The Issue Whether the Certificate of Need (“CON”) applications filed by Seasons Hospice and Palliative Care, Inc. (“Seasons”); Gulfside Hospice and Pasco Palliative Care, Inc. (“Gulfside”); and West Florida Health, Inc. (“West Florida”); for a new hospice program in Agency for Health Care Administration (“AHCA” or the “Agency”) Service Area 6A/Hillsborough County, satisfy the applicable statutory and rule review criteria sufficiently to warrant approval, and, if so, which of the three applications best meets the applicable criteria, on balance, for approval.
Findings Of Fact Procedural History The Fixed Need Pool On October 3, 2014, the Agency published a need for one additional hospice program in Hospice Service Area 6A, Hillsborough County, for the January 2016 planning horizon. Under the Agency's need methodology, numeric need for an additional hospice program exists when the difference between projected hospice admissions and the current admissions in a service area is equal to or greater than 350. The need methodology promotes competition and access because numeric need exists under the methodology when the hospice use rate in a service area falls below the statewide average use rate. In a service area in which there is a sole hospice provider, as in the present case, the existing provider has an incentive to continually improve access to hospice services in the service area in order to avoid numeric need for an additional program under the formula. For the January 2016 planning horizon, the Agency determined that the difference between projected hospice admissions and current admissions in Hospice Service Area 6A was 759, and therefore a numeric need for an additional hospice program exists in Hillsborough County. AHCA is the state agency authorized to evaluate and render final determinations on CON applications pursuant to section 408.034(1), Florida Statutes. The Proposals and Preliminary Decision Nine applicants submitted CON applications seeking to establish a new hospice program in AHCA Service Area 6A, Hillsborough County, in response to the fixed need pool. LifePath, the only existing provider of hospice care in the service area, opposed the hospice application which was sponsored by a hospital system, i.e., West Florida’s. After reviewing the applications, the Agency preliminarily approved West Florida's CON Application No. 10302 and preliminarily denied the remainder of the applications, including Seasons’ CON Application No. 10298 and Gulfside's CON Application No. 10294. At the final hearing, Marisol Fitch, supervisor of AHCA's CON unit, testified that the Agency approved West Florida's CON application because it determined that West Florida's application best promotes increased access to hospice services for residents of Hillsborough County. The Agency concluded that Tampa General and Florida Hospital, West Florida's parent organizations, already have large infrastructures in place in Hillsborough County. Accordingly, the Agency determined that West Florida's proposed hospice program, if approved, would benefit from built-in access points that would enable West Florida to improve hospice accessibility. The Applicants, AHCA and Lifepath West Florida West Florida is a joint venture with 50-50 ownership and control by Tampa General and Florida Hospital, two acute care hospitals in Hillsborough County. The entity was created for the purpose of seeking the CON at issue in this proceeding for a new hospice in Service Area 6A. West Florida recently became the owner/operator of three home health agencies which had been operated for several years by the Florida Hospital System. Tampa General has not operated hospices in the past, while Florida Hospital has, and the CON application submitted by West Florida relied heavily upon the Florida Hospital-affiliated hospice’s programs and history. West Florida is the only applicant in this proceeding that is hospital affiliated. Seasons Seasons, the applicant, is a single purpose entity created for the purpose of seeking a CON to operate a new hospice in Service Area 6A. It is affiliated with Seasons Hospice and Palliative Care, a for-profit company (hereinafter referred to as “Seasons HPC”). Seasons HPC is the largest family-owned hospice organization in the country. The first Seasons HPC-affiliated hospice opened in Chicago, Illinois, in 1997. In 2003, Seasons HPC opened its second hospice in Milwaukee, Wisconsin, and in 2004, it acquired a third hospice in Baltimore, Maryland. Since 2004, Seasons HPC has continued to grow nationally by opening, or in some cases acquiring, hospices in new markets. Today, Seasons HPC is the fourth largest hospice company in the United States with 25 separate hospices operating in 18 different states. Each Seasons HPC-affiliated hospice is a separate entity, with its own license, executive director, and staff. However, each Seasons HPC hospice is connected via overlapping ownership and via contracts with Seasons Healthcare Management, its management company. Among the services that Seasons Healthcare Management provides to each Seasons HPC hospice are: education and training, quality management, financial planning support, management of payrolls, tax preparation, cost report preparation and coordination, IT services, corporate compliance policies and programs, marketing and development expertise, in- house legal services, and a wide variety of policies and consultations including, but not limited to, clinical support and physician oversight. Todd Stern is the CEO of Seasons Healthcare Management and is also the CEO of the 25 separate hospices that Seasons HPC operates throughout the country. Mr. Stern joined Seasons HPC in 2001, and was appointed CEO in 2008. Gulfside Gulfside is a 501(c)3 community-based, not-for-profit organization and is licensed by AHCA. Gulfside has been providing hospice services in Pasco County (which is contiguous to Hillsborough County) for more the 25 years. Gulfside provides service to all patients in need regardless of race, creed, color, gender, sexual orientation, national origin, age, qualified individual with a disability, military status, marital status, pregnancy, or other protected status. LifePath LifePath is the sole existing, licensed hospice provider in Hospice Service Area 6A, Hillsborough County. LifePath is a subsidiary of Chapters Health System. LifePath has provided hospice services in Hillsborough County since 1983. It was the first hospice program in the state to be accredited by The Joint Commission and has continuously maintained that accreditation. LifePath is also accredited by the National Institute for Jewish Hospices. In addition to providing routine, continuous, and respite care to residents of Hillsborough County, LifePath also provides inpatient hospice care in two, 24-bed hospice houses located in Temple Terrace and Sun City, Florida. Additionally, LifePath has scatter-bed contracts with all of the acute care hospitals in Hillsborough County to provide inpatient care. LifePath is an important part of the healthcare continuum in Hillsborough County and works collaboratively with other healthcare providers in the community, including hospitals, nursing homes, and assisted-living facilities. AHCA AHCA is the state agency responsible for administering the Florida CON program. Overview of Hospice Services In Florida, a hospice program is required to provide a continuum of palliative and supportive care for terminally ill patients and their families. A terminally ill patient has a medical prognosis that his or her life expectancy is one year or less if the illness runs its normal course. Under the Medicare program administered by the federal government, a terminally ill patient is one who has a life expectancy of six months or less. Hospice services must be available 24 hours a day, seven days a week, and must include certain core services, such as nursing services, social work services, pastoral or counseling services, dietary counseling, and bereavement counseling services. Physician services may be provided by the hospice directly or through contract. Hospice care and services provided in a private home shall be the primary form of care. Hospice care and services may also be provided by the hospice to a patient living in an assisted living facility, adult family-care home, nursing home, hospice residential unit or facility, or other non-domestic place of permanent or temporary residence. The inpatient component of care is a short-term adjunct to hospice home care and hospice residential care and shall be used only for pain control, symptom management, or respite care. The hospice bereavement program must be a comprehensive program, under professional supervision, that provides a continuum of formal and informal support services to the family for a minimum of one year after the patient's death. The goal of hospice is to provide physical, emotional, psychological, and spiritual comfort and support to a dying patient and their family. Hospice care provides palliative care as opposed to curative care, with the focus of treatment centering on palliative care and comfort measures. Hospice care is provided pursuant to a plan of care that is developed by an interdisciplinary team consisting of, e.g., physicians, nurses, social workers, counselors, chaplains, and other disciplines. There are four levels of service in hospice care: routine home care, continuous care, general inpatient care, and respite care. Generally, hospice routine home care comprises the vast majority of patient days and respite care is typically a very minor percentage of days. Continuous care is basically emergency room-like or crisis care that can be provided in a home care setting or in any setting where the patient resides. Continuous care is provided for short amounts of time usually when symptoms become severe and skilled and individual interventions are needed for pain and symptom management. The inpatient level of care provides the intensive level of care within a hospital setting, a skilled nursing unit, or in a free-standing hospice inpatient unit. Respite care is generally designed for caregiver relief. Medicare reimburses different levels of care at different rates. Approximately 85-to-90 percent of hospice care is paid for by Medicare. There are certain services required or desired by some patients that are not necessarily covered by Medicare and/or private or commercial insurance. These services include music therapy, pet therapy, art therapy, massage therapy, and aromatherapy, among others. There are other, more complicated and expensive non-covered services, such as palliative chemotherapy and radiation, that may be indicated for severe pain control and symptom control. Hospices which provide these additional services are said to have “open access” and foot the bill for such services. The Parties’ Proposals Each of the applicants- -as well as LifePath and the Agency– -agree that any one of the applicants could provide quality hospice services if approved. The following paragraphs set out some of each applicant’s attributes. Before each of the applicants’ proposals is discussed more fully below, it is clear that all of the applicants would likely be successful if approved. As stated by the parties themselves: “All three applicants . . . have the ability to operate a high quality hospice.” West Florida counsel, Tr., p. 12. “These are all excellent providers” and “There are no bad choices here.” AHCA counsel, Tr., pp. 1802 and 2009. “All [applicants] would be qualified; they all do good.” Lifepath counsel, Tr., p. 1980. “All applicants will undoubtedly provide the same level of quality care.” West Florida PRO, ¶ 59. The ultimate concern of AHCA regarding a new hospice provider in Hillsborough County is not the quality of care that the applicants can provide. All applicants will undoubtedly provide the same level of quality care. The real concern is costs, access, and availability. The Agency believes that West Florida will be best suited to promote cost effectiveness, as well as increase access and availability. A. West Florida West Florida is a collaborative effort by two existing, licensed hospitals in the service area. West Florida justifiably touts its connection to educational institutions. West Florida conditioned its approval on the funding of an additional palliative care fellowship at the University Of South Florida College of Medicine at an annual cost of roughly $80,000 and an additional CPE resident in Tampa General’s CPE program at an annual cost of $30,000. Having West Florida as part of the Tampa General “family” will expose not only the new palliative care fellow, but also medical students, medical interns and residents, other fellows, nurses, and a wide variety of allied health professionals, to hospice services and the benefits of hospice care. The new CPE resident could help to expand knowledge about end-of-life care and ultimately improve access to hospice services. West Florida will benefit the Tampa General pastoral care and CPE program by extending pastoral palliative care and end-of-life care training and experiences for all CPE students. Florida Hospital is a part of the Adventist Health System, which operates all types of healthcare facilities throughout the nation, including hospitals, rehab facilities, home health agencies, hospices, long term acute care hospitals, nursing homes, and more. In Florida, Adventist operates a range of facilities, including statutory teaching hospitals, quaternary-level service providers, critical-access hospitals, and safety net hospitals. In Hillsborough County, Florida Hospital operates Florida Hospital Tampa and Florida Hospital Carrollwood, both acute care facilities, in addition to a variety of outpatient facilities, physician practices, and the like. West Florida has proposed and is committed to opening a four-bed hospice inpatient unit at Florida Hospital Carrollwood, located in the northwestern portion of the county. Currently, there are two other inpatient hospice house units in Hillsborough County, one on the eastern side and one in the far south, both operated by LifePath. The unit would theoretically benefit hospice patients by increasing the number of inpatient beds and improving geographic distribution, thereby providing more access to hospice care. An inpatient unit may operate better than contracted “scatter beds” because hospice staff trained in end-of-life care and symptom management would be the medical personnel providing care to the patient rather than other hospital staff. Florida Hospital is an experienced provider of hospice services in the State of Florida, operating Florida Hospital Hospice Care in Volusia and Flagler Counties, as well as Hospice of the Comforter in Orange and Osceola Counties. Ms. Rema Cole is the administrator for Florida Hospital Hospice in Flagler and Volusia Counties. She has been responsible for opening two new hospice programs in the State of Florida. West Florida will provide a wide variety of unfunded “open access” services to its patients, such as: radiation and chemotherapy, caring for patients on ventilators, and training staff to provide these services. Combined, Florida Hospital and Tampa General touch tens of thousands of lives in Hillsborough County, totaling approximately 52,000 patients each year. Tampa General or Florida Hospital could tell its patients and their families about the goals and benefits of hospice care. It is likely West Florida would tend to promote its own hospice more prominently than it would promote its competitor’s (LifePath) services. West Florida suggests the possibility of a fully integrated electronic medical record. It would entail a long process, but steps have already been taken to begin the integration. The ability of the medical records of both Tampa General Hospital and Florida Hospital to “talk” to each other and all related ancillary providers, including its clinically integrated network, home health agency, and West Florida could improve the ability to reduce costs, as well as emergency room visits and unplanned admissions of hospice patients to hospitals. Having a streamlined system that communicates between the hospice, hospitals, and their ancillary providers could reduce workload, unnecessary paperwork, and increase the efficiency at which the hospice staff is able to operate. There is no such system in operation yet, but West Florida has plans to implement it once it is available. Florida Hospital Hospice Care provides a wide range of non-compensated programs, including a pet partner program called “HosPooch” that provides pet therapy to patients in inpatient units, nursing homes, ALFs, and even to non-hospice patients at their cancer centers. They also have a recording project called Project Storytellers that has a group of volunteers going into patients’ homes or wherever they may be to talk to the patient about their life, record things that were important to them, and give that recording to the families as a keepsake. Florida Hospital Hospice Care is involved with their local Veterans Administration nursing home and clinic, where volunteers perform pinnings of veterans. There is also music therapy, a group of quilters, and vigil volunteers, who sit at the bedside of patients to keep watch if the caregiver needs to take a break or run errands. West Florida can immediately tap into the existing connections that both Florida Hospital and Tampa General have in the community. These include relationships and connections with physicians, churches, civic groups, and other organizations, both healthcare and non-healthcare related. These existing relationships would serve not only as opportunities to market West Florida, but could also serve as educational opportunities to inform more individuals, groups, and organizations about the benefits of hospice care and the availability of the West Florida. West Florida agreed to condition approval of its CON application on the following eleven concepts: Annual funding for an additional palliative care fellowship at the University of South Florida; Annual funding for an additional CPE resident; Annual sponsorship of up to $5,000 for children’s bereavement camps; Up to $10,000 annually for a special wish fund; Operating a 4-bed inpatient unit at Florida Hospital Carrollwood; Programs which are not paid by Medicare; Offices on the campus of Tampa General and Florida Hospital; Using a licensed clinical social worker with at least a Master’s degree to lead the psychological department; 8) Establish an education program on hospice care accessible to medical staff; Programs for the Hispanic population; and Creation of a community resource information website. A. Seasons Seasons described its proposal for services through various key players within its parent organization. Dr. Balakrishana Natarjan is the chief medical officer for Seasons Healthcare Management. Dr. Natarjan plays an active role in recruiting the medical directors for each Seasons hospice, and the medical director of each hospice reports directly to him. Dr. Natarjan has developed a detailed list of the medical director’s qualifications and responsibilities, and a list of what he deems to be “non-negotiable company values” to which each medical director must agree. It is difficult to imagine how some of those values can be monitored (e.g., “The Medical Director must love holding the patient’s hand”; “The Medical Director must go to bed each night knowing they made a difference in the lives of specific dying patients,” etc.), but the idea of non-negotiables is recognized as positive. Seasons has also recently hired Daniel Maison, M.D., as the associate chief medical officer for the company. Dr. Russell Hilliard is Seasons’ vice-president for Patient Experience and Staff Development. He has a Ph.D. in music education, with an emphasis in music therapy and social work from Florida State University. His work is well-recognized in the hospice community. He was instrumental is starting the music therapy programs at Big Bend Hospice in Tallahassee, Florida, and at Hospice of Palm Beach County (Florida). His concept of music therapy is innovative, inclusive, and well- proven to achieve positive results. Dr. Hilliard will assist Seasons in doing a community-oriented needs assessment to ascertain what needs exist in Hillsborough County, examine how to meet those needs, and establish programs to be implemented upon approval as a hospice provider in the area. Seasons’ music therapies would then be implemented as necessary to meet the identified needs. Seasons has also assembled a team of national experts who are available to assist in various areas. One such expert is Mary Lynn McPherson, Pharm.D. Dr. McPherson has developed an online course entitled “Medication Management at the End of Life for Clinical, Supportive, Hospice and Palliative Care Practitioners,” that is offered through Seasons. Dr. McPherson is purportedly available 24 hours a day, seven days a week, to field numerous calls from Seasons physicians and other staff regarding complex medication management issues. Joyce Simard, a national expert in caring for people with dementia, developed for Seasons HPC hospices a specialized program for patients in the advanced stages of dementia. The program uses person-centered approaches to improve the quality of life for people suffering from dementia through meaningful sensory activities that stimulate the senses and promote comfort and serenity. Seasons Hospice Foundation (Foundation) is an independent 501(c)(3), non-profit foundation founded in 2011. The Foundation was established because Seasons was receiving unsolicited donations from grateful families and friends of patients, and it wanted these funds to go to a charitable purpose. Today the mission of the Foundation is to serve the needs of patients outside the hospice benefit. For example, the Foundation will assist patients who are unable to cover basic non-hospice needs, such as restoring electricity to a patient’s home or airfare so family members can travel to see a patient. Seasons does not rely on charitable contributions or other philanthropy to support its operations, nor does it rely on any other types of non-hospice revenue sources such as thrift shops. Unlike some new hospices which try to conserve resources and hire part-time staff when opening, Seasons invests 100 percent in new programs up front. All of the initial core staff is full-time, even when the hospice may be starting out with just a handful of patients. This allows the hospice team to develop trust among the group and to become familiar with Seasons’ policies, procedures and culture. Each Seasons HPC program and staff is reflective of the ethnic and cultural make-up of the area it serves. However, the mission statement, core values, service standards, operating practices, protocols, and policies are uniform in each Seasons HPC hospice. Seasons provides a large depth and breadth of programs in its hospices. Included among those services are music therapy, pet therapy (using certified pet therapy animals, as well as a specialized robotic seal for certain patients), Namaste (a specialized program for patients in the advanced states of dementia), Kangaroo Kids summer camp, Volunteer Vigil program, Leaving a Legacy, and Careflash. Seasons also participates in the We Honor Veterans program. Seasons would provide “open access” services in Hillsborough County. Seasons would provide these services for patients choosing to continue them so long as their prognosis remains six months or less, and the treatment is approved by the clinical leadership team for appropriateness. Such interventions may include IV antibiotics, blood transfusions, palliative cardiac drips, ventilator support, radiation therapy, heart therapy, dialysis and other palliative therapies. As discussed earlier, Seasons offers a very robust and highly professional music therapy program. But Seasons also provides music companions when simple entertainment is what is called for and Seasons makes sure the entire interdisciplinary staff is trained in this subject. Seasons actively works with hospitals in the markets it serves to educate physicians and allied health professionals in hospice and end-of-life care. Seasons hospices have affiliation agreements with several medical schools around the country to offer internships, fellowships, and other educational opportunities to pre-med students, medical students, and residents. Seasons hires experienced nurses who have previously worked in emergency rooms and intensive care units, and consequently is able to provide a much more clinically complex service than some other hospices. As a result, Seasons is able to serve patients that other organizations typically may not have served. Seasons utilizes a hospice-specific electronic medical record and is the largest hospice client of Cerner, a medical records provider. When a patient is admitted to a Seasons hospice, Seasons gathers the medical history of the patient, including hospital records if the patient has recently been in the hospital, and all relevant non-hospital medical records, including rehab notes, labs and other diagnostic testing results. This integrated electronic medical record is accessible to all Seasons hospice team members. Seasons has a centralized call center that takes calls from patients and their families 24 hours a day, seven days a week. At the call center, there are clinicians who are licensed in every state where Seasons operates who can respond to questions and provide consultation. The call center staff has full access to the patient’s electronic medical record in real time. Seasons also requires that all of its staff, including management at all levels, make calls to check on patients during the term of their treatment (i.e., not only when a patient calls or after the patient has died). In September 2010, Seasons acquired a controlling interest in a hospice in Miami-Dade County that was formerly known as Douglas Gardens Hospice. The hospice was acquired from the Miami Jewish Health System, which retains a 20-percent ownership in the hospice. At the time Seasons took over Douglas Gardens Hospice, the census was approximately 63 patients and the hospice was largely dependent upon referrals from the relatively small Miami Jewish Health System. Seasons retooled the makeup of the staff to better reflect the county’s Hispanic population and aggressively developed outreach efforts across the entire county. By the time of the final hearing, Douglas Gardens had grown to be the second largest hospice in Miami-Dade County with a census of 520 patients. When Seasons acquired its interest in the Miami-Dade County hospice, it diligently pursued referrals from assisted living facilities and nursing homes. In September 2010, Seasons had 13 admissions from ALFs; in September 2015, that number had risen to 154 admissions. Seasons’ hospice in Miami-Dade County has contracts with over 60 percent of the nursing homes in the county. In September 2015, the hospice admitted 110 patients from skilled nursing facilities. It has also pursued marketing to more than 30 acute care hospitals in the county. Today, approximately 40 to 45 percent of Seasons’ referrals in Miami-Dade County come from acute care hospitals. The majority of Seasons’ Miami-Dade County’s staff, including its executive director, is bilingual, and the hospice serves a large number of Hispanic patients. It also employs five to six chaplains, including non-denominational chaplains, a rabbi, and a Catholic priest who is able to deliver the sacrament of last rites. Seasons HPC requires all of its chaplains to be either board-certified or become board-certified within a year of being hired. Seasons HPC has developed a more formalized consulting arrangement with another national expert, Rabbi Elchonon Freedman from West Bloomfield, Michigan. Rabbi Freedman has been involved in the hospice field since the early 1990s and has four CPE units (equivalent to a master’s degree) and is board- certified. He heads the Jewish Hospice & Chaplaincy Network in Michigan which is heavily involved in hospice education across all denominations. Seasons participates in the “We Honor Veterans” program, and its Miami program has achieved Level 3 status. Seasons opened a new hospice in Broward County in late 2014, and it became Medicare certified in August 2015. The Broward hospice has achieved an average daily census of more than 50 patients as of the date of the final hearing. Seasons HPC has been successful in opening and growing new hospices in other large metropolitan markets throughout the country, most of which have no CON requirements and therefore present significantly higher hospice competition. Examples of large metropolitan markets where Seasons has successfully opened and grown the census of new hospices include: Phoenix, northern California, San Bernandino, and Houston. Seasons also agreed to condition its CON application approval on certain agreed services, including: Providing at least two continuing education units per year to registered nurses and licensed social workers at no charge; Offering internship experiences for various disciplines involved in hospice care; Donation of $25,000 per year to fund a wish fulfillment program for its patients and families; Provision of services outside the therapies paid for by Medicare; and Voluntary reporting of the Family Evaluation of Hospice Care survey to AHCA. Gulfside Gulfside is a 501(c)3 community-based, not-for-profit organization licensed by the AHCA as a hospice. Gulfside has been providing hospice services in Pasco County for more the 25 years. Gulfside provides care to all individuals eligible for care who meet the criteria of terminal illness and reside within the service area. Gulfside is accredited by the Joint Commission with Gold Seal status. Gulfside has grown in scope of services and in terms of census and coverage. In July 2004, it had 50 patients and roughly 30 staff members. It had a limited reach within Pasco County, primarily serving the community of New Port Richey. Hernando-Pasco Hospice, now known as HPH, was the dominant hospice provider in Pasco County. Gulfside grew, in part, through extensive community education to physicians and other healthcare and service providers, to its current average census of 360, which makes it the dominant hospice provider in Pasco County. The leadership at Gulfside has extensive experience in hospice, senior living, and Alzheimer’s care and management, including the management of senior living and SNF facilities, and developing new facilities and programs. Gulfside has a depth of experience in oncology care, social work, nursing, hospice and palliative medicine, health care administration, technical development, as well as program and project development. For example, Gulfside’s CEO and COO were both part of the team at LifePath’s Service Area 6B program (Polk, Highland and Hardee Counties) as the program was developing, growing from a census of 200 to 350 in one year. Each hospice patient at Gulfside meets with its interdisciplinary team (“IDT”) at least bi-weekly to discuss patients and to review their plan of care and any adjustments to the care plan. These meetings also include an educational component for IDT members. IDT meetings also take place when a patient requests a change in their care plan or should a change in the patient’s status trigger a new IDT review. Additionally, the physician member of the IDT will confer on a regular basis with the hospice medical director to obtain guidance and advice. The spiritual and pastoral care staff are also part of the IDT. Gulfside has extensive orientation and training for newly hired staff, requires that new staff must demonstrate core competencies before rendering services, and requires all staff to regularly demonstrate their competencies at Gulfside’s recurring “skills days.” Gulfside encourages all disciplines of its staff to maintain competencies, receive additional training, and earn continuing education units in their respective fields. Field staff use web-connected laptops and smartphones to assist with documentation and make live updates to the Electronic Medical Record (Allscripts) which Gulfside phased in over two years ago. Gulfside also has software programs which help to identify potential hospice referrals, allowing them to focus their outreach and education efforts to reach new patients. Gulfside has inpatient and other hospice service agreements with every hospital and nursing home in Pasco County. Gulfside has a very involved structure for internal improvement and regulatory compliance. There are a series of audits conducted by supervisors and others throughout its organization to ensure proper care, documentation and compliance. This type of review for performance improvement has been in place at Gulfside since 2005. Gulfside uses the services of DEYTA, a national organization, to assist it with the processing and data aggregation of its CHAPs results as part of its benchmarking for excellence. Gulfside’s commitment to quality and compliance was recognized in their last CMS and State Survey results, both of which were deficiency-free. Gulfside’s volunteer services are well-developed, allowing trained and supervised volunteers to work in administration, patient care, patient support, and even as part of the spiritual care team. Gulfside was awarded the Florida Hospices and Palliative Care Association’s Excellence Award in 2015 for its specialized Spiritual Care Volunteer Program. That program uses volunteers with spiritual or counseling training, including Stephen Ministers (lay-ministers) and retired clergy, to primarily serve patients with memory impairments, allowing the hospice chaplains to focus their efforts on patients with a more involved spiritual plan of care that might involve complicated unresolved relationships and life review. Community outreach and education and marketing efforts by hospices are important for a hospice to be part of the community. Gulfside has an extensive history of outreach programs that include educational programs for physicians and facility staff, programs to honor local veterans, and to provide education and support to caregivers, patients, and to others caring for family and loved ones with life limiting illnesses. Local fundraisers and events help keep Gulfside in touch with the community at large, in addition to raising funds which help support its mission. Gulfside’s Thrift Shop operations are part and parcel of this community presence. The thrift shop operations are a significant source of Gulfside’s operating revenues. If approved, Gulfside would focus its attention to end-stage heart disease patients, as its research showed that fewer patients with this diagnosis were currently being served in Hillsborough County. Gulfside has developed special program to serve these patients and their unique needs. The end-stage heart disease incidence rate in Hillsborough County for the Hispanic population was 25 percent, much higher than the incidence rate for the population at large of seven percent. Gulfside sees this fact as evidence of need for more focused services. Another unique trend Gulfside identified in Hillsborough County is a comparatively higher infant mortality rate when compared to the state average. In response to that identified trend, Gulfside proposed a program to meet the need for anticipatory grief and bereavement counseling for the parents and siblings of these infants and children. Gulfside currently has well-established relationships with providers in Hillsborough County, physicians, hospitals, SNFs, and conducts outreach and education as part of its mission to educate about hospice, as well as to serve the increasing number of patients its serves who are Hillsborough County residents. Gulfside agreed to a number of conditions for approval of its CON application: Condition 1 is for enhanced services to Veterans. Gulfside is a Level 4 We Honor Veterans provider. Condition 2 is for special bereavement programs and is consistent with Gulfside’s programs and includes the traumatic loss program. Condition 3 is for special programs not covered by Medicare, and these programs all compliment the patient and family hospice experience and are incorporated into how Gulfside provides care. These programs include: (a) Pet Peace of Mind program for ensuring patients and families are not burdened with additional stress worrying about the care of their pets. (b) Treasured Memories, an interactive craft-based activity to express feelings and to create a tangible reminder of the patient. (c) Heartstrings, a program using Reverie Harps to provide a soothing focus for patients and families, and include the patient playing the Harp. The Reverie Harp is a unique instrument which is auto-tuned and harmonizing; anyone can play it and make beautiful soothing music. Condition 4 provides for an Ethics Committee to assist with dilemmas and concerns for professionals and others when there is a question regarding cultural, religious, or clinical questions about the appropriateness or compatibility of a course of care or other decisions related to a patient. Condition 5 is for Gulfside’s Crisis Stabilization program which has become a significant program as troubled family dynamics and other at-risk situations seem to arise with more frequency. Condition 6 is for the Patient and Family Resource Navigator, a program already being used in Pasco County which assists patients and families to identify community and governmental benefits and resources which may be available to them and assisting them with applying or accessing the benefits or resources. Condition 7 is to provide programs for patients whose primary language is not English. This will include providing for translations and to recruit bilingual staff and volunteers. Condition 8 reflects that Gulfside is an “open access” hospice, providing complex therapies such as infusion therapies, dobutamine, special wound care, palliative chemotherapy and palliative radiation to its patients. Condition 9 was for Gulfside to offer non- cancer patient outreach and education. This includes the previously discussed end-stage heart disease and Alzheimer’s patients. Condition 10, Gift of Presence for the actively dying, will require the provision of specially trained volunteers to be present with patients and families during the last stages to assist and comfort them. Condition 11 is related to physician and clinician education, and networking programs to educate community practitioners and aligned professionals about hospice and palliative care and to provide peer-to-peer networks. Condition 12, provides for professional and physician internships and residencies, as well as the use of professional volunteers to educate about hospice and palliative care services. Condition 13 is for the development and implementation of the Patient and Family secure web-portal. Condition 14 provides that Gulfside will establish a separate foundation for Hillsborough County to help cover patient needs and expensive treatments. Gulfside will provide seed-money of $25,000 and donations will remain in Hillsborough County as part of this Condition. Condition 15 is for the rapid licensure of the new Gulfside program in Hillsborough County. Gulfside will file its licensure application to add Hillsborough County to its existing license within 5 days of receipt of the CON. Gulfside’s corporate office in Land O’Lakes and its freestanding hospice inpatient facility in Zephyrhills would be used to support the Hillsborough County program. Both are located just north of the county line. Gulfside will not need to add administrative capabilities or staff at its corporate office to initially support staff and the incremental additional patients served in Hillsborough County. The existing supports for the new program would allow it to enjoy improved economies of scale and efficiencies. Gulfside projects it will take approximately 45 days to receive a license from AHCA. During that time, existing staff will be canvassed to see which of them would like to work in the new Hillsborough County program. Gulfside would only need to assemble one additional IDT initially to begin serving the new service area. Gulfside would provide services in Hillsborough County through existing experienced staff now working in Pasco County. Travel requirements for the Hillsborough County staff would not differ much from what is commonly seen in Pasco County, because Pasco has many remote areas that Gulfside serves. Gulfside already has 25 current staff who reside in Hillsborough County. Because Gulfside is not creating a new Medicare provider or newly licensed entity in Florida, it could begin offering services as a fully-licensed and Medicare Certified provider as soon as it has a license from AHCA. All of Gulfside’s current ancillary services and supply contractors already serve Hillsborough (as well as Pasco) County and all of these contracts necessary for delivering hospice care can readily be expanded to include Hillsborough County. Gulfside will serve all of Hillsborough County through its extensive network of relationships throughout the county. Pasco and Hillsborough Counties are part of the same recognized healthcare market with patients flowing between the two counties. Gulfside expects its initial referrals will originate in the northern part of the county due to its strong referral relationships with providers in that area, and Gulfside’s assessments showed greater unmet need in that same area. It will later expand to cover the entire county. Gulfside’s operations in Hillsborough County would be more profitable on average than its current operations in Pasco County despite the allocation of administration and corporate overhead costs to the Hillsborough County program, and despite the assessment of a seven percent fee for corporate services and management from the Pasco home office. The cause of this difference is that the new program in Hillsborough County will benefit from economies of scale. Adding service volume does not require the duplication of costs and services for administrative and other support in place in Pasco County. Gulfside had a loss in fiscal year 2015 due to several significant non-recurring expenses. Gulfside’s projected budget for the 2016 fiscal year included a profit of $337,000, and Gulfside for the first four months of the new fiscal year was ahead of budget. The 2016 fiscal year budget did not include those items which Gulfside had identified as non-recurring, and yet they out-performed that conservative budget, corroborating that these were non-recurring expenses, and that Gulfside will be more profitable than projected in the 2016 fiscal year budget. Gulfside had a one-year loss for the 2015 fiscal year, but in that year, it also acquired a significant asset with the purchase of its corporate center office. Gulfside also maintained a good cash position and had significant additional credit available should it have needed to draw on those resources. LifePath’s Position vis-à-vis Competition Due to LifePath’s growth and its penetration rate within Service Area 6A, there has not been a need established by AHCA for another hospice in Hillsborough County until recently. The events leading to the newly established need are partially of LifePath’s own making, to wit: In May 2013, the Centers for Medicare and Medicaid Services (“CMS”) announced a decision to eliminate two categories of diagnosis often used for hospice care–“debility, undefined” and “failure to thrive.” The initial pronouncement from CMS indicated the change would take effect in approximately October 2013. LifePath decided to immediately stop accepting patients with those diagnoses so as to be in compliance with the new federal regulations when they took effect. LifePath also informed all its referring partners, physicians, hospitals, discharge planners, etc., that it would not be taking those types of patients any longer. Then CMS decided to delay implementation of the new policies for a year. By then, LifePath had already taken actions resulting in the loss of some 700 potential admissions. When AHCA did its hospice need calculations shortly thereafter, lo and behold, there was a “shortage” of some 700 cases in the use rate portion of the need calculation formula. As a result, AHCA determined there was a need for one additional hospice provider in Service Area 6A. LifePath had been hoisted on its own petard. LifePath does not challenge the Agency’s fixed need calculation or that another hospice should be approved for Hillsborough County Service Area 6A. Rather, LifePath is desirous that only the hospice with least potential for negative impact on LifePath should be approved. Based on the preponderance of evidence, West Florida would have the most negative impact on LifePath. Gulfside, due to its lower census development, would have the least impact. However, as Seasons would be more likely to completely meet the need projected by AHCA and would impact LifePath less than would West Florida, its proposal is the most acceptable. IV. Statutory and Rule Review Criteria The parties stipulate that: (1) All three applicants’ letters of intent and CON applications were timely and properly filed with required fees; (2) AHCA duly noticed its preliminary intent to approve West Florida’s CON application and to deny Seasons and Gulfside; (3) Seasons, Gulfside and LifePath timely filed Petitions for Formal Administrative Hearings challenging AHCA’s preliminary decision; and (4) Each application contains the minimum application content prescribed by sections 408.037 and 408.039, Florida Statutes. Also, Schedules A, D-1, and 10 in each CON application are acceptable and reasonable. Section 408.035(1) Criteria Stipulations (1)(a) “The need for the health care facilities and health services being proposed.”– -There is a need for one additional hospice program in Service Area 6A. (1)(b) “The availability, quality of care, accessibility, and extent of utilization of existing health care facilities and health services in the service district of the applicant.”- –A consideration of this criterion supports the need for one new hospice program in the service area. (1)(d) “The availability of resources, including health personnel, management personnel, and funds for capital and operating expenditures, for project accomplishment and operation.”– -Each applicant has adequately projected the availability of personnel. Each party’s Schedule 6 and staffing projections are reasonable. Each party’s audited financial statements present an adequate financial condition. (1)(f) “The immediate and long-term financial feasibility of the proposal.”– -Schedules 1, 2, and 3 in each application are reasonable and indicate that each applicant’s proposal is financially feasible in the short term and long term. (1)(h) –“The costs and methods of the proposed construction, including the costs and methods of energy provision and availability of alternative, less costly, or more efficient methods of construction.” - This criterion is not applicable. Florida Administrative Code Rule 59C-1.030 Stipulations: (2)(d) – “In determining the extent to which a proposed service will be accessible, the following will be considered: . . . The performance of the applicant in meeting any applicable Federal regulations.”- –This criterion would support approval of any of the three applicants. Florida Administrative Code Rule 59C-1.0355 Stipulations (6)“An applicant for a new hospice program shall provide a detailed program description in its certificate of need application . . . .”– -Each application contained adequate evidence regarding the applicants’ proposals. Factors Mitigating Against Approval of West Florida West Florida's proposal to establish a hospital-based hospice program in Service Area 6A materially differs from Seasons’ and Gulfside's proposals seeking to establish community- based hospice programs in the service area. There are key differences between a freestanding or community-based hospice, on the one hand, and a hospital-based hospice, on the other. Most significantly, in contrast to a community-based hospice, a hospital-based hospice has ready access to a patient population (i.e., acute care patients at its sponsoring hospital) from which it may receive referrals. Further, a hospital-based hospice primarily serves patients discharged from its sponsoring hospital and not the community at large, thereby creating a silo of care in which patients are funneled from the sponsoring hospital to the affiliated hospice. Nationally, for the period 2010 through 2014, hospital-based hospice programs obtained approximately 71 percent of their admissions from hospitals within their own health system and only six percent of admissions from out-of- system hospitals. Further, it is possible for a hospital-based hospice program to quickly obtain a large volume of admissions by virtue of its relationship with its sponsoring hospital. The census development for a community-based hospice program is more gradual. Hospital-based hospices do not tend to serve the broader community; once they have captured all of the admissions coming out of their own hospital or health system, they cease to continue to achieve significant market share growth. Moreover, hospital-based hospices tend to have shorter average lengths of stay and provide higher levels of inpatient care than community-based hospices because they tend to treat patients with a higher acuity and have easy access to inpatient beds where they can provide inpatient hospice care. Medicare reimbursement for general inpatient care is significantly higher than for some other types of hospice care. To the extent that a hospice provider provides more inpatient care, they will experience higher revenues. This would result in a concomitant reduction in revenues for a competing hospice in the same service area. Approximately 36 percent of patients discharged from an acute care hospital in Hillsborough County and admitted to a hospice program are discharged from one of West Florida's sponsoring hospitals. In 2014, approximately 46 percent of LifePath's admissions were referred from acute care hospitals. Accordingly, even if West Florida made no effort to obtain referrals to its program from sources other than its affiliate organizations, approximately 16.6 percent of LifePath's admissions could be at risk if West Florida's proposed project is approved. Mr. Michael Schultz, the CEO of Florida Hospital's West Florida Region, testified that the goal of Tampa General and Florida Hospital is to manage a patient's entire episode of care and that if West Florida's application were approved, both hospital organizations would "absolutely" prefer to have West Florida provide hospice care to patients discharged from its hospitals. LifePath's projection that it would lose 20 percent of its admissions if West Florida's application was approved is reasonable. Mr. Burkhart discussed West Florida’s desire to develop a “covered lives” strategy or network, where the hospital system can control how the dollars are spent and how the care is delivered. West Florida applied for a hospice CON for two reasons: 1) AHCA had published need; and 2) because “we wish to have more control over a piece of the hospice continuum so that when we’re doing things like narrow networks, we have that in our portfolio under our control.” Tr., p. 99. In a covered lives network, a hospice patient would pay less if they went to a West Florida affiliated hospice, and more if they went to Lifepath or another out-of-network hospice. West Florida plans to open satellite hospice offices in Tampa General and in the two Florida Hospitals located in Hillsborough County. There was no mention of the desire or possibility of opening satellite hospice offices in any of the non-West Florida affiliated hospitals located in Hillsborough County. From a practical perspective, it seems unlikely that competing hospital systems would welcome such involvement by a competitor. Seasons Seasons is the only applicant without a current connection to the healthcare community in Hillsborough County. It has, however, some experience in other Florida markets. Fewer of Seasons’ programmatic proposals are directly tied to a Condition of CON approval, but the programs are nonetheless generally universal in Seasons HPC operations. Gulfside Service Area 6A has a sizeable Hispanic population, but Gulfside has very limited experience in treating Hispanics. In fact, only 3.3 percent of its recent admissions are Hispanic. Gulfside’s COO did not know how many, if any, of Gulfside’s existing staff was bilingual. Today, Gulfside relies on interpreters who are accessed through a language line to communicate with Hispanic patients and family members. Since Gulfside plans to utilize existing staff to serve Hillsborough County, it will need to continue to rely upon interpreters to communicate with Hispanics in that county. To the extent the Hispanic population in Hillsborough County is underserved, or there is a need to ensure that these patients have a choice of hospice providers that are committed to meeting their needs, Seasons demonstrated far more experience and ability than Gulfside. Seasons projected 516 admissions in year two while Gulfside projected 276 admissions. Seasons has reasonably projected to achieve 240 more admissions in year 2 than Gulfside and thus will do a better job in meeting the unmet need. West Florida also projects more admissions than Gulfside. Ultimate Findings of Fact Each of the applicants, as advertised, could provide quality hospice services to the residents of AHCA Service Area 6A/Hillsborough County. The proposal by West Florida would be more likely to serve its own hospital patients than the community at large. This would have the effect of less penetration by West Florida in the service area as a whole. It would also likely result in West Florida retaining more of the most critically ill hospice patients (i.e., those with shorter lengths of stay), thereby benefitting from the new reimbursement rules to the exclusion of the competing hospice. Gulfside would be able to commence operations in Hillsborough County more quickly than Seasons or West Florida. It has connections with other healthcare providers in Hillsborough County and could easily transition to that geographic area. However, it proposes less growth and coverage than either Seasons or West Florida, thus will less likely meet the need which currently exists. Seasons has the financial and operational wherewithal to be successful in Hillsborough County. It has more experience (and success) in starting a new hospice than the other applicants. Its programs are well-established and conducted by experts in their fields. Seasons would meet the need for a new hospice provider in Service Area 6A better than the other applicants. Upon consideration of all the facts in this case, Seasons’ application, on balance, is the most appropriate for approval.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a final order be entered approving Seasons Hospice and Palliative Care of Tampa, LLC’s, CON No. 10298 and denying West Florida Health, Inc.’s, CON No. 10302 and Gulfside Hospice & Palliative Care of Tampa, LLC’s, CON No. 10294. DONE AND ENTERED this 21st day of March, 2016, in Tallahassee, Leon County, Florida. S R. BRUCE MCKIBBEN 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 21st day of March, 2016. COPIES FURNISHED: Stephen K. Boone, Esquire Boone, Boone, Boone and Koda, P.A. 1001 Avenida Del Circo Post Office Box 1596 Venice, Florida 34284 (eServed) Lorraine Marie Novak, Esquire Agency for Health Care Administration 2727 Mahan Drive, Mail Stop 3 Tallahassee, Florida 32308 (eServed) Seann M. Frazier, Esquire Parker, Hudson, Rainer and Dobbs, LLP Suite 750 215 South Monroe Street Tallahassee, Florida 32301 (eServed) Jonathan L. Rue, Esquire Parker, Hudson, Rainer and Dobbs, LLC 303 Peachtree Street Northeast, Suite 3600 Atlanta, Georgia 30308 (eServed) Karl David Acuff, Esquire Law Office of Karl David Acuff, P.A. Suite 2 1615 Village Square Boulevard Tallahassee, Florida 32309-2770 (eServed) Stephen C. Emmanuel, Esquire Michael J. Glazer, Esquire Ausley & McMullen 123 South Calhoun Street Post Office Box 391 Tallahassee, Florida 32301 (eServed) Richard J. Shoop, Agency Clerk Agency for Health Care Administration 2727 Mahan Drive, Mail Stop 3 Tallahassee, Florida 32308 (eServed) Stuart Williams, General Counsel Agency for Health Care Administration 2727 Mahan Drive, Mail Stop 3 Tallahassee, Florida 32308 (eServed) Elizabeth Dudek, Secretary Agency for Health Care Administration 2727 Mahan Drive, Mail Stop 1 Tallahassee, Florida 32308 (eServed)
The Issue The issue in this proceeding is whether DHRS should approve the application for certificate of need of any one or more of the January, 1987, applicants for community nursing home beds in Hillsborough County. STIPULATIONS The parties stipulated to the following facts: All applicants timely filed their respective letters of intent, applications and omission responses with DHRS and the appropriate local health council for the January, 1987, batching cycle. The petitioners each timely filed a petition requesting a Section 120.57(1) hearing and have standing in this proceeding. The parties agree the Division of Administrative Hearings has jurisdiction over this matter and the parties. The CON application content requirements of Section 381.494, Florida Statutes (1985), apply as that was the statute in effect at the time the applications were filed. The review criteria in Section 381.705(1) and (2), Florida Statutes (1987), apply to this proceeding. The following statutory criteria have been met orare not applicable in this proceeding: Section 381.705(1)(d), (f), (g), (j) and (k) and all of Section 381.705(2), Florida Statutes (1987). Except for the effects the project will have on clinical needs of health professional training programs, the extent to which services will be accessible to schools for health professionals and the availability of alternative uses of such resources for the provision of other health services, Section 381.705(1)(h) is in dispute and remains to be litigated.
