The Issue Whether the proposed amendments to Florida Administrative Code Rule 10- 5.011(1)(f), the "open heart rule", constitute an invalid exercise of delegated legislative authority.
Findings Of Fact Based upon the oral and documentary evidence adduced at the final hearing and the entire record in this proceeding, the following findings of fact are made. On January 18, 1991, HRS published proposed rule changes (the "Proposed Amendments") to Rule 10-5.011(1)(f), Florida Administrative Code, in the Florida Administrative Weekly, Volume 17, No. 3 at page 163. These consolidated cases were brought pursuant to Section 120.54, Florida Statutes, to challenge these Proposed Amendments to the administrative rules for the Certificate of Need program. As a preliminary matter, it is important to understand the background of the rule and the Proposed Amendments. Rule 10-5.011(1)(f), regulates the provision of open heart surgery throughout the eleven HRS service districts in Florida. HRS' stated purpose in promulgating the Proposed Amendments was to "clarify" certain provisions of the existing rule. The original version of the open heart surgery rule was drafted in 1982, and was modeled after the National Guidelines for Health Planning, (hereinafter the "National Guidelines"). At the time the existing rule was adopted, the Florida Certificate of Need Program closely tracked the National Guidelines. Prior to adopting the existing rule, HRS reviewed the relevant literature regarding open heart surgery programs. In addition, a task force was convened to review numerous issues, including certain criticisms received from the health care industry that the National Guidelines were too restrictive. In 1985, the open heart rule was amended in response to evidence demonstrating that the incidence rate of adult open heart surgery had increased. The rule was amended to project need based upon the actual use rate experienced. The amended rule provided that the use rate would be adjusted for every batch of applications based on the most recent twelve month data available. In 1987, the open heart surgery rule was challenged by St. Mary's pursuant to Section 120.56, Florida Statutes. The primary issue in that rule challenge was whether the 350 minimum volume operations standard in the rule was too high. Following a three day hearing which included the presentation of extensive expert testimony, the rule was declared to be a valid exercise of delegated authority. See, St. Mary's Hospital v. Department of Health and Rehabilitative Services, DOAH Case No. 87-2729R, 9 F.A.L.R. 6159. (This subject matter is discussed in more detail in Findings of Fact 91-92 below.) In 1989, HRS published what it considered to be proposed technical amendments to the open heart surgery rule to resolve certain issues regarding the publication of the fixed need pool and to clarify some other aspects of the rule. No work group was convened for these proposals because HRS did not consider the proposed changes to be substantive. However, a number of challenges were filed to the proposed rule amendments. In April of 1990, HRS decided to withdraw the amendments and seek further input from the health care industry and other affected persons regarding possible changes to the rule. A work group (the "Work Group") was convened on June 18, 1990 to discuss the issues raised in the various challenges to the 1989 proposed rule amendments and to consider other matters raised by the various industry representatives and other concerned parties. Representatives from numerous Florida hospitals, as well as representatives from the Association of Voluntary Hospitals, the Florida League of Hospitals and the Florida Hospital Association participated in the Work Group. The participants included hospitals that have open heart surgery programs and those that do not, including several who had applied or who have an interest in offering those services. The minutes of the Work Group Meeting were transcribed and are contained in the rule promulgation file which was accepted into evidence as HRS Exhibit 5. Elfie Stamm, the HRS planner primarily responsible for the original development and subsequent amendments of the open heart surgery rule was an active participant in the Work Group. She also oversaw the development of Volume 3 of the State Health Plan in 1988 and 1989. This volume deals with certificate of need matters and contains detailed research and analysis of open heart surgery trends and developments. Thus, Ms. Stamm was very familiar with the issues and current research in the area. Based upon the evidence deduced during the Work Group Meeting and a review of the research in the area, HRS decided to promulgate the Proposed Amendments which it considered to be "technical" changes to the rule that were intended to not change the impact on current and prospective providers. HRS specifically decided not to make any changes that would modify the current overall need projections. Prior to publication, the Proposed Amendments were circulated for internal review, approval and signoff, and were sent to the House Health Care Committee and the Senate HRS Committee. The Proposed Amendments were also sent to all the members of the Work Group, who were advised that it would be published on January 18, 1991. As noted above, the Proposed Amendments were published in the Florida Administrative Weekly on January 18, 1991. Only one public comment (dated January 24, 1991, and received by HRS on January 28, 1991,) was submitted in response to the January 18, 1991 publication of the Proposed Amendments. That comment suggested clarifying language to Subparagraph 7(a) II of the Proposed Amendments. In response to this letter, HRS caused to be published a Notice of Change in the February 1, 1991 edition of the Florida Administrative Weekly. The January 18, 1991 Notice provided that a public hearing on the Proposed Amendments would be conducted on February 11, 1991 at 10:00 a.m. if requested. No public hearing was requested and, therefore, none was held. St. Mary's has insinuated that the Notice was somehow deficient because the public hearing was scheduled more than 21 days after the notice of rulemaking was published in the Florida Administrative Weekly. The evidence indicates that such scheduling is customary in order to assure that a request can be made right up until the last possible moment without the necessity of holding two public hearings. Overview of the Proposed Amendments Proposed Section 10-5.011(1)(f) is a new section entitled "Departmental Intent." This section states that certificates of need for open heart surgery programs will not normally be approved unless the applicant meets the relevant statutory criteria, including the need determination criteria in the rule. This Section also provides that separate certificates of need will be required in order to establish either an adult or pediatric open heart surgery program. As discussed in more detail below, the existing rule does not expressly state that separate CONs must be obtained to implement adult and pediatric programs. The proposed rule amendments do not specifically address the provision of adult and pediatric open heart surgery within the same program. Proposed Section 10-5.011(1)(f)2 sets forth several new definitions. Subparagraph 2j establishes for the first time pediatric open heart service areas which are made up of combined HRS districts and are thus much larger than adult open heart service areas. Proposed Section 10-5.011(1)(f)3 mandates that pediatric open heart surgery programs must have the same services and procedures as adult programs, including intraaortic balloon assists. Subparagraph 3c requires that pediatric open heart surgery programs shall only be located in hospitals with inpatient cardiac catheterization programs. Proposed Section 10-5.011(1)(f)4 contains the travel time standard which applies to adult open heart surgery service accessibility, and the maximum waiting period for open heart surgery team mobilization for adult and pediatric programs. There is no travel time standard for pediatric services in the Proposed Amendments. Proposed Section 10-5.011(1)(f)4d requires applicants for adult or pediatric open heart surgery programs to document the manner in which they will provide open heart surgery to all persons in need. Proposed Section 10-5.011(1)(f)7 is entitled "Adult Open Heart Surgery Program Need Determination". Subparagraph (a) essentially recodifies and restates existing Rule 10-5.011(f)11 and provides that each and every adult open heart surgery program within a district should be performing 350 adult open heart surgery operations per year prior to there being a calculated net need for a new program in that district. The section does not contain an explanation or delineation of "not normal" circumstances that HRS will consider in the absence of a net numeric need. Currently, Rule 10-5.011(1)(f)11., provides: There shall be no additional open heart surgery programs established unless: The service volume of each existing and approved open heart surgery program within the service area is operating at and is expected to continue to operate at a minimum of 350 adult open heart surgery cases per year or 130 pediatric heart cases per year. As discussed in more detail in Findings of Fact 89-97 below, from approximately early 1985 through January 22, 1990, HRS interpreted this section to require that the volume of procedures provided by all existing programs in each service district be averaged to determine whether need existed for a new open heart surgery program (the "averaging method"). This averaging method allowed HRS to find numeric need when the average total of procedures per program in the district equaled 350 or more. After this interpretation was rejected in several cases, HRS abandoned the "averaging" approach and has been requiring "each and every" existing program in a district to meet the 350 minimum standard before a new adult program will normally be approved. Subparagraph (b) of Proposed Section 10-5.011(1)(f)7 mandates that only one program shall be approved at a time, and contains the numeric need calculation formula for adult open heart surgery programs. Subparagraph (c) states that, regardless of whether need is shown according to the formula, if an incoming provider will reduce an existing provider's volume below 350, the applicant will not normally be approved. Proposed Section 10-5.011(1)(f)8 contains a new method for calculating need for pediatric open heart surgery programs. Pursuant to this proposal, need would be calculated based on the number of resident live births in a pediatric open heart surgery program service area. The proposal would require at least 30,000 resident live births per pediatric program. The economic impact statement (EIS) which accompanied the Proposed Amendments states that, other than administrative and word processing costs, there will be no additional annual or operating costs associated with the implementation of the Proposed Amendments. The EIS contains no statement of the impact upon potential applicants or existing providers due to the changes in either the adult or pediatric portions of the rule. WHETHER PARAGRAPH 1 OF THE PROPOSED AMENDMENT IS INVALID BECAUSE IT REQUIRES A SEPARATE CERTIFICATE OF NEED FOR AN ADULT OPEN HEART SURGERY PROGRAM AND PEDIATRIC OPEN HEART SURGERY PROGRAM. The existing rule does not expressly require separate certificate of need applications for pediatric and adult open heart surgery programs. However, HRS' policy for at least the last year has been to require hospitals to obtain separate certificates of need for adult open heart surgery programs and pediatric open heart surgery programs. See Findings of Fact 135 below. In other words, the proposed amendment codifies HRS' current interpretation of the existing rule. The Work Group which assisted in the development of the Proposed Amendments examined the issue of whether HRS should require hospitals to obtain separate CONs for adult open heart surgery programs and pediatric open heart surgery programs. In addition, HRS reviewed the available literature, including the National Guidelines and the Guidelines for Pediatric Cardiology Diagnostic and Treatment Centers (hereinafter the "Pediatric Guidelines"). Comments were also solicited from the Children's Medical Services Program Office which regulates certain aspects of pediatric cardiac surgery. Based upon a review of this information, HRS concluded that (1) pediatric and adult open heart surgery programs are generally and properly operated as separately organized programs and (2) pediatric programs are and should be staffed by personnel specially trained to provide pediatric care. There are significant differences between providing open heart surgery to adults and providing open heart surgery to children. Adults generally have acquired heart disease, while children generally have congenital heart problems. The transfer process and approach to open heart surgery differs between adults and children. Pediatric open heart patients are more labile in certain situations than adult open heart surgery patients. People who work with adult open heart surgery patients often lack the ability to work with pediatric open heart surgery patients. In sum, the evidence established that pediatric open heart surgery is a complex service which requires a team dedicated to that service. With the possible exception of one program, all the pediatric open heart surgery programs in Florida are offered in separately organized programs. The incidence rate of pediatric open heart surgery is significantly lower than that for adult open heart surgery. The latest data reflects that from October 1989 to September 1990 there were only 545 pediatric heart surgeries performed in the state of Florida as compared to nearly 21,000 adult open heart surgeries during the same period. Nothing in the Proposed Amendments prohibits an applicant from applying for both adult and pediatric open heart surgery. The rule does have separate requirements, including separate need methodologies, which would normally have to be satisfied as a predicate to the award of either program. St. Mary's voiced a concern that the Economic Impact Statement did not address the additional costs to applicants, (i.e. duplicate application fees) that will result from this provision of the Proposed Amendments which requires separate certificates of need for adult and pediatric programs. As noted above, such costs are already necessary under HRS' interpretation of the existing rules. In any event, St. Mary's has not demonstrated that such additional costs would be other than minimal. WHETHER THE CLASSIFICATION OF OPEN-HEART SURGERY BY THE DIAGNOSTIC RELATED GROUPS LISTED IN SUB-PARAGRAPH 2.g. OF THE PROPOSED AMENDMENT IS VAGUE, ARBITRARY AND CAPRICIOUS. Subparagraph 2.g. of the proposed amendments reads as follows: "Open Heart Surgery Operation". Surgery assisted with a heart-lung by-pass machine that is used to treat conditions such as congenital heart defects, heart and coronary artery diseases, including replacement of heart valves, cardiac vascularization, and cardiac trauma. One open heart surgery operation equals one patient admission to the operating room. Open heart surgery operations are classified under the following diagnostic related groups: DRGs 104, 105, 106, 107, 108 and 110. Diagnostic related groups or "DRGs", are a health service classification system used by the Medicare System. The existing rule does not include the reference to DRG classifications. Some confusion had been expressed by applicants as to whether certain organ transplant operations which utilized a bypass machine during the operation should be reported as open heart operations or as organ transplantation operations. The amendment was intended to clarify that only when the operation utilizes the bypass machine and falls within one of the enumerated categories should it be considered an open heart surgery operation. The inclusion of the listed DRGs was meant to clarify the existing definition by limiting the DRG categories within which open heart surgery services may be classified. There is no dispute that the primary factor in defining an open heart surgery procedure is the use of a heart-lung machine. Florida Hospital argued that the proposed definition is ambiguous and vague because not all procedures which fit into the listed DRG categories necessarily involve open heart surgery. Florida Hospital's fear that the new language would seem to indicate that each procedure falling into the listed DRGs qualifies as an open heart surgery operation is unfounded. While the provision could have been written in a simpler and clearer manner, the definition adequately conveys the intent that the use of a heart-lung by-pass machine is an essential element to classifying an operation as open-heart surgery. WHETHER SUBPARAGRAPH 2.j. OF THE PROPOSED AMENDMENT IS INVALID BECAUSE IT ESTABLISHES PEDIATRIC OPEN HEART SERVICE AREAS WHICH ARE LARGER THAN ADULT OPEN HEART SERVICE AREAS WHICH MAY RESULT IN DEPRIVATION OF NEEDED OPEN HEART SURGERY PROGRAMS IN SOME SERVICE AREAS. The Proposed Amendments will regulate pediatric open heart surgery on a regional basis. Five "Services Areas" are created by combining HRS service districts. In establishing these Service Areas, HRS considered the extent to which patients would have geographic access to pediatric open heart surgery services. The Service Areas were organized geographically in a manner intended to result in one pediatric open heart surgery program in each Service Area. Section 20.19(7), Florida Statutes, provides that "[t]he Department shall plan and administer its programs of health, social, and rehabilitative services through service districts and subdistricts ... ." This statute sets forth the geographic composition of each district and subdistrict through which HRS is to administer its programs. Section 20.19(7)(a), Florida Statutes. St. Mary's contends that no statutory authority exists for combining "service districts" to create "service areas." However, no prohibition against combining districts for tertiary services exists in the statute and, indeed, the nature of tertiary services mandates such an approach in some instances. As indicated below, HRS has combined districts for other programs. Section 381.702(20) defines "tertiary health services" and authorizes HRS to establish by rule a list of tertiary health services. Tertiary health care services are complex services which involve high consumption of hospital resources. Due to the low incidence of those medical conditions which require tertiary services, there is a benefit in limiting those services to select facilities in order to maximize volume at those facilities. This approach is known as the regionalization of health care services. HRS has promulgated a list of tertiary health services in Rule 10- 5.002(66) (previously 10-5.002(40), Florida Administrative Code. Subsection 9 of this Rule includes "neonatal and pediatric cardiac and vascular surgery." Thus, pediatric open heart surgery is a tertiary health care service. HRS regulates other tertiary services, including burn units, organ transplants programs, and pediatric cardiac catheterization services, on a regional basis. See e.g., Rules 10-5.043, and 5.044 Florida Administrative Code. Regionalization of tertiary services at a central point has been used by HRS to encourage an appropriate volume level at each center. The evidence established that there is a correlation between volume and outcome in pediatric open heart programs. HRS has concluded that pediatric open heart surgery should be limited to and concentrated in a limited number of hospitals to ensure the quality, availability, and cost effectiveness of the service. No persuasive evidence was presented to rebut this conclusion. The evidence indicates that pediatric open heart surgery services are currently delivered in Florida on a regional basis. A limited number of hospitals scattered throughout the state are serving the state's population. Of the eight hospitals which are included among the HRS inventory of hospitals providing pediatric open heart surgery services, only 5 perform a significant volume of cases. Each of those five hospitals is either a teaching hospital or a specialty pediatric hospital. The other three hospitals listed on the inventory have large adult open heart surgery programs, but perform a very low volume of pediatric cases. The evidence did not establish that the existing providers are currently unable to meet the need for services in the state. Based upon a review of the existing research and literature, HRS has concluded that a facility should perform approximately 100 pediatric heart surgeries annually in order to retain proficiency. As discussed in Findings of Fact 132 below, the 30,000 annual live births standard will, over time, result in approximately 100-130 pediatric open heart surgery cases per year among the population base from birth to age 21. In Service Area 1, the resident live births in 1988 were 16,142. (Service Area 1 combines HRS Districts 1 and 2.) Thus, the number of live births in this Service Area would have to almost double before a new program could meet this standard. While Petitioners object to this result, no persuasive evidence was presented to establish that HRS has acted arbitrarily in establishing the Service Area. The rule requires a pediatric program in each Service Area. However, only one of the Service Areas established by this Proposed Amendment meets the 30,000 live birth standard. St. Mary's contends that this discrepancy renders the proposed amendment internally inconsistent. However, there are significant countervailing considerations which militate against closing an existing program and justify the continuation of established programs in these areas. These considerations include the need to insure geographic access, the reluctance to disturb existing referral patterns and a reluctance to disturb programs with demonstrated proficiency. The HRS Work Group which assisted in the development of the Proposed Amendments addressed the issue of regulating pediatric open heart surgery services on a regional basis. No persuasive evidence was presented in opposition to this approach. WHETHER PARAGRAPH 3 OF THE PROPOSED AMENDMENT IS INVALID BECAUSE IT REQUIRES SERVICES AND PROCEDURES WHICH ARE NOT NECESSARY TO THE SAFE EFFECTIVE PROVISION OF PEDIATRIC OPEN HEART. The Proposed Amendments will require hospitals seeking to provide pediatric open heart surgery to have the ability to provide certain specified services. The requirements contained in paragraph 3 of the Proposed Amendments are the same as those contained in the existing rule. They are considered by HRS to be minimum standards for the provision of both adult and pediatric open heart surgery. The evidence established that it is desirable to have those services available, even if they are infrequently used. Dr. Byron testified that some of the procedures such as intra-aortic balloon assists, prolonged myocardial bypass and the repair and replacement of heart valves are performed less commonly in children. However, he did agree that these procedures are occasionally necessary and a pediatric program should have the ability to provide those services. Requiring a pediatric open heart program to have the capability to provide those services if necessary is consistent with the goal of regionalization of pediatric open heart surgery. There was no adverse public comment received during development of the Proposed Amendments regarding these requirements and no persuasive testimony or other evidence was offered during the Work Group or the hearing in this cause to establish that these minimum requirements are not appropriate and/or should be deleted. WHETHER PARAGRAPH 3c VI OF THE PROPOSED AMENDMENT, WHICH REQUIRES THAT IN ORDER TO BE AWARDED A PEDIATRIC OPEN HEART PROGRAM THE APPLICANT MUST ALSO HAVE PEDIATRIC CARDIAC CATH, CREATES A "CATCH 22" WHEN READ IN CONJUNCTION WITH THE CARDIAC CATH RULE WHICH REQUIRES AN APPLICANT FOR PEDIATRIC CARDIAC CATH TO OFFER PEDIATRIC OPEN HEART, AND IS THEREFORE INVALID. The Proposed Amendments require that in order to be awarded a certificate of need for a pediatric open heart surgery program, an applicant must have a pediatric cardiac catheterization ("cardiac cath") program. A similar requirement can be implied from the current open heart surgery rule and, indeed, HRS has interpreted the current rule is this manner. The cardiac cath rule requires that an applicant for a pediatric cardiac cath program must have a pediatric open heart surgery program. The Services Areas and the need methodologies in the proposed pediatric portion of the open heart surgery rule and the amended pediatric portion of the cardiac catheterization rule are the same. St. Mary's contention that applicants are placed in a "Catch 22" is rejected. If a facility wants to offer pediatric open heart, it is going to have to simultaneously apply for cardiac cath. There is nothing in this section, or anywhere else in the rule, which prohibits an applicant from applying for pediatric cardiac cath and pediatric open heart contemporaneously. In fact, such a simultaneous application is exactly what HRS is trying to encourage. The two services, pediatric open heart and pediatric cardiac cath, should only be offered in combination with each other. St. Mary's own witness, Dr. Harry Byron, a pediatric cardiologist, agreed that a facility that offers an open heart surgery program in pediatrics should also have pediatric cardiac cath capabilities. Every facility in the state of Florida which provides pediatric cardiac cath also provides pediatric open heart surgery. During the hearing, it was suggested that Hollywood Memorial Hospital is performing pediatric open heart without offering pediatric cardiac cath. However, an examination of the CON issued to Hollywood Memorial reveals that it was awarded both services simultaneously. St. Mary's contends that the Proposed Amendments to the open heart rule are deficient because they cross-reference the cardiac cath rules and there is some question as to the status of the cardiac cath rules. St. Mary's argues that HRS' predecessor cardiac catheterization rule is the current cardiac catheterization rule because proposed amendments to the cardiac cath rule were prevented from becoming final as the result of timely challenges. As best can be determined from the evidence in this case, there is no inconsistency between the Proposed Amendments and the cardiac cath rules. The evidence regarding the status of the cardiac cath rules was inconclusive. Amendments to the cardiac cath rule were published on April 22, 1988, but never became effective because of rule challenges which were eventually settled. When the rule amendments were republished on July 29, 1988 with certain agreed upon changes, timely challenges brought pursuant to Section 120.54(4), Florida Statutes, prevented those changes from becoming effective. However, the Final Order in the case challenging the procedural adequacy of the July 29, 1988 amendments upheld a large portion of that proposed rule, including the sections pertinent to this case. See, Florida Medical Center v. Department of Health and Rehabilitative Services, Case No. 88-3970R (DOAH Final Order entered June 30, 1989). Thus, it appears that St. Mary's contention is without merit. WHETHER SUBPARAGRAPH 4.a. OF THE PROPOSED AMENDMENT IS INVALID BECAUSE IT DOES NOT CONTAIN A TRAVEL TIME STANDARD FOR PEDIATRIC OPEN HEART SURGERY. The Proposed Amendments do not contain a travel time standard for pediatric open heart surgery services. St. Mary's contends that the proposed rule should include a travel time standard for pediatric patients who need emergency procedures. There is no dispute that the longer a pediatric patient has to wait to have open heart surgery, the greater the chance of a negative outcome. Moreover, transporting pediatric patients is often more complicated and dangerous than transporting an adult patient because infants are more labile and closer attention must be paid to their glucose levels, to the environmental temperature and similar matters. In the course of its deliberations concerning the Proposed Amendments, HRS considered whether it should include a travel time standard relating to pediatric open heart surgery. No persuasive evidence was presented to HRS during the rule development process that an appropriate travel time standard could or should be adopted. HRS elected not to provide for a travel time standard out of concern that such standard would have suggested a "need" for programs in geographic areas which would not generate a sufficient case load to allow the program to maintain proficiency. A travel time standard such as that contained in the rule for the provision of adult open heart surgery programs would not be appropriate for the provision of pediatric open heart surgery programs because of the highly tertiary nature of the service. Had HRS used a two-hour travel time standard for pediatrics as it did for adult open heart, a need may have been shown for more programs than the volume of operations could support, resulting in programs with lower volumes than desired from a quality of care standpoint. Some pediatric patients in need of open heart surgery may have to travel as much as six hours by car if the need methodologies and Service Areas in the Proposed Amendments are adopted. In most instances, however, the travel time would be substantially less and most areas of the state will be within two to three hours by car to a pediatric open heart surgery center. Geographical location was one of the factors considered in the establishment of the Service Areas. However, the need to insure an adequate volume of cases for each program was an overriding concern. While it is certainly desirable to minimize travel and distance for pediatric patients as much as possible, these concerns must be counterbalanced against the need to insure that each center performs enough procedures to maintain proficiency. The evidence was insufficient to establish that HRS was arbitrary and/or capricious in dealing with these sometimes conflicting goals. WHETHER SUBPARAGRAPH 4.c. OF THE PROPOSED AMENDMENT REQUIRING TEAM MOBILI- ZATION FOR EMERGENCY OPERATIONS WITHIN A MAXIMUM WAITING PERIOD OF TWO HOURS IS CONTRARY TO THE EXCLUSION OF A TRAVEL TIME STANDARD FOR PEDIATRIC OPEN HEART. As indicated above, there is no travel time standard for pediatric open heart surgery in the Proposed Amendments. There is, however, a requirement that a hospital be able to mobilize an open heart surgery team within a maximum time limit of two hours. Proposed Rule 10-5.011(1)(f)4. The purpose of the team mobilization standard is to assure rapid mobilization within the hospital once the baby has arrived at the hospital. This requirement is contained in the existing open heart rule and no adverse public comment was received regarding it. St. Mary's contends that having a two hour team mobilization standard for pediatric open heart surgery but no travel time standard for pediatric patients is inconsistent and reflects a disregard for pediatric accessibility or geographic accessibility. This criticism is rejected. The emergency mobilization standard addresses the applicant facility's ability to render emergency open heart surgery services subsequent to a patient's arrival at the facility. It is an internal requirement. A travel time standard addresses the extent to which the Service Area population has access to services. It is a requirement external to any specific hospital. For the reasons set forth in Findings of Fact 57-60 above, a travel time standard is not appropriate for pediatric open heart programs. However, these reasons do not negate the benefits of an emergency mobilization standard. WHETHER SUBPARAGRAPH 4.d. OF THE PROPOSED AMENDMENT IS INVALID BECAUSE HRS IS WITHOUT STATUTORY AUTHORITY TO REQUIRE APPLICANTS TO DOCUMENT HOW OPEN HEART WILL BE MADE AVAILABLE TO ALL PERSONS IN NEED. The existing rule mandates that open heart surgery be available to all persons in need regardless of the ability to pay. This provision remains intact in subparagraph 4.d. of the amended rule, but is clarified in part as follows: Applicants for adult or pediatric open heart surgery programs shall document the manner in which they will meet this requirement. HRS currently requires evidence of an applicant's past record with regard to Medicaid and indigent care, as well as statistical projections for the provision of such care upon implementation of its program. In fact, the language added to paragraph 4.d. simply reflects the Department's existing method of reviewing CON applications pursuant to the guidelines of Section 381.705, Florida Statutes, which requires consideration of an applicant's past and proposed provision of health care services to Medicaid patients and the medically indigent. Section 381.704(4), Florida Statutes (1989) gives HRS the authority to adopt rules necessary to implement Sections 381.701-381.715. Section 381.705, Florida Statutes (1989) requires HRS to review certificate of need applications in context with "(n) The applicant's past and proposed provision of health care services to Medicaid patients and the medically indigent," "(h)... the extent to which the proposed services will be accessible to all residents of the service district", and "(b) the ... accessibility of like and existing health care services and hospices in the service district of the applicant." The Petitioners have not established any inconsistencies between the Proposed Amendments and the statutory standards of review. WHETHER PARAGRAPH 5 OF THE PROPOSED AMENDMENT, SERVICE QUALITY STANDARDS, IS ARBITRARY AND CAPRICIOUS BECAUSE THE STANDARDS ARE UNRELATED TO PEDIATRIC OPEN HEART. The standards contained in Subsection 5 are minimum quality of care standards which apply to programs providing pediatric as well as adult open heart surgery. These requirements do not significantly change the existing rule. St. Mary's suggested that the standards were only applicable to an open heart program servicing adults and that pediatric programs should have different standards. No persuasive evidence was provided to establish that any of the requirements are unrelated or unnecessary to pediatric open heart programs. In fact, St. Mary's own witness, Dr. Bryon, testified that he had no objection to the provisions of paragraph 5. WHETHER PARAGRAPH 7 OF THE PROPOSED AMENDMENT IS INVALID BECAUSE IT DOES NOT PROVIDE AN OPPORTUNITY TO DEMONSTRATE "NOT NORMAL" CIRCUMSTANCES. Subparagraph 7b of the proposed rule amendments establishes a need determination formula. Application of this formula is governed by minimum volume and utilization standards established under subparts a and c of paragraph 7. Subparagraph 7e of the proposed amendments provides as follows: a. A new adult open heart surgery program shall not normally be approved in the HRS District if any of the following conditions exist: There is an approved adult open heart surgery program in the HRS District; One or more of the operational adult open heart surgery programs in the HRS District that were operational for at least twelve months as of six months prior to the beginning date of the quarter of the publication of the fixed need pool performed less than 350 adult open heart surgery operations during the twelve months ending six months prior to the beginning date of the quarter of the publication of the fixed need pool; or, One or more of the adult open heart surgery programs in the HRS District that were operational for less than twelve months during the twelve months ending six months prior to the beginning date of the quarter of the publication of the fixed need pool performed less than an average of 29 adult open heart surgery operations per month. * * * (c) Regardless of whether need for a new adult open heart surgery program is shown in subparagraph b. above, a new adult open heart surgery program will not normally be approved for an HRS district if the approval would reduce the 12 month total at an existing adult open heart surgery program in the HRS district below 350 open heart surgery operations. (emphasis added) The need determination formula includes a presumption against approval of a new provider if there is already an approved program within a district, or any existing program within a district is operating at less than 350 procedures annually. HRS has recognized that the need determination formula cannot take into account all factors within a district which may affect actual need. Accordingly, the rule implicitly allows consideration of "not normal" circumstances in determining need. If circumstances are "normal", then a failure to satisfy the conditions in paragraph 7 will mean that the application is denied. However, by proving that circumstances are "not normal", a new adult open heart surgery program can be approved despite the failure to satisfy the conditions in paragraph 7. The "not normal" provision is also found in the statement of Departmental Intent, subparagraph 1 of the Proposed Amendments. That provision proclaims that an application will "not normally" be approved unless the applicant meets relevant statutory criteria, including the standards and need determination criteria. HRS perceived its current rule and the Proposed Amendments as providing applicants with the opportunity to demonstrate need for a new adult open heart surgery program by demonstrating numeric need under paragraph 7 or by demonstrating "not normal" circumstances. HRS can and will approve an application in the absence of quantified need where the other statutory review criteria are met and the applicant demonstrates that a need for a new program exists. The current rule provides a similar presumption against approval if there is already an approved program in the district, or if any existing program in the district is operating at less than 350 procedures annually. This rule has been interpreted to allow applicants to demonstrate actual need by demonstrating circumstances that transcend the numeric calculation. For example, an open heart program was recently approved by HRS for Marion County even in the absence of numeric need as determined by the rule. It is impossible to list all of the circumstances where a new program could be approved even in the absence of "numeric need." Examples of not normal circumstances include a showing of inaccessibility, excessive utilization of a particular facility, or an intentional action by an existing provider to keep its utilization below 350 annual procedures. Other factors may include exceptional circumstances as they relate to the review criteria listed in Section 381.705, Florida Statutes, evidence of an unusual payor mix, established referral patterns among existing providers, or evidence to suggest that an existing program could not reach the 350 minimum procedure volume because of poor quality of care. In sum, Paragraph 7 of the Proposed Amendments does not preclude an applicant from attempting to demonstrate that its application should be approved in the absence of quantified need. The "not normally" language will enable HRS to consider all the statutory review criteria in its review of applications even in the absence of numeric need under paragraph 7. The Petitioners challenging the "not normal" language in paragraph 7 of the Rule have failed to provide any credible evidence to demonstrate that the "not normal" provisions are arbitrary or capricious or unduly vague. Similar provisions have been upheld in prior cases. See, Humana, Inc., v. Department of Health and Rehabilitative Services, 469 So.2d 889, 891, (Fla. 1st DCA, 1985); North Broward Hospital District v. Department of Health and Rehabilitative Services, DOAH Case No. 86-1186R (Final Order issued July 18, 1988.) WHETHER SUBPARAGRAPH 7.a. IS INVALID FOR THE FOLLOWING REASON: Existing programs could block a proposed program by keeping the number of open heart operations performed in a given year below 350. As indicated above, the Proposed Amendments provide that a new adult open heart surgery program will not normally be approved in a service district if any of the existing programs in the district performed less than 350 adult open heart surgery operations during the 12 months ending 6 months prior to the beginning date of the quarter of the publication of the fixed need pool. The challengers claim that the Proposed Amendments to paragraph 7a are invalid because they allow existing programs to bar approval of new programs by keeping their volume below 350. This issue was considered by HRS in its rule amendment promulgation deliberations. No evidence was presented during those deliberations or at the hearing in this cause that there has been a deliberate attempt by any existing provider to keep the number of operations performed below 350 per year. Indeed, such an attempt is unlikely because it would require physicians to intentionally turn away patients requiring open heart surgery when a facility's numbers reach close to 350 operations on an annual basis. The existing rule has a similar provision. As discussed in more detail below, a Section 120.56 rule challenge was filed in 1987 against this provision in the existing rule alleging the possibility that an existing provider could block a proposed adult open heart surgery program by deliberately keeping its annual adult open heart surgery volume below 350 cases. These charges were rejected as speculative and unsubstantiated. St. Mary's Hospital v. Department of Health and Rehabilitative, 9 F.A.L.R. 6159, DOAH Case No. 87- 2729R. The Proposed Amendments would not prohibit the award of a CON if a deliberate pattern or scheme to keep volume low to lockout new providers was demonstrated. Because it protects market share which is anticompetitive and contrary to statute; is unconstitutional in that it denies equal protection and due process, and because it is contrary to agency policy through 1989. Paragraph 7.a. of the Proposed Amendments is based upon a substantially similar provision found in the National Guidelines. The National Guidelines were adopted by the Federal Department of Health, Education and Welfare following an extensive consultation and review process in 1978. The National Guidelines are one of the key resource materials used by local and state health planning agencies in developing certificate of need regulations. The state of Florida conforms to the National Guidelines in most areas. According to the National Guidelines, a new open heart program should not ordinarily be approved if an existing program is operating at less than 350 operations annually. Specifically, Section 121.107(3) of the "Rules and Regulations" of the National Guidelines, entitled "Open Heart Surgery" published at Vol. 43, No. 60 of the Federal Register, provides at page 262: There should be no additional open heart units initiated unless each existing unit in the health service area(s) is operating and is expected to continue to operate at a minimum of 350 open heart surgery cases per year in adult services or 130 pediatric open heart cases in pediatric services. According to the "Discussion" at Section (b) of the Rules and Regulations for open heart surgery in the National Guidelines: In order to prevent duplication of costly resources which are not fully utilized, the opening of new units should be contingent upon existing units operating, and continuing to operate, at a level of at least 350 procedures per year. (emphasis added) The 350 service volume requirement has been a part of HRS' open heart surgery certificate of need rule since its adoption in 1982. As discussed in more detail below, there is a substantial body of literature which concludes that there is a relationship between volume and outcome in the provision of adult open heart surgery services. The literature contains data which demonstrates that, as a general rule, hospitals which provide higher volumes of adult open heart surgery cases achieve better patient outcomes. Based upon this research, the optimum efficiency standard, both from quality of care and economy of scale perspective, is believed to be approximately 500 procedures per year. The 350 minimum volume standard reflects HRS' desire that each existing and approved facility be operating at 75% of this optimum standard before any additional programs are approved within an HRS District. The 350 standard assumes that each facility can provide an average of seven operations per week, a schedule judged to be feasible in most institutions which provide open heart surgery services. As a matter of health planning policy, HRS adopted the 350-standard in an effort to prevent duplication of costly services which are not fully utilized, both as to facility resources and manpower. This standard is intended to assure both quality of care and efficiency in the operations of adult open heart surgery programs. For several years after the rule was originally adopted in 1982, the rule was interpreted by HRS to require a showing that each existing program was at or above 350 procedures annually before a new program could normally be approved. However, as discussed below, sometime around 1984 or 1985, HRS began "interpreting" the 350 standard to be an average, i.e., the average utilization of all existing programs in a district had to be at or above 350 before a new program would normally be approved. From approximately early 1985 through January 22, 1990, HRS interpreted the existing rule in accordance with the "averaging method". This averaging method allowed HRS to find numeric need when the average total of procedures per program in the district equaled 350 or more. In 1987, a Section 120.56 rule challenge was brought against the then existing open heart rule. In that case, the 350 standard was directly attacked as being too high as a minimum procedure threshold. In the 1987 challenge to the open heart rule, HRS explained the rule utilizing the averaging approach. St. Mary's Hospital v. Department of Health and Rehabilitative Services, supra, 9 FALR at 6174. HRS witness Elfie Stamm testified during that hearing in support of the rule as it was being interpreted at that time. Extensive testimony was presented regarding the 350 standard. It is not clear whether any of the parties challenged the averaging approach as part of that case. Ultimately the rule, including the 350 standard was, upheld. The Final Order presumes that the averaging approach would be used and does not specifically address the validity of that approach. None of the Petitioners in this case have provided persuasive evidence that the 350 standard has become obsolete or inappropriate. Indeed, as discussed in more detail below, the evidence indicates that the 350 standard is still the most widely accepted standard. During 1989, several Orders were entered by the Division of Administrative Hearings rejecting HRS' interpretation that the existing rule permitted the averaging method. In Lakeland Regional Medical Center v. HRS, 11 FALR 6463 (DOAH Final Order November 15, 1989), a hearing officer declared the HRS "averaging policy" to be inconsistent with the language of the existing rule and an invalid exercise of delegated legislative authority because it had not been adopted in accordance with Section 120.54, Florida Statutes. In a subsequent 120.57 proceeding involving the proposed issuance of a CON for a new open heart surgery program, the Recommended Order rejected HRS' averaging policy and concluded that it could not be applied because it was inconsistent with the existing rule. Hillsborough County Hospital Authority v. HRS, 12 FALR 785 (Final Order, January 23, 1990). In the Recommended Order in the Hillsborough County case, the hearing officer did not address the relative merits of the averaging policy versus the each and every method. He found that "the incipient policy constitutes an impermissible deviation from the terms of an existing rule and cannot be used in this proceeding. In view of this conclusion, it is unnecessary to determine whether an adequate record foundation exists to support that [averaging approach]." Although HRS had argued in favor of the averaging policy at the hearing in the Hillsborough County case, the Secretary of HRS in his Final Order in that case accepted the "each and every" interpretation declaring that "it is good health planning to allow newly approved providers to become operational and reach the 350 procedure level as soon as possible and before new programs are authorized." Id. at 787. In subsequent final orders on other open heart surgery CON applications, HRS has followed this original interpretation of its existing open heart surgery rule and agreed that, as written, the rule requires that the 350 standard be met by each existing and approved facility before a new program can normally be approved. See, Mease Health Care v. Department of Health and Rehabilitative Services, 12 FALR 853 (Final Order dated January 23, 1990); Humana of Florida, Inc. d/b/a Humana Hospital Lucerne v. Department of Health and Rehabilitative Services and Central Florida Regional Hospital Inc. d/b/a Central Florida Regional Hospital. 12 FALR 823 (Final Order dated January 23, 1990), reversed on other grounds 16 F.L.W. 1515 (Fla. 5th DCA 1991); Hospital Development and Services Corporation d/b/a Plantation General Hospital v. Department of Health and Rehabilitative Services, 12 FALR 3462 (Final Order dated July 27, 1990.) In sum, since January, 1990, the Department has abandoned its former policy of averaging utilization on a district-wide basis and applied the Rule literally to require that "each and every" facility perform the required threshold number of procedures before a new program will normally be approved. HRS uses the averaging method to determine need for other programs such as cardiac catheterization, nursing homes, rehabilitation services, psychiatric and substance abuse services, and neonatal intensive care. The challengers contend that it is arbitrary for HRS to use an averaging approach to determine numeric need for some services and not use it for open heart programs. The mere fact that an averaging approach is used for other services does not in and of itself establish that HRS is acting arbitrarily in refusing to follow that approach with open heart surgery programs. The evidence established that HRS treats open heart surgery services differently because the existing research indicates a direct tie between volume and outcome. HRS has not found a similar demonstrated connection between volume and outcome in any of those other services. In fact, in certain of those services, such as psychiatric care, the volume/quality of care correlation may be a negative one. The Proposed Amendments do not change the 350 standard in the existing rule, except in the case where an existing program has been operational for less than a year. Whereas the existing rule would not normally authorize a new program before an existing program is providing 350 procedures per year, the Proposed Amendments relax the standard by allowing a new program to be approved if a program that has been operational for less than one year achieves an average monthly volume of 29 operations. The challengers contend the Proposed Amendments to paragraph 7a are anticompetitive and serve to protect the market shares of existing providers. To the contrary, the more persuasive evidence indicates that the purpose of the 350 standard is not to thwart competition, but, rather, to ensure quality care and efficiency. The Petitioners did not establish that the 350 standard is inappropriate or does not tend to promote quality and efficient care. Without a doubt, HRS' conclusions and the Proposed Amendments reflect a preference for large volume open heart surgery providers and consequently serve to restrict new providers from entering the market. As set forth below, this preference is supported by the existing research in this area. While the correlation between large volume and quality of care is not absolute, the evidence did not demonstrate that HRS has acted arbitrarily in adopting a policy which is aimed at encouraging all open heart programs an opportunity to grow to the 350 level. HRS has adopted a rule designating adult open heart surgery as a tertiary health service. See, Rule 10-5.002(66)8. (previously 5.002(41)8,) Florida Administrative Code. A tertiary health service is defined in Section 381.701(20), as follows: "Tertiary health service" means 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, an cost-effectiveness of such service. To the extent that the 350 standard may work in some instances to favor greater use of existing providers over approval of a new competitor, that result is consistent with the nature of open heart surgery services as a tertiary health service. There is no question that several existing adult open heart surgery programs, including the programs of some of the intervenors in this case who are defending the Proposed Amendments, were approved after numeric need was found using the averaging policy. In many, if not all of those cases, need would not have been found if the "each and every" approach was used. See, Central Florida Regional Hospital, Inc. v. Department of Health and Rehabilitative Services, 16 F.L.W. 1515 (Fla. 5th DCA 1991). The challengers contend that they are being denied equal protection and/or that the "each and every" approach is being used to protect existing providers. As indicated above, the Petitioners have not established that the standards set forth in the National Guidelines are obsolete or inappropriate. The evidence of record in this case was insufficient to conclude that HRS is acting arbitrarily by reenacting standards that are consistent with the National Guidelines. HRS' temporary application of the averaging approach was not consistent with the language of the existing rule or the original interpretation given to the rule by HRS at the time it was adopted. While no evidence was presented that quality of care diminished during the period of time the averaging approach was used, HRS' policy decision to return to standards established in the National Guidelines can not be characterized as arbitrary and capricious. The research contained in the HRS 1988 and 1989 rule promulgation files supports the 350 standard as set forth in Paragraph 7.a. of the Proposed Rule. Most of this research indicates that there is a strong correlative relationship between the volume of open heart surgery performed by a program and the resulting quality of care, both in terms of morbidity and mortality. Specifically, studies performed by Dr. Harold Luft, suggest a relationship between volume of procedures and quality of care. The Luft studies suggest that mortality and morbidity tend to increase as a percentage of total procedures performed when volume is reduced. In contrast, morbidity and mortality tend to decrease as the annual number of procedures is increased. The Challengers have presented no persuasive evidence to rebut these studies. Given the undisputed relationship between the quality and economic efficiency of an open heart surgery program and its volume, HRS reasonably concluded that it is sound health planning policy to normally allow approved providers to achieve and sustain the 350 procedure level before new programs are authorized. The Work Group which assisted in the development of the Proposed Rule Amendments addressed the "each and every" versus "averaging" approach to the 350 standard. Representatives of hospitals which do not offer open heart surgery services were in attendance at the Work Group. No member of the Work Group presented evidence to support the "averaging" approach to the 350 standard nor was any evidence presented to rebut the data contained in the Luft studies. The evidence presented at the hearing in this matter did not establish that the "averaging approach" would in any way improve or contribute to quality assurance. Indeed, it could lead to problems in districts with established high volume open heart surgery providers. For example, if one provider in a service district performs 600 cases and another performs 100 cases, the service district would meet a "350" average standard However, the lower volume provider would be operating at well below the minimum necessary to insure quality of care. In other words, using an averaging approach, need could be found in a district containing an extremely low volume provider, which would probably inhibit the ability of the struggling existing provider to raise its service volume and could be detrimental to the overall quality of care in the district. The National Guidelines and Intersociety Study establish a minimum quality of care threshold at 200 annual procedures per open heart team. The existing rule provides, under the heading "Service Quality" for a "Minimum Service Provision" which requires 200 procedures to be performed annually within 3 years of initiation of service by an open heart program. Rule 10- 5.011(1)(f)5.d., Florida Administrative Code. The 200 procedure requirement was intended to ensure that a new program would operate at a minimum quality of care level. The Proposed Amendments delete this requirement. The challengers contend that HRS is inappropriately substituting the 350 procedure requirement contained in the Proposed Amendments as a new quality of care standard to be applied to open heart programs. The 350 standard is not intended by HRS to be a per se indicator of quality of care, nor is it intended to create a presumption that a program operating below 350 annual procedures provides poor quality of care. While the Petitioners claim that the 350 requirement in the National Guidelines was primarily an economic efficiency provision and was not a quality of care issue, the evidence indicates that the 350 standard was developed with both quality of care and efficiency in mind. Efficiency standards are important to allow a program to be doing enough operations to justify the staffing ratios, the inventory of supplies, and the utilization of the rooms themselves. While the challengers believe that the 350 standard is too high, the evidence was insufficient to establish that there is a more reasonable figure let alone that HRS' reliance upon the National Guidelines was arbitrary. Approximately seven districts would have shown need for a new program in 1993 if an averaging approach was used. However, under the "each and every" interpretation, HRS found there to be zero program need. The challengers point out that HRS has no authority to revoke a CON for a hospital operating an open heart surgery program with a low service volume. They contend that, due to referral patterns, quality of care problems, a shift in demographics, or similar reason, a hospital may be unable to generate a volume of 350 procedures which could preclude the addition of a new program even if there is a need in the district. The calculation of numeric need is only one of many criteria which the Department is required to consider under Section 381.705, Florida Statutes when reviewing applications for open heart surgery certificates of need. The Health Facility and Services Department Act sets forth many criteria which the department must consider when making a determination on an application for certificate of need including its need for the proposal, the existing availability of the proposed service of facility, the impact of the proposal on the cost of providing the service, and the quality of care provided by existing providers and proposed by the applicant. These criteria are consistent with the statutory aim as expressed in Title 42 - Public Health, Chapter 1 Public Health Service, Department of Health, Education and Welfare, Part 121 - National Guidelines for Health Planning which provides: "Equal access to quality health care at a reasonable cost ... Cost savings may be achieved without sacrificing the quality of or access to care through more efficient utili- zation of existing resources and increased emphases on ambulatory and community services. Moreover, limitations of certain resources, such as open heart units, can lead to improve- ments in the quality of care while at the same time containing costs." Federal Register, Vol. 43, No. 60., page 254. It is important to keep in mind that the 350 standard does not prohibit the approval of a new open heart program if an existing program in the district does not meet this standard. The proposed amendments, as well as existing HRS policy, simply provide that an application for a new program will "not normally" be approved. In other words, the burden of showing need for a new program is shifted to the applicant. The challengers contend that acquiring a CON when there is no numeric need calculated in accordance with the rule is next to impossible. Without question, an applicant's burden in such a situation would be substantially more difficult. However, the evidence does not support the contention that such approval is impossible. In conclusion, the 350 standard is a reasonable threshold criterion to presume need under normal circumstances. It is neither anti-competitive nor unconstitutional to require an applicant to allege and demonstrate the existence of not normal circumstances to overcome this presumption. Because no new program can be added when there is an outstanding approved but yet operational program in existence which could take an undue amount of time coming on line thereby preventing the approval of a new program. The challengers claim that requiring approved programs to become operational before a new program will normally be approved is unreasonable because of the length of time it could take for a newly approved program to come on line. HRS is generally aware of the length of time it takes an approved program to become operational. HRS reasonably resolved the balance of competing considerations by deciding that it should not approve a second new program in a district while there is still an approved program that has not yet become operational. HRS has concluded that it is preferable to allow programs to grow to a volume of 350 annual operations to assure quality and efficiency before adding a new program. The challengers have not established that this decision was arbitrary or that it would be in any way beneficial to allow simultaneous development of two or more adult open heart surgery programs within a service district. There are time restrictions on the implementation of a newly approved program and HRS has authority to void a CON when those restrictions are not met. See, Rule 10-5.018(2), Florida Administrative Code. Approved providers may not simply retain their CONs for open heart surgery services indefinitely without implementing them. If for some reason an approved program failed to commence operations within a reasonable time to the point of creating problems of service accessibility, an applicant could raise this issue as a "not normal" circumstance. The provision in the Proposed Amendments which would normally prevent approval of a new program when there is an outstanding approved but not yet operational program in existence is consistent with HRS' interpretation of the existing rule. WHETHER SUBPARAGRAPH 7.b OF THE PROPOSED AMENDMENT IS ARBITRARY AND CAPRICIOUS BECAUSE ONLY ONE NEW PROGRAM CAN BE APPROVED AT A TIME. Paragraph 7.b. of the Proposed Amendments provides that even where the numeric need calculation results in a projected need for more than one new adult open heart program, only one new program per service district may be approved in a given batching cycle. The only evidence presented concerning this issue was the testimony of Ms. Stamm, who asserted that the practice of approving one program at a time ensures that only one new provider will compete with established facilities within a service district and that a new program will have an opportunity for rapid start-up growth in order to reach a safe volume level in a short period of time. By limiting approval to only one new program per planning horizon, the volume and quality of care at existing programs is protected and the continued viability of new providers is assisted. The challengers claim that this provision is arbitrary and capricious because it could prevent the approval of a new open heart surgery program even when numeric need, as determined by the Rule, is present. However, as indicated above, the calculation of numeric need is based upon desired, not maximum levels of operation. Thus, even if numeric need is shown in accordance with the Rule, a new program is not automatically required. Petitioners have not established that HRS' balancing of the conflicting concerns on this issue was arbitrary or capricious. The requirement that only one new program be approved at a time is consistent with HRS' interpretation of the existing rule. WHETHER PARAGRAPH 8 IS ANTICOMPETITIVE, UNDULY RESTRICTIVE, ARBITRARY AND CAPRICIOUS. Paragraph 8 of the Proposed Amendments sets forth a new quantitative need formula for pediatric open heart surgery services programs. It provides: 8.9. Pediatric Open Heart Surgery Program Need Determination. The need for pediatric open heart surgery programs shall be deter- mined on a regional basis in accordance with the pediatric open heart surgery program service areas as defined in sub-subparagraph 2.1. A new pediatric open heart surgery program shall not normally be approved unless the total of resident live births in the pediatric open heart surgery service area, for the most recent calendar year available from the department's Office of Vital Statistics at least 3 months prior to publication of the fixed need pool, minus the number of existing and approved pediatric open heat surgery programs multiplied by 30,000, is at or exceeds 30,000. The 30,000 live birth standard is based upon and consistent with the standards adopted by the American Academy of Pediatrics, Section on Cardiology, for use by health planning agencies and health service organizations to evaluate existing pediatric cardiac centers and to establish the need for the development of new centers. The 30,000 live birth standard is set forth in the "Guidelines for Pediatric Cardiology, Diagnostic and Treatment Centers," published in Volume 62, No. 2, American Academy of Pediatrics (1978) (the "Pediatric Guidelines"). Those guidelines were updated in 1990 and the 30,000 live birth standard was retained in the updated version. The Pediatric Guidelines, like the National Guidelines, is a well-respected and readily available research tool that health planners customarily rely upon in evaluating the need for health care programs. The 30,000 live birth standard is also contained in the HRS Children's Medical Services administrative rules and this methodology is consistent with the minimum service volume standards found in the National Guidelines. Unlike the methodology utilized to project need for adult open heart surgery programs, the methodology proposed to project need for pediatric open heart surgery does not utilize a "use rate." This pediatric need methodology assumes a constant use rate and attributes increased need to population growth. St. Mary's argues that the 30,000 live birth standard should not be utilized because the incidence rate of pediatric open heart surgery (the number of procedures per 30,000 births) may change and the standard does not take into account such changes which could be based on advances in medicine, etc. This criticism is highly speculative and does not provide a basis for rejecting the 30,000 live birth standard. While the use rate for adult open heart surgery has generally increased since the open heart rule was adopted in the early 1980s, there is no evidence that the use rate for pediatric open heart surgery programs has increased. St. Mary's contends that the 30,000 live birth standard only takes into account the pediatric population in the neonatal or newborn time period. However, this contention was not supported by the evidence. The 30,000 live birth standard assumes that in the years prior to attaining 30,000 live births, a service area experienced something less than 30,000 live births each year and will experience approximately 30,000 live births in subsequent years, so that an age pyramid is building. The Florida data indicates that if this standard is applied over 14 years, approximately 75 pediatric open heart surgery cases per year would be generated based upon multiple years of approximately 30,000 volume base. Approximately 100-130 cases can be expected if the age cohort is increased to 21. St. Mary's proposed an alternative methodology based upon comments appearing in an article titled "Trends in Cardiac Surgery" from the Journal of Thoracic and Cardiovascular Surgery, 1980. That article suggested that a 380,000 pediatric population base from age 0-14 can be expected to generate 75 pediatric open heart surgery operations. Utilizing the 1970 United States age mix, which indicates that 27.5 percent of all persons are under the age of 14, St. Mary's suggests that the 380,000 pediatric population should be grossed up to a 1.38 million total population base and this total population figure is an appropriate standard for determining when to add a new pediatric program. Serious questions were raised regarding the validity of St. Mary's proposed standard. For example, it appears that the age mix in Florida is significantly different than the age mix figures used by St. Mary's. In sum, the evidence did not establish that St. Mary's proposed standard was more appropriate to use, let alone that HRS acted arbitrarily in adopting the 30,000 live birth standard. Indeed, the evidence established that the 30,000 live birth standard employed in the Proposed Amendments as a basis to project need for pediatric open heart surgery programs is a reasonable basis upon which to plan for pediatric open heart surgery programs. WHETHER THE PROPOSED AMENDMENT PROHIBITS AN APPLICANT FROM APPLYING FOR BOTH PEDIATRIC AND ADULT OPEN HEART SURGERY AND FOR THAT REASON IS INVALID. Proposed Rule 10-5.011(1)(f)1. states that providers must apply for separate certificates of need for adult and pediatric open heart surgery programs. The existing rule does not expressly state that separate certificates of need are necessary. However, Rule 10-5.008(1)(a), Florida Administrative Code, requires separate letters of intent for each type of service having a separate need methodology, even if the projects are within the same facility. Thus, separate applications are necessary under both the present rule and the proposed amendments because a separate need methodology is stated in both. As discussed above, the Proposed Amendments do not prohibit an applicant from applying for a certificate of need for pediatric open heart surgery services and adult open heart surgery services simultaneously. WHETHER THE PROPOSED AMENDMENT IS ARBITRARY AND CAPRICIOUS BECAUSE IT DOES NOT SET FORTH A MINIMUM NUMBER OF MIXED PEDIATRIC AND ADULT OPERATIONS WHICH MUST BE PERFORMED IN A MIXED PROGRAM AS A PREDICATE TO THE AWARD OF ANOTHER ADULT PROGRAM. Neither the existing rule nor the Proposed Amendments to the rule specifically address the minimum number of annual operations which must be performed in a "mixed" program before an additional adult program may be added. Thus, any "mixed" adult/pediatric open heart surgery program would have to be performing at least 350 adult procedures before there would be a calculated need for an additional adult open heart program in the district. St. Anthony's argues that this requirement should not apply to "mixed" programs and/or that a lower volume standard should have been adopted for hospitals that operate "mixed" programs. There is considerable confusion as to how to define a "mixed" program. St. Anthony's contends that a "mixed" open heart surgery program is any program that provides open heart surgery services to both adult and pediatric patients. HRS contends that if the programs are separately organized and staffed, the fact that a hospital has both programs is irrelevant to assessing the appropriate volume capacity. HRS considers a "mixed program" as one in which a single team is performing both pediatric and adult open heart surgery. Under this view, a hospital can have both an adult open heart surgery program and a pediatric open heart surgery program without necessarily being considered a "mixed" program. Applying this definition, there is apparently only one program in the state which is a "mixed" program. That program is located at Bayfront/All Children's Hospital. St. Anthony's contends that there are other programs in this state that offer both pediatric and adult open heart surgery. However, the evidence was insufficient to establish that any of these other programs meets the HRS definition of a mixed program. St. Anthony's cites to a provision in the National Guidelines which provides that the minimum number of open heart surgery procedures that should be performed in a "mixed" program is 200, of which 75 should be for children. However, HRS has reasonably concluded that this provision in the National Guidelines was not intended to establish a threshold for the addition of a new adult program. The studies which were the source of this provision did not attempt to address the number of procedures that should be performed in a "mixed" program before a new adult program should be awarded. In view of the extremely small number of "mixed" programs and the lack of clear evidence regarding the optimal number of procedures that should be performed in such programs, HRS has elected to not address "mixed" programs in the existing rule or the Proposed Amendments. For a true "mixed" program, it may not be reasonable or desirable to expect 350 adult surgeries per year. However, the available data is inconclusive and St. Anthony's has not presented persuasive evidence of a more realistic number. Thus, HRS' decision to not adopt a rule of general applicability to address this issue, is not arbitrary or capricious. An applicant in a district with a "mixed" program that is not performing 350 adult procedures per year can apply on a "not normal" basis. WHETHER THE PROPOSED AMENDMENTS ARE INVALID BECAUSE HRS HAS FAILED TO PREPARE A DETAILED ECONOMIC IMPACT STATEMENT, AN ESTIMATE OF THE IMPACT ON COMPETITION, OR DETAILED STATEMENT OF THE DATA AND METHODOLOGY USED IN MAKING THE PROPOSED RULES, THE FAILURE OF WHICH IMPAIRED THE CORRECTNESS OF THE ACTION TAKEN BY THE AGENCY. Section 120.54(2), Florida Statutes, requires the Department to prepare an Economic Impact Statement (EIS) containing the economic impact of the proposed rule on all persons directly affected. HRS assessed the economic impact of its proposed amendments and concluded that there would be no impact because the proposed amendments do not change the projected need for either adult or pediatric programs. As discussed in more detail above, the Proposed Amendments clarify that the 350 target volume must be achieved by each and every existing and approved program before a new program will be approved. The existing rule has been interpreted to require the same thing. While HRS followed an averaging interpretation for a period in the past, that interpretation has been rejected in a series of final orders. Since the averaging interpretation was deemed invalid before these Proposed Amendments, the Proposed Amendments do not change the way need is assessed under the existing rule. Thus, there is no economic impact by reason of the inclusion in the Proposed Amendments of the 350 standard. Likewise, the new methodology for calculating need for pediatric open heart surgery does not change the calculations made under the existing rule. None of the other changes to the existing rule have been shown to have a significant impact on existing providers or applicants. None of the challengers showed that they are able to obtain an economic benefit now that they will be deprived of under the rule as amended nor have they demonstrated any prejudice by reason of HRS' conclusion that the Proposed Amendments would not have an adverse economic impact.
