Baptist Health Care and President of Baptist Health Care Foundation, and Baptist's Vice President for Planning who expressed frustration over the denials of its prior open heart surgery CON applications. Baptist submitted CON applications for open heart surgery in 1987, 1989, 1991, 1992, and 1993. Among the issues of concern was the status of Sacred Heart and West Florida Regional as grandfathered providers resulting in their having "a permanent franchise." Baptist representatives expressed concern about their ability ever to secure an open heart surgery program under the current rules. After that meeting, the rule amendment process was initiated to allow consideration of data reported up to 3 months, rather than 6 months prior to the publication of the fixed need pool. At the time the Baptist application for CON 7184 was reviewed, the amendment had not been adopted. No other change in the open heart surgery rule has been made subsequent to the review of the prior Baptist CON application. When the Baptist application for CON 7184 was filed initially, Laura MacLafferty was assigned as AHCA's primary reviewer. The state agency action report ("SAAR") represents her factual analysis of the application, although she did not and, routinely, does not make recommendations to issue or deny CONs. Ms. MacLafferty and her supervisor, Alberta Granger, are not aware of any AHCA non-rule policy to determine if a calculation of minimum volume is "close" enough to the 350 standard of the rule, nor any agency guidelines to determine when a hospital is "large" or "operates a large cardiology program" which should include open heart surgery. Subsequent to reviewing the Baptist application, in December 1993, Ms. MacLafferty reviewed another open heart surgery application from District 1, filed on behalf of Fort Walton Beach Medical Center. In her review of both the Baptist and Fort Walton applications, Ms. MacLafferty found no documentation that patients in District 1 experienced problems with access to open heart surgery services. Ms. MacLafferty submitted the draft SAAR to a supervisor, Alberta Granger. The draft SAAR was retrieved from her desk, prior to Ms. Granger's reviewing it. It was removed by Elizabeth Dudek, who heads AHCA's CON and health care board sections. Ms. Granger did not review the SAAR, which was prepared by Ms. MacLafferty. The final draft was returned to Ms. Granger for her to sign on July 7, 1993. This was the only time since Ms. Granger became supervisor in the CON office, that she has not reviewed and discussed with Ms. Dudek SAARs prepared by her staff. Ms. Granger had been the primary reviewer of Baptist's 1989 CON application. Ms. Granger and her supervisor, Ms. Dudek, are aware that in this case and in one or more of its prior CON open heart surgery applications, Baptist argued that its size, scope of cardiology services, and proposed fixed rate structure were reasons to approve its proposal. Ms. Granger stated, and Ms. Dudek confirmed, that the usual procedure was not followed in the review of this and one other application in this batching cycle. In this batching cycle, Dr. Howell requested that Mr. Sharpe, head of AHCA's planning section, also review those two open heart surgery applications. Ms. Dudek recalls, that prior to 1987, there were two batches of approximately 12 total applications in which agency personnel other than the CON staff was involved in the review of CON applications. In making his decision on the Baptist application, Dr. Howell consulted Ms. Dudek and Mr. Sharpe. Ms. Dudek, who heads the CON and health care board section, was not initially in favor of the approval of the Baptist application. Mr. Sharpe, head of the planning section, prepared a 9 page analysis of the pros and cons of the Baptist proposal. The Sharpe analysis demonstrates that an increase of 9 additional open heart surgeries during the 12 month reporting period, and the use of the more current data under the pending rule revision would have resulted in the need for one additional open heart surgery program in District 1. The memorandum also demonstrated that a lower future volume of open heart surgeries is projected by using the actual use rate, as required by Rule 59C-1.033(7)(6)2, rather than a trended use rate. If these adjustments to the data are made to achieve numeric need, then Baptist's application could be approved without a showing of not normal circumstances. The memorandum also reported the October 1991-September 1992 volumes of cardiac cath admissions at Baptist as 2677, at Sacred Heart as 2053, and at HCA West Florida as 1915, with the conclusion that Baptist "had the largest number of cardiac catheterization admissions of the three hospitals." The evidence in this proceeding is that the memorandum was in error. Actual volumes for October 1991-September 1992 were 912 at Baptist, not 2677. Dr. Howell found Baptist's proposal consistent with health care reform trends towards eliminating the need for CON regulation by enhancing market competitive forces, as a part of Florida's managed competition model, as explained in the Sharpe analysis. Similarly, Dr. Luke described the 1980's use of the CON process to control costs by limiting duplication and the rejection of institution specific planning as outdated. Dr. Luke also favors a model of competition for cost controls. At this time, however, these positions have not been adopted in Florida Statutes and rules. The 1994 Florida Health Security Plan recommends the continuation of CON review of all tertiary services, including open heart surgery. That plan was submitted as a part of AHCA's 1994 legislative proposals. Ms. Dudek described traditional "not