Findings Of Fact SUMMARY DESCRIPTION OF THE PARTIES. HCR's application (CON Action No. 5000) is to construct a 120-bed nursing home consisting of 40,000 square feet at a cost of $3,964,000.00, or $33,033 per bed (including adult day care; $32,1127 when the cost for day care is excluded.) The HCR application describes special programs and services for Alzheimer's Disease and related disorder patients in a distinct special care unit and an Alzheimer's day care center, both Identified in the plans submitted by HCR showing special design elements. HCR also proposes to offer sub-acute care and respite care. The HCR nursing home will have 2.08 (120/57.6) patients per staff, which includes the assistant director of nursing and occupational therapy and recreational therapy aides listed by HCR in its application. FCP submitted an application for 30 nursing home beds to be constructed as a part of a retirement facility (CON Action NO. 4993). The 30 beds will comprise approximately 17,558 square feet at a cost of $1,549,599.00, or $51,653 per bed. The Florida Country Place application proposes a patient staff ratio of approximately 2.3 (30/13). Palm Court submitted an application for a 60-bed addition to its existing 120-bed facility (CON Action No. 4987). The 60-bed addition would consist of 15,260 square feet at a cost of $1,472,435.00, or $24,571 per bed. The Palm Court facility is located in Plant City in the far eastern portion of Hillsborough County, near the Polk County line. Palm Court proposed a ratio of 2.31 (60/26) patients per nursing staff. Manor Care submitted an application (CON Action No. 5006) to add 60 beds to an approved certificate of need for 60-beds for which construction has not yet begun. The area to be added would consist of 19,000 square feet at a cost of $2,187,045.00, or $36,451 per bed. The Manor Care addition would include a distinct special care unit for Alzheimer's Disease and related disorder victims and the 60-bed addition would provide a patient staff ratio of 1.98 (60/30.3), which includes a half-time physical therapy aide, a half-time recreational therapy assistant and an assistant director of nursing. Forum submitted an application (CON Action No. 4999) to construct a 120-bed nursing home as a part of a retirement complex. The nursing home element will consist of 49,283 square feet at a cost of $5,053,301.00, or $42,111 per bed. Forum proposes a staffing ratio of 3.0 patients per staff FTE. Forum proposed to provide respite care and hospice care, and adult day care and meals on wheels during or after the second year of operation. HHL submitted an application (CON Action No. 4978) for 120-bed nursing home consisting of 37,700 square feet at a cost of $3,900,000.00, or $32,500 per bed. The HHL facility proposes 2.27 (120/52.8) patients per staff, which includes the rehabilitation assistants and the assistant director of nursing listed by HHL. HHL proposes sub-acute care, respite care, programs for Alzheimer's Disease victims (but not a distinct special care unit) and an Alzheimer's adult day care program of from four to six patients. Cypress submitted an application (CON Action No. 5004) to construct a 60-bed nursing home in Sun City Center in southeastern Hillsborough County. The nursing home described in the application would contain 24,069 square feet at a cost of $2,125,000.00, or $35,419 per bed. But Cypress' estimated construction cost per square foot of $49.81 does not account for inflation and is unreasonably low. Median cost of nursing home construction in Florida is $55 per square foot. It is estimated that Cypress' construction cost estimate is 10-15 percent too low. Assuming that the cost estimate is 12.5 percent too low, the cost of construction would increase to approximately $2,274.485 or $37,914 per bed. Cypress did not detail any special programs in its application and proposed 2.45 (60/24.5) patients per staff. However, this ratio is questionable in view of the confusion surrounding Cypress' evidence regarding staffing and the apparent inaccuracy of the staffing presented by the application. DHRS is the state agency that preliminarily reviewed and passed on the applications and is responsible for final agency action on them. DHRS PRELIMINARY REVIEW AND ACTION. HCR, FCP, Palm Court, Manor Care, Forum, HHL, Cypress, and others filed their applications for community nursing home bed certificates of need for Hillsborough County in the January, 1987, batching cycle. On June 18, 1987, DHRS issued its State Agency Action Report (SAAR), in which it denied all of the applications except HCR's, FCP's and VHA/Oxford's (for 120 beds). Review of the SAAR in light of the evidence introduced at the final hearing indicates that DHRS erred in reviewing the applications in at least the following respects: Manor Care. -- The SAAR indicates that DHRS was not cognizant that Manor Care had a final approval for a 60-bed nursing home CON (No. 4155) to which to add the 60 beds applied for in this case, CON Action No. 5006. The SAAR was somewhat critical of the Manor Care proposal for being a two-story structure. It appears that DHRS confused the proposal to add 60-beds (CON Action No. 5006) with a parallel contingent proposal to build a new 120-bed facility (CON Action No. 5005), which Manor Care eventually withdrew during the final hearing. Actually, CON Action No. 5006, added to the approved CON No. 4155 for a new 60-bed nursing home, would result in a one-story 120-bed nursing home. On page 7 of the SAAR, DHRS indicated its understanding that Manor Care had not specified a location for its proposal. Later, on page 11, the SAAR acknowledges the true fact that Manor Care's proposed nursIng home would be located in the Northwest Hillsborough County subdistrict, which is the Local Health Plan's first priority for location of additional nursing home beds in DHRS District 6. HHL. The SAAR (p. 13) states that Convalescent Services, Inc. (CSI), the management corporation HHL and other limited partnerships for which the Kellett Brothers are the general partners, has no other nursing homes in Florida. While technically correct, Kellett limited partnerships do have other nursing homes in Florida. Staffing tables on page 17 of the SAAR are incorrect, attributing no LPNs to the HHL proposal instead of 6 and only 36 aides instead of 38. On page 18 of the SAAR, the table of patient privileges incorrectly states that the HHL applications had no patients' bill of rights. Also on page 18 of the SAAR, DHRS incorrectly omitted adult day care and community outreach from the table of programs provided by HHL. On page 26 of the SAkR, it gives HHL's private pay private room rate ($101) as its semi-private room rate (actually $69.92) The SAAR Review Matrix incorrectly omits adult day care, community outreach and sub-acute care from HHL's proposed programs and omits HHL's patients' bill of rights. Forum. -- The SAAR starts out on page 3 by misidentifying Forum as being affiliated with Hospital Corporation of America. On pages 4, 6 and 15, the SAAR incorrectly fails to recognize that a retirement living center (apartments) is part of the overall development Forum proposes. The semi-private room rate of $110 attributed to Forum's application on page 26 of the SAAR is wrong; it should have been $85. Cypress. -- The Review Matrix in the SAAR failed to identify several services and programs Cypress stated in its application that it would offer. The matrix did not recognize that Cypress would offer social activity functions within the community, would offer rehabilitation, would provide some Alzheimer's type services, (which Cypress called supportive care and mentally frail services) and physically frail services. Cypress also spoke of hospice care and respite care in its application, as well as specialized rehabilitation, physical therapy, and speech therapy. Cypress also spoke of community outreach programs, psychiatric services, home health agencies, and numerous other areas that were not recognized by DHRS in its matrix. However, there are valid reasons for some of these omissions. On May 9, 1988, the first day of the final hearing, VHA/Oxford withdrew its application. On the afternoon of May 17, 1988, DHRS announced it was supporting the grant of Palm Court's application since VHA/Oxford had withdrawn. But the only evidence to support the new DHRS position was through the testimony of Reid Jaffe, DHRS Health Services and Facilities Consultants Supervisor, who did not express a personal opinion but acted as a messsenger to relay the positions taken by others at DHRS who did not testify. NUMERIC NEED. Rule 10.5.011(1)(k), Florida Administrative Code, is a methodology for calculating net numeric need for nursing home beds. Under the methodology, gross numeric need is calculated essentially by multiplying the population of two age cohorts projected on the planning horizon by a use rate. The use rate is calculated by divIding current population by the current number of licensed beds. To obtain net need in a health planning sub-district, the methodology first prorates the gross need in the entire district, using the proportion of current licensed beds in the subdistrict to the current licensed beds in the district, and adjusts the resultant by a current occupancy rate factor (occupancy rate /0.90); then, the number of licensed beds, plus 90 percent of the number of approved beds in the subdistrict, are subtracted from the adjusted gross need in the subdistrict. With three exceptions, the parties agree on how net numeric need is calculated under the rule methodology. The parties disagree only on the current licensed bed count, the current approved bed count, and the occupancy rate at one facility that has both community nursing home beds and sheltered nursing home beds. (Sheltered nursing home beds generally are not factored into the formula.) As for the licensed bed count, the issue is whether The Home Association, a 96-bed facility in Hillsborough County, should be included as a licensed community nursing home facility or excluded as a sheltered facility. At hearing, all of the parties presenting evidence on the issue except Forum counted The Home Association's 96 beds as licensed community beds. Forum excluded The Home Association from the licensed bed count because it was not listed on the Department's Community Nursing Home Report for January 1, 1988. This same report reflects three other facilities in Hillsborough County in which the beds were formerly sheltered but as of August 1, 1987, began to be counted by the Department as community beds. Forum conceded, however, that if the Department recognizes The Home Association as a community facility, then it would be appropriate to include those beds in the licensed bed count under the rule formula. In its proposed recommended order, even Forum agrees that The Home Association beds are included in the licensed bed count. Two issues are presented relating to the inventory of approved beds under the rule formula: the date at which approved beds are to be counted; and whether the 120 beds under Careage CON #4714 and Manor Care's 60 beds under CON #4155 were approved at the pertinent time. On the first question, Forum again stands alone. In the face of a rule which is silent as to the date on which approved beds are to be counted, Forum suggests that they be counted cn the same day licensed beds are counted, December 1, 1986, for this batch. All other interested parties follow the Department's general practice of counting approved beds as of the date the State Agency Action Report for this batch was executed, June 18, 1987. Forum supports its position on the ground that use of the same date for both licensed and approved beds avoids the prospect that beds may be "lost" from the calculation if they are not licensed as of December 1, 1986, but become licensed before June 18, 1987, and therefore are no longer approved beds on that latter date. The argument is meritless. There is no evidence of any "lost" beds under this policy for this batch. Indeed, the evidence is that such beds are not lost: 120 beds at Carrollwood were licensed on December 15, 1986, after the December 1 licensed bed cut-off and before the June 18, 1987, SAAR date. These beds were included in the approved bed inventory on June 18, 1987. The Department's policy under its numeric need rule is to count approved beds as of the execution date of the SAAR. Under this policy, the need for beds in the future is predicated on the number of beds currently or soon to be available to meet the need. When more than seven months can elapse after licensed beds are counted but before the agency decision is formulated, it makes sense to count beds approved during this intervening period. A 120-bed award to Careage in the prior batch was published by DHRS in the Florida Administrative Weekly of January 23, 1987, reflecting approval on January 7, 1987. However, DHRS then received criticism.of the approval, and a new supervisor in charge initiated a second review of the circumstances and of the Careage approval. The second review did not conclude until after June 18, 1987. When it did, DHRS re- affirmed its decision to approve Careage and issued a CON for 120 beds on August 18, 1987. Although the Careage CON was issued after June 18, 1987, DHRS proved that there is a rational basis for including it in the approved bed count under these unusual circumstances. The Careage CON represents 120 beds approved in the batching cycle preceding the one at issue in this case. Counting the 120 beds as approved promotes sound health planning. The projection of net need on the planning horizon is predicated on the most accurate count of approved beds from prior batching cycles that can be anticipated to come on line in the near future. As of June 18, 1987, there were 308 other beds approved but not yet licensed in Hillsborough County. Included among these 308 approved beds are 60 beds awarded to Manor Care under CON 4155 by Stipulation dated March 30, 1987. By mistake, DHRS did not count Manor Care's 60-bed CON in the SAAR. This mistake was not discovered, and DHRS served discovery responses and took a final position on need, as required by prehearing orders, that did not count the Manor Care CON. But this mistake f fact should now be corrected, even if it could have been discovered earlier through the use of due diligence, so that the health planning decision resulting from these de novo proceedings will be predicated on the correct facts. See Gulf Court Nursing Center v. HRS, 483 So.2d 700, 712 (Fla. 1st DCA 1986). It is appropriate to include Manor Care's finally approved 60 beds in the rule formula. Adding Careage's 120 beds, the total approved bed count is 428. The final variation accounting for the differences in the parties' calculations under the formula is the manner in which the occupancy rate should be computed at John Knox Village, a facility containing both community and sheltered beds. The issue is whether the patient days in this mixed facility should be prorated between the two types of beds or whether the full patient days for both types of beds should be used in calculating the occupancy rate in the facility. There is no separate report of occupancy by bed type for this mixed facility. The number of patient days delivered in the community beds at John Knox is not known. If the patient days for the entire facility are prorated according to the percentage the community beds bear to the total number of beds, there is a necessary but wholly unsupported and speculative assumption that the proportion of patient days delivered in community beds is identical to the proportion of community beds. DHRS historically has been unwilling to make this assumption and has always included the total number of beds and patient days in mixed facilities to determine the occupancy rate under the community bed rule. The rationale supporting this policy has been appropriately explicated on the record. The use of prorated patient days to determine occupancy in mixed facilities, as suggested by DHRS for the first time at final hearing, also is a change from the position the Department took when exhibits were exchanged and the prehearing stipulation was executed and then relied on by the parties. Because the Department, as a party litigant, did not prorate in its prehearing submissions, it cannot do so at hearing in the absence of fraud, mistake of fact, or newly discovered evidence. No evidence of any such extenuating circumstances was presented. The only explanation DHRS gave for changing its treatment of the John Knox occupancy data was that more accurate recent data (using daily census data instead of first day of the month census data) furnished by the Local Health Council was prorated. But DHRS just as easily could have prorated the older, less accurate data if it had chosen to take that position at the time the parties were required to take final positions in prehearing procedures. The Department, therefore, is precluded from adopting a posture at hearing relating to the treatment of patient days in mixed facilities which is different from that reflected in the Department's prehearing stipulation and exchanged exhibits. In summary, the appropriate numeric need calculation must include The Home Association in licensed beds, count both Careage's 120-bed CON and Manor Care's 60-bed CON in the approved bed count, and use the full John Knox bed complement and patient days in determining the Hillsborough County occupancy rate. Using these factors in the rule methodology, the net need for community nursing home beds in Hillsborough County for the January, 1990, planning horizon is 231, as reflected in the calculation included in the attached Appendix To Recommended Order, Case Nos. 87-3409, etc. Rule 10-5.011(1)(k), Florida Administrative Code, provides that DHRS normally may not approve more beds than the numeric net need calculated under rule methodology. In this case, none of the circumstances specified in the rule that would justify exceeding the numeric net need were proven by the evidence. At the same time, the rule does not require DHRS to fill all, or as much as possible, of the numeric net need by attempting to "mix and match" applications to come as close as possible to the calculated number. LOCAL GEOGRAPHIC NEED PRIORITIES. The current, 1985 District VI Local Health Plan provides that, after consideration of numeric bed need under the rule need methodology, its "priority need rankings" should be considered in the competitive review for new nursing homes. Hil1sborough County, Northwest, is priority rank number one. HCR, FCP, Manor Care, Forum and HHL all propose to locate their nursing homes there. Cypress proposes to locate in Sun City Center and Palm Court is in Plant City, both in Hillsborough County, Southeast, an area ranked fifth in priority in District VI. Plant City is close to Polk County, which the Local Health Plan designates as the fourth ranked area in priority. Cypress proposes its 60-bed nursing home approximately 1/4 mile down the road from an existing nursing home called Sun Terrace, operated by CSI. Quality of care concerns have arisen due to rapid fill-up of 60 additional beds recently licensed at Sun Terrace and opened in September, 1987. See Findings of Fact 83-87, below. As a result, Sun Terrace has imposed on itself a moratorium on new admissions until quality of care concerns can be addressed. In part as a result of the moratorium, Sun Terrace's occupancy rate at the time of the final hearing was only approximately 65 percent, leaving 42 empty beds. MEDICAID NEED. One of the three major considerations for competitive review of nursing home CON applications in the Longterm Care section of the 1985-1987 State Health Plan is "resource access." Except as reflected in the priority rankings, geographic access is not an issue in this proceeding. (Priority/Policy 7 of the Local Health Plan, setting a goal of providing for nursing home services within 30 minutes travel time of 90 percent of urban residents and within 45 minutes travel time of 90 percent of rural residents, already has been achieved in District VI.) But, to address concern for financial access, Priority/Policy 2 of the Local Health Plan provides that applicants "should commit, at a minimum, to serve Medicaid eligible patients in proportion to the representation of elderly poor in the subdistrict." In Hillsborough County, Northwest, where all but two of the applicants propose to locate, the elderly poverty rate is 18.6; in Hillsborough County, Southeast, where Cypress and Pal:n Court would be located, the elderly poverty rate is 15.6 percent. The applicants propose to commit the following percentages of their nursing home beds to the care of Medicaid- 4 eligible patients: HCR, 70 percent; FCP, 70 percent; Manor Care, 30 percent; HHL, 45 percent; Palm Court, 70 percent; and Cypress, approximately 10 percent. Cypress proposed in its application to commit 10 percent of its beds for Medicaid use. It attempted to update its application to provide for a 15 percent Medicaid commitment. The update was said to have been the result of a decrease in the average age of the residents of Sun City Center, Cypress' proposed primary service area, from 73 to 70. But the percentage was calculated by first estimating 60 percent private pay and "backing down" to a Medicare percentage of 25 percent, leaving 15 percent Medicaid. The evidence was persuasive that this attempted update was not due to extrinsic factors. See Conclusions of Law 20 to 25, below. Forum has committed only to have 50 percent of its beds Medicaid- certified and to meet the requirements of Priority/Policy 2. Although Priority/Policy 2 is written as a minimum Medicaid percentage, no evidence was presented from which to determine how high a percentage of Medicaid commitment is desirable. There was, e.g., no evidence on which to find that a Medicaid percentage as high as four times the elderly poverty rate is more desirable than a percentage approximately equal to or perhaps just a bit higher than the elderly poverty rate. To the contrary, the only evidence on the subject was that DHRS does not now consider the Medicaid percentage to be as important as it was considered to be in the past and that DHRS now just checks to see that the percentage approximates the elderly poor rate in the County. NEED FOR ALZHEIMER'S DISEASE PROGRAMS. Description Of The Disease And The Need. There is a need in Hillsborough County for additional nursing home beds and services for Alzheimer's Disease and related disorder victims. There is no known nursing home in Hillsborough County which provides a distinct care unit for Alzheimer's Disease and related disorder victims. There is an estimated unmet need by Alzheimer's patients for nursing home care in Hillsborough County of approximately 1,271 by July, 1989. DHRS has recommended that "preference should be given to applicants for new nursing home beds which propose the development of special Alzheimer's units" and "greater preference should be given to units that will also provide adult day care and/or respite care." Alzheimer's Disease is a brain disorder that was discovered at the turn of the century. It primarily affects persons over the age of 60. The term "related disorders" is used because some non-Alzheimer's disorders mimic Alzheimer's Disease symptoms and create many of the same needs for specialized care. Typically, Alzheimer's Disease results in gradual memory loss and, as memory loss progresses, results in the need for ever- increasing personal care. In the earlier stages, the victim is often in reasonably good physical condition and simply exhibits signs of recent memory loss. However, as memory loss increases, various activities of daily living are disrupted. Victims encounter more serious physical problems and exhibit symptoms such as wandering, significant weight loss, clumsiness, incontinence and antisocial behavior. In the last stages of the disease, the victim requires increasingly intense medical attention, becomes totally dependent on others, and may eventually require total skilled nursing care. The intensity of care required for the Alzheimer's Disease and related disorder victim increases as the disease progresses. In early stages, the victims are typically cared for at home by a family member. The nature of care required for an Alzheimer's Disease or related disorders victim is very exhausting for the care giver. Toward the end of the first stage of the disease when the victim requires increasing supervision, the victim can be maintained longer in the home if there is available to the care giver some form of occasional rest, such as adult day care or respite care. Adult day care and respite care provide opportunities for the primary care giver to "take a break". See Findings of Fact 133 to 135, below. An Alzheimer's Disease patient usually requires inpatient nursing home care late in the second stage of the disease. If the patient is ambulatory, he often exhibits a wandering behavior. Approximately 50 percent of the Alzheimer's victims admitted to a nursing home have the potential to wander. Ultimately, Alzheimer's victims become bed-ridden and require skilled or sub- acute nursing home care, including tube feedings, cathethers, and artificial life support. Historically, ambulatory Alzheimer's patients in nursing homes have been mixed with other patients. The Alzheimer's victim has often disrupted life in the nursing home because of the victim's wandering, incontinence, confusion, and socially unacceptable behavior. Because of these characteristics, some nursing homes avoid admitting Alzheimer's patients and others control problem behavior with sedation and physical restraint. A separate Alzheimer's care unit enables the nursing home to utilize special techniques to manage the Alzheimer's disease victim and allows the victim to maintain his cognitive capabilities for as long as possible, without restraint and sedation. Nursing home patients who do not suffer from Alzheimer's and related diseases are often agitated and disrupted by the Alzheimer's patients' unacceptable social behavior. A separate unit for Alzheimer's Disease victims accommodates the needs of the non-Alzheimer's patient by eliminating unpleasant, often violent encounters between dementia victims and other patients. Distinct Alzheimer's special care units provide better care for Alzheimer's disease and related disorder victims for several reasons. A separate unit eliminates the tendency of the Alzheimer's disease patient to disrupt the remainder of the nursing home. A separate unit provides a smaller, safer, specially designed area with specially trained staff to address the unique needs of the Alzheimer's disease victim. A separate unit is preferable to mixing Alzheimer's patients with non- Alzheimer's patients. Traditional nursing home programs and activities are often inappropriate and counterproductive for the Alzheimer's patient. HCR's Proposal. The 120-bed nursing home proposed by HCR will help meet the needs in Hillsborough County for adult day care, respite care, sub-acute care and a special care unit for Alzheimer's Disease and related disorder victims. The programs and services will enable the HCR nursing home to provide at one location a complete continuum of care from the least intense level of care in adult day care to total (sub-acute) care. HCR's Alzheimer's special care unit will incorporate special design features, special patient activities and programs and higher staffing levels to meet the unique needs cf Alzheimer's disease victims. These features are intended to compensate for memory loss and provide a safe environment where cognitive capabilities can be maintained for as long as possible while patients enjoy personal freedom without the use of restraints and sedation which have typified the treatment of unmanageable Alzheimer's and dementia patients. The architectural design of the HCR nursing home will accommodate the tendency of Alzheimer's victims to wander by allowing the victims to ambulate in circular patterns through the facility and the adjacent court yard and by providing an electronic warning system to prevent inadvertent exit from the nursing home. Patient bathrooms are specially designed to avoid fright and confusion through the use of automatic lighting fixtures, appropriate coloring and distinctly shaped fixtures and waste baskets. Calming colors, color coding, carefully selected art work, special floor coverings and labeling are provided. Separate dining and activities areas enable the nursing home to provide programs and activities for Alzheimer's disease victims in a more effective and efficient manner than would be possible if the same areas also had to be used for non- Alzheimer's Disease victims. The proposed HCR nursing home includes a discreet area designed for an adult day care center, which will share some resources with the nursing home. The program will accommodate 12 persons and be operated in accordance with adult day care regulations. The physical spaces include an entry separate from the main nursing home entry, a lobby, an office, a therapeutic kitchen for use by the patients, toilet facilities, an activities center, and a lounge with an adjacent covered porch. The adult day care program will be staffed by a nurse director, an assistant and volunteers. The participants in this program will be provided with various activities of daily living in an environment developed for Alzheimer's Disease victiMs. This program is intended to provide placement for persons not yet in need of in-patient care and will provide an alternative to premature nursing home admission. Manor Care's Proposal. Manor Care proposes a dedicated 30-bed specialized unit for persons suffering from Alzheimer's disease and related disorders. In 1985, Manor Care perceived the need to treat Alzheimer's patients in a manner different than patients in the general nursing home population. Manor Care's task force of nurses, administrators, architects, and designers developed an Alzheimer's program which recognizes the special needs of the patient. Manor Care now operates 21 special dedicated Alzheimer's units throughout the country and is planning 16 additional Alzheimer's units. Manor Care's comprehensive Alzheimer's program encompasses five components: (1) environment, (2) staffing and training, (3) programming, (4) specialized medical services, and (5) family support. Environment. The proposed 30-bed Alzheimer's unit will be separate from the rest of the facility and self-contained, with its own dining room, activities room, lounge, quiet/privacy room, nurses sub-station, director's office, and outdoor courtyard. A separate dining room for Alzheimer's residents enables staff to provide individualized attention and special assistance. By providing a simple and separate dining environment, residents are no longer embarrassed by confusion and agitation displayed in the presence of non-Alzheimer's residents during mealtime. A separate lounge area is provided for families to visit with residents. In a typical nursing center, the family must visit a confused resident in the presence of other families; families of Alzheimer's residents can find this embarrassing. A separate lounge makes visitation more desirable for Alzheimer's residents and families. The quiet/privacy room can be used by families as a quiet area to visit with a family member, by residents who want to spend time alone, or by staff persons and residents for individualized programming away from the activity on the unit. The outdoor courtyard, which is enclosed and accessible to the unit through the activities room and hallway door, allows Alzheimer's residents to walk outside freely without wandering off. The Manor Care Alzheimer's unit is specially designed with features which reduce environmental stress by minimizing glare (using parabolic lenses), noise and bold patterns which increase agitation in Alzheimer's residents. Throughout the unit, a residential, uncluttered atmosphere is emphasized, using soft, contrasting colors and textures. The unit also contains visual cues to increase orientation. Furnishings are functional, durable and easy to maintain. Staffing and Training. The Alzheimer's unit has its own specialized staff including a Unit Director, Activities Director, and nursing staff. The unit is staffed at a higher "nurse to resident" ratio than the rest of the facility. Staffing patterns emphasizu continuity to ensure that residents receive individualized care. The nurses become f;i1iar with the behavior and abilities of each resident and are able to render care appropriately. Programming. The goal of programming and activities in the Alzheimer's unit is to improve the quality of life of the Alzheimer's resident. This specialized programming results in reducing the use of medications and restraints necessary to manage the Alzheimer's resident. The Manor Care Alzheimer's activity program is success-oriented; staff provide activities designed to allow Alzheimer's residents to succeed more frequently. (They usually fail when mixed in with the general nursing home population.) specialized Medical Services. The use of consultant medical specialists is an integral part of Manor Care's Alzheimer's Program. Specialists provide diagnostic and treatment services for Alzheimer's residents upon admission to the unit, and thereafter when deemed medically appropriate. Family support. Family support is another important aspect of the Manor Care Alzheimer's program. Families are very supportive of the unit's programming and have benef itted from the understanding and support available to them. The Others' Proposals. None of the other applicants propose specialized units for the care of patients with Alzheimer's disease and related disorders. Alzheimer's sufferers will be treated in an "open unit" at the HHL facility and will be placed as compatibly as possible with other residents. Although these residents will be able to intermingle with other residents, their movements will be monitored by the "wander guard" system and all doors will be equipped with buzzers connected to the nurse's stations. The HHL facility will be designed to incorporate secure courtyards and other areas where residents will be free to wander safely throughout the living areas. The facility's nursing personnel will be specially trained to provide services to Alzheimer's sufferers. The proposed HHL facility will also offer an adult Alzheimer's day care program. Although the program will be small (accommodating between four to six individuals) it will interface with the Alzheimer's program offered to the in-house residents. As with the respite program, the Alzheimer's adult day care program will give the families of Alzheimer's disease sufferers an opportunity to take a breather during the day, and the participants will benefit from the special Alzheimer's programs and activities offered. With its proposed 60-bed addition, Palm Court plans to add a program directed specifically at persons suffering from Alzheimers and related brain disorders. Currently, it does not have one. Neither FCP nor Forum make any particular provision for the care of Alzheimer's patients. FCP points out that its facilities in other states historically have cared for this special category of patient, primarily through use of high quality, thereapy-oriented programs, especially at the earlier stages of the disease. Cypress proposes to locate off of a central core: a 60-bed nursing home, offering both intermediate and skilled care, with its own recreation area and dining, serviced from the central kitchen; (2) a 20-bed assisted living unit (which Cypress also calls "supportive care") for mentally frail and physically strong individuals which has its own outdoor recreation area and dining area; and (3) another 40 assisted living beds broken into two 20-unit wings for mentally strong and physically frail individuals, with their own dining and recreation area, including outdoor recreation. The various levels of care are separate since each of the levels have different needs and methods of treatment. However, Cypress will only accept in the mentally frail, physically strong wing, Alzheimer's-type patients who are in the earlier stages of the disease. QUALITY OF CARE. Priority/Policy 9 of the 1985 Local Health Plan states: "Applicants should be evaluated as to their achievement of superior quality ratings by DHRS and other indications of quality as available." Track Record. At the time of application, three of the nursing homes operated by HCR in Florida had superior licenses and the remaining homes had standard licenses. FCP has one nursing home in Florida. It is rated standard by DHRS. None of the facilities operated by FCP's principals, the Phillipses, has ever been in receivership or had a Medicaid or Medicare certification revoked. The Phillipses have an excellent reputation in Ohio for their operation and management of nursing homes and have remained in positive standing with federal and state certification agencies. Manor Care's proposed 60-bed addition will be owned by Manor Care of Florida, Inc., a wholly-owned subsidiary of Manor HealthCare Corporation. Manor HealthCare Corporation is a publicly-held corporation which owns and operates about 130 nursing homes in various states. Manor Care owns and operates nine nursing homes and three adult congregate living facilities (ACLFs) in Florida. All nine Florida nursing homes exceed DHRS licensure standards; the majority of Manor Care's Florida facilities hold a superior license rating. Manor Care has never had a license denied, revoked, or suspended in Florida. Manor Care has opened three nursing homes in Florida in recent years. All three are superior rated. Palm Court Nursing Home has a superior license, with zero deficiencies, from DHRS' Office of Licensure and Certification with the most recent inspection having occurred between May 2 and May 4 immediately preceding the beginning of the final hearing. It is managed by National Health Corp., Murpheesboro, Tennessee. National Health Corp is an owner-operator of other facilities and either owns or operates some 19 facilities in Florida. It has managed Palm Court Nursing Home since its inception and, if the 60 bed addition is approved, will manage the addition. Forum has never had a license denied, revoked or suspended, nor had a facility placed in receivership. Forum has never had any nursing home placed in receivership at any time during its ownership, management or leasing. Forum has a history of providing quality of care and owns and operates facilities in other states which hold superior ratings. Forum has a corporate policy of seeking to attain a superior rating in those states which have such a system. Forum presently owns and operates one facility in Florida. That facility is rated standard and was acquired by Forum within the past two years. That facility, which only has 35 nursing beds, is not a prototype of what Forum proposes in this case. Seventeen (17) of the twenty-one (21) nursing homes currently managed by CSI are located in states which utilize a superior rating system. Of the facilities that are eligible to receive superior licenses, CSI maintains superior ratings in over 80 percent of its beds. CSI's Sun Terrace in Sun City Center was the subject of an extensive survey issued by the