The Issue Petitioner, St. Mary's, and Intervenor, BRCH contend that Rule 10- 5.011(1)(f), Florida Administrative Code, constitutes an invalid exercise of delegated legislative authority for the reasons more specifically set forth in St. Mary's Amended Petition for Administrative Determination of the Invalidity of a Rule. Respondent, HRS, and Intervenors, JFK, PBGMC, and Florida Hospital, contend that Rule 10-5.011(1)(f), Florida Administrative Code, constitutes a valid exercise of delegated legislative authority. BACKGROUND AND PROCEDURE Petitioner, St. Mary's, presented the oral testimony of Philip Rond, W. Eugene Nelson-Michael L. Schwartz, and James McElreath. Petitioner submitted 9 exhibits at formal hearing, 8 of which were admitted in evidence. Pursuant to a stipulation among the parties, St. Mary's subsequently had admitted an after- filed deposition of Frank R. Sloan. Intervenor BRCH had admitted in evidence 1 exhibit but called no witnesses. Respondent HRS presented the oral testimony of Elfie Stamm and Reid Jaffe. Respondent HRS had 4 exhibits admitted in evidence. At formal hearing, Intervenors JFK and PBGMC presented the oral testimony of Mark Richardson which was also adopted by HRS as its own. Pursuant to a stipulation among the parties, JFK and PBGMC subsequently had admitted an after- filed deposition of Harold B. Luft which was also adopted by HRS. Official recognition of JFK's Petition in DOAH Case No. 86-4368 was granted. PBGMC had 1 exhibit admitted in evidence at formal hearing. Intervenor Florida Hospital, submitted no exhibits and adopted the testimony of HRS' witnesses. The Hearing Officer received two documents into evidence as Hearing Officer Exhibits, the Prehearing Stipulation between the parties in this proceeding and a copy of Rule 10-5.011(1)(f), Florida Administrative Code. Official recognition was taken of the Final Order dated July 27, 1987, in St. Francis Careunit v. Department of Health and Rehabilitative Services, et al., DOAH Case No. 84-2918. Subsequent to the filing of the transcript herein, and pursuant to time waivers and stipulations among the parties, St. Mary's and BRCH filed their joint proposed final order; JFK and PBGMC filed their joint proposed final order; and HRS and Florida Hospital filed individual respective proposed final orders. The parties' respective proposed findings of fact are ruled upon in the Appendix to this Final Order, pursuant to Section 120.59(2), Florida Statutes. Additionally HRS' Motion to Strike Portions of the Joint Proposed Findings of Fact of St. Mary's and Intervenor BRCH, and JFK's Motion to Strike are ruled upon within this Final Order and its Appendix.
Findings Of Fact St. Mary's is an existing general acute care hospital in HRS Service District 9, West Palm Beach, Florida. St. Mary's has pending before the Division of Administrative Hearings DOAH Case No. 86-4368 concerning its certificate of need (CON) application for an open heart surgery program at St. Mary's which was preliminarily denied by HRS (CON Action No. 4551). Rule 10- 5.011(1)(f), Florida Administrative Code, was utilized by HRS in evaluating St. Mary's CON application and was relied upon by HRS in its decision to deny CON Action No. 4551. Pursuant to that HRS review, there is no numerical need for the St. Mary's proposed program, based upon HRS' application of the quantitative need methodology contained in the Rule. St. Mary's is substantially affected by Rule 10-5.011(1)(f), Florida Administrative Code, and consequently has standing to seek administrative determination of the validity of said rule through this present cause. BRCH is an existing general acute care hospital in HRS Service District 9, Boca Raton Florida. BRCH has pending before HRS a CON application for an open heart surgery program at BRCH (CON Application No. 5194) which is currently being reviewed by HRS in accordance with Rule 10-5.011(1)(f), Florida Administrative Code. BRCH is substantially affected by Rule 10-5.011(1)(f), Florida Administrative Code, and consequently has standing to seek administrative determination of the validity of said rule through this present cause. JFK is an existing general acute care hospital in HRS Service District 9, Lake Worth, Florida, which has in place its open heart surgery program. JFK's open heart surgery program opened and closed in 1986. On the date of formal hearing, JFK had scheduled to reopen its open heart surgery program in August, 1987. The program is subject to regulation pursuant to Sections 381.493-499, Florida Statutes, (1985), and regulations promulgated thereunder, including Rule 10-5.011(1)(f), Florida Administrative Code. JFK is an Intervenor in opposition to St. Mary's application in DOAH Case No. 86-4368 alleging that due to the service area and medical staff overlaps between St. Mary's and JFK, there will be adverse staffing, economic, availability, and quality impacts upon JFK. PBGMC is an existing general acute care hospital in HRS Service District 9, Palm Beach Gardens, Florida, which has in place an open heart surgery program. Its program is likewise subject to regulation pursuant to Sections 381.493-499, Florida Statutes (1985), and regulations promulgated thereunder, including Rule 10-5.011(1)(f), Florida Administrative Code. PBGMC is an Intervenor in opposition to St. Mary's application in DOAH Case No. 86- 4368 alleging that due to the service area and medical staff overlaps between St. Mary's and PBGMC, there will be adverse staffing, economic, availability and quality impacts upon PBGMC. Florida Hospital is an existing general acute care hospital in Service District 7, Orlando Florida, which has in place an open heart surgery program. It is subject to regulation pursuant to Sections 381.493-499, Florida Statutes (1985), and regulations promulgated thereunder, including Section 10- 5.011(1)(f), Florida Administrative Code. It may be inferred that a determination of invalidity of the Rule wall impact upon Florida Hospital if, as a result thereof CONs are granted for other open heart surgery programs in that District, but there is no direct evidence to that effect. No direct threat of revocation of Florida Hospital's existing CON or of economic or other impact of this rule challenge upon Florida Hospital was demonstrated by Florida Hospital at formal hearing. Respondent, HRS, is responsible for the administration of Sections 381.493-499, Florida Statutes, (the CON statute) and Chapter 10-5, Florida Administrative Code, (the CON rules). The initial development of the Rule was undertaken in 1982 and 1983 in a manner consistent with HRS internal policy. HRS reviewed the relevant literature relating to open heart surgery programs and services. Included among the literature reviewed were the National Guidelines for Health Planning (National Guidelines or Guidelines) and the standards for review of applications for certificates of need (CON) for open heart surgery services proposed by several Health Systems Agencies. At the time those standards were developed, the Health Systems Agencies were responsible for the first level of review in the state certificate of need process. Originally, the companion to the open-heart surgery rule, was Rule 10- 5.011(15), now codified as Rule 10-5.011(1)(e), Florida Administrative Code, which rule sets forth criteria for cardiac catheterization lab CON applications. Considerably more emphasis was accorded the development of the companion rule initially, but even expert witnesses for Petitioner's view acknowledge that the rule promulgation process relative to the adoption of the open heart surgery rule was thorough, rational, and essentially non-remarkable in the scope of promulgation of numerous CON rules drafted and implemented for the first time during a period in which HRS was also developing other rules dealing with a broad range of services and facilities to comply with new legislation eliminating Health Systems Agencies and requiring HRS to adopt uniform methodologies to be used in the CON program. Subsequent to its review of the literature, HRS formed a work group to assist in the development of the Rule. HRS prepared a draft of the proposed Ruled which was sent to over fifty experts in the field of cardiology. HRS received extensive comments on the draft rule. The final proposed Rule was published in the Florida Administrative Weekly. A public hearing on the proposed Rule was held in December, 1982, during which extensive public comment was received. The public comments were reviewed by and discussed among the HRS' health planning staff and administration. Upon consideration of all the input received, the final draft of the initial rule abandoned a proposal to rely on 1979 utilization data and substituted 1981 data. Additionally, provision was made to allow for consideration within the Rule's need formula of approved, but not yet operational, open heart surgery programs. The Rule was then filed for adoption and went into effect February 14, 1983. Because it was deemed prudent, and because the National Guidelines provided for it, HRS intended, at the time the initial open heart surgery rule was promulgated, to revisit the components of the Rule every 2-3 years. The Rule was next amended in 1986. At that time, in response to public comment, "Uc" of Subparagraph 8 of the Rule, which prescribes the base period to be used in the calculation of a service area use rate, was substantially revised. In its initial form, element "Uc" was based on the 1981 service area actual use rate. As amended, "Uc" measures the actual use rate in the service area for a 12 month period beginning 14 months prior to the letter of intent deadline for the batching cycle at issue, or the most recent use rate available to HRS. There have been no other substantial amendments which impinge upon the instant Rule challenge. Among other allegations, Petitioner asserts that because the Rule is silent as to which or however many exceptional circumstances would have to exist in order to justify approval of a CON application for an open heart surgery program in the absence of numerical needs the Rule is arbitrary and capricious. The evidence and applicable case law do not support such a premise. The Rule provides that HRS will consider applications in the context of applicable statutory and rule criteria. See 10-5.011(1)(f)2. The Rule further provides that HRS will "not normally" approve applications for new open heart surgery programs unless the conditions of subparagraphs 8 and 11 of the Rule are met. Also 10-5.011(1)(f)2. The very nature of "not normal" circumstances is that all possible "not normal" circumstances cannot be enumerated within a rule because in the attempt, some exceptionalities would inevitably be excluded. Of the four applications proposing new open heart surgery programs which have been approved in the recent past, three were approved under "not normal" circumstances, that is, where one or both provisions of Subparagraphs 8 and 11 were not met. The applicable state agency action reports (SAARS) which reflect HRS' preliminary position on CON applications, demonstrate that HRS routinely considers all relevant statutory and regulatory criteria in its review of open heart surgery program CON applications. There is no competent substantial evidence to show that HRS' evaluation of applications proposing new open heart surgery programs are prohibited by the Rule from entailing a balanced consideration of the statutory and regulatory criteria relevant to CON review. As a corollary of the foregoing allegation, it is alleged that because the Rule does not specifically address what has come to be known in CON practice as "the in-migration/out-migration" phenomenon, while at least one other CON rule does specifically address this phenomenon, a balanced consideration of all statutory criteria is frustrated, thereby resulting in understating the need for open heart surgery programs in one District/service area while enabling unnecessary, costly duplication of programs within other Districts/service areas. The use rate (discussed infra) purports to capture that in- and out- migration which can be standardized within the 12 month base period. At hearing, it was tenuously demonstrated that an unmeasured in-/out-migration phenomenon may exist within 2 out of 11 HRS Districts, but the degree to which it exists, if at all, is purely speculative. Even if these two Districts clearly possessed extraordinary timeframe, geographical, or transportation uniqueness, these access abnormalities would not justify declaring the Rule invalid. Rather, in the event the use rate for some reason does not measure them, these exceptionalities would be just the sort of "not normal" aberration for which it would be appropriate to resort to balancing of all statutory and rule criteria. Petitioner also contends that because this Rule does not define "service area" as the respective HRS Service District, it leaves each applicant free to designate, virtually at will, its own service area. Apparently, the initial Rule drafters intended that the service area be defined in the open heart surgery Rule as the HRS Service District. In finalizing Section (1)(e)(its companion cardiac catheterization lab rate rule), this definition was indeed included. However, in the open heart surgery rule, it was omitted. No witness recommended or even seriously considered that any service area less than the relevant HRS District should be designated, and the evidence is unrefuted and substantial that District lines have always been uniformly applied by HRS in interpreting the open heart surgery Rule. This interpretation is consistent with the agency's application of similarly silent rules. Petitioner alleges that because there is no Rule requirement or uniform manner for hospitals to report their open heart surgery utilization data to Local Health Councils or to HRS, the Rule is arbitrary and capricious. Authorized HRS representatives and others testified that data for the most current 12-month period, with a 2 month lag time are the most appropriate data to use. Testimony by St. Mary's experts that the data necessary to derive the rule methodology is not available, was directly refuted by evidence from authorized HRS representatives and others that HRS is able to collect all necessary data even though some councils report at different intervals from each other, and even though some hospitals report in "cases," others in "procedures" and one in "minutes." Because of these procedures of reporting, it may be necessary to make certain mathematical conversions or interpretations in preparing an agency SAAR or in presenting evidentiary proof in a Section 120.57 hearing, but even if one accepts that it is difficult to collect and interpret the necessary data, that concept does not support the conclusion that the Rule itself is arbitrary, capricious, or otherwise fatally flawed. Subparagraph 8 of the Rule defines Year X as the year in which the proposed open heart surgery program would initiate service but no more than two years into the future. St. Mary's contentions with regard to this provision are that the triggerpoint cannot be determined and that by allowing applicants in the same batching cycle to elect varying dates of initiating service, similarly batched applicants may select different horizons within the two year outside limit and therefore those two applicants could not be comparatively reviewed. It was shown that in the last batching cycle all applications were reviewed from the same trigger date and that HRS' implementation of the CON rules is guided by legal precedent. HRS' shifting of trigger dates in past batches is accounted for by shifting legal precedents. Therefore, assuming applicants in the same batch may unilaterally select different planning horizons within the traditional two year range permissible under the Rule, that is not sufficient to invalidate the Rule as arbitrary and capricious. The Rule establishes a need formula. Entitlement of applicants to "comparative review" is set forth in other statutory, ruled and case law authority. Applicants in the same batching cycle who elect significantly different horizon dates under the Rule probably ought not to be comparatively reviewed, but that problem is to be addressed within the context of "all statutory and rule criteria" both at the agency level in the case of initial review, and, when necessary, in the case of litigation before the Division of Administrative Hearings, by appropriate motion. The remainder of Petitioner's challenge addresses, in one form or another, the Rule's numerical need formula. The Rule establishes three thresholds which apply to utilization of open heart surgery programs. Subsection 3.d. requires that each program shall be able to provide 500 open heart operations per year." Each program is required to provide a minimum of 200 adult open heart procedures annually within 3 years of the initiation of service, with no additional programs to be approved in a service area until each existing program is operating at a minimum of 350 adult open heart cases. Subparagraphs 8 and 11 are the cornerstones of the numerical need formula provided in the Rule. Specifically, Subparagraph 11 of the Rule provides: There shall be no additional open heart surgery programs established unless; The service volume of each existing and approved open heart surgery program within the service area is operating at and is expected to continue to operate at a minimum of 350 adult open heart surgery cases per year or 130 pediatric heart cases per year; and, The conditions specified in Sub- subparagraph 5.d., above, will be met by the proposed program. b. No additional open heart surgery programs shall be approved which would reduce the volume of existing open heart surgery facilities below 350 open heart procedures annually for adults and 130 pediatric heart procedures annually, 75 of which are open heart. The standard found at Subparagraph 11 of the Ruled which provides that there should be no additional open heart surgery units initiated in a service area unless each existing and approved unit is operating at and is expected to continue to operate at 350 adult open heart surgery cases per year or 130 pediatric open heart cases per year, is based upon a substantially similar standard enunciated in the National Guidelines published in 1978 and in effect at the time the Rule was initially promulgated. The National Guidelines were developed by the Federal Department of Health Education and Welfare (HEW) pursuant to an extensive process of public consultation, including receipt of recommendations and comments for Health Systems Agencies (HSAs), State Health Planning and Development Agencies (SHPDAs) Statewide Health Coordinating Councils, associations representing various health care providers, and the National Council on Health Planning and Development. The federal process of promulgation encompassed over two years of consultation, public notices, public meetings, and related activities. There were strong incentives to SHPDAs to develop local standards consistent with the National Guidelines and the National Guidelines contain a provision which permitted HSAs and SHPDAs pursuant to detailed local analyses, to deviate from the standards contained in the National Guidelines. The Florida Rule deviates from the National Guidelines in that it does not require facilities which offer cardiac catheterization services to also offer open heart surgery service. Florida's rationale supporting the 350 standard in its Rule is that of the National Guidelines which assumes that each facility can provide an average of seven operations a weeks a schedule HEW judged to be feasible in most institutions which provide open heart surgery services. As a matter of health planning policy, HEW established the 350 standard in an effort to prevent duplication of costly services which are not fully utilized, both as to facility resources and manpower. This goal is reiterated in the 1985 Florida State Health Plan. Reasonableness of the 350 case requirement is supported by testimony regarding the purposes behind the hours of operation standards portion of the Rule. See 10-5.011(1)(f)4.b. That subparagraph mandates that open heart surgery programs be available for procedures 8 hours per days 5 days per weeks for a total of 40 available hours of surgery per week, and capable of rapid mobilization of the surgical and medical support team for emergencies 24 hours per day, 7 days per week. Since it is estimated that each open heart procedure requires an average of 4 hours of operating room time, including cleanup, and operations go forward 50 weeks per year, then each program can, over time, attain the goal of 500 annual open heart operations which is set in Subsection 3.b. Considering both elective and unscheduled services, HRS arrived at a 75 percent of maximum as a reasonable utilization figure, and Petitioner has in no way refuted the reasonableness of these hours of operation requirements or of HRS' 75 percent figure for reasonable utilization. The 350 threshold figure is primarily intended to ensure an appropriate utilization level of every open heart surgery unit. In fact, the minimum quality standard is set forth in Subparagraph 5 of the Rule as "200" and is supported in reason and logic upon the facts set forth, infra. The 350 figure here is intended to result in greater efficiency which results in economic benefits to the hospital which may ultimately be passed on to patients. I accept Dr. Luft's expert opinion and analysis that the economic benefits of a 350 threshold are derived primarily from clinical economies of scale which result from improved proficiencies in the provision of service rather than solely in the classic economy of scale of a greater division of fixed costs. One clinical economy of scale demonstrated by Dr. Luft is that shorter average lengths of hospital stay result from high volume facilities. The shorter lengths of stay translate into patient or third party payor dollars saved. Admittedly, the 350 standard also secondarily encompasses consideration of the relationship of the volume of open heart surgery services and patient mortality, thus peripherally impinging on the volume of a 200 minimum threshold for quality of care purposes. Except for one study by Dr. Sloan, the evidence consistently supports existence of a negative relationship between volume and outcome, e.g., facilities performing higher volumes of open heart surgery have lower mortality rates. Obvious empirical problems inherent in Dr. Sloan's study impair its credibility. In light of his deposition testimony concerning how his several studies were conducted and how empirical data was converted by him for use in those studies, and due to his superior education, training, and experience, I find more credible Dr. Luft's determination that hospitals which perform low volumes of open heart surgery, particularly with respect to coronary artery bypass graft surgery, have substantially higher mortality rates than hospitals performing higher volumes of such surgery. Moreover, those areas of analysis in which the opinions of these two health care economic experts, Dr. Luft and Dr. Sloan, are consistent with one another and with the other literature and experts in the field whom they each cite as accepted and relied upon by them, strongly suggest that Dr. Sloan's unusual conclusion that low volume hospitals more often fit his unique categorization of "low mortality" should not be relied upon for purposes of formulating, drafting, and promulgating standard rules. The 350 standard does not appear to have impeded either competition or quality of care. There is also no competent substantial evidence to establish that there are too few open heart surgery programs in Florida at this time. At present, no District/Service Area has fewer than two open heart surgery programs, and 8 of the 11 Districts have 3 or more programs. Although many individual programs fall below the 350 thresholds on average, open heart surgery programs in operation in Florida perform close to 350 cases per year apiece. Between 1985 and 1986 the percentage of Florida programs performing 350 or more cases annually climbed from 24 percent to 35 percent. Petitioner never directly attacked the 200 procedure standard for quality, however, some evidence was presented to show that a lesser figure could still uphold quality considerations. This evidence was neither substantial nor credible. In lieu of the 350 utilization threshold, a variety of possible optimal threshold numbers were suggested by Petitioner's expert witnesses, among them 130 (the same utilization figure as for pediatric cases), 150, and 200 (the same figure as presently used to insure adult quality of care). Even if the highest of these suggested figures were selected as a utilization standard, that is, 200 cases per year substituted for the 350 utilization standards a minimum additional 31 open heart surgery programs would be "needed" on a statewide basis. This would nearly double the current number. Assuming there would emerge therefrom a normal distribution of programs around the substituted 200 standard, there could be the result that half the State's programs would then be operating below 200 and half above 200, so that half the programs would operate below the 200 quality of care standard now in effect. Even assuming arguendo that Petitioner's expert, Mr. Schwartz, is correct that 72 percent of current programs meet or exceed the 200 procedure levels and that that 72 percent would remain constant, more than one quarter of the state's programs would be below the 200 quality of care level. This is clearly not a desirable health planning goal. Such a proliferation of straight numbers of programs would doubtless impact adversely on all existing approved providers' utilization, concomitantly forcing up individual consumer costs. The testimony is more credible that the improvement curve "flattens out" anywhere from 333 to 350, but even if one were to accept St. Mary's witnesses position that the improvement curve "bottoms out" (that is, utilization and quality optimums meet) at 200 open heart surgeries, there is evidence that there is still some minimal improvement in outcome (quality) in operations performed in hospitals exceeding the 200 figure. The 350 standard reduces the number of institutions over which a given number of procedures is spread and in general will result in higher volume per hospital, reducing the likelihood that outcomes would be worse than they might be otherwise. To the extent that witnesses support the position that the 350 figure is not reasonably or rationally related to the CON statutes, is arbitrary, or is unduly restrictive of the initiation of new open heart surgery programs, their testimony is unpersuasive in light of the foregoing determinations with regard to the hours of operation standards, the National Guidelines, and the statutory goal to avoid proliferation of such programs at the expense of efficiency, economy, and quality. Subsection 8 of the Rule provides as follows: Need Determination. The need for open heart surgery programs in a service area shall be determined by computing the projected number of open heart surgical procedures in the service area. The following formula shall be used in this determination: Where: N = Number of open heart procedures projected for Year X; U = Actual use rate (number of procedures per hundred thousand population) in the service area for the 12 month period beginning 14 months prior to the Letter of Intent deadline for the batching cycle. P = Projected population in the service area in Year X; and, Year X = The year in which the proposed open heart surgery program would initiate service, but not more than two years into the future. Subparagraph 8 of the Rule provides a formula by which numerical need for open heart surgery programs within a service area may be calculated. The use rate therein is based upon the number of procedures per 100,000 population in the District/Service Area for the 12 month period beginning 14 months prior to the letter of intent deadline for the applicant. If a District does not have 12 months' experience, the statewide use rate is used. This use rate is based upon the most recent utilization data available to HRS. The data necessary to calculate the use rate is accessible and available to HRS as set out supra. The base period employed in the calculation of the use rate is appropriate for use in the numerical need methodology. It provides the most current picture of utilization of open heart surgery services within each District/Service Area which the agency has been able to devise. The Rule's base period essentially provides what health planners describe as a "realistic" or "rolling" use rate. Such a component permits consideration of facility number increases and volume fluctuations within facilities within the District/Service Area. Increased number of facilities and volume increases and decreases within specific facilities are quickly reflected by such a use rate and may be quickly considered in projecting need for the future. Such reality based use rates are customarily employed by health planners in projecting need for new open heart surgery services. The use rate minimally approaches the differences in population utilization of open heart surgery facilities occurring across age differential groupings. Although there is some evidence that the use rate formula contained in the Rule is not optimal in providing accessibility where there occasionally is clustering of "aged aged" population centers or clustering of heart surgery optimal age groups, the evidence in favor of such a rolling use rate establishes that as a statewide rule component, it is reasonable, not arbitrary, and not capricious. No witness offered a more reasonable substitute base period and the agency is not required to promulgate an optimal one, merely a reasonable one. St. Mary's and BRCH's witnesses suggestion that the Rule is ambiguous for a discernible number need methodology is not substantiated by credible competent evidence, and is generally rejected. Ms. Stamm, testifying for Respondent, had trouble with applying basic arithmetic under stress but not with the methodology. Mr. Schwartz, on behalf of the Rule's opponents, had some difficulty in determining whether the 200 or 350 standard was the appropriate figure for need determination. No other witness experienced Mr. Schwartz' confusion. When called to work Subparagraph 8 calculations, all witnesses were in agreement as to the mechanics of the Rule. No witness, including those who attacked the Rule as facially inconsistent due to the Rule's use of undefined terms of "programs," "procedures," and "cases" and/or those who complained about difficulty of obtaining raw data for the base time period had any difficulty in applying the Rule's numerical need formula, and indeed, Mr. Rond testified that HRS' interpretation of the numerical need formula was the most straightforward interpretation (TR-115) and the way he would logically do it. (TR-98-100) Each witness who was asked to use the Rule's formula in order to determine numerical need, consistently offered the following approach: First Derive Nx, as provided in Subparagraph 8. (Nx is the number of open heart procedures projected for year X). Second: Divide Nx by 350 (from Subparagraph 11) to obtain the gross projected need. Third, subtract from the gross projected needs the numbers of existing and approved programs within the applicable district so as to obtain the net need. The Rule's provision for subtraction of approved as well as for subtraction of operating programs from gross need so as to determine net need was investigated and adopted in the rational approach to rule promulgation. This is an accepted health planning component utilized in numerous CON rules. For these reasons and for all of the foregoing reasons related to the value of retaining 350 utilization and 200 quality thresholds, this provision for subtracting approved facilities from the gross need is found neither arbitrary nor capricious. The evidence presented by St. Mary's and BRCH is insufficient to demonstrate that HRS has not, subject to evolving legal precedent, consistently used the formula's interpretation set forth in Finding of Fact 33, at least as modulated by universally accepted common mathematical principles such as rounding results to the nearest whole number and considering "not normal" circumstances in light of all statutory and rule criteria on a case by case basis. In any case, if the agency misapplies its own Rule, applicants have recourse to a Section 120.57 proceeding and misapplication is not cause to invalidate the rule applied. I also reject as speculative and not credible St. Mary's allegation that a "sinister" conspiracy among existing and authorized providers within a given District may unnaturally reduce a single facility below the 350 threshold in order to thwart new program applications. Mr. Rond and Mr. Schwartz also promoted the premise that this result might occur unintentionally as well. HRS has not interpreted the Rule in such a peculiar manner and has approved new programs in districts where individual existing programs were not performing at the 350 level. I specifically reject as not credible the testimony of the St. Mary's and BRCH's witnesses professing concern that persons applying the Rule may be confused about how to work the formula and whether or not the pediatric population within a service area or the 130 pediatric procedures are to be subtracted at some point. Px is defined in the Rule to mean "the projected population in the service area in Year X." The Rule's language is plain and unambiguous. Nothing in the language of the Rule suggests the "projected population in the service area" is intended to exclude the pediatric population. Petitioner offered evidence that in certain instances HRS has applied Px to include the pediatric population. This, on its face, is an erroneous application of the Rule but without more, will not invalidate the Rule itself. Should HRS fail to implement the Rule according to the plain meaning of its languages an affected party may contest that agency action in a Section 120.57 hearing. In the case of former HRS employees concerned with drafting, promulgating amending and/or applying the Rule over a period of several years, their credibility is impaired by their never attempting to correct the alleged flaws and by their expressed perception of the necessity for a rule challenge as a strategic litigation move in anticipation of St. Mary's contested CON action.