normal" circumstances as issues related to financial, geographic, or programmatic access to the proposed service by potential patients, and not facility specific concerns. Facility specific concerns, in this case, include Baptist's attempt to retain cardiologists who wish to perform procedures not approved at Baptist and to improve its position to compete for managed care contracts. Baptist and AHCA contend that the intent to approve the application is predicated upon the exercise of AHCA's discretion to determine whether the circumstances justify a departure from the "normal" operation of the rule methodologies. As stated by Baptist and AHCA, this position is not inconsistent with the wording of the rule, but reflects a disagreement with Sacred Heart over what constitutes not normal circumstances. AHCA interprets Rule 59C-1.033 as giving the agency flexibility, in the exercise of its professional judgment, to approve open heart surgery applications when the rule methodology does not result in a numeric need for a new program, and/or the calculation intended to assure the 350 minimum procedures for established providers yields a lower number. Both sections of the open heart surgery rule have been upheld with the not normal circumstances provisions included. St. Mary's Hospital v. HRS, 13 FALR 2096 (F.O. 5/1/91). In the review of certificate of need applications, the weight to be accorded a particular statutory or rule criterion varies based upon the facts and circumstances of each case. If an earlier application is denied, and a new one submitted, the weight to be afforded certain criterion in the review of the more recent application may be different if the facts and circumstances are different. It is not consistent, however, for AHCA to treat the same facts differently, or to reach different conclusions of law on the same facts. In 1987, the agency responsible for CON regulation, denied a Baptist application, in the absence of numeric need, for the express purpose of protecting the 350 volumes at existing providers. In the preceding 12 months, there were 45 emergency angioplasties performed at Baptist, Sacred Heart's open heart surgery volume was 291, and West Florida Regional's was 344. The Baptist application was denied in a SAAR, which is replete with the references to the relationship of volume to quality, and which concludes: There is insufficient need for a third open heart surgery program in District One. It would lower the average number of procedures below the 350 recommended in the Rule and it would have a negative impact on existing providers. SAAR, CON Action No. 5120 at p.17. In early 1990, another Baptist application for an open heart surgery CON was denied. Using the preferences from the 1989 state health plan, the agency found that Baptist was (1) in a large county with a higher than average elderly population, (2) a disproportionate share provider, which would serve patients regardless of their ability to pay, (3) large enough to propose a fixed price structure for 3 years, and (4) capable of providing all the supplementary procedures for a complete cardiac program. Baptist was also found to have met the quality of care standard and to have the resources to implement the program. In addition, the fixed rate proposal was viewed as enhancing competition. The agency recommended denial, after finding no need for the project, no enhanced access or quality of care benefits and that existing providers volumes would fall below 350. The 1989 state health plan is also applicable to the review of CON 7184. Using the same 1989 preferences, the findings on the preferences in this case are essentially the same, except that the elderly population in Escambia is now below the state-wide average. See, DOAH Cases Nos. 93-4886 and 93-4887, Findings of Fact 53-60 (R.O. 11/18/94). By 1992, the use rate indicated a need for 2.48 open heart surgery programs in District One. Baptist asserted as "not normal" circumstances: (1) scheduling difficulties at Sacred Heart, (2) its status as a Level II trauma center, and (3) a fixed price structure at 85 percent of the average rate per DRG for the two existing providers. In its analysis of Baptist's asserted "nor normal" circumstances, the agency noted that "[a]pparently, Baptist has made no attempt to refer cases to West Florida Regional." The agency rejected the assumption that a trauma center has a need for open heart surgery services. The agency treated the proposed pricing structure as one reason for concluding that Baptist's proposed open heart program would reduce patient volumes at Sacred Heart and West Florida Regional. See, SAAR CON Action No. 6774, pp. 3-5. In this case, AHCA made a mistake of fact and failed to follow its precedents in determining not normal circumstances. See, Finding of Facts 16 and 17, supra. Due to the regulatory scheme which establishes the certificate of need review process and the criteria in statutes and rules which have be weighed and balanced, it is impossible to have a rule which would describe every set of circumstances which would justify departure from the "normal" operation of a rule methodology. The agency has, however, described the conditions which should be alleviated by the approval of a CON under not normal circumstances. In the 1987 CON 5120 SAAR, the agency found: There is no accessibility problem, geographic, programmatic or financial, noted by the applicant or the Local Health Council, for patients in District One for open heart surgery. SAAR, CON Action No. 5120 at p.6. The "not normal" circumstance claimed by Baptist do not involve access problems for District 1 residents and have been rejected as such by the agency in the past.