Office of Licensure and Certification, an arm of DHRS, in April, 1988, that cited numerous deficiencies in the areas of quality of care, staffing, and programs at the Sun Terrace facility. The licensure survey also cited violations of state and federal laws in the handling of controlled substances and problems with resident care plans at the facility. The findings of DHRS in its licensure survey of Sun Terrace appear to be serious matters, the resolution of which is clearly within the control of CSI. Following the opening of the second 60 beds at Sun Terrace in September, 1987, the facility experienced a shortage of nursing personnel which necessitated a greater use of agency personnel to staff the facility. The problems cited by DHRS at Sun Terrace were largely the result of the increased use of agency personnel, lack of documentation, a newly licensed administrator, and the unexpected resignation of the director of nursing. Even before the DHRS licensure survey, CSI had taken affirmative action to address the problems at Sun Terrace, including a voluntary moratorium on new admissions. In response to the recent problems at Sun Terrac, CSI has moved toward more centralized management of its facilities. CSI now requires administrators to adhere very closely to the corporate policies and procedures. Further, the addition of a second full-time nurse/consultant will double the frequency of quality of care monitoring visits at CSI facilities. The problems experienced at Sun Terrace are atypical of CSI-managed facilities. When CSI's policies and procedures are properly followed, the result is excellent nursing care and services. But the problems at Sun Terrace are examples of what can happen when an organization attempts to expand operations more rapidly than it should. In this connection, CSI has received seven CONs since July 1984. Two of the seven are preliminary approvals that have been challenged and have not yet gone to hearing. One was the 60-bed addition to Sun Terrace which is now licensed. Another is a 73-bed nursing home in Brevard County which is expected to open within the next several months, and another is a 21-bed addition project in Collier County. Cypress has never operated a nursing home and has no track record. Staffing. Staffing arrangments are important considerations in assessing the quality of care to be expected from a proposal, but there is not necessarily a proportional correlation between staffing and quality. How staffing affects quality also depends on the breadth and types of programs to be offered. For example, Alzheimer's programs and sub-acute care will require higher staffing ratios. HCR, FCP, Manor Care, Palm Court and Forum all propose staffing arrangments that meet or exceed state requirements. See Findings Of Fact 1-5, above. Cypress' application, on the other hand, leaves much to be desired in its proposed staffing. The staffing plan presented by Cypress on its Updated Table 11 fails to meet the requirements of Rule 10D-29, F.A.C. Specifically, no provision has been made for an activity director (10D-29.116), a medical director (10D-29.107), a pharmacy consultant (10D-29.112), or a medical records consultant (10D-29.118), all of which are required by rule. (Cypress attempted to explain that it would have a pharmacy consultant on contract who would bill patients separately.) Further, no provision has been made for utilization review to monitor the appropriateness of the placement of residents, as required by Rule 10D-29. Cypress' Updated Table 11 provides for LPNs of 1.5 FTEs on the first shift and night shift and 6.0 FTEs on the second shift. The second shift LPN coverage is over-staffed by 4 1/2 FTEs which will result in inefficiency. Rule 10D-29.108, F.A.C., requires staffing of nursing assistants on all shifts. The Cypress staffing plan makes no provision for nursing assistants on the second shift. In testimony, Cypress attempted to explain that Table 11 was wrong and that the second shift LPNs should have been aides. The proposes Cypress nursing home will not offer 24-hour RN coverage. The third shift has no RN coverage. Based upon the proposed staffing pattern appearing in Cypress' Updated Table 11, its proposed facililty would not qualify for licensure under Florida regulations, much less qualify for a superior rating. Cypress has not secured or identified the day-to-day management of the proposed nursing home. No medical director has been secured or identified. Quality Assurance programs. All of the applicants except Cypress have existing quality assurance (QA) programs that are adequate to assL're quality of care. From the evidence HCR's, Manor Care's, HHL's and Forum's QA programs are comparable and are the best among the applicants. Palm Court has had results comparable to or better than the others , which is itself evidence of an adequate QA program. Meanwhile, CSI, despite an evidently superior QA program, has experienced quality programs due to rapid fill-up of its 60 additiional beds at Sun Terrace. Cypress has no experience operating a nursing home. Not surprisingly, it professes to desire quality and to plan to implement stringent QA programs. But its plans at this stage are not as developed and detailed as the existing QA programs being used by the other applicants at other facilities. Other Factors. Whether Therapies Are In-House or Contracted. Assuming a need for it, and reasonable cost of providing it, provision of therapies--e.g., physical therapy, occupational therapy and speech therapy-- in-house generally is preferable to providing them by contracts with third parties. From an operational and administrative perspective, there are advantages to providing physical therapy services (PT) on an in- house basis. Contracted physical therapy staff tend to be available only for scheduled treatments; in-house staff are always available to assist staff and perform unscheduled maintenance therapy. In-house physical therapy staff work regularly with the nursing home staff. They are present within the facility anc learn the operation of the nursing home facility better than outside agencies. Manor Care proposes to provide in-house physical therapy staff, as opposed to employing outside physical therapy staff on a contract basis. The evidence was that the other applicants plan to provide all of these therapies through third- party contracts. Palm Court has one full-time PT assistant who works under the direction of a licensed physical therapist who now divides time among three 120- bed nursing homes managed by National Health Corp. The service of this licensed physical therapist is provided as part of National Health Corp's management services. Having to cover another 60 beds at Palm Court will spread the service even thinner. In addition, Palm Court's administrator conceded that the single PT assistant in Palm Court's application will not be enough once 60-beds are added to the facility; two will be required. Of course, the trade-off (implied in Finding of Fact 102, above) for providing in-house therapy is that it is less efficient if full use of the services is not required. De-institutionalization. FCP, Forum and Cypress have made special efforts to "de- institutionalize" nursing home care at their proposed facilities. All three proposals emphasize the provision of nursing care within aresidential development--a combination of retirement apartments, assisted living accommodations and nursing home. (See also this concept's impact on Continuum of Care concerns, Findings of Fact 114-127, below.) FCP's proposed facility is designed with a residential appearance to facilitate and implement the philosophy of de-institutionalization co:tained in its application. It reflects FCP's modular approach to care with residential units in wings tied to a common area of support services. The support services are extensive. There are activities areas, craft areas, exercise rooms, therapy areas, a beauty salon and barber shop, men's and women's recreational areas, private dining rooms, a community dining room, screened patios and porches, a newsstand, a bank, a post office, a library, a chapel, a screened-in gazebo, and a swimming pool. The exterior amenities of the design include a pond, an exercise course, a sitting deck, and a putting green. The center core and its recreation and therapy programs are designed to encourage interact ion among the residents in all the different levels of care. Although the third floor, where the nursing home is located, also has a secondary lounge and supplemental dining area, the primary dining area, as well as all of the other amenities, are on the first floor to enhance the interaction. The 30-bed size of FCP's proposed nursing home unit is a part of the original Phillips concept of a de- institutionalized setting, enabling the provision of more personalized care. Where there are fewer residents to care for, a better rapport between the residents and the care givers and a more family-type, personal atmosphere are achieved. This 30-bed concept previously has been approved by the Department in Lee and Polk Counties. Those projects are operationally, structurally, and physically identical to this proposed project. The symmetrical, 3-story design minimizes the amount of travel distance for the resident at the farthest unit to the amenities of the center core and its services. The nursing unit is on the third and smallest floor so that the distance by elevator to the central core for the nursing home iesidents is at a minimum'while still providing those residents with the greatest opportunity for quiet time. Privacy is an essential element in achieving high quality of care. The semi-private room plan utilized in this proposal is a unique approach to maximizing privacy for each resident. A permanent partial partition separating the two beds in each room effectively creates two private rooms. This provides a private space for each resident with his or her own thermostat, window, storage space, television, and telephone accommodation, and heightened auditory privacy. There will be equal access to and control of the vestibule and bathroom for each resident. The 585 gross square feet per bed in the FCP proposal is approximately one-third greater than standard nursing home room configuration. Forum's proposal's chief effort in furtherance of the goal of deinstitutiona1izationother than the continuum of care concept and overall residential appearance--is in the relatively large and "up-scale" living areas. The Cypress facility will include a central core dividing the two 60- bed portions of the project. The central core will include an administrative area, a chapel, a beauty and barber shop, enclosed courtyard, physical and occupational therapy, dining, a central kitchen, and a laundry area. One trade-off for de-institutionalization is cost. Both FCP and Forum generally cost more than the others. Cypress claims not to, but its projected construction cost of $49 per square foot is unrealistically low. See Findings of Fact 147 and 149, below. PROGRAMS (OTHER THAN ALZHEIMER'S). Continnum of Care. As just alluded to, several of the proposals emphasize the placement of their nursing home within a larger community of persons needing different levels of care. FCP. FCP proposes the construction of a 30-bed nursing unit as part of a family owned and operated, 120-unit, full continuum of care facility for the elderly. The facility also contains 60 independent living apartments and 30 adult congregate living units. The full continuum of care is proposed in a uniquely designed, de-institutionalized, home-like atmosphere. FCP offers a therapeutic community offering individualized, personalIzed care in small self- contained units, each specializing in various levels of care ranging from day care and respite care, through apartments for the elderly and assisted living, to skilled, post-hospital rehabilitation. The continuum of care will provide a homogeneous environment through which residents can move as their medical and personal needs change. Forum. Forum Group, Inc., is a national company which owns, develops and operates retirement living centers in a number of states. Forum's proposed nursing home will be part of a total retirement living center containing two other levels of care, assisted living (or ACLF units) and independent apartment units. Forum's proposal calls for provision of a continuum of care, from independent living to assisted living to nursing care, all on the same campus. Cypress. Cypress Total Care would be part of an overall medical project known as Cypress Park. The corporation was formed and a master plan was created, to be developed in two phases. Phase I is a 120-bed nursing facility consisting of 60 skilled and intermediate nursing beds, the subject of these proceedings, and 60 personal care units. Phase II would consist of a 290-unit adult congregate living facility (ACLF) and 143 units of independent villa housing on a golf course with nature trails and other amenities. Also proposed in Phase II would be units of medical offices and commercial health-related facilities to support the community. The area selected by Cypress is adjacent to the Sun Hill Medical Arts Building and the Community Arts Building, as well as a hospital owned by Hospital Corporation of America known as Sun City Hospital. These components would be worked into the overall master plan proposed by Cypress. Cypress proposes a multi-level assessment program. The 120-bed Cypress Park Community facility will have an independent level one facility in Sun City Center which will admit healthy elderly residents. These elderly may have canes, but no walkers or wheelchairs, and they will function normally in their activities of daily living. These individuals may prepare two meals a day in their apartments, or have them in the dining room. The main meal will be in the dining room. Social services and activities will be provided and recommended to the independent living residents to enhance their lifestyles. A home health agency is planned as a part of the center so that house calls can be made to insure that any necessary medications are taken and that residents receive the services they might need from time to time. (Cypress has not yet applied for a CON for its home health agency.) The next level of living is for patients who need more assistance. These are residents who require 24-hour companion service. These patients do not require skilled nursing care and do not require the institutional environment of a nursing home. Some of these paients may be in the first stage of Alzheimer's, or they may be physically frail, but not enough to require skilled nursing care. This level is primarily for those individuals who are physically frail and mentally strong or mentally frail and physically strong. The physically frail and mentally strong may have limited ambulatory capabilities, need assistance in activities of daily living, need medication, or need all their meals prepared. As noted above, this level of services also will be provided to individuals who are physically strong but mentally frail. The majority of these people will be Alzheimer's residents, they must be carefully monitored 24 hours a day and receive strong psychological support. The next level of care offered is for individuals who require some nursing care and no longer qualify for the level two care described above. This will be intermediate nursing care and will consist of care from certified nursing aides and licensed practical nurses. These individuals do not require skilled nursing care. Rehabilitation is the key to this portion of the plan, and the rehabilitative center will be involved to constantly push these individuals to the point of rehabilitation where they can reenter an independent lifestyle. If individuals progress further, they can move into the skilled nursing care center in which they will receive care not only from nursing aides and licensed practical nurses, but also from registered nurses. The final level would be acute hospital care which would be provided by the existing Sun City Hospital. The medical staff who are involved in the Cypress project also are on the medical staff of the Sun City Hospital and will be working and consulting with individuals both in the acute hospital care and the nursing home setting to provide appropriate levels of care to the individuals who need it. The nursing home will share IV teams, work with tracheotomy patients, A.D.A. dieticians, accounting services, and other services with the existing hospital in Sun City Center. Palm Court. Palm Court, while currently a free-standing 120- bed nursing home, is located on property where construction of a 360-bed adult congregate living facility (ACLF) is now starting. In addition, Palm Court has transfer agreements with area hospitals including Plant City Hospital, South Florida Baptist Hospital, Brandon Humana Hospital and Lakeland Regional Medical Center. It also has formal working relationships with home health agencies and with elderly programs in the area. The Others. The other applicants--HCR, Manor Care and HHL-- propose free-standing nursing homes. But all can be expected to make efforts to achieve transfer and other agreements with local hospitals, home health agencies and providers of care for the elderly where reasonable and appropriate. Sub-Acute Care. The HCR nursing home will be staffed and equipped to provide sub- acute care. The sub-acute care services provided by HCR will include high tech services such as ventilator care, IV therapy, pulmonary aids, tube feeding, hyperalimentation, and short and long term rehabilitation. HCR currently provides a wide variety of these sub-acute services in its existing nursing homes. CSI currently provides sub-acute nursing services at its existing Florida facilities. Those services include ventilators, hyperalimentation, intravenous therapy, Clinitron beds, heparin pumps, nosogastric and Jejunoscopy tube feedings, subclavian lines, and Hickman catheters. These service will be provided at HHL's proposed facility. Forum will provide skilled and intermediate care, and the following services will be offered at the proposed facility: Sterile dressing changes for decubitus care. Brittle diabetics on sliding scale insulin. Continuous administration of oxygen. Sterile case of tracheotomies. Ventilators. Continuous bladder irrigation. Hyper-alimentation or N-G feeding. IV treatment. Special medication monitoring (e.g. heparin, comadin). New post-operative cases facing hospital discharge as a result of D.R.G. reimbursement. The skilled nursing services to be provided by FCP include parenteral nutrition, internal nutrition, tracheostomy care, respirator care, skin wound decubitus care, ostomy care, and head trauma care. Palm Court also will provide sub-acute care. Adult Day Care Adult day care is a part of the specialized Azfleimer's program HCR proposes. In addition, HHL, FCP and Forum offer adult day care. Respite Care. HCR and Manor Care offer respite care as part of their Alzheimer's programs. Both will have no minimum length of stay and no extra charge over the regular daily rate for nursing home care. All the others except Palm Court also offer respite care, but Cypress' proposal for respite care is sketchy. HHL says it will offer respite care at no extra charge. D. Hospice. Only HCR, Forum and HHL offer hospice care as part of their nursing home programs. F. Rehabilitation and Community Outreach. All of the applicants propose rehabilitative (or restorative) care and some kind of community outreach programs. The distinctions among the ideas expressed by the applicants are not particularly competitively significant. However, the manner in which the therapies are delivered can be significant. See Finding of Facts 102 to 105, above. HOW SOON THE PROJECT BECOMES OPERATIONAL. Because there is a shortage of nursing home beds in Hillsborough County, there is a valid concern how long it would take for the holder of a CON to get its facility operational. Priority/Policy 3 of the 1985 Local Health Plan gives expression to this concern as follows: In competitive reviews, preference should be given to applicants with a documented history of implementing certificates of need within the statutory time frames. Of the applicants who have developed nursing homes in the past (i.e., excluding Cypress), all but Palm Court have a history of timely implementing their CONs. Palm Court had to request an extension of time in implementing its existing 120-bed facility. But Palm Court bought the CON for that project from the original owners in 1982 or 1983. Palm Court then had to secure another, more suitable location, re-design the facility, get construction financing and enter into a construction contract before construction could begin. This delayed the project and resulted in administrative litigation to decide whether Palm Court should lose the CON for failure to timely implement it or be given an extension of time. Palm Court prevailed, and the facility opened in September, 1985. HHL, through CSI, also has a history of timely implementing CONs but recent expansion in Florida raises some question whether it can continue to be as timely in implementing this CON, along with the others. See Findings of Fact 82-87,98, and 100, above. Generally, an addition of beds to an existing nursing home can be constructed more quickly than a new facility, giving Palm Court an advantage in potential speed of implementation. similarly, Manor Care, which is prepared to begin construction on its finally approved 60-bed CON, has an advantage over the others, as well as a potential construction cost savings over Palm Court. See Findings of Fact 146, below. COST OF CARE. Cost of Construction And Development. Advantage of Additions. Within limits placed on recovery of capital costs under the Medicaid and Medicare reimbursement programs now in place (which, to some extent, are emulated by private health care insurers and employers' health benefit plans), construction and development costs generally are reflected in the charges patients pay for nursing home care. Additions, such as Palm Court's and Manor Care's proposals, have a cost advantage over the other proposals. Construction sites already have been prepared, and it is not ncessary to duplicate some features already incorporated in the original structure, such as the kitchen, laundry and building plant. Due to delays in finalization of its approved CON for 60 beds, Manor Care has the fortuitous additional potential cost advantage of being able to construct both the "original facility" and the 60-bed "addition" at the same time. Quality vs. Cost Trade-Off. Other than the cost advantage of adding on, and of saving the contractor's fee by using an in-house construction team (as HCR does), reduced cost of construction generally will reflect reduced quality. For example, some of the quality features incorporated in the proposals of Forum, FCP and Cypress will cost more. See Finding of Fact 113, above. Put another way, lower costs may result in lower patient charges but also may result in lower quality, everything else being equal. The costs of construction of the various proposals may be found in Findings of Fact 1 to 7, above. It should also be noted at this point that Cypress' facility design has features--primarily unusual wall and roof angles and one water heater requiring larger pipe sizing-- which make its construction costs appear lower than they should be. Cost Overruns. The applicants' respective records for cost overruns in implementing CONs mirror their records for timeliness. See Findings of Fact 138-143, above. Cypress has no track record; all the others except Palm Court have experienced no cost overruns; Palm Court's $1.3 million cost overrun was precipitated by the need to secure another site and re-design the facility after it acquired the CON for 120 beds; and CSI, which would be responsible for implementing HHL's proposal, is involved in recent expansion which could affect its ability to bring all of its' CONs on line within budget. Cost of Operations. Economies of Scale--Size of Facility. In addition to construction and development costs, cost of operations are reflected in patient charges. It generally is accepted that a 120-bed nursing home is the optimal size for operational efficiencies. In this respect, the proposals by HCR, Forum and HHL have an advantage over the others. Manor Care has the advantage of proposing to expand a less efficient 60-bed nursing home to an optimally efficient 120-bed facility. To some extent, the generally accepted principle that 120-bed nursing homes are more desirable may have become dated. Two of the proposals--FCP's and Cypress'--combine some of the operating efficiencies of a 120-bed nursing home with the continuum of care and quality of care that can be achieved in a 120-bed living complex that incorporates a smaller nursing unit with other living units of different levels of care. By c(Jmparison, these type facilities are less institutionalized than a 120-bed nursing home, whether free-standing or incorporated within a larger complex with other living units. See Findings of Fact 106 to 113, above. Economies of Scale--Size of Organization. Economies of scale also can be realized from the size of the organization that owns or manages a nursing home. The proposals of all of the applicants except Cypress benefit from this principle, Palm Court to a lesser extent than the others, including in the area of quality assurance, nurse training and nurse recruiting. At the time of hearing, HCR operated nine nursing homes in Florida. HCR has approximately twelve nursing homes scheduled to begin construction in Florida within the next year. Nationwide, HCR operates more than 125 facilities containing approximately 16,000 beds. HCR has designed and built over 200 nursing homes and related health care facilities. HCR realizes substantial savings by using national contracts for the purchase of furniture, equipment, hardware and other operating supplies. Forum, as a national company, has the experience and purchasing power to cut operational costs through national purchase contracts and through economies and improvements experienced at the local level with a total retirement facility all on one campus. The Manor Care Florida Regional Office offers the services of a Regional Director, a Regional Nurse, a Nurse Recruiter, and a Comptroller to work with the corresponding departments of the Manor Care Florida nursing homes. FCP's long term plans are to develop homes in clusters, currently concentrating on the central west coast area of Florida. FCP has previously been granted certificates of need in Lee County and Polk County and has been recommended by the Department for a certificate of need in Hillsborough County. This cluster will operate under a unified local administration and share rehabilitative, medical, social, dietary and transportation personnel, enhancing economies of operation. CSI was formed in 1978 for the purpose of operating extended care facilities, including nursing homes and retirement centers. Since that time, the company has grown to its current operations of twenty-one (21) nursing homes, two (2) retirement centers and one (1) home for the aged located in seven states. Historically, much of this growth has occurred through the acquisition of existing facilities, although more recently the focus has shifted to the development of new facilities. Because CSI has established "national accounts" for the acquisition of movable equipment CSI can purchase nursing home equipment and furnishings and other operating supplies for HHL at reduced prices. (3) Patient Charges. The applicants propose the following room charges for semi-private rooms. Applicant Medicaid Medicare Private Pay HCR 60.94 76.00 75.00 FCP 60.00 65.00 80.00 Manor Care 1/ 69.37 ---- 72.57 HHL 66.30 109.33 2/ 72.76 Forum 67.18 80.67 79.50 Palm Court 77.00 100.00 77.00 Cypress 58.00 65.00 69.00 However, Cypress' charges are suspect; they probably are unrealistically low. Palm Court's charges also are suspect. It is difficult to understand from the evidence whether they are charges or Medicaid reimbursements. It also is difficult to tell if they are current or projected. In any event, they do not relate to the information in Palm Court's pro forma. As previously alluded to, patient charges do not necessarily proportionately reflect construction and development and operating efficiencies. They also are affected by programs and quality. BUILDING DESIGN AND ENERGY FEATURES. Patient Care and Safety. Overall, HCR's design is excellent. Functional elements are effectively inter-related, the building is designed to be open to landscaping, sunlight and court yards, and there is a wide range of amenities. Cypress' patient rooms are smaller than allowed under state requirments. The state minimum in Chapter 10D-29, Florida Administrative Code, is 80 net square feet per bed for multi-bed and 100 net square feet in a single room. Cypress' proposal only has approximately 65.58 gross square feet per bed. Cypress' building design also has rooms that are approximately 130 feet from the nurses' stations and clean utility and soiled utility rooms, 10 feet over the state maximum under Rule 10D-29.121(24), Florida Administrative Code. Forum's :4 floor plan also violates this standard. Rule 10D-29.121(6), Florida Administrative Code, requires a 20 foot clear view out room windows. Cypress' design also violates this standard. Manor Care's floorplan is the most compact one- story design. It has four compact wings off a central core. Forum proposes a two-story structure, creating a potential increased hazard for patients with reduced mobility. But DHRS rules provide for nursing homes of more than one floor, and required safety features, which Forum will provide, keep the potential to an insignificant minimum. FCP proposes a three-story facility with the nursing home on the third floor adjacent to the elevators connecting it to the first floor central core and amenities. FCP, too, adequately addresses DHRS safety concerns and actually could be more convenient to more nursing home patients than a one-story structure. Energy Conservation Features. All of the applicants propose to insulate their facilities for energy efficiency, some, e.q., HHL, somewhat better than others. Building design itself also affects energy consumption. Cypress' high exterior building surface area makes it a less energy-efficient design; Manor Care's compact design aces it a more energy-efficient design. FCP's three-story design also is a more energy-efficient design. Cypress' design incorporates only one water heater. This will produce line loss and lower energy efficiency, as well as potential total loss of hot water. (Cypress also has only one electrical plant.) Other Unique Design Features. Several unique features in FCP's room design helps "de- institutionalize" the facility and contributes to overall quality of care. Similarly, residents at FCP will be able to offer their guests refreshments from the kitchen at any time of the day or nights and children, spouses, and entire families will be encouraged to join residents for meals as often as they wish, assisting in the maintenance of ties with the community. Dining may be either communal or in the several lounge areas and private dining rooms. One of Cypress' unique design features is of the bizarre and morbid variety--a room designed to store deceased residents. FINANCIAL FEASIBILITY. The short-term and long-term feasibility of the proposals of HCR, FCP, Manor Care, Forum and HHL was never seriously questioned and was easily proven. Not so with Palm Court and Cypress. Palm Court. The duty to defend the immediate and long term financial feasibility of Palm Court's project rested with Steve Jones. Mr. Jones, who was not involved in the preparation of the application, offered his opinion that the Palm Court 60-bed addition would be feasible in the immediate and long terms. In giving his opinion of the project's financial feasibility, Mr. Jones stated he believed the pro forma in years 1 and 2 relate back to the corresponding tables in the application; but acknowledged he performed no analysis of his own, but rather he took the information provided him at face value. The pro forma is one of the key components of an application, as literally the heart of the application ties directly or indirectly into developing the pro forma, including Tables 1, 2, 3, 7, 8, 10, 11 and 25, as well as the amortization schedule. It is a required component of the application. Section 381.494(4)(e), F.S. (1985). Mr. Jones was asked to render an opinion on the reasonableness of Tables 8, 10, 11 and 25, which he did. On cross examination, however, Mr. Jones acknowledged he did not evaluate existing staff at Palm Court to determine the reasonableness of the pro forma. He did not verify the projected management fee and, in fact, stated he didn't know if it was included as a line item under "administration and general" on the pro forma nor how the management fee was computed. Mr. Jones, who has never prepared all the financial information in a CON application, also admitted he didn't know what current nursing salaries were in Hillsborough County, or any other salaries for that matter. He further acknowledged that he could not testify that the application's hourly wage times the number of working hours in a year would give you the stated nursing salaries. In sum, Mr. Jones admitted his opinion of the project's feasibility was based solely on his review of Tables 8, 11, 20 and 25 and his firm's involvement in the preparation of Palm Court's two most recent cost reports and not on the pro forma filed with Palm Court's application. Mr. Jones' accounting firm, in preparing Palm Court's cost reports, does not conduct an audit or express any opinion relating to the reasonableness of the statement of revenues and expenses. Joseph Lennartz, an expert in financial feasibility analysis, gave persuasive testimony outlining the inconsistencies in Palm Court's application. Palm Court's total revenue projections appearing in Table 7 for years 1 and 2 do correspond to the daily room and board revenues appearing in the pro forma, yet none of the Table 7 revenue projections correspond to the projected charges on Table 8. Assuming the salaries on Table 11 do not include fringe benefits, all FTE's and salaries on Table 11 are not accounted for in the pro forma. The pro forma salaries are significantly lower than on Table 11: RNs ,- understated by $12,426 LPNs - understated by $30,518 CNAS -understated by $239,541 Social Worker - understated by $2,983 Dietary - understated by $3,009 Maintenance - understated by $10,165 Activities - understated by $4,486 Housekeeping - understated by $6,365 Laundry & Linen - understated by $6,498 Admin & General - understated by $2,560 Palm Court's salary information on Table 11 is in 1987 dollars and needs to be inflated forward at least two to three years. Palm Court's current average salaries exceeded the proposed salaries on Table 11--including the administrator's salary, proposed at an annual salary of just over $31,000 when it actually was over $50,000 in 1987. Based on Palm Court's answers to interrogatories, Palm Court's management fee is not accurately reflected in the pro forma and is $44,559 too low in year 2; the projected dietary expense is understated by $112,386 in year 2; the projected housekeeping expense is understated by $46,609 in year 2; the projected laundry expense is understated by $35,308 in year 2; and plant expenses are understated by $100,116 in year 2. The terms of debt financing appearing on Table 2 of Palm Court's application do not conform to the amortization table, causing the interest expense line item on the pro forma to be understated. Cypress. As previously alluded to, the reasonableness of Cypress' projected Medicaid and Medicare rates appearing on its Updated Table 8 has not been established by competent substantial evidence. The Cypress pro forma fails to make provision for interest expense, depreciation, and property tax expense. These omissions represent an understatement of expenses as follows: YEAR ONE YEAR TWO INTEREST $177,818 $176,186 DEPRECIATION $110,000 $100,000 PROPERTY TAXES 2,200 25,000 (at assessed value 75 percent of market) TOTAL $290,018 $301,186 When interest, depreciation, and property taxes are included in the Cypress pro forma, the result is a loss of $90,000 in year one and $80,000 in year two. Furthermore, from a cash flow perspective, Cypress will incur a cash loss of $2,037 in year one and a cash gain of just $6,342 in year two. If property taxes are based on an assessed value at 100 percent of fair market value, there would be a $2,000 cash loss even in year two. It is not unusual for a nursing home to experience a negative cash flow in its first year of operation due to its low occupancy. However, it is unusual for a nursing home to experience a negative cash flow, as the Cypress facility will, while operating at optimal occupancy (95 percent). Cypress' owner/investors are willing to proceed with the project because they expect to be able to use some of the approximately $90,000 per year tax loss in years one and two to offset personal income, resulting in a cash on cash return of approximately $23,000 or 5.4 percent. Cypress' Table 1, "source of funds" states that the applicant has $425,000 "in hand". In fact, Cypress does not have those funds in hand. They are in the hands of the Cypress owner/investors. So far they have contributed $90,000 to the venture and will have to contribute not only an additional $425,000 to fund the nursing home but also an unspecified larger sum to fund Cypress planned ACLF and other projects. The evidence suggests that at least $425,000 more of equity contribution would be required for the rest of the project. Cypress did not prove that its proposed facility is financially feasible, either in the immediate or long term. BALANCED CONSIDERATION. Giving a balanced consideration to all of the statutory and rule factors addressed in the preceding findings, it is found that there is a net need for 231 community nursing home beds in Hillsborough County, that the applications of HCR, FCP and Manor Care should be granted and that the other applications should be denied.
Recommendation Based on the foregoing Findings Of Fact and Conclusions Of Law, it is recommended that the Department of Health and Rehabilitative Services enter a final order granting the applications of HCR (CON Action No. 5000), FCP (CON Action No. 4993) and Manor Care (CON Action No. 5006) and denying the applications of Forum (CON Action No. 4999), HHL (CON Action No. 4978) Palm Court (CON Action No. 4987) and Cypress (CON Action No. 5004). RECOMMENDED this 14th day of November, 1988, in Tallahassee, Florida. J. LAWRENCE JOHNSTON Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 14th day of November, 1988.
The Issue Whether the certificate of need (CON) applications filed by New Port Richey Hospital, Inc., d/b/a Community Hospital of New Port Richey (Community Hospital) (CON No. 9539), and Morton Plant Hospital Association, Inc., d/b/a North Bay Hospital (North Bay) (CON No. 9538), each seeking to replace and relocate their respective general acute care hospital, satisfy, on balance, the applicable statutory and rule criteria.