Findings Of Fact The Agency For Health Care Administration ("AHCA") is the state agency responsible for the administration of certificate of need ("CON") laws in Florida. On February 5, 1993, AHCA published a need for one additional adult open heart surgery program in District 9. AHCA defines open heart surgery as a "tertiary health service" which, due to complexity, cost, and the relationship between volume and quality of care should be concentrated in a limited number of hospitals. Rule 59C-1.002(66), Florida Administrative Code. District 9 is located generally along the southeast coast of Florida and includes Palm Beach, Indian River, Martin, St. Lucie, and Okeechobee Counties. Palm Beach is the county at the southern end of District 9. The parties have referred to the counties other than Palm Beach, as the four northern counties. Martin County is north of Palm Beach, and St. Lucie, Okeechobee, and Indian River are further north. The applicants in this proceeding, seeking to establish an additional District 9 adult open heart surgery program, are Lawnwood Medical Center, Inc., d/b/a Lawnwood Regional Medical Center, Inc. ("Lawnwood"), St. Mary's Hospital, Inc. ("St. Mary's"), and Martin Memorial Medical Center, Inc. ("Martin Memorial"). Lawnwood Regional Medical Center Lawnwood is a 335-bed for-profit hospital located in Ft. Pierce, in St. Lucie County. Lawnwood has CON approval for the construction of an additional 18 skilled nursing beds and 10 level II NICU beds. In addition to the 335 licensed beds, Lawnwood has 16 unlicensed bassinets for a total of 351. Lawnwood's 335 licensed beds include 60 psychiatric beds, located one and a half blocks away from the main Lawnwood building, at a facility called Harbor Shores. Lawnwood has 260 general acute care beds. When Lawnwood filed its application, its parent corporation was HCA, Inc., a subsidiary of the Hospital Corporation of America. HCA was also the parent corporation of the Medical Center of Port St. Lucie, the only other hospital in St. Lucie County, and of Raulerson Hospital in Okeechobee County. After the application was filed and prior to hearing, a subsidiary of Columbia Health Care Corporation merged with HCA. As a result of the merger, the administrator of Lawnwood also serves as the market manager assigned to coordinate the services offered at the three hospitals. Lawnwood is classified by the State as a disproportionate share provider of Medicaid-reimbursed services for financially needy patients. In 1993, 21 percent of its total patient days were attributable to Medicaid and 4 percent to charity. Lawnwood operates an outpatient cardiac catheterization ("cath") laboratory and, in 1992, received CON approval to perform inpatient cardiac caths in a lab which was scheduled to open in October 1994. The outpatient lab opened in 1988 at Lawnwood. In 1989, 561 cardiac cath lab procedures were performed at Lawnwood, 494 in 1990, 362 in 1991, and 468 procedures in 1993. Although 602 procedures were reported to the local health council in 1993, these were performed on 468 patients, which is the number consistent with reporting methods of other cath labs. As a result of the diagnostic caths, 45 patients were referred for open heart surgery, and 98 for angioplasties. Of the 45 patients referred for open heart surgery, 26 were actually scheduled for the procedure. Lawnwood proposes to establish an adult open heart surgery program for a total project cost of $4.99 million. The project includes construction of two dedicated operating rooms, renovations to provide a 4-bed dedicated recovery room, and conversion of 12 acute care beds to construct a 12-bed cardiovascular intensive care unit ("CVICU"). St. Mary's Hospital St. Mary's is a 430-bed not-for-profit hospital, which has been operated 55 years by the Franciscan Sisters, currently through a parent organization called the Allegheny Health System. St. Mary's is the largest hospital in District 9, and the largest provider of womens' and childrens' medical services in the district. St. Mary's is a designated regional perinatal intensive care center with level II and III neonatal intensive care units, and is the designated level II trauma center for the northern area of Palm Beach County. Like Lawnwood, St. Mary's is recognized by the State as a disproportionate share provider of services to Medicaid reimbursed and indigent patients. It is approximately sixth in the state in the provision of services to financially needy patients. St. Mary's cardiac cath lab began operation in February 1988. There were 267 inpatient and 116 outpatient cardiac caths at St. Mary's lab in 1991, 240 and 118 respectively in 1992, and 171 and 115 respectively from January to November 1993. St. Mary's operates a 10-bed coronary care unit. St. Mary's proposes to establish an adult open heart surgery program for a total of $2,166,351, funded by private donors. The project will include renovations to two existing operating rooms and to a recovery room area. Martin Memorial Medical Center Martin Memorial is a 336-bed not-for-profit acute care hospital, with an additional 17 nursery/bassinets which are not required to be in the total licensed beds. The ultimate parent corporation for the Martin Memorial facilities and its foundation is Martin Memorial Health Systems, a not-for- profit corporation with a volunteer community board of directors. Martin Memorial's beds are divided between two campuses, with 236 beds in Stuart, and 100 in Port Salerno. The Port Salerno hospital opened in September, 1992 and is approximately 8 miles south of Stuart. Included in the 236 beds at Martin Memorial in Stuart are 5 level II neonatal intensive care beds, 23 intensive care unit beds, 45 ventilator, telemetry or other monitored beds, and 134 medical/surgical beds. Martin Memorial's existing cardiac services include a cardiac cath lab which opened in 1989 and, that year, reported 250 procedures. Caths at Martin reached the highest volume, 905 in 1991, followed by 799 in 1992, and 867 in 1993. Martin Memorial proposes to establish an adult open heart surgery program in Stuart for a total project cost of $3,594,720. Martin's project includes a newly constructed open heart surgery suite adjacent to the cardiac cath lab and, as a back-up, renovation of an existing operating room. As a part of an approved, separate CON application, Martin proposes to renovate and expand to accommodate a 13-bed surgical intensive care unit ("SICU") with four private rooms dedicated as a cardiovascular intensive care unit ("CVICU"). The expenses associated with the four CVICU rooms are included in the total open heart surgery project costs. Existing Open Heart Surgery Providers In Or Adjacent To District 9 All of the existing adult open heart surgery programs in District 9 are in Palm Beach County, at Delray Community Hospital ("Delray"), JFK Medical Center, Inc. ("JFK"), and AMI Palm Beach Gardens Community Hospital, Inc. d/b/a Palm Beach Gardens Medical Center ("Palm Beach Gardens"). The same services are also available in the adjacent districts to the north in District 7 at Holmes Regional Medical Center in Brevard County, and to the south in District 10 at AMI North Ridge General Hospital in Broward County. In addition, established referral patterns exist from District 9 to Miami Heart Institute in Dade County and Holy Cross Hospital in Broward County. All residents of District 9 have access to open heart surgery within two hours average drive time, which exceeds the geographic access standard of Rule 59C-1.033(4)(a), Florida Administrative Code. Delray is located in southern Palm Beach County and is a level II trauma center for that area. JFK is a 369-bed not-for-profit hospital located in Atlantis, Florida, approximately midway between Boca Raton and West Palm Beach, in north central Palm Beach County. The corporation which owns and operates JFK, also is the parent of a fund-raising foundation, and other subsidiaries, some of which are for-profit corporations. JFK has had an open heart surgery program since 1987. JFK's two operating rooms are equipped and sized identically, and located in close proximity to the two room cardiac cath lab and the intensive care unit. JFK has the capacity to perform up to 1000 cases annually, while actual annual volumes at JFK have ranged from 350 to 370 cases. Palm Beach Gardens is a 204-bed for-profit hospital located in the northern part of Palm Beach County. It operates the oldest open heart surgery program in the district, having started in 1982 or 1983. In fiscal year 1992- 1993, there were 477 open heart surgery patients at Palm Beach Gardens, of which 173 resided in the four northern counties of the District. Palm Beach Gardens has 11 operating suites, 7 capable of being used for open heart surgeries, and 4 dedicated solely to open heart surgeries. The current capacity of Palm Beach Gardens is 900 open heart procedures a year. By adding staff, Palm Beach Gardens could reach a volume of 1100 cases a year. While Palm Beach Gardens has excess capacity in its operating rooms, at the peak of its seasonal demand, delays occur in scheduling non-emergency surgeries due to inadequate capacity in its 24-bed intensive care unit. Occupancy levels in the 24 beds were 112.5 percent in 1993, according to Treasure Coast Health Council data. Although Palm Beach Gardens also suggested that an 8-bed overflow unit supplemented the 24 beds, accounting reports do not reflect billings for their use as intensive care services. Comparison of Applicants and Applications Subsection 408.035(1)(a) -- need in relation to state and local plans The 1989 state health plan, Healthy Floridians, includes six preferences for the review of open heart surgery applications. The first preference favors applicants establishing programs in counties with a population over 100,000 and a higher percentage than statewide average of 18.8 percent elderly persons. All the experts in health planning testified that the term "elderly" in this preference means persons 65 years of age and older, which is consistent with the age group with the greatest demand for open heart surgery. St. Mary, Lawnwood, and Martin meet the preference. The 1993 population of Palm Beach County was 900,000, St. Lucie's was 162, 598, and Martin's was 108,089. The population age 65 and over as a percentage of total population was 24 percent in Palm Beach, 21.2 percent in Lawnwood, and 27.5 percent in Martin County. The second state preference is for applicants who can demonstrate the ability to perform at least 350 annual procedures within 3 years of initiating an open heart program. Lawnwood reasonably projected a total of 314 open heart surgery procedures in year one, 350 in year two, and 386 in year three. Lawnwood's utilization projections are conservatively based on the assumption that, by the third year, 70 percent of its open heart patients will come from St. Lucie and Okeechobee Counties, which are already in its primary service area. Martin Memorial's expert questioned Lawnwood's projected open heart volumes from Martin and Indian River Counties, based on its acute care and cath lab patient origins. In addition, traditional referral patterns show Indian River patients going north to Brevard and Orange Counties, while Martin County patients go south to Palm Beach, Broward, and Dade Counties. Considering the acute care and cath lab competition within the four northern counties, the absence in that area of any competition for an open heart surgery program, the relative success of Lawnwood's outpatient cath lab despite its limitations and competition, and its affiliation with Port St. Lucie and Raulerson hospitals, Lawnwood established the reasonableness of its projected utilization. Lawnwood also reasonably expects to reverse some of the 73.5 percent out-migration for open heart surgery by residents of the northern four counties. See, Findings of Fact 27, infra. Martin Memorial's projections of 249 cases in year one, 317 in year two, and over 350 in year three are also reasonable. Martin Memorial's underlying assumptions, that its open heart surgery market share will at least equal that of its acute care, that it will keep some patients previously referred from its cath lab, and that, it, like Lawnwood, would reverse some district out-migration, are also reasonable. Martin Memorial referred 172 patients from its cath lab for open heart surgery in 1993, in contrast to 45 from St. Mary's, and 41 from Lawnwood. Martin Memorial's projections are based on 1991-1992 use rates which declined in 1993. Despite the one year decline and some expert predictions of a continuing downward trend in use rates, Martin Memorial's projections are bolstered by the fact that its open heart surgery primary service area includes Port St. Lucie, which contains 40 percent of the population of St. Lucie County and is the fastest growing area of District 9. That area, which is closer to Stuart, but is located in the St. Lucie County community in which Lawnwood has an affiliate hospital, supports both the projections of Lawnwood and Martin Memorial, and could be served by an open heart surgery program at either facility. Although Martin Memorial's projected volumes are higher than and inconsistent with other projections made by Martin Memorial, the reasonableness of the projections was established. St. Mary's projected 171 open heart surgeries in year one, 265 in year two, and 363 in year three. The projections are based on the use of a gravity model designed to determine potential volume "attracted" to the program by using the size of the hospital and the proximity of patients as factors. The model used a zip code level analysis to take into consideration the fact that St. Mary's expects a sub-county primary service area, as a result of sharing the county with the three existing District 9 providers. The projected utilization was reduced, by St. Mary's expert, to take into consideration an expected start- up factor. There is, however, substantial expert testimony that the variables and/or the weight attributed to each variable included in this gravity model are inadequate to explain actual or potential volumes. There is substantial evidence that the size of a hospital is not reliable enough to be one of only two variables in a model. For example, JFK although larger than Palm Beach Gardens, only exceeded 350 cases in 1991-1992 by 16, when smaller Palm Beach Gardens with an older open heart surgery program reached 499 cases. The model also fails to consider actual physician referral patterns. St. Mary's projections and its ability to exceed 350 cases also depend on its ability to attract Medicaid patients over and above the patients projected by the gravity model. See, Findings of Fact 35, infra. The volume of diagnostic cardiac caths at St. Mary's is low and has declined over the past three years. In part, the volume is low because there is no open heart surgery back-up available in the event the diagnostic cardiac cath indicates that need. Cath patients suspected of needing more invasive procedures are diverted by referring physicians to hospitals with angioplasty and open heart programs. But that explanation of St. Mary's volumes apparently is incomplete, since, by contrast Boca Raton Community Hospital and Martin Memorial, which also have no open heart surgery back-up, have had more steadily increasing cardiac cath volumes. The fact that St. Mary's cath volumes are low and its open heart surgery projections unreliable is also attributable to the fact that St. Mary's is located 11 miles north of JFK and 5 1/2 miles south of Palm Beach Gardens, therefore, at a competitive disadvantage with these established programs. The third state health plan preference applies to proposals, for improving access for persons currently leaving the district. With almost half of Palm Beach County open heart surgery patients receiving the service outside the county, St. Mary's claims to be in the best location to reverse that trend if geographical access is the problem. St. Mary's also points to the convenience of access to its hospital, which is 2 miles from Interstate 95, the main north-south transportation corridor through the district. Approval of St. Mary's proposal will not, however, reverse out-migration to the extent that it is attributable to factors such as seasonal residency, established physician referral practices from northern areas of District 9 to providers in adjacent districts, and managed care contractual arrangements. Lawnwood is located in the largest, fastest growing, and most centrally located county of the northern four counties. St. Lucie County is adjacent to each of the other three northern counties, with Martin to the south, Okeechobee to the west, and Indian River to the north. The level of "out-migration," defined as those patients leaving the district to receive the service, increases dramatically from south to north in District 9, from 55 percent in Martin, 70 percent in St. Lucie, 80 percent in Okeechobee, to 100 percent in Indian River County. Considering growth in western St. Lucie County, the needs of St. Lucie and Okeechobee County residents, and the alternative to out-migration provided for both Indian River and Martin County residents, the Lawnwood location is superior to that of Martin Memorial in terms of the ability to improve access to the service. See, also Findings of Fact 23-24, supra. The fourth state preference for applicants with a history of providing disproportionate share Medicaid and charity care favors the applications of St. Mary's and Lawnwood, in that order. Martin Memorial argues that it also meets the disproportionate share criteria, which the preference requires, although it has not been designated by the State, which the preference does not require. Relying on the criteria in subsection 409.911(2), Florida Statutes, Martin claims to meet or exceed the disproportionate share requirements for 1990, despite the agency's reliance on 1989 data. Assuming, arguendo, that Martin is entitled to the preference, the comparative ranking of St. Mary's first, Lawnwood second, and Martin third remains the same. In addition, the preference looks at a history of disproportionate service, as does subsection 408.035(1)(n), in part, which Martin failed to establish. For 1991, St. Mary's provided 15.8 percent of total District 9 Medicaid, Lawnwood provided 11.7 percent, and Martin Memorial, 1.7 percent. Martin Memorial established that it treated a larger number of Medicaid patients with circulatory diseases as a proportion of Medicaid patients in Martin County, as compared to St. Lucie County residents treated at Lawnwood. However, the absolute number of circulatory disease Medicaid patients treated at Lawnwood was approximately two and half times the number treated at Martin Memorial. Statistical indicators, including per capita income and low income patients diagnosed with circulatory diseases, demonstrate that residents of St. Lucie and Okeechobee Counties are less affluent, and more medically needy than those in Palm Beach and Martin Counties. The fifth state preference favors the applicant offering a service with the highest quality of care at the least expense. The preference includes an explanation that larger facilities usually have more available resources to meet the preference. As the largest hospital with the lowest cost per case by the second year of the program, $22,659, St. Mary's best meets the preference. Martin's projected cost is $26,909 and Lawnwood's is $27,085. Martin Memorial's expert calculated total expenses per case at $23,221 for Martin Memorial, $22,615 for St. Mary's, and $23,645 for Lawnwood. St. Mary's projected charges of $50,600 in year one and $53,100 in year two. Lawnwood projected charges of $55,199 in year one, and $58,133 in year two. Martin Memorial projected charges of $55,594, in year one, $58,955 in year two. Total project costs were estimated at $2,166,351 for St. Mary's, $3,594,720 for Martin Memorial, and $4,995,039 for Lawnwood. Using either set of cost data or the projected charges, St. Mary's best meets this preference based on size, the lowest total project costs, and the lowest projected charges for open heart surgery services. Martin Memorial and Lawnwood have, as described by one expert, remarkably similar costs, and the same is true of projected average charges per case. The final state preference favors applicants who will include protocols for the use of innovative therapeutic alternatives to surgery for appropriate patients, including streptokinase and tissue plaminogen activator therapies. Lawnwood and Martin Memorial currently use streptokinase. St. Mary's performs emergency angioplasties, and uses streptokinase therapy. All three applicants meet the preference for providing and/or planning to provide alternative therapies to open heart surgery. The first District 9 local health plan allocation factor gives a priority for established cardiac cath programs. Based on expert testimony, a cardiac cath program exceeding 150 annual procedures is established. All the applicants exceed the minimum volume and, therefore, comply with the allocation factor. Martin Memorial has the highest volume in an operational inpatient and outpatient lab and, meets the allocation factor better than Lawnwood and St. Mary's. The other District 9 factor favors applicants with a documented commitment to provide services regardless of patient's ability to pay. Lawnwood projects 2.51 percent Medicaid and 1.5 percent charity care in year two. St. Mary's projects providing 5 percent Medicaid and 3.5 percent charity care in year two. Martin Memorial projects 2 percent Medicaid and 1.9 percent charity care in year two. St. Mary's best meets the factor, followed by Lawnwood, and then Martin Memorial. More Medicaid residents live in the primary service area of Lawnwood than that of Martin Memorial. Martin has filed CON compliance reports demonstrating difficulty in meeting prior CON Medicaid conditions due to the demographics of its service area. Subsections 408.035(1)(b) - availability, quality of care, efficiency, accessibility, extent of utilization of like and existing programs; 408.035(2)(b) - appropriate and efficient use of existing inpatient facilities; and 408.035(2)(d) - serious problems in obtaining care without proposed new program(s). With the exception of seasonal excess demand for Palm Beach Gardens' ICU beds, the evidence demonstrates there is excess capacity in existing District 9 providers. Geographic access to existing providers in or adjacent to the district is also reasonable. The quality of care at existing providers is excellent. St. Mary's asserts that its proposal will best assist in alleviating access barriers to open heart surgery for low income persons with limited geographic mobility. One expert estimated that 38 District 9 Medicaid patients needed, but did not receive, open heart surgeries in 1991, based on the use rates for commercially insured patients. In general, the highest density of population with a demand for invasive heart therapies and open heart surgeries is concentrated in southern and central Palm Beach County. However, expert testimony established that Medicaid patients are underserved for reasons, other than the policies of the existing providers. The evidence does not show that St. Mary's proposal can overcome these financial barriers. St. Mary's is a level II trauma center, and maintains that trauma patients in need of open heart surgery are at risk of death from having to wait for transfers. Transfers of patients from St. Mary's to Palm Beach Gardens or JFK for open heart surgery take from three hours to three days, averaging 8 to 12 hours, in approximately 30 percent of the cases. From May 1991 through January 1994, over 2600 trauma patients were treated at St. Mary's. Expert testimony, after review of medical records, indicates that from one to six patients needed open heart surgery, an insufficient number to constitute a not normal circumstance for the establishment of an open heart program at St. Mary's. Palm Beach Gardens' position that an additional adult open heart surgery program is not needed in District 9 is rejected. Open heart surgery use rates are not increasing nationally or in Florida. However, District 9 population is increasing, as is open heart surgery utilization for District 9 as a whole, and for Palm Beach, St. Lucie and Okeechobee Counites, while remaining static in Martin County and decreasing in Indian River. Palm Beach Gardens and JFK have demonstrated that in Palm Beach County, an additional open heart surgery program is not needed, and would be detrimental to existing programs. See, Findings of Fact 51-52. Subsection 408.035(1)(c) - quality of care The applicants, like the existing providers, are accredited by the Joint Commission on Accreditation of Healthcare Organizations. All of the applicants provide excellent quality care, as indicated by their accreditations and proposals, compromised only by their ability to achieve the projected volumes. See, Findings of Fact 23-26. Subsection 408.035(1)(d) - alternatives or outpatient facilities and 408.035(2)(a) - alternatives to inpatient services There are no alternatives or facilities other than acute care hospitals in which open heart surgeries can be performed. The criterion is inapplicable to this case. Subsections 408.035(1)(e) - economies of joint or shared facilities and 408.035(2(k) - modernization or sharing arrangements as alternatives to new construction. Martin Memorial is a part of a network of hospitals planning a more formalized affiliation to attract managed care contracts. Lawnwood is a part of a large corporate group, which can offer experience in establishing an open heart surgery program. Neither of these arrangements entitles the applicants to special consideration under the statutory criterion, as it has been construed by AHCA. In this case, each applicant is a separate acute care hospital. An alternative arrangement for a shared program was considered by Martin Memorial, but there is no showing that any proposal which improves access for the northern four counties could avoid the necessity for new construction. Subsection 408.035(1)(f) - needs for equipment and services not accessible in adjoining areas There is no evidence that any applicant proposes to provide a service not readily available in adjoining areas. On the contrary, each applicant proposes to offer an alternative within the district for residents who currently use providers in adjoining areas. See, Finding of Fact 27. Subsection 408.035(1)(g) - need for research and educational programs There is no evidence that any of the applicants will meet research or educational needs, or is a teaching hospital. AHCA has strictly construed the statutory criterion to apply to teaching hospitals. Subsection 408.035(1)(h) - availability of resources, including staff, management, and funds for capital and operating expenditures, including personnel required in Rule 59C-1.033(5)(b). The Cleveland Clinic has expressed an interest in providing surgeons for Martin Memorial's program, but no agreement has been formalized. Martin Memorial was criticized for not having a full-time infectious disease specialist, inadequate pulmonary and nephrology specialists, and for being unable to perform transesophageal echocardiology, all of which are necessary to support an open heart surgery program. St. Mary's was criticized for not planning to have nurses assigned exclusively to its open heart surgery team. Lawnwood has been unable to attract full-time coverage in thoracic, orthopedic, and neurosurgery. Despite these specific criticisms, each applicant has successful recruitment mechanisms and affiliations which will be enhanced by the presence of an open heart surgery program. The applicants' staffing and equipment proposals are reasonable. Both St. Mary's and Lawnwood are subsidiaries of larger organizations which include hospitals with open heart surgery programs. Subsection 408.035(1)(i) - immediate and long term financial feasibility St. Mary's has the ability to establish an adult open heart surgery program for a total of $2,166,351, funded by private donors. St. Mary's provided a pro forma of expected revenues and expenses to establish financial feasibility based on two factors which were challenged, the average length of stay ("ALOS") and the mix of payer classifications for patients. St. Mary's projected 10.3 days as the ALOS. JFK's experts suggested that a 13-day ALOS is more reasonable, particularly for a new program. JFK's actual experience was an ALOS of 16.1 days in 1988, 14.5 days in 1992, and 12.6 days by the year ending June 1993. Mature programs generally have lower ALOS than newer ones. Currently, ALOS in the District are 10.9 for Palm Beach Gardens, 12.5 for Delray, and 14.5 for JFK. JFK's assertion that St. Mary's initial ALOS will more likely be 13 days not 10.3 is reasonable. The fact that the ALOS will be longer than that projected in the pro forma means that expenses for the care of each patient will be greater, while revenues will not increase proportionately. Revenues are limited in fixed Diagnostic Related Group ("DRG") reimbursement categories, such as Medicare and managed care, which are the dominant payer groups, in contrast to the more flexible per diem reimbursement of commercial insurers. St. Mary's failed to include revenues and expenses for the construction period, anticipating only capital expenditures and start-up costs for implementing a new service. St. Mary's pro forma was based on a first year payer mix which includes 12.4 percent managed care and 11.6 percent commercial insurance in 1995. At JFK, the open heart surgery payor mix was 33 percent managed care and 9 percent commercial in 1993. St. Mary's underestimated the proportion of patients in the DRG-based managed care category, as compared to the per diem arrangements typical of commercial insurance. Taking into consideration increased expenses of $251,000 in year one and $409,000 in year two, due to adjustments from 10.3 to 13 days in the ALOS, and reduced revenues of $350,000 in year two, St. Mary's proposal is not financially feasible. The conclusion is also compelled by St. Mary's failure to establish the reasonableness of its utilization projections for the program. See, Finding of Fact 25. Martin Memorial has the funds necessary to establish an open heart surgery program for $3,594,720. Its pro forma shows revenues and expenses for the construction period, which are identical with or without the open heart surgery program. Martin Memorial's pro forma is flawed by double counting revenues from patients currently spending some time and revenues at Martin Memorial prior to transfers for open heart surgery. Revenues associated with pre-transfer stays must be deducted from revenues for open heart surgeries of average total lengths of stay. The amounts of over-stated revenues were not calculated by Palm Beach Gardens expert, and other criticisms of Martin Memorial's pro forma are rejected. Lawnwood, like St. Mary's, failed to include any construction period revenues and expenses in its pro forma. Lawnwood, as a separate legal entity, does not have the funds to establish its open heart surgery program, without relying on its parent, Hospital Corporation of America. The commitment of funds, represented by a letter dated April 30, 1993, indicated the source as either internally generated cash or available lines of credit. Lawnwood demonstrated its financial feasibility, in part, by showing that its open heart program's break-even point, at which expenses and revenues would be equal is 182 cases, well below projected utilization. See, Findings of Fact 23. Subsection 408.035(1)(j) - special needs and circumstances of health maintenance organizations The applicants do not propose to provide any different or special services for health maintenance organizations, nor is any applicant in this batch itself a health maintenance organization, as required by AHCA's interpretation to the statutory criterion. NME Hospitals, Inc., d/b/a West Boca Medical Center v. HRS, DOAH Case Nos. 90-7037 and 91-1533 (F.O. 4/8/92). Subsection 408.035(1)(k) - substantial, specialty services to non-residents of the service district Although the applicants propose to provide open heart surgery, which is one of the specialty services listed in the statute, they do not project that they will serve residents of other districts. The applications are not distinguishable on the basis of Subsection 408.035(1)(k), Florida Statutes. Subsection 408.035(1)(l) - impact on costs and effects of competition with existing providers. If St. Mary's proposal is approved and, as St. Mary's projects, two- thirds of its patients come from existing district providers, the program at JFK will be adversely affected. As the result of JFK's loss of approximately 106 cases, its net income could also be reduced up to $2.6 million. By contrast, programs at Lawnwood or Martin Memorial would have a negligible impact on JFK. The existing program at Palm Beach Gardens would suffer an adverse impact from the approval of programs at either St. Mary's or Martin Memorial. The adverse impact of a program at Martin Memorial is greater. Palm Beach Gardens could lose from 128 to 142 cases in the first year and from 179 to 198 cases in the third year in the worst case scenarios, depending on whether the use rate declines or remains constant. In addition, the further development of the VHA Network proposed by some District 9 hospitals, including Martin Memorial, as a means to attract managed care contracts, would enhance referrals to an open heart surgery program at Martin Memorial. Reasonable estimates of the financial loss to Palm Beach Gardens range between $2.8 and $3.1 million, although Palm Beach Gardens, with $9 million in annual income, would still be profitable. While the numeric calculations required in Rule 59C-1.033(7)(c), Florida Administrative Code, indicate that there will be enough total open heart surgeries to allow each of the existing providers to continue to exceed 350 operations, Palm Beach Gardens would be disproportionately, adversely affected by a program at Martin Memorial, as would JFK by a program at a St. Mary's. As the lowest volume provider, JFK is also at greater risk of dropping below the 350 minimum level established as indicative of the quality of care. Subsection 408.035(1)(m) - costs and methods of construction With total project costs of $4.99 million, Lawnwood's proposal to construct two new, dedicated operating rooms is the most expensive. Martin Memorial's cost of $3.59 million includes new construction of one and renovation of another operating room. St. Mary's low project cost of $2.16 reflects the fact that renovations rather than new construction is planned. The advantages of new construction, however, are that the size of the operating rooms will exceed general state requirements, and comply with recommendations developed specifically for open heart surgery. See, Findings of Fact 58, infra. Subsection 408.035(1)(n) - past and proposed service to Medicaid and medically indigent patients Based on history and proposed service, the applicants rank, in order, St. Mary's, Lawnwood, and Martin Memorial in complying with the criterion. See, Findings of Fact 28 and 32, supra. Subsection 408.035(1)(o) - continuum of care in multilevel system, including acute, skilled nursing, and home health care The applicants failed to distinguish their proposals on the basis of this statutory criterion. Other Criticisms of the Applications St. Mary's has a 16-bed intensive care unit, 4 of those beds will require no additional equipment to be used to provide post-operative care for open heart surgery patients. The 4 beds are located adjacent to the intended open heart surgery operating suite. The proposed 4-bed ICU was criticized for being too crowded, and inadequately designed to allow adequate patient observation and monitoring, and for not being dedicated solely to open heart surgery patients. The 16-bed unit has experienced over 90 percent occupancy rates, but some of those patients have required the staffing, but not the equipment available in the intensive care unit. St. Mary's acknowledged potential capacity problems, but has the ability to create additional step-down unit beds to relieve the ICU unit, when necessary. In addition, outpatient surgeries were scheduled to be performed in a separate facility beginning in July 1994. While some clinicians may prefer a separate ICU, there was no evidence of any requirements that open heart surgery patients receive post-operative care in a separate ICU, nor that the lack of a specialized unit means a lack of staff capable of caring for such patients. St. Mary's project involves the renovation of a total of 1731 square feet, 764 net square feet of that in the main operating room on the first floor. The back-up operating room at St. Mary's is 480 square feet, below the American College of Cardiologists' recommendation and 1992 Federal Guidelines of a minimum of 600 and up to 800 square feet. Despite the term "back-up," expert testimony established the need for regular use of both operating rooms, one for regularly scheduled procedures and one for emergencies which occur within the cardiac cath lab or the post-operative intensive care unit. The size of St. Mary's back-up operating room meets state requirements for operating rooms, which do not differentiate on the basis of the type of surgery. St. Mary's also demonstrated that open heart surgeries are performed in comparably sized or smaller operating rooms at JFK. The space allocated to Lawnwood's 4-bed open heart surgery recovery room was criticized as inadequate to accommodate the equipment and personnel required to monitor and, if necessary, to revive post-operative patients. The space allocated complies with state licensure requirements. Reconfiguration of the beds and equipment in the space is permissible, if necessary, in final construction documents which must be approved by AHCA. Lawnwood's proposal was also criticized because the CVICU will be located three stories above the surgical area and recovery rooms. There was no evidence that the location of the CVICU violated licensure requirements or compromised the quality of care. The use of restricted elevator access between the surgical/recovery area and the CVICU is reasonable. AHCA favored the applications of both Lawnwood and Martin over that of St. Mary's due to their locations outside Palm Beach County. Having been told by staff that it was then a "toss up" between the two, AHCA's Division Director selected Martin Memorial. The Division Director, Dr. James Howell, is a former Deputy District Administrator for AHCA District 9 and former County Health Director for Palm Beach County. In explaining his decision, Dr. Howell testified as follows: Q. Ultimately, sir, you recommended to Ms. Dudek that Martin be approved rather than Lawnwood; isn't that correct, sir? A. Yes, sir. In our mutual discussions we had a discussion about two. To be straightforward, the reason that I'd recommended Martin was that Martin is a long-term community hospital with local community responsiveness or local community board of directors, as far as I know, and that AHCA owned - now I believe, it's part of the Columbia system, was in St. Lucie County and was a newer hospital, and that, you know, I felt more comfortable with giving the first CON in the area to a group that had a long heritage and commitment to the area, even though I can tell you I can't say anything negative about AHCA in dealings with them. Q. Or Columbia? A. Or Columbia; right. I can't say anything. That's not meant to be prejudicial with them. They did a good job with us, with maternity/child health. Q. You did approach this batch, did you not, sir, with a bias towards Martin Memorial because you knew the institution had been there a long, long time and was a very stable institution; isn't that correct? A. That is quite correct, yes, sir. See, Transcript, p. 251. The court reporter's references to "AHCA" are corrected and understood, in this context, to refer to HCA or Hospital Corporation of America. The statutory and rule criteria, on balance, demonstrate that open heart surgery programs at Martin Memorial or Lawnwood are more likely to improve access, to meet projected volumes, and to be financially feasible. Of these two, however, Lawnwood is better situated to reverse district out-migration, and has to be preferred, under the state and local health plans and subsection 408.035(1)(n), Florida Statutes, for its history of providing a disproportionate share of its services to Medicaid and charity patients. Finally, the most significant distinction between the applicants is that the quality of care at existing providers, as measured by their volumes of open heart surgeries, will not be adversely affected by the approval of a new program at Lawnwood. Application Content AHCA accepted Martin Memorial's application, although two different letters of intent for mutually exclusive open heart surgery programs were filed simultaneously by Martin Memorial, one for a program shared with Indian River Memorial, and one for a separate program. Martin Memorial's application also, arguably exceeds the scope of its Board approval by including renovation of a portion of the surgical intensive care unit ("SICU"). AHCA accepted Martin Memorial's proposal to allocate the cost of 4 of 13 SICU beds to the open heart surgery project. As a practical matter, Martin Memorial's witnesses concede, the 4 beds cannot be constructed independently. The Board separately authorized the filing of an expedited CON for the SICU construction and renovations. In an Additional Motion For Summary Recommended Order Palm Beach Gardens' submitted correspondence between AHCA and Martin Memorial attempting to establish that the separate SICU CON has expired. AHCA accepted Lawnwood's application without a construction period pro forma, and without identification of the ultimate parent corporation of the subsidiary, Lawnwood Medical Center, Inc.
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 issuing Certificate of Need 7245 to Lawnwood Medical Center, Inc., denying Certificate of Need 7244 to St. Mary's Hospital, Inc., and denying Certificate of Need 7243 to Martin Memorial Medical Center, Inc. DONE AND ENTERED this 13th day of March, 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 13th day of March, 1995. APPENDIX TO RECOMMENDED ORDER, CASE NO. 93-4908 To comply with the requirements of Section 120.59(2), Fla. Stat. (1991), the following rulings are made on the parties' proposed findings of fact: Petitioner, Lawnwood's Proposed Findings of Fact. Accepted in Findings of Fact 2. Accepted in Findings of Fact 3. Accepted in Findings of Fact 16. Accepted in Findings of Fact 4. Accepted in Findings of Fact 5. 6-12. Accepted in or subordinate to Findings of Fact 27. 13. Accepted in Findings of Fact 13. 14-20. Accepted in or subordinate to Findings of Fact 27. Accepted in or subordinate to Findings of Fact 16 and 19. Accepted in Findings of Fact 24. 23-39. Accepted in or subordinate to Findings of Fact 27. 40-47. Accepted in or subordinate to Findings of Fact 34. 48-61. Accepted in or subordinate to Findings of Fact 28. 62-64. Accepted in relative terms or subordinate to Findings of Fact 27. 65-70. Accepted in or subordinate to Findings of Fact 28. 71-73. Accepted in part or subordinate to Findings of Fact 24 and 28. 74-86. Accepted in part or subordinate to Findings of Fact 2, 23 and 27. 87. Issue not reached. 88-94. Accepted in or subordinate to Findings of Fact 23. 95. Rejected in part and accepted in part in Findings of Fact 24. 96-100. Accepted in Findings of Fact 23. 101-105. Accepted in general in Findings of Fact 24. 106-111. Accepted in Findings of Fact 47. Accepted in general in Findings of Fact 22-29. Accepted in Findings of Fact 22. Accepted in Findings of Fact 23. Accepted in Findings of Fact 27. Accepted in Findings of Fact 28. Accepted in relevant part in Findings of Fact 28. Accepted in Findings of Fact 29. Accepted in Findings of Fact 30. 120-122. Accepted in or subordinate to Findings of Fact 31. 123-131. Accepted in or subordinate to Findings of Fact 5, 43, and 48. 132-133. Accepted in or subordinate to Findings of Fact 43. 134-146. Accepted in or subordinate to Findings of Fact 48. Accepted in or subordinate to Findings of Fact 45, 48 and conclusions of law 66. Accepted in or subordinate to Findings of Fact 48. 139-141. Accepted in or subordinate to Findings of Fact 29. 142-147. Accepted in or subordinate to Findings of Fact 48. 148-152. Accepted in Findings of Fact 8 and 53. Accepted in Findings of Fact 43. Subordinate to Finding of Fact 53. 155-164. Accepted in or subordinate to Findings of Fact 59. 165-173. Accepted in or subordinate to Findings of Fact 43. 174. Accepted in or subordinate to Findings of Fact 38 and 43. 175-176. Accepted in Findings of Fact 7. Accepted in or subordinate to Findings of Fact 38 and 43. Accepted in or subordinate to Findings of Fact 53. Accepted in or subordinate to Findings of Fact 43. 180-181. Accepted in Findings of Fact 38. 182-187. Accepted in Findings of Fact 61. 188. Rejected in Findings of Fact 61. Petitioner, Palm Beach Gardens' Proposed Findings of Fact. 1-3. Accepted in Findings of Fact 16-19. Accepted in Findings of Fact 5 and 8. Accepted in Findings of Fact 13 and 15. Accepted in Findings of Fact 9 and 12. Accepted in preliminary statement. Accepted in Findings of Fact 3. Accepted in Findings of Fact 3 and 16. 10-15. Accepted in or subordinate to Findings of Fact 61. Rejected in conclusions of law 69. Rejected in Findings of Fact 53. Rejected in Findings of Fact 2 and 27. 19-25. Accepted in or subordinate to Findings of Fact 16 and 33. 26. Accepted in or subordinate to Findings of Fact 34. 27-44. Accepted in or subordinate to Findings of Fact 52. 45-48. Accepted in or subordinate to Findings of Fact 18-19 and 27-28. 49-52. Accepted in or subordinate to Findings of Fact 51 and 52. 53. Accepted in general in Findings of Fact 27. 54-55. Accepted in or subordinate to Findings of Fact 33. 56-60. Accepted in or subordinate to Findings of Fact 34. 61. Rejected "substantially" in Findings of Fact 52. 62-72. Accepted in or subordinate to Findings of Fact 16, 27, and 33. 73-76. Accepted in or subordinate to Findings of Fact 27. 77-84. Accepted in or subordinate to Findings of Fact 52. 85-92. Accepted in or subordinate to Findings of Fact 27,28 and 34. 93-103. Accepted in or subordinate to Findings of Fact 28. 104-105. Accepted in Findings of Fact 31. 106. Accepted in Findings of Fact 32. 107-109. Accepted in or subordinate to Findings of Fact 28 and 32. 110-111. Accepted in Findings of Fact 22. 112-125. Accepted in or subordinate to Findings of Fact 23. 126. Accepted in or subordinate to Findings of Fact 5. 127-141. Accepted in Findings of Fact 23 and 24. 142. Rejected in Findings of Fact 7 and 23. 143-145. Accepted in or subordinate to Findings of Fact 7 and 23. 146-151. Issue not reached. 152-158. Accepted in or subordinate to Findings of Fact 24. 159-160. Accepted in Findings of Fact 27. 161-162. Accepted in Findings of Fact 28. Accepted in part in Findings of Fact 28. Accepted in or subordinate to Findings of Fact 29. 165-167. Accepted in or subordinate to Findings of Fact 29. 168-169. Accepted in Findings of Fact 30. 170. Accepted in Findings of Fact 21-30. 171-172. Rejected in general in Findings of Fact 47. 173. Accepted in Findings of Fact 47. 174-184. Rejected or subordinate to Findings of Fact 47. 185-187. Rejected or subordinate to Findings of Fact 43 and 47. 188-193. Accepted in Findings of Fact 47. 194-199. Subordinate to Finding of Fact 47. 200. Accepted in Findings of Fact 29. 201-208. Accepted in or subordinate to Findings of Fact 52. 209. Rejected. 210-218. Accepted in or subordinate to Findings of Fact 52. 219. Rejected conclusion as to "substantial" in Findings of Fact 52. 220-229. Accepted in or subordinate to Findings of Fact 52. 230. Rejected conclusion as to "substantial" in Findings of Fact 52. Petitioner, St. Mary's, Proposed Findings of Fact. 1-3. Accepted in or subordinate to Findings of Fact 9. Accepted in Findings of Facts 3 and 22. Accepted in or subordinate to Findings of Fact 9. Accepted in or subordinate to Findings of Fact 12. Accepted in or subordinate to Findings of Fact 10. Accepted in or subordinate to Findings of Fact 27. Accepted in Findings of Fact 2. 10-12. Accepted in or subordinate to preliminary statement and Finding of Fact 12. 13-14. Accepted in or subordinate to Findings of Fact 58. 15-17. Accepted in or subordinate to Findings of Fact 43. 18-24. Accepted in Findings of Fact 30. 25-26. Rejected in Findings of Fact 44-46. 27-29. Accepted in Findings of Fact 30. Rejected in Findings of Facts 44-46. 31-32. Accepted in or subordinate to Findings of Fact 44. 33-35. Accepted in or subordinate to Findings of Fact 43. 36. Accepted in or subordinate to Findings of Fact 56. 37 Accepted in or subordinate to Findings of Fact 9. Accepted in Findings of Fact 38. Accepted in or subordinate to Findings of Fact 58. Accepted in or subordinate to Findings of Fact 60. 41-44. Accepted in or subordinate to Findings of Fact 56 and 57. 45-54. Accepted in or subordinate to Findings of Fact 35. 55. Rejected in Findings of Fact 35. 56-57. Accepted in or subordinate to Findings of Fact 34. 58. Conclusion rejected, although access is limited by comparison to commercially insured patients, See, Findings of Fact 34. 59-66. Accepted in or subordinate to Findings of Fact 34. 67-73. Accepted in Findings of Facts 9, 28 and 32. Accepted in Findings of Fact 9. Accepted in Findings of Fact 32. Accepted in Findings of Fact 34. Rejected as significant benefit in Findings of Fact 34. Accepted (as both interests can be better accomplished) in Findings of Fact 27. Accepted in or subordinate to Findings of Fact 25. 80-81. Rejected in Findings of Fact 25. Accepted in Findings of Fact 25. Rejected in Findings of Fact 25. Rejected in Findings of Fact 25. Rejected as valid in Findings of Fact 34. 86-88. Accepted in Findings of Facts 27 and 36. 89-91. Accepted in part or subordinate to Findings of Fact 26. Rejected in Findings of Fact 26. Rejected in Findings of Fact 25 and 26. Accepted in Findings of Fact 22. Rejected in Findings of Fact 25-26. Rejected in general in Findings of Fact 27. 97-98. Accepted in or subordinate to Findings of Fact 28. Accepted in Findings of Fact 29. Accepted in Findings of Fact 30. Rejected conclusion in Findings of Fact 35. Accepted in Findings of Fact 31 and 32. 103-104. Accepted in Findings of Fact 27. 105. Accepted in Findings of Fact 37. 106-107. Rejected in Findings of Fact 51. Accepted in or subordinate to Findings of Fact 51. Accepted in Findings of Fact 35. Rejected in Findings of Fact 47. Rejected in Findings of Fact 48. Rejected in Findings of Fact 24. Intervenor, JFK Medical Center, Inc.'s Proposed Findings of Fact. Accepted in Findings of Fact 9. Accepted in Findings of Fact 18. Accepted in or subordinate to Findings of Fact 12. 4-6. Accepted in or subordinate to preliminary statement. 7-9. Accepted in or subordinate to Findings of Fact 2. Accepted in or subordinate to Findings of Fact 16-19. Accepted in Findings of Fact 27. Accepted in relevant part in Findings of Fact 16 and 27. 13-19. Accepted in or subordinate to Findings of Fact 34. Accepted in Findings of Fact 18 Accepted in Findings of Fact 35. Accepted in Findings of Fact 19. 23 Accepted in relevant part in Findings of Fact 33. 24. Accepted in Findings of Fact 36. 25-27. Accepted in or subordinate to Findings of Fact 33. 28-31. Accepted in or subordinate to Findings of Fact 27. 32-34. Accepted in or subordinate to Findings of Fact 27 and 34. 35-44. Accepted in or subordinate to Findings of Fact 35. 45-48. Accepted in or subordinate to Findings of Fact 25. 49-50. Accepted in or subordinate to Findings of Fact 26. 51. Accepted in or subordinate to Findings of Fact 25. 52-57. Accepted in Findings of Fact 44-46. 58. Subordinate to Finding of Fact 44-46. 59-66. Accepted in or subordinate to Findings of Fact 51. 67-75. Accepted in or subordinate to Findings of Fact 59. 76-78. Rejected in Findings of Fact 59. 79-80. Accepted in or subordinate to Findings of Fact 25. 81-82. Rejected in or subordinate to Findings of Fact 57. 83-84. Accepted in or subordinate to Findings of Fact 52. 85. Accepted in Findings of Fact 43. 86-89. Accepted in or subordinate to Findings of Fact 58. Respondent, AHCA's Proposed Findings of Fact. 1. Accepted in general or subordinate to Findings of Fact 5-8. 2. Accepted in or subordinate to Findings of Fact 9-12. 3. Accepted in or subordinate to Findings of Fact 13-15. 4. Accepted in Findings of Fact 16 and 18. 5. Accepted in Findings of Fact 6 and 19. 6. Accepted in preliminary statement and Findings of Fact 2. 7. Accepted in Findings of Fact 31 and 32. 8. Accepted in Findings of Fact 31. 9. Accepted in or subordinate to Findings of Fact 7. Subordinate to Findings of Fact 7. Accepted in Findings of Fact 11 and 26. Accepted in or subordinate to Findings of Fact 14. 13,14. Accepted in or subordinate to Findings of Fact 6, 28 and 32. 15. Accepted in or subordinate to Findings of Fact 10, 28 and 32. 16,17. Accepted in or subordinate to Findings of Fact 28 and 32. Accepted in Findings of Fact 21-30. Accepted in Findings of Fact 22. 20,21. Accepted in part in Findings of Facts 23 and 24. Accepted in Findings of Fact 24. Accepted in or subordinate to Findings of Fact 25, 26 and 27. Accepted in Findings of Fact 27. Accepted in Findings of Fact 28. Subordinate to Findings of Fact 29. Accepted in Findings of Fact 5, 9 and 13. Rejected conclusion in terms of other indicators in Findings of Fact 29. Accepted in or subordinate to Findings of Fact 5, 9, 13 and 29. Accepted in Findings of Fact 29. 30-33. Accepted in or subordinate to Findings of Fact 23-26. Accepted in Findings of Fact 30. Accepted in Findings of Fact 27 and 34-37. 36-37. Accepted in or subordinate to Findings of Fact 27. 38. Accepted in Findings of Fact 35. 39-42. Accepted in or subordinate to Findings of Fact 32 and 34. Accepted in Findings of Fact 18. Accepted in Findings of Fact 51. Accepted conclusion in Findings of Fact 52. 46-48. Accepted in Findings of Fact 23-26 and 38. Accepted in Findings of Fact 14 and 24. Accepted if last line changed from "St. Mary's" to "Lawnwood" in Findings of Fact 27, 36 and 37. 51-52. Accepted in Findings of Fact 40 and 61. Accepted in Findings of Fact 42. Accepted in Findings of Fact 29. Accepted in Findings of Fact 48. Accepted in Findings of Fact 44-46. Accepted in Findings of Fact 47. Accepted in Findings of Fact 29 and 51. Respondent, Martin Memorial's Proposed Findings of Fact. Accepted in Findings of Fact 2. Accepted in preliminary statement. Accepted in or subordinate to Findings of Fact 13. Accepted in or subordinate to Findings of Fact 9. 5-6. Accepted in or subordinate to Findings of Fact 5. Accepted in or subordinate to Findings of Fact 7, 11 and 14. Accepted in or subordinate to preliminary statement and Findings of Fact 19. Accepted in or subordinate to preliminary statement and Findings of Fact 18. Accepted in preliminary statement and Finding of Fact 1. Accepted in Findings of Fact 3 and 16. Accepted in or subordinate to Findings of Fact 23 and 24. Accepted in or subordinate to Findings of Fact 20. 14-15. Accepted in or subordinate to Findings of Fact 14. Accepted in or subordinate to Findings of Fact 15. Subordinate to Finding of Fact 13. Accepted in Findings of Fact 12. Accepted in relevant part or subordinate to Findings of Fact 8 and 49. 20-21. Accepted in Findings of Fact 61. Accepted in Findings of Fact 62. Accepted in preliminary statement and Finding of Fact 2. Accepted in Conclusions of Law 74. Accepted in Findings of Fact 52. Accepted in Findings of Fact 38. 27-28. Rejected conclusion that program is superior in terms of quality of care in Findings of Fact 38. 29-30. Accepted in or subordinate to Findings of Fact 43. Accepted in general or subordinate to Findings of Fact 43. Rejected in or subordinate to Findings of Fact 59. 33-34.. Accepted conclusion in Findings of Fact 43. 35-37. Accepted in or subordinate to Findings of Fact 23-26. 38-40. Conclusion rejected in substantial part in Findings of Fact 23. 41-43. Accepted in substantial part in Findings of Fact 24. 44. Accepted in Findings of Fact 47. 45-48. Accepted in or subordinate to Findings of Fact 48. 49-50. Rejected in Findings of Fact 66 and 67. 51-52. Accepted in or subordinate to Findings of Fact 29. Rejected conclusion in part in Findings of Fact 23 and 24. Accepted in Findings of Fact 27. 55-59. Accepted in or subordinate to Findings of Fact 28 and 34. 60. Conclusion rejected in Findings of Fact 32. 61-62. Accepted in Findings of Fact 27. 63. Rejected in general in Findings of Fact 23 and 27. 64-65. Rejected as to alternatives for "residents most likely" to the extent that is inconsistent with need in relation to state plan, in Findings of Fact 27. Accepted in Findings of Fact 51 and 52. Accepted in or subordinate to Findings of Fact 52. Rejected in Findings of Fact 52. 69-70. Accepted in or subordinate to Findings of Fact 52. Accepted in Findings of Fact 22 and 30. Rejected conclusion in Findings of Fact 23 and 24. Accepted except last sentence in Findings of Fact 27. 74-75. Accepted in Findings of Fact 28. 76-77. Accepted in or subordinate to Findings of Fact 29. Rejected conclusion or subordinate to Findings of Fact 29. Accepted in Findings of Fact 32. 80-82. Accepted in or subordinate to Findings of Fact 31. COPIES FURNISHED: W. David Watkins, Esquire 2700 Blair Stone Road, Suite C Post Office Box 6507 Tallahassee, Florida 32314-6507 (Counsel for St. Mary's Hospital) Michael J. Cherniga, Esquire David C. Ashburn, Esquire Greenberg, Traurig, Hoffman, et al. Suite 2000 111 South Monroe Street Tallahassee, Florida 32302 (Counsel for Palm Beach Gardens Community Hospital) Elizabeth McArthur, Esquire 101 North Monroe Street, Suite 1000 Post Office Drawer 11307 Tallahassee, Florida 32302 (Counsel for Lawnwood Medical Center) Leslie Mendelson, Esquire Senior Attorney Agency for Health Care Administration 325 John Knox Road, Suite 301 Tallahassee, Florida 32303-4131 Byron B. Mathews, Jr., Esquire 201 South Biscayne Boulevard Suite 2200 Miami, Florida 33131 Robert A. Weiss, Esquire John M. Knight, Esquire The Perkins House, Suite 200 118 North Gadsden Street Tallahassee, Florida 32301 R. S. Power, Agency Clerk Agency for Health Care Administration Atrium Building, Suite 301 325 John Knox Road Tallahassee, Florida 32303 Harold D. Lewis, Esquire The Atrium, Suite 301 325 John Knox Road Tallahassee, Florida 32303
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 the adult open heart surgery rule in effect at the time the certificate of need (CON) applications were filed, and until January 24, 2002, or the rule as amended on that date is applicable to this case. Which, if any, of the applications filed by Martin Memorial Medical Center, Inc. (Martin Memorial); Bethesda Healthcare System, Inc., d/b/a Bethesda Memorial Hospital (Bethesda); and Boca Raton Community Hospital, Inc. (BRCH) meet the requirements for a CON to establish an adult open heart surgery program in Agency for Health Care Administration (AHCA) Health Planning District 9, for Okeechobee, Indian River, St. Lucie, Martin, and Palm Beach Counties, Florida.