Findings Of Fact The Parties AHCA AHCA is the single state agency responsible for the administration of the CON program in Florida pursuant to Chapter 408, Florida Statutes (2000). The agency separately reviewed and preliminarily approved both applications. Community Hospital Community Hospital is a 300,000 square feet, accredited hospital with 345 licensed acute care beds and 56 licensed adult psychiatric beds, located in southern New Port Richey, Florida, within Sub-District 5-1. Community Hospital is seeking to construct a replacement facility approximately five miles to the southeast within a rapidly developing suburb known as "Trinity." Community Hospital currently provides a wide array of comprehensive inpatient and outpatient services and is the only provider of obstetrical and adult psychiatric services in Sub-District 5-1. It is the largest provider of emergency services in Pasco County with approximately 35,000 visits annually. It is also the largest provider of Medicaid and indigent patient days in Sub-District 5-1. Community Hospital was originally built in 1969 and is an aging facility. Although it has been renovated over time, the hospital is in poor condition. Community Hospital's average daily census is below 50 percent. North Bay North Bay is a 122-bed facility containing 102 licensed acute care beds and 20 licensed comprehensive medical rehabilitation beds, located approximately one mile north of Community Hospital in Sub-District 5-1. It serves a large elderly population and does not provide pediatric or obstetrical care. North Bay is also an aging facility and proposes to construct a replacement facility in the Trinity area. Notably, however, North Bay has spent approximately 12 million dollars over the past three years for physical improvements and is in reasonable physical condition. Helen Ellis Helen Ellis is an accredited hospital with 150 licensed acute care beds and 18 licensed skilled nursing unit beds. It is located in northern Pinellas County, approximately eight miles south of Community Hospital and nine miles south of North Bay. Helen Ellis provides a full array of acute care services including obstetrics and cardiac catheterization. Its daily census average has fluctuated over the years but is approximately 45 percent. Mease Mease operates two acute care hospitals in Pinellas County including Mease Dunedin Hospital, located approximately 18 to 20 miles south of the applicants and Mease Countryside Hospital, located approximately 16 to 18 miles south of Community and North Bay. Each hospital operates 189 licensed beds. The Mease hospitals are located in the adjacent acute care sub-district but compete with the applicants. The Health Planning District AHCA's Health Planning District 5 consists of Pinellas and Pasco Counties. U.S. Highway 41 runs north and south through the District and splits Pasco County into Sub- District 5-1 and Sub-District 5-2. Sub-District 5-1, where Community Hospital and North Bay are located, extends from U.S. 41 west to the Gulf Coast. Sub-District 5-2 extends from U.S. 41 to the eastern edge of Pasco County. Pinellas County is the most densely populated county in Florida and steadily grows at 5.52 percent per year. On the other hand, its neighbor to the north, Pasco County, has been experiencing over 15 percent annual growth in population. The evidence demonstrates that the area known as Trinity, located four to five miles southeast of New Port Richey, is largely responsible for the growth. With its large, single- owner land tracts, Trinity has become the area's fuel for growth, while New Port Richey, the older coastal anchor which houses the applicants' facilities, remains static. In addition to the available land in Trinity, roadway development in the southwest section of Pasco County is further fueling growth. For example, the Suncoast Highway, a major highway, was recently extended north from Hillsborough County through Sub-District 5-1, west of U.S. 41. It intersects with several large east-west thoroughfares including State Road 54, providing easy highway access to the Tampa area. The General Proposals Community Hospital's Proposal Community Hospital's CON application proposes to replace its existing, 401-bed hospital with a 376-bed state- of-the-art facility and relocate it approximately five miles to the southeast in the Trinity area. Community Hospital intends to construct a large medical office adjacent to its new facility and provide all of its current services including obstetrical care. It does not intend to change its primary service area. North Bay's Proposal North Bay's CON application proposes to replace its existing hospital with a 122-bed state-of-the-art facility and also plans to relocate it approximately eight miles to the southeast in the Trinity area of southwestern Pasco County. North Bay intends to provide the same array of services it currently offers its patients and will not provide pediatric and obstetrical care in the proposed facility. The proposed relocation site is adjacent to the Trinity Outpatient Center which is owned by North Bay's parent company, Morton Plant. The Outpatient Center offers a full range of diagnostic imaging services including nuclear medicine, cardiac nuclear stress testing, bone density scanning, CAT scanning, mammography, ultrasound, as well as many others. It also offers general and specialty ambulatory surgical services including urology; ear, nose and throat; ophthalmology; gastroenterology; endoscopy; and pain management. Approximately 14 physician offices are currently located at the Trinity Outpatient Center. The Condition of Community Hospital Facility Community Hospital's core facilities were constructed between 1969 and 1971. Additions to the hospital were made in 1973, 1975, 1976, 1977, 1979, 1981, 1992, and 1999. With an area of approximately 294,000 square feet and 401 licensed beds, or 733 square feet per bed, Community Hospital's gross area-to-bed ratio is approximately half of current hospital planning standards of 1,600 square feet per bed. With the exception of the "E" wing which was completed in 1999, all of the clinical and support departments are undersized. Medical-Surgical Beds And Intensive Care Units Community Hospital's "D" wing, constructed in 1975, is made up of two general medical-surgical unit floors which are grossly undersized. Each floor operates 47 general medical-surgical beds, 24 of which are in three-bed wards and 23 in semi-private rooms. None of the patient rooms in the "D" wing have showers or tubs so the patients bathe in a single facility located at the center of the wing on each floor. Community Hospital's "A" wing, added in 1973, is situated at the west end of the second floor and is also undersized. It too has a combination of semi-private rooms and three-bed wards without showers or tubs. Community Hospital's "F" wing, added in 1979, includes a medical-surgical unit on the second and third floor, each with semi-private and private rooms. The second floor unit is centrally located between a 56-bed adult psychiatric unit and the Surgical Intensive Care Unit (SICU) which creates security and privacy issues. The third floor unit is adjacent to the Medical Intensive Care Unit (MICU) which must be accessed through the medical-surgical unit. Neither intensive care unit (ICU) possesses an isolation area. Although the three-bed wards are generally restricted to in-season use, and not always full, they pose significant privacy, security, safety, and health concerns. They fail to meet minimum space requirements and are a serious health risk. The evidence demonstrates that reconfiguring the wards would be extremely costly and impractical due to code compliance issues. The wards hinder the hospital's acute care utilization, and impair its ability to effectively compete with other hospitals. Surgical Department and Recovery Community Hospital's surgical department is separated into two locations including the main surgical suite on the second floor and the Endoscopy/Pain Management unit located on the first floor of "C" wing. Consequently, the department cannot share support staff and space such as preparation and recovery. The main surgical suite, adjacent recovery room, and central sterile processing are 25 years old. This unit's operating rooms, cystoscopy rooms, storage areas, work- stations, central sterile, and recovery rooms are undersized and antiquated. The 12-bay Recovery Room has no patient toilet and is lacking storage. The soiled utility room is deficient. In addition, the patient bays are extremely narrow and separated by curtains. There is no direct connection to the sterile corridor, and staff must break the sterile field to transport patients from surgery to recovery. Moreover, surgery outpatients must pass through a major public lobby going to and returning from surgery. The Emergency Department Community Hospital's existing emergency department was constructed in 1992 and is the largest provider of hospital emergency services in Pasco County, handling approximately 35,000 visits per year. The hospital is also designated a "Baker Act" receiving facility under Chapter 394, Florida Statutes, and utilizes two secure examination rooms for emergent psychiatric patients. At less than 8,000 total square feet, the emergency department is severely undersized to meet the needs of its patients. The emergency department is currently undergoing renovation which will connect the triage area to the main emergency department. The renovation will not enlarge the entrance, waiting area, storage, nursing station, nor add privacy to the patient care areas in the emergency department. The renovation will not increase the total size of the emergency department, but in fact, the department's total bed availability will decrease by five beds. Similar to other departments, a more meaningful renovation cannot occur within the emergency department without triggering costly building code compliance measures. In addition to its space limitations, the emergency department is awkwardly located. In 1992, the emergency department was relocated to the front of the hospital and is completely separated from the diagnostic imaging department which remained in the original 1971 building. Consequently, emergency patients are routinely transported across the hospital for imaging and CT scans. Issues Relating to Replacement of Community Hospital Although physically possible, renovating and expanding Community Hospital's existing facility is unreasonable. First, it is cost prohibitive. Any significant renovation to the 1971, 1975, 1977, and 1979 structures would require asbestos abatement prior to construction, at an estimated cost of $1,000,000. In addition, as previously noted, the hospital will be saddled with the major expense of complying with all current building code requirements in the 40-year-old facility. Merely installing showers in patient rooms would immediately trigger a host of expensive, albeit necessary, code requirements involving access, wiring, square footage, fireproofing columns and beams, as well as floor/ceiling and roof/ceiling assemblies. Concurrent with the significant demolition and construction costs, the hospital will experience the incalculable expense and loss of revenue related to closing major portions, if not all, of the hospital. Second, renovation and expansion to the existing facility is an unreasonable option due to its physical restrictions. The 12'4" height of the hospital's first floor limits its ability to accommodate HVAC ductwork large enough to meet current ventilation requirements. In addition, there is inadequate space to expand any department within the confines of the existing hospital without cannibalizing adjacent areas, and vertical expansion is not an option. Community Hospital's application includes a lengthy Facility Condition Assessment which factually details the architectural, mechanical, and electrical deficiencies of the hospital's existing physical plant. The assessment is accurate and reasonable. Community Hospital's Proposed Replacement Community Hospital proposes to construct a six- story, 320 licensed beds, acute care replacement facility. The hospital will consist of 548,995 gross square feet and include a 56-bed adult psychiatric unit connected by a hallway to the first floor of the main hospital building. The proposal also includes the construction of an adjacent medical office building to centralize the outpatient offices and staff physicians. The evidence establishes that the deficiencies inherent in Community Hospital's existing hospital will be cured by its replacement hospital. All patients will be provided large private rooms. The emergency department will double in size, and contain private examination rooms. All building code requirements will be met or exceeded. Patients and staff will have separate elevators from the public. In addition, the surgical department will have large operating rooms, and adequate storage. The MICU and SICU will be adjacent to each other on the second floor to avoid unnecessary traffic within the hospital. Surgical patients will be transported to the ICU via a private elevator dedicated to that purpose. Medical-surgical patient rooms will be efficiently located on the third through sixth floors, in "double-T" configuration. Community Hospital's Existing and Proposed Sites Community Hospital is currently located on a 23-acre site inside the southern boundary of New Port Richey. Single- family homes and offices occupy the two-lane residential streets that surround the site on all sides. The hospital buildings are situated on the northern half of the site, with the main parking lot located to the south, in front of the main entrance to the hospital. Marine Parkway cuts through the southern half of the site from the west, and enters the main parking lot. A private medical mall sits immediately to the west of the main parking lot and a one-acre storm-water retention pond sits to the west of the mall. A private medical office building occupies the south end of the main parking lot and a four-acre drainage easement is located in the southwest corner of the site. Community Hospital's administration has actively analyzed its existing site, aging facility, and adjacent areas. It has commissioned studies by civil engineers, health care consultants, and architects. The collective evidence demonstrates that, although on-site relocation is potentially an option, on balance, it is not a reasonable option. Replacing Community Hospital on its existing site is not practical for several reasons. First, the hospital will experience significant disruption and may be required to completely close down for a period of time. Second, the site's southwestern large four-acre parcel is necessary for storm-water retention and is unavailable for expansion. Third, a reliable cost differential is unknown given Community Hospital's inability to successfully negotiate with the city and owners of the adjacent medical office complexes to acquire additional parcels. Fourth, acquiring other adjacent properties is not a viable option since they consist of individually owned residential lots. In addition to the site's physical restrictions, the site is hindered by its location. The hospital is situated in a neighborhood between small streets and a local school. From the north and south, motorists utilize either U.S. 19, a congested corridor that accommodates approximately 50,000 vehicles per day, or Grand and Madison Streets, two-lane streets within a school zone. From the east and west, motorists utilize similar two-lane neighborhood streets including Marine Parkway, which often floods in heavy rains. Community Hospital's proposed site, on the other hand, is a 53-acre tract positioned five miles from its current facility, at the intersection of two major thoroughfares in southwestern Pasco County. The proposed site offers ample space for all facilities, parking, outpatient care, and future expansion. In addition, Community Hospital's proposed site provides reasonable access to all patients within its existing primary service area made up of zip codes 34652, 34653, 34668, 34655, 34690, and 34691. For example, the average drive times from the population centers of each zip code to the existing site of the hospital and the proposed site are as follows: Zip code Difference Existing site Proposed site 34652 3 minutes 14 minutes 11 minutes 34653 8 minutes 11 minutes 3 minutes 34668 15 minutes 21 minutes 6 minutes 34655 11 minutes 4 minutes -7 minutes 34690 11 minutes 13 minutes 2 minutes 34691 11 minutes 17 minutes 6 minutes While the average drive time from the population centroids of zip codes 34653, 34668, 34690, and 34691 to the proposed site slightly increases, it decreases from the Trinity area, where population growth has been most significant in southwestern Pasco County. In addition, a motorist's average drive time from Community Hospital's existing location to its proposed site is only 10 to 11 minutes, and patients utilizing public transportation will be able to access the new hospital via a bus stop located adjacent to the proposed site. The Condition of North Bay Facility North Bay Hospital is also an aging facility. Its original structure and portions of its physical plant are approximately 30 years old. Portions of its major mechanical systems will soon require replacement including its boilers, air handlers, and chillers. In addition, the hospital is undersized and awkwardly configured. Despite its shortcomings, however, North Bay is generally in good condition. The hospital has been consistently renovated and updated over time and is aesthetically pleasing. Moreover, its second and third floors were added in 1986, are in good shape, and structurally capable of vertical expansion. Medical Surgical Beds and ICU Units By-in-large, North Bay is comprised of undersized, semi-private rooms containing toilet and shower facilities. The hospital does not have any three-bed wards. North Bay's first floor houses all ancillary and support services including lab, radiology, pharmacy, surgery, pre-op, post-anesthesia recovery, central sterile processing and supply, kitchen and cafeteria, housekeeping and administration, as well as the mechanical, electrical, and facilities maintenance and engineering. The first floor also contains a 20-bed CMR unit and a 15-bed acute care unit. North Bay's second and third floors are mostly comprised of semi-private rooms and supporting nursing stations. Although the rooms and stations are not ideally sized, they are in relatively good shape. North Bay utilizes a single ICU with ten critical care beds. The ICU rooms and nursing stations are also undersized. A four-bed ICU ward and former nursery are routinely used to serve overflow patients. Surgery Department and Recovery North Bay utilizes a single pre-operative surgical room for all of its surgery patients. The room accommodates up to five patient beds, but has limited space for storage and pre-operative procedures. Its operating rooms are sufficiently sized. While carts and large equipment are routinely stored in hallways throughout the surgical suite, North Bay has converted the former obstetrics recovery room to surgical storage and has made efficient use of other available space. North Bay operates a small six-bed Post Anesthesia Care Unit. Nurses routinely prepare patient medications in the unit which is often crowded with staff and patients. The Emergency Department North Bay has recently expanded its emergency department. The evidence demonstrates that this department is sufficient and meets current and future expected patient volumes. Replacement Issues Relating to North Bay While it is clear that areas of North Bay's physical plant are aging, the facility is in relatively good condition. It is apparent that North Bay must soon replace significant equipment, including cast-iron sewer pipes, plumbing, boilers, and chillers which will cause some interruption to hospital operations. However, North Bay's four-page written assessment of the facility and its argument citing the need for total replacement is, on balance, not persuasive. North Bay's Proposed Replacement North Bay proposes to construct a new, state-of-the- art, hospital approximately eight miles southeast of its existing facility and intends to offer the identical array of services the hospital currently provides. North Bay's Existing and Proposed Sites North Bay's existing hospital is located on an eight-acre site with limited storm-water drainage capacity. Consequently, much of its parking area is covered by deep, porous, gravel instead of asphalt. North Bay's existing site is generally surrounded by residential properties. While the city has committed, in writing, it willingness to assist both applicants with on-site expansion, it is unknown whether North Bay can acquire additional adjacent property. North Bay's proposed site is located at the intersection of Trinity Oaks Boulevard and Mitchell Boulevard, south of Community Hospital's proposed site, and is quite spacious. It contains sufficient land for the facilities, parking, and future growth, and has all necessary infrastructure in place, including utility systems, storm- water structures, and roadways. Currently however, there is no public transportation service available to North Bay's proposed site. Projected Utilization by Applicants The evidence presented at hearing indicates that, statewide, replacement hospitals often increase a provider's acute care bed utilization. For example, Bartow Memorial Hospital, Heart of Florida Regional Medical Center, Lake City Medical Center, Florida Hospital Heartland Medical Center, South Lake Hospital, and Florida Hospital-Fish Memorial each experienced significant increases in utilization following the opening of their new hospital. The applicants in this case each project an increase in utilization following the construction of their new facility. Specifically, Community Hospital's application projects 82,685 total hospital patient days (64,427 acute care patient days) in year one (2006) of the operation of its proposed replacement facility, and 86,201 total hospital patient days (67,648 acute care patient days) in year two (2007). Using projected 2006 and 2007 population estimates, applying 2002 acute care hospital use rates which are below 50 percent, and keeping Community Hospital's acute care market share constant at its 2002 level, it is reasonably estimated that Community Hospital's existing hospital will experience 52,623 acute care patient days in 2006, and 53,451 acute care patient days in 2007. Consequently, Community Hospital's proposed facility must attain 11,804 additional acute care patient days in 2006, and 14,197 more acute care patient days in 2007, in order to achieve its projected acute care utilization. Although Community Hospital lost eight percent of the acute care market in its service area between 1995 and 2002, two-thirds of that loss was due to residents of Sub- District 5-1 acquiring services in another area. While Community Hospital experienced 78,444 acute care patient days in 1995, it projects only 64,427 acute care patient days in year one. Given the new facility and population factors, it is reasonable that the hospital will recapture half of its lost acute care market share and achieve its projections. With respect to its psychiatric unit, Community Hospital projects 16,615 adult psychiatric inpatient days in year one (2006) and 17,069 adult inpatient days in year two (2007) of the proposed replacement hospital. The evidence indicates that these projections are reasonable. Similarly, North Bay's acute care utilization rate has been consistently below 50 percent. Since 1999, the hospital has experienced declining utilization. In its application, North Bay states that it achieved total actual acute care patient days of 21,925 in 2000 and 19,824 in 2001 and the evidence at hearing indicates that North Bay experienced 17,693 total acute care patient days in 2002. North Bay projects 25,909 acute care patient days in the first year of operation of its proposed replacement hospital, and 27,334 acute care patient days in the second year of operation. Despite each applicant's current facility utilization rate, Community Hospital must increase its current acute care patient days by 20 percent to reach its projected utilization, and North Bay must increase its patient days by at least 50 percent. Given the population trends, service mix and existing competition, the evidence demonstrates that it is not possible for both applicants to simultaneously achieve their projections. In fact, it is strongly noted that the applicants' own projections are predicated upon only one applicant being approved and cannot be supported with the approval of two facilities. Local Health Plan Preferences In its local health plan for District 5, the Suncoast Health Council, Inc., adopted acute care preferences in October, 2000. The replacement of an existing hospital is not specifically addressed by any of the preferences. However, certain acute care preferences and specialty care preferences are applicable. The first applicable preference provides that preference "shall be given to an applicant who proposes to locate a new facility in an area that will improve access for Medicaid and indigent patients." It is clear that the majority of Medicaid and indigent patients live closer to the existing hospitals. However, Community Hospital proposes to move 5.5 miles from its current location, whereas North Bay proposes to move eight miles from its current location. While the short distances alone are less than significant, North Bay's proposed location is further removed from New Port Richey, is not located on a major highway or bus-route, and would therefore be less accessible to the medically indigent residents. Community Hospital's proposed site will be accessible using public transportation. Furthermore, Community Hospital has consistently provided excellent service to the medically indigent and its proposal would better serve that population. In 2000, Community Hospital provided 7.4 percent of its total patient days to Medicaid patients and 0.8 percent of its total patient days to charity patients. Community Hospital provided the highest percentage and greatest number of Medicaid patient days in Sub-District 5-1. By comparison, North Bay provided 5.8 percent of its total patient days to Medicaid patients and 0.9 percent of its total patient days to charity patients. In 2002, North Bay's Medicaid patients days declined to 3.56 percent. Finally, given the closeness and available bed space of the existing providers and the increasing population in the Trinity area, access will be improved by Community Hospital's relocation. The second local health plan preference provides that "[i]n cases where an applicant is a corporation with previously awarded certificates of need, preference shall be given to those which follow through in a timely manner to construct and operate the additional facilities or beds and do not use them for later negotiations with other organizations seeking to enter or expand the number of beds they own or control." Both applicants meet this preference. The third local health plan preference recognizes "Certificate of Need applications that provide AHCA with documentation that they provide, or propose to provide, the largest percentage of Medicaid and charity care patient days in relation to other hospitals in the sub-district." Community Hospital provides the largest percentage of Medicaid and charity care patient days in relation to other hospitals in Sub-District 5-1, and therefore meets this preference. The fourth local health plan preference applies to "Certificate of Need applications that demonstrate intent to serve HIV/AIDS infected persons." Both applicants accept and treat HIV/AIDS infected persons, and would continue to do so in their proposed replacement hospitals. The fifth local health plan preference recognizes "Certificate of Need applications that commit to provide a full array of acute care services including medical-surgical, intensive care, pediatric, and obstetrical services within the sub-district for which they are applying." Community Hospital qualifies since it will continue to provide its current services, including obstetrical care and psychiatric care, in its proposed replacement hospital. North Bay discontinued its pediatric and obstetrical programs in 2001, does not intend to provide them in its proposed replacement hospital, and will not provide psychiatric care. Agency Rule Preferences Florida Administrative Code Rule 59C-1.038(6) provides an applicable preference to a facility proposing "new acute care services and capital expenditures" that has "a documented history of providing services to medically indigent patients or a commitment to do so." As the largest Medicaid provider in Sub-District 5-1, Community Hospital meets this preference better than does North Bay. North Bay's history demonstrates a declining rate of service to the medically indigent. Statutory Review Criteria Section 408.035(1), Florida Statutes: The need for the health care facilities and health services being proposed in relation to the applicable district health plan District 5 includes Pasco and Pinellas County. Pasco County is rapidly developing, whereas Pinellas County is the most densely populated county in Florida. Given the population trends, service mix, and utilization rates of the existing providers, on balance, there is a need for a replacement hospital in the Trinity area. Section 408.035(2), Florida Statutes: The availability, quality of care, accessibility, and extent of utilization of existing health care facilities and health services in the service district of the applicant Community Hospital and North Bay are both located in Sub-District 5-1. Each proposes to relocate to an area of southwestern Pasco County which is experiencing explosive population growth. The other general acute care hospital located in Sub-District 5-1 is Regional Medical Center Bayonet Point, which is located further north, in the Hudson area of western Pasco County. The only other acute care hospitals in Pasco County are East Pasco Medical Center, in Zephyrhills, and Pasco Community Hospital, in Dade City. Those hospitals are located in Sub-District 5-2, east Pasco County, far from the area proposed to be served by either Community Hospital or North Bay. District 5 includes Pinellas County as well as Pasco County. Helen Ellis and Mease are existing hospital providers located in Pinellas County. Helen Ellis has 168 licensed beds, consisting of 150 acute care beds and an 18-bed skilled nursing unit, and is located 7.9 miles from Community Hospital's existing location and 10.8 miles from Community Hospital's proposed location. Access to Helen Ellis for patients originating from southwestern Pasco County requires those patients to travel congested U.S. 19 south to Tarpon Springs. As a result, the average drive time from Community Hospital's existing and proposed site to Helen Ellis is approximately 22 minutes. Helen Ellis is not a reasonable alternative to Community Hospital's proposal. The applicants' proposals are specifically designed for the current and future health care needs of southwestern Pasco County. Given its financial history, it is unknown whether Helen Ellis will be financially capable of providing the necessary care to the residents of southwestern Pasco. Mease Countryside Hospital has 189 licensed acute care beds. It is located 16.0 miles from Community Hospital's existing location and 13.8 miles from Community Hospital's proposed location. The average drive time to Mease Countryside is 32 minutes from Community Hospital's existing site and 24 minutes from its proposed site. In addition, Mease Countryside Hospital has experienced extremely high utilization over the past several years, in excess of 90 percent for calendar years 2000 and 2001. Utilization at Mease Countryside Hospital has remained over 80 percent despite the addition of 45 acute care beds in April 2002. Given the growth and demand, it is unknown whether Mease can accommodate the residents in southwest Pasco County. Mease Dunedin Hospital has 189 licensed beds, consisting of 149 acute care beds, a 30-bed skilled nursing unit, five Level 2 neonatal intensive care beds, and five Level 3 neonatal intensive care beds. Its former 15-bed adult psychiatric unit has been converted into acute care beds. It is transferring its entire obstetrics program at Mease Dunedin Hospital to Mease Countryside Hospital. Mease Dunedin Hospital is located approximately 18 to 20 miles from the applicants' existing and proposed locations with an average drive time of 35-38 minutes. With their remote location, and the exceedingly high utilization at Mease Countryside Hospital, neither of the two Mease hospitals is a viable alternative to the applicants' proposals. In addition, the construction of a replacement hospital would positively impact economic development and further attract medical professionals to Sub-District 5-1. On balance, given the proximity, utilization, service array, and accessibility of the existing providers, including the applicants, the relocation of Community Hospital will enhance access to health care to the residents. Section 408.035(3), Florida Statutes: The ability of the applicant to provide quality of care and the applicant's record of providing quality of care As stipulated, both applicants provide excellent quality of care. However, Community Hospital's proposal will better enhance its ability to provide quality care. Community is currently undersized, non-compliant with today's standards, and located on a site that does not allow for reasonable expansion. Its emergency department is inadequate for patient volume, and the configuration of the first floor leads to inefficiencies in the diagnosis and treatment of emergency patients. Again, most inpatients are placed in semi-private rooms and three-bed wards, with no showers or tubs, little privacy, and an increased risk of infection. The hospital's waiting areas for families of patients are antiquated and undersized, its nursing stations are small and cramped and the operating rooms and storage facilities are undersized. Community Hospital's deficiencies will be effectively eliminated by its proposed replacement hospital. As a result, patients will experience qualitatively better care by the staff who serve them. Conversely, North Bay is in better physical condition and not in need of replacement. It has more reasonable options to expand or relocate its facility on site. Quality of care at North Bay will not be markedly enhanced by the construction of a new hospital. Sections 408.035(4)and(5), Florida Statutes, have been stipulated as not applicable in this case. Section 408.035(6), Florida Statutes: The availability of resources, including health personnel, management personnel, and funds available for capital and operating expenditures, for project accomplishment and operation The parties stipulated that both Community Hospital and North Bay have available health personnel and management personnel for project accomplishment and operation. In addition, the evidence proves that both applicants have sufficient funds for capital and operating expenditures. Community Hospital proposes to rely on its parent company to finance the project. Keith Giger, Vice-President of Finance for HCA, Inc., Community Hospital's parent organization, provided credible deposition testimony that HCA, Inc., will finance 100 percent of the total project cost by an inter-company loan at eight percent interest. Moreover, it is noted that the amount to be financed is actually $20 million less than the $196,849,328 stated in the CON Application, since Community Hospital previously purchased the proposed site in June 2003 with existing funds and does not need to finance the land acquisition. Community Hospital has sufficient working capital for operating expenditures of the proposed replacement hospital. North Bay, on the other hand, proposes to acquire financing from BayCare Obligated Group which includes Morton Plant Hospital Association, Inc.; Mease; and several other hospital entities. Its proposal, while feasible, is less certain since member hospitals must approve the indebtedness, thereby providing Mease with the ability to derail North Bay's proposed bond financing. Section 408.035(7), Florida Statutes: The extent to which the proposed services will enhance access to health care for residents of the service district The evidence proves that either proposal will enhance geographical access to the growing population in the service district. However, with its provision of obstetrical services, Community Hospital is better suited to address the needs of the younger community. With respect to financial access, both proposed relocation sites are slightly farther away from the higher elderly and indigent population centers. Since the evidence demonstrates that it is unreasonable to relocate both facilities away from the down-town area, Community Hospital's proposal, on balance, provides better access to poor patients. First, public transportation will be available to Community Hospital's site. Second, Community Hospital has an excellent record of providing care to the poor and indigent and has accepted the agency's condition to provide ten percent of its total annual patient days to Medicaid recipients To the contrary, North Bay's site will not be accessible by public transportation. In addition, North Bay has a less impressive record of providing care to the poor and indigent. Although AHCA conditioned North Bay's approval upon it providing 9.7 percent of total annual patient days to Medicaid and charity patients, instead of the 9.7 percent of gross annual revenue proposed in its application, North Bay has consistently provided Medicaid and charity patients less than seven percent of its total annual patient days. Section 408.035(8), Florida Statutes: The immediate and long-term financial feasibility of the proposal Immediate financial feasibility refers to the availability of funds to capitalize and operate the proposal. See Memorial Healthcare Group, Ltd. d/b/a Memorial Hospital Jacksonville vs. AHCA et al., Case No. 02-0447 et seq. Community Hospital has acquired reliable financing for the project and has sufficiently demonstrated that its project is immediately financially feasible. North Bay's short-term financial proposal is less secure. As noted, North Bay intends to acquire financing from BayCare Obligated Group. As a member of the group, Mease, the parent company of two hospitals that oppose North Bay's application, must approve the plan. Long-term financial feasibility is the ability of the project to reach a break-even point within a reasonable period of time and at a reasonable achievable point in the future. Big Bend Hospice, Inc. vs. AHCA and Covenant Hospice, Inc., Case No. 02-0455. Although CON pro forma financial schedules typically show profitability within two to three years of operation, it is not a requirement. In fact, in some circumstances, such as the case of a replacement hospital, it may be unrealistic for the proposal to project profitability before the third or fourth year of operation. In this case, Community Hospital's utilization projections, gross and net revenues, and expense figures are reasonable. The evidence reliably demonstrates that its replacement hospital will be profitable by the fourth year of operation. The hospital's financial projections are further supported by credible evidence, including the fact that the hospital experienced financial improvement in 2002 despite its poor physical condition, declining utilization, and lost market share to providers outside of its district. In addition, the development and population trends in the Trinity area support the need for a replacement hospital in the area. Also, Community Hospital has benefited from increases in its Medicaid per diem and renegotiated managed care contracts. North Bay's long-term financial feasibility of its proposal is less certain. In calendar year 2001, North Bay incurred an operating loss of $306,000. In calendar year 2002, it incurred a loss of $1,160,000. In its CON application, however, North Bay projects operating income of $1,538,827 in 2007, yet omitted the ongoing expenses of interest ($1,600,000) and depreciation ($3,000,000) from its existing facility that North Bay intends to continue operating. Since North Bay's proposal does not project beyond year two, it is less certain whether it is financially feasible in the third or fourth year. In addition to the interest and depreciation issues, North Bay's utilization projections are less reasonable than Community Hospital's proposal. While possible, North Bay will have a difficult task achieving its projected 55 percent increase in acute care patient days in its second year of operation given its declining utilization, loss of obstetric/pediatric services and termination of two exclusive managed care contracts. Section 408.035(9), Florida Statutes: The extent to which the proposal will foster competition that promotes quality and cost-effectiveness Both applicants have substantial unused capacity. However, Community Hospital's existing facility is at a distinct competitive disadvantage in the market place. In fact, from 1994 to 1998, Community Hospital's overall market share in its service area declined from 40.3 percent to 35.3 percent. During that same period, Helen Ellis' overall market share in Community Hospital's service area increased from 7.2 percent to 9.2 percent. From 1995 to the 12-month period ending June 30, 2002, Community Hospital's acute care market share in its service area declined from 34.0 percent to 25.9 percent. During that same period, Helen Ellis' acute care market share in Community Hospital's service area increased from 11.7 percent to 12.0 percent. In addition, acute care average occupancy rates at Mease Dunedin Hospital increased each year from 1999 through 2002. Acute care average occupancy at Mease Countryside Hospital exceeded 90 percent in 2000 and 2001, and was approximately 85 percent for the period ending June 30, 2002. Some of the loss in Community Hospital's market share is due to an out-migration of patients from its service area to hospitals in northern Pinellas and Hillsborough Counties. Market share in Community's service area by out-of- market providers increased from 33 percent in 1995 to 40 percent in 2002. Community Hospital's outdated hospital has hampered its ability to compete for patients in its service area. Mease is increasing its efforts to attract patients and currently completing a $92 million expansion of Mease Countryside Hospital. The project includes the development of 1,134 parking spaces on 30 acres of raw land north of the Mease Countryside Hospital campus and the addition of two floors to the hospital. It also involves the relocation of 51 acute care beds, the obstetrics program and the Neonatal Intensive Care Units from Mease Dunedin Hosptial to Mease Countryside Hospital. Mease is also seeking to more than double the size of the Countryside emergency department to handle its 62,000 emergency visits. With the transfer of licensed beds from Mease Dunedin Hospital to Mease Countryside Hospital, Mease will also convert formerly semi-private patient rooms to private rooms at Mease Dunedin Hospital. The approval of Community Hospital's relocated facility will enable it to better compete with the hospitals in the area and promote quality and cost- effectiveness. North Bay, on the other hand, is not operating at a distinct disadvantage, yet is still experiencing declining utilization. North Bay is the only community-owned, not-for- profit provider in western Pasco County and is a valuable asset to the city. Section 408.035(10), Florida Statutes: The costs and methods of the proposed construction, including the costs and methods or energy provision and the availability of alternative, less costly, or more effective methods of construction The parties stipulated that the project costs in both applications are reasonable to construct the replacement hospitals. Community Hospital's proposed construction cost per square foot is $175, and slightly less than North Bay's $178 proposal. The costs and methods of proposed construction for each proposal is reasonable. Given Community Hospital's severe site and facility problems, the evidence demonstrates that there is no reasonable, less costly, or more effective methods of construction available for its proposed replacement hospital. Additional "band-aide" approaches are not financially reasonable and will not enable Community Hospital to effectively compete. The facility is currently licensed for 401 beds, operates approximately 311 beds and is still undersized. The proposed replacement hospital will meet the standards in Florida Administrative Code Rule 59A-3.081, and will meet current building codes, including the Americans with Disabilities Act and the Guidelines for Design and Construction of Hospitals and Health Care Facilities, developed by the American Institute of Architects. The opponents' argue that Community Hospital will not utilize the 320 acute care beds proposed in its CON application, and therefore, a smaller facility is a less- costly alternative. In addition, Helen Ellis' architectural expert witness provided schematic design alternatives for Community Hospital to be expanded and replaced on-site, without providing a detailed and credible cost accounting of the alternatives. Given the evidence and the law, their arguments are not persuasive. While North Bay's replacement cost figures are reasonable, given the aforementioned reasons, including the fact that the facility is in reasonably good condition and can expand vertically, on balance, it is unreasonable for North Bay to construct a replacement facility in the Trinity area. Section 408.035(11), Florida Statutes: The applicant's past and proposed provision of health care services to Medicaid patients and the medically indigent Community Hospital has consistently provided the most health care services to Medicaid patients and the medically indigent in Sub-District 5-1. Community Hospital agreed to provide at least ten percent of its patient days to Medicaid recipients. Similarly, North Bay agreed to provide 9.7 percent of its total annual patient days to Medicaid and charity patients combined. North Bay, by contrast, provided only 3.56 percent of its total patient days to Medicaid patients in 2002, and would have to significantly reverse a declining trend in its Medicaid provision to comply with the imposed condition. Community Hospital better satisfies the criterion. Section 408.035(12) has been stipulated as not applicable in this case. Adverse Impact on Existing Providers Historical figures demonstrate that hospital market shares are not static, but fluctuate with competition. No hospital is entitled to a specific or historic market share free from competition. While the applicants are located in health planning Sub-District 5-1 and Helen Ellis and the two Mease hospitals are located in health planning Sub-District 5- 2, they compete for business. None of the opponents is a disproportionate share, safety net, Medicaid provider. As a result, AHCA gives less consideration to any potential adverse financial impact upon them resulting from the approval of either application as a low priority. The opponents, however, argue that the approval of either replacement hospital would severely affect each of them. While the precise distance from the existing facilities to the relocation sites is relevant, it is clear that neither applicants' proposed site is unreasonably close to any of the existing providers. In fact, Community Hospital intends to locate its replacement facility three miles farther away from Helen Ellis and 1.5 miles farther away from Mease Dunedin Hospital. While Helen Ellis' primary service area is seemingly fluid, as noted by its chief operating officer's hearing and deposition testimony, and the Mease hospitals are located 15 to 20 miles south, they overlap parts of the applicants' primary service areas. Accordingly, each applicant concedes that the proposed increase in their patient volume would be derived from the growing population as well as existing providers. Although it is clear that the existing providers may be more affected by the approval of Community Hosptial's proposal, the exact degree to which they will be adversely impacted by either applicant is unknown. All parties agree, however, that the existing providers will experience less adverse affects by the approval of only one applicant, as opposed to two. Furthermore, Mease concedes that its hospitals will continue to aggressively compete and will remain profitable. In fact, Mease's adverse impact analysis does not show any credible reduction in loss of acute care admissions at Mease Countryside Hospital or Mease Dunedin Hospital until 2010. Even then, the reliable evidence demonstrates that the impact is negligible. Helen Ellis, on the other hand, will likely experience a greater loss of patient volume. To achieve its utilization projections, Community Hospital will aggressively compete for and increase market share in Pinellas County zip code 34689, which borders Pasco County. While that increase does not facially prove that Helen Ellis will be materially affected by Community Hospital's replacement hospital, Helen Ellis will confront targeted competition. To minimize the potential adverse affect, Helen Ellis will aggressively compete to expand its market share in the Pinellas County zip codes south of 34689, which is experiencing population growth. In addition, Helen Ellis is targeting broader service markets, and has filed an application to establish an open- heart surgery program. While Helen Ellis will experience greater competition and financial loss, there is insufficient evidence to conclude that it will experience material financial adverse impact as a result of Community Hospital's proposed relocation. In fact, Helen Ellis' impact analysis is less than reliable. In its contribution-margin analysis, Helen Ellis utilized its actual hospital financial data as filed with AHCA for the fiscal year October 1, 2001, to September 30, 2002. The analysis included total inpatient and total outpatient service revenues found in the filed financial data, including ambulatory services and ancillary services, yet it did not include the expenses incurred in generating ambulatory or ancillary services revenue. As a result, the overstated net revenue per patient day was applied to its speculative lost number of patient days which resulted in an inflated loss of net patient service revenue. Moreover, the evidence indicates that Helen Ellis' analysis incorrectly included operational revenue and excluded expenses related to its 18-bed skilled nursing unit since neither applicant intends to operate a skilled nursing unit. While including the skilled nursing unit revenues, the analysis failed to include the sub-acute inpatient days that produced those revenues, and thereby over inflated the projected total lost net patient service revenue by over one million dollars.
Recommendation Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED that: Community Hospital's CON Application No. 9539, to establish a 376-bed replacement hospital in Pasco County, Sub- District 5-1, be granted; and North Bay's CON Application No. 9538, to establish a 122-bed replacement hospital in Pasco County, Sub-District 5- 1, be denied. DONE AND ENTERED this 19th day of March, 2004, in Tallahassee, Leon County, Florida. S WILLIAM R. PFEIFFER 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 19th day of March, 2004. COPIES FURNISHED: James C. Hauser, Esquire R. Terry Rigsby, Esquire Metz, Hauser & Husband, P.A. 215 South Monroe Street, Suite 505 Post Office Box 10909 Tallahassee, Florida 32302 Stephen A. Ecenia, Esquire R. David Prescott, Esquire Richard M. Ellis, Esquire Rutledge, Ecenia, Purnell & Hoffman, P.A. 215 South Monroe Street, Suite 420 Post Office Box 551 Tallahassee, Florida 32302-0551 Richard J. Saliba, Esquire Agency for Health Care Administration Fort Knox Building III, Mail Station 3 2727 Mahan Drive Tallahassee, Florida 32308 Robert A. Weiss, Esquire Karen A. Putnal, Esquire Parker, Hudson, Rainer & Dobbs, LLP The Perkins House, Suite 200 118 North Gadsden Street Tallahassee, Florida 32301 Darrell White, Esquire William B. Wiley, Esquire McFarlain & Cassedy, P.A. 305 South Gadsden Street, Suite 600 Tallahassee, Florida 32301 Lealand McCharen, Agency Clerk Agency for Health Care Administration 2727 Mahan Drive, Mail Station 3 Tallahassee, Florida 32308 Valda Clark Christian, General Counsel Agency for Health Care Administration 2727 Mahan Drive, Mail Station 3 Tallahassee, Florida 32308 Rhonda M. Medows, M.D., Secretary Agency for Health Care Administration 2727 Mahan Drive, Mail Station 3 Tallahassee, Florida 32308
The Issue Assuming a need for additional hospital beds in Broward County by 1987, the agreed "planning horizon," the question becomes which, if any, of the six or seven proposals advanced in these proceedings would be the best means of meeting the need. Central to the bed need issue in this case is the parties' enigmatic stipulation: 2/ that there is a need for acute care beds in Broward County in 1987, and this need should be determined on a regionalized basis. Pembroke Pines joins in this stipulation only to the extent that a need does not exist in the proposed service area of SBHD. Prehearing Stipulation C.8. The parties were unable to agree on where these regional boundaries should be drawn, among other things.
Findings Of Fact There is a glut of hospital beds in Broward County. Twenty hospitals have some 6,000 licensed or authorized beds in the county exclusive of free- standing psychiatric hospitals and their beds. In 1980, when Broward County's population numbered 1,018,200, six thousand beds would have been at least a quarter again too many by accepted standards. In 1987, Broward County's population has been projected to be between 1,137,160 and 1,276,911 by the University of Florida's Bureau of Economic and Business Research (BEBR). Other population projections for the year 1987 range all the way to 2,260,700, but it is highly unlikely that so many people will ever live in Broward County, much less by the year 1987. There is no assurance that even BEBR's high projection of 1,276,911 will be reached by 1987. If it should be, the ratio of beds to population in Broward County as a whole would only then fall within the upper reaches of arguably appropriate levels, assuming no additional beds in the interim. CENTROID MOVES WEST Whatever its magnitude, there is no reason to expect population growth to cluster around existing hospitals. Contrary trends have, indeed, already emerged. Population growth in western Broward County is expected to continue at a rate in excess of the rate for the county as a whole. From 1970 to 1980, the population in Broward County's western and central planning subregions (see Appendix) combined went from 140,581 to 417,461 while the population in eastern Broward County went from 479,518 to 600,736. Broward County is most densely populated in its eastern portion, but, increasingly, people have been moving into housing further west in the county. The result has been rapidly growing occupancy at Bennett, the county's westernmost hospital; and high occupancy, often to capacity, at University, which is further north than Bennett but almost as far west. Occupancy rates at Pembroke Pines, the southwestern most hospital in the county, have also increased. If additional hospital beds could be added in the west without affecting the efficiency of operations at other hospitals in the west, their addition would still have the effect of depressing demand for hospital beds in eastern Broward County or, at least, of slowing the rate of increase in demand. The four public hospitals along the Atlantic seaboard are operating at efficient occupancy levels and, in the case of SBHD's Memorial Hospital (Memorial), at capacity, but many hospitals in eastern Broward County are operating extremely inefficiently, including HCA's North Beach Medical Center (North Beach) with 1981 average occupancy of 37.1 percent, and Humana's Community Hospital of South Broward (Community), with 1981 average occupancy of 42.7 percent. THE PROPOSALS HCA, NBHD and Humana, the three organizations which together already own and operate half of the short-term hospitals in Broward County are vying for the right to build a new hospital in the northwest part of the county. In addition to its contention that a new hospital should be built in the northwest to open in 1987, HCA argues that present conditions justify expansion of University long before then, and Humana put on evidence tending to show a need for expansion at Bennett by 1987. SBHD has proposed a new hospital for southwest Broward to open at 84 beds in 1987 and go to 128 beds in 1988. Bennett's expansion is the only other proposal to meet (at least in part) the bed need alleged to exist in southwest Broward. THE NORTHWEST By anybody's reckoning, HCA's Margate is located in northwest Broward already. Depending on how far south the boundary of a northwest region is drawn, HCA's University can also be said to be located in northwest Broward. Humana's Cypress Community Hospital (Cypress), the closest hospital to the east, lies north of University and south of Margate; and Bennett is almost due south of University. NBHD's North Broward Hospital lies further east and considerably north of Cypress. HCA acquired Margate by acquiring or merging with Hospital Affiliates International (HAI) the for-profit hospital chain that formerly owned Margate. Even before the acquisition, planning had begun (by HAI) to replace the facility. Licensed at 150 beds, its effective capacity is significantly lower. Situated on 3.7 acres that do not provide adequate parking, Margate is, in numerous respects, an example of how hospitals should not be built. Hospital ancillary departments were added to a physical plant originally designed as a nursing home and the result has been narrow, dead end corridors and a pathetic 400 gross square feet per bed. There was uncontroverted testimony that the corridors amounted to "life and safety code" violations. No other such violations were specified, however, nor was any statute or regulation cited with respect to the corridors. The testimony was, in fact, that HRS has granted a variance for the corridors based on a similar variance by the Joint Commission on Accreditation. The evidence revealed no request by any licensing or other authority to renovate or to replace Margate, nor any threat to delicense so much as a single bed at Margate. HCA proposes nevertheless to close Margate down when it opens a new 250-bed hospital on 15-acres of a 21-acre site two miles to the north, at a total project cost of $33,750,577. Alternatively, HCA argues it is statutorily entitled to build a 150- bed replacement hospital, and uncontroverted testimony put the project cost at $25,696,403, rather than three-fifths of the 250-bed hospital cost used by HRS. Replacing Margate on its existing site, like renovating it, would not be economical, and for many of the same reasons. Whether at 150 or 250 beds, the HCA proposals include 24 intermediate care, 20 obstetric, 14 pediatric and 12 critical care beds. The proposed hospital would have Margate's medicare and medicaid provider numbers, so that it would not be a "new hospital" under TEFRA regulations. At 150 beds, 929 square feet per bed are contemplated at a cost of $171,309 per bed. At 250 beds, 766 square feet per bed are contemplated at a cost of $135,002 per bed. Humana proposes to build a new 150 bed hospital on a site yet to be acquired in northwest Broward at a project cost of $27,772,500. As proposed, 3/ Coral Ridge General Hospital would have 20 obstetrical beds, 20 pediatric beds, 10 critical care beds and 100 medical-surgical beds. There would be 972 square feet per bed at a cost per bed of $185,150. Larger by a third but in many other ways comparable to Humana's proposed Coral Ridge is NBHD's proposal for a new hospital. At 200 beds, the total project cost would be $37,203,658 or $186,018 per bed and there would be some 950 square feet per bed. Twenty-four obstetric, 20 pediatric, 16 critical care and 140 medical-surgical beds are proposed. A site of approximately 20 acres has been donated, subject to CON approval of the project. University seeks immediate authority to house 73 additional medical- surgical beds in shelled-in space now available on site. University's 209 beds had 83.2 percent average occupancy in 1981, and, at the time of hearing, when it was full to overflowing, University had experienced 87 percent average occupancy for 1982. The uncontroverted evidence was that University can add 73 beds at a total project cost in the neighborhood of $310,000, or $4,227 per bed, resulting in 576 square feet per bed at University. These figures do not reflect associated ancillary costs already or to be incurred. SOUTH AND CENTRAL Although Bennett has not yet reached efficient occupancy levels, a strong trend in that direction has been demonstrated. Average occupancy in 1981 was 63.5 percent, up from 58.5 percent in 1980. By CON number 1996, dated March 15, 1982, Bennett was authorized to spend $8,780,100 to build a parking garage, establish a separate day surgery and expand ancillaries. In these proceedings it seeks authority to add 64 beds in existing shelled-in space. Of these beds 30 would be "minimal care" beds and the remainder would be medical-surgical beds. Exclusive of ancillary costs already authorized, the project cost would be $1,600,000 or $25,000 per bed. Finally SBHD's proposed WBH would have 128 beds at a total project cost of $38,386,000 or $299,891 per bed. WBH would have 852 square feet per bed, 8 critical care beds and 120 medical-surgical beds, and would be built with a view toward expansion. It would operate as a "satellite" of Memorial. DRAWING LINES In order to analyze the County by regions, boundaries must be drawn. Each applicant for a certificate of need (CON) to add hospital beds in northwest Broward county defined "northwest" differently. Both Humana and NBHD saw the hospitals they proposed as serving the 1987 need each identified in its particular northwest planning area. For its purposes, Bennett defined a west central region of Broward County; and SBHD defined its proposed service area for WBH to include the southwest and part of the south central Broward County planning regions. Objections to the WBH proposal focused on southern Broward County, an aggregate of planning subregions extending east to the ocean. SBHD, HCA and Bennett all analyzed bed need on the basis of regions coterminous with the service areas of specific institutions: that of the proposed WBH, in the case of the SBHD; the combined service areas of University and Margate, in the case of HCA; and Bennett's own service area. Defining the service area of an existing institution is a different problem than forecasting the perimeters of a hospital's service area, before the hospital is built. The key to defining historical service areas is information about where patients served by a hospital lived. Hospitals keep data on patient origin by zip code, and the South Florida Hospital Association compiled some of this information for 1979, in its Hospitalization Utilization and Patient Origin Project (HUPOP). Studies like HUPOP provide a basis for judgments about whether a particular zip code furnishes a hospital a great enough fraction of its total patients (or patient days) to be considered part of the hospital's primary or secondary service area. A lightly populated zip code might be included in a hospital's service area on the basis of the size of the share of all patients it sends to hospitals who go to that particular institution, even if the number is a small fraction of the total for the hospital. As the parties demonstrated at great length, it is possible to attach undue significance to regional or other boundaries. They are not, after all, magical barriers through which persons seeking hospital care cannot pass. Beds available to people living within a region do not cease to exist just because they are located on the other side of some arbitrary line. No hospital in Broward County meets the need of the whole population within its service area, or serves nobody outside its service area. There are substantial overlaps in hospital service areas. Any calculation of need must take beds already available into account. The parties' stipulation that there is a need for an unspecified number 3/ of additional beds in an unspecified northwest region does not address the question of what beds outside any such area are nevertheless available to residents of the area. DEMOGRAPHIC PROJECTIONS Once an area is defined, the next step is forecasting its population for the year 1987. Such forecasts begin with census counts or population estimates, which require judgment and extrapolation themselves, unless an actual count in a census block or other census division is relied on. Taking points at either end of a time interval, future projections are made using linear extrapolation, proportional growth, shift-share and other methodologies. Forecasts represent a weighted average of these projections, informed by a judgment on such things as "ultimate build out," and the likely effects of anticipated transportation improvements. Forecasts of population cohorts or components are also pertinent because child bearing women and children have special needs, and because older people are more likely to use hospital beds than younger people. John Short and Associates, Inc., forecast a total population of 256,800 in the northwest area defined by HCA (NW-HCA) in 1987, based on medium projections by the Bureau of Economic and Business Research at the University of Florida. Urban Decision Systems, Inc. forecast a total population of 110,053 for the northwest Broward County planning subregion used by NBHD (NW-NBHD), and Dr. Ladner projected a population increase in the northwest area as defined by Humana (NW-HU) of 76,812 between 1982 and 1987. In making his only population projection for NW-HU, Dr. Ladner assumed an 8.6 percent compound annual growth rate, which the weight of the evidence showed to be unrealistically high. For that and other reasons, Dr. Ladner's population forecast has not been deemed reliable. The John Short and Urban Decisions forecasts are theoretically compatible, pertaining, as they do, to two different areas, They represent compound annual growth rates of 6.69 and 5.86 percent, respectively, and together indicate the likely order of magnitude of the growth of population in northwest Broward County by 1987. The population in western Broward generally, and northwest Broward in particular, is younger on average than the population of the county as a whole. In the northwest planning subregion, 21.7 percent of the population was under 15, 59 percent was 15 to 64, and 19.3 percent was 65 or older in 1980. Also in 1980, women aged 15 to 44 comprised 20.1 percent of the population. Assuming the population of the northwest planning subregion ages slightly in line with the projections for the county as a whole, 19.4 percent of the population in 1987 should be under 15, 80.2 percent should be under 65 and 19.8 percent should be 65 or over. The proportion of women 15 to 44 should grow to 20.8 percent. Dr. Ladner's 1987 projection for Bennett's service area, zip codes 33313, 33314, 33317, 33322, 33323, 33324, 33325, 33326, 33327, 33328, 33330, 33331 and 33332, reflects the same methodology he used for the northwest. Even though the part of Bennett's service area to the south and west of the hospital is not as well developed as northwest Broward, so that there is more justification for Dr. Ladner's growth rate assumption there, his projections for Bennett's service area of 252,644 5/ in 1985 and 368,050 in 1990 are probably too high. Thousands of acres of residential and other development are planned or under construction in these zip codes, however. If Arvida sells 2,680 housing units between now and 1987 in its Indian Trace development in zip code 33327 (whether it can depends on interest rates and other factors) and if household size there averages 2.7, as projected, that development alone would house 7,236 additional persons in 1987. Some time between 1984 and 1988, construction of I-75 will be completed, and southwest Broward will become a 30-minute commute from Miami. When 1-95 was completed in south Palm Beach County, annual population growth jumped from 5,000 to 33,000. The land in Palm Beach County cost less to develop and is closer to the ocean, although further from Miami, than land in southwest Broward County. Population forecasts for the southwest and south central Broward planning regions have been made by Dr. Stanley Smith and by Urban Decisions Systems, Inc. For the two regions combined, their projections for 1987 are 183,700 and 173,800, respectively. For the WBH proposed service area, as revised, zip codes 33025, 33026, 33027, 33028, 33029, 33326, 33327, 33328, 33330, 33331 and 33332, Dr. Smith forecast a 1987 population of 69,128. This number was arrived at without reference to the projected opening of Interstate Highway 75, but Dr. Smith did not think that prospect called for an adjustment in the forecast. For south Broward County, as a whole, i.e., the southwest, southeast and south central planning subregions combined, Dr. Smith projected a population of 380,711 in 1986, and 388,795 in 1987. Gateway's Exhibit No. 16. In 1980, 10.6 percent of the population in the revised WBH proposed service area was 65 or over, as compared to 21.7 percent in the three south regions as a whole. NBHD FORMULAE If facilities in an area serve only that area and nobody enters or leaves the area for hospitalization, the use rate of the population will be the sum of draw rates of the hospitals in the area. In analyzing the need for a specific institution, or assessing the likely draw of a new institution, it is necessary to assign some fraction of the whole population in its service area as its market share. Existing institutions have historical market shares which can be used where historical conditions are not predicted to change, while, for new institutions, other assumptions have to be made. Demand-based need formulae express utilization rates as patient days per 1,000 population. Translating patient days per thousand persons per year to beds needed per thousand persons requires dividing by 365 to get an average daily census per thousand persons then multiplying by the inverse of the optimal average occupancy rate assumed. One hundred percent occupancy of hospital beds on a regular basis would be undesirable, if achievable, because of the lack of reserve capacity to meet fluctuating demand. As a practical matter the problems of matching patients in hospital rooms with more than one bed on the basis of gender, service, smoking habits, and diagnosis prevent 100 percent utilization. For acute care medical-surgical beds, an average occupancy of 80 percent is a desideratum with which no health care planner who testified disagreed, although Dr. Schoeman spoke in terms of 80 to 85 percent average occupancy. Even lower average occupancies are recommended for certain specialty beds, including obstetric (75 percent), pediatric (65 percent) and cardiac intensive care (75 percent) beds. Eighty percent average occupancy as a health planning goal for all short-term beds taken together is supported by the weight of the evidence. (The Florida Task Force on Institutional Needs calls for a 79.4 percent weighted average occupancy). The goal of 80 percent occupancy underlies the national standard of 4 beds per 1,000 persons. This average also reflects the age distribution of the national population and other nationally average conditions. In 1980, 11.3 percent of the population in the United States was 65 or over, while the 65 and older age group made up 22 percent of Broward County's population. In Broward County, where the population is older on average than the population of the country as a whole and where there is significant seasonal variation in population (so that greater reserve capacity is desirable), the consensus is that 4.5 beds per 1,000 persons is a more appropriate rule of thumb. Based on historical demand in Broward County, Mr. Baehr of Amherst Associates, Inc. made an "area specific" analysis. In 1981, 752.1 patient days in Broward County hospitals were attributed on average to every 1,000 persons in Broward County under 65, while 3,442.8 patient days were attributed on average to every 1,000 Broward County residents 65 and older. Mr. Baehr also calculated service specific use rates and, on that basis, the need for, obstetric and pediatric beds. These specialized use rates are reflected in the aggregate use rates for the under 65 age cohort, but breaking them out separately permits the use of service specific occupancy rates. Mr. Baehr's 1981 Broward County use rates correspond to 2.58 beds per 1,000 persons under 65 (at 80 percent occupancy for all services) and 11.79 beds per 1,000 persons 65 and older. Free-standing psychiatric facilities were excluded from the calculations. To the extent the number of people leaving Broward County for hospitalization exceeds the number entering Broward County for that purpose, these utilization rates understate demand. A net outflow of this kind can be inferred from Medpar data reflecting such movement by medicare patients. Dr. Schoeman adjusted Broward County use rates for out-migration and concluded that county-wide use rates were 810.2 patient days per 1,000 population under age 65 and 3623.8 patient days per 1,000 population 65 and over. Dr. Schoeman's 1981 Broward County use rates correspond to 2.7747 beds per 1,000 under 65 (at 80 percent occupancy for all services) and 12.41 beds per 1,000 persons 65 and older (at 80 percent occupancy). The Health Systems Plan, which lacks any legal significance, but purportedly reflects local conditions, uses 861.8 patient days per 1,000 population under 65 and 3204.6 patient days per 1,000 population 65 and over. These numbers correspond to 2.95 and 10.97 beds per 1,000, respectively. At least in the absence of area-specific utilization rates, other utilization rates are used by health care planners. Dr. Kennedy calculated use rates specific to five zip codes in South Broward County for the year 1979 for each of four age cohorts, but testified that the most reasonable utilization rates to use in South Broward were those developed by the Florida Task Force on Institutional Need (TFIN), viz.: Medical-Surgical Patient Days per 1,000 Persons 0-64 565.9 65 and over 2982.2 ICC and CCU 0-64 43.1 65 and over 321.1 Psychiatric 0-64 44.9 65 and over 44.6 Obstetrics Females 15-44 186.3 Pediatrics 0-14 149.2 Gateway's Exhibit No. 12, Table 2, page 4. These figures supposedly represent the experience in Florida statewide. Finally, in the southern United States in 1980, utilization rates calculated from the National Hospital Discharge Survey (NHDS) were 348.2 patient days per 1,000 population under 15, 796.5 patient days per 1,000 population aged 15 to 44, 1,554.9 patient days per 1,000 population aged 45 to 64 and 3,994.2 patient days per 1,000 population 65 or over. The choice of appropriate utilization rates is complicated by the fact that there is no guarantee that historic rates will persist. Advances in medical science may make hospitalization for some conditions obsolete. Aging of the population over 65 on account of continued disproportionately elderly in- migration may result in greater utilization rates. Aging of the 15 to 64 age cohort would presumably result in greater utilization of certain services but might result in less utilization of obstetric beds, and so forth. The 1981 Broward County use rates adjusted for out-migration may prove an unreliable guide to future hospital utilization rates but no other use rates were shown by the evidence to be more reliable. Assuming these rates and applying the average occupancy rate of 80 percent, bed need in Broward County can appropriately be predicted by a weighted average of 2.7747 beds per 1,000 population under age 65, and 12.41 beds per 1,000 population 65 and older. FINANCIAL FEASIBILITY The two-tined "immediate and long-term" financial feasibility criterion was described by HRS' Mr. Konrad as a "go-no go gauge." With respect to each application, the questions are 1) whether financing for start-up costs is available and 2) whether the facility will have enough revenue to support operations, on a long-term basis. GO It is clear from the evidence that HCA and Humana each have access to massive amounts of capital, much more than needed to accomplish any or all of their respective expansion and construction proposals in Broward County. HCA proposes to use 100 percent equity for each of its projects. Humana plans 22.3 percent equity and 77.7 percent debt for the new hospital; and 86 percent equity and 14 percent debt for its expansion project at Bennett. Issue was not joined as to their contentions, amply supported by expert opinion, that operations at proposed facilities would quickly become profitable. Although HCA's showing in this regard as to the proposed 150-bed version of NWBRMC was fairly broad brush, nothing in the evidence raised any doubt but that, with substantial occupancy assured (by Margate's closing) almost from the start, NWBRMC would be profitable at 150 beds. NBHD is a legislatively created tax district charged with serving the hospital needs of residents of the district. NBHD has ad valorem taxing authority and also has a healthy operating margin, partly because it charges indigent care against tax revenues, not at cost, but at full charges. In addition, it has accumulated, in a funded depreciation account, all the equity it plans to use to build a new 200-bed hospital in northwest Broward. NBHD had originally planned to issue bonds for the total project cost but changed its plans for fear medicare and medicaid reimbursement for the additional interest expense might be jeopardized, because the additional borrowing might be deemed unnecessary. In the past, NBHD has expended five or six million dollars annually for routine equipment and other capital costs. At the time of the hearing, NBHD had CONs authorizing work (to be done over periods of time not specified in the record) at a cost of at least $58,000,000, including expenditures for revenue- generating extra beds at its North Broward Hospital. NBHD's debt capacity is on the order of $100,000,000, in the event it becomes necessary to issue bonds in an amount greater than the $16,815,000 now contemplated. NBHD also has a line of bank credit ($35,000,000 at half of prime) that should give it some flexibility in timing going to market for its permanent financing, even though, under its charter, NBHD's short-term borrowing is limited to no more than 15 percent of its assets for no more than one year. HCA sought to show that NBHD's proposal was not financially feasible by trying to show that NBHD could not muster the capital necessary to build a new 200 bed hospital, sustain the loss anticipated during the initial year of operations, and meet its other commitments, but these efforts fell short of the mark. There was no attempt to discredit the revenue projections for the 200-bed hospital or to prove that it would not become profitable in the second year of operations, if built. NO GO The evidence showed that WBH is not financially feasible as far as financing construction, unless planned renovations at SBHD's Memorial are scaled down to levels significantly below those contemplated in an outstanding CON, or delayed past completion times contemplated when the outstanding renovation CON was applied for. At the time of the hearing, no amendment of the renovation CON had been obtained, nor, as far as the evidence showed, had any been applied for. SBHD filed its application for a CON for the modernization of Memorial at or about the time (in the same batching cycle) as it filed its application for a CON for WBH. In the Memorial modernization application it sought, and it has since received, authorization to make capital improvements to Memorial costing $95,419,000 to be completed in November of 1985. Gateway's Exhibit No. In order to accomplish this, it planned to borrow $75,245,000 by issuing tax-exempt bonds. In order to build WBH, which it planned to open (at 84 beds) in January of 1987, SBHD planned to issue tax-exempt bonds in the amount of $31,930,000. Arthur R. Guastella, a municipal investment banker retained by SBHD, testified that SBHD was not in a position to incur additional indebtedness of more that $80,000,000, in May of 1981. (Vol. 36, 37) Because of tax revenues, SBHD's revenues have exceeded expenses in the last few years despite operating losses at Memorial and the walk-in center SBHD operates near Pembroke Pines. SBHD has nevertheless been able to put aside only $1,000,000 for WBH. Management conceded that building WBH was incompatible with renovating Memorial on schedule. In short, SBHD is in the posture of seeking authority for projects which, taken together, it lacks the financial wherewithal to accomplish. SBHD failed to demonstrate financial feasibility in another important respect, counsel's heroic efforts notwithstanding. The basic assumptions of average annual occupancy at WBH in the beginning years, which underlie the Price, Waterhouse projections, were not established as reasonable by competent evidence. These assumptions were first predicated on an analysis, prepared by Herman Smith Associates, of demand in the service area originally proposed by WBH; but faulty population projections came to light and the work of Herman Smith Associates was not relied on at hearing. Instead, a much larger service area was drawn, including some zip codes closer to other hospitals than to the site proposed for WBH, and various problematic assumptions were made (e.g., a 100 percent draw rate from several zip codes). This work was done by a certified public accountant with an admitted lack of expertise in projecting bed need, and no health care planner or other qualified expert testified that the utilization or occupancy rates projected for WBH were reasonable. Detailed information about the population of south Broward County and its likely growth was put on by SBHD and other parties. The record is replete with competent evidence of various methods of projecting a population's bed need, based on the number, age and sex of the population. It is thus possible to calculate bed need for southern Broward County, each of the three planning subregions there, and the service areas proposed for WBH. Even when reduced by the number of beds already available in an area, bed need does not automatically translate into demand for beds at a particular institution, however; and SBHD failed to prove the reasonableness of its demand or utilization assumptions for WBH. SBHD has argued that Gateway's expert, Dr. Kennedy, supplied this omission with his Newtonian "spatial interaction model," but the record does not support this contention. For one thing, the model was shown to be a highly unreliable predictor of real world phenomena. For another, time unrelated to population change is not a variable in the model, nor is a lag in utilization at a new hospital otherwise taken into account, so that the 46 percent occupancy figure for WBH in 1987 on which SBHD seeks to rely is, according to Dr. Kennedy, unrealistically high for an initial operating year. Even if WBH opened in 1986, Dr. Kennedy predicted something like 33 percent average occupancy for 1987. Gateway's Exhibit No. 12, p. 28. For 1989, the Price, Waterhouse compilation that SBHD offered in an effort to prove WBH's financial feasibility, SBHD Exhibit No. 184, assumes 39,274 patient days at WBH, which represents an average daily census of 107.6 or average occupancy for 1989 of 84 percent. Without the "start-up curve" adjustment, Dr. Kennedy's model predicts less than 50 percent occupancy on average for 1989 at WBH. With the adjustment, the figure is lower. SBHD has also argued that evidence of record of utilization projections at other proposed hospitals should be looked to in order to show the reasonableness of its utilization assumptions for WBH. For the first two years, occupancy levels projected at WBH do closely parallel similar projections for, e.g., the new 200 bed hospital proposed by NBHD, but this in no way shows the reliability of the utilization assumptions used for the projections at WBH. Assuming some bed need arguendo, WBH's draw rate and so its utilization and occupancy levels would depend on, among other things, its location vis-a-vis physicians' offices, other hospitals, patients' residences and so forth, factors that differ in south Broward from conditions in northwest Broward. As proposed, WBH would be smaller, have fewer services and a different medical staff than the hospital proposed by NBHD. Among the consequences of the opening of Interstate 75 may be a dramatic shift to utilization of Dade County hospitals by the population of southwest Broward County. Lifemark, who owns and operates Palmetto General located in North Dade County on I-75, did not prove, however, that any such shift can be counted on to occur. Palmetto is currently operating at efficient levels and management is contemplating expansion based on the prospect of population growth in Dade County alone, although no letter of intent to apply for a CON has yet been filed. While Palmetto serves about four percent of the need for patient days attributable to southwest Broward's population, this represents something under one percent of Palmetto's total patient days. EXPANSION PROPOSALS COMPARED University hospital, at the time of the hearing, had occupancy rates which interfered with its efficient operation and required frequent emergency room to emergency room and other transfers. The parties stipulated: that University has experienced an occupancy level for the past year of approximately 87 percent including an occupancy level in excess of 90 percent during certain winter months. The parties further stipulate that in the case of University such occupancy levels have resulted in an adverse impact on certain aspects of patient care. Specifically, there have been problems in treating emergency room patients because of the emergency room being used as a holding area for patients that are waiting for beds to be available. There is difficulty in assuring continuity of care as patients have had to receive hospital care at facilities for which their regular physician does not have staff privileges, and a new physician had to be involved. There have been significant problems and inconveniences to patients as a result of the unavailability of beds. Furthermore, there have been difficulties encountered in spouses, relatives, and friends being able to visit patients when such patients have had to receive their care at other hospitals because of transportation difficulties (which is particularly a problem for the elderly). The demand for University's services has been convincingly demonstrated by real people seeking hospital care there. Beginning with a 1987 population forecast (extrapolated linearly from Dr. Ladner's 1985 and 1990 projections) that was probably too high for the area within zip codes 33313, 33314, 33317, 33322, 33323, 33324, 33325, 33326, 33327, 33328, 33330, 33331, and 33332 (Bennett's service area), Mr. Richardson multiplied by a use rate that was probably too low and assumed an 80 percent occupancy rate to calculate a 1987 bed need for the area of 1,291 beds. The understated use rate tends to compensate for the overstated population projection, and the end result is not unreasonable. From 1,291, beds already available at Bennett (204), Florida Medical Center (400), Plantation General (262) and Doctors General (202) were subtracted and a net bed need of 221 was forecast for Bennett's service area. Proceeding in the same manner with reference to Bennett's primary service area only (the same area except for zip codes 33317, 33330, 33331 and 33332), a net bed need of 145 was forecast there for 1987. Finally, applying the same utilization rate to the increment by which the population of Bennett's service area is projected (extrapolation from Ladner) to increase between 1982 and 1987 yields a prediction that the incremental population alone will use 323 beds a day on average. Allotting 177 of these full beds (average daily census) among Bennett and the other hospitals in the service area would bring each of them to 80 percent average occupancy and still leave an average daily census of 146, which, again assuming 80 percent occupancy, is a prediction of bed need in Bennett's service area of 183 for 1987. These predictions assume that the hospitals in Bennett's service area will draw no more patient days from outside the service area in 1987 than they do in 1982, but also unrealistically assume that the hospitals in the service area will have a combined 100 percent draw of patients in the service area. Bennett's primary service area overlaps University's secondary service area. No allowance has been made for any increase in University's draw that might result from expansion at University, nor has the historical draw of hospitals outside the service area been taken into account. Due east of Bennett is the largest aggregation of underutilized hospital beds in the county. In the east central planning subregion, the ratio of beds to population is 7.1 per 1,000. Among the 64 beds Bennett proposes to add are 30 "minimal care" beds. At least by that name, there are no such hospital beds in Florida, and only 52 in the United States. The room charge for a "minimal care" bed is expected to be 25 or 30 percent less than the comparable charge for a medical-surgical bed, reflecting lower nurse to bed ratios for "minimal care" beds than for ordinary medical-surgical beds. A condominium medical office complex adjacent to Bennett is expected to be finished by the fall of this year. The complex' 55,000 square feet are expected to provide office space for 41 physicians who together already account for 34 percent of Bennett's admissions. These condominium offices are already sold even though construction has not been completed. NEW HOSPITAL PROPOSALS FOR NORTHWEST COMPARED HCA contends that 73 new beds are needed in NW-HCA now and an additional 100 by 1987, for a total of 173; HRS and NBHD contend that 200 new beds are needed in NW-NBHD in 1987; and Humana contends that 223 beds are needed in NW-HU, plus 64 beds at Bennett, for a total of 287 by 1987. In making its case for the low number, HCA unilaterally assumed it should have the same market share it now enjoys in NW-HCA in 1987, and ignoring the increased attractiveness of a new 250 bed facility, as compared to Margate, put on evidence tending to show that, if all 173 beds were allotted to HCA, population increase in NW-HCA would assure their efficient utilization in 1987 without increasing the proportion of patient days from NW-HCA at University and the proposed 250-bed NWBRMC combined over the proportion now received by Margate and University combined. The evidence showed that adding 173 beds in NW-HCA would still leave a bed NBHD of 76 assuming 80 percent average occupancy, to be met by hospital beds outside of NW-HCA. NBHD put on evidence tending to show that the 1987 population in NW- NBHD could efficiently use 471 hospital beds. Assuming Margate or a hospital replacing Margate supplied 150 beds, 321 beds would still be needed in 1987 to serve the residents of NW-NBHD, NBHD contends. These forecasts ate based on the most conservative population and utilization predictions for northwest Broward County. Humana tried to prove that 254 additional beds will be needed in NW-HU by 1987, of which an expansion at University would supply 73, leaving 181. The 181 figure should be reduced by 34, Humana contends, because "since Margate experienced an average occupancy of 57.5 percent in 1981, it must be allocated an additional 34 patients per bed [sic] to raise it to the 80 percent occupancy level," Proposed Findings of Fact, Conclusions of Law and Recommended Order of Petitioners, Humedicenter, Inc. d/b/a Coral Ridge General Hospital and Humana of Florida, Inc. d/b/a Bennett County Hospital, p. 72, leaving 147 beds needed which Humana's proposed 150 bed hospital would supply. This argument is difficult to follow, but Humana's incremental analysis (with low use rates tending to compensate for exaggerated population projections) does suggest that opening 250 or so beds in NW-HU in 1987 would not depress patient flows to hospitals outside NW-HU below current levels. Unlike HCA, neither Humana nor NBHD has a hospital in northwest Broward County (NW-NBHD, NW-HU or NW-HCA). Competition would be enhanced there by building a new non-HCA hospital in the area, although it is true that most people presently leave the area to go to non-HCA hospitals. It is possible to overstate the advantage of competition in this context, moreover, inasmuch as people generally go to the hospital a physician recommends or, in emergencies, to the closest hospital. Competition may only foster better amenities for the medical staff rather than lower charges to the patients, but efforts by physicians or others to improve quality of care for patients would presumably have more chance of success in a competitive environment. Miami-Dade puts on continuing education programs for nurses at Humana's five south Florida hospitals and a new Humana hospital in northwest Broward would presumably also make space available for them. HCA and NBHD also have various training programs at their Broward County facilities. There was no showing that facilities for training in Broward County were limited. Humana publishes pamphlets about new medical technology for physicians on staff at its hospitals. With respect to expansion and new hospital proposals alike, the parties stipulated: The applicants and HRS agree that each applicant can adequately staff its project with all necessary personnel, including technical, nursing, and-medical personnel, and that this is not a comparative issue in this proceeding. Pembroke Pines does not join in this stipulation. The applicants and HRS agree that each applicant has adequate community support for its proposed project, and that this is not a comparative issue in this proceeding. Pembroke Pines does not join in this stipulation. 11. The parties agree that a new hospital in the northwest Broward area would attract a large number of physicians presently practicing in that area to join the medical staff of the new hospital. The need to cover this hospital, in addition to hospitals currently being covered, will result in physician inconvenience and more travel time. The most important comparative issues joined by the parties involved financial projections. FINANCIAL COMPARISONS The parties' proposed construction costs are not strictly comparable. The incremental costs per bed stated by Bennett, University and for the "additional" 100 beds at the proposed 250 bed version of NWBRMC do not reflect all of the costs that are properly associated with making a hospital bed available for occupancy. But it is true that construction costs for expansion are less than those for new construction when there is excess ancillary capacity and ordinarily even where there is not. Even among the non-incremental projections for new hospitals, there have been different assumptions about, among other things, inflation rates for different items and the dates operations would begin. Under one view, the site donated to NBHD, and any other gifts to NBHD for a new hospital, should be counted as costs of the new hospital. The parties have stipulated that projected construction costs are reasonable, and the costs of constructing a hospital are only the beginning, in any event. Once occupancies projected for the second or third year of operations are reached, any of the three new hospitals proposed for the northwest will have gross revenues every year well in excess of the "total project costs" expected to be incurred to build the hospital in the first place. CHARGE COMPARISONS Since people are hospitalized for a whole range of maladies, and receive different kinds and combinations of diagnostic and therapeutic services while in hospital, it is difficult to compare the charges for or cost of care at one hospital with the charges for or cost of care at another. It will not do to look at room charges only as a sort of gauge, because the medicare program has created pressure to keep room charges down, and hospitals have responded to the pressure by increasing charges for ancillary services. To take the most recent increases into account, therefore, ancillaries have to be included, even though they vary from patient to patient. NBHD's Exhibit 55 reflects one approach to comparing hospital charges. There charges for the 30 services most frequently "sold" by hospitals are listed for three of the four HCA Broward County hospitals, two of Humana's three Broward County hospitals and all three of NBHD's hospitals, for fiscal years ended in 1982. One difficulty with this approach is that at least one service listed on this exhibit (as "chemical profile"), evidently means one thing to one hospital laboratory and something else to another. Affecting all the comparisons on the chart is the difference among fiscal year ends for NBHD (June 30), Humana (August 31), and HCA (December 31). With hospital charges in Broward County escalating at annual rates on the order of 14 or 15 percent, a half year's difference in fiscal year ends can make essentially identical charge structures appear to differ significantly. HCA complains, in addition, that there is no justification for including one (Margate) but not the other (North Beach) of the Broward County hospitals it acquired from HAI. Humana's Community Hospital of South Broward was also omitted. Both Community and North Beach have extremely low occupancy rates, however, well below what anybody is projecting for a new hospital in northwest Broward County. Even making a rough adjustment for inflation, NBHD's charges were lower, on average, in more categories than the two Broward Humana Hospitals' average charges, than vice versa; and the same is true as between NBHD's average charges and the three Broward HCA hospitals' average charges. Invoking formulas developed by the Health Care Cost Containment Board, the parties made various comparisons using "gross revenue per adjusted patient day, gross revenue per admission," "total net revenue per adjusted patient day," and "total net revenue per adjusted admission." See NBHD Exhibit No. 71. The for-profit hospitals, but not NBHD's hospitals, subtract income taxes in arriving at "total net revenue." Using the same HCA and Humana Broward County hospitals whose charges were compared to all of NBHD's hospitals in NBHD Exhibit No. 55, average gross revenues were computed for fiscal years ended 1981 and stated per adjusted patient day ($340.60 for NBHD, $475.72 for HCA and $476.38 for Humana) and per adjusted admission ($2,870.70 for NBHD $3,154.67 for HCA, and $3,365.70 for Humana). NBHD Exhibit No. 56. On average, HCA's Florida hospitals' total net revenue per adjusted patient day is about five percent lower than the average for Humana's hospitals in Florida in 1980. HCA Exhibit No. 20. In 1980, the average total net revenue per adjusted patient day for HCA's Plantation General and University Community was $291.50 as compared to the $252.80 average for the two smaller of the three NBHD hospitals. HCA Exhibit No. 18. On the other hand, the 1980 average total net revenue per adjusted admission for the same two HCA hospitals was $1,842.60, as opposed to $2,363.60 for the same two NBHD hospitals. HCA Exhibit No. 18. Since indigent patients have longer average stays than other hospital patients, and NBHD treats significantly more indigent patients than HCA's University, Margate and Plantation, or Humana's Bennett and Cypress, the NBHD "adjusted admission" in charge or cost per adjusted admission comparisons represents more patient days. COST COMPARISONS In Broward County historically, average net operating expense per adjusted patient day and per adjusted admission at HCA's Plantation and University exceeded the NBHD averages in 1981. HCA Exhibit No. 25. For fiscal years ended 1981, HCA (Margate, University and Plantation) Humana (Cypress and Bennett) and NBHD incurred average costs per adjusted patient day of, respectively, $311.29, $289.79 and $262.27. NBHD Exhibit No. 56. NBHD's average cost per adjusted admission was higher than the others, on account of longer average stays. Because of the differing assumptions underlying the various pro forma financial statements, expenses stated there are not strictly comparable, although HCA produced a witness who made arithmetic adjustments purportedly simulating uniform inflation assumptions for comparative purposes, with reference to the proposed 250 bed NWBRMC. Hospitals have variable operating costs, fixed operating costs and fixed capital costs (which are related to construction costs and reflect financing costs). It is because fixed costs are so high (60 percent on average in the industry) that occupancy levels are crucial to a hospital's financial viability. In general, hospitals with 200 to 400 beds are more efficient than larger or smaller hospitals. Satellite hospitals like the proposed WBH enjoy certain economies by sharing administration, purchasing and the like with another established hospital. Both HCA and Humana buy hospital equipment and supplies at substantial discounts, comparable to those available through shared purchasing organizations to which NBHD (which has 1,304 approved beds itself as well as the possibility of discounts on account of governmental status) belongs. Private patients and insurers pay charges but hospitals are reimbursed through the medicare and medicaid programs in amounts fixed by a cost-based formula. (This amount comes to less than charges, and the difference is known as the medicaid or medicare "contractual.") Changes in the reimbursement formula have been dictated by the Tax Equity and Fiscal Responsibility Act of 1981 (TEFRA), but not yet fully implemented. The consensus is that new TEFRA regulations will slow the rate of growth in reimbursement rates. These new regulations designate a base year for existing institutions by which to measure cost increases, but exempt new hospitals from certain reimbursement caps. HCA showed that it makes better economic sense to start over and build a new hospital than to renovate Margate, but did not show it was under legal compulsion to do either. Taking replacement of Margate as a given, HCA argues that the cost of adding 100 beds in northwest Broward County should be viewed as the difference between the cost of building NWBRMC at 250 beds and the cost of building it at 150 beds. In projecting both of these costs, HCA ignored the cost of closing Margate, 6/ but the cost of closing Margate would be the same whether it was replaced by a 150-bed or a 250-bed hospital, so the difference between the replacement costs would be unaffected. The incremental cost per bed is less meaningful than the relative per-bed costs for the whole institution at 150 as opposed to 250 beds. Any savings in construction costs inures first to the benefit of HCA. Such savings benefit the public directly only to the extent they may affect costs for medicaid or medicare reimbursement purposes. With respect to the proposed Margate replacement, the question of medicare and medicaid reimbursement is complicated by the change proposed in the ratio of debt to equity. Assuming optimal occupancies, however, operating a hospital with 200 to 400 beds would be less costly per bed than operating a 150-bed hospital, and these economies should be reflected in lower medicaid and medicare reimbursement. INDIGENT CARE Not all hospitals seek to serve the poor. Those that do receive medicaid reimbursement for services rendered to some, but not all, of their patients who are otherwise uninsured and unable to pay. Humana's Cypress did not have a medicaid provider number at the time of hearing. HCA's University had no medicaid contract until September of 1982 and has had less than one percent medicaid utilization since then. At its three hospitals, on average, NBHD has six to eight percent medicaid utilization. While NBHD hospitals are reimbursed for services to indigent persons ineligible for medicaid benefits at full charges, paid from NBHD's ad valorem tax revenues, HCA and Humana's hospitals in Broward County receive nothing for services rendered to medically indigent persons who are medicaid-ineligible. 7/ In addition, some patients with the ability to pay for hospital services fail to do so. Their charges are cumulated under the heading "bad debts." For want of complete information, some charges for indigent care may end up in this category. In the fiscal year ending August 31, 1982, Cypress' bad debts amounted to 3.3 percent of total revenues as compared to NBHD's 11 or 12 percent in recent years. NBHD has deposit requirements, but does not enforce them in every case at its hospitals. Some 27 to 30 percent of NBHD's hospitals' services are provided to persons unable to make full payment. Nobody is denied medical care for inability to pay at NBHD's existing hospitals. This policy would apply at the proposed 200 bed hospital in the northwest, as well. The sole exception to this policy has been NBHD's refusal to accept "economic transfers." Attempts by for-profit hospitals to transfer patients whose resources have been exhausted or whose inability to pay has become clear, in order to free beds for paying patients, have been resisted by NBHD, although medically indigent patients are accepted for transfer to NBHD hospitals whenever they need services that are unavailable at the transferring hospital. The HCA and Humana hospitals in Broward County do not turn emergencies away for inability of patients to pay, but do not, as a general rule, accept non-emergent cases when there is no assurance they will be paid. There are exceptions: On occasion medical staff admit non-emergent, indigent patients. Northwest Broward County is attractive to HCA, Humana and NBHD just because of the low numbers of indigent persons there, perhaps three or four percent of the population. In its second year of operation, a new hospital in northwest Broward County can expect less than one admission of an indigent patient per day. Medicare utilization should also be significantly lower than elsewhere in the county, where 56.4 percent of total patient days are attributable to medicare patients on average. TAXES AND SUBSIDIES Under current regulations, for-profit hospitals like HCA's and Humana's, but not nonprofit hospitals like NBHD's receive a return on equity component in medicare and medicaid reimbursement. (The rate is a healthy 150 percent of an average interest rate on certain government securities.) All other things being equal, an HCA or Humana hospital in northwest Broward would, if financed even in part by equity, receive more governmental reimbursement for rendering the same medicare or medicaid services than a hospital owned and run by NBHD, how much more depending on the debt-equity mix. HCA proposes to use 100 percent equity, in replacing Margate. On the other hand, HCA and Humana pay federal income and other taxes which NBHD does not pay. For comparative purposes, it is appropriate to assess the net fiscal impact of each proposal on government, but, with consolidated tax accounting and the number and diverse financial circumstances of HCA and Humana hospitals, setting medicare and medicaid payments off against federal income taxes can be viewed in more than one way. Federal tax liability that would otherwise arise from profits from operations at one HCA or Humana hospital can be offset by losses from operations at another hospital. NBHD not only pays no taxes, it also levies a tax, on real property within District boundaries. About four fifths of these revenues, on the order of $28,000,000 or $29,000,000 annually, are allocated to charges for "indigent care." There would be no NBHD for a tax increase to finance a new hospital, however. The "funded depreciation" account from which the equity contribution is to come does not, moreover, contain past tax receipts, except to the extent the fraction of NBHD's operating margin attributable to indigent care made its way into "funded depreciation." Similarly, tax revenues would not be used to operate the proposed hospital, except to the extent tax revenues were used to pay charges for the care of indigent patients. The terms "cost-shifting" or "charge shifting" describe the fact that some payers subsidize other payers. In the case of for-profit hospitals, private pay patients and third party payors other than the government pay rates that are set high enough to cover expenses incurred in treating patients whose bills go unpaid and to make up for the medicaid and medicare contractuals. With respect to NBHD hospitals, tax revenues are looked to to pay the full cost of the care of medically indigent persons, but bad debts are still reflected in the NBHD charge structures. To the extent for-profit hospitals provide services to medically indigent persons, the cost of those services is shifted to uninsured private pay patients, persons who pay premiums for hospital insurance, and the medicare and medicaid programs. On the other hand, all owners of taxable real property within the North Broward Hospital District bear the expense of the treatment of medically indigent persons at NBHD hospitals. Aside from expanding by building new hospitals, a course on which HCA, Humana, and NBHD alike seem to have embarked, these organizations have different uses for profits or any positive operating margin which a new hospital in the northwest might generate. Humana uses such money for corporate overhead, including shareholders' dividends, and to finance things like the work of Dr. Rollo who, in conjunction with researchers at Vanderbilt University and elsewhere, evaluates new medical technology as it becomes available. Humana also designates some of its hospitals "centers of excellence" in certain fields, encouraging research and specialized treatment of particular afflictions. HCA uses money from operations of its hospitals for overhead and other corporate purposes. Money from the NBHD hospitals' operations is used to finance specialized services in Broward County, principally at Broward General, which has, among other costly and unprofitable services, a substantial neonatology unit. LESS EXPENSIVE FOR WHOM For people who pay no taxes, have no hospitalization insurance, and are unable to pay hospital bills, the cost of each of the proposals for the northwest would be the same: nothing. (These people might not have access to services at a for-profit institution, however.) Private insurers, those that pay their premiums, federal taxpayers who finance the medicaid and medicare programs, taxpayers in the North Broward Hospital District and patients themselves all will bear part of the cost of any new hospital in northwest Broward. Private pay patients and their insurers will supply almost half of the total patient revenue. Historically, charges, which are the basis for these patients' payment, have been lower at NBHD hospitals than at HCA's or Humana's Broward County hospitals, on average, as reflected most clearly by the gross revenue per adjusted patient day comparisons. It is little consolation to private payers that Humana and HCA pay taxes while NBHD does not. But, in forecasting the relative costs to cost-based payors, projected federal income taxes should be subtracted from reimbursement for equity projected to be received by Humana and HCA through the medicare and medicaid programs. Even after income taxes are netted, HCA or Humana would receive compensation for equity that NBHD would not receive. Especially in light of evidence that shows that NBHD's expenses per patient day have been lower in the past than such expenses at the for-profit hospitals, the weight of the evidence established that cost-based reimbursement at a new northwest Broward hospital would, in all probability, be less if the hospital were operated by NBHD than if it were operated by HCA or Humana. Because of the medicare and medicaid rules allowing a return on equity component in reimbursement of providers, an NBHD hospital would receive less medicare and medicaid reimbursement even if the NBHD hospital had the same operating costs. The taxpayers of the District pay for the care of the medically indigent at NBHD hospitals, but not for the care of these persons at Broward County's Humana and HCA hospitals. There is no provision, presently, for using NBHD tax revenues to pay for the care at HCA or Humane hospitals in Broward County of medically indigent persons who are not eligible for medicare or medicaid. On the other hand, to the extent medically indigent persons are cared for by HCA and Humana, the costs of that care are "shifted" to, among others, private pay patients which, if persons paying for hospital insurance are included, constitute a group within the North Broward Hospital District that presumably overlaps substantially with taxpayers in the District. OBSTETRICS AND PEDIATRICS The parties stipulated that 20 to 24 obstetric beds were needed in northwest Broward County. Each proposal for a new hospital in northwest Broward County contemplates an obstetric service of this magnitude. Eighteen obstetric beds and 24 pediatric beds will be needed in 1987 to serve the population of NW- NBHD alone. There is presently a shortage of obstetric beds in Broward County as a whole. The site proposed for the new NBHD hospital in northwest Broward County is considerably further from other obstetric beds in the county than the site proposed for NWBRMC, although NWBRMC is mere central to the northern part of the county where there is a dearth of obstetric beds. In general, traffic in Broward County moves better north and south than east and west. Humana is not so committed to any particular site, that it could not build a hospital even further away. 8/ At NBHD's Broward General a training program for physicians wishing to specialize in obstetrics is already in place. Broward General has an intensity of pediatric and obstetric services that make it a desirable location for such a program for residents. A community hospital serving a population with a significant child bearing cohort, like that proposed for the northwest, would be an appropriate complement to the existing program.