Findings Of Fact The Agency for Health Care Administration (AHCA) is the agency which administers the certificate of need (CON) program for health care facilities and programs in Florida. It is also the designated state health planning agency. See Subsection 408.034(1), Florida Statutes. For health planning purposes, AHCA District 9 includes Indian River, Okeechobee, St. Lucie, Martin, and Palm Beach Counties. See Subsection 408.032(5), Florida Statutes. AHCA published a fixed need pool of zero for additional open heart surgery programs in District 9, for the January 2002, planning horizon. The mathematical need formula in the rule, using the use rate for open heart surgery procedures in the district as applied to the projected population growth, indicated a gross numeric need for 7.9 programs in District 9. After rounding off the decimal and subtracting four, for the number of existing District 9 open heart surgery programs, the formula showed a numerical need for four additional ones. The need number defaulted to zero, however, because one of the existing programs, at Lawnwood Medical Center, Inc., d/b/a Lawnwood Regional Medical Center (Lawnwood), had not reached the required minimum of 350 surgeries a year, or 29 cases a month for 12 months prior to the quarter in which need was published. Having initiated services in March 1999, the Lawnwood program had not been operational for 12 months at the time the applications were filed in October 1999. The other existing providers of adult open heart services in District 9, in addition to Lawnwood, are Palm Beach Gardens Community Hospital, Inc., d/b/a Palm Beach Gardens Medical Center (PBGMC); Columbia/JFK Medical Center Limited Partnership, d/b/a JFK Medical Center (JFK); and Tenet Healthsystem Hospitals, Inc., d/b/a Delray Medical Center (Delray). All are intervening parties to this proceeding. In the Pre-Hearing Stipulation, the parties agreed that the Intervenors have standing to participate in this proceeding. Despite the publication of zero numeric need, five hospitals in District 9 applied for CONs to establish new adult open heart programs asserting need based on not normal circumstances. Three of those applications are at issue in this case: CON Number 9249 filed by Martin Memorial Medical Center, Inc. (Martin Memorial); CON Number 9250 by Bethesda Healthcare System, Inc., d/b/a Bethesda Memorial Hospital (Bethesda); and CON Number 9248 by Boca Raton Community Hospital, Inc. (BRCH). AHCA initially reviewed and denied all of the applications. After changing its position before the final hearing, AHCA supports the approval of the applications filed by Martin Memorial and BRCH. Martin Memorial Martin Memorial, the only hospital in Martin County, and the only party/applicant not located in Palm Beach County, operates two facilities, a total of 336 beds, on two separate campuses under a single license. The larger hospital, in Stuart, has 236 beds and is located approximately 20 miles south of Lawnwood and 30 miles north of PBGMC. Martin Memorial owns and maintains, at the hospital, its own ambulance service used exclusively for hospital-to-hospital transfers. The drive from Martin Memorial to Lawnwood averages 38 minutes. The drive time to PBGMC averages 48 minutes. By helicopter, it takes 11 or 12 minutes to get from Martin Memorial to PBGMC. The remaining 100 Martin Memorial Hospital beds are located on its southern campus, approximately six miles south of the Stuart facility. Martin Memorial is a private not-for-profit hospital, established in 1939. The parent corporation also operates an ambulatory care center, physician group, billing and collection company, and a foundation. Martin Memorial is applying to operate an open heart program at its Stuart location, where it currently offers cardiology, hematology, nephrology, pulmonary, infectious disease, pathology, blood bank, anesthesiology, diagnostic nuclear medicine, and intensive care services. Martin Memorial has a 25-bed telemetry unit, a 14-bed medical intensive care unit, a nine-bed surgical intensive care unit, and a 22-bed progressive care unit, with an identically equipped 16-bed overflow unit used only for high seasonal occupancy, from approximately December to April. If its CON is approved, Martin Memorial will dedicate four surgical intensive care unit beds and six progressive care beds for post-open heart surgery patients. Martin Memorial agreed to condition its CON on the provision of 2.4% of the project's gross revenues for charity care and 2% for Medicaid. The total estimated project cost is $6.5 million. Martin Memorial intends to affiliate with the University of Florida and its teaching facility, Shands Hospital, to assist in establishing the program and training staff. The cardiovascular surgeon is expected to be a full-time faculty member who will live and work in Martin County. Although initially opposed, AHCA now supports Martin Memorial’s application primarily because (1) it has the largest cardiac catheterization (cath) program at any hospital in this state which does not also provide open heart services; (2) it has a medium size and growing Medicare population, which constitutes the age group most likely to require open heart surgery and related services; (3) Martin County residents now must receive open heart and related services at hospitals outside Martin County, primarily in areas ranging from Palm Beach County south to Dade County; (4) emergency heart attack patients who present at Martin Memorial-Stuart could receive primary angioplasties without transfer; and (5) it is a not-for-profit hospital, while all of the existing open heart providers in the District are for- profit corporate subsidiaries. Of the applicants, Martin Memorial is also located the greatest distance from the existing providers. Bethesda Memorial Bethesda has 362 licensed beds located in Boynton Beach. JFK is nine miles north or an average drive of 18 minutes from Bethesda. Delray is nine miles south or an average drive of 17 minutes from Bethesda. Established in February 1959, Bethesda is a not-for- profit subsidiary of Bethesda Health Care Systems, Inc., which also operates some for-profit subsidiaries, including Bethesda Medical/Surgical Specialists, Bethesda Management Services, and Bethesda Comprehensive Cancer Institute. Bethesda is a disproportionate share provider of Medicaid and Medicare services. The services currently available at Bethesda include obstetrics, Level II and III neonatal intensive care, cardiology, orthopedics, pediatrics, neurological and stroke care, peripheral vascular surgery, wound care, pulmonary and infectious disease care. Bethesda recently eliminated a 20-bed unit for adult psychiatric services, and a 20-bed skilled nursing unit. Currently, at Bethesda, the sickest patients are placed in a 10-bed critical care unit. The hospital also operates a 12- bed surgical intensive care unit, an eight-bed medical intensive care unit, and 30 and 25-bed telemetry units. Bethesda was planning to open a 20-bed extension to the telemetry unit, all in private rooms, in January 2002. If an open heart surgery program is established, Bethesda, will add an eight-bed cardiovascular intensive care unit to care post-operatively for the patients. Bethesda offered to condition its CON on the provision of 3% of total open heart surgeries to Medicaid and 3% of total open heart surgeries to indigent patients. Bethesda's estimated total project cost is $4 million, $1.7 million for equipment, and $2.24 for construction. Bethesda will receive assistance from Orlando Regional Medical Center in training personnel and developing protocols for an open heart program. At Orlando Regional, a statutory teaching hospital, the number of open heart cases ranges from 1,300 to 1,600 a year. Bethesda has a contract with a physicians' group to provide a board-certified cardiovascular surgeon to serve as medical director for the open heart program. AHCA’s position is that the Bethesda application is "approvable" but, of the Palm Beach County applicants, less desirable than that of BRCH. By contrast, Bethesda's experts emphasized (1) the absence of any overlap with the Lawnwood market; (2) the greater need for a new program, based on the volume of cases, in Palm Beach County than elsewhere in the District; (3) the size, growth, and age of the population within Bethesda's market area, and (4) the ability of Bethesda to enhance access for underserved groups, particularly Medicaid patients. Boca Raton Community Hospital BRCH is licensed for 394 beds. Located in southern Palm Beach County, close to the Broward County line, BRCH is from eight to nine miles south of Delray and approximately 15 miles north of North Ridge Medical Center (North Ridge), in adjacent Broward County. On average, the drive from BRCH to Delray takes 20 minutes. The drive from BRCH to North Ridge takes about 25 minutes. Founded in the late 1960's, BRCH operates as a not-for- profit corporation. BRCH has a staff of 750 physicians and 1,600 employees. Services at BRCH include cardiology, a 10-bed Level II neonatal intensive care unit, hematology, nephrology, pulmonology, radiology, nuclear medicine, and neurology. If approved and issued a CON for adult open heart surgery, BRCH will build a new facility for the program, including two new cath labs, an electrophysiology lab and 12 intensive care beds. In the CON, the estimated construction cost was $16.5 million and the estimated equipment cost was $2.7 million of the $20 million estimated for the total project. BRCH agreed to having conditions on its CON (1) to provide 5% of open heart cases in year two to uninsured patients, (2) to establish an outreach program to increase the utilization of open heart services among the uninsured, and (3) to relinquish the CON if it fails to perform at least 350 open heart surgery procedures a year in any two consecutive years after the end of the second year of operations. AHCA determined that it should change its initial position opposing the approval of the BRCH application to one of approval because of (1) the large Medicare population in the service area; (2) the volume of emergency room heart attack patients; (3) the district out-migration for services primarily to North Ridge; (4) the large, well-developed interventional cardiology program; and (5) the not-for-profit organizational structure. When AHCA decided to support the approval of the BRCH application, it did so, in part, based on erroneous data. The cath lab volume was assumed to be approximately 1,800 caths a year, as compared to the actual volume of 667 caths for the year ending March 2001. Having considered the corrected data, AHCA’s expert described BRCH’s application as significantly less compelling, but still preferable to that of Bethesda. BRCH is the largest hospital in number of beds in Florida which does not have an open heart surgery program. AHCA also responded favorably to identified "cultural" access issues, described as underservice to demographic groups, based on race, gender, and class. BRCH presented a plan to equip a mobile unit to provide diagnostic screenings and primary care in underserved areas. Pre-Hearing Stipulations The parties stipulated that all of the applications met the statutory requirements concerning the application content and filing procedures of Sections 408.037 and 408.039, Florida Statutes (1999), and Rule 59C-1.033, Florida Administrative Code. Martin Memorial, Bethesda, and BRCH have a history of providing quality care. See Subsection 408.035(1)(c), Florida Statutes (1999). There are no existing outpatient, ambulatory or home care services which can be used as alternatives to inpatient adult open heart and angioplasty services. See Subsection 408.035(1)(d), Florida Statutes (1999). Martin Memorial and Bethesda have sufficient available funds for capital and operating expenses required for their proposed open heart surgery programs. See Subsection 408.035(1)(h), Florida Statutes (1999). Martin Memorial complied with the requirements related to costs and methods of construction, and equipment for the proposed project. Except for the contention that it omitted $1,687,180 in fixed equipment costs and that the proposed construction project is excessively large and expensive, the parties stipulated that BRCH reasonably estimated construction and equipment costs, including costs and methods of energy provision. See Subsection 408.035(1)(m), Florida Statutes (1999). The parties agreed that Subsections 408.035(1)(p), and 408.035(2)(e), Florida Statutes, related to nursing home beds, are not at issue at in this proceeding. If Bethesda, BRCH, and Martin Memorial can recruit the necessary, competent nursing and surgical staff, they will meet the requirements of Rule 59C-1.033(3), (4)(b), (4)(c), and (5)(c), Florida Administrative Code. Adult open heart surgery services are currently available to District 9 residents within the two-hour travel standard of Rule 59C-1.033(4)(a), Florida Administrative Code. Bethesda, BRCH, and Martin Memorial are accredited by the Joint Commission on Accreditation of Healthcare Organizations (JCAHO), assuring quality as required by Rule 59C-1.033(5)(a), Florida Administrative Code. The parties agreed that if Bethesda, BRCH, and Martin Memorial can recruit the necessary nursing and surgical personnel, their programs would meet the requirements of Rule 59C-1.033(4)(b), (4)(c), (5)(b), and (5)(c), Florida Administrative Code, except that JFK and Lawnwood did not agree that the applicants satisfied the requirements related to cardiovascular surgeons. Martin Memorial will be able to obtain perfusionist services, as required by Rule 59C-1.033(5)(b)5, Florida Administrative Code. Bethesda and BRCH projected reasonable staffing patterns, in their CON schedules 6A, given projected census levels, although the ability to recruit staff and adequacy of projected salaries are at issue. The rule criteria related to pediatric open heart surgery are not applicable to this proceeding. Disputed Statutory and Rule Criteria The following statutory criteria and applicable in this case: Subsections 408.035(1)(a), (b), (c) - for comparison; (e), (f), (g), (h) - related to funding for BRCH, and related to staff recruitment and salaries; (i), (j), (k), (l), (m) - for Bethesda, and related to the size, scope, and fixed equipment cost for BRCH, (n), and (o); and Subsections 408.035(2)(a), (b), (c), and (d), Florida Statutes. The criteria in Rules 59C-1.030, and of Rule 59C-1.033(5)(b) - related to staffing, except as stipulated - are at issue. The parties have also raised the issue of whether AHCA is consistent in applying its agency rules related to open heart cases. The District 9 health plan contains two preferences for open heart applicant hospitals, the first for hospitals with established cardiac cath programs, the second for applicants with a documented commitment to serve patients regardless of their ability to pay or county of residence. All of the applicants have established diagnostic cardiac cath programs and related cardiology services. During the cardiac cath procedure, a catheter is inserted into a cardiac chamber to diagnose heart disease. During a therapeutic cardiac cath procedure, or angioplasty, the catheter with a balloon-tip is inserted into a coronary artery and inflated to open blockages. The latter requires open heart surgery back-up in case a vessel is ruptured and thus, an open heart surgery certificate of need. Martin Memorial operates the largest cardiac cath program at a hospital in Florida which does not also offer open heart surgery. At Martin Memorial, 1,885 inpatient and outpatient caths were performed in 1999, 1,770 in 2000, and 1,286 in the first nine months of 2001. Cardiac caths are only performed at the Stuart facility. Non-invasive cardiology services began in the 1970's at Martin Memorial. A CON to establish the first cardiac cath lab was issued in 1989, and a second, CON-exempt cath lab opened in 1998. Martin Memorial also offers pacemaker implants and peripheral angioplasties to eliminate clots in other areas of the body, for example, in the legs, electrocardiography, echocardiography, stress tests, and cardiac rehabilitation. Neither electrophysiology studies nor defibrillator implants are performed at Martin Memorial. Martin Memorial has an open staff of cardiologists, meaning that its cath lab is available for use by any of the invasive cardiologists on staff. The facilities include two cardiac cath procedure rooms, a control room for the laboratory, a five-bed holding room and a two-bay inpatient recovery area. Bethesda also has an established cardiac cath program with an open staff. Seventeen cathing physicians were listed on the Bethesda roster for the month of March 2001. Of those, five were also the only cardiologists allowed to perform caths at the closed lab at JFK. Some of these cardiologists are permitted to perform emergency angioplasties at Bethesda. Bethesda has, at least, two cardiovascular surgeons on staff. From 1995 to 1998, the volume of cardiac caths at Bethesda increased over 60%, from 133 to 213. For the 12 months ending August 31, 2000, Bethesda cardiologists performed 428 caths. For the 12 months ending September 30, 2001, the cath volume was 506 cases. Currently, cath procedures at Bethesda are performed in one lab with recently upgraded digital equipment. As part of the planned expansion of the hospital, the existing lab will be relocated and a second one added. Permanent pacemakers are implanted at Bethesda, but internal cardioverter defibrillator procedures, electrophysiology, and table studies are not performed. Cardiac cath services, at BRCH, started in 1987. Two cath labs with state-of-the-art digital equipment are used. In the 12 months ending March 31, 2001, there were 667 inpatient and outpatient caths performed at BRCH. Currently, cardiac services at BRCH are the largest source of admissions, approximately 20% of total admissions. The available services include echocardiography, tilt table studies, electrocardiography, stress tests, cardiac wellness and rehabilitation programs, electrophysiology studies, and internal cardioverter defibrillator implants. Each year, one or two "rescue" or salvage angioplasties are performed in extreme, life- threatening circumstances at BRCH. Forty-nine cardiologists are on the closed "invitation-only" medical staff at BRCH, 47 are board-certified and approximately half are invasive cardiologists. The staff also includes seven electrophysiologists, five of whom are board-certified, and seven thoracic surgeons, five of whom perform open heart surgeries at other hospitals. For the first two years of operating an open heart program, BRCH intends to have a closed program, by virtue of an exclusive contract with a single group of cardiovascular surgeons. Subsection 408.035(1)(a) - district health plan preference for serving patients regardless of county of residence or ability to pay; and Subsection 408.035 (1)(n) - history of and proposed services to Medicaid and indigent patients Martin Memorial, Bethesda, and BRCH will serve patients regardless of residence and, they contend, will enhance access for Medicaid, indigent, charity and/or self-pay patients. Each applicant has offered to care for patients in some of these categories as a condition for CON approval. The proposed conditions, are, for Martin Memorial, 2.4% of total project revenues for charity and 2% of admissions for Medicaid patients. Martin Memorial provides a number of services without charge, including follow-up education to former inpatients to assist them in managing diseases such as asthma, diabetes, congestive heart failure and chronic obstructive pulmonary disease. Obstetric care includes one free home visit by a nurse/midwife to check the health of newborns and mothers. Office space is provided for a free clinic for the "working poor" of Martin County, which receives approximately 10,000 annual visits from a patient base of about 2,000 patients. Over $100,000 a year is provided for an indigent pharmacy program. Combining the outreach services with other charitable contributions, including charity care, Martin Memorial valued "community benefits" at $24 million in 1998, $30.5 million in 2000. When Martin Memorial received an inpatient cardiac cath CON, it agreed to provide a minimum of 2.5% of total cardiac caths to Medicaid patients and 3% to charity care. Due to changes in state regulation, Medicaid and charity care for cardiac caths no longer needs to be reported to the state. That data, representing as it does, the base of patients from which open heart cases will come, is useful in evaluating Martin Memorial's projections. In 1999, seven-tenths of one percent of the patients in Martin Memorial's cath lab were Medicaid and four-tenths of one percent were indigent. In 2000, seven-tenths of one percent were Medicaid and two-tenths of one percent were indigent. Martin's cath lab data indicates that its projected open heart levels of Medicaid and indigent care are not attainable. Bethesda offered a commitment to provide 3% of total open heart cases for Medicaid patients and 3% to indigent patients annually. Historically, Bethesda has cared for a relatively large number of Medicaid, minority, and indigent patients. It is recognized as a disproportionate share provider of Medicaid care under the Florida program and of Medicare under the Federal program. The Palm Beach County Health Department provides approximately $1 million a year to Bethesda for charity care. As a percentage of gross revenue, Bethesda provided 8.8% Medicaid and 3.46% charity care in 1999. Approximately 54% of the charity care is attributable to obstetrics and pediatric services. Bethesda's younger patient base and the number of adult open heart Medicaid cases from Bethesda's service area, 2.4% or 7 cases in the year ending September 2000, raise the issue of its ability to generate sufficient cases to meet the proposed commitment. In 1995, 20 of the 36 total resident Medicaid open heart surgeries were performed at the three providers in District 9, Delray, JFK, and PBGMC. In 1999, when Lawnwood began open heart care, the Medicaid volume at the District providers increased to 51 of the 64 total Medicaid resident cases. In 2000, the four programs treated a net number of 56 of 60 resident Medicaid cases. A program at Bethesda also could reasonably be expected to increase the number of Medicaid and charity cases performed in the District, in volume and by reversing outmigration, but the patients must come from a base of patients with cardiac diagnoses. For the year ending September 2000, in Bethesda's service area, 4.9% of cardiac patients were Medicaid and charity patients combined, 1.6% Medicaid and 3.3% charity. Assuming that the same proportions could be maintained for open heart surgeries, Bethesda cannot achieve 3% Medicaid and, although unlikely, has a chance of reaching 3% charity only in the best case scenario. If approved, BRCH commits to providing 5% of total OHS in the second year to uninsured patients and to establish an outreach program to increase utilization by uninsured patients. BRCH has, over the past three and a half years, established outreach programs, which include having nurses and social workers in schools, providing free physical examinations to children who do not have primary care doctors, and performing echocardiograms for high school athletes, equipping police and fire rescue units with portable defibrillators, and operating mobile units for mammography screenings and vans to transport patients to and from their homes for hospital care. A free dental screening program is operated in conjunction with Nova Southeastern University. BRCH also operates a family medical center approximately seven miles west of the hospital. Recently, the Foundation for BRCH purchased, for $1.8 million, a large bus to equip as a mobile clinic. The mobile diagnostic unit is intended to reach uninsured patients to provide primary care and ultimately open heart surgery care to those who might not otherwise be screened, diagnosed and referred. No information was available and no decisions had been made about the staff and equipment, or service areas for use of the van. Because of the lack of more specific plans, it is impossible to determine whether the outreach effort has any reasonable prospects for success in meeting any unmet need. For the years ending June 1996, 1997, and 1998, BRCH provided six-tenths of one percent, and five-tenths of one percent of gross revenues for charity care. In 2000, BRCH provided one-half of one percent for charity care and, in 2001, twenty-seventh hundreds of a percent. The historical levels do not support the proposed commitment of 5% of open heart surgeries for uninsured patients in the second year of the program. Although worded to apply only to the second year, BRCH's President and CEO testified concerning the condition without limiting it to the second year. In Boca Raton Community Hospital, Inc.'s Proposed Recommended Order (Reformatted), filed on July 5, 2002, the condition is described as follows: 49. As conditions of CON approval, Boca will, beginning in the second year of operation of the program and continuing thereafter, provide a minimum of five percent each year of OHS cases to uninsured patients, and establish an outreach program to locate and provide OHS and cardiology services to uninsured patients in Palm Beach County. (Boca Ex. 3 at Schedule C; Pierce, 1899). Boca reasonably decided to focus on the needs of the uninsured, rather than Medicaid patients, because of the low volume of Medicaid patients who require OHS services. (Pierce, 1902). At BRCH, Medicaid and Medicaid health maintenance organization (HMO) care as a percent of total ranged from 1.3% to 1.4% from 1996 through 1998. BRCH projected serving 1.2% to 1.3% open heart Medicaid cases, or four patients in the first year and 1.5% to 1.6%, or seven Medicaid patients in the second year. The projections are consistent with its history although BRCH offered no Medicaid condition. Bethesda and BRCH also claimed not normal circumstances exist in District 9 due to the disparity in open heart care for uninsured and Medicaid patients as compared to the insured. For uninsured residents of Palm Beach County during the twelve months ending June 30, 2000, the use rate was 4.7 per 1000, as compared to 21.8 per 1,000 for insured open heart patients. For angioplasty patients, the insured use rate was 38.2, but the uninsured rate was only 8.9. Assuming that the use rates should not be so different, the discrepancy in access for the uninsured is significant and unfortunate but was not shown to be a not normal circumstance in the health care delivery system. The applicants' proposals, unlikely as they are to meet even the proposed conditions, are inadequate to increase access materially for the uninsured. Comparisons of the level of Medicaid provided statewide to that provided in District 9 without consideration of other factors, including age and income levels, were not useful in analyzing access. Assertions that any discrepancy in care for potential Medicaid open heart patients constitutes a not normal circumstance are not substantiated by this evidence. Subsection 408.035(1)(b) and (2)(b) - availability, quality of care, efficiency, appropriateness, accessibility, extent of utilization and adequacy of like and existing facilities in District Nine In 2006, the population in District 9 is projected to reach 1.2 million people, of which approximately 992,378 will reside in Palm Beach County, 119,573 in Martin County, 181,406 in St. Lucie County, 106,790 in Indian River County, and 31,140 in Okeechobee County. In District 9, throughout Florida, and in the United States, heart disease is the leading cause of death. In 2000, heart disease was the cause in 522 of 1,560 total deaths in Martin County, and 4,337 of 12,795 total deaths in Palm Beach County. From 1995 to 2000, the number of Florida residents having open heart surgeries increased 15.1%. During the same period of time, the number of District 9 resident cases, regardless of where the surgeries were performed, increased from 3,119, to 3,938, an increase of 755 OHS cases, or 24%. Palm Beach County residents represented 427 of the 755 increase, and 2,633 of the total of 3,938 resident cases. The distribution of the remaining 1,305 District resident cases by county was as follows: 597 from St. Lucie, 339 from Martin, 269 from Indian River, and 100 from Okeechobee County. More recent data, however, indicates trends towards a leveling off or even decline in the number, but an increase in the complexity of open heart procedures. Some experts describe open heart volumes having reached a "plateau" in the United States, in Florida, and in District 9. Last year, the number of open heart surgeries in the United States declined 22%. The statewide volume of cases was 32,199 in 1996, 33,507 in 1997, 34,013 in 1998, and 32,097 in 1999. At District 9 hospitals, open heart volumes were 1,670 in 1994, 1,841 in 1995, 2,152 in 1996, 2,407 in 1997, 2,527 in 1998, 2,656 in 1999, and 2,650 in 2000. Cardiac Catheterizations and Angioplasties The major reason given for the stable and declining open heart volume is the increase in the utilization of angioplasty, or therapeutic cardiac cathing, an alternative which costs less and is less invasive. Angioplasty procedures increased from 1995-2000, by over 2,500 cases for District 9 residents, and over 2,600 cases in District 9 hospitals, from 2,104 cases in 1995, to 4,714 in 2000. Among the procedures generally referred to as angioplasties are percutaneous transluminal angioplasty (PTCA) or balloon angioplasty, percutaneous transluminal coronary rotational atherectomy (PTCRA), and the insertion of scaffolding- like devices, called stents, to prevent re-occlusion of coronary arteries. In Florida, diagnostic cardiac caths may be performed at facilities which do not have angioplasty and open heart surgery programs, but angioplasties must be performed, except in rare emergency circumstances, only at hospitals which are licensed to provide open heart services, in case back-up surgery is needed. Lawnwood Regional Lawnwood is located in Fort Pierce, in St. Lucie County, which is second to Palm Beach County in population and in District 9 resident open heart cases. Lawnwood is owned by a subsidiary of HCA, the Hospital Corporation of America, formerly known as Columbia. HCA is a for-profit, investor-owned corporation which owns and operates approximately 200 hospitals in the United States. A $17 million addition at Lawnwood, designed for the open heart program, includes two dedicated operating rooms and a 12-bed intensive care unit. The Lawnwood program has a full-time staff of two surgeons and one additional surgeon who divides his time between Lawnwood and PBGMC. Lawnwood, having opened its program early in 1999, is not considered a mature program. In addition, Lawnwood has had some difficulties with accreditation and disputes with cardiologists. Lawnwood reported one open heart case in the first quarter of 1999, and 143 or 144 for the year. In calendar year 2000, between 330 to 340 open heart surgeries were performed at Lawnwood. In calendar year 2001, the volume was between 333 and 336 cases. Depending on the source of the data, the volume at Lawnwood was reported to be as high as 364 for the twelve months ending September 30, 2000; in a range from 336 to 396 for the twelve months ending March 31, 2001; and up to 412 for the twelve months ending July 2001. The variances result from seasonal patient utilization, and from AHCA’s use, for the fixed need pool, of the most current available data which it receives from the various local health councils. That data is submitted on handwritten or typed forms which are not uniform across districts. Subsequently, the hospitals provide electronic data tapes directly to AHCA, which if properly decoded, should provide more accurate statistics. While there may be variances either way, in this case, the lower volumes for Lawnwood were derived from the more reliable electronic tapes. Based on that data and the testimony of the cardiac surgeon who is the director of the program at Lawnwood, the annual volume of open heart surgeries was approximately 330 in 2000, and 348 in 2001. The new rule, adopted on January 24, 2002, reduces the minimum number required for existing programs to 300 a year, or 25 adult operations a month. The number of angioplasties performed at Lawnwood increased from 465 in 1999, to 845 in 2000. Palm Beach Gardens Medical Center South of the four relatively small northern counties in District 9, PBGMC has 204 beds located in northern Palm Beach County. It is a subsidiary of Tenet Healthsystem Hospitals (Tenet). Adult open heart surgery has been available at PBGMC since 1983. The surgeries are typically performed in two or three of the 11 operating rooms, although five are equipped to handle open heart cases. PBGMC has 94 telemetry beds, and 32 intensive care beds, eight designated for cardiovascular intensive care patients. PBGMC has four cardiac cath labs and separate electrophysiology labs. The medical staff of approximately 400 physicians includes about 200 cardiologists, 24 invasive cardiologists and seven cardiac surgeons. The number of open heart cases at PBGMC was 700 in 1994, 801 in 1995, 913 in 1996, 1,028 in 1997, 1,045 in 1998, 1,124 in 1999, 940 in 2000, and 871 in 2001. The number of angioplasties increased from 552 in 1994, to 1,019 in 1997, to 1,431 in 2000. JFK JFK, which has 387 beds, is located roughly in the center of Palm Beach County, in the City of Lake Worth. Like Lawnwood, JFK is an HCA's subsidiary, having been purchased by that corporation in 1995. Open heart services and cardiac cath services began simultaneously at JFK in 1987. JFK has three open heart operating rooms. JFK, after a major expansion, has a separate entrance to its three cardiac cath laboratories, a dedicated electrophysiology suite, for treatment of arrhythmias, and 17- patient holding area. JFK provides all cardiac services, except heart transplants. The average age of patients at JFK is 74 years old. The medical staff of 504 board-certified or board- eligible physicians includes 25 cardiologists, five invasive cardiologists, two electrophysiologists, and three cardiac surgeons. JFK has recently accepted applications from but not yet extended privileges to three additional cardiovascular surgeons. Volumes of open heart cases at JFK were, with some variances depending on the data source, approximately 428 in 1994, 434 in 1995, 630 in 1996, 674 in 1997, 711 in 1998, 613 in 1999, 621 in 2000, and 610 in 2001. The number of angioplasties ranged from 709 in 1994, to 1,152 in 1997, to 1,281 in 2000. Delray Delray, with 343 beds, in Delray Beach, is the trauma center for southern Palm Beach County. Open heart care began at Delray in 1986. The surgeries are currently performed in three of ten, but soon to be a total of twelve operating rooms with shelled-in spaces set aside for two more. Patients recover in a 15-bed surgical intensive care unit. The Delray medical staff of over 600 physicians has close to 60 cardiologists, including 15 invasive cardiologists and six cardiovascular surgeons. Delray has three cath lab rooms and seven bays for holding patients pre- and post-procedure. For the years 1994 through 2001, open heart volumes at Delray were 542, 606, 609, 705, 771, 758, 759, and 738, respectively. During the same period of time, the annual number of angioplasty procedures increased from 591 in 1994, to 810 in 1997, to 929 in 2000. The existing CON-planned and approved programs in the District are well distributed geographically and allocated appropriately based on population. Considering the declining utilization, the like and existing open heart surgery programs are available and accessible. Subsection 408.035(1)(f) - services that are not reasonably and economically accessible in adjoining areas Over 30% of District 9 resident open heart cases are performed in other districts, the vast majority at North Ridge in District 10 (Broward County). The district outmigration for a service when excessive or difficult can indicate access or quality concerns and constitute a not normal circumstance for approval of a new program. In this case, with adequate available services in District 9 and its close proximity, the outmigration to North Ridge, which is 15 miles or 25 minutes from BRCH is not a not normal circumstance. There is also substantial overlap in the medical staff at both hospitals which allows continuity of care for patients despite transfers. The argument that families, particularly an older spouse, will necessarily have to drive farther to visit the patient is rejected, since that depends on where in the district the person resides not on the distances between hospitals. North Ridge has 391 licensed beds, with 260 to 270 acute care beds in use. At North Ridge, cardiovascular surgeons usually use three OHS operating rooms, although a fourth is also available. Open heart patients recover in a six-bed cardiovascular intensive care unit. The reported volumes of open hearts at North Ridge have been from 1994 through 2001, respectively, 864, 935, 893, 826, 882, 890, 905, and 795. The total number of open heart cases in District 10 has been declining since 1998. The volume of angioplasties at North Ridge increased from 793 in 1994, to 829 in 1997, to 1,155 in 2000, consistent with a rising District 10 use rate from 2.95 to 3.66 over the same period of time. The staff at North Ridge includes 107 cardiologists, 27 interventional cardiologists, and 17 cardiovascular surgeons, many of whom also regularly perform open heart surgeries at Holy Cross, which is approximately a mile south of North Ridge in Fort Lauderdale. At Holy Cross, which also has established referral networks from District 9, open heart volumes declined from a high of 753 in 1998 to 693 in 2000. All of the open heart services proposed by the applicants are reasonably available in adjoining areas, in Districts 10 and 11 to the south and in the other districts to the north. Subsection 408.035(1)(c) - comparisons of quality; and Subsection 408.035(1)(e) - joint, cooperative or shared resources; and Subsection 408.035(1)(g), (h), and (k) - need for research, educational and training programs or facilities for medical and health care professionals; and Subsection 408.035(1)(h) and Rule 59C-1.033 - recruitment, training and salaries for staff The parties stipulated that the applicants have a history of providing quality care. Martin Memorial was accredited with commendation by the JCAHO in 1997, which is now called accreditation without Type I Recommendations. That was followed, in July 2001, with a score of 93 on survey items with some follow-up improvements required related to patient assessment and nutrition. Martin Memorial offers internships, and residencies for training non-physician medical personnel from Barry University, Indian River Community College, and Florida Atlantic University. The cancer center at Martin Memorial is affiliated with the Moffitt Center. Despite the absence of an open heart program, Martin Memorial has participated in clinical trials of cardiac drugs. The Shands Healthcare System of nine affiliated hospitals, including two research and teaching hospitals, is the model for the relationship proposed with Martin Memorial. The partnerships are intended to upgrade the care available in community hospitals and to establish, for complex cases, referral networks for the Shands teaching hospitals. Shands has already satisfied itself that Martin Memorial meets its due diligence test for the quality of its existing program and philosophical compatibility. If Martin Memorial's CON is approved, Shands will assist in training staff for the program. Initially, the program will have one cardiovascular surgeon, a University of Florida medical school faculty member, in Martin County. When that surgeon is ill or on vacation, others from the University of Florida will be available. The logistics of the plan raises questions about the adequacy of coverage to meet the 24-hour requirements of Rule 59C-1.033, Florida Administrative Code. In the JCAHO survey process, Bethesda received a score of 97, as a result of its survey in June 2000, and was accredited for the maximum allowable time, three years. Personnel for a Bethesda program can be appropriately trained at Orlando Regional, a statutory teaching hospital with a high volume open heart program. In June 2000, BRCH received a JCAHO score of 96. BRCH maintains a scholarship program for new nurses making a two-year commitment, and an on-site educational department with a preceptorship for training operating room and emergency room nurses. Nursing students from Florida Atlantic University (FAU), which is located across Glades Road from BRCH, rotate at BRCH. FAU is in the process of establishing a medical school. There is a severe shortage of nurses in the United States, in Florida, and in District 9. All of the hospitals in District 9 have resorted to highly competitive and innovative recruitment and retention strategies, including international recruiting, signing bonuses, child care and, of course, rising salaries and benefits. The demand is greater and shortages more severe in highly specialized areas, such as critical care, telemetry and open heart surgery nursing. The average age of nurses has also increased to 46 or 47 years old, while enrollment in nursing schools and the number of nursing school professors have declined. All of the applicants concede that recruiting and retaining nurses for new open heart program will be a challenge. The likely results are a loss of experienced nurses from existing programs, an increase in total health care costs, an increase in vacancies, and, at least temporarily a decline in the quality of experienced nursing care in existing open heart programs. At this time, there is no evidence that declining open heart utilization will eventually alleviate the shortage of experienced nurses. It has, so far, only eased the need to resort as frequently to other extreme and expensive alternatives, including pay overtime, contracting with private agencies, and bringing in traveling nurses. Subsection 408.035(1)(m) - size, scope and fixed equipment cost at BRCH; Subsection 408.035(2)(c) - alternatives to new construction; and Subsection 408.035(1) (h) - funding for BRCH BRCH plans to construct a 74,000 square-foot cardiac care facility, which will include two open heart operating rooms and two cardiac cath labs, an electrophysiology lab, 12 cardiovascular intensive care beds, and 18 cardiac cath lab bays. Only 18,568 square feet are attributable to the open heart operating rooms and cardiovascular intensive care unit which compares favorably with Bethesda's estimate of 17,759 square feet for the same functions. It is not possible, therefore, to conclude that the size of the BRCH project is excessive as compared to that proposed by Bethesda. BRCH underestimated the cost for fixed equipment for the open heart project by approximately $1.6 million. That omission resulted in understated estimates of depreciation by approximately $275,000. The total project cost for BRCH is approximately $2.2 million when almost $2 million in omitted equipment costs is added to the original estimate of $20 million. All pending capital projects, as shown on Schedule 2 of the BRCH application, total $54 million. With combined cash and investments of $160 million, the BRCH foundation has sufficient funds for the hospital's projects. Although BRCH earned profits of $6.6 million and $7.3 million in 1998 and 1999, respectively, the hospital lost $30 million from operations due to billing and collection errors in 2000. BRCH has a donor who has stated a willingness to donate $20 million for the cardiac care center. BRCH has the funds necessary to build the facility. With Medicare capital cost reimbursement completely phased out, there is insufficient evidence of a direct impact on health care costs based on this proposed capital expenditure. Subsection 408.035(1)(i) - short and long term financial feasibility Martin Memorial initially projected that its program would perform 360 open heart surgeries in year one and 405 in year two. As a result of changes in the use rate, Martin Memorial lowered its second year projection to 375 surgeries while increasing staffing levels. Even if projected open heart surgery revenues of $264,000 in the second year decline in proportion to expected lower utilization, estimated angioplasty revenues of $468,000, are sufficient to make up the deficit and to keep the combined program financially feasible in the short and long term. Bethesda projected volumes of 165 open heart surgeries in the first year and 270 in the second year. Assuming Bethesda's revenues are 90% of the district average, the combined net profit for open heart and angioplasty services is reasonably expected to be approximately $750,000 in the second year operations. The project is profitable, therefore, financially feasible in the short and long term. BRCH's expert projected volumes of 308 open heart surgeries and 289 angioplasties in the first year, and 451 open heart surgeries and 422 angioplasties in the second year. If utilization projections are correct, then BRCH will receive incremental net income of $1.6 million from the open heart surgery program and $825,000 from the angioplasty services. Factoring in claims that the Medicare case weight was overstated and depreciation underestimated, the BRCH project is, nevertheless, financially feasible for the short and long term. Typically, any open heart surgery program that can reach volumes in the range of 200 to 250 cases, will be financially feasible. The establishment of an open heart program also has a "halo effect," for the hospital, attracting more patients to the cardiac cath labs and other related cardiology services. Open heart surgery and angioplasty tend to be profitable, generating revenue which hospitals use to offset losses from other services. Subsection 408.035(1)(j) - needs of HMOs All of the applicants will enter into contracts with, but none is a health maintenance organization. Subsection 408.035(1)(l) - probable impact of fostering competition to promote quality assurance and cost-effectiveness Hospitals with higher volumes of open heart surgeries and angioplasties usually have higher quality as measured by lower mortality rates and fewer complications. The open heart surgery rule, in effect at the time the applications were filed, established a minimum volume of 350 annual admissions for existing providers. In the rule as amended on January 24, 2002, the minimum volume for existing programs was reduced to 300. The divisor in the formula for determining need, which represents the average size of a program in the district, was 350 prior to amendment and 500 subsequently. The minimum and average volumes in the rule set, in effect, the protected range for existing programs, not the optimal size, or "cut point" at which outcomes are worse below and better above. According to the American College of Cardiology and American Heart Association (ACC/AHA) the evidence is clear that outcomes are better if an individual performs at least 75 procedures at a high volume center with more than 400 cases. The ACC/AHA guidelines indicate, although more controversial and less clearly established, that acceptable outcomes may be achieved if the individual operator performs at least 75 procedures in centers with volumes from 200 to 400 cases. Because the relationship between higher volumes and better outcomes is continuous and linear, and because research showing the benefits of primary angioplasty with or without open heart surgery back-up is preliminary and limited, the position of the ACC/AHA is, in summary, as follows: The proliferation of small angioplasty or small surgical programs to support such angioplasty programs is strongly discouraged. (Journal of the American College of Cardiology, Vol. 37, no. 8 June 15, 2001, pp. 2239xvii (Tenet Exhibit 5)) An open heart program at Martin Memorial will redirect cases that would otherwise have gone to Lawnwood, PBGMC, and JFK. The proposed Martin Memorial Service area overlaps that of Lawnwood in southern St. Lucie County, an area which generates one quarter of the open heart cases at Lawnwood. Lawnwood is reasonably expected to lose 56 open heart cases a year with total volume going down below 300, resulting in loss of $1.8 million, or 20% of its total revenues. Lawnwood would have unacceptably low volumes threatening the quality of the open heart program. PBGMC, as a result of a new program at Martin Memorial, will lose approximately 170 and 180 open heart cases annually and an equal number of angioplasties reducing its open heart volume to approximately 700 a year. The financial loss would range from $4 to $5 million a year, as compared to total net income which was between $20 and $30 million a year for past three years. PBGMC would not suffer an adverse impact sufficient to threaten either the quality or the financial feasibility of the open heart program or total hospital operations. JFK, which currently receives most of the angioplasty referrals from Martin Memorial, is expected to lose from 25 to 30 open heart cases, and 65 to 70 angioplasties each year during the first two years of a Martin Memorial program. The estimated financial loss to JFK is $1.7 million, a significant detriment when compared to $2.8 million in net income from operations in calendar year 2000. Approval of open heart program at Bethesda will adversely affect case volumes at JFK and Delray. Bethesda projected that, in its first year, 75% of its cases would have gone to Delray and 25% to JFK, and that by the third year, the split would be even at 50% from Delray and 50% from JFK. JFK, depending on the approach to the impact analysis, will lose from 40 to 60 open heart cases in the first year, from 90 to 110 in the second year, and from 115 to 170 in the third year of a program at Bethesda. The volumes of lost angioplasties is expected to be slightly higher. The resulting combined open heart and angioplasty financial loss is $6.6 million, far greater than the significant detriment expected from a Martin Memorial program alone. The annual volume of open heart cases at JFK would be approximately 400 to 500, assuming flat not continued declining utilization. If Bethesda offered the service, Delray's open heart volumes would decline by 124 cases in the first year and by 248 cases in the third year of operations, decreasing total volume to 500 or 600 annual surgeries. Delray had a net income from operations of approximately $24.7 million in 2000, which would indicate that neither quality nor financial stability would be significantly adversely affected. If an open heart program is approved for BRCH, the volumes of cases at Delray and North Ridge will decline. Delray would be expected to lose 163 open heart cases and 235 in years one and two, respectively, and equal numbers of caths and angioplasties, resulting in annual open heart cases reduced from the low 700s to approximately 500 cases. Delray's pre-tax revenue was $39 million in 2001. In terms of quality and financial stability, Delray can withstand the adverse impact of a new program at BRCH. North Ridge would lose approximately 124 open heart cases in year one and 178 in year two, and similar numbers of caths, reducing open heart volumes from the upper 700s to approximately 600 annual cases. North Ridge's pre-tax income was $21 million for the year ending May 31, 2001. It appears that North Ridge could, even with the adverse impact of BRCH, maintain a quality, financially viable open heart program. Subsection 408.035(l) - probable impact on costs The applicants, all not-for-profit corporations, contend that the fact that District 9 has only for-profit open heart hospitals affects charges and is a not normal circumstance for the approval of one or more not-for-profit. District 9 is the only district in Florida in which all open heart providers are for-profit corporations. Statewide, not-for-profit open heart hospitals charge 31% less than for-profit. Martin Memorial's CON proposal includes a charge structure below that at existing programs. Bethesda's planned charges are 10% less than the District 9 average for open heart and angioplasty services. BRCH is the applicant which is most likely to increase competition in District 9, based on the Herfindahl-Hirschman Index (HHI). The HHI's measurement of competition in a market used by economists frequently to analyze anti-trust issues. Charges are not a factor in up to 75% of open heart/angioplasty cases reimbursed by payors, such as Medicare, at set flat rates. In approximately 10% of cases, including complex "outlier" cases exceeding the range for flat rate reimbursement and for other payors on a percent-of-charges basis, charges are not irrelevant. But, the evidence to demonstrate lower charges were applicable to patients of the same severity was questionable. Subsection 408.035(1)(o) - continuum of care There is insufficient evidence the any applicant is preferable based on its ability to promote a continuum of care in a multilevel system. Subsection 408.035(2)(a) - alternatives to inpatient services There are no alternatives to inpatient services for open heart surgery and angioplasty patients. Subsection 408.035(2)(d) - patients who will experience serious problems in the absence of the proposed new service The applicants and AHCA determined that new open heart surgery programs are needed mainly to provide emergency or "primary" angioplasty to patients suffering heart attacks (acute myocardial infections). Primary angioplasty is an alternative to "clot busting" medications, or thrombolytics, and to open heart surgery. Performed on an emergency basis, the three different treatments are used to restore blood flow before heart muscle dies. Because "time is muscle," patients benefit only if treated within a relatively short time after the onset of symptoms. The goal is 90 minutes from door-to-balloon for angioplasty. The decision to treat a patient with a particular therapy is based on a number of factors assessed during triage. Paramedics in consultation with ER doctors at the receiving hospital frequently begin triage and administering medications and oxygen in ambulances equipped with sophisticated diagnostic equipment. As the statistical data demonstrates, angioplasty, whether scheduled or emergency, is increasingly becoming the preferred therapy. Some studies have shown improved outcomes, higher survival rates and fewer complications, from primary angioplasty as compared to thrombolytics. Comparisons have not been made over extended periods of time, and the apparent benefits of angioplasty have not been duplicated in community hospitals as compared to clinical trials in high volume research centers. Estimates of the number of people who could benefit from the availability of angioplasty services at the applicants vary based on the number of elderly in the service area, the number of non-traumatic chest pain ER visits, delays in transfers of emergency patients, and the number of patients being transferred to existing providers for angioplasties or open heart surgeries. Martin Memorial selected five patients as examples of those who could be served in an open heart program at Martin Memorial. The anecdotal evidence of transfer "delays" is insufficient to demonstrate bed unavailability or capacity constraints. Martin Memorial-Stuart and Martin Memorial South transferred 240 heart attack patients to open heart surgery hospitals. Only 18 of the emergency heart attack patients who presented at the Martin Memorial ER were transferred from the ER. Approximately ten patients a year are so unstable that an intra- aortic balloon pump is required during transfer. Martin Memorial presented evidence of delays of two hours or more in transfers of 84 patients from its cath labs to open heart surgery hospitals. The transfer records, created for subsequent certificate of need litigation, were of questionable probative value. The case studies were inadequate to establish whether "delays" were reasonable or not. Factors such as physician consultation time, time to stabilize a patient for transfer and the assumed travel time seem to have been included in the time periods. Bethesda transferred 270 patients for cardiac care from October 1999 through September 2000. Thirty patients were transferred, from November 2000 to July 2001, for angioplasties or open heart surgery after having cardiac caths at Bethesda. Bethesda failed to establish that transfers were delayed due to capacity problems at existing hospitals because emergency patients were not classified separately, and the causes of the time lapses were not identified. Of the applicants, BRCH has the busiest ER, with 50,000 to 52,000 annual visits compared to approximately 48,000 at the two Martin Memorial locations combined. BRCH admitted 439 heart attack patients through its ER during the year ending June 30, 2000. The majority of patients are treated with thrombolytics at BRCH. BRCH transfers approximately one emergency heart attack patient a week on average, or from 30 to 50 a year, for interventional cardiac procedures. BRCH's presentation of evidence of delays in transfers was flawed. The data was collected and used only for litigation, and was incomplete. Some patient records were lost and others were deleted due to inaccurate data. Of the applicants, BRCH is located in an area with the largest percentage of the population age 65 and older, approximately 35%, as compared to 24% in Martin Memorial's service area. Agency Consistency Martin Memorial, through expert witness testimony, compared its situation to that of Brandon, a hospital in AHCA District 6, which was issued an open heart surgery CON in 2001. The expert noted that Martin Memorial and Brandon are both in five county health planning districts, and that they are 19 and from 15 to 17 miles, respectively, from the nearest open heart provider. Three of the counties in District 6 have open heart programs, including Hillsborough County where Brandon is located, as compared to two District 9 counties, St. Lucie and Palm Beach, but not Martin. The Martin Memorial primary service area projected population is 238,861 for 2004, 24.1% aged 65 and older. The Brandon service area population projection is 309,000 for 2004, with 10.5% aged 65 and older. Brandon has 255 beds, Martin Memorial-Stuart has 236. Brandon had 53,000 emergency room visits, and Martin Memorial, at both locations, had 48,503 in 1999. Before defaulting to zero, the numerical formula yielded a need for 3.27 additional open heart programs in District 6 as compared to 3.9 in District 9. Other specific comparisons favorable to Martin Memorial included the number of heart attack patients presenting at its ER, cath lab volumes, patient transfers for open heart and angioplasty procedures. Among others, there are several significant distinguishing facts in Florida Health Sciences Center, Inc. v. Agency for Health Care Administration, Case No. 00-0481CON, (R.O. Mar. 30, 3001, F.O. Oct. 17, 2001) aff'd per curiam sub nom, University Community Hospital v. Agency for Health Care Administration, Case No. 1DO1-3592, et al. (Fla. 1st DCA Sept. 19, 2002), the Brandon case. In that case, the two existing providers performing fewer than 350 cases a year, Blake Medical Center, and Manatee Memorial Hospital, both in Manatee County, were mature programs located 40 miles from Brandon with no service area overlap. By contrast, Lawnwood which is not a mature program and, therefore, has not reached its potential volume, is 20 miles from Martin Memorial, and has an overlapping service area. Martin Memorial's ER volume and the number of transfers from its ERs are the combined experience from two locations. The more accurate comparison is 27,000 ER visits at Martin Memorial-Stuart to 53,000 at Brandon. Emergency heart attack patients presenting at Martin Memorial South would continue to require transfers for primary angioplasty. Finally, the decision in Brandon was based, in large part, on transportation difficulties, inadequate interfacility ambulances and traffic congestion, which are not factors in District 9. Factually, the case of Halifax Hospital Medical Center, d/b/a Halifax Medical Center v. Agency for Health Care Administration, et al., Case No. 95-0742 (AHCA Jan. 14, 1997) is also distinguishable. The applicant could have no effect on the low volume providers located 80 miles to the north. That was one not normal circumstance. Need existed because of another not normal circumstance, i.e., capacity constraints at the only other provider in the same primary service area. In Oak Hill Hospital v. AHCA, Case No. 00-3216CON (R.O. Oct. 4, 2001, F.O. Jan. 22, 2002), appeal dismissed sub nom Hernando HMA, Inc. v. HCA Services of Florida, Inc., Case No. 1DO2-854 (Fla. 1st DCA June 6, 2002), the two approved applicants were in separate counties which constituted entirely separate health care markets. Neither applicant would adversely affect the low volume providers. After the Administrative Law Judge recommended approval of the Citrus County applicant, AHCA, engaging in what appears to be a comparative review of the two remaining applicants from Hernando County, approved a second applicant from the same district at the same time. Some facts are similar to those in this case: The average drive time between hospitals was 30 minutes; transfers and admissions procedures required additional time; there was a recognition of increasing preferences for reperfusion of heart muscle using primary angioplasty; patients and families experience stress and anxiety as a result of transfers. Institution-specific issues included the transfer of 600 cardiac patients by ambulance from Oak Hill, the size of the cardiology and cardiac cath programs (1,641 caths in 1999), the larger elderly population in the service area, and the hospital's size.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Agency for Health Care Administration enter a final order denying Certificate of Need Application Number 9248 filed by BRCH, Certificate of Need Application Number 9249 filed by Martin Memorial, and Certificate of Need Application Number 9250 filed by Bethesda. DONE AND ENTERED this 11th day of November, 2002, in Tallahassee, Leon County, Florida. S ELEANOR M. HUNTER Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 11th day of November, 2002. COPIES FURNISHED: Lealand McCharen, Agency Clerk Agency for Health Care Administration Fort Knox Building 3, Suite 3431 2727 Mahan Drive Tallahassee, Florida 32308-5403 Valda Clark Christian, General Counsel Agency for Health Care Administration Fort Knox Building 3, Suite 3431 2727 Mahan Drive Tallahassee, Florida 32308-5403 Gerald L. Pickett, Esquire Agency for Health Care Administration 525 Mirror Lake Drive, North Sebring Building, Suite 310K St. Petersburg, Florida 33701 Lori C. Desnick, Esquire Agency for Health Care Administration Fort Knox Building 3, Suite 3431 2727 Mahan Drive Tallahassee, Florida 32308-5403 Stephen A. Ecenia, Esquire David Prescott, Esquire Rutledge, Ecenia, Purnell & Hoffman, P.A. 215 South Monroe Street, Suite 420 Post Office Box 551 Tallahassee, Florida 32302-0551 W. David Watkins, Esquire R. L. Caleen, Jr., Esquire Watkins & Caleen, P.A. 1725 Mahan Drive, Suite 201 Post Office Box 15828 Tallahassee, Florida 32317-5828 H. Darrell White, Esquire William B. Wiley, Esquire McFarlain & Cassedy, P.A. 305 South Gadsden Street Post Office Box 2174 Tallahassee, Florida 32316-2174 Paul H. Amundsen, Esquire Amundsen, Moore & Torpy, P.A. 502 East Park Avenue Post Office Box 1759 Tallahassee, Florida 32302 Robert D. Newell, Jr., Esquire Law Firm of Newell & Terry, P.A. 817 North Gadsden Street Tallahassee, Florida 32303-6313 C. Gary Williams, Esquire Michael J. Glazer, Esquire Ausley & McMullen 227 South Calhoun Street Post Office Box 391 Tallahassee, Florida 32302 Seann M. Frazier, Esquire Michael J. Cherniga, Esquire Greenberg Traurig, P.A. 101 East College Avenue Tallahassee, Florida 32302
The Issue Whether the Certificate of Need application (CON 9239) of Galencare, Inc., d/b/a Brandon Regional Hospital ("Brandon") to establish an open heart surgery program at its hospital facility in Hillsborough County should be granted?