Recommendation It is accordingly, RECOMMENDED: That HRS dismiss Lifemark as a party to these proceedings. That HRS grant NBHD's application for a CON to build a 200-bed hospital, in its entirety. That HRS grant HCA's application to build NWBRMC but only at 150 beds and without an obstetric service; and that HCA be authorized to expend to that end $25,969,403.00, less an appropriate adjustment for the lack of an obstetric service. That HRS deny the application for a CON to build a new hospital filed by South Broward Hospital District in its entirety. That HRS deny the application for a CON to build a new hospital filed by Humedicenter, Inc. d/b/a Coral Ridge General Hospital in its entirety. That HRS deny University Community Hospital's application for a CON to add beds there in its entirety. That HRS deny the application for a CON to add beds filed by Humana of Florida, Inc. d/b/a Bennett Community Hospital, in its entirety. DONE and RECOMMENDED this 12th day of April, 1983, in Tallahassee, Florida. ROBERT T. BENTON II Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32301 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 12th day of April, 1983.
Findings Of Fact 1. On or about April 25, 2006, Heartland Services of Florida, Inc. withdrew its CON application No. 9846 and then filed a Notice of Voluntary Dismissal of its Petition at DOAH, attached hereto as Ex. A. 8. On or about May 01, 2006, Hospice of the Palm Coast, Inc. withdrew its CON application No. 9844 and then filed a Notice of Voluntary Dismissal of its Petition at DOAH, attached hereto as Ex. B. 3. On or about June 1, 2006, North Central Hospice, Inc. (“NCFH”), and Hospice of Citrus County, Inc. (“HOCC”), filed a Joint Motion for Remand, based upon serious settlement negotiation, attached hereto as Ex. C. 4, On or about April 28, 2006, the Administrative Law Judge assigned to the case issued an Order Closing File based on the Notice of Voluntary Dismissal (Heartland Services of Florida, Inc.), attached hereto as Ex. D. 5. On May 03, 2006, the Administrative Law Judge assigned to the case issued an Order Closing File based on the Notice of Voluntary Dismissal (Hospice of the Palm Coast, . Inc.), attached hereto as Ex. E. 6. On June 08, 2006, the Administrative Law Judge assigned to the case issued an Order Remanding without Prejudice based on North Central Hospice, Inc.’s (“NCFH”), and Hospice of Citrus County, Inc.’s (“HOCC”), Joint Motion for Remand, attached hereto as Ex. F. 7. On or about December 29, 2006, North Central Hospice, Inc. (“NCFH”), and . Hospice of Citrus County, Inc. (“HOCC”), withdrew their Petitions with respect to CON application No. 9843 and then filed a Notice of Voluntary Dismissal of its Petition at DOAH, attached hereto as Ex. G. 8. The Agency hereby adopts and incorporates by reference the attached Notices of: Voluntary Dismissals; Order Closing Files, Joint Motion for Remand, and Order Remanding Without Prejudice. 9. There are no remaining disputed issues of fact or law.
The Issue Whether the certificate of need (“CON”) applications filed by Cornerstone Hospice & Palliative Care, Inc. (“Cornerstone”); Suncoast Hospice of Hillsborough, LLC (“Suncoast”); and VITAS Healthcare Corporation of Florida (“VITAS”), for a new hospice program in Agency for Health Care Administration (“AHCA” or the “Agency”) Service Area 6A (Hillsborough County), satisfy the applicable statutory and rule review criteria sufficiently to warrant approval, and, if so, which of the three applications, on balance, best meets the applicable criteria for approval.
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 AHCA AHCA is designated as the single state agency for the issuance, denial, and revocation of CONs, including exemptions and exceptions in accordance with present and future federal and state statutes. AHCA is also the state health planning agency. See §§ 408.034(1) and 408.036, Fla. Stat. In addition, AHCA is the agency designated as responsible for licensure and deficient practice surveys for health facilities, including hospices. See ch. 408, Part II and § 400.6005-.611, Fla. Stat. Pursuant to Florida Administrative Code Rule 59C-1.0355(4)(a), the Agency established a numeric formula for determining when an additional hospice program is needed in a service area. The Agency's need formula determined a need for one new hospice program in SA 6A in the application cycle at issue. That determination is unchallenged. None of the applicants argued that more than one new hospice program should be approved for Hillsborough in this cycle. Suncoast The Hospice of the Florida Suncoast (“Suncoast Pinellas”) was founded in 1977, and was one of the first hospices in Florida, and in the nation. Although it operates only in Pinellas County, Suncoast Pinellas has grown to become one of the largest nonprofit hospices in the country. Suncoast Pinellas is a subsidiary of Empath Health (“Empath”), which also provides a number of non-hospice services. As discussed further below, Empath is currently undergoing a merger with Stratum Health System (“Stratum”), which operates Tidewell Hospice in Sarasota and Manatee Counties. The Chief Executive Officer (“CEO”) of Empath and Suncoast Pinellas is Rafael Sciullo. Mr. Sciullo was recruited to be CEO of Suncoast Pinellas in 2013, where he has served ever since. When Mr. Sciullo arrived at Suncoast Pinellas, the company operated a human immunodeficiency virus (“HIV”) testing and treatment program, a PACE program, a home health program, and a palliative care program. Mr. Sciullo became concerned that patients in the HIV, PACE, and home health programs were not comfortable hearing the word “hospice,” as those patients did not view themselves as hospice patients. Mr. Sciullo reorganized Suncoast Pinellas by creating Empath in order to alleviate this concern with a more inclusive and mission directed organization. Empath is an administrative services provider that provides support to its affiliates, which include Suncoast Pinellas, Empath Partners in Care (“EPIC”),2 Suncoast PACE, Suncoast Hospice Foundation, and programs for palliative care, pharmacy, durable medical equipment (“DME”), and infusion services. Through its affiliates, Empath already provides several services within Hillsborough, including EPIC HIV services and support, and palliative care. The federal definition of hospice care requires a prognosis of a six- month or less life expectancy. However, Florida’s definition permits patients with a 12-month prognosis. Under its supportive care program, Suncoast Pinellas offers hospice services to patients with a prognosis of six to 12 months. As one of the largest not-for-profit hospices in the nation, Suncoast Pinellas offers specialized programs for veterans, the Jewish population, African Americans, the Hispanic population, and disease groups such as heart failure, Alzheimer’s, and COPD. The applicant entity for the CON is Suncoast Hospice of Hillsborough, LLC. If approved, Suncoast will appear beside Suncoast Pinellas in Empath’s organizational chart, operating as a subsidiary under the Empath Health, Inc., family of companies. Empath has entered into a Memorandum of Understanding with Stratum to merge the two organizations. The merger has not yet been accomplished; the companies are currently in the process of conducting due 2 Empath’s EPIC program provides programs and services to persons impacted by HIV and AIDS throughout the Tampa Bay area. diligence. However, the two companies have already agreed that if the merger is consummated, Mr. Sciullo will serve as the CEO of the merged entity, and will be in charge of both original entities after the merger. According to Mr. Sciullo, the merger will not distract or otherwise serve as an impediment to Suncoast’s plans to implement its new hospice program in Hillsborough. Cornerstone Cornerstone is a 501(c)(3) community-based, not-for-profit entity, founded in 1981 by compassionate nurses in Eustis, Florida, to care for patients during their last days of life. Licensed in 1984, Cornerstone (formerly, Hospice of Lake and Sumter, Inc.) has since grown to serve three hospice service areas (3E, 6B, and 7B) which encompass seven central Florida counties, including Polk County, which is contiguous to Hillsborough. Cornerstone has spent more than 35 years serving tens of thousands of patients and their loved ones in the Central Florida region. As a local, not-for-profit hospice, Cornerstone’s governing body is comprised of leaders from the communities it serves, and its board would be expanded to include new members from Hillsborough. This fosters local accountability to the populations Cornerstone serves. Due to its not-for-profit status, Cornerstone is also legally and ethically bound to benefit its communities, and its earnings are reinvested locally rather than inuring to the benefit of private owners. The Cornerstone Hospice Foundation is an independent, 501(c)(3), nonprofit foundation led by community volunteers. The purpose of the Foundation is to raise money for Cornerstone’s community programs, hospice houses, and for people with no method of paying for hospice. Cornerstone Health Services, LLC, is an affiliated entity which provides non-hospice palliative care services to patients. Cornerstone also includes Care Partners, LLC, which is a consulting and group purchasing organization that provides information and materials to other hospices and group purchasing options. Cornerstone leadership has extensive experience in hospice, including development and expansion of new programs in Florida and elsewhere. Cornerstone has achieved significant growth and expansion within its existing service areas in recent years, led largely by the team that would lead Cornerstone’s expansion into Hillsborough. Cornerstone serves all patients in need regardless of race, creed, color, gender, sexual orientation, national origin, age, disability, military status, marital status, pregnancy, or other protected status. Hospice and palliative care are the only healthcare services Cornerstone provides. This focus assures that Cornerstone is committed to providing high quality care to meet the needs of hospice patients and their families. VITAS VITAS Healthcare Corporation (“VITAS Healthcare”), the corporate parent of VITAS, is the largest provider of end-of-life care in the nation. VITAS Healthcare was initially founded in 1978 in South Florida. At that time, its leaders helped organize bipartisan legislative efforts to establish the state and federal regulatory mechanisms that guide the provision of hospice services today. Upon its inception, VITAS programs in Dade and Broward Counties participated in a federal demonstration project that resulted in the development of model clinical protocols and procedures used by hospice programs across the country. In 2018, VITAS Healthcare served 85,095 patients and maintained an average daily census of 17,743 patients among its 47 hospice programs in 14 states and the District of Columbia. As of 2018, VITAS Healthcare employed 12,176 staff members, including over 4,700 nurses nationwide. VITAS currently serves 46 of Florida’s 67 counties, which covers about 72% of Florida’s population. VITAS serves 16 of AHCA’s 27 hospice service areas under three separate licenses. VITAS successfully operates 34 satellite offices in Florida and provides facility-based care through freestanding inpatient units as well as its contracts with hospitals and nursing homes. In Florida in 2018, VITAS served over 36,000 patients, providing 3.3 million days of care with an average daily census of 9,028 patients. This was no aberration—at the time of the filing of its 6A CON application, VITAS had admitted over 35,000 patients in Florida during 2019. In addition to providing the four required levels of hospice care (see ¶ 35), VITAS also provides a full continuum of palliative and supportive care, and additional unreimbursed services that are beneficial to the hospice population it serves. VITAS has over 40 years of experience as a hospice provider, and has developed comprehensive outreach, education, and staff training programs and resources designed specifically to address the unique needs of a wide range of patient types, communities, and clinical settings. Similarly, VITAS recognizes that the needs of Florida patients vary between service areas, and it has endeavored to provide programs and services tailored to meet the needs of each community. In its Florida programs, VITAS provides complete hospice care, including medications, equipment and supplies, expert nursing care, personal care, housekeeping assistance, emotional counseling, spiritual support, caregiver education and support, grief counseling, dietary, physical, occupational and speech therapy, and volunteer support. VITAS has a long history of providing significant levels of care to all patients without regard to the ability to pay, as well as a demonstrated commitment to underserved populations such as the homeless, veterans, AIDS population, and minorities. VITAS provided almost $7 million in charity care in Florida in 2018, and $7.25 million in 2019 at the time it submitted its CON application. VITAS ensures that anyone who is appropriate for hospice services has the right to access them. VITAS is committed to giving back to the communities it serves through meaningful donations. It accomplishes this goal through VITAS Community Connections, a nonprofit organization, which makes donations and grants to local organizations and families. In 2018, VITAS made over $161,000 in charitable contributions to organizations in Florida. In that same year, VITAS contributed over $700,000 to sponsoring Florida community events. At the time of filing its Hillsborough application, VITAS employed nearly 5,500 persons in Florida, 2,235 of which are nurses. VITAS encourages and assists its nurses in obtaining board certification in hospice and palliative care through training, compensation incentives, and support. Due to VITAS Healthcare’s multi-state operations, VITAS can readily recruit staff to Florida from other markets. VITAS also relies on volunteers in a variety of roles to enhance patient care. In 2018, VITAS used 1,165 active volunteers in Florida, who provided over 145,054 volunteer hours. VITAS is led by an extremely experienced and highly qualified leadership team, many of which have long and successful tenures with the company. Hospice Care Generally Hospice refers both to care provided to terminally ill patients and the entities that provide the care. Hospice care is palliative care. Palliative care relieves or eliminates a patient's pain and suffering and helps patients remain at home. It differs from curative care, which seeks to cure a patient's illness or injury. 42 C.F.R. § 418.24(d); §§ 400.6005 and 400.601(6), Fla. Stat. Hospices provide physical, emotional, psychological, and spiritual comfort and support to patients facing death and to their families. The Medicare and Medicaid programs pay for the vast majority of hospice care. The services those programs require hospices to offer and the services the programs will pay for have become, de facto, the default definition of hospice care, the arbiter of hospice services, and the decider of when a patient is terminally ill. Florida requires a CON to establish a hospice program and regulates hospices through licensure. §§ 400.602 and 408.036(1)(d), Fla. Stat. Florida considers a patient with a life expectancy of one year or less to be terminally ill and eligible for Medicaid payment for hospice care. § 400.601(10), Fla. Stat. To be eligible for Medicare payment for hospice services, a patient must have a life expectancy of six months or less. 42 C.F.R. § 418.20; 42 C.F.R. § 418.22(b)(1). A hospice must provide a continuum of services tailored to the needs and preferences of the patient and the patient’s family delivered by an interdisciplinary team of professionals and volunteers. §§ 400.601(4) and 400.609, Fla. Stat. Hospice programs must provide physical, emotional, psychological, and spiritual support to their patients. A hospice must provide physician care, nursing care, social work services, bereavement counseling, dietary counseling, and spiritual counseling. 42 C.F.R. § 418.64; § 400.609(1)(a), Fla. Stat. In Florida, hospices must also provide, or arrange for, additional services including, but not limited to, “physical therapy, occupational therapy, speech therapy, massage therapy, home health aide services, infusion therapy, provision of medical supplies and durable medical equipment [DME], day care, homemaker and chore services, and funeral services.” § 400.609(1)(b), Fla. Stat. Federal requirements are similar. 42 C.F.R. § 418.70. Hospices are required to provide four levels of care. The levels are routine home care, general inpatient care, crisis care (also called continuous care), and respite care. Since hospice’s goal is to support a patient remaining at home, hospices provide the majority of their services in a patient’s home. Routine home care is the predominant form of hospice care. Routine care is for patients who do not need constant bedside support. A hospice may provide routine care wherever the patient lives. The location could be a residence, a skilled nursing facility (SNF), an assisted living facility (ALF), some other residential facility, or a homeless camp. Continuous care, sometimes called crisis care, may also be provided wherever the patient resides. It is more intense services for a short period of time. Continuous care supports a patient whose pain and symptoms are peaking and need quick management. With continuous care, unlike routine care, a nurse may be at a patient’s bedside 24 hours a day, seven days a week. Continuous care is an option allowing a patient to avoid admission to an inpatient facility. Hospices provide general inpatient care in a hospital, a dedicated nursing unit, or a freestanding hospice inpatient facility. To qualify for inpatient care, a patient must be acutely ill and need immediate assistance and daily monitoring to the extent that they cannot be cared for at home. Hospices must offer around-the-clock skilled nursing coverage for patients receiving general inpatient care. Respite care is caregiver relief. It allows patients to stay in an inpatient setting for up to five days in order to provide caregivers respite. Florida law requires hospices to accept all medically eligible patients. Each hospice must make its services available to all terminally ill persons and their families without regard to age, gender, national origin, sexual orientation, disability, diagnosis, cost of therapy, ability to pay, or life circumstances. A hospice may not impose any value or belief system on its patients or their families, and must respect the values and belief systems of its patients and their families. § 400.6095(1), Fla. Stat. Hospices frequently offer additional, uncompensated services that are not required by Florida licensure laws or federal Medicare requirements. Pre- hospice care and community counseling are two examples. Hospices often establish programs to meet the needs of particular populations, such as the Hispanic, African American, Jewish, veteran, and HIV/AIDS communities. Cornerstone, Suncoast Pinellas, and VITAS provide the hospice services required by state laws and funded by the Medicare benefit. All three providers also offer services beyond those required by, or paid for by, government programs. The Fixed Need Pool and Preliminary Agency Decision Pursuant to its rule-based numeric need methodology, AHCA determined and published a fixed need for one new hospice program in SA 6A, Hillsborough, in the second batching cycle of 2019. Under the Agency's need methodology, numeric need for an additional hospice program exists when the difference between projected hospice admissions and the current admissions in a service area is equal to or greater than 350. In this instance, the difference between projected hospice admissions and current admissions in SA 6A was 863, and therefore a numeric need for an additional hospice program exists in Hillsborough.3 In addition to the three litigant applicants, three other entities filed applications seeking approval for the new program. Those three applications have been deemed abandoned and are not at issue herein. On February 21, 2020, the Agency published its preliminary decision to award the hospice CON to Suncoast, and to deny the remaining applications. Thereafter, Cornerstone and VITAS both filed timely petitions for formal administrative hearing contesting the Agency’s preliminary decision. On April 1, 2020, Suncoast filed a “Cross Petition, Notice of Related Cases and Notice of Appearance” in support of the Agency decision on the competitively reviewed applications. None of the applicants petitioning for 3 According to AHCA’s need methodology, absent a showing of “not normal” circumstances, only one new hospice program may be approved for a SA at a time, regardless of the multiples of 350 “need” that may be shown. Fla. Admin. Code R. 59C-1.0355(4)(c). hearing alleged “special circumstances” or “not normal” circumstances in their application. Service Area 6A: Hillsborough County As can be seen by the map below, Hillsborough is located on the west coast of Florida along Tampa Bay. It includes 1,048 square miles of land area and 24 square miles of inland water area. Hillsborough is home to three incorporated cities: Tampa, Temple Terrace, and Plant City, with Tampa being the largest and serving as the county seat. The county is bordered by Pasco County to the north, Polk County to the east, Manatee County to the south, and Pinellas County to the west. (Source: Google Maps) According to AHCA’s Florida Population Estimates 2010-2030, published February 2015, Hillsborough’s total population as of January 2020 was estimated to be 1,439,041. Hillsborough’s total population is expected to grow to 1,557,830 by January 2025, or 8.25% over that five-year period. In 2020, 14% of Hillsborough’s population was aged 65 and older. According to the 2010 U.S. Census, 35.4% of the county population age 65 and older has a disability, and 17.2% of the county population is below the poverty level, compared to 12.2% statewide. The Hillsborough County Department of Health (“HCDOH”) reports that the county has a diverse mix of residents, with 52% White, 16% African American, 26% Hispanic, and 5% other races. Of the Hillsborough households living below the poverty level, 23.73% are Hispanic/Latino and 31.07% are African American. Nearly 10% of Hillsborough residents report not speaking English “very well.” The most recent U.S. Census indicates that the median income for households in Hillsborough is $54,742, considerably below the national average, with 17.2% reported below poverty level. A larger percentage of the county’s residents (3.3%) received cash assistance than did the state’s residents (2.2%), and a larger percentage (15.7%) received food stamp benefits than is the case for the state overall (14.3%), as reported by HCDOH. Hillsborough is currently served by two hospice providers: Lifepath Hospice (“Lifepath”); and Seasons Hospice and Palliative Care of Tampa, LLC (“Seasons”), a for-profit company. Following approval after an administrative hearing, Seasons was newly licensed to begin operations in Hillsborough in December 2016. Florida’s hospice CON rule prevents need for a new program from being shown for a period of two years following the addition of a new program to a service area. The purpose of the two-year forbearance is to allow new programs to gain a foothold in the market, and to potentially avoid a repeated need determination in future batching cycles. Hospice admissions at Lifepath for the period of July 1, 2018, through June 30, 2019, were 6,195, and for Seasons were 601. The addition of Seasons to the service area was not successful in deterring the need for yet another new program in Hillsborough. The Application Proposals and CON Conditions Suncoast Suncoast recently applied for approval for a hospice program in neighboring Pasco County, but, after a DOAH hearing, that application was denied in favor of another applicant. From that experience, Suncoast determined to better identify local needs before applying for approval in Hillsborough. Upon learning that a fixed need pool would be announced for Hillsborough, Mr. Sciullo directed his team of executives and staff over a series of strategy meetings to conduct an independent community needs assessment of Hillsborough. Mr. Sciullo tasked Kathy Rabon to oversee the development of a community needs assessment of Hillsborough to identify potential needs of Hillsborough residents, based on key informant surveys and other assessment tools. Ms. Rabon has significant experience in conducting feasibility studies for capital projects funded by the Suncoast Hospice Foundation, which she leads. Ms. Rabon began by reviewing existing community needs assessments of the county. Those assessments identified the health needs of Hillsborough’s underserved patients, and identified community leaders that informed the assessments. Ms. Rabon then contacted many of those key informants. At hearing, Ms. Rabon described the process she used to develop a community needs assessment for Hillsborough as follows: Q. When tasked with doing an assessment for Hillsborough's hospice, where did you start? What documents did you first review? A. A community needs assessment can take quite a while when you engage focus groups and need to meet with stakeholders. We didn't have the luxury of a lot of time. We also had the luxury of knowledge that other hospitals in Hillsborough County that are not-for-profit have to periodically do a community needs assessment. So rather than start from a blank piece of paper, I turned to those community needs assessments and I began compiling and gathering as many as I could that I felt were relevant to, A, the geographic boundaries of the entire county, which some did not, but B, also were timely. And I found that the Department of Health had done a very comprehensive community needs assessment in 2015-16 that had been updated in March of 2019 that I felt would provide a lot of good information. * * * I was responsible for identifying need and, if possible, identifying perhaps solutions that could be developed as a result of a partnership or a relationship or an engagement or a future plan that we could put together that would help solve a need in Hillsborough County relative to chronic and advanced illness. In addition to the HCDOH needs assessment and update, Ms. Rabon also obtained quantitative information for her assessment from the following sources: Community Health Improvement Plan 2016- 2020, Florida Department of Health in Hillsborough County, Revised January, 2018; Moffitt Cancer Center Community Health Needs Assessment Report 2016; Florida Hospital Tampa Community Needs Assessment Report 2016; Florida Hospital Carrollwood Community Needs Assessment Report 2016; South Florida Baptist Hospital 2016 Community Needs Assessment Report; Tampa General Hospital; Community Health Needs Assessment 2016; and Community Needs Assessment St. Joseph’s Hospitals Service Area 2016. Ms. Rabon also developed a key informant survey tool to elicit qualitative information regarding the healthcare needs of Hillsborough residents. The survey specifically asked about the strengths and weaknesses of the community for treatment of persons with chronic or advanced illness, and other pressing issues relating to end of life care. Those survey questions included, among others: What is your role, and responsibilities within your organization? What do you consider to be the strengths and assets of the Hillsborough community that can help improve chronic and advanced illness? What do you believe are the three most pressing issues facing those with chronic or advanced illness in Hillsborough County? From your experience, what are the greatest barriers to care for those with chronic or advanced illness? What are the strategies that could be implemented to address these barriers? Once meetings with key informants were complete, and 25 key informant surveys were returned, Ms. Rabon summarized her findings in a final Community Needs Assessment Summary. Ms. Rabon’s findings were consistent with assessments conducted by other organizations, including HCDOH, and local hospitals. The results of the Community Health Needs Assessments, Suncoast Key Informant Surveys, and detailed letters of support, identified the following gaps in end-of-life care for residents of Hillsborough: Need for Disease-Specific Programming: High cardiovascular disease mortality rates (higher than the state average and the highest of the six most populous counties in Florida) and low percentage of patients served by existing hospice providers. Other areas where there appears to be a gap in specific end-of-life programming and a large need in terms of Hillsborough resident deaths include: Alzheimer's Disease and Chronic Lower Respiratory Disease, both of which are in the top 5 leading causes of death in the county. Need for Ethnic Community-Specific Programming Nearly 30 percent of the Hillsborough population is Hispanic, with 19 percent of the county's 65+ population falling into the Hispanic ethnic category. The concentration of 65+ Hispanic residents in Hillsborough is higher than the state average. Surveys and assessments indicate a lack of knowledge in the Hispanic/Latinx[4] community in Hillsborough regarding end-of-life care. Many of these residents speak Spanish at home and/or have limited English proficiency. Hillsborough Hispanic population has low utilization of hospice due to factors including lack of regular physician and medical care, lack of information and cultural barriers. Lack of Available Resources for Homeless and Low-lncome Populations With the 5th largest homeless population in the state, Hillsborough has 1,650 homeless residents as of a Point in Time Count conducted in February 2019. Nearly 60 percent of the area’s homeless population is considered ‘sheltered’, yet there are no resources for end-of-life care for these patients where they live, whether it be an emergency shelter, safe haven or transitional housing. Additionally, 17.2 percent of the Hillsborough population lives below the poverty level and has limited access to coordinated care, including end-of- life services. Largest Veteran Population in Florida Requires Special Programming and Large Number of Resources More than 93,000 veterans currently reside in Hillsborough, with more than one-third over the age of 65. 4 Latinx is a gender-neutral neologism, sometimes used to refer to people of Latin American cultural or ethnic identity in the United States. The ?-x? suffix replaces the ?-o/-a? ending of Latino and Latina that are typical of grammatical gender in Spanish. See “Latinx,” Wikipedia (last visited March 19, 2021). While most hospice programs provide special services for veterans, Suncoast Pinellas has obtained Partner Level 4 certification by We Honor Veterans, a program of the National Hospice and Palliative Care Organization (“NHPCO”) in collaboration with the Department of Veterans Affairs (“VA”). Lack of Specialized Pediatric Hospice Program in the Area Pediatric hospice programming in Hillsborough is limited, as there are no specialized pediatric hospice providers in the county. Hillsborough is home to approximately 338,000 residents ages 0-17 in 2020, and is projected to increase to more than 368,000 by 2025. The pediatric utilization rate of hospice services in Hillsborough is low compared to the general population. For the year ended March 31, 2019, there were only five pediatric patients discharged from the hospital setting to home hospice or an inpatient hospice facility, while 106 pediatric patients died in the hospital. Absence of Continuum of Care Navigation Navigation of the healthcare system was highlighted as a key driver that will bring positive improvements to overall continuum of care in Hillsborough. Hillsborough residents are not accessing hospice services at a rate consistent with the rest of the state, and either access hospice programs very late in the disease process, or not at all. Transportation Challenges for Rural Areas of the County Transportation challenges as a deterrent to seeking medical care, particularly in rural areas of Hillsborough. Approximately one-third of the Hillsborough population is considered “transportation disadvantaged” meaning they are unable to transport themselves due to disability, older age, low income or being a high-risk minor/child. Suncoast retained David Levitt and his firm as its healthcare consultant and primary drafter of its CON application. To develop Suncoast’s application, Mr. Levitt utilized numerous reliable data sources and worked with Suncoast Pinellas’s staff. Mr. Levitt credibly confirmed the need for an additional hospice program in Hillsborough based on reliable healthcare planning data. AHCA’s CON application form, adopted by rule, requires applicants to submit letters of support with their CON applications. Suncoast complied with this requirement and included numerous letters of support from the Hillsborough community. One of the key informants identified by Ms. Rabon was Dr. Douglas Holt of the HCDOH. Dr. Holt agreed to meet with Mr. Sciullo and ultimately agreed to provide a letter of support, which was included with the Suncoast application. Mr. Sciullo also personally met with Dr. Larry Fineman, the regional medical director of HCA West Florida, who provided a letter of support. HCA West Florida hospitals are key referral sources of Suncoast Pinellas’s current hospice admissions. In addition to HCA West Florida, Suncoast Pinellas has an existing relationship with other Hillsborough hospitals: St. Joseph’s, Moffitt Cancer Center and Tampa General Hospital. Suncoast received letters of support from St. Joseph’s and Tampa General. The Agency’s witness, James McLemore, testified that letters from such referral sources were highly persuasive to the Agency, as they indicate the likelihood of successful operations. Suncoast’s witness, Dr. Larry Kay, credibly testified that he obtained letters of support from Dr. Howard Tuch, Director of Palliative Medicine at Tampa General Hospital; Dr. Larry Feinman, Chief Medical Officer at HCA West Florida; and Dr. Harmatz, the Chief Medical Officer at Brandon Regional Hospital, an HCA hospital within HCA West Florida. Those letters were included with the Suncoast application. Suncoast Pinellas currently has working relationships with BayCare, HCA, AdventHealth West Florida, Tampa General, and Moffitt hospital systems. Suncoast submitted letters from BayCare and HCA, which were included with its application. Suncoast received letters specifically related to partnering with Suncoast for inpatient services from St. Joseph’s (BayCare) and Brandon Regional (HCA). Suncoast also received a letter of support related to partnering with Suncoast for inpatient services from the Inn at University Village, a long- term care facility in Hillsborough; and support from a pediatric hospitalist who provides care to terminally ill and medically fragile children at St. Joseph’s Children’s Hospital and Johns Hopkins All Children’s Hospital. Suncoast also received letters of support from numerous community organizations, including Balance Tampa Bay and The AIDS Institute. Also included with the Suncoast application were several letters of support from [Remainder of page intentionally blank] the veterans’ community, including one from the Military Order of the World Wars.5 After considering Ms. Rabon’s Community Needs Assessment, and input from key informants, Suncoast developed programs and plans to meet each of the needs identified above. Suncoast conditioned the approval of its CON on the provision of those services. In all, Suncoast offered 19 conditions in its CON application intended to meet the unique needs of Hillsborough. Condition 1: Development of Disease Specific Programing: Suncoast is committed to providing disease-specific programming in Hillsborough: Empath Cardiac CareConnections, Empath Alzheimer’s CareConnections, and Empath Pulmonary CareConnections. Dr. Larry Kay and Dr. Janet Roman credibly testified that Suncoast will fulfill Condition 1 for disease specific programming. To fulfill Condition 1, Suncoast will provide Empath Cardiac CareConnections in Hillsborough. Dr. Roman designed and currently runs the CardiacCare Connections program in Pinellas County. Dr. Roman is a national expert in developing programs across the continuum of care to assist heart failure patients. Although Suncoast Pinellas has always treated patients with heart failure, since Dr. Roman’s arrival, cardiologists have been referring patients to Suncoast Pinellas earlier than before. Dr. Roman has trained Suncoast Pinellas’s nurses in all advanced heart failure therapies, including IV inotropes, and mechanical circulatory 5 As correctly noted by Cornerstone in its Proposed Recommended Order, letters of support included in the three applications, unless adopted by the sponsoring author at hearing or in sworn deposition received in evidence, are uncorroborated hearsay, and the contents therein may not form the basis of a finding of fact. However, the letters are not being received for the truth of the matters set forth therein, but rather the number and types of support letters included in the applications are relevant generally as a gauge of the level of community support for the proposals. The Hospice of the Fla. Suncoast, Inc. v. AHCA and Seasons Hospice and Palliative Care of Pasco Cty., DOAH Case No. 18-4986 (Fla. DOAH Sept. 5, 2019; Fla. AHCA Oct. 15, 2019) (“In a broad sense, comparison of each applicant's letters of support illuminates the differences between each applicant's engagement with the community.” FOF No. 127.). supports such as left ventricular assist devices (“LVAD”) and artificial hearts. Dr. Roman’s program has been successful at reducing hospital readmissions. Suncoast’s application provided significantly more detail about the operations of its heart program than either Cornerstone or VITAS. Cornerstone and VITAS’s descriptions of their heart programs do not reach the level of specificity of operation as Suncoast’s and are not backed up with a measure of success such as a reduction in readmissions. In furtherance of Condition 1, Suncoast will also offer Empath Alzheimer’s CareConnections. Suncoast Pinellas has already created the foundation for Empath Alzheimer’s CareConnections in Pinellas County, but has not yet been marketing the program under the brand of CareConnections. As part of Empath Alzheimer’s CareConnections, Suncoast will deploy a Music in Caregiving program for Hillsborough hospice patients, including those suffering from Alzheimer’s Disease. Suncoast will also offer Empath Pulmonary CareConnections in Hillsborough. Suncoast Pinellas has already created the foundation for Empath Pulmonary CareConnections in Pinellas County, but has not yet been marketing the program under the brand of CareConnections. Suncoast Pinellas already has several respiratory therapists full time caring for COPD and asthma patients. In Hillsborough, Suncoast plans to engage a pulmonologist as a consultant and to hire dedicated respiratory therapists as volume increases in Hillsborough. Condition 2: Development of Ethnic Community-Specific Programming Suncoast conditioned its CON application on the purchase of a mobile van staffed by a full-time bilingual LPN and a full-time bilingual social worker to discuss advanced care planning and education, and increase access to care to diverse populations. The van will operate eight hours a day, five days a week, and drive to areas in Hillsborough that have a need for the services offered by Suncoast and Empath. This outreach is intended to enhance access to care to diverse communities. The van will spend time at the HCDOH and its satellite clinics, and use Metropolitan Ministries as a resource for identifying additional locations that could benefit. The van will also visit key Latinx community locations within Hillsborough and offer Spanish language assistance. The van will be equipped with telehealth technology capabilities to link the LPN and social worker to the care navigation office to further enhance the care navigation function of the mobile van. The purpose of the mobile outreach van is to build relationships with, and trust in, the community, enhance visibility, and bring care navigation to areas of Hillsborough that may not typically access it. Suncoast Pinellas’s EPIC program has significant experience operating a mobile outreach unit. EPIC currently operates a mobile outreach and testing unit that provides HIV testing and sexually transmitted infection testing in the community. Condition 3: Development of Resources for Homeless and Low-Income Populations Suncoast conditioned its application on the development of resources for homeless and low-income populations. Under this condition, Suncoast will provide up to $25,000 annually for five years to Metropolitan Ministries. Metropolitan Ministries is a leading community-based organization in Hillsborough that serves homeless and low-income individuals. Christine Long, Chief Programs Officer for Metropolitan Ministries, provided a letter of support which was included in Suncoast’s CON application. Condition 4: Development of Specialized Veterans Program Suncoast conditioned its CON application on the development of a specialized veterans program, which includes a dedicated Veterans Professional Relations Liaison to collaborate with the local VA hospital, outpatient clinics, and veterans organizations. Suncoast Pinellas provides a wide range of specialized care for veterans, through its Empath Honors program, including Honor Flight and pinning ceremonies. Additionally, Suncoast Pinellas holds a Level 4 Certification from We Honor Veterans, a national program through the National Hospice and Palliative Care Organization (“NHPCO”) whose mission is to honor military veterans in hospice care. The NHPCO recently added a new Level 5 Partnership, for which Suncoast Pinellas has already applied for its Pinellas hospice program. Suncoast will also pursue a Level 5 Certification in Hillsborough, if awarded the CON. Condition 5: Development of Specialized Pediatric Hospice Program in Hillsborough County Suncoast will also develop a specialized pediatric hospice program in Hillsborough. Dr. Stacy Orloff started the Children’s Hospice Program at Suncoast Pinellas in 1990 and has been with Suncoast Pinellas for 30 years. Dr. Orloff helped draft the first waiver that the State of Florida submitted to CMS for approval to operate a PIC/TFK program. Once the PIC/TFK waiver was approved, Ms. Orloff led Florida’s PIC/TFK steering committee for 12 years. PIC/TFK is a Medicaid waiver program that provides palliative care services for children with a risk of a death event by age 21, and also provides counseling support for family members who lived at the child’s home, such as parents, siblings, and grandparents. A PIC/TFK provider must be a licensed hospice provider in the service area. Suncoast Pinellas has operated a PIC/TFK program in Pinellas since 2004, utilizing a pediatric interdisciplinary team to provide its PIC/TFK services. Suncoast Pinellas’s PIC/TFK program averages a census of approximately 40 children. Combining the PIC/TFK patients with pediatric patients, Suncoast Pinellas’s census averages approximately 50 children. Suncoast Pinellas has already received acknowledgment from Children’s Medical Services to permit it to operate a PIC/TFK program in Hillsborough if awarded the hospice CON. Initially, pediatric patients will be serviced by the Suncoast Pinellas pediatric staff. Suncoast Pinellas currently has sufficient staff availability to service Hillsborough at the commencement of the program. Suncoast anticipates that by the second year, the Hillsborough pediatric program will have a sufficient census to have a staff that serves only Hillsborough. VITAS’s regional Medical Director, Dr. Leyva, acknowledged that a pediatric patient will receive better care from a care team with pediatric expertise than with an adults-only team. Of the three applicants, Suncoast has demonstrated the most experience providing care to pediatric patients.6 In addition, Suncoast Pinellas has longstanding relationships with the local children’s hospitals, St. Joseph’s Children’s Hospital, and Johns Hopkins All Children’s Hospital. Concurrent care is a benefit created as part of the Affordable Care Act that allows children admitted to hospice care to continue to receive their curative care. Although all applicants have proposed providing concurrent care, only Suncoast has proposed a PIC/TFK program. Suncoast is the only applicant currently operating a perinatal loss program and miscarriage at home program. Dr. Orloff credibly confirmed that Suncoast will implement the perinatal loss program if approved in Hillsborough. Condition 6: Development of Continuum of Care Navigation Program Suncoast’s Community Needs Assessment identified that Hillsborough lacks effective access to the full continuum of healthcare services. Suncoast 6 AHCA’s witness, James McLemore, credibly testified that this is an area where Suncoast enjoys an advantage over the other applicants because “Suncoast went with an entire pediatric program.” Pinellas operates an entire care navigation department that can address any inquiry or referral regarding hospice and Empath’s other services, in order to direct that patient to the right care at the right time. All services offered by Empath, including hospice, palliative care, home health, EPIC, and PACE are available to individuals who call the Care Navigation Center. Care Navigation staff can also assist existing patients with questions involving, for example, DME. Suncoast Pinellas’s care navigation center is available 24 hours a day, 7 days a week, 365 days a year. If its application is approved, Suncoast will also offer its Care Navigation Department in Hillsborough. Condition 7: Development of a Program to Address Transportation Challenges for Rural Areas Suncoast has conditioned its application on developing a program to address transportation challenges for rural areas in Hillsborough. As part of this condition, Suncoast will provide up to $25,000 annually in bus vouchers for the first five years to current hospice patients and their families, as well as non-hospice patients. Critics of Suncoast’s plans to offer bus vouchers claimed that Hillsborough’s bus system does not reach all areas within the county. However, Suncoast has also conditioned its application on the provision of funds that may be used to purchase transportation, including ridesharing providers such as Uber. Condition 8: Interdisciplinary Palliative Care Consult Partnerships Suncoast will implement interdisciplinary palliative care partnerships with hospitals, ALFs, and nursing homes located in Hillsborough. Suncoast has already identified potential partnerships, including with Dr. Harmatz at Brandon Regional Medical Center, to launch the program. Condition 9: Dedicated Quality-of-Life Funds for Patients and Families Suncoast is committed to providing quality of life funds as described in Condition 9 in Suncoast’s CON application. Suncoast Pinellas has extensive experience with providing each interdisciplinary team with $1,200 of quality of life funds to be used to facilitate a safe environment for its patients, such as paying rent, getting rid of bedbugs, paying utilities such as electricity for air conditioning, and to power specialized medical equipment. On occasion these funds are also used to provide meaningful patient experiences, similar to the Make-a-Wish programs. Conditions 10 – 13: Development of Advisory Committees and Councils Suncoast has committed to establishing care councils and advisory committees to learn firsthand the needs and concerns of the community. A care council is made up of members from a particular community who provide input regarding the needs of the community. Suncoast Pinellas offers similar councils and committees in Pinellas County. These groups are critical to the success of Suncoast Pinellas’s mission. Condition 14: Development of Open Access Model of Care Suncoast has committed to implementing an open access model of care in Hillsborough. This condition recognizes that while some patients may be receiving complex medical treatments that may lead some to question whether the patient is terminal, those treatments are actually required for palliation and the patient’s comfort. Under this condition, Suncoast promises to admit these patients and provide coverage for their treatments. Condition 15: SAGECare Platinum Level Certification Joy Winheim testified at the final hearing regarding the HIV positive community and the LGBTQ community. Over her many years working with the HIV/AIDS community, Ms. Winheim has built lasting relationships with community partners in the Tampa Bay area, including HCDOH and the Pinellas County Health Department. Empath’s EPIC program has a permanent staff member housed within the HCDOH, and the HCDOH has physicians housed in EPIC’s Tampa office to provide medical care to EPIC’s clients. Ms. Winheim has built lasting relationships with community partners in the Tampa Bay LGBTQ community, including Metropolitan Community Church, an LGBTQ friendly church; the Tampa Bay Gay and Lesbian Chamber of Commerce; and Balance Tampa Bay. SAGE is a national organization dedicated to improving the rights of LGBTQ seniors by providing education and training to businesses and non- profits. The platinum level of SAGECare certification is the highest level and indicates that 80% of an organization’s employees and 100% of its leadership have been trained by SAGE. Leadership training is in the form of a four-hour in-person training. Employee training is in the form of a one-hour training conducted either in person or web-based. All of Empath’s entities are SAGECare certified at the platinum level. Although the platinum level certification requires only 80% of its employees to receive training, Empath Health required that 100% of its employees attend the training. SAGECare certification makes a difference to members of the LGBTQ community choosing a healthcare provider. Suncoast is committed to fulfilling this condition. Condition 16: Jewish Hospice Certification Suncoast Pinellas has a specialized Jewish Hospice Program and holds a Jewish Hospice Certification from the National Institute of Jewish Hospices. Suncoast has conditioned its CON application on achieving this same certification in Hillsborough by the end of year one. Condition 17: Joint Commission Accreditation The Joint Commission on Accreditation of Healthcare Organizations (“Joint Commission”) accreditation is the “gold standard” for hospitals, nursing homes, hospices, and other healthcare providers. Suncoast is currently accredited by the Joint Commission, and if approved, is committed to achieving Joint Commission accreditation for its Hillsborough program. Condition 18: Provision of Value-Added Services Beyond Medicare Hospice Benefit Suncoast has committed to provide its integrative medicine program in Hillsborough. Suncoast Pinellas’s existing integrative medicine program is staffed by an APRN who is also certified in acupuncture. Suncoast Pinellas’s integrative medicine program is a holistic approach for helping patients manage their symptoms with such therapies as acupuncture, Reiki,7 and aromatherapy. Suncoast Pinellas recently established a Wound, Ostomy, and Continence Nurse Program in Pinellas County to provide expertise in end-of- life wounds and incontinence issues in long-term care settings, particularly smaller ALFs that may not have the necessary staffing. Suncoast will also offer this program in Hillsborough. [Remainder of page intentionally blank] 7 Reiki (??, /'re?ki/) is a Japanese form of alternative medicine called energy healing. Reiki practitioners use a technique called palm healing or hands-on healing through which a “universal energy” is said to be transferred through the palms of the practitioner to the patient in order to encourage emotional or physical healing. Condition 19 – Limited Fundraising in Hillsborough County Suncoast has committed to limiting fundraising activities in Hillsborough. Ms. Rabon credibly testified that Suncoast can, and will, fulfill this condition.8 Suncoast’s PACE Program In addition to its conditions, Suncoast’s proposal also includes several other non-hospice services that will be made available in Hillsborough. For example, Suncoast Pinellas operates a PACE program. The PACE program provides everything from medical care to transportation for medical needs and adult daycare services, as well as respite services for caregivers. The overall goal of the PACE program is to reduce unnecessary hospital visits and nursing home placement and keep elderly participants at home. Suncoast Pinellas’s PACE program currently operates at capacity, with 325 participants enrolled. Over the last four years, Suncoast Pinellas PACE has referred 175 people to Suncoast Pinellas. And although there are approximately 14,000 eligible PACE participants in Hillsborough, there is not a PACE provider in the county. In recognition of this unmet need, Suncoast Pinellas is currently in the process of expanding PACE services to residents of Hillsborough. Suncoast’s PACE program distinguishes Suncoast from Cornerstone and VITAS, neither of which currently operates a PACE program in any of their service areas. Suncoast’s Volunteer Program Under the Medicare Conditions of Participation, hospice programs must use volunteers “in an amount that, at a minimum, equals 5 percent of 8 Both Suncoast and Vitas condition their applications on eschewing fundraising activities in SA 6A, apparently in an effort to minimize adverse impact on the two existing providers in the service area. However, neither Lifepath nor Seasons participated as a party to this litigation, or presented evidence at hearing as to revenues received through their fundraising activities. Thus, it is impossible to determine whether the conditions proposed by Suncoast and VITAS would have a material impact on either of the existing providers. the total patient care hours of all paid hospice employees and contract staff.” 42 C.F.R. § 418.78(e). Suncoast Pinellas regularly exceeds that 5% requirement and, in fact, reached 12% in the last fiscal year. Suncoast Pinellas currently has over 1,000 volunteers who support the hospice program by assisting with palliative arts, including Reiki and aromatherapy, Lifetime Legacies, pediatric patients, and transportation. Suncoast Pinellas’s volunteers also assist with Suncoast’s Pet Peace of Mind Program, for which Suncoast Pinellas won the inaugural award for program of the year in 2019. Suncoast is the only applicant that operates a teen volunteer program. Suncoast Pinellas’s teen volunteer program was established in 1994 and was the first of its kind in the entire country. In 1998, it was awarded the Presidential Point of Light award. Suncoast Pinellas’s Volunteer Services Director, Melissa More, regularly consults with hospices across the country on the development of teen volunteer programs. Ninety of Suncoast Pinellas’s 1,000 volunteers currently live in Hillsborough, but travel to Pinellas to volunteer at Suncoast Pinellas. Nine of those volunteers submitted letters of support for Suncoast’s CON application to serve Hillsborough. Doctor Direct Program Suncoast Pinellas’s existing Doctor Direct Program enables physicians in the community and their ancillary referral partners to contact a Suncoast Pinellas physician 24/7, who can answer any questions about a patient they think might be eligible for hospice, and questions related to other Suncoast Pinellas programs. Suncoast will provide its Doctor Direct Program in Hillsborough. Plan for Inpatient Services Suncoast received letters of support from hospitals and a nursing home indicating a willingness to enter into a contract for inpatient services with Suncoast. Suncoast intends to offer both inpatient units and “scatter- bed” arrangements with these providers. Suncoast received letters specifically related to potential partnerships with St. Joseph’s (BayCare) and Brandon Regional (HCA) for the provision of inpatient hospice services. Suncoast also received a letter related to a potential partnership with the Inn at University Village, a long-term care facility in Hillsborough, for the provision of inpatient services. Telehealth Suncoast Pinellas offers telehealth services using CMS and HIPAA- approved software so that patients can keep meaningful connections with their family and friends, regardless of ability to travel. In Hillsborough, Suncoast will provide nurses, social workers, and chaplains with traveling technology for use in the patient’s home to connect with family and friends. Utilizing telehealth in this way will help to minimize emergency room visits and hospitalizations. Suncoast will be prepared to implement its telehealth program in Hillsborough on day one of operation if awarded the CON. Outreach Efforts to Diverse Communities Suncoast is committed to, and has a proven track record of, community outreach efforts to diverse communities. As part of its outreach efforts in Hillsborough, Empath’s Vice President of Access and Inclusion, Karen Davis-Pritchett, met with the Executive Director of the Hispanic Service Council, Maria Pinzon, to discuss the organization’s outreach efforts and gain insight into the Hispanic community in Hillsborough. Ms. Davis- Pritchett learned that the Hispanic community in Hillsborough differs from the Hispanic community in Pinellas, in that Hillsborough has a large and spread out migrant population. Ms. Davis-Pritchett and Ms. Pinzon also discussed the transportation issues facing residents of Hillsborough. To address these transportation issues, Suncoast conditioned its CON application on the purchase and use of a mobile outreach van with bilingual staff to conduct outreach to the Hispanic and other diverse communities. Suncoast also conditioned its application on the provision of vouchers that may be used for buses or ride-sharing services. Ultimately, Suncoast obtained a letter of support from Ms. Pinzon, which was submitted with its CON application. Additionally, Suncoast conditioned its application on recruiting four community partnership specialists, who will conduct outreach to the African American community, the Hispanic community, the Veterans community, and the Jewish community, and six professional liaisons who will conduct outreach to clinical partners in Hillsborough. All of these positions will be dedicated to Hillsborough and be filled by individuals who are connected to these communities, and understand the importance of access to hospice care. Suncoast’s proposal includes a bilingual medical director, Dr. Jerez- Marte, for its Hillsborough program. Dr. Jerez-Marte regularly speaks Spanish with patients and staff, which would be a benefit to Hispanic patients in Hillsborough. Mr. Sciullo credibly testified that Suncoast will offer high quality hospice services in SA 6A, and will fulfill the 19 conditions proposed in its application. Cornerstone Based on its review of data and analytics that Cornerstone relies upon and conducts as part of its ongoing operations in Florida, Cornerstone recognized in the second quarter of 2019, long before AHCA published its need projections, that there was need for an additional hospice program to enhance access to hospice services in Hillsborough. Regardless of the service area, Cornerstone offers quality hospice care through consistent policies, protocols, and programs to ensure that patients are getting the highest quality care possible. Cornerstone will bring all aspects of its existing hospice programs and services to Hillsborough, including all of the programs and services described throughout its application. However, Cornerstone recognizes each service area is different in terms of the needs and access issues patients face, whether based on demographics, geography, infrastructure, a lack of information about hospice, or other factors. When looking to enter a market, Cornerstone conducts a detailed community-oriented needs assessment to determine the specific needs of the community with regard to hospice to best understand how to enhance access to quality hospice services. Cornerstone explores each potential new area to identify the cultural, ethnic, and religious makeup of the community, the current providers of end- of-life care in the community, and the unmet needs and gaps in care, which is critical to understanding where issues may lie. This allows Cornerstone to build and develop an appropriate operational plan to meet the needs identified in a particular market. Cornerstone conducted this type of analysis for its recent successful expansion in Marietta, Georgia, and has had success expanding access to hospice in its existing markets through ongoing similar analyses. Cornerstone conducted an analysis of Hillsborough similar to those it conducts in its existing markets and in expansion efforts outside its existing markets. In its assessment of Hillsborough, Cornerstone relied, in part, on the extensive knowledge of its senior leaders and outreach personnel, many of whom live and previously worked in Hillsborough, with regard to the population characteristics and needs of the Hillsborough area. This experience in the target service area affords Cornerstone’s team a detailed knowledge of the hospice-related needs of the county. Mr. D’Auria, who conducted much of the analytics internally for Cornerstone, also oversaw a team of Cornerstone staff who spent several weeks canvassing Hillsborough at a grassroots level. The Cornerstone team spoke to residents, medical professionals, community leaders, SNFs, ALFs, and hospitals, among others, on the local experience of hospice care, to identify any areas of concern regarding unmet needs or perceived improvements necessary relative to the provision of hospice care by the current providers. Cornerstone’s retained health planning experts, Mr. Roy Brady and Mr. Gene Nelson, further undertook an extensive data-driven analysis of Hillsborough’s health-related needs to explore the access issues and service gaps identified in Cornerstone’s analytics, knowledge of and discussions in the local community, as well as the issues raised in community health needs assessments,9 letters of support, and other resources. Together, the team concluded that quality hospice services are available in Hillsborough County through existing providers LifePath and Seasons Hospice. That care is available to patients of all ages and demographic groups with virtually any end-stage disease process. Yet some patients simply are not accessing hospice services at the expected rate in Hillsborough. For example, Cornerstone’s analyses identified specific unmet community need among particular geographic areas, as well as among persons with a diagnosis other than cancer, particularly those under age 65, persons with end-stage respiratory disease, the Hispanic and African American communities, migrant communities, residents of smaller ALFs, and veterans. Based upon its analysis of the healthcare needs of Hillsborough, Cornerstone included multiple conditions intended to address those needs. In 9 Cornerstone considered the health needs assessments released by Tampa General Hospital and the Moffitt Cancer Center, both published in 2019. Cornerstone also considered the health needs assessment prepared by HCDOH issued on April 1, 2016, as updated, including the March 2019 update. all, Cornerstone proposed 10 conditions in its CON application targeted to meet the hospice needs of Hillsborough: Licensure of the Hospice Program: Cornerstone commits to apply for licensure within 5 days of receipt of the CON to ensure that its service delivery begins as soon as practicable to enhance and expand hospice and community education and bereavement services in SA 6A; Hispanic Outreach: Cornerstone commits to provide two full-time salaried positions for bilingual staff as part of its Community Education Team. These Community Education Team members will be responsible for the development, implementation, coordination and evaluation of programs to increase community knowledge and access to hospice services, particularly designed to reach the Hispanic community in Spanish. Bilingual Volunteers: Cornerstone commits to recruit bilingual volunteers. Patients’ demographic information, including other languages spoken, is already routinely collected so that the most compatible volunteer can be assigned to fill each patient’s visiting request. Offices: Cornerstone commits to establish its first program office in the Brandon area (zip code 33511 or 33584) during the first year of operation. Cornerstone commits to establish a satellite office in the Town & Country area (zip code 33615 or 33634) during the second year of operations. Complimentary Therapies: Cornerstone conditions its application on offering alternative therapies to patients that may include massage therapy, music therapy, play therapy, and holistic (non-drug) pain therapy. These complimentary therapies are not generally considered to be part of the hospice's core services, but are enhancements to the patient’s care which often have a marked impact on the quality of life during their last days. Veterans: Cornerstone commits to providing services tailored to the military veterans in the community. Cornerstone will immediately upon licensure expand its existing We Honor Veterans Level 4 program to serve Hillsborough and will provide the same broad range of programs and services to veterans in Hillsborough as it currently provides in its existing service areas. Bereavement Counseling for Parents: Cornerstone will implement a program in its second year of operation which will provide outreach for bereavement and anticipatory grief counseling for parents of infants who have died. The Tampa area has several hospitals which provide high-level newborn and infant services such as Level III NICU and other programs, consequently there is a higher than average infant mortality rate due to this concentration of high-level services. Cornerstone will work with the local hospitals which provide high-level neonatal intensive care to develop and carry out this program. Cooperation with Local Community Organizations: Cornerstone commits to donate at least $25,000.00 for four years to non-profit community organizations focused upon providing greater healthcare access, disease advocacy groups and professional associations located in SA 6A. These donations will be to assist with their core missions, which foster access to care, and in collaboration with Cornerstone to provide educational content on end-of-life care. Separate Foundation Account: Cornerstone will donate $25,000.00 to a segregated account for SA 6A maintained and controlled by the Cornerstone Hospice Foundation. Additionally, all donations made to Cornerstone or the Foundation from SA 6A, or identified as a gift in honor of a patient served in the 6A program, shall be maintained in this segregated account and only used for the benefit of patients and services in Hillsborough. This account will be used to meet the special needs of patients in Hillsborough which are not covered under the Medicare hospice benefit and cannot be met through insurance, private resources, or community organization services or programs. Continuing Education Programming (CEUs): Cornerstone will commit to extending free CEU in- services to the healthcare community in Hillsborough. Topics will cover a wide range of both required and pertinent subjects and will include information on appropriate conditions and diagnoses for hospice admission, particularly for non-cancer patients. A minimum of 10 in-services will be offered in a variety of healthcare settings during each of the first five years. Additional CEU will be provided on an ongoing basis. In addition to formulating CON conditions, Cornerstone used information gleaned from its community exploration to develop an operational plan detailing the number and type of staff to hire, which programs to offer, and how to tailor its outreach and education to best enhance access to hospice services in Hillsborough to meet the unmet need. Given Cornerstone’s existing outreach to area providers in Hillsborough, such as Moffitt, Tampa General Hospital, and the VA, which already discharge patients to Cornerstone in neighboring service areas, Cornerstone fully expects that it will receive referrals to its hospice from providers throughout Hillsborough upon the initiation of operations in the county. Cornerstone will provide hospice services to those and any other patients throughout Hillsborough from day one. However, when seeking to expand access in new or existing markets, Cornerstone focuses not on taking patients from existing providers but on enhancing access to groups and populations that have been overlooked, or whose needs are not otherwise being met by existing hospices. Cornerstone therefore developed a phased operational plan to focus its outreach and education efforts on areas where there are barriers to access, rather than simply scattering their efforts haphazardly or concentrating on areas that already have a heavy hospice presence. Phase One of Cornerstone’s operational plan will begin immediately upon licensure and continue through the first six months of operation. During this time, Cornerstone will focus outreach and education efforts heavily on the underserved southeast portion of Hillsborough, including Plant City, Valrico, Brandon, Riverview, Mango, and Sun City Center. Phase One includes 68 ALFs, six SNFs, and four hospitals. Almost one-third of the population of Hillsborough resides in this area, and an estimated 28 percent of the residents are Hispanic, and 14 percent are African American. There is also a large, underserved migrant population in this area. Cornerstone conditioned its application on opening an office in Brandon during this initial phase in the first year of operation. Phase Two will expand Cornerstone’s targeted outreach efforts into the southwest quadrant of Hillsborough, including the Apollo Beach, Ruskin, Gibsonton, Progress Village, and Palm River areas. While the population of this phase is smaller than Phase One, the two areas combined make up almost a third of the county’s Hispanic population, and a fourth of the county’s African American population. Phase Three will reach into the broader Tampa area, including towns such as Temple Terrace, Pebble Creek, University, Ybor City, and Carrollwood. This is the largest and most populated of the four phases; however, it is also currently the most hospice-penetrated area of the county as the two existing providers, LifePath and Seasons, each have offices in Phase Three. There is also a hospice house and two hospice inpatient units in the area as well. Because this area already has better hospice visibility and access, and to avoid siphoning patients from existing providers, Cornerstone will focus on this area after Phases One and Two. Cornerstone will ramp up its outreach staffing consistent with the increased area, facilities, and population added during Phase Three. Combined, the first three phases of the operational plan will offer enhanced outreach and education to 90% of the Hillsborough population starting at the beginning of year two operations. Phase Four will encompass the remainder of the county to the west of Tampa in the Town ‘n’ Country area. While this area represents only about 10% of the county’s population, Phase Four has no hospice visibility currently in the form of hospice offices, hospice houses, or hospice inpatient units. Cornerstone has conditioned its application on establishing an office in the Town ‘n’ Country area within project year two to enhance hospice visibility and access in this area of the county. Upon implementation of Phase Four, Cornerstone’s targeted outreach and education will be fully integrated throughout the county. Cornerstone’s application included more than 174 letters of support for its proposal. The letters of support are from a broad range of individuals and facilities located within and outside Hillsborough, including families, SNFs, ALFs, hospitals, vendors, and local charitable organizations, among others. Cornerstone presented testimony from three authors of letters of support, Andrea Kowalski, Eric Luetkemeyer, and Colonel (Ret.) Gary Clark. Ms. Kowalski is an employee benefits coordinator for USI Insurance Representatives in Tampa who works with Cornerstone to build benefits programs for its employees. In addition to authoring her own letter of support, Ms. Kowalski also assisted in gathering approximately 40 additional letters of support for Cornerstone from her colleagues in Hillsborough. Ms. Kowalski strongly supports Cornerstone’s approval and indicated the community would benefit not only from enhanced access to Cornerstone’s excellence and expertise in caring for those with advanced illness, but also from the addition of a highly-regarded employer, which will provide additional options for healthcare workers and financial benefits as Cornerstone reinvests in the community. Mr. Leutkemeyer is the COO for Spectrum Medical Partners (“Spectrum”), the largest privately-held hospitalist group in Florida. Spectrum manages roughly 400 providers across the state, the majority of which (85%) are medical doctors or doctors of osteopathic medicine, either in hospital or post-acute settings, and sees roughly 2,000 patients per day. Spectrum’s footprint includes coverage in Hillsborough for entities such as Simply or Humana with which Spectrum contracts statewide. Spectrum is looking to expand its footprint and services in Hillsborough in the near future. As detailed in his letter, Mr. Luetkemeyer supports Cornerstone’s efforts to establish a hospice program in Hillsborough, indicated a desire to work with Cornerstone in the county if awarded, and believes the community would benefit from the additional resources and quality care that Cornerstone would provide. Colonel Clark, who retired from the United States Air Force in 1993, is co-founder and current Chairman of the Polk County Veterans Council, a volunteer organization of individuals interested in assisting veterans. Colonel Clark is also affiliated with, and participates in, a number of veterans organizations in Hillsborough, including as an adviser to the Mission United Suncoast Chapter in Hillsborough, which primarily assists veterans in transitioning from service to the civilian world. He also serves on the management advisory committee of James A. Haley Veterans’ Hospital in Tampa, which provides a broad spectrum of hospital-based care to area veterans. Colonel Clark has significant experience with Cornerstone through its participation in the Polk County Veterans Council, including on the Council’s committee for the Flight to Honor program, which provides veterans a flight to Washington D.C. to visit war memorials. If a veteran is unable to make the flight, a virtual flight and tour, as well as ceremonies or presentations, are provided by Cornerstone to veterans enrolled in hospice. Cornerstone is heavily involved in the Council’s Flight to Honor program— participating on the committee, recruiting volunteers, working with local schools to gather letters for the veterans on the flights, arranging for orientation prior to the flights, and putting on the virtual flights for those Veterans unable to make the flight due to various disabilities. Colonel Clark is also familiar with Cornerstone’s efforts to support veterans at James A. Haley Veterans’ Hospital in Tampa. Colonel Clark described Cornerstone’s support not only for veterans but for the community overall as “magnificent,” and detailed his support for Cornerstone’s application in a letter of support that is included in Cornerstone’s application. Cornerstone is well-positioned to quickly establish a successful hospice program to enhance access in Hillsborough, and its proposal is a carefully considered, long range plan that would bring its established and proven processes, procedures, and programs to the residents of the county. Cornerstone also posits that its existing presence nearby in Lakeland will enhance its ability to topple barriers to care and serve patients in adjacent SA 6A immediately. For example, Cornerstone has existing relationships with veterans groups that serve both Polk and Hillsborough, and will utilize those relationships to enhance access to the large veteran population in Hillsborough, as highlighted through Cornerstone’s condition to provide services tailored to the veteran community. VITAS VITAS, which operates a hospice program in adjacent SA 6B, proposes to expand into SA 6A under its existing license. This will allow VITAS to begin serving patients quickly without creating an entirely new administrative infrastructure for the opening. Although VITAS provides many of the same core programs in each of its service areas, it also recognizes that each community is different. VITAS performed a qualitative and quantitative assessment that examined the specific needs of Hillsborough regarding hospice care and services. Through its consultants and internal team, VITAS identified several communities, patient types, and clinical settings that are underserved in SA 6A. These include: the African American, Hispanic, and migrant communities, particularly those age 65 and older; impoverished, food insecure and homeless communities; patients with non-cancer diagnoses such as pulmonary disease, cardiac disease, Alzheimer’s Disease, and patients with sepsis; cancer patients in need of palliative care; high acuity patients in need of complex services and those needing admissions during evenings and weekends; patients requiring admission after hours and on weekends; and patients who reside in nursing homes and small ALFs. To understand the hospice needs within Hillsborough, VITAS conducted a two-step review—(1) analyzing data from a wide variety of sources including Medicare, AHCA, Florida Department of Elder Affairs, Florida CHARTS, and demographic and socioeconomic data; and (2) meeting with some healthcare and social service providers in Hillsborough. Key members of VITAS’s leadership team, including Patty Husted, Mark Hayes, and Dr. Shega, conducted an assessment in Hillsborough to identify the unmet need within the community and underserved populations. VITAS’s needs assessment team physically went into Hillsborough to visit nursing homes, ALFs, hospitals, and physicians to determine the unmet need and how to achieve greater access to hospice services for the residents of Hillsborough. VITAS’s team spent a significant amount of time conducting hospice outreach and education in Hillsborough in furtherance of the needs assessment. Specifically, VITAS’s team met with hospitals including H. Lee Moffitt Cancer Center, Baptist Health, BayCare, St. Joseph’s, and Brandon Regional; nursing homes, such as Hudson Manor, Ybor Health and Rehabilitation Center; and physician and nurse practitioner groups. VITAS’s needs assessment team also participated in physician advisory council meetings as part of its needs assessment for Hillsborough. During these meetings, VITAS gained perspective from these local physicians regarding the challenges faced by patients in need of hospice services in SA 6A, as well as insight as to what VITAS could bring from its existing programs to fill the unmet needs. VITAS also drew on the knowledge of the 18 VITAS employees currently living in Hillsborough. To address the needs it identified in SA 6A, VITAS proposes a broad array of programs and services to be offered in Hillsborough which are specifically targeted to increase the availability and accessibility of hospice services for underserved groups and Hillsborough residents more broadly. To demonstrate its commitment, VITAS conditioned its CON application on providing the following 20 programs and services in SA 6A: VITAS Pulmonary Care Program. VITAS Cardiac Care Program. Clinical research and support for caregivers of patients with Alzheimer’s and dementia. VITAS Sepsis Care Program. Veterans programs, including achieving Level 4 commitment to the We Honor Veterans program within the first two years of operation in SA 6A. Bridging-the-Gap Program and Medical/Spiritual Toolkit, which is an outreach and end-of-life education tool for African American and other minority communities. ALF Outreach and CORE Training Program. Palliative care resources and access to complex and high acuity services, including engaging area residents with serious illness in advance care planning and goals of care conversations, as well as offering palliative chemotherapy, inotrope drips and radiation to optimize pain and symptom management as appropriate. Provider clinical education programs for physicians, nurses, chaplains, HHA’s and social workers. Quality and Patient Satisfaction Program, including hiring a full-time Performance Improvement Specialist within the first six months of operation dedicated to supporting quality and performance improvement programs for the 6A hospice program. VITAS staff training and qualification, ensuring the medical director covering SA 6A will be board-certified in hospice and palliative care medicine. Hospice office locations. Deployment of a mobile van to increase access and outreach to rural counties. VITAS will not solicit donations. Outreach and end-of-life education for 6A residents experiencing homelessness, food insecurity, and limited access to healthcare, including advanced care planning for area homeless shelter residents and a partnership to provide a grant for housing and food assistance with a community organization. $5,000 will be distributed during the first two years to the Hispanic Services Coalition or similar qualified organization for promoting academics, healthy communities and engagement of Latinos. Outreach program for underserved residents of SA 6A. Educational grant, to the University of South Florida Foundation including $250,000 for fellowships, scholarships, education and workforce development as well as $20,000 for diversity initiatives. Inpatient hospice house and shelter for natural disasters and hurricanes. Medicaid Managed Care education Services beyond the hospice benefit, including, among others: 24/7 Telecare Program and access to admission on evenings and weekends, including outreach and end-of-life education for residents experiencing poverty, food insecurity, homelessness and/or food insecurity, including nutrition services, advanced care planning for shelter residents, and housing assistance. Hospice Education and Low Literacy (HELLO) Program. Multilingual education materials in several languages including Spanish, Chinese, Korean, Portuguese, Russian, Vietnamese and Creole. CAHPS Ambassador Program to generate interest, awareness and encourage ownership by team members of their team’s performance on CAHPS survey results. Community outreach and education programs. Partnership with a local college for fellowships, scholarships, education and workforce development and diversity initiatives. VITAS’s application contains approximately 50 letters supporting its proposed program, the vast majority of which are from hospitals, nursing homes, ALFs, physicians, and community organizations in Hillsborough County with direct hospice experience. VITAS obtained these letters of support as part of its community-oriented needs assessment, and they attest to the community’s confidence in VITAS’s ability to meet hospice care needs in Hillsborough. Included are letters of support from Cynthia Chavez, Executive Director at Hudson Manor Assisted Living; Brian Pollett, Administrator at Ybor Health and Rehabilitation Center; and Dr. Jorge Alfonso, Regional Chief Medical Officer at Dedicated Senior Medical Center. All three providers expressed a local need to address high acuity patients, including greater access to continuous home care. Statutory and Rule Review Criteria The review criteria are found in sections 408.035, 408.037, and 408.039, and rules 59C-1.008 and 59C-1.0355. (Prehearing Stipulation). Section 408.035(1) - Need for the health care facilities being proposed There are currently two licensed hospice programs in hospice SA 6A, and a need for one additional hospice program, as calculated using the need methodology found in rule 59C-1.0355(4), and published by AHCA, without challenge. AHCA’s need calculation compares reported hospice admissions during the base year with projected admissions in the horizon year and finds need if the difference between base and horizon year admissions exceeds 350, assuming there are no recently-licensed or CON-approved hospice programs in the service area. In this case, AHCA’s calculation revealed a net need of 863 hospice admissions for the January 2021 planning horizon. Each Applicant has put forth a proposal to meet the calculated need for one additional hospice program in Hillsborough. None of the applicants are advocating the approval of more than one new program. Section 408.035(2) – Availability, quality of care, accessibility, and extent of utilization of existing health care facilities and health services in the service district. It is undisputed that quality hospice services are available in Hillsborough today through existing providers LifePath and Seasons, including for patients of all ages and with essentially all end-stage disease processes, as well as for patients of all demographic groups. Relevant data demonstrates discharges to hospice in Hillsborough for a wide range of diagnoses and demographic groups, including African American and Hispanic patients, non-cancer and cancer patients, both over and under age 65; patients with end-stage cardiac disease; end-stage pulmonary disease and dementia, including Alzheimer’s disease, among others. However, despite the availability of quality hospice services, some patients simply are not accessing hospice services at the rate expected in SA 6A, as reflected by low penetration rates and low discharge-to-hospice rates, particularly within certain major disease categories and demographic groups, including Hispanic and African American residents. All three applicants agreed that the underutilization is concentrated among certain patient populations, including demographic groups and disease groups. Generally, all three applicants agreed that the Hispanic, African- American, veteran, and homeless populations are currently underserved in Hillsborough. In addition, Suncoast points to the need for a specialized pediatric hospice program in SA 6A; Cornerstone argues that non-cancer patients younger than age 65 are in need of enhanced access, as are residents of smaller ALF’s; and VITAS asserts that patients with respiratory, sepsis, cardiac, and Alzheimer’s diseases are underserved, as are patients requiring continuous care and high acuity services, such as high-flow oxygen. VITAS’s argument is based largely on a claim that the existing providers are not providing “any measurable continuous care,” as well as hearsay reports from area hospitals indicating a lack of high-acuity services available through existing hospice providers. However, VITAS’s health planning expert conceded that, in fact, existing providers are offering continuous care, and she was unable to quantify any purported dearth of continuous care in Hillsborough as compared to other providers or the statewide average. The record establishes that continuous care is part-and- parcel of the hospice benefit, and there was no evidence presented at final hearing to support the claimed lack of availability of that service from existing providers. Based on the foregoing, the evidence tended to show quality hospice care is available in SA 6A, that it is underutilized, and that the underutilization is driven by accessibility challenges among particular patient groups, and supports AHCA’s determination that another hospice program is needed in Hillsborough. Section 408.035(3) - Ability of the applicant to provide quality ofcare and the applicant’s record of providing quality of care Cornerstone is the only applicant accredited by the Joint Commission, which is a national symbol of quality that reflects its commitment to meeting high quality performance standards. Cornerstone’s Joint Commission accreditation, which was just recertified in 2020, and the accompanying high standards of quality care, will carry over to its new SA 6A program. As a new entity, Suncoast is not Joint Commission accredited, but conditions its application on achieving such accreditation by the end of year two. Suncoast Pinellas is Joint Commission accredited, and indeed, is one of only a handful of hospices nationwide, along with Cornerstone, to hold Joint Commission accreditation and/or certification. While VITAS represents that some affiliated VITAS hospice programs are Joint Commission accredited, VITAS, the applicant here, is not accredited by the Joint Commission, and makes no representation that it will seek or attain such accreditation for its new hospice program in SA 6A. There are two universal metrics codified in federal law that are used as a proxy for assessing the quality of care offered by hospice programs— Hospice Item Set (“HIS”) scores and Consumer Assessment of Healthcare Providers and Systems (“CAHPS”) survey scores. See 42 C.F.R. § 418.312; see also § 400.60501, Fla. Stat. (2020). CAHPS surveys are a subjective metric sent to family members and other caregivers months after a patient's death. The survey asks respondents to provide ratings like: “would definitely recommend,” “would probably recommend,” “would probably not recommend,” and “would definitely not recommend.” It also seeks yes or no responses to statements like: the hospice team “always communicated well,” “always provided timely help,” “always treated the patient with respect,” and “provided the right amount of emotional and spiritual support.” It also asks if the patient always got the help they needed for pain and symptoms, and if “they” received the training they needed. The CAHPS survey was created by CMS in conjunction with the Agency for Healthcare Research and Quality to measure and assess the care experience provided by a hospice. The purpose of the Hospice Compare Website is to allow the public to compare quality scores for CAHPS among different hospice providers. CAHPS scores are one measure of quality that is intended to allow for comparison across hospice programs. Significant time at final hearing was dedicated, through multiple witnesses, to discussing the strengths and weaknesses of CAHPS scores as a measure of quality. Ultimately, the greater weight of the evidence supports that CAHPS scores are an indicator of quality, but are not the only consideration, and suffer from limitations that prohibit drawing distinctions from minor differences in scores. The three applicants’ CAHPS scores are summarized in this chart: (Suncoast Ex. 42, BS p. 12203) While it is true that Suncoast Pinellas’s scores on all CAHPS measures are higher than those of Cornerstone, the slight difference between Suncoast Pinellas and Cornerstone is not significant given the subjective nature of the survey instrument. However, both Suncoast Pinellas and Cornerstone do score significantly higher than VITAS on most measures. Cornerstone’s CAHPS scores meet or exceed state averages on six of the eight measures, are within one to three points of the state average on the remaining two measures, and its average CAHPS score exceeds the state average. As a new entity, Suncoast does not have CAHPS scores. Suncoast Pinellas’s CAHPS scores meet or exceed state averages on six of the eight measures, are within one to two points of the state average on the remaining two measures, and its average CAHPS score exceeds the state average. In contrast, VITAS’s CAHPS scores fall below the state average on all eight metrics, fall five to seven points below the state average on seven of the eight metrics, and its average CAHPS score for all measures combined falls five points below the state average. Cornerstone and Suncoast Pinellas are within one to three points of each other on every CAHPS metric. The difference in scores between Cornerstone and Suncoast Pinellas is not statistically significant or meaningful, particularly given the shortcomings of CAHPS scoring. VITAS’s CAHPS scores are below both Cornerstone and Suncoast Pinellas, falling six and eight points below Cornerstone and Suncoast Pinellas, respectively, on the average of all CAHPS metrics. This difference is meaningful, particularly when viewed in the context of VITAS’s history of substantiated complaints discussed below. HIS scores, which assess documentation of various items, are more a process or compliance measure than a quality measure. Suncoast Pinellas’s HIS scores exceed the state and national average on all metrics, albeit most scores are within two points of the state average. Cornerstone’s HIS scores are on par with state averages on most metrics and meet or exceed the national average on every metric, except Pain Assessment. Cornerstone has worked to substantially improve its Pain Assessment score through better documentation protocols, raising its score from 52.1 to 89.1 in the last few years, and is implementing a new Electronic Records Management system to further improve its scores. VITAS’s HIS scores are on par with state averages on most metrics, and meet or exceed the national average on all metrics except Visits When Death Imminent. VITAS scores 68.4 on Visits When Death Imminent compared to the state and national averages of 83.2 and 82.4, respectively. As measured by the HIS scores, there was no credible, persuasive testimony establishing a meaningful difference among the three applicants. In contrast to CAHPS and HIS scores, the number and substance of complaints substantiated against each applicant by AHCA is a more direct indicator of quality of care. Suncoast has no prior hospice operations history, and therefore no prior substantiated complaints. Suncoast Pinellas has had only three substantiated complaints since 2008, and none since 2013. Cornerstone has only two substantiated complaints since 2008, and only one since Mr. Lee took over as CEO of Cornerstone in late 2012. VITAS has 73 substantiated complaints since 2008, including 10 substantiated complaints in the three years ending November 20, 2019, just prior to submission of the CON application at issue here. Between November 20, 2019, and June 17, 2020, VITAS had five additional substantiated complaints. VITAS’s health planning expert, Ms. Platt, also considered all AHCA survey deficiencies, whether based upon a complaint, life safety survey, or otherwise. Ms. Platt’s analysis demonstrates that VITAS had 80 such surveys with deficiencies since 2012, including 26 between January 2018 and June 2020. VITAS argues that its greater number of substantiated complaints are the consequence of higher patient volumes than Suncoast and Cornerstone. However, even taking into consideration the greater number of patient days provided by VITAS, VITAS had infinitely more surveys with deficiencies in 2019 than Cornerstone, which had zero. And VITAS had five times as many surveys with deficiencies for 2018 and 2019 as Cornerstone. A comparison of VITAS to Suncoast Pinellas yields similar results, with VITAS having significantly more surveys with deficiencies than Suncoast Pinellas, even when taking into consideration the greater number of patient days provided by VITAS. Complaints substantiated against VITAS demonstrate failures in many areas of patient care, including some of the specific aspects of hospice care at which VITAS claims to excel beyond other providers, such as after- hours care, the provision of continuous care, and care to patients wherever they live, including smaller ALFs. For example, a substantiated complaint against VITAS in November 2019 included a finding of “immediate jeopardy”—the most severe level of deficiency possible—for a patient who failed to receive proper care after-hours at end-of-life, resulting in a particularly painful death for the patient, and an excruciating experience for the patient’s daughter who witnessed her mother’s painful death, unaccompanied by hospice personnel. Two additional substantiated complaints from January and February 2020 found deficiencies in VITAS’s care to patients on continuous care, including one where the VITAS nurse had headphones in and was not paying attention when the patient fell. Indeed, VITAS’s own internal review of the substantiated complaint involving the patient who fell confirmed an upward trend in falls among VITAS patients. And, as recently as June 2020, a separate substantiated complaint found that VITAS abandoned a patient on continuous care, requiring the patient to be transferred to the hospital rather than continue to receive care in the “small ALF” where the patient resided. VITAS acknowledged the patients at issue in the substantiated complaints discussed at final hearing did not receive quality hospice care. Those five examples are only a sampling of the complaints substantiated against VITAS, and the others demonstrate similar quality deficiencies. The number of substantiated complaints weighs in favor of Cornerstone and Suncoast, and heavily against VITAS with regard to record of providing quality of care. There is no meaningful difference between Cornerstone and Suncoast in regard to substantiated complaints, and neither is entitled to preference in this regard. On balance, among the three applicants, the quality of care provided by Suncoast and Cornerstone is on equal footing, with both having a distinct advantage over VITAS. Section 408.035(4) - Availability of resources, including health personnel, management personnel, and funds for capital and operating expenditures, for project accomplishment and operation; and Section 408.035(6): The immediate and long-term financial feasibility of the project The parties stipulated that each of the applicants have available funds for capital and operating expenditures in the short term for purposes of project accomplishment and operation. Suncoast demonstrated that it has the resources to accomplish its proposed project. Suncoast provided detailed descriptions of the personnel that would be required to successfully implement its proposed program. Suncoast has reasonably projected the types of staff necessary to operate Suncoast in year 1 and 2 of operation. At hearing, Suncoast witnesses credibly described the roles of the staff contained in Suncoast’s Schedule 6, including the roles of administrator, care team manager, administrative assistant, regional hospice scheduler, business development liaisons, physicians, program director, nurses, hospice aides, respiratory therapists, staff for the mobile van in Condition 2 of its application, community partnership specialists, social workers, patient social team lead, chaplain, volunteer coordinator, and senior staff nurse. Suncoast’s financial expert, Armand Balsano, testified that part of his role in preparing Suncoast’s CON application was working with Suncoast Pinellas’s Chief Financial Officer, Mitch Morel, to develop Suncoast’s financial projections that were included on Schedules 1 through 8 of the application. Mr. Balsano, in collaboration with Mr. Morel, utilized Suncoast Pinellas’s internal financial modeling system to develop the financial schedules and financial narrative for the application. Mr. Balsano credibly testified that financial Schedules 1 through 8 are accurate and reasonable. Suncoast projects admissions of 460 patients for project year one and 701 patients for project year two. Suncoast’s health planner, David Levitt, developed Suncoast’s projected admissions based on experience of other providers entering a market with two existing providers. Suncoast’s projected number of admissions for years one and two are reasonable projections of admissions for a new hospice program in Hillsborough. Suncoast was criticized as having a lackluster record for admissions in its existing Pinellas hospice. While it is true that Suncoast Pinellas’s admissions declined slightly from 2013 to 2014, the overall trend has been one of increasing admissions. For example, based on Medicare claims data, from 2005 to 2019, Suncoast Pinellas’s admissions grew from 4,679 to 6,534.10 Financial feasibility may be proven by demonstrating the expected revenues and expenses upon service initiation, and determining whether a shortfall or excess revenue results. The projection of revenue is not complicated for hospice services. The vast majority of hospice care, more than 90%, is funded by the Medicare Program which pays uniform rates to all hospice providers. Mr. Balsano testified that Suncoast’s projected revenues in Schedule 7 are based on the revenues that are currently realized for the various payer categories, including Medicare, Medicaid, Commercial, and self-pay. Mr. Balsano credibly testified that the assumptions reflected on Schedule 7 of Suncoast’s CON application are reasonable and appropriate. 