Findings Of Fact District 6 District 6 is one of eleven health service planning districts in Florida set up by the "Health Facility and Services Development Act," Sections 408.031-408.045, Florida Statutes. See Section 408.031, Florida Statutes. The district is comprised of five counties: Hillsborough, Manatee, Polk, Hardee, and Highlands. Section 408.032(5), Florida Statutes. Of the five counties, three have providers of adult open heart surgery services: Hillsborough with three providers, Manatee with two, and Polk with one. There are in District 6 at present, therefore, a total of six existing providers. Existing Providers Hillsborough County The three providers of open heart surgery services ("OHS") in Hillsborough County are Florida Health Sciences Center, Inc., d/b/a Tampa General Hospital ("Tampa General"), St. Joseph's Hospital, Inc. ("St. Joseph's"), and University Community Hospital, Inc., d/b/a University Community Hospital ("UCH"). For the most part, Interstate 75 runs in a northerly and southerly direction dividing Hillsborough County roughly in half. If the interstate is considered to be a line dividing the eastern half of the county from the western, all three existing providers are in the western half of the county within the incorporated area of the county's major population center, the City of Tampa. Tampa General Opened approximately a century ago, Tampa General has been at its present location in the City of Tampa on Davis Island at the north end of Tampa Bay since 1927. The mission of Tampa General is three-fold. First, it provides a range of care (from simple to complex) for the west central region of the state. Second, it supports both the teaching and research activities of the University of South Florida College of Medicine. Finally and perhaps most importantly, it serves as the "health care safety net" for the people of Hillsborough County. Evidence of its status as the safety net for those its serves is its Case Mix Index for Medicare patients: 2.01. At such a level, "the case mix at Tampa General is one of the highest in the nation in Medicare population." (Tr. 2452). In keeping with its mission of being the county's health care safety net, Tampa General is a full-service acute care hospital. It also provides services unique to the county and the Tampa Bay area: a Level I trauma center, a regional burn center and adult solid organ transplant programs. Tampa General is licensed for 877 beds. Of these, 723 are for acute care, 31 are designated skilled nursing beds, 59 are comprehensive rehabilitation beds, 22 are psychiatry beds, and 42 are neonatal intensive care beds (18 Level II and 24 Level III). Of the 723 acute care beds, 160 are set aside for cardiac care, although they may be occupied from time-to-time by non-cardiac care patients. Tampa General is a statutory teaching hospital. It has an affiliation with the University of South Florida College of Medicine. It offers 13 residency programs, serving approximately 200 medical residents. Tampa General offers diagnostic and interventional cardiac catheterization services in four laboratories dedicated to such services. It has four operating rooms dedicated to open heart surgery. The range of open heart surgery services provided by Tampa General includes heart transplants. Care of the open heart patient immediately after surgery is in a dedicated cardiovascular intensive care unit of 18 beds. Following stay in the intensive care unit, the patient is cared for in either a 10-bed intermediate care unit or a 30- bed telemetry unit. Tampa General's full-service open heart surgery program provides high quality of care. St. Joseph's Founded by the Franciscan Sisters of Allegheny, New York, St. Joseph's is an acute care hospital located on Martin Luther King Boulevard in an "inner city kind of area" (Tr. 1586) of the City of Tampa near the geographic center of Hillsborough County. On the hospital campus sit three separate buildings: the main hospital, consisting of 559 beds; across the street, St. Joseph's Women's Hospital, a 197-bed facility dedicated to the care of women; and, opened in 1998, Tampa Children's Hospital, a 120-bed free-standing facility that offers pediatric services and Level II and Level III neonatal intensive care services. In addition to the women's and pediatric facilities, and consistent with the full-service nature of the hospital, St. Joseph's provides behavioral health and oncology services, and most pertinent to this proceeding, open heart surgery and related cardiovascular services. Designated as a Level 2 trauma center, St. Joseph's has a large and active emergency department. There were 90,211 visits to the Emergency Room in 1999, alone. Of the patients admitted annually, fifty-five percent are admitted through the Emergency Room. The formal mission of St. Joseph's organization is to take care of and improve the health of the community it serves. Another aspect of the mission passed down from its religious founders is to take care of the "marginalized, . . . the people that in many senses cannot take care of themselves, [those to whom] society has . . . closed [its] eyes . . .". (Tr. 1584). In keeping with its mission, it is St. Joseph's policy to provide care to anyone who seeks its hospital services without regard to ability to pay. In 1999, the hospital provided $33 million in charity care, as that term is defined by AHCA. In total, St. Joseph's provided $121 million in unfunded care during the same year. Not surprisingly, St. Joseph's is also a disproportionate Medicaid provider. The only hospital in the district that provides both adult and pediatric open heart surgery services, St. Joseph's has three dedicated OHS surgical suites, a 14-bed unit dedicated to cardiovascular intensive care for its adult OHS patients, a 12-bed coronary care unit and 86 progressive care beds, all with telemetry capability. St. Joseph's provides high quality of care in its OHS. UCH University Community Hospital, Inc., is a private, not-for-profit corporation. It operates two hospital facilities: the main hospital ("UCH") a 431-bed hospital on Fletcher Avenue in north Tampa, and a second 120-bed hospital in Carrollwood. UCH is accredited by the JCAHO "with commendation," the highest rating available. It provides patient care regardless of ability to pay. UCH's cardiac surgery program is called the "Pepin Heart & Vascular Institute," after Art Pepin, "a 14-year heart transplant recipient [and] . . . the oldest heart transplant recipient in the nation alive today." (Tr. 2841). A Temple Terrace resident, Mr. Pepin also helped to fund the start of the institute. Its service area for tertiary services, including OHS, includes all of Hillsborough County, and extends into south Pasco County and Polk County. The Pepin Institute has excellent facilities and equipment. It has three dedicated OHS operating suites, three fully-equipped "state-of-the-art" cardiac catheterization laboratories equipped with special PTCA or angioplasty devices, and several cardiology care units specifically for OHS/PTCA services. Immediately following surgery, OHS patients go to a dedicated 8-bed cardiovascular intensive care unit. From there patients proceed to a dedicated 20-bed progressive care unit ("PCU"), comprised of all private rooms. There is also a 24-bed PCU dedicated to PTCA patients. There is another 22-bed interventional unit that serves as an overflow unit for patients receiving PTCA or cardiac catheterization. UCH has a 22-bed medical cardiology unit for chest pain observation, congestive heart failure, and other cardiac disorders. Staffing these units requires about 110 experienced, full-time employees. UCH has a special "chest pain" Emergency Room with specially-trained cardiac nurses and defined protocols for the treatment of chest pain and heart attacks. UCH offers a free van service for its UCH patients and their families that operates around the clock. As in the case of the other two existing providers of OHS services in Hillsborough Counties, UCH provides a full range of cardiovascular services at high quality. Manatee County The two existing providers of adult open heart surgery services in Manatee County are Manatee Memorial Hospital, Inc., and Blake Medical Center, Inc. Neither are parties in this proceeding. Although Manatee Memorial filed a petition for formal administrative hearing seeking to overturn the preliminary decision of the Agency, the petition was withdrawn before the case reached hearing. Polk County The existing provider of adult open heart surgery services in Polk County is Lakeland Regional Medical Center, Inc. ("Lakeland"). Licensed for 851 beds, Lakeland is a large, not-for- profit, tertiary regional hospital. In 1999, Lakeland admitted approximately 30,000 patients. In fiscal 1999, there were about 105,000 visits to Lakeland's Emergency Room. Lakeland provides a wide range of acute care services, including OHS and diagnostic and therapeutic cardiac catheterization. It draws its OHS patients from the Lakeland urban area, the rest of Polk County, eastern Hillsborough County (particularly from Plant City), and some of the surrounding counties. Lakeland has a high quality OHS program that provides high quality of care to its patients. It has two dedicated OHS surgical suites and a third surgical suite equipped and ready for OHS procedures on an as-needed basis. Its volume for the last few years has been relatively flat. Lakeland offers interventional radiology services, a trauma center, a high-risk obstetrics service, oncology, neonatal intensive care, pediatric intensive care, radiation therapy, alcohol and chemical dependency, and behavioral sciences services. Lakeland treats all patients without regard to their ability to pay, and provides a substantial amount of charity care, amounting in fiscal year 1999 to $20 million. The Applicant Brandon Regional Hospital ("Brandon") is a 255-bed hospital located in Brandon, Florida, an unincorporated area of Hillsborough County east of Interstate 75. Included among Brandon's 255 beds are 218 acute care beds, 15 hospital-based skilled nursing unit beds, 14 tertiary Level II neonatal intensive care unit ("NICU") beds, and 8 tertiary Level III NICU beds. Brandon offers a wide array of medical specialties and services to its patients including cardiology; internal medicine; critical care medicine; family practice; nephrology; pulmonary medicine; oncology/hematology; infectious disease; neurology; psychiatry; endocrinology; gastroenterology; physical medicine; rehabilitation; radiation oncology; pathology; respiratory therapy; and anesthesiology. Brandon operates a mature cardiology program which includes inpatient diagnostic cardiac catheterization, outpatient diagnostic cardiac catheterization, electrocardiography, stress testing, and echocardiography. The Brandon medical staff includes 22 Board-certified cardiologists who practice both interventional and invasive cardiology. Board certification is a prerequisite to maintaining cardiology staff privileges at Brandon. Brandon's inpatient diagnostic cardiac catheterization program was initiated in 1989 and has performed in excess of 800 inpatient diagnostic cardiac catheterization procedures per year since 1996. Brandon's daily census has increased from 159 to 187 for the period 1997 to 1999 commensurate with the burgeoning population growth in Brandon's primary service area. Brandon's Emergency Room is the third busiest in Hillsborough County and has more visits than Tampa General's Emergency Room. From 1997- 1999, Brandon's Emergency Room visits increased from 43,000 to 53,000 per year and at the time of hearing were expected to increase an additional 5-6 percent during the year 2000. Brandon has also recently expanded many services to accommodate the growing health care needs of the Brandon community. For example, Brandon doubled the square footage of its Emergency Room and added 17 treatment rooms. It has also implemented an outpatient diagnostic and rehabilitation center, increased the number of labor, delivery and recovery suites, and created a high-risk ante-partum observation unit. Brandon was recently approved for 5 additional tertiary Level II NICU beds and 3 additional tertiary Level III NICU beds which increased Brandon's Level II/III NICU bed complement to 22 beds. Brandon is a Level 5 hospital within HCA's internal ranking system, which is the company's highest facility level in terms of service, revenue, and patient service area population. Brandon has been ranked as one of the Nation's top 100 hospitals by HCIA/Mercer, Inc., based on Brandon's clinical and financial performance. The Proposal On September 15, 1999, Brandon submitted to AHCA CON Application 9239, its third application for an open heart surgery program in the past few years. (CON 9085 and 9169, the two earlier applications, were both denied.) The second of the three, CON 9169, sought approval on the basis of the same two "not normal" circumstances alleged by Brandon to justify approval in this proceeding. CON 9239 addresses the Agency's January 2002 planning horizon. Brandon proposes to construct two dedicated cardiovascular operating rooms ("CV-OR"), a six-bed dedicated cardiovascular intensive care unit ("CVICU"), a pump room and sterile prep room all located in close proximity on Brandon's first floor. The costs, methods of construction, and design of Brandon's proposed CV-OR, CVICU, pump room, and sterile prep room are reasonable. As a condition of CON approval, Brandon will contribute $100,000 per year for five years to the Hillsborough County Health Care Program for use in providing health care to the homeless, indigent, and other needy residents of Hillsborough County. The administration at Brandon is committed to establishing an adult open heart surgery program. The proposal is supported by the medical and nursing staff. It is also supported by the Brandon community. The Brandon Community in East Hillsborough County Brandon, Florida, is a large unincorporated community in Hillsborough County, east of Interstate 75. The Brandon area is one of the fastest growing in the state. In the last ten years alone, the area's population has increased from approximately 90,000 to 160,000. An incorporated Brandon municipality (depending on the boundaries of the incorporation) has the potential to be the eighth largest city in Florida. The Brandon community's population is projected to further increase by at least 50,000 over the next five to ten years. Brandon Regional Hospital's primary service area not only encompasses the Brandon community, but further extends throughout Hillsborough County to a populous of nearly 285,000 persons. The population of Brandon's primary service area is projected to increase to 309,000 by the year 2004, of which approximately 32,000 are anticipated to be over the age of 65, making Brandon's population "young" relative to much of the rest of the State. The community of Brandon has attracted several new large housing developments which are likely to accelerate its projected growth. According to the Hillsborough County City- County Planning Commission, six of the eleven largest subdivisions of single-family homes permitted in 1998 are located nearby. For example, the infrastructure is in place for an 8,000-acre housing development east of Brandon which consists of 7,500 homes and is projected to bring in 30,000 people over the next 5-10 years. Two other large housing developments will bring an additional 5,000-10,000 persons to the Brandon area. The community of Brandon is also an attractive area for relocating businesses. Recent additions to the Brandon area include, among others, CitiGroup Corporation, Atlantic Lucent Technologies, Household Finance, Ford Motor Credit, and Progressive Insurance. CitiGroup Corporation alone supplemented the area's population with approximately 5,000 persons. The community of Brandon has experienced growth in the development of health care facilities with 5 new assisted living facilities and one additional assisted living facility under construction. The average age of the residents of these facilities is much higher than of the Brandon area as a whole. Existing Providers' Distance from Brandon's PSA Brandon's primary service area ("PSA") is comprised of 12 zip code areas "in and around Brandon, essentially eastern Hillsborough County." (Tr. 1071). Using the center of each zip code in Brandon's primary service area as the location for each resident of the zip code area, the residents of Brandon's PSA are an average of 15 miles from Tampa General, 16.4 miles from St. Joseph's, 17.3 miles from UCH and 24.6 miles from Lakeland Regional Medical Center. In contrast, they are only 7.7 miles from Brandon Regional Hospital. Using the same methodology, the residents of Brandon's PSA are an average of more than 40 miles from Blake Medical Center (44.9 miles) and Manatee Memorial (41 miles). Numeric Need Publication Rule 59C-1.033, Florida Administrative Code (the "Open Heart Surgery Program Rule" or the "Rule") specifies a methodology for determining numeric need for new open heart surgery programs in health planning districts. The methodology is set forth in section (7) of the Rule. Part of the methodology is a formula. See subsection (b) of Section (7) of the Rule. Using the formula, the Agency calculated numeric need in the District for the January 2002 Planning Horizon. The calculation yielded a result of 3.27 additional programs needed to serve the District by January 1, 2002. But calculation of numeric need under the formula is not all that is entailed in the complete methodology for determining numeric need. Numeric need is also determined by taking other factors into consideration. The Agency is to determine net need based on the formula "[p]rovided that the provisions of paragraphs (7)(a) and (7) (c) do not apply." Rule 59C-1.033(b), Florida Administrative Code. Paragraph (7)(a) states, "[a] new adult open heart surgery program shall not normally be approved in the district" if the following condition (among others) exists: 2. One or more of the operational adult open heart surgery programs in the district that were operational for at least 12 months as of 3 months prior to the beginning date of the quarter of the publication of the fixed need pool performed less than 350 adult open heart surgery operations during the 12 months ending 3 months prior to the beginning date of the quarter of the publication of the fixed need pool; . . . Rule 59C-1.033(7)(a), Florida Administrative Code. Both Blake Medical Center and Manatee Memorial Hospital in Manatee County were operational and performed less that 350 adult open heart surgery operations in the qualifying time periods described by subparagraph (7)(a)2., of the Rule. (Blake reported 221 open heart admissions for the 12-month period ending March 31, 1999; Manatee Memorial for the same period reported 319). Because of the sub-350 volume of the two providers, the Rule's methodology yielded a numeric need of "0" new open heart surgery programs in District 6 for the January 2002 Planning Horizon. In other words, the numeric need of 3.27 determined by calculation pursuant to the formula prior to consideration of the programs described in (7)(a)2.1, was "zeroed out" by operation of the Rule. Accordingly, a numeric need of zero for the district in the applicable planning horizon was published on behalf of the Agency in the January 29, 1999, issue of the Florida Administrative Weekly. No Impact on Manatee County Providers In 1998, only one resident of Brandon's PSA received an open heart surgery procedure in Manatee County. For the same period only two residents from Brandon's PSA received an angioplasty procedure in Manatee County. These three residents received the services at Manatee Memorial. Of the two Manatee County programs, Manatee Memorial consistently has a higher volume of open heart surgery cases and according to the latest data available at the time of hearing has "hit the mark" (Tr. 1546) of 350 procedures annually. Very few residents from other District 6 counties receive cardiac services in Manatee County. Similarly, very few Manatee county residents migrate from Manatee County to another District 6 hospital to receive cardiac services. In 1998, only 19 of a total 1,209 combined open heart and angioplasty procedures performed at either Blake or Manatee Memorial originated in the other District 6 counties and only two were from the Brandon area. Among the 6,739 Manatee County residents discharged from a Florida hospital in calendar year 1998 following any cardiovascular procedure (MDC-5), only 58(0.9 percent) utilized one of the other providers in District 6, and none were discharged from Brandon. Among the 643 open heart surgeries performed on Manatee County residents in 1998, only 17 cases were seen at one of the District 6 open heart programs outside of Manatee County. There is, therefore, practically no patient exchange between Manatee County and the remainder of the District. In sum, there is virtually no cardiac patient overlap between Manatee County and Brandon's primary service area. The development of an open heart surgery program at Brandon will have no appreciable or meaningful impact on the Manatee County providers. CON 9169 In CON 9169, Brandon applied for an open heart surgery program on the basis of special circumstances due to no impact on low volume providers in Manatee County. The application was denied by AHCA. The State Agency Action Report ("SAAR") on CON 9169, dated June 17, 1999, in a section of the SAAR denominated "Special Circumstances," found the application to demonstrate "that a program at Brandon would not impact the two Manatee hospitals . . .". (UCH Ex. No. 6, p. 5). The "Special Circumstances" section of the SAAR on CON 9169, however, does not conclude that the lack of impact constitutes special circumstances. In follow-up to the finding of the application's demonstration of no impact to the Manatee County, the SAAR turned to impact on the non-Manatee County providers in District The SAAR on CON 9169 states, "it is apparent that a new program in Brandon would impact existing providers [those in Hillsborough and Polk Counties] in the absence of significant open heart surgery growth." Id. In reference to Brandon's argument in support of special circumstances based on the lack of impact to the Manatee County providers, the CON 9169 SAAR states: [T]he applicant notes the open heart need formula should be applied to District 6 excluding Manatee County, which would result in the need for several programs. This argument ignores the provision of the rule that specifies that the need cannot exceed one. (UCH No. 6, p. 7). The Special Circumstances Section of the SAAR on CON 9169 does not deal directly with whether lack of impact to the Manatee County providers is a special circumstance justifying one additional program. Instead, the Agency disposes of Brandon's argument in the "Summary" section of the SAAR. There AHCA found Brandon's special circumstances argument to fail because "no impact on low volume providers" is not among those special circumstances traditionally or previously recognized in case law and by the Agency: To demonstrate need under special circumstances, the applicant should demonstrate one or more of the following reasons: access problems to open heart surgery; capacity limits of existing providers; denial of access based on payment source or lack thereof; patients are seeking care outside the district for service; improvement of care to underserved population groups; and/or cost savings to the consumer. The applicant did not provide any documentation in support of these reasons. (UCH No. 6, p. 29). Following reference to the Agency's publication of zero need in District 6, moreover, the SAAR reiterated that [t]he implementation of another program in Hillsborough County is expected to significantly [a]ffect existing programs, in particular Tampa General Hospital, an important indigent care provider. (Id.) Typical "not normal circumstances" that support approval of a new program were described at hearing by one health planner as consisting of a significant "gap" in the current health care delivery system of that service. Typical Not Normal Circumstances Just as in CON 9169, none of the typical "not normal" circumstances" recognized in case law and with which the Agency has previous experience are present in this case. The six existing OHS programs in District 6 have unused capacity, are available, and are adequate to meet the projected OHS demand in District 6, in Hillsborough County ("County"), and in Brandon's proposed primary service area ("PSA"). All three County OHS providers are less than 17 miles from Brandon. There are, therefore, no major service geographic gaps in the availability of OHS services. Existing providers in District 6 have unused capacity to meet OHS projected demand in January 2002. OHS volume for District 6 will increase by only 179 surgeries. This is modest growth, and can easily be absorbed by the existing providers. In fact, existing OHS providers have previously handled more volume than what is projected for 2002. In 1995, 3,313 OHS procedures were generated at the six OHS programs. Yet, only 3,245 procedures are projected for 2002. The demand in 1995 was greater than what is projected for 2002. Neither population growth nor demographic characteristics of Brandon's PSA demonstrate that existing programs cannot meet demand. The greatest users of OHS services are the elderly. In 1999, the percentage in District 6 was similar to the Florida average; 18.25 percent for District 6, 18.38 percent for the state. The elderly percentage in Hillsborough County was less: 13.21 percent. The elderly component in Brandon's PSA was less still: 10.44 percent. In 2004, about 18.5 percent of Florida and District 6 residents are projected to be elderly. In contrast, only 10.5 percent of PSA residents are expected to be elderly. Brandon's PSA is "one of the younger defined population segments that you could find in the State of Florida" (Tr. 2892) and likely to remain so. Brandon's PSA will experience limited growth in OHS volume. Between 1999 - 2002, OHS volume will grow by only 36. The annual growth thereafter is only 13 surgeries. This is "very modest" growth and is among the "lowest numbers" of incremental growth in the State. Existing OHS providers can easily absorb this minimal growth. Brandon's PSA, is not an underserved area . . . there is excellent access to existing providers and . . . the market in this service area is already quite competitive. There is not a single competitor that dominates. In fact, the four existing providers [in Hillsborough and Polk Counties] compete quite vigorously. (Tr. 2897). Existing OHS programs in District 6 provide very good quality of care. The surgeons at the programs are excellent. Dr. Gandhi, testifying in support of Brandon's application, testified that he was very comfortable in referring his patients for OHS services to St. Joseph and Tampa General, having, in fact, been comfortable with his father having had OHS at Tampa General. Likewise, Dr. Vijay and his group, also supporters of the Brandon application, split time between Bayonet Point and Tampa General. Dr. Vijay is very proud to be associated with the OHS program at Tampa General. Lakeland also operates a high quality OHS program. In its application, Brandon did not challenge the quality of care at the existing OHS programs in District 6. Nor did Brandon at hearing advance as reasons for supporting its application, capacity constraints, inability of existing providers to absorb incremental growth in OHS volume or failure of existing providers to meet the needs of the residents of Brandon's primary service area. The Agency, in its preliminary decision on the application, agreed that typical "not normal" circumstances in this case are not present. Included among these circumstances are those related to lack of "geographic access." The Agency's OHS Rule includes a geographic access standard of two hours. It is undisputed that all District 6 residents have access to OHS services at multiple OHS providers in the District and outside the District within two hours. The travel time from Brandon to UCH or Tampa General, moreover, is usually less than 30 minutes anytime during the day, including peak travel time. Travel time from Brandon to St. Joseph's is about 30 minutes. There are times, however, when travel time exceeds 30 minutes. There have been incidents when traffic congestion has prevented emergency transport of Brandon patients suffering myocardial infarcts from reaching nearby open heart surgery providers within the 30 minutes by ground ambulance. Delays in travel are not a problem in most OHS cases. In the great majority, procedures are elective and scheduled in advance. OHS procedures are routinely scheduled days, if not weeks, after determining that the procedure is necessary. This high percentage of elective procedures is attributed to better management of patients, better technology, and improved stabilizing medications. The advent of drugs such as thrombolytic therapy, calcium channel blockers, beta blockers, and anti-platelet medications have vastly improved stabilization of patients who present at Emergency Rooms with myocardial infarctions. In its application, Brandon did not raise outmigration as a not-normal circumstance to support its proposal and with good reason. Hillsborough County residents generally do not leave District 6 for OHS. In fact, over 96 percent of County residents receive OHS services at a District 6 provider. Lack of out-migration shows two significant facts: (a) existing OHS programs are perceived to be reasonably accessible; and (2) County residents are satisfied with the quality of OHS services they receive in the County. This 96 percent retention rate is even more impressive considering there are many OHS programs and options available to County residents within a two-hour travel time. In contrast, there are two low-volume OHS providers in Manatee County, one of them being Blake. Unlike Hillsborough County residents, only 78 percent of Manatee County residents remain in District 6 for OHS services. Such outmigration shows that these residents prefer to bypass closer programs, and travel further distances, to receive OHS services at high-volume facility in District 8, which they regard as offering a higher quality of service. In its Application, Brandon does not raise economic access as a "not normal" circumstance. In fact, Brandon concedes that the demand for OHS services by Medicaid and indigent patients is very limited because Brandon's PSA is an affluent area. Brandon does not "condition" its application on serving a specific number or percentage of Medicaid or indigent patients. There are no financial barriers to accessing OHS services in District 6. All OHS providers in Hillsborough County and LRMC provide services to Medicaid and indigent patients, as needed. Approving Brandon is not needed to improve service or care to Medicaid or indigent patient populations. Tampa General is the "safety net" provider for health care services to all County residents. Tampa General is an OHS provider geographically accessible to Brandon's PSA. Tampa General actively services the PSA now for OHS. Brandon did not demonstrate cost savings to the patient population of its PSA if it were approved. Approving Brandon is not needed to improve cost savings to the patient population. Brandon based its OHS and PTCA charges on the average charge for PSA residents who are serviced at the existing OHS providers. While that approach is acceptable, Brandon does not propose a charge structure which is uniquely advantageous for patients. Restated, patients would not financially benefit if Brandon were approved. Tertiary Service Open Heart Surgery is defined as a tertiary service by rule. A "tertiary health service" is defined in Section 408.032(17), Florida Statutes, as follows: health service, which, due to its high level of intensity, complexity, specialized or limited applicability, and cost, should be limited to, and concentrated in, a limited number of hospitals to ensure the quality, availability, and cost- effectiveness of such service. As a tertiary service, OHS is necessarily a referral service. Most hospitals, lacking OHS capability, transfer their patients to providers of the service. One might expect providers of open heart surgery in Florida in light of OHS' status as a tertiary service to be limited to regional centers of excellence. The reality of the six hospitals that provide open heart surgery services in District 6 defies this health-planning expectation. While each of the six provides OHS services of high quality, they are not "regional" centers since all are in the same health planning district. Rather than each being a regional center, the six together comprise more localized providers that are dispersed throughout a region, quite the opposite of a center for an entire region. Brandon's Allegations of Special Circumstances. Brandon presents two special circumstances for approval of its application. The first is that consideration of the low-volume Manatee County providers should not operate to "zero out" the numeric need calculated by the formula. The second relates to transfers and occasional problems with transfers for Brandon patients in need of emergency open heart services. "Time is Muscle" Lack of blood flow to the heart during a myocardial infarction ("MI") results in loss of myocardium (heart muscle). The longer the blood flow is disrupted or diminished, the more myocardium is lost. The more myocardium lost, the more likely the patient will die or, should the patient survive, suffer severe reduction in quality of life. The key to good patient outcome when a patient is experiencing an acute MI is prompt evaluation and rapid treatment upon presentation at the hospital. Restoration of blood flow to the heart (revascularization) is the goal of the treating physician once it is recognized that a patient is suffering an MI. If revascularization is not commenced within 2 hours of the onset of an acute MI, an MI patient's potential for recovery is greatly diminished. The need for prompt revascularization for a patient suffering an MI is summed up in the phrase "time is muscle," a phrase accepted as a maxim by cardiologists and cardiothoracic surgeons. Recent advances in modern medicine and technology have improved the ability to stabilize and treat patients with acute MIs and other cardiac traumas. The three primary treatment modalities available to a patient suffering from an MI are: 1) thrombolytics; 2) angioplasty and stent placement; and, 3) open heart surgery. Because of the advancement of the effectiveness of thrombolytics, thrombolytic therapy has become the standard of care for treating MIs. Thrombolytic therapy is the administration of medication to dissolve blood clots. Administered intravenously, thrombolytic medication begins working within minutes to dissolve the clot causing the acute MI and therefore halt the damage done by an MI to myocardium. The protocols to administer thrombolysis are similar among hospitals. If a patient presents with chest pain and the E.R. physician identifies evidence of an active heart attack, thrombolysis is normally administered. If the E.R. physician is uncertain, a cardiologist is quickly contacted to evaluate the patient. Achieving good outcomes in cases of myocardial infarctions requires prompt consultation with the patient, competent clinical assessment, and quick administration of appropriate treatment. The ability to timely evaluate patient conditions for MI, and timely administer thrombolytic therapy, is measured and evaluated nationally by the National Registry of Myocardial Infarction. The National Registry makes the measurement according to a standard known as "door-to-needle" time. This standard measures the time between the patient's presentation at the E.R. and the time the patient is initially administered thrombolytic medication by injection intravenously. Patients often begin to respond to thrombolysis within 10-15 minutes. Consistent with the maxim, "time is muscle," the shorter the door-to-needle time, the better the chance of the patient's successful recovery. The effectiveness of thrombolysis continues to increase. For example, the advent of a drug called Reapro blocks platelet activity, and has increased the efficacy rate of thrombolysis to at least 85 percent. As one would expect, then, thrombolytic therapy is the primary method of revascularization available to patients at Brandon. Due to the lack of open heart surgery backup, moreover, Brandon is precluded by Agency rule from offering angioplasty in all but the most extreme cases: those in which it is determined that a patient will not survive a transfer. While Brandon has protocols, authority, and equipment to perform angioplasty when a patient is not expected to survive a transfer, physicians are reluctant to perform angioplasty without open heart backup because of complications that can develop that require open heart surgery. Angioplasty, therefore, is not usually a treatment modality available to the MI patient at Brandon. Although the care of choice for MI treatment, thrombolytics are not always effective. To the knowledge of the cardiologists who testified in this proceeding, there is not published data on the percentage of patients for whom thrombolytics are not effective. But from the cardiologists who offered their opinions on the percentage in the proceeding, it can be safely found that the percentage is at least 10 percent. Thrombolytics are not ordered for these patients because they are inappropriate in the patients' individual cases. Among the contraindications for thrombolytics are bleeding disorders, recent surgery, high blood pressure, and gastrointestinal bleeding. Of the patients ineligible for thrombolytics, a subset, approximately half, are also ineligible for angioplasty. The other half are eligible for angioplasty. Under the most conservative projections, then at least 1 in 20 patients suffering an MI would benefit from timely angioplasty intervention for which open heart surgery back-up is required in all but the rarest of cases. In 1997, 351 people presented to Brandon's Emergency Room suffering from an acute MI. In 1998, the number of MIs increased to 427. In 1999, 428 patients presented to Brandon's Emergency Room suffering from an acute MI. At least 120 (10 percent) of the total 1206 MI patients presenting to Brandon's Emergency Room from 1997 to 1999 would have been ineligible for thrombolytics as a means of revascularization. Of these, half would have been ineligible for angioplasty while the other half would have been eligible. Sixty, therefore, is the minimum number of patients from 1997 to 1999 who would have benefited from angioplasty at Brandon using the most conservative estimate. Transfers of Emergency Patients Those patients who presented at Brandon's Emergency Room with acute MI and who could not be stabilized with thrombolytic therapy had to be transferred to one of the nearby providers of open heart surgery. In 1998, Brandon transferred an additional 190 patients who did not receive a diagnostic catheterization procedure at Brandon for either angioplasty or open heart surgery. For the first 9 months of 1999, 114 such transfers were made. Thus, in 1998 alone, Brandon transferred a total of 516 cardiac patients to existing providers for the provision of angioplasty or open heart surgery, more than any other provider in the District. In 1999, Brandon made 497 such transfers. Not all of these were emergency transfers, of course. But in the three years between 1997 and 1999 at least 60 patients were in need of emergency transfers who would benefit from angioplasty with open heart backup. Of those Brandon patients determined to be in need of urgent angioplasty or open heart surgery, all must be transferred to existing providers either by ambulance or by helicopter. Ambulance transfer is accomplished through ambulances maintained by the Hillsborough County Fire Department. Due to the cardiac patient's acuity level, ambulance transfer of such patients necessitates the use of ambulances equipped with Advanced Life Support Systems (ALS) in order to monitor the patient's heart functions and to treat the patient should the patient's condition deteriorate. Hillsborough County operates 18 ambulances. All have ALS capability. Patients with less serious medical problems are sometimes transported by private ambulances equipped with Basic Life Support Systems (BLS) that lack the equipment to appropriately care for the cardiac patient. But, private ambulances are not an option to transport critically ill cardiac patients because they are only equipped with BLS capability. Private ambulances, moreover, do not make interfacility transports of cardiac patients between Hillsborough County hospitals. There are many demands on the ambulance transfer system in Hillsborough County. Hillsborough County's 18 ALS ambulances cover in excess of 960 square miles. Of these 18 ambulances, only three routinely operate within the Brandon area. Hillsborough County ambulances respond to 911 calls before requests for interfacility transfers of cardiac patients and are extremely busy responding to automobile accidents, especially when it rains. As a result, Hillsborough County ambulances are not always available on a timely basis when needed to perform an interfacility transfer of a cardiac patient. At times, due to inordinate delay caused by traffic congestion, inter-facility ambulance transport, even if the ambulance is appropriately equipped, is not an option for cardiac patients urgently in need of angioplasty or open heart surgery. It has happened, for example, that an ambulance has appeared at the hospital 8 hours after a request for transport. Some cardiac surgeons will not utilize ground transport as a means of transporting urgent open heart and angioplasty cases. Expeditious helicopter transport in Hillsborough County is available as an alternative to ground transport. But, it too, from time-to-time, is problematic for patients in urgent need of angioplasty or open heart surgery. Tampa General operates two helicopters through AeroMed, only one of which is located in Hillsborough County. AeroMed's two helicopters are not exclusively devoted to cardiac patients. They are also utilized for the transfer of emergency medical and trauma patients, further taxing the availability of AeroMed helicopters to transfer patients in need of immediate open heart surgery or angioplasty. BayCare operates the only other helicopter transport service serving Hillsborough County. BayCare maintains several helicopters, only one of which is located in Hillsborough County at St. Joseph's. BayCare helicopters are not equipped with intra-aortic balloon pump capability, thereby limiting their use in transporting the more complicated cardiac patients. Helicopter transport is not only a traumatic experience for the patient, but time consuming. Once a request has been made by Brandon to transport a patient in need of urgent intervention, it routinely takes two and a half hours, with instances of up to four hours, to effectuate a helicopter transfer. At the patient's beside, AeroMed personnel must remove the patient's existing monitors, IVS, and drips, and refit the patient with AeroMed's equipment in preparation for flight. In more complicated cases requiring the use of an intra-aortic balloon pump, the patient's balloon pump placed at Brandon must be removed and substituted with the balloon pump utilized by AeroMed. Further delays may be experienced at the receiving facility. The national average of the time from presentation to commencement of the procedure is reported to be two hours. In most instances at UCH, it is probably 90 minutes although "[t]here are of course instances where it would be much faster . . .". (Tr. 3212). On the other hand, there are additional delays from time-to-time. "[P]erhaps the longest circumstance would be when all the labs are full . . . or . . . even worse . . . if all the staff has just left for the day and they are almost home, to then turn them around and bring them all back." (Id.) Specific Cases Involving Transfers Delays in the transfer process were detailed at hearing by Brandon cardiologists with regard to specific Brandon patients. In cases in which "time is muscle," delay is critical except for one subset of such cases: that in which, no matter what procedure is available and no matter how timely that procedure can be provided, the patient cannot be saved. Craig Randall Martin, M.D., Board-certified in Internal Medicine and Cardiovascular Disease, and an expert in cardiology, wrote to AHCA in support of the application by detailing two "examples of patients who were in an extreme situation that required emergent, immediate intervention . . . [intervention that could not be provided] at Brandon Hospital." (Tr. 408). One of these concerned a man in his early sixties who was a patient at Brandon the night and morning of October 13 and 14, 1998. It represents one of the rare cases in which an emergency angioplasty was performed at Brandon even though the hospital does not have open heart backup. The patient had presented to the Emergency Room at approximately 11:00 p.m., on October 13 with complaints of chest pain. Although the patient had a history of prior infarctions, PTCA procedures, and onset diabetes, was obese, a smoker and had suffered a stroke, initial evaluation, including EKG and blood tests, did not reveal an MI. The patient was observed and treated for what was probably angina. With the subsiding of the chest pain, he was appropriately admitted at 2:30 a.m. to a non- intensive cardiac telemetry bed in the hospital. At 3:00 a.m., he was observed to be stable. A few hours or so later, the patient developed severe chest pain. The telemetry unit indicated a very slow heart rate. Transferred to the intensive care unit, his blood pressure was observed to be very low. Aware of the seriousness of the patient's condition, hospital personnel called Dr. Martin. Dr. Martin arrived on the scene and determined the patient to be in cardiogenic shock, an extreme situation. In such a state, a patient has a survival rate of 15 to 20 percent, unless revascularization occurs promptly. If revascularization is timely, the survival rate doubles to 40 percent. Coincident with the cardiogenic shock, the patient was suffering a complete heart block with a number of blood clots in the right coronary artery. The patient's condition, to say the least, was grave. Dr. Martin described the action taken at Brandon: . . . I immediately called in the cardiac catheterization team and moved the patient to the catheterization laboratory. * * * Somewhere around 7:30 in the morning, I put a temporary pacemaker in, performed a diagnostic catheterization that showed that one of his arteries was completely clotted. He, even with the pacemaker giving him an adequate heart rate, and even with the use of intravenous medication for his blood pressure, . . . was still in cardiogenic shock. * * * And I placed an intra-aortic balloon pump . . ., a special pump that fits in the aorta and pumps in synchrony with the heart and supports the blood pressure and circulation of the muscle. That still did not alleviate the situation . . . an excellent indication to do a salvage angioplasty on this patient. I performed the angioplasty. It was not completely successful. The patient had a respiratory arrest. He required intubation, required to be put on a ventilator for support. And it became apparent to me that I did not have the means to save this patient at [Brandon]. I put a call to the . . . cardiac surgeon of choice . . . . [Because the surgeon was on vacation], [h]is associate [who happened to be in the operating room at UCH] called me back immediately . . . and said ["]Yes, I'll take your patient. Send him to me immediately, I will postpone my current case in order to take care of your patient.["] At that point, we called for helicopter transport, and there were great delays in obtaining [the] transport. The patient was finally transferred to University Community Hospital, had surgery, was unsuccessful and died later that afternoon. (Tr. 409-412). By great delays in the transport, Dr. Martin referred to inability to obtain prompt helicopter transport. University Community Hospital, the receiving hospital, was not able to find a helicopter. Dr. Martin, therefore, requested Tampa General (a third hospital uninvolved from the point of being either the transferring or the receiving hospital) to send one of its two helicopters to transfer the patient from Brandon to UCH. Dr. Martin described Tampa General's response: They balked. And I did not know they balked until an hour later. And I promptly called them back, got that person on the telephone, we had a heated discussion. And after that person checked with their supervisor, the helicopter was finally sent. There was at least an hour-and-a-half delay in obtaining a helicopter transport on this patient that particular morning that was unnecessary. And that is critical when you have a patient in this condition. (Tr. 413, emphasis supplied.) In the case of this patient, however, the delay in the transport from Brandon to the UCH cardiovascular surgery table, in all likelihood, was not critical to outcome. During the emergency angioplasty procedure at Brandon, some of the clot causing the infarction was dislodged. It moved so as to create a "no-flow state down the right coronary artery. In other words, . . ., it cut off[] the microcirculation . . . [so that] there is no place for the blood . . . to get out of the artery. And that's a devastating, deadly problem." (Tr. 2721). This "embolization, an unfortunate happenstance [at times] with angioplasty", id., probably sealed the patient's fate, that is, death. It is very likely that the patient with or without surgery, timely or not, would not have survived cardiogenic shock, complete heart block, and the circumstance of no circulation in the right coronary artery that occurred during the angioplasty procedure. Adithy Kumar Gandhi, M.D., is Board-certified in Internal Medicine and Cardiology. Employed by the Brandon Cardiology Group, a three-member group in Brandon, Dr. Gandhi was accepted as an expert in the field of cardiology in this proceeding. Dr. Gandhi testified about two patients in whose cases delays occurred in transferring them to St. Joseph’s. He also testified about a third case in which it took two hours to transfer the patient by helicopter to Tampa General. The first case involves an elderly woman. She had multiple-risk factors for coronary disease including a family history of cardiac disease and a personal history of “chest pain.” (Tr. 2299). The patient presented at Brandon’s Emergency Room on March 17, 1999 at around 2:30 p.m. Seen by the E.R. physician about 30 minutes later, she was placed in a monitored telemetry bed. She was determined to be stable. During the next two days, despite family and personal history pointing to a potentially serious situation, the patient refused to submit to cardiac catheterization at Brandon as recommended by Dr. Gandhi. She maintained her refusal despite results from a stress test that showed abnormal left ventricular systolic function. Finally, on March 20, after a meeting with family members and Dr. Gandhi, the patient consented to the cath procedure. The procedure was scheduled for March 22. During the procedure, it was discovered that a major artery of the heart was 80 percent blocked. This condition is known as the “widow-maker,” because the prognosis for the patient is so poor. Dr. Gandhi determined that “the patient needed open heart surgery and . . . to be transferred immediately to a tertiary hospital.” (Tr. 2305-6). He described that action he took to obtain an immediate transfer as follows: I talked to the surgeon up at St. Joseph’s and I informed him I have had difficulties transferring patients to St. Joseph’s the same day. [I asked him to] do me a favor and transfer the patient out of Brandon Hospital as soon as possible by helicopter. The surgeon promised me that he would take care of that. (Tr. 2261). The assurance, however, failed. The patient was not transferred that day. That night, while still at Brandon, complications developed for the patient. The complications demanded that an intra-aortic balloon pump be inserted in order to increase the blood flow to the heart. After Dr. Gandhi’s partner inserted the pump, he, too, contacted the surgeon at St. Joseph’s to arrange an immediate transfer for open heart surgery. But the patient was not transferred until early the next morning. Dr. Gandhi’s frustration at the delay for this critically ill patient in need of immediate open heart surgery is evident from the following testimony: So the patient had approximately 18 hours of delay of getting to the hospital with bypass capabilities even though the surgeon knew that she had a widow-maker, he had promised me that he would make those transfer arrangements, even though St. Joseph’s Hospital knew that the patient needed to be transferred, even though I was promised that the patient would be at a tertiary hospital for bypass capabilities. (Tr. 2262). Rod Randall, M.D., is a cardiologist whose practice is primarily at St. Joseph’s. He had active privileges at Brandon until 1998 when he “switched to courtesy privileges,” (Tr. 1735) at Brandon. He reviewed the medical records of the first patient about whom Dr. Gandhi testified. A review of the patient’s medical records disclosed no adverse outcome due to the patient’s transfer. To the contrary, the patient was reasonably stable at the time of transfer. Nonetheless, it would have been in the patient’s best interest to have been transferred prior to the catheterization procedure at Brandon. As Dr. Randall explained, [W]e typically cath people that we feel are going to have a probability of coronary artery disease. That is, you don’t tend to cath someone that [for whom] you don’t expect to find disease . . . . If you are going to cath this patient, [who] is in a higher risk category being an elderly female with . . . diminished injection fraction . . . why put the patient through two procedures. I would have to do a diagnostic catheterization at one center and do some type of intervention at another center. So, I would opt to transfer that patient to a tertiary care center and do the diagnostic catheterization there. (Tr. 1764, 1765). Furthermore, regardless of what procedure had been performed, the significant left main blockage that existed prior to the patient’s presentation at Brandon E.R. meant that the likely outcome would be death. The second of the patients Dr. Gandhi transferred to St. Joseph’s was a 74-year-old woman. Dr. Gandhi performed “a heart catheterization at 5:00 on Friday.” (Tr. 2267). The cath revealed a 90 percent blockage of the major artery of the heart, another widow-maker. Again, Dr. Gandhi recommended bypass surgery and contacted a surgeon at St. Joseph’s. The transfer, however, was not immediate. “Finally, at approximately 11:00 the patient went to St. Joseph’s Hospital. That night she was operated on . . . ”. (Tr. 2267). If Brandon had had open heart surgery capability, “[t]hat would have increased her chances of survival.” No competent evidence was admitted that showed the outcome, however, and as Dr. Randall pointed out, the medical records of the patient do not reveal the outcome. The patient who was transferred to Tampa General (the third of Dr. Ghandhi's patients) had presented at Brandon’s ER on February 15, 2000. Fifty-six years old and a heavy smoker with a family history of heart disease, she complained of severe chest pain. She received thrombolysis and was stabilized. She had presented with a myocardial infarction but it was complicated by congestive heart failure. After waiting three days for the myocardial infarction to subside, Dr. Gandhi performed cardiac catheterization. The patient “was surviving on only one blood vessel in the heart, the other two vessels were 100 percent blocked. She arrested on the table.” (Tr. 2271). After Dr. Gandhi revived her, he made arrangements for her transfer by helicopter. The transfer was done by helicopter for two reasons: traffic problems and because she had an intra-aortic balloon pump and there are a limited number of ambulances with intra- aortic balloon pump maintenance capability. If Brandon had had the ability to conduct open heart surgery, the patient would have had a better likelihood of successful outcome: “the surgeon would have taken the patient straight to the operating room. That patient would not have had a second arrest as she did at Tampa General.” (Tr. 2273). Marc Bloom, M.D., is a cardiothoracic surgeon. He performs open-heart surgery at UCH, where he is the chief of cardiac surgery. He reviewed the records of this 54-year-old woman. The records reflect that, in fact, upon presentation at Brandon’s E.R., the patient’s heart failure was very serious: She had an echocardiogram done that . . . showed a 20 percent ejection fraction . . . I mean when you talk severe, this would be classified as a severe cardiac compromise with this 20 percent ejection fraction. (Tr. 2712). Once stabilized, the patient should have been transferred for cardiac catheterization to a hospital with open- heart surgery instead of having cardiac cath at Brandon. It is true that delay in the transfer once arrangements were made was a problem. The greater problem for the patient, however, was in her management at Brandon. It was very likely that open heart surgery would be required in her case. She should have been transferred prior to the catheterization as soon as became known the degree to which her heart was compromised, that is, once the results of the echocardiogram were known. Adam J. Cohen, M.D., is a cardiologist with Diagnostic Consultative Cardiology, a group located in Brandon that provides cardiology services in Hillsborough County. Dr. Cohen provided evidence of five patients who presented at Brandon and whose treatments were delayed because of the need for a transfer. The first of these patients was a 76-year old male who presented to Brandon’s ER on April 6, 1999. Dr. Cohen considered him to be suffering “a complicated myocardial infarction.” (Brandon Ex. 45, p. 43) Cardiac catheterization conducted by Dr. Cohen showed “severe multi-vessel coronary disease, cardiogenic shock, severely impaired [left ventricular] function for which an intra-aortic balloon pump was placed . . .”. (Id.) During the placement of the pump, the patient stopped breathing and lost pulse. He was intubated and stabilized. A helicopter transfer was requested. There was only one helicopter equipped to conduct the transfer. Unfortunately, “the same day . . . there was a mass casualty event within the City of Tampa when the Gannet Power Plant blew up . . .”. (Brandon Ex. 45, p. 44). An appropriate helicopter could not be secured. Dr. Cohen did not learn of the unavailability of helicopter transport for an hour after the request was made. Eventually, the patient was transferred by ambulance to UCH. There, he received angioplasty and “stenting of the right coronary artery times two.” (Id., at p. 47.) After a slow recovery, he was discharged on April 19. In light of the patient’s complex cardiac condition, he received a good outcome. This patient is an example of another patient who should have been transferred sooner from Brandon since Brandon does not have open heart surgery capability. The second of Dr. Cohen’s patients presented at Brandon’s E.R. at 10:30 p.m. on June 14, 1999. He was 64 years old with no risk factors for coronary disease other than high blood pressure. He was evaluated and diagnosed with “a large and acute myocardial infarction” Two hours later, the therapy was considered a failure because there was no evidence that the area of the heart that was blocked had been reperfused. Dr. Cohen recommended transfer to UCH for a salvage angioplasty. The call for a helicopter was made at 12:58 a.m. (early the morning of June 15) and the helicopter arrived 40 minutes later. At UCH, the patient received angioplasty procedure and stenting of two coronary arteries. He suffered “[m]oderately impaired heart function, which is reflective of myocardial damage.” (Brandon Ex. 45, p. 58). If salvage angioplasty with open heart backup had been available at Brandon, the patient would have received it much more quickly and timely. Whether the damage done to the patient’s heart during the episode could have been avoided by prompt angioplasty at Brandon is something Dr. Cohen did not know. As he put it, “I will never know, nor will anyone else know.” (Brandon Ex. 45, p. 60). The patient later developed cardiogenic shock and repeated ventricular tachycardia, requiring numerous medical interventions. Because of the interventions and mechanical trauma, he required surgery for repair of his right femoral artery. The patient recently showed an injection fraction of 45 percent below the minimum for normal of 50 percent. The third patient was a 51-year-old male who had undergone bypass surgery 19 years earlier. After persistent recurrent anginal symptoms with shortness of breath and diaphoresis, he presented at Brandon’s E.R. at 1:00 p.m. complaining of heavy chest pain. Thrombolytic therapy was commenced. Dr. Cohen described what followed: [H]he had an episode of heart block, ventricular fibrillation, losing consciousness, for which he received ACLS efforts, being defibrillated, shocked, times three, numerous medications, to convert him to sinus rhythm. He was placed on IV anti- arrhythmics consisting of amiodarone. The repeat EKG showed a worsening of progression of his EKG changes one hour after the initiation of the TPA. Based on that information, his clinical scenario and his previous history, I advised him to be transferred to University Hospital for a salvage angioplasty. (Brandon Ex. 45, p. 62). Transfer was requested at 1:55 p.m. The patient departed Brandon by helicopter at 2:20 p.m. The patient received the angioplasty at UCH. Asked how the patient would have benefited from angioplasty at Brandon without having to have been transferred, Dr. Cohen answered: In a more timely fashion, he would have received an angioplasty to the culprit lesion involved. There would have been much less occlusive time of that artery and thereby, by inference, there would have been greater salvage of myocardium that had been at risk. (Brandon Ex. 45, p. 65). The patient, having had bypass surgery in his early thirties, had a reduced life expectancy and impaired heart function before his presentation at Brandon in June of 1999. The time taken for the transfer of the patient to UCH was not inordinate. The transfer was accomplished with relative and expected dispatch. Nonetheless, the delay between realization at Brandon of the need for a salvage angioplasty and actual receipt of the procedure after a transfer to UCH increased the potential for lost myocardium. The lack of open heart services at Brandon resulted in reduced life expectancy for a patient whose life expectancy already had been diminished by the early onset of heart disease. The fourth patient of Dr. Cohen’s presented to Brandon’s E.R. at 8:30, the morning of August 29, 1999. A fifty-four-year-old male, he had been having chest pain for a month and had ignored it. An EKG showed a complete heart block with atrial fibrillation and change consistent with acute myocardial infarction. Thrombolytic therapy was administered. He continued to have symptoms including increased episodes of ventricular arrhythmias. He required dopamine for blood pressure support due to his clinical instability and the lack of effectiveness of the thrombolytics. The patient refused a transfer and catheterization at first. Ultimately, he was convinced to undergo an angioplasty. The patient was transferred by helicopter to UCH. The patient was having a “giant ventricular infarct . . . a very difficult situation to take care of . . . and the majority of [such] patients succumb to [the] disease . . .”. (Tr. 2703). The cardiologist was unable to open the blockage via angioplasty. Dr. Bloom was called in but the patient refused surgical intervention. After interaction with his family the patient consented. Dr. Bloom conducted open heart surgery. The patient had a difficult post-operative course with arrythmias because “[h]e had so much dead heart in his right ventricle . . .”. (Id.) The patient received an excellent outcome in that he was seen in Dr. Bloom’s office with 40 percent injection fraction. Dr. Bloom “was just amazed to see him back in the office . . . and amazed that this man is alive.” (Tr. 2704). Most of the delay in receiving treatment was due to the patient’s reluctance to undergo angioplasty and then open heart surgery. The fifth patient of Dr. Cohen’s presented at Brandon’s E.R. on March 22, 2000. He was 44 years old with no prior cardiac history but with numerous risk factors. He had a sudden onset of chest discomfort. Lab values showed an elevation consistent with myocardial injury. He also had an abnormal EKG. Dr. Cohen performed a cardiac cath on March 23, 2000. The procedure showed a totally occluded left anterior descending artery, one of the three major arteries serving the heart. Had open heart capability been available at Brandon, he would have undergone angioplasty and stenting immediately. As it was, the patient had to be transferred to UCH. A transfer was requested at 10:25 that morning and the patient left Brandon’s cath lab at 11:53. Daniel D. Lorch, M.D., is a specialist in pulmonary medicine who was accepted as an expert in internal medicine, pulmonary medicine and critical care medicine, consistent with his practice in a “five-man pulmonary internal medicine critical care group.” (Brandon Ex. 42, p. 4). Dr. Lorch produced medical records for one patient that he testified about during his deposition. The patient had presented to Brandon’s E.R. with an MI. He was transferred to UCH by helicopter for care. Dr. Lorch supports Brandon’s application. As he put it during his deposition: [Brandon] is an extremely busy community hospital and we are in a very rapidly growing area. The hospital is quite busy and we have a large number of cardiac patients here and it is not infrequently that a situation comes up where there are acute cardiac events that need to be transferred out. (Brandon Ex. 42, p. 20). Transfers Following Diagnostic Cardiac Catheterization Brandon transfers a high number cardiac patients for the provision of angioplasty or open heart surgery in addition to those transferred under emergency conditions. In 1996, Brandon performed 828 diagnostic cardiac catheterization procedures. Of this number, 170 patients were transferred to existing providers for open heart surgery and 170 patients for angioplasty. In 1997, Brandon performed 863 diagnostic catheterizations of which 180 were transferred for open heart surgery and 159 for angioplasty. During 1998, 165 patients were transferred for open heart surgery and 161 for angioplasty out of 816 diagnostic catheterization procedures. For the first nine months of 1999, Brandon performed 639 diagnostic catheterizations of which 102 were transferred to existing providers for open heart surgery and 112 for angioplasty. A significant number of patients are transferred from Brandon for open heart surgery services. These transfers are consistent with the norm in Florida. After all, open heart surgery is a tertiary service. Patients are routinely transferred from most Florida hospitals to tertiary hospitals for OHS and PCTA. The large majority of Florida hospitals do not have OHS programs; yet, these hospitals receive patients who need OHS or PTCA. Transfers, although the norm, are not without consequence for some patients who are candidates for OHS or PCTA. If Brandon had open heart and angioplasty capability, many of the 1220 patients determined to be in need of angioplasty or open heart surgery following a diagnostic catheterization procedure at Brandon could have received these procedures at Brandon, thereby avoiding the inevitable delay and stress occasioned by transfer. Moreover, diagnostic catheterizations and angioplasties are often performed sequentially. Therefore, Brandon patients determined to be in need of angioplasty following a diagnostic catheterization would have had access to immediate angioplasty during the same procedure thus reducing the likelihood of a less than optimal outcome as the result of an additional delay for transfer. Adverse Impact on Existing Providers Competition There is active competition and available patient choices now in Brandon's PSA. As described, there are many OHS programs currently accessible to and substantially serving Brandon's PSA. There is substantial competition now among OHS providers so as to provide choices to PSA residents. There are no financial benefits or cost savings accruing to the patient population if Brandon is approved. Brandon does not propose lower charges than the existing OHS providers. Balanced Budget Act The Balanced Budget Act of 1997 has had a profound negative financial impact on hospitals throughout the country. The Act resulted in a significant reduction in the amount of Medicare payments made to hospitals for services rendered to Medicare recipients. During the first five years of the Act's implementation, Florida hospitals will experience a $3.6 billion reduction in Medicare revenues. Lakeland will receive $17 million less, St.Joseph's will receive $44 million less, and Tampa General will receive $53 million less. The impact of the Act has placed most hospitals in vulnerable financial positions. It has seriously affected the bottom line of all hospitals. Large urban teaching hospitals, such as TGH, have felt the greatest negative impact, due to the Act's impact on disproportionate share reimbursement and graduate medical education payment. The Act's impact upon Petitioners render them materially more vulnerable to the loss of OHS/PTCA revenues to Brandon than they would have been in the absence of the Act. Adverse Impact on Tampa General Tampa General is the "safety net provider" for Hillsborough County. Tampa General is a Medicaid disproportionate share provider. In fiscal year 1999, the hospital provided $58 million in charity care, as that term is defined by AHCA. Tampa General plays a unique, essential role in Hillsborough County and throughout West Central Florida in terms of provision of health care. Its regional role is of particular importance with respect to Level I trauma services, provision of burn care, specialized Level III neonatal and perinatal intensive care services, and adult organ transplant services. These services are not available elsewhere in western or central Florida. In fiscal year 1999, Tampa General experienced a net loss of $12.6 million in providing the services referenced above. It is obligated under contract with the State of Florida to continue to provide those services. Tampa General is a statutory teaching hospital. In fiscal year 1999, it provided unfunded graduate medical education in the amount of $19 million. Since 1998, Tampa General has consistently experienced losses resulting from its operations, as follows: FY 1998-$29 million, FY 1999-$27 million; FY 2000 (5 months)-$10 million. The hospital’s financial condition is not the result of material mismanagement. Rather, its financial condition is a function of its substantial provision of charity and Medicaid services, the impact of the Act, reduced managed care revenues, and significant increases in expense. Tampa General’s essential role in the community and its distressed financial condition have not gone unnoticed. The Greater Tampa Chamber of Commerce established in February of 2000 an Emergency Task Force to assess the hospital's role in the community, and the need for supplemental funding to enable it to maintain its financial viability. Tampa General requires supplemental funding on a continuing basis in order to begin to restore it to a position of financial stability, while continuing to provide essential community services, indigent care, and graduate medical education. It will require ongoing supplemental funding of $20- 25 million annually to avoid triggering the default provision under its bond covenants. As of the close of hearing, the 2000 session of the Florida Legislature had adjourned. The Legislature appropriated approximately $22.9 million for Tampa General. It is, of course, uncertain as to what funding, if any, the Legislature will appropriate to the hospital in future years, as the terms which constitute the appropriations must be revisited by the Legislature on an annual basis. Tampa General has prepared internal financial projections for its fiscal years 2000-2002. It projects annual operating losses, as follows: FY 2000-$20.1 million; FY 2001- $20.6 million; FY 2002-$31.9 million. While its projections anticipate certain "strategic initiatives" that will enhance its financial condition, including continued supplemental legislative funding, the success and/or availability of those initiatives are not "guaranteed" to be successful. If the Brandon program is approved, Tampa General will lose 93 OHS cases and 107 angioplasty cases during Brandon's second year of operation. That loss of cases will result in a $1.4 million annual reduction in TGH's net income, a material adverse impact given Tampa General’s financial condition. OHS services provide a positive contribution to Tampa General's financial operations. Those services constitute a core piece of Tampa General's business. The anticipated loss of income resulting from Brandon's program pose a threat to the hospital’s ability to provide essential community services. Adverse Impact on UCH UCH operated at a financial break-even in its fiscal year 1999. In the first five months of its fiscal year 2000, the hospital has experienced a small loss. This financial distress is primarily attributed to less Medicare reimbursement due to the Act and less reimbursement from managed care. UCH's reimbursement for OHS services provides a good example of the financial challenges facing hospitals. In 1999, UCH's net income per OHS case was reduced 33 percent from 1998. Also in 1999, UCH received OHS reimbursement of only 32 percent of its charges. UCH would be substantially and adversely impacted by approval of Brandon's proposal. As described, UCH currently is a substantial provider of OHS and angioplasty services to residents of Brandon's PSA. There are many cardiologists on staff at Brandon who also actively practice at UCH. UCH is very accessible from Brandon's PSA. UCH reasonably projects to lose the following volumes in the first three years of operation of the proposed program: a loss of 78-93 OHS procedures, a loss of 24-39 balloon angioplasties, and a loss of 97-115 stent angioplasties. Converting this volume loss to financial terms, UCH will suffer the following financial losses as a direct and immediate result of Brandon being approved: about $1.1 million in the first year, and about $1.2 million in the second year, and about $1.3 million in the third year. As stated, UCH is currently operating at about a financial break-even point. The impact of the Balanced Budget Act, reduced managed care reimbursement, and UCH's commitment to serve all patients regardless of ability to pay has a profound negative financial impact on UCH. A recurring loss of more than $1 million dollars per year due to Brandon's new program will cause substantial and adverse impact on UCH. Adverse Impact on St. Joseph’s If Brandon's application is approved, St. Joseph’s will lose 47 OHS cases and 105 PTCA cases during Brandon's second year. That loss of cases will result in a $732,000 annual reduction in SJH's net income. That loss represents a material impact to SJH. Between 1997 and 2000, St. Joseph’s has experienced a pattern of significant deterioration in its financial performance. Its net revenue per adjusted admission had been reduced by 12 percent, while its costs have increased significantly. St. Joseph's net income from operations has deteriorated as follows: FYE 6/30/97-$31 million; FYE 12/31/98- $24 million; FYE 12/31/99-$13.8 million. A net operating income of $13.8 million is not much money relative to St Joseph's size, the age of its physical plant, and its need for capital to maintain and improve its facilities in order to remain competitive. St. Joseph’s offers a number of health care services to the community for which it does not receive reimbursement. Unreimbursed services include providing hospital admissions and services to patients of a free clinic staffed by volunteer members of SJH's medical staff, free immunization programs to low-income children, and a parish nurse program, among others. St. Joseph’s evaluates such programs annually to determine whether it has the financial resources to continue to offer them. During the past two years, the hospital has been forced to eliminate two of its free community programs, due to its deteriorating financial condition. St. Joseph’s anticipates that it will have to eliminate additional unreimbursed community services if it experiences an annual reduction in net income of $730,000. Adverse Impact to LRMC The approval of Brandon will have an impact on Lakeland. Lakeland will suffer a financial loss of about $253,000 annually. This projection is based on calculated contribution margins of OHS and PTCA/stent procedures performed at the hospital. A loss of $253,000 per year is a material loss at Lakeland, particularly in light of its slim operating margin and the very substantial losses it has experienced and will continue to experience as a result of the Balanced Budget Act of 1997. In addition to the projected loss of OHS and other procedures based upon Brandon's application, Lakeland may experience additional lost cases from areas such as Bartow and Mulberry from which it draws patients to its open heart/cardiology program. Lakeland will also suffer material adverse impacts to its OHS program due to the negative effect of Brandon's program on its ability to recruit and retain nurses and other highly skilled employees needed to staff its program. The approval of Brandon will also result in higher costs at existing providers such as Lakeland as they seek to compete for a limited pool of experienced people by responding to sign-on bonuses and by reliance on extensive temporary nursing agencies and pools. Nursing Staff/Recruitment The staffing patterns and salaries for Brandon's projected 40.1 full-time equivalent employees to staff its open heart surgery program are reasonable and appropriate. Filling the positions will not be without some difficulty. There is a shortage for skilled nursing and other personnel needed for OHS programs nationally, in Florida and in District 6. The shortage has been felt in Hillsborough County. For example, it has become increasingly difficult to fill vacancies that occur in critical nursing positions in the coronary intensive care unit and in telemetry units at Tampa General. Tampa General's expenses for nursing positions have "increased tremendously." (Tr. 2622). To keep its program going, the hospital has hired "travelers . . . short-term employment, registered nurses that come from different agencies, . . . with [the hospital] a minimum of 12 weeks." (Tr. 2622). In fact, all hospitals in the Tampa Bay area utilize pool staff and contract staff to fill vacancies that appear from time-to- time. Use of contract staff has not diminished quality of care at the hospitals, although "they would not be assigned to the sickest patients." (Tr. 2176). Another technique for dealing with the shortage is to have existing full-time staff work overtime at overtime pay rates. St. Joseph's and Lakeland have done so. As a result, they have substantially exceeded their budgeted salary expenses in recent months. It will be difficult for Brandon to hire surgical RNs, other open heart surgery personnel and critical care nurses necessary to staff its OHS program. The difficulty, however, is not insurmountable. To meet the difficulty, Brandon will move members of its present staff with cardiac and open heart experience into its open heart program. It will also train some existing personnel in conjunction with the staff and personnel at Bayonet Point. In addition to drawing on the existing pool of nurses, Brandon can utilize HCA's internal nationwide staffing data base to transfer staff from other HCA facilities to staff Brandon's open heart program. Approximately 18 percent of the nurses hired at Brandon already come from other HCA facilities. The nursing shortage has been in existence for about a decade. During this time, other open heart programs have come on line and have been able to staff the programs adequately. Lakeland, in District 6, has demonstrated its ability to recruit and train open heart surgery personnel. Brandon, itself, has been successful, despite the on- going shortage, in appropriately staffing its recent additions of tertiary level NICU beds, an expanded Emergency Room, labor and delivery and recovery suites, and new high-risk, ante-partum observation unit. Brandon has begun to offer sign-on bonuses to compete for experienced nurses. Several employees who staff the Lakeland, UCH and Tampa General programs live in Brandon. These bonuses are temptations for them to leave the programs for Brandon. Other highly skilled, experienced individuals who already work at existing programs may be lost to Brandon's program as well simply as the natural result of the addition of a new program. In the end, Brandon will be able to staff its program, but it will make it more difficult for all of the programs in Hillsborough County and for Lakeland to meet their staffing needs as well as producing a financial impact on existing providers. Financial Feasibility Short-Term Brandon needs $4.2 million to fund implementation of the program. Its parent corporation, HCA will provide financing of up to $4.5 million for implementation. The $4.2 million in start-up costs projected by Brandon does not include the cost of a second cath lab or the costs to upgrade the equipment in the existing cath lab. Itemization of the funds necessary for improvement of the existing cath lab and the addition of the second cath lab were not included in Brandon's pro formas. It is the Agency's position that addition of a cath lab (and by inference, upgrade to an existing lab) requires only a letter of exemption as projects separate from an open heart surgery program even when proposed in support of the program. (See UCH No. 7, p. 83). The position is not inconsistent with cardiac catheterization programs as subject to requirements in law separate from those to which an open heart surgery program is subject. Brandon, through HCA, has the ability to fund the start-up costs of the project. It is financially feasible in the short-term. Long-Term Open heart surgery programs (inclusive of angioplasty and stent procedures, as well as other open heart surgery procedures) generally are very profitable. They are among the most profitable of programs conducted by hospitals. Brandon's projected charges for open heart, angioplasty, and stent procedures are based on the average charges to patients residing in Brandon's PSA inflated at 2 percent per year. The inflation rate is consistent with HCFA's August 1, 2000, Rule implementing a 2.3 percent Medicare reimbursement increase. Brandon's projected payor mix is reasonably based on the existing open heart, angioplasty, and stent patients within its PSA. Brandon also estimated conservatively that it would collect only 45 to 50 percent of its charges from third-party payors. To determine expenses, Brandon utilized Bayonet Point's accounting system. It provided a level of detail that could not be obtained otherwise. "For patients within Brandon's primary service area, . . . that information is not provided by existing providers in the area that's available for any public consumption." (Tr. 1002). While perhaps the most detailed data available, Bayonet Point data was far from an ideal model for Brandon. Bayonet Point performs about 1,500 OHS cases per year. It achieves economies of scale that will not be achievable at Brandon in the foreseeable future. There is a relationship between volume and cost efficiency. The higher the volume, the greater the cost efficiency. Brandon's volume is projected to be much lower than Bayonet Point's. To make up for the imperfection of use of Bayonet Point as an "expenses" proxy, Brandon's financial expert in opining that the project was feasible in the long-term, considered two factors with regard to expenses. First, it included its projected $1.8 million in salary expenses as a separate line item over and above the salary expenses contained in the Bayonet Point data. (This amounted to a "double" counting of salary expenses.) Second, it recognized HCA's ability to obtain competitive pricing with respect to equipment and services for its affiliated hospitals, Brandon being one of them. Brandon projected utilization of 249 and 279 cases in its second and third year of operations. These projections are reasonable. (See the testimony of Mr. Balsano on rebuttal and Brandon Ex. 74). Comparison of Agency Action in CONs 9169 and 9239 Brandon's application in this case, CON 9239, was filed within a six-month period of the filing of an earlier application, CON 9169. The Agency found the two applications to be similar. Indeed, the facts and circumstances at issue in the two applications other than the updating of the financial and volume numbers are similar. So is the argument made in favor of the applications. Yet, the first application was denied by the Agency while the second received preliminary approval. The difference in the Agency's action taken on the later application (the one with which this case is concerned), i.e., approval, versus the action taken on the earlier, denial, was explained by Scott Hopes, the Chief of the Bureau of Certificate of Need at the time the later application was considered: The [later] Brandon application . . ., which is what we're addressing here today, included more substantial information from providers, both cardiologists, internists, family practitioners and surgeons with specific case examples by patient age [and] other demographics, the diagnoses, outcomes, how delays impacted outcomes, what permanent impact those adverse outcomes left the patient in, where earlier . . . there weren't as many specifics. (Tr. 1536, 1537). A comparison of the application in CON 9169 and the record in this case bears out Mr. Hopes' assessment that there is a significant difference between the two applications. Comparison of the Agency Action with the District 9 Application During the same batching cycle in which CON 9239 was considered, five open heart surgery applications were considered from health care providers in District 9. Unlike Brandon's application, these were all denied. In the District 9 SAAR, the Agency found that transfers are an inherent part of OHS as a tertiary service. The Agency concluded that, "[O]pen heart surgery is a tertiary service and patients are routinely transferred between hospitals for this procedure." (UCH Ex. 7, pp. 51-54). In particular, the Agency recognized Boca Raton's claim that it had provided "extensive discussion of the quality implications of attempting to deal with cardiac emergencies through transfer to other facilities." (UCH Ex. 7, p. 52). Unlike the specific information referred to by Mr. Hopes in his testimony quoted, above, however, the foundation for Boca Raton's argument is a 1999 study published in the periodical Circulation, entitled "Relationship Between Delay in Performing Direct Coronary Angioplasty and Early Clinical Outcomes." (UCH Ex. 7, p. 21). This publication was cited by the Agency in its SAAR on the application in this case. Nonetheless, a fundamental difference remains between this case and the District 9 applications, including Boca Raton's. The application in this case is distinguished by the specific information to which Mr. Hopes alluded in his testimony, quoted above.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a final order be entered granting the application of Galencare, Inc., d/b/a Brandon Regional Hospital for open heart surgery, CON 9239. DONE AND ENTERED this 30th day of March, 2001, in Tallahassee, Leon County, Florida. DAVID M. MALONEY Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 30th day of March, 2001. COPIES FURNISHED: Sam Power, Agency Clerk Agency for Health Care Administration 2727 Mahan Drive Building 3, Suite 3431 Tallahassee, Florida 32308-5403 Julie Gallagher, General Counsel Agency for Health Care Administration 2727 Mahan Drive Building 3, Suite 3431 Tallahassee, Florida 32308-5403 Richard A. Patterson, Esquire Agency for Health Care Administration 2727 Mahan Drive Building 3, Suite 3431 Tallahassee, Florida 32308-5403 Stephen A. Ecenia, Esquire R. David Prescott, Esquire Thomas W. Konrad, Esquire Rutledge, Ecenia, Purnell & Hoffman, P.A. 215 North Monroe Street, Suite 420 Post Office Box 551 Tallahassee, Florida 32302-0551 James C. Hauser, Esquire Metz, Hauser & Husband, P.A. 215 South Monroe Street, Suite 505 Post Office Box 10909 Tallahassee, Florida 32302 John H. Parker, Jr., Esquire Jonathan L. Rue, Esquire Sarah E. Evans, Esquire Parker, Hudson, Rainer & Dobbs 1500 Marquis Two Tower 285 Peachtree Center Avenue, Northeast Atlanta, Georgia 30303 Robert A. Weiss, Esquire Karen A. Putnal, Esquire Parker, Hudson, Rainer & Dobbs, LLP The Perkins House, Suite 200 118 North Monroe Street Tallahassee, Florida 32301
The Issue Whether there is a need for a new Pediatric Heart Transplant (PHT) program in Organ Transplant Service Area (OTSA) 3, and, if so, whether Certificate of Need (CON) Application No. 10518, filed by Orlando Health, Inc., d/b/a Arnold Palmer Medical Center (APMC), to establish a PHT program, satisfies the applicable statutory and rule review criteria for award of a CON to establish a PHT program at the Arnold Palmer Hospital for Children (APH).
Findings Of Fact Based upon the credibility of the witnesses and evidence presented at the final hearing and on the entire record of this proceeding, the following Findings of Fact are made: The Parties Orlando Health, Inc., d/b/a Arnold Palmer Medical Center OH was originally formed by two community physicians 100 years ago as a 20-bed hospital in downtown Orlando. Today, OH is a large not-for-profit healthcare system with more than 3,300 beds serving Central Florida and beyond. Comprised of nine wholly-owned or affiliated hospitals and rehabilitation centers, OH serves as the region’s only Level One Trauma Center and Pediatric Trauma Center, and is a statutory teaching hospital system offering graduate medical education and clinical research in both specialty and community hospitals. OH has been actively involved in clinical research since the beginning of its graduate medical education and residency programs in the 1950s. OH’s primary service area includes approximately 2.2 million people, with a greater service area of Central Florida, which encompasses more than three million people today and is rapidly growing. OH experiences about 100,000 inpatient admissions and 1.5 million ambulatory visits each year. OH has 24,000 employees, including 2,000 physicians and 8,000 nurses. OH has long been recognized as the safety net provider for the Central Florida region. APMC is comprised of two hospitals, APH and Winnie Palmer Hospital for Women and Babies (WPH). APMC was founded on the premise that the close integration of specialty inpatient pediatrics and obstetrics services improves quality and outcomes. APMC is the single largest acute care facility in the nation dedicated to women and children. APH has achieved national ranking as a Top 50 Children’s Hospital by U.S. News and World Report, based on quality data metrics that focus on process, structure, and outcomes, for the past eight consecutive years for key programs, including pediatric cardiology. Since 2015, APH has been the only pediatric hospital in Florida to receive the Top Hospital award from Leapfrog, an achievement based on evaluation of numerous quality metrics, including outcomes data over time. APH has been a Magnet-designated facility since 2013. APH’s primary service area covers 25 counties. APH’s pediatric trauma center and dedicated pediatric emergency department receive approximately 55,000 visits per year. The Heart Center at APH (the Heart Center) is nationally ranked among the top pediatric cardiac programs in the country for its outcomes in complex congenital heart surgery. Dr. William DeCampli, APH’s chief of Pediatric Cardiac Surgery, and Dr. David Nykanen, APH’s chief of Cardiology, serve as the medical directors of the Heart Center. Dr. DeCampli and Dr. Nykanen will continue to serve as the medical directors of the Heart Center following implementation of APH’s proposed PHT program. The Heart Center is on the third floor of APH in the “corner pocket” of the hospital. It is intentionally designed so that the pediatric cardiovascular intensive care unit (CVICU), cardiovascular operating suite, and cardiac catheterization suite are in close proximity to each other, to promote the integration of care between the units and to ensure the safe transition of pediatric patients. APH’s 20-bed CVICU is more advanced than the intensive care units of most pediatric cardiac programs across the country. APH established a freestanding dedicated CVICU in January 2005, and was one of the first in the nation to do so. APH CVICU clinical staff are dedicated to the CVICU and specifically trained to care for the special needs of pediatric cardiac patients. Unlike many other pediatric cardiac programs in the country, APH’s CVICU has 24/7/365 attending physician in- house coverage which leads to better access for patients and better outcomes. APH’s commitment to this continuous on-site physician presence reflects a standard that all pediatric cardiac programs aspire to, but few have achieved. APH has three employed pediatric cardiac anesthesiologists providing 24/7/365 in-house coverage, rare among pediatric cardiac programs. The specialty of pediatric cardiac anesthesia is distinct from the specialty of general pediatric anesthesia. Pediatric cardiac anesthesiologists specialize in the complex defects and anatomy of the cardiovascular system in patients with congenital heart disease (CHD) for whom anesthesia and sedation poses heightened risk. Pediatric cardiac anesthesiologists provide anesthesia for cardiac procedures as well as for any non-cardiac procedures the CHD patient may require. APH is the highest ranked program in Florida in outcomes for the most complex category of congenital heart surgery. In 2007, the Heart Center’s surgical team published more than three times the number of investigational papers than the state’s leading academic pediatric cardiac surgery program. Nationally, APH has the highest neonate population with the lowest mortality rate. APH has a state-of-the-art echocardiography (echo) program with the entire infrastructure necessary for PHT. Echo is essential at every stage of diagnosing, treating, and evaluating the response to therapies and interventions in pediatric cardiac care, including PHT. Dr. Riddle, an echocardiologist at APH, has extensive experience in diagnosing and evaluating complex congenital heart anomalies, including patients requiring PHT. APH’s echo program is comprised of multiple components: the facility, the equipment, the physicians, the sonographers, the protocols, and the quality. APH’s echo lab is the “mission control center” for the program, with four large screens that enable clinicians to watch and discuss echos as they are being performed, and to review echos in meticulous detail, sometimes spending hours looking at complex echos. APH’s culture is the tremendous differentiator among pediatric cardiac programs. APH’s goal is to know every aspect of a patient’s care and anatomy, and APH clinicians, with the full support of administration, spend significant time doing that. All APH sonographers are certified and APH has weekly didactic sessions for sonographers, along with quality improvement and quality review sessions. All APH echo readers are dedicated echo physicians, with extensive training, who also are involved in constant didactic lectures and immersion in quality improvement measures. APH’s director of echo, Dr. Craig Fleishman, is nationally recognized and serves as the chair of the Scientific Sessions of the American Society of Echocardiography, the national governing and education body for echo. APH is the only pediatric heart program in Central Florida to achieve accreditation from the American Society of Echocardiography in transthoracic, transesophageal, and fetal echo. APH is highly skilled at diagnosing complex congenital heart anomalies, including those in fetuses when the patient’s heart may be no larger than a grape. APH’s echo surgical correlations, in which the echo gradients are compared to actual measurements during surgery, are “phenomenal.” Similar correlations occur in coordination with the APH cardiac catheterization lab. APH has used printed 3D heart modeling, but printed 3D modeling includes only data obtained from a computerized tomography (CT) scan or magnetic resonance imaging (MRI) , and does not show all of the finer complex structures of the heart and valves; thus, it has limited utility in evaluating treatment options for complex CHD. However, APH is implementing a virtual reality 3D modeling system that combines data from echo, CT, and MRI data, and even surgical images, to create a complete virtual 3D model of the heart that includes the fine details, including valve attachments. Unlike a printed 3D model, which once cut open, no longer represents the heart and cannot be put back together for further evaluation, virtual 3D modeling enables clinicians to evaluate multiple potential interventions and observe responses and to repeat as many times as may be necessary, using the same model. APMC has a large maternal fetal medicine program staffed by seven employed perinatologists specializing in high- risk pregnancies. The program is expected to have 10 employed perinatologists by the end of 2018. Agency for Health Care Administration AHCA is the state health-planning agency charged with administration of the CON program as set forth in sections 408.31-408.0455, Florida Statutes. Context of the Arnold Palmer Application Approximately one in 100 babies are born with CHD. The majority of these disorders can be treated, at least initially, with reconstructive surgery. The earlier a congenital heart defect can be repaired, the better the chances the patient has to not only survive but to grow normally in infancy and thrive. However, some children with CHD have a severity level such that current methods of reconstructive surgery are not adequate to produce what might be called a cure. Treatment of such cases is called “palliation.” As a result of medical and surgical advances in palliation, children are now surviving complex CHD in numbers that previously were not thought possible. However, in the most severe cases, the palliation is fairly short-term. Many children who receive palliative surgery ultimately will progress to end-stage heart failure despite having had multiple operations and extensive medical management, as their heart will eventually begin to have decreased function due to the underlying anomaly. Prior to the advances in palliative care, many children born with complex CHD simply did not survive long enough to receive a PHT. Today, the number of children who face heart failure later in life, rather than earlier, is increasing. Successful palliation has resulted in significantly more CHD patients requiring PHT at age 10, 15, or 20, rather than as infants or young children. Another category of children requiring PHT are those who do not have CHD, but who have an acquired problem known as cardiomyopathy. Children with cardiomyopathy may present in heart failure at any time and at any age, having gone from a state of completely normal function--exercising, growing, doing well in school--to within two or three days having end stage heart failure. About half of these children recover with medication and intensive care--which APH does extremely well on a regular basis. But those who do not recover will require a PHT. Patients with CHD tend to be more medically and surgically complex and higher risk than patients with cardiomyopathy with respect to PHT. On a percentage basis, and because of advancements in palliation, there are more CHD patients and fewer cardiomyopathies in the teenage cohort requiring PHT today than there were 10 years ago. Pursuant to Florida Administrative Code Rule 59C- 1.044, AHCA requires applicants to obtain separate CONs for the establishment of each adult or pediatric organ transplantation program, including: heart, kidney, liver, bone marrow, lung, lung and heart, pancreas and islet cells, and intestine transplantations. “Transplantation” is “the surgical grafting or implanting in its entirety or in part one or more tissues or organs taken from another person.” Fla. Admin. Code R. 59A- 3.065. Heart transplantation is defined by rule 59C-1.002(41) as a “tertiary health service,” meaning “a health service which, due to its high level of intensity, complexity, specialized or limited applicability, and cost, should be limited to, and concentrated in, a limited number of hospitals to ensure the quality, availability, and cost effectiveness of such service.” AHCA rules define a “pediatric patient” as “a patient under the age of 15 years.” Fla. Admin. Code R. 59C- 1.044(2)(c). AHCA rules divide Florida into four OTSAs, corresponding generally with the northern, western central, eastern central, and southern regions of the state. Fla. Admin. Code R. 59C-1.044(2)(f). If approved, the proposed program at issue in this proceeding would be located in OTSA 3, which is comprised of Brevard, Indian River, Lake, Martin, Okeechobee, Orange, Osceola, Seminole, and Volusia Counties. Currently, there are no providers of PHT in OSTA 3. However, that does not mean that OTSA 3 residents lack access to these transplant services. In fact, the unrefuted evidence demonstrated that pediatric residents of OTSA 3 have received transplants at Shands, by way of example. At hearing, APMC agreed that OTSA 3 residents are accessing these services at existing providers in Florida, with APH referring a few of these patients on average to Shands every year for these services. The incidence of PHT in Florida, as compared to other types of solid organ transplants, is relatively small. The chart below sets forth the number of pediatric (aged 0-14) heart transplant discharges by year for the four existing Florida PHT programs during the reporting period from June 30, 2013, to June 30, 2017: HOSPITAL HEART TRANSPLANT FY 12/13 FY 13/14 FY 14/15 FY 15/16 FY 16/17 UF Health Shands Hospital 13 4 17 12 9 John Hopkins All Children’s Hospital 6 13 10 9 7 Memorial Regional Hospital 5 3 4 11 4 Jackson Memorial Hospital 1 2 1 3 1 TOTAL 25 22 32 35 21 The above historic data demonstrates that the incidence of PHT statewide is relatively rare and does fluctuate from program to program and from year to year. As seen above, only 21 PHTs were performed statewide during the 12-month period July 1, 2016, to June 30, 2017, for an average program volume of only 5.25 cases for the four existing programs. There are four existing and one CON-approved PHT programs in Florida. This is more than every state in the country except California, which also has five programs but more than double the pediatric population of Florida. And three of the California programs have a volume of five per year or less. Texas, another geographically large state with over 1.4 million more children than Florida, has only two centers. The number of PHTs is also impacted by a national shortage in donor hearts. Unfortunately, there are not enough donor hearts to meet the demand for pediatric heart patients in the United States. While the total number of PHTs in the United States increased between 2012 and 2015, it has more recently declined from 2015 to 2017. Based on population, the number of PHTs in Florida is higher than the national average. Thus, while fortunately its incidence is rare, Florida residents in need of PHT are currently able to access this life-saving procedure. Arnold Palmer’s “Readiness” to Implement a PHT Program APH has over 14 years of experience performing complex congenital heart surgery and has met the majority of the demand for complex pediatric cardiac surgery in Central Florida for the past 25 years. In that time, APH has performed thousands of heart operations and achieved extraordinary outcomes, which are most dramatically apparent in the highest acuity levels. APH is the largest pediatric cardiac surgical program in Central Florida. Because WPH and APH are regional centers of excellence for neonatal and pediatric cardiac care, APH has a large proportion of complex, single-ventricle patients in its existing pediatric cardiac program. In turn, approximately 70 percent of the patients who ultimately require PHT have complex, single-ventricle physiologies. In addition, APH is a regional referral center for patients presenting with cardiomyopathies that may require PHT services. APH voluntarily participates in the Society for Thoracic Surgeons (STS) National Congenital Heart Surgery Database (the “STS database”). The STS is the official organ for the collegial development of the field of thoracic and cardiac surgery, both adult and pediatric. There are over 75,000 physician and institutional members of the STS. The STS maintains the largest worldwide data collection of multiple variables and data points pertaining to every cardiac surgery performed by its members. The data is rigorously analyzed to measure the actual and risk-adjusted expected performance and quality of each member facility, and to support quality improvement projects, as well as original research in the field. The STS is a national organization, and its publishing arm, the Annals of Thoracic Surgery, is one of the top-ranked journals in the world. Once a year, the STS updates a running, four-year cumulative tally of outcomes for each participating institution in the country and publishes a one-page report summarizing the facility’s performance.1/ The STS stratifies cardiac surgical cases by “STAT” level, which is a measure of acuity, complexity and risk.2/ STAT 1 is the simplest kind of congenital heart defect that generally requires a straightforward surgical repair, while STAT 5 reflects complex, high-acuity, and high- risk conditions and surgeries. The STS public report contains four columns. The first lists the STAT levels. The second column lists the facility’s number of deaths divided by the number of patients operated on at that facility within the given STAT category. The third column, “Expected” reflects the STS’ expectation of mortality within the reporting institution’s program based on the relative acuity of the cases performed at that institution and if the reporting hospital performs consistent with the national average for that STAT level. The data in the third column reflects the very high acuity level of APH’s CHD patient population, i.e., the risk factors for the patient not surviving their congenital heart defect and surgery. The fourth column, “Observed/Expected” (the “O/E ratio”), divides the program’s actual mortality by its expected mortality. The O/E ratio is widely accepted as the standard metric for evaluating performance in pediatric cardiac programs because in contrast to reporting raw mortality, the STS O/E ratio is risk-adjusted using multivariable regression models which enable the STS to risk adjust each institution’s mortality and compare it against the national norm; i.e., to produce a model containing every case that every program did within the four-year time period measured. An O/E ratio of less than one means the facility is doing better than the overall STS database. For STAT 2 cases, APH’s O/E ratio is 0.58, meaning that APH has achieved close to one-half the mortality that STS expects APH to have for APH’s STAT 2 cases. Even more impressive, however, is APH’s STAT 5 O/E ratio of 0.24. The analysis conducted by the STS shows that, statistically speaking, a patient in the highest risk STAT 5 category has a four-fold less risk of dying after an operation at APH than at an average pediatric cardiac surgery program in the country. APH has consistently achieved outstanding outcomes in its pediatric cardiac program, on a national basis, for more than a decade. AHCA has recognized APH as first in the state for overall pediatric heart surgery mortality. Mechanical cardiopulmonary support or cardiac extracorporeal membrane oxygenation (ECMO) (referred to as “CPS” within the APH pediatric cardiac program) is a very short-term method of sustaining life when a patient has rapid onset end- stage heart failure.3/ To place a patient on CPS, the cardiac surgeon makes an incision in the base of the neck to expose the main artery to the brain and the main vein draining from the brain. The vessels are controlled by the surgeon and opened, and cannulas are inserted into the vessels and advanced into the heart, or if the chest is open, may be placed directly into the heart, then sutured into place and connected to a heart-lung machine. Often the procedure is done while a baby is sustaining a cardiac arrest. CPS is not the preferred intervention for patients in heart failure who require PHT. Complications from CPS develop exponentially with each 24 hours on the circuit. Thus, CPS can be a contraindication for PHT. Complications from CPS include bleeding from fresh suture lines in the heart, arteries, pericardium, or chest wall; bleeding in the brain, or at IV line locations; and clotting caused by the CPS lines, which can be devastating if the clot travels to the brain, kidneys, bowel, or heart. There also is significant risk in moving a patient on CPS. Particularly in neonates, the movement of a cannula by even a few millimeters can obstruct circulation, or cause thrombus or ventilator issues. CPS thus is not a sustainable method for bridging a patient to PHT, when the majority of patients face long periods on a waitlist. The proper method for bridging to PHT is the use of ventricular assist device (VAD) therapy, relatively recently approved for use in pediatric patients. A VAD is a device that does not mechanically process or oxygenate the blood, and does not require transfusion, and, thus, provides far more stable and longer-term maintenance of life while a patient waits for PHT. In contrast to CPS, which cannot safely be used more than a few days to, at most, two weeks, a heart failure patient may safely remain on a VAD for months in the hospital while they await a donor heart. The ability to implement VAD therapy enhances quality of care for patients and increases a patient’s eligibility for PHT. Currently, the standard of care is that hospitals that do not provide PHT should not provide VAD therapy. Consequently, patients at APH with rapid onset heart failure do not have access to VAD therapy and must be placed on CPS. There is no question that OH has built a mature, high quality pediatric cardiac program at APH over the past 14 years. The organization has the demonstrated experience and success in complex reconstructive heart surgery and medical management of patients with heart disease. With the additional staffing described below, APH would be able to successfully implement a PHT program, assuming need for such a program is demonstrated. The Arnold Palmer Application APMC is proposing to establish a PHT program in Orlando, which is located in OTSA 3. The application was conditioned on APMC promoting and fostering outreach activities for pediatric cardiology services, which will include the provision of pediatric general cardiology outpatient services at satellite locations within OTSA 3. This condition is not intended to include any outreach activities beyond establishing outpatient clinics in OTSA 3. There is currently no PHT provider in OTSA 3. There are, however, three providers of pediatric open-heart surgery and pediatric cardiac catheterization within the OTSA. APMC proposes that Dr. William DeCampli and Dr. David Nykanen, who currently staff its pediatric cardiac program, would also staff the proposed transplant program. However, neither has worked in a transplant program in over 14 years. APMC acknowledges its need to recruit additional nurses to staff the program. It also concedes that it might recruit nurses without transplant experience, who may need to obtain necessary training at a different facility. Additionally, APMC has not yet recruited a physician specializing in pediatric heart failure, which the applicant agrees is necessary to implement the program. At hearing, much of APMC’s case focused on its readiness and desire to offer a full spectrum of services to cardiac patients at its hospital. This is reflected in the testimony of Sharon Mawa, a nurse operations manager in APMC’s CVICU: And I feel Arnold Palmer is ready. We—it’s all encompassed. When you have a heart program, you—you want to do it all . . . . And the only piece that we are unable to provide, that we’re—that we haven’t been ready for, and I feel like we’re ready for now, is heart transplant. And I think to do a heart program well, you should be able to do all of it for that patient. However, as detailed further below, such arguments do not demonstrate community need for the proposed service, but instead represent an institutional desire to expand the facility’s service lines. A public hearing was held in Orlando on January 8, 2018, pertaining to APMC’s PHT application. APMC participated in support of the application at this hearing. About one year earlier, on January 10, 2017, a public hearing was held in Orlando pertaining to a CON application to establish a PHT program submitted by Nemours Children’s Hospital (Nemours), which is also located in Orlando. OH/APMC participated at that hearing in opposition to the Nemours application. OH/APMC submitted written opposition to the Nemours PHT program at that time, urging the Agency to deny Nemours’ proposal. OH/APMC’s 2017 opposition to the Nemours PHT application included argument related to access and need for the service in OTSA 3. OH/APMC’s written opposition to the proposed Nemours program included letters of opposition authored by Dr. DeCampli and Dr. Nykanen. In urging the denial of the Nemours’ PHT application, Dr. Nykanen told AHCA: For the past 14 years at Arnold Palmer Hospital for Children we have referred our patients requiring advanced heart failure management, including cardiac transplantation, predominantly to Shands Children’s Hospital. We have been the largest referral source of these patients in the region over the past decade. Many of our patients have had the opportunity to be evaluated as outpatients, which is always preferable. The management of this patient population is medically intense but surgery is rarely an emergency. The geographic proximity of Gainesville to our region is not a significant barrier with respect to transport from one facility to the other. The availability of organs for transplantation mandates the time from assessment to surgery which is measured in weeks to months. The Shands team has been readily accessible to us day or night and I am aware of no financial or programmatic barriers to providing this specialized care to our patients. We have been pleased with the outcomes achieved. (emphasis added). In December 2017, several months after opposing Nemours’ PHT proposal, APMC submitted its own PHT application to AHCA. UF Health Shands UF Health-Shands Hospital (Shands), as an existing provider of PHT in OTSA 1, participated extensively in this proceeding notwithstanding its acknowledged lack of standing to formally intervene.4/ Shands is located in Gainesville, Florida and is the sole provider of PHT in OTSA 1. OTSA 1 extends from Pensacola to Jacksonville, south to Gainesville and west to Hernando County. AHCA called numerous witnesses affiliated with Shands in its case-in-chief. The scope of the testimony presented by Shands-affiliated witnesses was circumscribed by Order dated June 18, 2018 (ruling on APMC’s motion in limine), that: At hearing, the Agency may present evidence that the needs of patients within OTSA 3 are being adequately served by providers located outside of OTSA 3, but may not present evidence regarding adverse impact on providers located outside of OTSA 3. Baycare of Se. Pasco, Inc. v. Ag. for Health Care Admin., Case No. 07-3482CON (Fla. DOAH Oct. 28, 2008; Fla. AHCA Jan. 7, 2009). Shands is located in Gainesville, Florida. Shands Children’s Hospital (SCH) is an embedded hospital within a larger academic health center. SCH has 202 beds and is held out to the public as a children’s hospital. SCH occupies multiple floors of the building in which it is located, and the children’s services are separated from the adult services. SCH has its own separate entrance and emergency department. SCH is nationally recognized by the U.S. News and World Report as one of the nation’s best children’s hospitals. SCH has its own leadership, including Dr. Shelley Collins, an associate professor of Pediatrics and the associate chief medical officer of SCH who was called as a witness by the Agency. As a comprehensive teaching and research institution, SCH has between 140 to 150 pediatric specialists who are credentialed. It has every pediatric subspecialty that exists and is also a pediatric trauma center. In the area of academics and training, SCH has over 180 faculty members and approximately 50 residents, and 25 to 30 fellows in addition to medical students. SCH has 72 Level II and III Neonatal Intensive Care Unit (NICU) beds. It also has a dedicated 24-bed pediatric intensive care unit, as well as a dedicated 23-bed pediatric cardiac intensive care unit, both of which are staffed 24/7 by pediatric intensive care physicians, pediatric intensive care nurses, and respiratory therapists. As a tertiary teaching hospital located in Gainesville, Shands is accustomed to caring for the needs of patients and families that come from other parts of the state or beyond. Jean Osbrach, a social work manager at Shands, testified for the Agency. Ms. Osbrach oversees the transplant social workers that provide services to the families of patients at SCH. Ms. Osbrach described how the transplant social workers interact with the families facing transplant from the outset of their connection with Shands. They help the families adjust to the child’s illness and deal with the crisis; they provide concrete services; and help the families by serving as navigators through the system. These social workers are part of the multi-disciplinary team of care, and they stay involved with these families for years. Shands is adept at helping families with the issues associated with receiving care away from their home cities. Shands has relationships with organizations that can help families that need financial support for items such as lodging, transportation, and gas. Shands has 20 to 25 apartments in close proximity to the hospital that are specifically available for families of transplant patients. Shands also coordinates with the nearby Ronald McDonald House to secure lodging for the families of out-of-town patients. Ms. Osbrach’s ability to empathize with these families is further amplified because her own daughter was seriously ill when she was younger. As Ms. Osbrach testified, while she was living in Gainesville, she searched out the best option for her child and decided that that was actually in Orlando. She did not hesitate to make those trips in order to get the highest level of care and expertise her child needed at that time. SCH accepts all patients, including pediatric heart transplant patients, regardless of their financial status or ability to pay. At final hearing, both Ms. Osbrach and Dr. Pietra testified at length about the different funding sources and other resources and assistance that are available to families from lower social economic circumstances that have a child who may need a transplant. SCH is affiliated with the Children’s Hospital Association, the Children’s Miracle Network, the March of Dimes, and the Ronald McDonald House Charities. Both Shands and APMC witnesses agreed that the quality of care rendered by SCH is excellent. ShandsCair Shands operates ShandsCair, a comprehensive emergency transport system. ShandsCair operates nine ground ambulances of different sizes, five helicopters, and one fixed wing jet aircraft. It owns all of the helicopters and ambulances so it never has to wait on a third-party vendor. ShandsCair performs approximately 7,000 ground and air transports a year. ShandsCair selects the “best of the best” to serve on its flight teams. ShandsCair has been a leader in innovation, implementing a number of state-of-the-art therapies during transport, such as inhaled nitrous oxide and hypothermic for neonates that are at high risk for brain injury. ShandsCair is one of just three programs in the country that owns an EC-155 helicopter, which is the largest helicopter used as an air ambulance. This helicopter is quite large, fast, and has a range of approximately 530 miles one way. This makes it easier to transport patients that require a significant amount of equipment, including those on ECMO. The EC-155 has room for multiple patients and the ability to transport patients on ventricular assist devices, ventilators, and other larger medical equipment. The Orlando area is well within the operational range of both ShandsCair’s ground and air transport assets. Transporting Pediatric Patients on ECMO In its CON application, one of the reasons APMC contended that its application should be approved is that it is too dangerous to transport patients on ECMO. Timothy Bantle, a certified respiratory therapist and the manager of the ECMO program at Shands, was called as a witness by the Agency. The ECMO program at Shands was established in 1991, and Shands has supported over 500 patients on ECMO. When Mr. Bantle began working in the Shands ECMO program in 2008, all ECMO patients at Shands were supported by an ECMO machine that utilized a roller head pump. In addition to the machine’s bulky size and weight, there was an inherent risk of the occlusion pressure causing a rupture. In 2014, Shands began using a newer, much smaller CARDIOHELP ECMO machine. In addition to weighing at most 20 pounds, the CARDIOHELP ECMO machine utilizes a centrifugal pump, instead of a roller head pump, which eliminates the risk of circuit ruptures. The technology in the CARDIOHELP ECMO machines is outstanding, and it is much easier to manage patients on the newer machines than the older machines. Shands now has nine of the newer and far more compact CARDIOHELP ECMO machines. Shands uses the CARDIOHELP ECMO machine for both veno-arterial (VA) and veno-venous (VV) ECMO and for every patient population, including infants. In the current fiscal year, Shands has had 67 patients on the CARDIOHELP ECMO machine. Shands has safely transported both adult and pediatric patients on ECMO. When transporting a patient on ECMO, the transport team includes a physician, an ECMO primer, a nurse, and a respiratory therapist. In addition to being highly trained, the transport team discusses the specifics of each patient en route, including discussing the situation with the referring doctor so they arrive fully prepared. Mr. Bantle persuasively testified that a properly trained team, using the newer CARDIOHELP ECMO machine, can transport these patients safely. ShandsCair has safely transported numerous pediatric patients on VA- and VV-ECMO by both ground and air, including pediatric heart transplant candidates. The newer CARDIOHELP ECMO equipment makes transport of ECMO patients much easier. ShandsCair has flown simultaneous, same day ECMO transports to the Grand Cayman Islands and to Miami. Transporting ECMO patients on the CARDIOHELP ECMO machine has become so routine that Dr. Weiss does not go on those flights. ShandsCair has also safely transported small infants on VA-ECMO, including a three-kilogram infant who was recently transported from Nemours on VA-ECMO, and after arrival at Shands was transitioned to a VAD and is now awaiting a heart transplant. The testimony of Dr. Weiss and Mr. Bantle regarding Shands’ ability to safely transport pediatric patients on ECMO was substantiated by the testimony of Drs. Fricker, Pietra, and Collins. The overwhelming evidence established that ShandsCair can safely transfer pediatric patients, including infants, on ECMO by both ground and by air. Shands’ Pediatric Heart Program The congenital heart program at Shands includes two pediatric heart surgeons, and a number of pediatric cardiologists, including Dr. Jay Fricker and Dr. Bill Pietra, both of whom testified for the Agency. Dr. Fricker did much of his early work and training at the Children’s Hospital of Pittsburgh, and came to the University of Florida in 1995. He is a professor and chief of the Division of Cardiology in the Department of Pediatrics. He is also the Gerold L. Schiebler Eminent Scholar Chair in Pediatric Cardiology at UF. He has been involved in the care of pediatric heart transplant patients his entire career. Dr. Bill Pietra received his medical training in Cincinnati and then went to Denver, specifically to do transplant training under Dr. Mach Boucek, who was one of the pioneers in pediatric infant transplant. He came to the University of Florida and Shands in August 2014, and he is now the medical director for the UF Health Congenital Heart Center. Shands performed its first PHT in 1986. Shands provides transplants to pediatric patients with both complex congenital conditions and cardiomyopathy patients. Shands takes the most difficult PHT cases, including those that other transplant centers will not take. PHT patients are referred to Shands from throughout the state, with many patients coming from central and north Florida. Every patient that is referred for transplant evaluation is seen and evaluated by Shands. While transplantation is not an elective service, it also is very rarely done on an emergent basis. Some conditions are diagnosed well in advance of the need for a transplant. It is not uncommon for a patient to be seen by a Shands physician for a number of years before needing a transplant. Pediatric transplant patients now survive much longer, and frequently well into adulthood. Unlike APH, Shands has the ability to continue to care for those patients as they transition from childhood to becoming adults. The Congenital Heart Center at Shands has a good relationship with APH. Physicians at APH have not only referred patients to Shands for transplant evaluation, they have also specifically recommended Shands to parents of children in need of a heart transplant. Shands operates a transplant clinic at Wolfson Children’s Hospital in Jacksonville. Approximately once a month a Shands transplant physician, a transplant coordinator, and nurses will go to Wolfson to evaluate patients with PHT issues. Wolfson personnel, such as ECHO techs and nurses, are also involved. Before APH filed its CON application, Dr. Pietra twice asked Dr. Nykanen about the possibility of Shands establishing a similar joint clinic at APH. Dr. Nykanen replied by stating he would need to confer with his colleagues, but never otherwise responded to these inquiries. Dr. Pietra testified that he would not be opposed to a joint venture clinic with APMC. Managed care companies are now a significant driver of where patients go for transplantation services. Managed care companies identify “centers of excellence” as their preferred providers for services such as pediatric heart transplantation. Shands is recognized by a majority of the major managed care companies that identify pediatric transplant programs as a center of excellence. In addition, the congenital heart surgery program at Shands has a three-star rating, which is the highest rating possible, and one that only 10 percent of such programs achieve. The quality of care provided by the PHT program at Shands is superb. The most recent Scientific Registry of Transplant Recipients data for Shands, for pediatric transplants performed between February 1, 2014, and December 31, 2016, is excellent. There is no credible evidence of record that any pediatric patient in OTSA 3 was denied access or unable to access an existing transplant program. To the contrary, the evidence established that UF Health Shands and ShandsCair are currently serving the needs of OTSA 3 residents who need a PHT. The APMC CON application was not predicated on any argument that a new program is needed because of poor quality care at any of the existing pediatric transplant programs in Florida. Rather, Dr. Nykanen, the co-director of The Heart Center at APH, testified that Shands provides outstanding medical care, and that he has been “happy with the care” received by the patients he has referred to Shands for PHT. At hearing, APMC witnesses suggested that the Shands program is unduly conservative in accepting donor hearts from beyond 500 miles, and may have some “capacity” issues in its pediatric cardiac intensive care unit (CICU). These statements, made by persons with no first-hand knowledge of the operations of the Shands program, are not persuasive. APMC called Cassandra Smith-Fields as an expert witness. Ms. Smith-Fields is the administrative director for the transplant program and dialysis services at Phoenix Children’s Hospital. Phoenix Children’s Hospital is the only PHT center in Arizona. Notably, two states bordering Arizona, Nevada and New Mexico, do not have PHT centers. Ms. Smith- Fields noted that the volume of transplants at Shands had recently declined from 18 to 11. However, in 2016, by volume, Phoenix Children’s Hospital was the second largest pediatric heart transplant center in the country with 24 transplants, but in 2017, its volume had dropped to 14. Ms. Smith-Fields agreed that “you have to always be careful drawing inferences from numbers that are low in any matter.” Ms. Smith-Fields testified that based upon her review of Scientific Registry of Transplant Recipients data for Shands, Shands did not appear to be aggressive in terms of accepting donor hearts beyond 500 miles. However, that criticism was based upon a one-year period when Shands’ PHT volume was lower than normal, and during which Shands was able to obtain donor hearts from within a 500-mile radius. Stephan Moore, director of the solid organ transplant and VAD programs at Shands, prepared an exhibit, which showed the location (by state and distance) of Shands donor hearts and lungs recovered from March 2, 2014, through March 18, 2018. This exhibit showed numerous trips by Shands beyond 500 miles to retrieve a donor organ, including trips to Texas, New Jersey, Illinois, and Ohio. During this four-year period, 27.6 percent of the organs recovered by Shands came from within Florida, and the remaining 72.3 percent were obtained from out of state. This data not only refutes Ms. Smith-Fields’ testimony on this issue, it also again illustrates why, due to the variability of PHT heart program volumes and availability of donor hearts, one should be extremely cautious in drawing conclusions based upon a single year of data. In addition, Dr. Pietra testified about the complexity of these cases and how an organ that might be acceptable for one patient would not be acceptable for another, for a host of reasons. Consequently, being conservative and cautious in choosing the right heart for each patient are good and important traits for a pediatric heart transplant program, particularly for one that wants the organ to work well for the patient long- term. Dr. Elise Riddle, a cardiologist practicing at APMC, testified that she was aware of instances when there had been a delay in obtaining a bed at Shands for a patient being referred for transplant services. However, Dr. Pietra testified that Shands has never refused a patient because a bed was not available, and that any delay would have been at most a matter of hours. In addition, Dr. Collins, who regularly reviews the throughput numbers of Shands CICU, testified that there was no need to expand the size of the unit. APMC did not question Dr. Collins about the unit’s occupancy rate, nor did it make any attempt to otherwise obtain that information. Dr. Riddle also testified that she had not been informed when a former patient had returned to the Orlando area following a successful PHT at Shands. However, Dr. Pietra testified at length about how Shands coordinates care with the patient’s primary care doctor and referring cardiologist post discharge, and works to develop a team to assist with follow care. Dr. Pietra testified: But we try to, again, develop a team and the team has to include like a local physician and usually a family practice or a pediatrician as the captain. If the patient’s got that, you feel a lot better about having a patient leave the local area and return to their hometown, as you say, so that they can be seen kind of in conjunction or collaboration with us in their hometown. If they have a referring cardiologist, that makes it that much easier sometimes to have a more sophisticated follow up done if needed. But again, the patient belongs to the transplant program in the long run, and so you are going to continue to offer them follow-up care basically for life. Since coming to Shands in August 2014, Dr. Pietra has updated many of the program’s protocols, including the protocols for immunosuppression, frequency of follow-up visits, and what is included in follow-up visits. Dr. Pietra has also initiated more written contracts between a prospective patient’s parents and the program, which make it very clear what the expectations are for the family. Two parents, one of whom lives in Clermont (one hour and 40 minute drive from Gainesville) and one of whom lives in Cocoa Beach (two hours and 35 minute drive from Gainesville) testified that their child had received a PHT at Shands in Gainesville, and that there were no issues with follow-up care for their children post-transplant. Volume/Outcome Relationship in Pediatric Heart Transplantation At the final hearing, experts for both sides agreed that there is a positive relationship between PHT volume and outcomes. In complex, highly specialized areas involving patients with rare diseases or conditions, volume provides experience not only for the surgeons but for the entire team. This is particularly true for pediatric heart transplantation, where higher volume keeps the entire team and ancillary staff functioning at a very high level. Both Dr. Pietra and Ms. Smith-Fields agreed that a minimum of 10 or more PHTs annually is a good standard for maintaining the proficiency of the entire transplant team. In Calendar Year 2017, there were only 32 PHTs in Florida. Both Dr. Pietra and Dr. Fricker testified about how the statewide volume made it very difficult to justify approving a sixth program in the State, and that the proliferation of programs would result in most of the programs not able to achieve the 10 or more transplants per year goal. Indeed, during the 12-month period of July 1, 2016, through June 30, 2017, none of Florida’s four existing PHT programs met the minimum volume standard of 10 PHTs. In addition, PHT programs are measured based on outcomes, and a single fatality in a small program can be devastating to that hospital’s quality metrics. As such, small programs are often less willing to take more complicated patients. Ironically, adding more programs that dilute volumes may decrease rather than increase access because of the fear a small program might have for taking more complex patients. Johns Hopkins All Children’s Hospital Johns Hopkins All Children’s Hospital (JHACH) is located in St. Petersburg, OTSA 2, AHCA District 5. According to reported AHCA data, JHACH performed seven PHTs during the 12 months ending June 2017. Several APMC witnesses made references to possible issues with the PHT program at JHACH based upon newspaper articles they had read. Such articles are hearsay, were not specifically identified or discussed by any witness, and accordingly, cannot form the basis of any finding of fact. Only one of APMC’s witnesses, Dr. Riddle, had any personal knowledge about JHACH, and she has not worked there or been involved in the care of any patients there since February 2016. The only APMC witness who actually looked at any data for JHACH, Ms. Smith-Fields, testified that JHACH had no deaths on its waiting list, that it was aggressive in retrieving donor hearts beyond 500 miles, and that had transplanted two patients during the first four months of this calendar year. When the Centers for Medicare and Medicaid Services (CMS) identifies a program as having deficient outcomes, it will send a peer review team to thoroughly assess the program. If necessary, CMS will enter a systems improvement agreement, which may include the appointment of a quality administrator to help the program improve its operations. There was no evidence presented that CMS had taken any such steps with JHACH. As discussed above, it was uncontroverted that there is a positive correlation between volumes and outcomes, and that a minimum of 10 transplants a year is an important volume threshold in order to maintain a high-quality program. With Florida already having five existing and approved programs, it is currently not possible for all five programs to achieve 10 transplants a year. Approving a new program in the State based upon rumors about the status of an existing program would in all likelihood only reduce the average volume even further below the 10 transplants per year standard, and lead to poorer outcomes. AHCA’s Preliminary Decision Following AHCA’s review of APMC’s application, as well as consideration of comments made at the public hearing held on January 8, 2018, and written statements in support of and in opposition to the proposals, AHCA determined to preliminarily deny CON application 10518. AHCA’s decision was memorialized in a SAAR dated February 16, 2018. Marisol Fitch, supervisor of AHCA’s CON and commercial-managed care unit, testified for AHCA. Ms. Fitch testified that AHCA does not publish a numeric need for transplant programs, as it does for other categories of services and facilities. Rather, the onus is on the applicant to demonstrate need for the program. In addition to need methodologies presented by an applicant, AHCA also looks at availability and accessibility of services in the area to determine whether there is an access problem. Additionally, an applicant may attempt to demonstrate that “not normal” circumstances exist in the proposed service area sufficient to justify approval. Statutory Review Criteria Section 408.035(1), Florida Statutes, establishes the statutory review criteria applicable to CON Application No. 10518. The parties have stipulated that APMC’s CON application satisfies the criteria found in section 408.035(1)(f) and (h). The Agency believes that there is no need for the PHT program that APMC seeks to develop, because the needs of the children in the APMC service area are being met by other providers in the State, principally Shands and JHACH. Section 408.035(1)(a) and (b): The need for the health care facilities and health services being proposed, and the availability, quality of care, accessibility, and extent of utilization of existing health care facilities and health services in the district of the applicant. Florida Administrative Code Rule 59C-1.044(6)(b)5/ The criteria for the evaluation of CON applications, including applications for organ transplantation programs, are set forth at section 408.035 and rule 59C-1.044. However, neither the applicable statutes nor rules have a numeric need methodology that predicts future need for PHT programs. Thus, it is up to the applicant to demonstrate need in accordance with section 408.035 and rule 59C-1.044. There are four OTSAs in Florida, numbered OTSA 1 through OTSA 4. APMC is located in OSTA 3, which includes the following counties: Seminole, Orange, Osceola, Brevard, Indian River, Okeechobee, St. Lucie, Martin, Lake, and Volusia Counties. (See § 408.032(5), Fla. Stat; Fla. Admin. Code R. 59C-1.044(2)(f)3.). OTSA 3 also generally corresponds with the pediatric cardiac catheterization and open heart surgery service areas defined by AHCA rule. (See Fla. Admin. Code R. 59C- 1.032(2)(g) and 59C-1.033(2)(h)). Currently, there is no provider of PHT in OTSA 3, but there are three providers of pediatric cardiac catheterization and pediatric open-heart surgery: APH, Florida Hospital for Children, and Nemours. There are four existing providers and one approved provider of PHT services in Florida: Shands in OTSA 1; JHACH in OTSA 2; Jackson Memorial Hospital in OTSA 4; and Memorial Regional Hospital, d/b/a Joe DiMaggio’s Hospital in OTSA 4; and an approved program in OTSA 4, Nicklaus Children’s Hospital, which received final approval from AHCA in August 2017. APMC’s Need Methodology 1: Ratio of Pediatric Cardiac Surgery Volume to PHT Case Volume To quantify need for a new PHT program in AHCA District 7, OTSA 3, APMC presented two “need methodologies.” According to the applicant, there is an observed correlation between a PHT center’s volume of congenital heart surgery and its PHT case volume. It should be noted that consistent with the rest of the application--which was focused on APH’s capabilities rather than community need for the service--both methodologies were designed to support the assertion that APMC could potentially attain a volume of 12 transplants by year two of operation. While APMC’s ability to generate 12 transplant cases is pertinent under rule 59C-1.044(6)(b), it is not indicative of unmet community need for this service. For example, if APMC retains or diverts patients who would otherwise have had access to these services through an existing provider, then they may be improving convenience whilst failing to satisfy any unmet community need. The first numeric methodology advanced by APMC in support of its proposal relied on an assumed correlation or a ratio between open-heart surgery cases and PHTs performed by the four existing PHT programs in Florida for calendar year 2016. The applicant then assumed that it would perform the mean rate experienced by the existing programs, in its second year of operation. When applied to APMC’s forecasted cardiac surgeries during the second year of operation (167), it arrived at a projected PHT volume of 11.7 by year two of operation. There are several issues with this methodology. The 11.7 projection is still below the threshold 12 transplants required under rule 59C-1.044(6)(b). The methodology also relied on figures for the 0-17 age cohort. APMC did not apply either methodology considering only 0-14 age data.6/ Additionally, APMC failed to demonstrate that there is any statistically predictive link between the two variables. The data presented in APMC’s application suggests that the correlation is weak, at best. For example, Bates page 0053 of the application reports Shands as having performed 140 pediatric cardiac surgeries and 15 pediatric heart transplants in 2016, while Memorial Regional Hospital performed more surgeries at 170, but less than half the transplants at seven for the same year. While APMC attempts to control for this variability by utilizing averages, such variability itself calls the causal relationship into question. Indeed, APMC’s own cardiac surgeon did not believe cardiac surgery volume and PHT volume to be directly related. An additional problem with APMC’s first methodology is that many of the numbers relied upon to reach its calculated forecast of 11.7 appear to be inflated. The 7 percent average, which APMC applies to its own facility, is not an accurate reflection of the true average rate among the four existing centers for 2016. While the 2016 transplant volume used represented the statewide total, APMC considered only the cardiac surgery volume reported by these four centers. Stated differently, APMC calculated a ratio considering the entire universe of one variable but not the other. The actual total number of cardiac surgeries performed statewide for 2016 for aged 0-14 was 1,216, not 491, as utilized as the denominator in calculating the ratio. As Ms. Fitch testified, when one uses the 1,216 surgeries in the formula, the ratio would be roughly 2.8 percent, not the 6.9 percent used by APMC. Then, applying APMC’s proffered number of 167 cardiac surgeries as representing its facility, the forecast would be about five PHTs, not 11.7. APMC only considered the open-heart surgeries performed at the four PHT hospitals, but certainly, the PHT patients, if they had open-heart surgery at all, may have had such surgeries at other facilities. As a pediatric OHS provider, APH is itself a good example of this, having provided 99 pediatric open-heart surgeries in 2016 that were not considered in the denominator of the formula. APMC’s Need Methodology 2: Ratio of PHT Volume to Common Indicators for PHT. APMC’s second need methodology is based on the identification of the International Classification of Disease (ICD) ICD-10 codes that are the most common indicators for PHT, taking into account acuity and based on APH’s actual experience. Starting with an analysis of ICD-9 codes and updating to ICD-10 codes as the most currently available model, APMC attempted to correlate the ICD-10 codes with the incidence of PHT in Florida hospitals using data from the AHCA inpatient database. This analysis produced an average ratio of the “most frequent indicators” to PHT cases, of 0.187. APMC then identified the volume of patients within OTSA 3 discharged under the top “most frequent” ICD-10 code indicators for PHT. Applying a conversion rate of 0.100 to this potential pool of PHT patients results in a forecast of 8.2 potential PHT cases in year 1 of APH’s PHT program. Holding constant the baseline potential patient volume in OTSA 3 and applying a conversion rate of 0.180 to years two and three resulted in a forecast of 14.8 PHT cases in OTSA 3 in years two and three. As with the previous methodology, this methodology is rejected, both as being an unreasonable basis for forecasting 12 PHTs by year 2, and as not being indicative of community need in OTSA 3 for this service. APMC presented no evidence that a link between the identified diagnosis codes and an eventual PHT exists or is predictive for any individual or group of individuals. Indeed, its health planner admitted that no statistical analysis was undertaken to test the validity of a causal relationship between these variables. Further, it is unconvincing that the average performance of the four existing long-established transplant programs over three recent calendar years is a reliable predictor of the prospective future performance of a new program by its second year of operation. This methodology, similar to the first, examined the age-range 0-17, even though rule 59C- 1.044 defines a pediatric patient as one aged 0-14. In considering the numbers of patients who presented at the four hospitals with one of the selected ICD-10 codes compared to the number of transplants, APMC acknowledged the variability in the ratios among the years and between the providers. This is evident from a review of the figures in the chart on Bates page 0055 of the APMC application. For example, according to the table, from 2014 to 2015, the number of inpatients with one of the ICD-10 codes decreased by one at Shands, but the number of PHTs performed over this same period doubled from 10 to 20. Such variability in the ratios suggests that there is no predictive link, and that it is instead other variables that affect PHT volume. Additionally, while this methodology considers diagnoses of patients actually treated in the four transplant hospitals to come up with a ratio, it then relies on average ICD volume of three Orlando hospitals instead of its own volume, without explanation. If APMC applied the ratio to its own ICD-10 volume of 138, as appears on Bates page 0056, without adding the other hospitals, its projected transplant volume would be 24.8 by year two, which is higher than any existing provider in the state. Or, if APMC applied only its own average ICD-10 volume over 2014-2016 of 46, it would result in a projected volume of 8.3 transplants at year two. While APMC’s approach is the one that gets it closest to a projected case volume of 12, it appears arbitrary and lacks credibility. Pediatric Population Growth in OTSA 3. In its application, and at hearing, APMC repeatedly referenced the growing pediatric population in central Florida as a factor supporting approval of its application. For example, APMC pointed out that OTSA 3 experienced the fastest growth rate for the 0-17 age cohort among all of the OTSAs for 2014, 2015, and 2016, and has a very robust projected annual growth rate of 2.7 percent through 2022. Moreover, each of the 10 counties in OTSA 3 is projected to experience rapid growth in the pediatric population, with the most dramatic growth rates in Orange, Osceola, and St. Lucie counties, at 10.3 percent, 12.4 percent, and 9.0 percent respectively. While the projected growth of the pediatric population in OTSA 3 is significant, such growth does not, in itself, demonstrate unmet demand or need for the project. Any increased demand for PHT due to population growth was not quantified by APMC in its application or at hearing, as APMC elected not to utilize a population and use rate analysis as a need methodology. No evidence of population demographics was presented to substantiate APMC’s transplant volume projections. On this issue, the following exchange from Dr. Nykanen’s deposition is informative: Q. When you referred to population information, is it your position that population demographics or population changes are in part a reason for the need for this project? A. As the population of Central Florida and as the population of this district increases the demand for cardiac services increases. So to the extent that you are serving more people, then I would agree, yes, that’s part of the – that’s part of the equation. Is it the tipping point? No. We don’t – we didn’t – nowhere in my discussions with Dr. DeCampli or administration was there the thought that, hey, the population is growing here so we need to provide this service. I think that the – it was more a question of, our program has grown to such a position that we need to provide this service in order to be able to be a quality program offering what we believe to be quality care for our patients. The fact that there are more people here is really not driving the need for it. That doesn’t drive the need, but it just – it does state that there may be more demand. That’s kind of the way that I feel about that. The above exchange, besides downplaying population growth as a significant argument for a PHT program, also reiterates the theme of APMC’s application and entire case, which is a focus on APMC and its institutional desire to expand the services it can provide to its patients. Another argument made by APMC in its application and at hearing is that approval of its program could reduce outmigration of PHT patients. By definition, because there is no existing PHT program in OTSA 3, all patients leave OTSA 3 for this service. However, that alone does not establish need for a new program. As discussed herein, APMC has not demonstrated a sufficient need or an access problem that justifies approval of its application. Outmigration of Donor Hearts There are four Organ Procurement Organizations (OPOs) in Florida, geographically distributed so that there is one OPO centrally located in each of the four OTSAs. The OPO in OTSA 3 has done well in procuring donor hearts notwithstanding the lack of a PHT program in its region. The establishment of a PHT program within an OPO region is known to positively correlate with an increase in the number of donor hearts that the OPO is able to procure. The number of hearts procured in Florida varies annually. In 2016, Florida OPOs procured 30 donor organs. Over 50 percent of the hearts procured in Florida leave the state. However, donor hearts also migrate into the state. With regard to the outmigration of organs from Florida, APMC has suggested that since Florida is a net exporter of organs, this is an additional reason for approval. However, organs harvested in one state are commonly used in another. There is nothing unusual or negative about that fact. There is a national allocation system through the United Network for Organ Sharing (UNOS) and this sharing, as explained by Dr. Pietra, facilitates the best match for organs and patients. UNOS divides the country into regions for the purpose of allocation of donor organs, with Florida being one of six states in Region 3. The evidence of record did not establish that approval of the APMC application would result in the reduction of organs leaving Florida, or even that such would be a desirable result. APMC also argues that approving its application would increase the number of donor organs that are both procured and transplanted within Florida. Specifically, the applicant suggested that its proposed program would increase public awareness of the need for donor hearts; and, by doing so, increase the supply of donor hearts. However, no record evidence was produced in an effort to demonstrate that the proposed program would increase the supply of organs in Florida. In fact, an APH pediatric cardiologist testified that it is unlikely that adding the proposed PHT program would impact the availability or supply of organs. Rule 59C-1.044(6)(b) Volume Standards Rule 59C-1.044(6)(b) includes additional criteria that must be demonstrated by an applicant. Subsection (6)(b)4. provides that an application for PHT include documentation that the annual duplicated cardiac catheterization patient caseload was at or exceeded 200, and that the duplicated cardiac open heart surgery caseload was at or exceeded 125 for the calendar year preceding the CON application deadline. Cardiac programs in Florida report their open-heart surgery volumes quarterly to a local health council, and the Agency publishes the calendar year totals. In the applicable baseline calendar year of 2016, APH’s duplicated OHS case volume for patients aged 0-14 was 139 OHS cases, satisfying the minimum OHS volume requirement.7/8/ APH also met the catheterization volume threshold by performing 227 cardiac catheterizations for patients aged 0-14 in the baseline 2016 calendar year. Geographic Access There is no evidence of record that families living in Central Florida are currently being forced to travel unreasonable distances to obtain PHT services. Indeed, there are five existing or approved programs within the state, with at least two located very reasonably proximate to OTSA 3. There was agreement that patients that need a PHT are approaching the end-stage of cardiac function, and in the absence of a PHT will very likely die. Accordingly, it is reasonable to infer that the parents of a child living in central Florida and needing a PHT will travel to St. Petersburg, Gainesville, or OTSA 4 for transplant services rather than let their child die because the travel distance is too far. To the contrary, the evidence in this record, as well as common sense, is that families will go as far as necessary to save their child. The notion that there is some pent-up demand for PHT services among central Florida residents (especially when there is no evidence of a single instance of an OTSA 3 patient being turned down or unable to access a PHT) is without support in this record. The parents of two pediatric patients that received PHT at Shands testified on behalf of the Agency at the final hearing.9/ Their testimony substantiated AHCA’s position that residents of the greater Orlando area have reasonable access to PHT services. One of the testifying parents lives in Brevard County, which is directly east of Orlando. Her daughter likely had a heart defect since birth, but it was not diagnosed until she was six years old. That patient was asymptomatic at the time of diagnosis but deteriorated over a period of years. When she was first seen at Shands, her condition was not emergent and the family had the time and researched other prominent institutions, including Texas Children’s Hospital, Boston Children’s Hospital, Children’s Hospital of Pittsburgh, and the Mayo Clinic in Rochester, Minnesota. Their goal was to find a program that did a good volume of transplants with above average survival rates. After doing this research, they chose Shands. Their daughter received her heart transplant at Shands, is doing well, and is now considering where to go to college. This family did not find the distance to be a problem. This parent also persuasively spoke of her concerns about further diluting the volumes of the existing programs that could result from approval of a sixth PHT program in Florida. This parent also observed that because of the shortage of donors, adding more transplant centers does not necessarily mean there will be more PHTs performed. The other lay witness is the parent of a very young boy who went from appearing to be perfectly healthy to almost dying, and being placed on life support within a 24-hour period. This family lives in Clermont, which is near Orlando. Shortly after her son’s two-month old check-up, the witness took her son to the local hospital thinking he had a urinary tract infection. The hospital sent him to APH for evaluation. As soon as he arrived there, he went into respiratory distress. An echocardiogram was done and showed he had a severely enlarged heart. APH recommended that he be transferred to Shands. Before being transferred, the mother spoke with her sister who coincidentally is a nurse in Chicago who works on the transplant floor. She also highly recommended Shands. Her son was safely transported to Shands by ShandsCair just over 24 hours after being first admitted to APH. When they arrived at Shands, both Dr. Bleiweiss and Dr. Fricker gave the parents their cell numbers and were always there to answer any questions. The infant was placed on a Berlin heart machine until an appropriate donor heart became available. This patient was able to undergo a transplant approximately three weeks after admission, and also had an excellent outcome. This mother testified that the distance to Shands was not a problem, that the social workers and nurses were always available to help, and that follow-up care at Shands has not been an issue. In fact, the patient is now able to have his labs done in Orlando. It is also notable that this patient’s transfer was uneventful and that the patient had no difficulties in being immediately admitted to Shands’ CICU. It is clear from the testimony of these parents that nothing about having a gravely ill child is “convenient.” But it was also clear that for both of these families, having an experienced provider care for their child was much more important to them than geographic proximity. The following exchange summarizes how the young boy’s mother felt about the inconvenience of having to travel from Clermont to Gainesville: Q If you want to hypothetically encounter a family who expressed to you a concern that their child needed a transplant, they resided in Orlando or the Orlando area, but they were concerned about having to travel to Gainesville to receive that service, what would you say to them? A That’s where they need to be and that everything will fall in place, but the most important thing is the care that your child needs. While transplantation is not an elective service, it is not done on an emergent basis. As noted, the number of families affected is, quite fortunately, very small. While having a child with these issues is never “convenient,” the travel issues that might exist do not outweigh the weight of the evidence that fails to demonstrate a need for approval of the APMC application. The Orlando area, being centrally located in Florida, is reasonably accessible to all of the existing providers. Most appear to go to Shands, which is simply not a substantial distance away. The credible evidence is that families facing these issues are able to deal with the travel issues. The testimony of the two parents supports the Agency’s position that obtaining the best possible outcome for the child is the parents’ primary motivation in choosing a PHT program. Financial Access APMC asserts that approval of its proposed program will enhance financial access to care. APMC currently serves patients without regard to ability to pay and will extend these same policies to PHT recipients. APMC’s application indicates that Medicaid/Medicaid HMO will account for 26.8 percent of total patient days in years one and two of the proposal. Self- pay is expected to account for 9.0 percent of patient days in years one and two. However, there was no competent evidence of record that access to PHT services was being denied by any of the existing transplant providers because of a patient’s inability to pay. Not Normal Circumstances APMC alleged the existence of “not normal circumstances” in support of its application. They are categorized as “‘not normal’ circumstances relating to access to PHT for residents of OTSA 3,” and can be summarized as follows: APMC has the one of the largest NICUs under one roof in the country, resulting in a disproportionate volume of newborns at [APH] with complex forms of congenital heart disease; There are patients at APMC who are placed on ECMO or other heart-assist devices after surgery who are too sick to be transferred from APMC to another facility to receive transplant; Forcing patients to accept the high and potentially fatal risks of transport on ECMO presents a major access issue; Post-transplant follow-up care for patients is life-long and can be time- critical, and the ability to provide 24/7 rapid access to specialized transplant urgent care is medically optimal. The first argument related to the size of APMC’s NICU, does not speak to community need. Regardless of how many newborns APH sees, if the needs of these newborns are currently being met by existing programs, then it is difficult to see how this circumstance bears upon need or accessibility to this service. Additionally, to the extent that APMC suggests that the size of its NICU will correlate with a similarly large number of PHT patients, the proposition is unsupported by the record evidence. In fact, APMC admits that its pediatric cardiac surgery program is at the border of the lowest tercile of STS programs by volume. If APH’s NICU yields only a modest to medium cardiac surgery volume, there is no reason to conclude that this NICU will, by virtue of its size alone, yield a high PHT volume. Next, APMC argued that it has had patients who could have potentially benefitted from transplant but who did not receive such services due to their being too sick or otherwise unable to transfer. It is noteworthy that APMC did not identify these patients or provide data in any fashion to bolster this claim. The application referenced 33 NICU patients on ECMO in four years, but APMC conceded that most of these are babies on respiratory or “VV ECMO,” who eventually wean off. The application also references 11 CVICU patients placed on bypass at APMC in the last four years, but no testimony was presented as to the actual number of patients alleged to be unable to transfer. APMC did not maintain at hearing that any of its pediatric patients have died as a result of being unable to transfer to a transplant facility. In fact, any incidence of children being too sick or acute to transfer outside the OH system to a transplant facility appears to be a product of APH clinical decision-making about appropriateness for transplant referral, rather than that such patients were refused at a transplant center or could not have been transferred at an earlier time. At his deposition, Dr. Nykanen discussed the issue: I think that I do agree that patients— pediatric patients in Central Florida can get a heart transplant. And I have sent patients—my patients to Gainesville for a transplant because I felt at least in the patient’s [sic] that they’ve transplanted I can support that I’m doing the right thing for my patient. In answering that question, there are patients that I do not refer for transplant because I just feel that they are not a candidate for traveling for a transplant, medically a candidate for traveling without— for a transplant. So the term reasonable is—is it reasonably accessible. It is accessible, indeed, for the majority of the patients that I feel need a heart transplant. They can travel and get a transplant. However, for some patients it’s not an option for them. Either due to their medical complexity, risks that I consider with transport, and rarely family situation. APMC emphasized the risks of moving pediatric cardiac patients while on ECMO. However, as noted earlier, the credible testimony of witnesses presented by the Agency was that while there are always risks inherent with the treatment of critically ill children, with modern advancements in technology, these transports are done routinely and safely. It is also significant that while APMC cited various risks associated with ECMO transports and underscored the danger to the patient, no APMC witness could point to a single example of a patient that died due to complications with ECMO during a transport. The Agency in its preliminary decision noted that the application lacked any data illustrating mortality or negative outcomes related to pediatric ECMO transports, and no such evidence was forthcoming at hearing. APMC presented no evidence demonstrating that children of OTSA 3 who are transplanted at an existing provider are denied or otherwise unable to access follow-up care. The two mothers that testified for the Agency both stated that they have not had issues accessing follow-up care at Shands. APMC relies instead in its application on theoretical claims about emergent complications that could arise and the challenges of accessing a center. However, these arguments are unconvincing. Both parties agreed that transplant centers can and do work with a patient’s local providers so that patients can receive urgent medical care closer to home and then return to their transplant center as necessary. Dr. Pietra testified that Shands works with primary physicians and providers post- transplant. Shands has developed a thorough protocol for all of its patients, which includes frequent follow-ups. Additionally, Ms. Smith-Fields agreed that at her facility in Arizona (the only PHT provider in that state) the program coordinates with providers local to patients to ensure rapid acute care is accessible, if needed. APMC’s cardiologist, Dr. Riddle, testified that APH does provide acute care and other necessary care to children post-PHT, and that it competently does so. APMC maintained at hearing that post-transplant care is life-long, and that in the event of an emergent situation, immediate access is critical. However, the evidence indicates that existing transplant centers plan for these events. There are more frequent follow-up visits to a transplant center during the period immediately following the transplant. Both Dr. DeCampli and Dr. Riddle testified that organ rejection is more likely to occur during the first year after transplant. Additionally, diagnostic testing can often detect signs of rejection in advance, to allow a transplant center to respond before an acute episode occurs. Indeed, one of the functions of echocardiograms is to scan the heart and detect abnormalities or episodes of rejection. The record reflects that transplant centers, such as Shands, are capable of properly and safely monitoring these patients and dealing with issues of rejection. The evidence in this record does not support the proposition that geographic distance to existing centers is a barrier to patients receiving necessary follow-up care. Orlando Health’s Prior Position APMC’s claim that there is an accessibility issue or a need for PHT services in OTSA 3 is further undermined by its own contrary position on these issues just a few months prior to the submission of its application. In January 2017, OH and APH presented written opposition to Nemours Children’s Hospital’s attempt to establish a PHT program in Orlando. APH also presented oral argument from Drs. Nykanen and DeCampli in opposition to the proposed Nemours PHT program being approved by the Agency. The written statement of opposition, identified on its face to be on behalf of OH and APH for Children, unequivocally advanced the position that PHT services are not needed in OTSA 3, and that they are reasonably available to residents of the service area: Nothing supports the theory in the [Nemours] applications that the proposed services are unique or not otherwise available, or that there is a need for them among the population. * * * Specifically, CON application no. 10471 [Nemours’ PHT application] does not provide any facts that would lead the Agency to conclude that existing pediatric heart transplant services are not reasonably available to residents of the service area. For example, the data shown in CON application no. 10471, Exhibit 15, p. 75, does not reflect time travel distances; existing providers are within the typical two hour drive time standard accepted by health planning experts and the Agency for tertiary services. The personal letter authored by Dr. Nykanen and included as part of the APH opposition was unequivocal and specific in its conclusion that access to these services for residents of OTSA 3 is not a problem. Dr. Nykanen stood by his statement in this proceeding, testifying in his deposition: So we would—we would do anything for our child. I’d travel around the world, you know, halfway around the world if I thought that something would benefit my child. So geographic proximity in that sense probably doesn’t matter. And it doesn’t matter. If I’m an outpatient and I can get in my car and I can go to Gainesville. * * * And I don’t think that it—I honestly don’t think that a two-hour drive is that much of a barrier. It’s a pain and it’s inconvenient. * * * So I think what I intended with that statement and believe it to be true today is that if my child needed a transplant and I could travel to Gainesville and I could get there, I’ll do it, as a family. Is that an inconvenience, yes. Is it a huge barrier, probably not. Because if it, in the balance of things, meant that my child would survive or not, then I would do it. I’d go to London, England if I had to. APMC attempted to justify its prior position as mere concern about the inexperience of the Nemours cardiac program. However, this is contradicted by the record evidence in this case. Dr. Nykanen testified that, at the time of the Nemours public hearing, his expressed position was that there was not a need for PHT services in central Florida. The unambiguous statements by APMC opposing a local competitor’s attempt to establish the same health service that it now claims the children of central Florida need, further undermines the credibility of APMC’s current position, and underscores APMC’s focus on its own interests. The prior position taken by APMC with respect to need and accessibility in OTSA 3 was made with the intent that it be received and considered by the Agency in its decision on the Nemours application. AHCA witness, Marisol Fitch, found this clinical and health planning testimony to be persuasive, and APMC’s prior position that need and accessibility do not support approval of a new PHT program are in line with the record evidence. The glaring inconsistency in APMC’s past and current assertions calls into serious question the credibility of the general, theoretical, and unsubstantiated access problems that are alleged in APMC’s application. Section 408.035(1)(c): The ability of the applicant to provide quality of care and the applicant’s record of providing quality of care; Section 408.035(1)(d): The availability of resources, including health personnel, management personnel, and funds for capital and operating expenditures, for project accomplishment and operation; and Rule 59C-1.044(3-4). Quality in the delivery of health care is APMC’s first and foremost strategic imperative. APMC defines “quality” as the simultaneous achievement of excellence in three areas: patient outcomes, patient experience, and patient access. APMC is very deliberate in its approach to metric- driven performance in quality and safety. APMC is the highest- rated system in all of Central Florida within the CMS rating system, which analyzes data for 66 quality improvement metrics. Similarly, APMC is the highest ranked Truven-rated health care system in Central Florida, and is ranked first among the over 30 hospitals analyzed and ranked by Vizient Southeast. The metrics analyzed by these rating organizations include, but are not limited to, mortality rates, readmission rates, cost containment, patient experience scores, emergency department wait times, and infection rates. Through deliberate focus and a compulsive commitment to quality, the APH Heart Center has performed at the highest levels with respect to quality of care and patient outcomes for well over a decade. For its part, the Agency does not dispute that the applicant is a quality provider. However, AHCA does maintain that approval of an unneeded sixth provider of PHT services in Florida could lead to or correlate with negative patient outcomes. Given the relatively low PHT volumes statewide, and agreement that volume is positively correlated with quality and outcome in transplantation, splitting state volume among six providers could negatively impact the quality of this service, as it concerns the residents of OTSA 3 and Florida more broadly. This service is defined by Florida law as a tertiary service of limited concentration. Indeed, APMC agrees that there should not be a PHT program in every hospital, particularly since organs are a limited resource. APMC failed to credibly demonstrate that it would achieve the PHT volumes it projected unless it diverts significant volumes from other Florida providers. Approval of a new program will not create transplant patients that do not exist or are not currently able to reasonably access services. The applicant has not demonstrated that it will achieve volume sufficient to reasonably assure quality care. Rule 59C-1.044(4) requires that applicants meet certain staffing requirements, including: “The program shall employ a transplant physician, and a transplant surgeon, if applicable, as defined by the United Network for Organ Sharing (UNOS) June 1994.” The applicant concedes that it still needs to hire a transplant surgeon and a cardiologist specializing in heart failure, to staff the proposed program. While APH has had difficulty recruiting and retaining a bone marrow transplant physician to implement the bone marrow program approved in 2014, given its outstanding reputation for quality it is likely that APMC would ultimately be successful in recruiting a PHT surgeon and an advanced heart failure cardiologist. Section 408.035(1)(e): The extent to which the proposed services will enhance access to health care for residents of the service district. Approval of APMC’s proposed program would likely improve physical access to PHT services for the very few residents of OTSA 3 that need them. Generally speaking, adding an access point for a service will make that service more convenient and geographically proximate for some. However, given the rarity of PHTs, approval of the APMC program would not result in enhanced access for a significant number of patients. Moreover, there was no credible evidence presented at hearing that any resident of OTSA 3 that needed PHT services was unable to access those services at one of the existing PHT programs in Florida. Based upon persuasive record evidence, there is also clearly a positive relationship between PHT volume and outcomes. As with any complex endeavor, practice makes perfect. In this instance, maintaining a minimum PHT case volume provides experience to the clinicians involved and helps maintain proficiency. According to the credible testimony of Dr. Pietra, maintaining a volume of no fewer than 10 PHTs per year is critical, “because your relative risk for the next patient that you do is at its lowest” if you stay above that volume. The clear intent of the minimum volume requirement of 12 heart transplants per year contained in rule 59C- 1.044(6)(b)2. is to ensure a sufficient case volume to maintain the proficiency of the transplant surgeons and other clinicians involved in the surgical and post-surgical care of PHT patients. In the 12 months ending in June 2016, there were only 35 PHT’s performed in Florida. By the end of June 2017, that number had dropped to 21, with none of the four operational PHT programs meeting the 10-case minimum volume. And when the approved PHT program at Nicklaus Children’s Hospital becomes operational, the per-program volume of PHTs is likely to drop even further. Given the lack of demonstrated need for a sixth program, and low volume of PHT’s statewide, the undersigned is unable to recommend approval of the APMC program knowing that it would further dilute the pool of PHT patients, potentially adversely affecting the quality of care available at the existing programs. Adequate case volume is also important for teaching facilities, such as Shands, to benefit residents of all the OTSAs by being able to train the next generation of transplant physicians. There was no persuasive evidence of record that approval of APMC’s application would meaningfully and significantly enhance geographic access to transplant services in OTSA 3. The modest improvement in geographic access for the few patients that are to be served by the program is not significant enough to justify approval in the absence of demonstrated need. There is no evidence that approval of the APMC application will enhance financial access, or that patients are not currently able to access PHT services because of payor status. Section 408.035(1)(g): The extent to which the proposal will foster competition that promotes quality and cost- effectiveness. It is clear that establishing and maintaining a transplant program is expensive and entails a significant investment of resources. Given the limited pool of patients, the added expense of yet a sixth Florida program is not a cost- effective use of resources. Section 408.035(1)(i): The applicant’s past and proposed provision of health care services to Medicaid patients and the medically indigent. OH is the designated safety net provider for the Central Florida region. In 2016, OH provided approximately $437 million in unreimbursed charity care. OH’s commitment to provide health care services to its entire community without regard to ability to pay continues today. Fifty-five percent of the patients served by APH are Medicaid beneficiaries, and 5-7 percent are self-pay or uninsured. If approved, OH’s mission and role as a safety net provider would extend to its proposed PHT program.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a final order be entered denying CON Application No. 10518 filed by Orlando Health, Inc., d/b/a Arnold Palmer Medical Center. DONE AND ENTERED this 26th day of December, 2018, in Tallahassee, Leon County, Florida. S W. DAVID WATKINS Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 26th day of December, 2018.
The Issue The issue in this case is whether Venice Hospital, Inc., (Venice) meets the statutory and rule criteria for a Certificate of Need (CON) to operate an open heart surgery program, and therefore, whether the Department of Health and Rehabilitative Services (Department) should approve its CON Application Number 5715.
Findings Of Fact The Parties 1. Venice is a 342 bed general hospital located in Venice, Florida, which is in south Sarasota County and is a part of the Department's Service District There are no subdistricts in District 8 for open heart surgery. The majority of patients served by Venice are from 50-55 years of age or older, and 22%-25% of patients admitted to Venice have a primary diagnosis of heart disease. If patients with heart disease as a secondary diagnosis are considered along with those who have this as their primary diagnosis, the total represents over 40% of all patients admitted at Venice. Of the cardiac catheterization patients treated at Venice in 1988, 78% were Medicare patients. Venice is a Medicaid provider, projecting 1.6% of its total revenue from Medicaid. It has a critical care center with 32 beds capable of invasive monitoring, multi-infusion of medications, pacemakers, Swans Ganz catheters, and care of post- catheterization patients. A separate 8-bed unit has been designated for use by open heart patients, with the same monitoring capability as the remainder of the unit. Memorial is an acute care hospital located in Sarasota, Florida, and is governed by the Sarasota County Public Hospital Board, which is elected to provide health care services to all residents of Sarasota County. It provides a full range of services, including an open heart surgery program, and is the largest provider of services to medically indigent and Medicaid patients in Sarasota County. Medical Center is a 208 bed not-for-profit hospital located in Punta Gorda, Florida, which has provided cardiac catheterization since 1985, and has been approved to initiate an open heart surgery program which is scheduled to open in late 1989. It has a 5% Medicaid payor mix. The primary service area for Medical Center is Charlotte County. Its secondary service area includes south Sarasota County. Both Memorial and Medical Center are also located in District 8, with Venice located between these facilities. Venice is approximately 35 miles to the north of Medical Center, and about 25 miles to the south of Memorial. There are two existing open heart programs in District 8, one at Memorial and the other at Southwest Regional Medical Center in Ft. Myers. In addition, there are two approved, but not yet operational, open heart programs, one at Medical Center and the other at Lee Memorial in Ft. Myers. The Department is the state agency which is responsible for administering Sections 381.701 through 381.715, Florida Statutes, the "Health Facility and Services Development Act", under which applications for Certificates of Need (CON) are filed, reviewed, and either granted or denied by the Department. The Application On or about September 27, 1988, Venice filed an application with the Department for a CON to implement an open heart surgery program at its hospital in Venice, Florida, with a capital expenditure of $665,500. This application was designated as CON Application Number 5715. The Department reviewed this application, and in October, 1988, forwarded an omissions letter to Venice. Venice responded to the omissions letter, and addressed not only the items noted by the Department in its omissions letter, but also provided additional materials, information, and corrections not requested in the omissions letter. Effective on November 14, 1988, the Department deemed Venice's application complete. A public hearing was held on this application at the request of Memorial on November 18, 1988. Thereafter, the Department reviewed and considered all material received from the applicant, as well as the information received at the public hearing, and prepared its State Agency Action Report (SAAR) noticing its intent to grant CON 5715. Memorial and Medical Center timely filed petitions to challenge the Department's notice of intent to issue this CON. Venice is relying upon its application which was deemed complete and reviewed by the Department in its SAAR, and not upon its original application that was filed prior to the omissions letter. Additionally, the applicant is not relying upon a "not normal circumstance" justification for its application, but rather urges that it meets the statutory and rule criteria for the issuance of this CON. The Department's CON Manual HRSM 235-1, dated October 1, 1988, is irrelevant to this proceeding since it has not been adopted by, or incorporated in, a rule, and was not applied in the batching cycle in which Venice's application was filed, or in the subsequent batch. It has not yet been applied to any hospital CON application. Therefore, the matters contained within this Manual concerning what is a permissible response to an omissions letter have not been considered. As part of its originally filed application, Venice included a document prepared by Ernst & Whinney entitled, "Audited Financial Statements and Other Financial Information, Venice Hospital, Inc., June 30, 1987." Through a clerical error in the copying process, page one of this twenty-four page document was omitted. At the time it filed its omissions response, Venice included this missing first page which is signed on behalf of Ernst & Whinney, and which states that the examinations contained therein were made in accordance with generally accepted auditing standards. It expresses the opinion that these financial statements present fairly the financial position of the applicant. An auditor's opinion letter is an essential part of the audited financial statement which must be included with the CON application. However, Venice provided this inadvertently missing page prior to its application being deemed complete. Thus, it was available to, and was reviewed by, the Department in the preparation of the SAAR on this application. Venice's application did raise concerns which it was seeking to address concerning availability and accessibility by addressing the current practice of transferring patients requiring open heart surgery to other facilities. Patient costs for such transport, as well as patient risk, inconvenience and comfort for the patient and family members, were all referenced in the application. Additionally, testimony at the public hearing held on November 18, 1988, which the Department considered in the preparation of its SAAR, dealt with concerns and problems arising from patient transport, including delay, risks to the patient from ambulance or helicopter transfers, and adverse effects which may occur on quality of care through this practice which is inconsistent with the concept of a continuum of care. The SAAR specifically notes that Venice contends its proposal will improve geographic access in its immediate service area, and that from July, 1987 through June, 1988, it transferred 144 of its cardiac patients from its facility for open heart surgery and an additional 125 were transferred for angioplasty procedures. The application did not specifically address or identify any adverse impact which its approval would have on existing providers. However, evidence on this issue is admissible at hearing since it is relevant to the issue of the standing of Memorial and Medical Center, and also because it is relevant to establish whether approval of this application would be consistent with statutory and rule review criteria, and provisions of the Local Health Plan that require assessment of any such impact. The SAAR notes that Venice did contend that approval of this CON will not affect the economy or quality of existing services in the District. Stipulations The parties stipulated that: The project is financially feasible in the short term; Venice has a record of providing quality care and this record is not an issue in this case; Other than for open heart services, other facilities are adequate and available to act as alternatives; The size and cost of construction for Venice's proposal are appropriate; Open heart surgery programs currently exist within a two hour drive time under average driving conditions for at least 90% of the District's population; The type and cost of equipment in the application are reasonable; If approved, Venice will provide the services required by Rule 10- 5.011(1)(f)3a and 3b, Florida Administrative Code, and does provide the services shown at paragraph 3c of said Rule. State Health Plan Objective 4.2 of the State Health Plan applicable to this application is to "maintain an average of 350 open heart surgery procedures per program in each district through 1990." (Emphasis Supplied.) The goal set forth in the State Plan relative to open heart surgery programs is to ensure the appropriate availability of such services at reasonable costs. Venice's application is not consistent with Objective 4.2. If Venice's application were to be approved, there would be five programs in the District. The number of procedures projected for 1990 is 1683, and if 1683 is divided by 5 programs, the result is an average of only 337 procedures per program. The two existing providers in District 8 are currently performing over 1600 procedures annually, and as is discussed below, it does not appear that Venice itself will be able to achieve an acceptable level of service at any time established by the record in this case. Approval of this application will also significantly and adversely impact the ability of the two approved programs to achieve an acceptable level of service. In the State Health Plan narrative, it is recognized that "quality of patient care is a primary concern in open heart surgery programs due to the potential consequences to the patient of poorly trained and/or skilled staff.11 In order to ensure quality, and in recognition of the relationship between the volume of open heart surgery procedures and quality, the State Plan references the Department's requirement, set forth by Rule, that a minimum of 200 adult procedures be performed within 3 years of initiation of an open heart program. The narrative also notes that a broad range of services must be provided to fulfill the requirements of an open heart surgery program. Venice's application is partially consistent with these narrative statements in the State Health Plan since the parties have stipulated that it has a record of providing quality care, and it offers a complete range of services with departments within the hospital where a broad range of diagnostic techniques and expertise are available. However, it was not established that a minimum of 200 adult open heart surgical procedures will be performed at Venice within three years of initiation of this program. Local Health Plan Even though an applicant does not include within its application every element in a Local Health Plan which is relevant to its application, the Department itself will look at the applicable Local Plan to determine if an application is consistent therewith. The applicable District 8 Health Plan recommends that "existing facilities should be afforded the opportunity for expansion before developing a new cardiac surgical center." However, if a numeric need for an additional program is shown, and if existing facilities do not seek to expand their existing programs to meet such need, an application for a new program would not be inconsistent with this portion of the Local Health Plan. Under the facts of this case where there are no competing applications from hospitals with existing open heart surgery programs, and where a numeric need for one additional program in District 8 is projected by the Department's need methodology, Venice's application is consistent with this recommendation. The Local Plan also recommends that preference be given to applications for new or expanded programs which clearly document the impact of the proposed new service on existing providers in the District and adjacent Districts. As found above, Venice did not specifically address any adverse impact its proposal would have on existing providers, and therefore, its application is not consistent with this recommendation. The Department's Need Methodology and the "35O Rule" Rule 10-5.011(1)(f)8, Florida Administrative Code, sets forth the Department's methodology for calculating the numeric need for additional open heart surgery programs It provides a formula by which the number of open heart procedures for the horizon year, in this case 1990, are to be estimated. Pursuant to the formula, there are projected to be 1683 open heart surgery procedures performed in 1990 in District 8. This number of projected procedures is then divided by 350 procedures in order to determine the number of programs which will be needed. See Rule l0-5.011(1)(f)11b. Using this methodology, the Department has identified the need for 4.8, rounded to 5, programs in the District in the horizon year. Since there are currently 2 existing and 2 approved programs in District 8, the Department and Venice have concluded that there is a projected numeric need for Venice's additional program in 1990. There is a direct relationship between the volume of open heart surgery procedures performed at a facility and the quality of care provided at such facility, with lower mortality rates generally at hospitals with higher volumes than those with low volumes. Therefore, in addition to its numeric need calculation, the Department has also developed a "350 standard" to address patient safety and quality of care concerns by ensuring that each existing and approved open heart surgery program achieves a volume sufficient to assure quality and efficiency prior to approval of a new program. Rule 10- 5.011(1)(f)11aI, Florida Administrative Code, prohibits the establishment of new open heart surgery programs unless: the service volume of each existing and approved open heart surgery program within the service area is operating at and is expected to continue to operate at a minimum of 350 adult open heart cases per year. Memorial and Medical Center urge an interpretation and application of the 350 standard in a manner which would require each existing and approved program to actually operate at the level of 350 cases per year. Since approved programs are not yet operational, and therefore cannot operate at the 350 level, they argue that the intent of this standard, as set forth in the above-cited Rule, is to preclude the approval of any additional programs while there are approved programs, or existing programs which are not meeting the 350 standard. To the contrary, the Department and Venice urge that the 350 standard be applied by averaging the actual number of cases at existing programs, and the number of cases which are reasonably projected to be performed at approved programs. Under this interpretation, as long as the average between cases which are performed at existing, and which are reasonably projected to be performed at approved programs exceeds 350, then the further approval of an additional program is not prohibited. Having considered the testimony and evidence presented by the parties, and in particular the testimony of Eugene Nelson and Elizabeth Dudek, which is found to be more credible, consistent, and reasonable than the testimony of Michael Carroll and Harold Luft, it is found that the Department's interpretation and application of the 350 standard is reasonable and consistent with the terms of Rule 10- 5.011(1)(f)11aI. It is also noted that if the interpretation urged by Memorial and Medical Center were to be followed, it is inexplicable how there could presently be two approved, but not operational, open heart programs in District 8. The Department has consistently applied this 350 standard since its adoption in 1983 by averaging caseloads at existing programs and reasonably projected caseloads for approved programs. To interpret this standard as urged by Memorial and Medical Center would impose a moratorium on new open heart surgery programs while there is an already approved, but not operational, program in a District, or while a newly operational program has not yet attained the 350 standard. There is no basis for this prohibitory interpretation which would not only reduce competition, but would also be inconsistent with sound health planning and the State Health Plan Objective 4.2, as discussed above. Quality of Care Venice is accredited by the Joint Commission on Accreditation of Health Care Facilities for special care units, and it has been stipulated that it has a record of providing quality care in its existing programs and departments. On average, hospitals performing greater than 200 open heart procedures per year have superior surgical outcomes than hospitals doing less than 200 procedures. Mortality rates are significantly lower at hospitals performing more than 200 procedures annually than at those performing less. It was established that there is a direct relationship between volume of open heart surgical procedures and quality of care at facilities with open heart surgery programs. Therefore, the existence of more open heart programs than are truly needed in an area may result in some existing programs not achieving sufficient volume to assure patient safety and quality of care. Certainly, not every hospital should have an open heart program, but as long as there is sufficient volume to assure quality, the competition among programs will encourage quality care, and result in an overall increase in the quality of care provided at all departments in a hospital with an open heart program. Rule 10-5.011(1)(f)5d, Florida Administrative Code, was adopted by the Department in order to set forth the minimum volume deemed necessary to assure quality of care, and provides, in part: There shall be a minimum of 200 adult open heart procedures performed annually, within 3 years after initiation of service, in any institution in which open heart surgery is performed for adults. Although Venice urges that it will be able to meet this threshold level within three years, it failed to establish by competent substantial evidence that it would actually attract the patients necessary to perform either the number of open heart procedures projected in its application, or this minimum number of 200 procedures required by the Department to assure quality of care in its third year of operation, given the current pattern of physician referrals in the area, its market share in relation to those of Memorial and Medical Center, and actual utilization levels for the existing District 8 programs at Memorial and Southwest Regional Medical Center, as is more fully discussed below. Without the assurance of sufficient volume to meet the 200 procedure threshold established by the Department by Rule, the validity of which is not at issue in this case, Venice has failed to show that it will be able to achieve and maintain a patient volume in its proposed program which will assure quality of care in its proposed open heart surgery program. Availability and Access While the addition of the Venice program would obviously increase the availability of services in the District, open heart surgery services are already reasonably available in District 8, especially in view of there being two approved programs which will become operational before 1990, the horizon year in this case, in addition to the two existing programs. The two hour travel time standard is already being met in District 8, as stipulated to by the parties. Geographic accessibility will not be appreciably or significantly increased by this proposal since Venice's facility lies approximately midway between Memorial and Medical, which are sixty miles apart. There is significant excess capacity in existing and approved open heart surgery programs in District 8 during most of the year, especially at Memorial. Therefore, there is ready access to, and availability of open heart surgery services to patients in the District. Venice did not establish that approval of its application would enhance access to open heart surgery services for the medically indigent. Despite its assertion in its application that its program would be available to the underserved, there is no definite commitment to serve charity care patients as a percentage of total patient days or of total revenue. Venice has proposed to serve Medicaid patients at the level of 1.5% of total patient days, but Medicaid patients are currently receiving services through existing programs at substantially higher levels of commitment. The applicant has reserved the right to refuse non-emergency care to indigents. While it was established that unstable patients who have to be transferred from one hospital to another face increased risks, and that members of the medical staff at Venice feel that there are unacceptable delays in transferring patients who need open heart surgery from Venice to other facilities due to an asserted lack of available beds, it was not shown that such delays have actually jeopardized the safety of patients or resulted in a reduction in the quality of care received by patients to an unacceptable level. A delay in transferring a patient from one facility to another of from 6 to 8 hours is reasonable, and in line with experience nationally. The anecdotal evidence presented by Venice on this point was not competent and substantial, and in fact shows that the number of delays exceeding 8 hours has increased only slightly from 1986 to 1988, a condition that may be addressed in any event when the two approved programs become operational. Additionally, the applicant never formally shared any concerns about transfer delays with existing facilities in an effort to reduce such delays or to document extreme cases of delay. Transfer delays are exacerbated by seasonal increases in population in District 8, but there continues to be a reasonable likelihood that patient transfers can be accommodated, even during seasonal population increases, without adverse impacts to patient care. However, a large majority of open heart surgery cases are non- emergency that can be scheduled for surgery within 6 to 48 hours after diagnosis without any compromise in patient care. Emergency patients are given priority, and there are sufficient available beds to accommodate emergency patients, regardless of seasonal delays. Recent studies have shown that even emergency patients benefit from a delay of up to 24 hours in order to stabilize their condition rather than rushing them to surgery. In any event, such seasonal delays do not establish that there is a lack of available beds in District 8 which would require the approval of this application, especially with two approved programs already in the District which will become operational by 1990. Alternatives Considered Venice did not fully explore alternatives, including less costly alternatives, to a new program at its facility, such as a joint or shared program with an existing provider. In fact, a consultant retained by Venice recommended on September 8, 1988, that Venice pursue a joint program with Memorial, but Venice never approached Memorial to ascertain if its administrators or medical staff would be interested in such a joint effort, even though these two hospitals have previously cooperated in providing joint services in obstetrics, shared nursing services, and jointly provided emergency services to the Town of North Port. Memorial previously loaned Venice 24 nursing full time equivalent positions (FTE) to fully staff a 35 bed unit at Venice during a critical nursing shortage. There are existing or approved open heart surgery programs at Tampa General Hospital, Manatee Memorial Hospital in Bradenton, Memorial, Medical Center, and Southwest Regional Medical Center in Ft. Myers. In addition, there are additional approved programs at HCA Blake Memorial Hospital in Bradenton and at Lee Memorial in Ft. Myers. Venice did not consider these existing and approved programs as alternatives to its proposed new program. It was not established that Venice has attempted, or proposed to establish a joint open heart surgery program with any of these facilities, or to secure staff privileges for its cardiologists at Memorial, or any of these other hospitals. Regionalization of health care services for open heart surgery patients is being encouraged and reviewed by the Medicare program. Under this concept, primary care hospitals would treat common diagnoses and offer common treatments, while regional referral hospitals would provide specialized care and offer more complex services referred to as tertiary level services. Open heart surgery is a specialized, tertiary care service. Venice did not consider regionalization or establish why it would not be appropriate in District 8. Personnel Availability and Costs There has been a long-term shortage of nurses, particularly in intensive care and open heart surgery, which even Venice's expert in nursing administration recognized and acknowledged. This shortage is present in Sarasota County not merely for nursing staff, but also for technical support staff, and is particularly acute in operating room and critical care personnel. While Venice does have nursing staff with open heart surgery experience, it would have to recruit additional nurses to fully staff this new program. It is not always possible to fill open heart surgery or critical care nursing positions with trained personnel. Memorial presently has 32 registered nursing vacancies, including 5 open heart surgery and 3 open heart critical care RN positions, despite a full-time nurse recruiter and an aggressive recruiting program. Because of this critical shortage, Memorial has been forced to use "traveler" or temporary nurses in its open heart surgery unit. In contrast to Venice's lack of actual experience in attracting and training open heart surgery and critical care nurses, Memorial established that in Sarasota County, it takes 6 to 8 months and costs $15,000 to $16,000 to train open heart surgery nurses, and 6 to 8 weeks to- train open heart critical care nurses. Venice will compete with Memorial and Medical Center in attracting open heart surgery nursing and technical staff. There has been a recent instance of a nurse leaving Venice to join Memorial, being trained as an open heart surgery nurse at Memorial, and then leaving to return to Venice. With the limited pool of available, trained open heart surgery nurses, and in view of the two approved open heart surgery programs in District 8 which need to be staffed and become operational prior to 1990, the implementation of the Venice program will have an adverse impact on the ability of existing and approved programs to attract and maintain trained open heart surgery nursing and technical staff, and can reasonably be expected to increase personnel costs for these providers. Venice proposes to add two cardiovascular surgeons to its medical staff prior to opening its open heart surgery program, and to retain a consulting firm to assist in recruiting these physicians. However, the consulting firm contacted by Venice has not agreed to accept this recruiting assignment. Memorial has been trying to recruit an additional open heart surgeon for over a year, without success. Venice has been trying to recruit a neurosurgeon, neurologist or cardiologist for almost a year, without success. It is, therefore, reasonable to infer that Venice will have difficulty recruiting two cardiovascular surgeons in less that one year. The salaries and benefits in Venice's application are generally reasonable, including the proposed salary for a perfusionist, although it did slightly underproject open heart surgery nursing salaries. However, its estimate of the number of additional positions, or FTE, which would be required throughout the hospital to accommodate the workload resulting from an open heart surgery program is incomplete. For example, an additional 3.5 FTE that would be needed for the clinical lab and donor center is not reflected in the application, although the costs associated therewith are included. Venice does have a record of successfully staffing critical care services, such as its open heart catheterization and thoracic surgery programs, without attracting staff from other hospitals in the District. It does propose to have a training program for open heart surgery personnel, and has an affiliation with nurse training programs at four universities. Financial Feasibility In its application, Venice projects that it will perform 125 open heart surgery procedures in its first year of operation, 175 in its second year, and 211 in its third year of operation. However, it is specifically found that these projections are not reasonable, based upon the testimony and evidence received. The testimony and exhibits prepared by Mark Richardson and Michael Carroll, who were accepted as experts in health planning, as well as the testimony offered by Rick Knapp, an expert in health care finance, was more credible and persuasive than, and outweighs the testimony and exhibits prepared by Eugene Nelson, an expert in health care planning, Dr. Henry W. Zaretsky, an expert in health care economics and planning, and Michael Rolph, who was accepted as an expert in health care finance and accounting. Initially, Venice relies upon the Department's Rule for determining the numeric need for additional programs, discussed above, and divides the Department's number of projected procedures in District 8 (1683) by 350 to arrive at the need for an additional program in 1990 by rounding 4.8 up to 5. However, Venice has conducted no analysis of market share or physician referral patterns to test the reliability of this projected need. Thus, this projection of numeric need is made in a vacuum, without any reference to the actual number of procedures already being performed, or actual market shares and referral patterns which are critical to an understanding of patient and physician preferences which have existed, and are likely to continue to be experienced, in the future. Venice's administration and members of its medical staff consider Memorial's open heart surgery program to be excellent and convenient to Venice's patients. It is unlikely that all five of Venice's cardiologists will refer all of their open heart surgery patients to Venice, and in fact, a member of Venice's medical staff who supports this application testified that he would only refer about half of his patients to Venice. Since most open heart patients are referred, and since there is no apparent dissatisfaction with the quality of Memorial's program, existing market share and referral patterns would likely continue and should have been considered in any meaningful analysis presented by the applicant. For the July, 1990 horizon in District 8, the Department's numeric need methodology projects that there will be 1683 open heart surgery procedures. With referral patterns in place and two existing providers with operational and well regarded programs, it is unlikely that Venice will have an automatic, equal share of the District's pool of open heart patients, or even that it will perform the 125 procedures in its first year, and 175 procedures shown on its pro forma for the second year of operation. In fact, the two existing providers, Memorial and Southwest Regional Medical Center, already performed 1637 procedures in 1988, leaving fewer than 50 procedures projected through the Department's numeric need methodology for the two already approved programs and Venice, if it were to be approved. Memorial has been performing over 600 procedures per year from 1986 through 1988, and has the capacity to perform up to 1,000 procedures annually. Thus, the existing and approved programs have more than sufficient capacity to absorb growth in open heart surgery volumes which are being projected. A second method Venice uses to justify its projected number of open heart procedures is to quantify the population of Venice's service area, and then apply the Department's open heart surgery use rate to that population. This assumes that virtually all of Sarasota County's population growth will occur in the south county area, which is an inaccurate assumption, and also assumes that Venice will capture all of the open heart surgeries in its service area, which is unreasonable given existing market shares and referral patterns. Memorial presently has a 42% market share of District 8 open heart surgery patients. To perform 200 procedures in its third year of operation, Venice would have to capture an 83% market share, and there is no basis to find that it would be successful in attracting this unreasonably high market share in its primary service area. In fact, Venice projects that it will only achieve a 45% and 61% market share in the first and second year of operation, respectively. Applying these percentages, Venice will perform 99 procedures in its first year, not 125, and 140 in its second year, not 175. It must be noted that Venice's consultant, which had recommended that it explore a joint or shared program with Memorial, had projected market shares of only 29% in the first year, 35% in the second year, and 45% in year three. Using these figures, Venice would only perform 63 procedures in its first year of operation, 81 in the second year, and 102 in the third. Given this level of operation in its second year of operation (81 procedures), the Venice program would lose $334,000 in its second year, and therefore, not be financially feasible. The third method used by the applicant to support its projection of the number of procedures it will perform, which is the basis of its assertion of financial feasibility, is based upon its assessment of cardiac catheterization volumes and applies a conversion factor to determine the number of open heart surgery procedures that will result. This analysis again assumes that it would receive a 100% market share, and does not take into account referral patterns and satisfaction with existing programs. In addition, while the growth of Venice's cardiac cath volume has stabilized, and may even be decreasing, this analysis incorrectly uses a l5%-16% annual growth rate in cardiac caths through 1990, which is unrealistic and not supported by the record. Venice relies upon the expert testimony of Eugene Nelson to establish that the use rate for open heart surgery has been increasing since 1985, and will continue to increase. The use rate increased over 53% between 1985 and 1988, and Nelson projects a continued 15.3% annual increase in the use rate through 1991. Under his projections the use rate per 100,000 population will be 235.79 in 1990, and 257.97 in 1991. Nelson's projected continued annual increase in the use rate of over 15%, and the use rates he projects for 1990 and 1991, are unreasonable. He has ignored the fact that annual increases in the use rate have been steadily decreasing from 17.5% between 1985 and 1986, to 13% between 1987 and 1988, as testified to be all health planners, and as even he acknowledged. Applying this decrease in the annual use rate increase, it would be increasing only 9% in 1990, and this would result in a total of 2108 procedures that could be projected to be performed in 1990. With the two existing programs in District 8 already performing 1600 procedures, a figure that will reasonably grow by 1990, there will be less than 444 procedures for the two already approved programs and Venice, if it were to be approved. Given this fact, which is even acknowledged by Venice, it is unlikely that Venice will be able to reach its projected number of cases in its first two years of operation in order to achieve financial feasibility. As recognized by Harold Urschel, Jr., M.D., who was called by Venice as an expert in cardiovascular surgery and open heart surgery programs, for the next five years open heart surgery volumes nationally will be "stable", although they "probably" will go up some. Open heart use rates have plateaued on a national level, with an average national use rate of l80~per 100,000 population. This use rate compares favorably with the Department's current use rate of 183 for District 8, and further questions the reasonableness of Nelson's projected use rates of almost 236 and 258 in 1990 and 1991, respectively. These use rates have stabilized and shown a marked decrease in their rates of increase due to the development of acceptable alternatives to open heart surgery, and close review of the necessity of this treatment by third party payors. As testified to by Nelson, there is a danger that an excess of open heart surgery programs in an area will exacerbate an already stabilized or flattened use rate, and may cause it to decline. He cited both the Miami and Jacksonville areas as examples of Districts in which there appear to be an excess of programs, with a resulting decline in the District's use rate, and inability of a substantial number of programs to even achieve the requisite level of 200 procedures per year to maintain quality of care. When it comes to open heart surgery programs, more is not necessarily better and may actually result in less, according to Nelson. Even applying Nelson's inflated use rate of 236 per 100,000 population in 1990 to the Venice service area population, the applicant will not achieve its projected number of procedures when the market share of 29% in 1990 predicted by Venice's consultant is considered. Applying its consultant's projected market shares, Venice will realize only 81 procedures in the first year, 98 in year two, and 126 procedures in the third year. Since Venice's pro forma bases its assessment of financial feasibility upon its projections of 125 procedures in year one, and 175 in year two, and since the applicant has not established the reasonableness of these projections, the long- term financial feasibility of this project has not been shown. Further, Venice has also failed to establish that it can reasonably be expected to achieve the level of 200 procedures in its third year, and therefore, it has also failed to show that it can achieve that minimum level which the Department, by Rule, requires to ensure quality of care. In other respects, the assumptions used by Venice in its pro forma are reasonable, including its 2% inflation factor for income, bad debt, payor mix and utilization by class of pay, projected charges, expenses, and depreciation. Effect on Competition and Costs There will not be a significant difference between the charges proposed by Venice and the actual charges at Memorial. The applicant projects that 80% of its open heart surgery will be reimbursed through Medicare, which reimburses on a fixed fee basis to which hospital charges have no direct relevance. Therefore, there would be no appreciable impact on costs in the health care community if this application is approved. As previously discussed, there would be greater competition among existing and approved programs in District 8 for trained open heart surgery and critical care nurses, which are in short supply. While Venice has projected open heart surgery nurses' salaries at a somewhat unrealistically low level, it can reasonably be expected that greater competition for trained personnel who are in short supply will eventually result in higher salaries and health care costs. If this application is approved, the cost to transport patients who require open heart surgery from Venice to another facility would be eliminated. This would mean that patients could avoid a $235 to $250 ambulance charge for transfer to Memorial, a $450 charge for ambulance transport to Tampa General, or a $1,000 to $1,300 helicopter charge for transport to Tampa General Hospital. This savings is not significant when compared to total charges for open heart surgery procedures. Impact on Existing and Approved Programs As discussed above, approval of the Venice application will adversely affect the ability of existing providers to attract and retain trained open heart surgery and critical care RNs due to the already existing shortage of personnel to fill these positions, and the fact that two already approved programs will become operational prior to Venice's program, if it were to be approved. Although Memorial has the capacity to perform 1,000 open heart surgery procedures annually, Venice's expert, Eugene Nelson, projects that if the Venice program is approved, Memorial will experience only a 12% growth between 1988 to 1991, and will only perform 771 cases in 1991. Curiously, he then concludes that this represents no impact on Memorial. The proposed primary service area for the Venice program and Memorial's primary service area completely overlap, and they are, therefore, competing for the same open heart surgery patients. Venice has been referring 85%-87% of its patients who require open heart surgery to Memorial. If Venice had its own open heart surgery program, the need for transfer and referral would be obviated. In the second year of operation, Venice projects on its pro forma that it will perform 175 cases. Using its own projection of 85%, 149 to 150 of these cases would have been transferred to Memorial, but for the Venice program. If the more realistic number of 81 procedures in the second year of operation for the Venice program is used, 69 cases which would have otherwise been transferred to Memorial would stay at Venice. Rick Knapp, who was accepted as an expert in health care finance, provided a reasonable estimate of financial impact upon Memorial, given these projected losses in patient referrals. He concluded that Memorial would experience a net income reduction of approximately $1.4 million if Venice's projection of 175 cases in its second year is correct, and Memorial lost 149 to 150 referrals. Even Michael Rolph, who was called as an expert in health care finance by Venice, testified that Memorial would loose $2 million in net revenue if it lost 100 open heart surgery patients. If the more realistic figure of 81 cases in the second year were used, there would also be a net income loss for Memorial, but more importantly for purposes of this case, it was established through Knapp's testimony that Venice's program would lose $334,000, and not be financially feasible. It is, of course, recognized that Memorial would still experience a growth in its absolute number of open heart procedures due to population increases and increases in the use rate. However, any such increase in the absolute number of procedures performed at Memorial through growth does not obviate the fact that the total number of procedures it would have performed will be significantly reduced by the loss of referrals from Venice, if this application is approved. This is particularly noteworthy given its excess capacity. Memorial's most recent annual gross income was $160 million, with an operating margin (profit) of between $3.5 and $3.9 million. Therefore, losses which would result from the Venice program would not threaten the financial viability of Memorial, but would be significant in terms of its open heart surgery program. Jerry Sommerville, an expert in hospital finance, estimated that 9% of Medical Center's open heart surgery cases would come from the Venice area, which is included in Medical Center's secondary service area. If these cases are lost to Medical Center with the opening of the Venice program, Medical Center's projected 150 cases in 1990 would be reduced by 13.5, and in 1991 its projection of 200 cases would be reduced by 18. These reductions would result in a net revenue loss for Medical Center of $254,000 with a gross marginal loss of $62,800 in 1990, and a net revenue loss of $329,500 with a gross marginal loss of $95,200 in 1991. This represents a significant reduction in income for this open heart surgery program in its first years of operation. Medical Center's most recent annual profit margin was approximately $1 million.
Recommendation Based upon the foregoing, it is recommended that the Department enter a Final Order which: (l) Denies Memorial's Motion for Summary Adjudication; Dismisses Medical Center as a party due to a lack of standing; and Denies Venice's CON Application Number 5715. DONE AND ENTERED this 28th day of September, 1989 in Tallahassee, Florida. DONALD D. CONN Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 Filed with the Clerk of the Division of Administrative Hearings this 28th day of September, 1989. APPENDIX (DOAH CASE NOS. 89-1412 & 89-1413) Rulings on the Petitioners' Proposed Findings of Fact: Adopted in Finding 6. Adopted in Findings 6, 17. Adopted in Finding 6. Adopted in Finding 9. Adopted in Findings 6, 9. Rejected as a conclusion of law. 7-8. Adopted in Finding 1. Adopted and Rejected in part in Finding 12. Adopted in Finding 15; Rejected in Finding 16. Adopted in Finding 17. Rejected in Finding 41, as otherwise as irrelevant. Adopted and Rejected in part in Findings 41, 42. Rejected as irrelevant. 15-18. Adopted and Rejected in part in Finding 42. 19. Adopted in Finding 43. 20-21. Rejected in Finding 43. Adopted in Finding 38. Adopted and Rejected in Finding 53. Adopted and Rejected in Finding 57. Rejected in Finding 57. Rejected in Finding 55. Adopted and Rejected in Findings 55, 56. Adopted in Finding 57. Rejected in Finding 57. Adopted and Rejected in Finding 57. Rejected as irrelevant. Adopted in Findings 12, 20 and 39; Rejected in Findings 53, 55 and 56. Adopted in part in Finding 27, but otherwise Rejected as unnecessary. Rejected as irrelevant and unnecessary. Rejected in Finding 44. Adopted in Finding 44. Adopted in Finding 37; Rejected in Findings 38-47. Rejected in Finding 41. Rejected in Finding 25. Rejected as irrelevant and unnecessary. Rejected in Finding 26. Adopted in Finding 21. Adopted in Finding 43. Adopted in Finding 34, but otherwise rejected as unnecessary. Rejected in Finding 24. Adopted in Finding 6. Adopted in Finding 11. Adopted in Finding 35. Adopted and Rejected in part in Findings 34, 35. 50-54. Adopted in Finding 48. 55-61. Adopted in Finding 11. Adopted in Finding 1. Adopted in Finding 31. Adopted and Rejected in part in Finding 35. Adopted in Finding 36; Rejected in Finding 35 and otherwise as irrelevant and unnecessary. Adopted in Finding 36; Rejected in Finding 33. Adopted in Finding 35. Rejected as cumulative and unnecessary. Adopted in Finding 36. Adopted in Finding 31. Adopted in Finding 6. Rejected as unnecessary. 73-75. Rejected in Finding 27 and otherwise as irrelevant. Adopted in Finding 27. Adopted in Finding 22. Rejected in Finding 27 and otherwise as unnecessary. Adopted in Finding 51. 80-81. Rejected in Findings 28, 29. 82-85. Rejected in Finding 49 and otherwise as irrelevant. 86. Rejected as not based on competent substantial evidence. 87-94. Rejected in Finding 49 and otherwise as irrelevant. 95. Adopted in Finding 22. 96-97. Rejected as irrelevant and unnecessary, and simply a summation of and argument on the evidence. 98. Adopted in Finding 11; Rejected in Finding 24. Rulings on the Respondents' Proposed Findings of Fact: Adopted in Finding 1. Adopted in Finding 6. Adopted in Finding 2. Adopted in Finding 3. Adopted and Rejected in part in Finding 17. Adopted in Finding 17. 7-9. Adopted in Finding 18. 10. Adopted in Findings 18, 22. 11-12. Adopted in Finding 22. 13-14. Rejected in Finding 20. 15-17. Rejected as irrelevant and unnecessary. 18. Adopted in Finding 18. 19. Adopted in Finding 22; Rejected in Finding 20. 20. Adopted in Finding 30. 21. Adopted in part in Finding 13, but otherwise Rejected as irrelevant and unnecessary. 22-23. Adopted in Findings 15, 16. 24. Adopted in Findings 4, 25. 25. Adopted in Findings 25, 39. 26. Adopted in Finding 26. 27-34. Adopted in Finding 27. 35. Adopted in Findings 22, 23 and 24. 36. Adopted in Findings 28, 29. 37. Rejected as unnecessary. 38-43. Adopted in Findings 28, 29. 44. Adopted in Findings 31, 32. 45. Rejected as unnecessary. 46-49. Adopted in Finding 34. 50. Adopted in Finding 24. 51. Adopted in Findings 24, 37. 52-55. Adopted in Finding 38. 56. Adopted in Finding 39. 57-61. Adopted in Finding 40. 62-64. Adopted in Finding 41. 65-66. Adopted in Findings 42, 43. 67. Adopted in Finding 44. 68-69. Adopted in Finding 46. 70. Adopted in Finding 47. 71. Rejected in Finding 48. 72. Adopted in Finding 40. 73. Adopted in Finding 47. 74-75. Adopted in Finding 49. 76. Adopted in Findings 55, 57. 77. Adopted in Findings 50, 52. 78. Adopted in Findings 31, 50 and 52. 79-82. Adopted in Finding 32. 83. Adopted in Findings 33, 50 and 52. 84. Adopted in Finding 33. 85. Adopted in Finding 32. 86-87. Adopted in Findings 33, 50 and 52. 88. Adopted in Findings 28, 29. 89. Adopted in Findings 24 through 27. 90. Adopted in Finding 6. 91-92. Rejected in Finding 7. 93. Adopted and Rejected in Finding 8. 94. Rejected in Finding 14 and otherwise as unnecessary. 95. Adopted in Findings 15, 16. 96. Rejected in Findings 14, 15. 97-99. Adopted and Rejected in Findings 12, 13. 100. Rejected in Finding 9. 101. Adopted in Findings 6, 9. COPIES FURNISHED: Theodore C. Eastmoore, Esquire A. Lamar Matthews, Jr., Esquire P. O. Box 3258 Sarasota, FL 33577 Robert A. Weiss, Esquire The Perkins House 118 North Gadsden Street Tallahassee, FL 32301 Charles A. Stampelos, Esquire P. O. Box 2174 Tallahassee, FL 32316 Richard A. Patterson, Esquire Fort Knox Executive Center 2727 Mahan Drive Tallahassee, FL 32308 Kenneth F. Hoffman, Esquire P. O. Box 6507 Tallahassee, FL 32314 R. S. Power, Agency Clerk 1323 Winewood Boulevard Tallahassee, FL 32399-0700 John Miller, General Counsel 1323 Winewood Boulevard Tallahassee, FL 32399-0700 Gregory Coler, Secretary 1323 Winewood Boulevard Tallahassee, FL 32399-0700
Recommendation Based upon the findings of fact and conclusions of law recited above, it is recommended that petitioner's applications for certificates of need to institute cardiac catheterization and open heart surgery services be GRANTED. Respectfully submitted and entered this 15th of January, 1979, in Tallahassee, Florida. DIANE D. TREMOR Hearing Officer Division of Administrative Hearings 530 Carlton Building Tallahassee, Florida 32304 (904) 488-9675 COPIES FURNISHED: Kenneth F. Hoffman Rogers, Towers, Bailey, Jones and Gay Post Office Box 1872 Tallahassee, Florida 32302 Robert M. Eisenberg District IV Legal Counsel Post Office Box 2417-F Jacksonville, Florida 32231 Charles Collette Art Forehand, Administrator Assistant General Counsel Office of Community Medical Department of HRS Facilities 1317 Winewood Boulevard Department of HRS Tallahassee, Florida 32301 1323 Winewood Boulevard Tallahassee, Florida 32301