10 Suggestions by VITAS and Cornerstone that Suncoast’s internal data indicate a history of low utilization or inaccurate reports to AHCA are without merit. Mr. Sciullo credibly testified that the data reported to AHCA is the most accurate admissions data. Mr. Sciullo further credibly testified that the Utilization Trend Reports contained in Cornerstone’s exhibits 82 through 88, relied on by VITAS and Cornerstone, contain duplicate hospice admissions and admissions from non-hospice programs such as Suncoast’s home health program. Mr. Sciullo also credibly testified that the most accurate admissions numbers reported to AHCA are not generated from the Utilization Trend Reports. Rather, the admissions numbers reported to AHCA are produced by Suncoast’s reimbursement department. Mr. Sciullo’s testimony under cross examination demonstrated a confident and credible understanding of the nuances of the Utilization Trend Reports. Additionally, the suggestion that Suncoast would intentionally under-report admissions to AHCA lacks credibility because hospice providers in Florida are incentivized to report higher numbers of admissions. In Year 2, Suncoast projects net operating revenue of $7,138,000, which breaks down to approximately $172 per day of overall net revenue per patient day. Mr. Balsano’s credibly testified that this is a reasonable forecast of net operating revenue. Projected expenses were also reasonably projected by Suncoast. Mr. Balsano testified that Suncoast’s projected income and expenses in Schedule 8A includes salaries and wages, fringe benefits, medical supplies and ancillary services, and approximately 1.5% of inpatient days. Suncoast also included a separate allowance for administrative and overhead cost. Suncoast also allocated $752,000 in management fees to account for “back office services” and other support services that would be provided to the Hillsborough program through the Empath home office. Mr. Balsano arrived at this number by determining that a reasonable assessment would be the cost per patient day of $18, as reflected on Schedule 8 for year two. Mr. Balsano credibly testified that, for a startup program, it is appropriate to include the costs associated with services provided by the corporate office because one must be cognizant of what services are provided locally, and what services will be provided through the corporate office. Mr. Balsano further testified that it would not be reasonable to assume that 100% of the costs associated with corporate services to a new hospice program would be fixed. As Mr. Balsano explained, the variable costs must be accounted for as well. Mr. Balsano credibly testified that Suncoast’s net profit in year two as reflected in Schedule 8A is $615,416. It is found that Suncoast has reasonably projected the revenues and expenses associated with its proposed hospice, and that Suncoast’s proposal is financially feasible in the long term. Cornerstone projected admissions of 448 patients in year one, and 819 patients in year two, for the highest year two admissions of the three applicants. In comparison, Suncoast projected admissions of 460 patients in year one and 701 in year two, while VITAS projected 491 patients in year one and just 593 in year two. Cornerstone’s projected admissions were developed by health planning experts Roy Brady and Gene Nelson based on the experience of recent new hospice programs in the state of Florida, were discussed and confirmed by Cornerstone personnel prior to being finalized, and are a reasonable projection of admissions for years one and two of operations in Hillsborough. Despite the highest anticipated year two admissions, Cornerstone’s projection still fell below the SA 6A service gap of 863 patients and therefore did not, standing alone, establish any greater adverse impact on area providers than Suncoast or VITAS. Cornerstone emphasized its mission as an organization, and intent for this proposal, to expand penetration by resolving unmet need as opposed to capturing patients already served by existing providers. The adverse impact analysis in Cornerstone’s application therefore represents a worst-case scenario by assuming all of its patients otherwise would be served by existing providers, a premise undercut by the substantial published need. Using this approach, Cornerstone anticipated that LifePath would bear the overwhelming burden of its entry into Hillsborough, with a projected adverse impact on LifePath of 408 patients in year one, and 747 in year two. Cornerstone anticipated adverse impact to Seasons of 39 patients for year one, and 72 patients for year two. Even in this worst-case scenario, existing [Remainder of page intentionally blank] providers’ volumes in Cornerstone project years one and two exceed their historical volumes.11 Cornerstone has available health personnel and management personnel for project accomplishment and operation. Cornerstone’s existing staff, as well as its projected incremental staff for the new program, is reflected in schedule 6A of its application. The projected incremental staff shown in schedule 6A is based on established ratios and methodologies Cornerstone uses in its existing hospice programs. The projected incremental staff is all the incremental staff Cornerstone will need to establish the new program in Hillsborough, and combined with its existing personnel, are sufficient to achieve program implementation as proposed in the application. Both Suncoast and VITAS criticized Cornerstone’s financial projections as flawed because they did not present the fully allocated costs of the project. According to Mr. Balsano, Cornerstone’s projected profit margin is unreasonable and, in fact, is “an extreme outlier.” As he explained, Cornerstone’s financial schedules make no allocation of shared service costs for critical services to be provided by the home office. According to Suncoast and VITAS, this omission is unreasonable when viewed in context with Cornerstone’s Schedule 6, which does not allocate any FTEs to back office support services. Not shown are the expenses Cornerstone will incur for finance, billing, revenue cycle, accounts receivable, payroll, human resources, 11 Relative adverse impact on existing hospice programs of competing applicants has been used as a dispositive factor for favoring one applicant over another. See, Hospice of Naples, Inc. v. Ag. for Health Care Admin., DOAH Case No. 07-1264, ¶ 274 (Fla. DOAH Mar. 3, 2008; Fla. AHCA Jan. 22, 2009) (“One factor outweighs all others, however, in favor of VITAS. VITAS's application will have much less impact on HON and its fundraising efforts and in turn on the high-quality services that HON presently provides in Service Area 8B.”). However, as noted here, neither of the existing providers presented evidence as to the relative impact that any of the applicants would potentially have on its existing operations, or whether such impacts would be material. Accordingly, there is no evidentiary basis for providing an advantage to one or another of the applicants based upon consideration of adverse impact. and contract negotiations, among others. Notably, hospice providers include home office costs as part of their Medicare cost reports filed with CMS.12 Because Cornerstone did not allocate home office costs in its application, its profit margins are substantially higher than all other applicants for the October 2019 Batching Cycle. While most applicants fall within the $100,000 – $500,000 range, Cornerstone projected a staggering $4.9 million profit margin. There is nothing in the CON application form or instructions that require that financial projections be presented on a “fully allocated” basis. Notably, in its review of the financial projections, AHCA determined that each applicant’s proposed program appeared to be financially feasible in the long-term. Cornerstone’s financial feasibility analysis included consideration of payer mix, level of service mix, admissions, average lengths of stay, patient days and incremental staffing needs, among others, and focused on the resulting incremental revenues and expenses generated by addition of the new program in Hillsborough. Cornerstone’s projected admissions are reasonable and appropriate for the proposed new program in Hillsborough. Cornerstone’s proposed incremental staff, combined with its existing staff, is sufficient for project accomplishment and operation. Cornerstone’s projected payer mix is based upon consideration of Cornerstone’s own historic experience, the demographics and recent hospice payer characteristics of Hillsborough, and consideration of Cornerstone’s goal to serve the non-cancer under-65 population, which may reduce Medicare 12 In terms of its budgeting process, Cornerstone has one “bucket” for its administrative overhead/home office expenses and then separate buckets for each of its hospice programs. Home office expenses include human resources, IT, compliance, and facility maintenance. Cornerstone does not allocate its home office expenses to each of its hospice programs within its internal books. However, when an audit is performed, the performances of each hospice program and the home office expenses are all included, and the home office expenses are allocated to each of its hospice programs. levels slightly from what they otherwise may be, and is reasonable and appropriate for its proposed hospice program in Hillsborough. Cornerstone’s projected level of service mix and average length of stay are based upon Cornerstone’s historical experience, and are reasonable and appropriate for the proposed hospice program in Hillsborough. Likewise, Cornerstone’s projected revenues as set forth in schedule 7A are based upon the projected volumes, service level mix, payer mix projections, and Medicare service level specific rates, and are a reasonable projection of revenues for the proposed project in Hillsborough. Cornerstone has established the long-term financial feasibility of its proposed SA 6A program. VITAS’s financial projections were prepared through the work of an internal team led by Lou Tamburro, Vice President of Development for VITAS. VITAS reasonably based these projections on the successful opening and ramp up of new hospice programs in Service Areas 1, 3E, 4A, 6B, 7A, 8B, and 9B, and other Florida communities. VITAS has a clear understanding of what startup costs will be, and it was appropriate for VITAS to rely on its past history of success in developing these projections. VITAS projects admissions of 492 patients for project year one and 593 patients for project year two. Mr. Tamburro developed the projected admissions using an internal model based upon VITAS’s prior experience. While Mr. Tamburro is an expert in health finance, not health planning, Ms. Platt reviewed VITAS’s projections and credibly concluded they are reasonable. VITAS proposes to dedicate more resources to SA 6A than the other two applicants in the second year of operations; 74% of that expense is focused on direct patient care, with only 23% associated with administrative and overhead, and 2% property costs. In contrast, Suncoast and Cornerstone only dedicate 54% and 56%, respectively, of their expenses on direct patient care and 41% and 42%, respectively, on administrative and overhead. However, VITAS’s higher direct patient care costs are at least partially explained by the larger number of clinical and ancillary FTE’s associated with the higher levels of continuous care projected by VITAS than either Suncoast or Cornerstone. As would be expected, VITAS also projects to admit a larger number of high acuity patients than Suncoast or Cornerstone. Given VITAS’s vast experience in the start-up and operation of hospice programs, including 16 within Florida, there is no reason to doubt that the VITAS Hillsborough program would be financially feasible in the long term. The following table summarizes the three applications’ financial metrics: Cornerstone Suncoast Vitas Total Project Costs $286,080 $703,005 $1,134,149 Operating Costs Yr.2 $6 million $5.7 million $8.6 million Net Profit Yr.2 $4,972,346[13] $615,416 $154,913 Proj. Admits Yr. 2 819 701 593 Routine Home Care 95.4% 97.5% 94% General Inpatient 3.5% 1.5% 2.5% Continuous Care 0.3% 0.5% 3.5% Respite 0.8% 0.5% 0% Section 408.035(5) The extent to which the proposed services will enhance access to health care for residents of the service district; and Section 408.035(7) The extent to which the proposal will foster competition that promotes quality and cost-effectiveness. Rule 59C-1.0355 and the criteria for determination of need for a new hospice program found within that rule, is predicated upon the notion that, 13 As noted, Cornerstone’s relatively large profit margin is a function of its incremental cost, versus fully allocated cost, financial projections. when need exists, approval of an additional program will foster competition beneficial to potential and prospective hospice patients in the service area. As between the three applicants, Suncoast did the most thorough and extensive analysis of the current needs of the Hillsborough population. This effort was driven by the fact that Suncoast had recently applied for a new hospice program in neighboring Pasco County, and was denied in favor of a competing applicant. In that case, Administrative Law Judge Newton specifically faulted Suncoast for failing to carefully evaluate the hospice needs of Pasco County residents: Suncoast, in effect, proposes a branch operation for Pasco County. Suncoast did not conduct the focused, individualized inquiry into the needs of Pasco County that Seasons did. Nor did it begin developing targeted ways to serve the needs or begin establishing relationships to further that service. The Hospice of the Fla. Suncoast v. Ag. For Health Care Admin., Case No. 18- 4986, ¶ 126 (Fla. DOAH Sept. 5, 2019; Fla. AHCA Oct. 16, 2019). As explained by Mr. Sciullo at hearing, Suncoast took the above criticism to heart, and determined to conduct an exhaustive evaluation of the hospice needs in SA 6A, and to formulate a strategy for addressing those needs. Specifically, Suncoast’s intent was to identify issues and gaps in services facing residents of Hillsborough, and to enable a dialogue with existing community partners and providers in order to create shared solutions. As part of this comprehensive effort, Suncoast met with more than 50 key individuals and organizations, representing a broad range of general and special populations within the county. This effort resulted in the development of collaborative strategies and action plans to fill the gaps and meet the unmet need for additional hospice services in Hillsborough, as reflected in the Suncoast application conditions. In contrast to Suncoast, Cornerstone did not conduct its own needs assessment, but rather relied on the community needs assessments prepared by the HCDOH and two area hospitals. Moreover, rather than reaching out to the Department of Health and to the area hospitals that prepared those assessments to conduct further research or seek their support of its CON application, Cornerstone simply “verified that their documentation was thorough enough.” Cornerstone’s limited outreach effort in Hillsborough is further demonstrated by the letters of support submitted with its CON application. While Suncoast obtained letters of support from the HCDOH and numerous hospitals and community organizations in Hillsborough, Cornerstone failed to obtain a single letter of support from any hospital in Hillsborough. Despite submitting approximately 150 letters of support (many of which were form letters, and letters from Cornerstone employees), Cornerstone failed to obtain any letters from the Hispanic community, the African American community, the HIV community, the migrant community, or organizations that assist the homeless, unlike Suncoast. As Mr. McLemore testified, “a large part” of the review criteria is “hav[ing] the commitment from the organizations in the service area. I think that’s where – a little bit where Cornerstone was a little off base. They did have a bunch of letters of support, but again, they were not specific to the service area.” Mr. McLemore further testified that, rather than a large pile of letters, he was looking for letters “that are definitely from hospitals, nursing homes and civic organizations, healthcare organizations in the area.” Cornerstone’s failure to conduct meaningful and thorough outreach efforts in Hillsborough is also demonstrated by its generic list of CON application conditions. As multiple Cornerstone witnesses acknowledged, the services Cornerstone is proposing to offer in Hillsborough are identical to the services Cornerstone already offers in its existing service areas. Specifically, Cornerstone conditions its application on Hispanic outreach, bilingual volunteers, multiple office locations within a service area, complementary therapies, veterans-specific programming, bereavement counseling for parents, cooperation with local community organizations, a separate foundation account for the specific service area, and continuing education programming, all of which are services that Cornerstone already offers in its existing service areas. Thus, unlike Suncoast, which used the existing community health needs assessments as a starting point for its own comprehensive needs assessment, and proposed conditions that are reflective of the unique needs of Hillsborough, the conditions proposed by Cornerstone are almost identical to the services Cornerstone currently provides elsewhere. Cornerstone’s plan to serve Hillsborough in phases does not immediately address the unmet need for hospice services countywide. Cornerstone will not send its marketing team to facilities and other referral sources in those phased areas until Cornerstone has completed each phase of its plan. Although Cornerstone’s witnesses testified that Cornerstone will not turn away referrals from parts of the county before Cornerstone begins operations in those areas, they also confirmed that Cornerstone will not actively seek referrals from other phased areas until it is ready to move into those areas. Unlike Suncoast, and to a lesser extent VITAS, there is no evidence that Cornerstone conducted a thorough needs assessment of SA 6A before developing its phased implementation plan. Cornerstone simply looked at a map of where existing providers have offices and decided to start elsewhere. Likewise, Cornerstone did not conduct any independent assessment of the needs of the four different geographic areas of its plan to determine whether Cornerstone will be capable of serving all of the county’s residents immediately upon CON approval. Further, Cornerstone did not conduct any review or analysis of comparable start-ups in Florida when preparing its SA 6A CON application. VITAS undertook an analysis of information from a variety of sources, including meetings with various individuals within Hillsborough regarding the perceived gaps in care. Based on this review, VITAS identified a number of patient groups with purported unmet needs: African American and Hispanic populations; migrant workers; patients residing in the eastern and southern parts of the county who are not accessing hospice at the same rate as other parts of the subdistrict; patients with respiratory, sepsis, cardiac, and Alzheimer’s diagnoses; patients requiring continuous care and high acuity services such as Hi-Flow oxygen; patients requiring admission in the evening or on weekends; and patients residing in small, less than 10-bed, ALFs. VITAS proposed a number of solutions to address the purported needs identified in Hillsborough, and largely included those proposed solutions as conditions of its application. However, VITAS failed to identify a specific operational plan for Hillsborough. The purported gaps in care and solutions identified in VITAS’s application for Hillsborough largely mirror those identified in its application for Service Area 2A that was submitted during the same cycle, despite significant differences between the makeups of those two service areas. VITAS’s application included 47 letters of support. Many of the letters are from persons and organizations outside Hillsborough, and even include a letter from one of VITAS’s employees, Kellie Newman, and two letters in support of its 2A application. At hearing, VITAS offered testimony from letter of support authors Mary Donovan and Margaret Duggar. Ms. Donovan lives in Miami and is VP for Caregiver Services, Inc., a nurse staffing agency that contracts with VITAS in other areas of the state and hopes to do so in Hillsborough. Ms. Duggar is the President of MLD & Associates, Inc., located in Tallahassee, which is a management firm that serves as executive staff for a number of entities. Neither of these letters is probative of VITAS’s ability to meet the hospice needs of Hillsborough residents. Ultimately, the applicants all agreed that the unmet need in SA 6A is not purely numeric: it is concentrated among certain patient populations, including Hispanic and migrant communities; non-cancer patients under age 65, including those with dementia, Alzheimer’s, respiratory, and cardiac disease; and lower income groups. Each applicant tailored their proposal to address the perceived, underlying access barriers accordingly. Two primary theories concerning the source of access barriers in Hillsborough developed at final hearing: (a) that access barriers, and hence, unmet need in the service area stem from a lack of access to relevant hospice services through existing providers once a patient has entered hospice care; and (b) that access barriers, and hence, unmet need in Hillsborough, stem from a lack of outreach and education necessary to bring awareness of hospice services to Hillsborough residents so that they access hospice services in the first place. All three applicants proposed to tailor their hospice services and programming to the particular residents of Hillsborough. But Suncoast’s proposal and conditions focused more heavily on outreach and education to bring geographically and culturally-driven awareness of the hospice benefit to patients appropriate for hospice. As noted, Suncoast also did a more comprehensive needs analysis, which allowed Suncoast to focus its CON conditions on those segments of the Hillsborough population most in need of improved access to hospice services. Among the applicants, Suncoast alone proposes to implement a dedicated pediatric hospice program, which is not currently offered in Hillsborough. Dr. Stacy Orloff, accepted as an expert in pediatric hospice care, confirmed in her testimony the following: Suncoast's pediatric hospice program includes a dedicated integrated care team comprised of a fulltime pediatric nurse with more than 25 years’ hospice experience, a pediatric medical director, a full-time licensed social worker, a team assistant, a volunteer coordinator and a pediatric team leader. Additionally, there are part-time staff members including LPNs and CNAs with dedicated pediatric hospice experience. This is an important distinction, as many hospice programs claim to provide pediatric hospice services, but oftentimes they utilize the same care teams that provide care for adult patients. Suncoast's longstanding expertise and network of community partners for its pediatric program will ensure that the proposed pediatric hospice program fits the specific needs of the pediatric patient and family. Suncoast will use a combination of existing staff and PRN assistance until the pediatric caseload is large enough to warrant addition of new team members in Hillsborough County. Suncoast's existing pediatric hospice team has a strong relationship with St. Joseph's Children's Hospital, which it will utilize to expand its network of pediatric providers to increase hospice awareness and utilization in Hillsborough. Suncoast conditions its application on purchasing a $350,000 mobile van, the “Empath Mobile Access to Care,” to conduct mobile outreach activities in Hillsborough for ethnic-specific programming and outreach to homeless. VITAS also conditioned its application on a “Mobile Hospice Education Unit” van, and included photos of similar vans that it operates in other service areas. The Suncoast van will be staffed by a full-time bilingual LPN and a full-time social worker prepared to discuss advanced care planning and education, and will be equipped with telehealth technology capable of linking with the Empath Care Navigation Office. In contrast, VITAS did not explain how its van will be staffed, or whether any of the staff will be clinicians. Indeed, from the photos included in the application, the van appears to be more of a mobile advertisement for VITAS, than it does a tool for hospice education and outreach. VITAS attempted to differentiate its proposal by pointing to disease- specific programming for patients with pulmonary and cardiac conditions, Alzheimer’s, and sepsis. But, Cornerstone and Suncoast are also capable of caring for patients with those conditions. And, specific to sepsis programming—a feature of VITAS’s presentation at final hearing— septicemia is not usually the primary reason a patient enrolls in hospice. Instead, sepsis is a complication of another terminal condition for which a patient is admitted to hospice, and therefore does not represent a need unto itself. VITAS further attempted to differentiate its program by pointing to its comparatively longer average length of stay, arguing that longer average lengths of stay are indicative of greater access and quality. However, this notion was countered by credible testimony that longer lengths of stay, along with a higher percentage of live discharges and higher 30-day readmission rate, may, alternatively, represent targeting of patients unlikely to experience the types of access barriers at which CON is aimed, and may be indicative of lower quality and higher costs. And VITAS’s healthcare planning expert did not conduct an analysis, and offered no opinion, as to the specific cause of VITAS’s comparatively longer length of stay. Taken together, the evidence was inconclusive as to whether longer lengths of stay reflect access enhancements generally, or as applied to VITAS’s proposal. Section 408.035(9) - The applicants’ past and proposed provision of health care services to Medicaid patients and the medically indigent. Rule 59C-1.0355(2)(f) provides that hospice services must be available “to all terminally ill persons and their families without regard to age, gender, . . . cost of therapy, ability to pay, or life circumstances.” Consistent with rule, hospice providers must provide care to Medicaid patients. Medicaid pays essentially the same for hospice care as does Medicare. As such, there is no financial disincentive to accept Medicaid hospice patients. VITAS and Cornerstone both have a history of providing Medicare, Medicaid, and medically-indigent care; Suncoast’s affiliated entity, Suncoast Pinellas, has a similar history, and all three applicants propose to provide care to Medicare, Medicaid, and the medically indigent. While the three applicants project that they will experience different payor mixes for Medicaid and indigent patients, there is no evidence in this record that any of the applicants have discriminated against such patients in the past, or would do so in their Hillsborough program. Cornerstone argues that it is entitled to preference over Suncoast because Cornerstone’s projected percentage of Medicaid and medically indigent admissions (6%) is almost double that of Suncoast (3.3%). However, Cornerstone’s projection is exactly that: a projection of the payor mix it may experience in its new program. Significantly, Cornerstone did not commit to a 6% Medicaid/indigent payor mix within its CON conditions, and therefore that level of Medicaid/indigent admissions is unenforceable. Rather than the applicants’ projected payor mixes, what is significant are plans to reach out to the Medicaid and charity care population to improve their knowledge about, and use of, hospice services. Suncoast’s application presents a specific plan for doing exactly that. All of the applicants have proposed programs for outreach to financially disadvantaged communities within Hillsborough, and none of the applicants are entitled to preference under this criterion. Rule 59C-1.0355(4)(e) – Preferences for a New Hospice Program.Preference shall be given to an applicant who has a commitment to serve populations with unmet needs. Each applicant expressed a commitment to provide hospice services to populations with unmet needs. And to a greater or lesser extent, each applicant conducted an analysis of the specific populations with unmet needs in Hillsborough. No evidence was presented to establish that care for hospice patients with the varying identified conditions or within the various demographic groups is not available in Hillsborough. Rather, the evidence demonstrates that patients are not accessing hospice services, despite their availability to residents of Hillsborough. Among the three applicants, Suncoast best demonstrated a plan for enhancing access to quality hospice care for these populations, as well as a track record of past experience with enhancing access to quality hospice services for these populations. Preference shall be given to an applicant who proposes to provide the inpatient care component of the Hospice program through contractual arrangements. Each of the applicants propose to provide the inpatient care component of the hospice program through contractual arrangements, and presented testimony regarding their ability to do so. Likewise, all three applicants presented letters from entities in Hillsborough regarding their purported willingness to contract for the inpatient care component of the hospice program. However, no applicant presented non-hearsay evidence from any entity within Hillsborough regarding a willingness to contract for the inpatient care component of the hospice program. The applicants are on equal footing in terms of the ability to contract for inpatient care. Notwithstanding its intention to provide the inpatient component of the hospice program through contractual arrangements, VITAS conditioned its application on applying for a CON to construct an inpatient hospice house within the first two years of operation. However, VITAS presented no evidence to establish the need for an additional inpatient hospice house in SA 6A, and no evidence was presented to demonstrate that an inpatient hospice house is a more cost-effective alternative to contracted beds. The proposals by Cornerstone and Suncoast to contract for the inpatient component of the hospice program represent a better use of existing resources than that of VITAS, which will incur the expense of a freestanding hospice house for its proposed program. On balance, this preference weighs equally in favor of Cornerstone and Suncoast, and against VITAS. Preference shall be given to an applicant who has a commitment to serve patients who do not have primary caregivers at home; the homeless; and patients with AIDS. Each applicant presented evidence of a commitment to serve patients who do not have primary caregivers at home; the homeless; and patients with AIDS. However, the programs proposed by Suncoast to address the needs of these populations are more precisely targeted than those of the other applicants, and Suncoast is therefore entitled to preference. Proposals for a Hospice service area comprised of three or more counties. SA 6A is comprised of a single county, Hillsborough. This preference is therefore not applicable in this case. Preference shall be given to an applicant who proposes to provide services that are not specifically covered by private insurance, Medicaid, or Medicare. All three applicants propose to provide services in Hillsborough that are not specifically required or paid for by private insurance, Medicaid, or Medicare. The added services beyond those covered by private insurance, Medicaid, or Medicare as proposed by the applicants differ slightly, but on balance, weigh equally in favor of approval of each applicant. Rule 59C-1.0355(5) – Consistency with Plans. Each of the applicants conducted an analysis of the needs of Hillsborough residents and included evidence within their applications and through testimony at final hearing regarding the consistency of their respective plans with the needs of the community. However, Suncoast’s evaluation of the needs specific to Hillsborough was more thorough, and its application is best targeted at meeting the identified needs. Rule 59C-1.0355(6) – Required Program Description. Each applicant provided a detailed program description in its CON application. The elements of the program descriptions are discussed above in the context of the various statutory and rule criteria. Ultimate Findings Regarding Comparative Review Suncoast conducted the most comprehensive evaluation of the end of life care needs of Hillsborough residents, and developed targeted programs and services to address those needs. Those programs and services are identified as CON conditions, and are enforceable by AHCA. The depth and breadth of Suncoast’s commitments to the residents of Hillsborough exceed those of Cornerstone and VITAS. Unlike the other applicants, Suncoast offers needed programs which are not currently available in Hillsborough, including a dedicated pediatric hospice program, and enhanced transportation options for persons living in rural areas of the county. Suncoast and Cornerstone are comparable in terms of history of providing quality care. VITAS is inferior in this regard, as evidenced by the numerous confirmed deficiencies in recent years. Undoubtedly, VITAS has redoubled its efforts to improve quality in response to the numerous confirmed deficiencies and complaints, but based upon the record in this case, Suncoast and Cornerstone have a better history of providing quality care. Suncoast would be able to commence operations in SA 6A more quickly than Cornerstone or VITAS. It has connections with other healthcare providers in Hillsborough and could easily transition to that adjacent geographic area. All three proposals would enhance access to hospice services in the county, but Suncoast’s program would be the most effective at enhancing access. A careful weighing and balancing of the statutory review criteria and rule preferences favors approval of the Suncoast application, and denial of the Cornerstone and VITAS applications. Upon consideration of all the facts in this case, Suncoast’s application, on balance, is the most appropriate for approval.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a final order be entered approving Suncoast Hospice of Hillsborough, LLC’s, CON No. 10605 and denying Cornerstone Hospice and Palliative Care, Inc.’s, CON No. 10602 and VITAS Healthcare Corporation of Florida’s, CON No. 10606. DONE AND ENTERED this 26th day of March, 2021, in Tallahassee, Leon County, Florida. COPIES FURNISHED: D. Ty Jackson, Esquire GrayRobinson, P.A. 301 South Bronough Street, Suite 600 Post Office Box 11189 Tallahassee, Florida 32302 Seann M. Frazier, Esquire Parker, Hudson, Rainer & Dobbs, LLP Suite 750 215 South Monroe Street Tallahassee, Florida 32301 Kristen Bond Dobson, Esquire Suite 750 215 South Monroe Street Tallahassee, Florida 32301 Marc Ito, Esquire Parker Hudson Rainer & Dobbs, LLP 215 South Monroe Street, Suite 750 Tallahassee, Florida 32301 S W. DAVID WATKINS Administrative Law Judge 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 26th day of March, 2021. Julia Elizabeth Smith, Esquire Agency for Health Care Administration Mail Stop 3 2727 Mahan Drive Tallahassee, Florida 32308 Stephen A. Ecenia, Esquire Rutledge, Ecenia & Purnell, P.A. Suite 202 119 South Monroe Street Tallahassee, Florida 32301 Gabriel F.V. Warren, Esquire Rutledge Ecenia, P.A. 119 South Monroe Street, Suite 202 Post Office Box 551 Tallahassee, Florida 32301 Elina Gonikberg Valentine, Esquire Agency for Health Care Administration Mail Stop 7 2727 Mahan Drive Tallahassee, Florida 32308 Amanda Marci Hessein, Esquire Rutledge Ecenia, P.A. Suite 202 119 South Monroe Street Tallahassee, Florida 32301 Allison Goodson, Esquire GrayRobinson, P.A. Post Office Box 11189 Tallahassee, Florida 32302 Maurice Thomas Boetger, Esquire Agency for Health Care Administration 2727 Mahan Drive, Mail Stop 3 Tallahassee, Florida 32308 Richard J. Shoop, Agency Clerk Agency for Health Care Administration 2727 Mahan Drive, Mail Stop 3 Tallahassee, Florida 32308 James D. Varnado, General Counsel Agency for Health Care Administration 2727 Mahan Drive, Mail Stop 3 Tallahassee, Florida 32308 Thomas M. Hoeler, Esquire Agency for Health Care Administration 2727 Mahan Drive, Mail Stop 3 Tallahassee, Florida 32308 Jonathan L. Rue, Esquire Parker, Hudson, Rainer and Dobbs, LLC Suite 3600 303 Peachtree Street Northeast Atlanta, Georgia 30308 D. Carlton Enfinger, Esquire Agency for Health Care Administration Mail Stop 7 2727 Mahan Drive Tallahassee, Florida 32308 Simone Marstiller, Secretary Agency for Health Care Administration 2727 Mahan Drive, Mail Stop 1 Tallahassee, Florida 32308 Shena L. Grantham, Esquire Agency for Health Care Administration Building 3, Room 3407B 2727 Mahan Drive Tallahassee, Florida 32308
The Issue The issue is whether Respondent properly determined that there is a numeric need for one additional hospice program in health planning Service Area 2B for the January 2003 planning horizon pursuant to a revised fixed need pool projection.
Findings Of Fact AHCA is the state agency that is responsible for administering the CON program and laws in Florida. In conjunction with these duties, AHCA determines, on a semi-annual basis, the net numeric need for new hospice programs pursuant to Rule 59C-1.0355(4), Florida Administrative Code (the Rule). AHCA then publishes such need in the Florida Administrative Weekly. Community volunteers began organizing BBH in 1981. After its incorporation in 1983 as a not-for-profit community organization, BBH commenced operation under a license that authorized it to provide hospice services only in SA 2B, consisting of the following eight counties: Franklin, Gadsden, Jefferson, Leon, Liberty, Madison, Taylor, and Wakulla. On average, BBH serves 162 patients per day. Its main office is located in Tallahassee, Florida, but it operates the following branch offices and/or community centers: Franklin County at Carrabelle, Florida; Gadsden County at Quincy, Florida; Jefferson County at Monticello, Florida; Madison County at Madison, Florida; and Taylor County at Perry, Florida. BBH also operates a twelve-bed inpatient facility, The Hospice House, located in Tallahassee, Florida. Covenant, formerly known as Hospice of Northwest Florida, is a not-for-profit community organization that was founded by a committee in 1982. Covenant began treating its first patients in 1984 and is currently licensed to provide hospice services in SA 1 and SA 2A. The following counties are located in SA 1: Escambia, Santa Rosa, Okaloosa, and Walton. The following counties are located in SA 2A: Holmes, Washington, Jackson, Calhoun, Bay and Gulf. Covenant also is licensed to provide hospice services in 26 southern Alabama counties. On average, Covenant serves 429 Florida hospice patients per day. Its main office and its eight-bed inpatient facility are located in Pensacola, Florida. Covenant operates the following Florida branch offices: Okaloosa County at Niceville, Florida; Jackson County at Marianna, Florida, and Bay County at Panama City, Florida. Covenant operates Florida community centers in Okaloosa County at Crestview, Florida, and in Walton County at Destin, Florida. The Hospice CON Rule and Need Methodology The Rule establishes criteria and standards for assessing the need for new hospice programs. The Rule includes a numeric need formula for determining whether a new hospice is needed in a particular SA. In this case, AHCA used the following data sources to produce need projections: (a) population projections from the Executive Office of the Governor; (b) mortality data as reported in the applicable Florida Vital Statistics Annual Report from the Department of Health's Office of Vital Statistics; and (c) utilization data based on the number of hospice patients served by all licensed hospice programs in the SA as reported by licensed hospice programs. Under the Rule, numeric need is demonstrated if the projected number of unserved patients who would elect a hospice program is 350 or greater. The Rule targets 350 as the minimum number of patients that should be admitted to a hospice program in a 12-month period. Pursuant to the Rule, AHCA calculates need for additional facilities and services every six months or twice annually. The numeric need formula contained in the Rule is a conditional formula, which works as follows: If HPH minus HP is equal to or greater than 350, then a net numeric need exists. HPH is the projected number of patients who will elect hospice services in a particular SA during the 12-month period beginning in the planning horizon. Specifically, HPH is the sum of (U65C X P1) + (65C X P2) + (U65NC X P3) + (65NC X P4). U65C is the projected number of SA resident cancer deaths under age 65. U65C is calculated by dividing the current annual number of cancer deaths under age 65 by the current annual total of resident deaths, and multiplying the result by the SA's projected annual total of resident deaths at the planning horizon. P1 is the projected proportion of U65C who will be hospice patients. P1 is calculated by dividing the current 12-month statewide total of hospice admissions under age 65 with cancer by the current statewide total of deaths under age 65 from cancer. 65C is the projected number of SA resident cancer deaths age 65 and over. 65C is calculated by dividing the current annual number of cancer deaths age 65 and over by the current annual total of resident deaths, and multiplying the result by the SA's projected annual total of resident deaths at the planning horizon. P2 is the projected proportion of 65C who will be hospice patients. P2 is calculated by dividing the current 12-month statewide total of hospice admissions age 65 and over with cancer by the current statewide total of deaths age 65 and over from cancer. U65NC is the projected number of SA resident deaths under age 65 from all causes except cancer. U65NC is calculated by dividing the current annual number of deaths under age 65 from all causes except cancer by the current annual total of resident deaths, and multiplying the result by the SA's projected annual total of resident deaths at the planning horizon. P3 is the projected proportion of U65NC who will be hospice patients. P3 is calculated by dividing the current 12-month total of hospice admissions under age 65 with diagnoses other than cancer by the current statewide total of deaths under age 65 from causes other than cancer. 65NC is the projected number of SA resident deaths age 65 and over from all causes except cancer. 65NC is calculated by dividing the current annual number of deaths age 65 and over from all causes except cancer by the current annual total of resident deaths, and multiplying the result by the SA's projected annual total of resident deaths at the planning horizon. P4 is the projected proportion of 65NC who will be hospice patients. P4 is calculated by dividing the current 12-month statewide total of hospice admissions age 65 and over with diagnoses other than cancer by the current statewide total of deaths age 65 and over from causes other than cancer. In other words, HPH is a projection of the number of persons who will elect hospice care in a particular SA, irrespective of their normal place of residence. It is a compilation of projected hospice usage for four age and diagnostic classes. Thus, the need methodology and need projection is specific to the particular demographics and diagnostic experiences of a SA. HP represents the number of admissions to hospice programs serving a SA during the most recent 12-month period ending on June 30 or December 31. The number is derived from reports on standardized forms submitted to AHCA by licensed hospice programs every six months. The Rule uses a statewide use rate as a normative standard for each age and diagnostic category. The use rate is a ratio of the hospice admissions in a particular age and diagnostic class to deaths in the same age and diagnostic class for the state as a whole. When applied to any particular hospice SA, the use rate projects what the hospice admissions should be in that SA, based upon the performance of the state as a whole, rather than the actual historical penetration rate in the SA. The need methodology thus provides that the hospice penetration rate in a SA should equal the state average penetration rate. The need methodology does not assume that the level of hospice services being provided in a particular area is sufficient to meet the needs of the area. This is appropriate because hospice is a fast-growing and relatively new service that has been widely available only since the early 1980s. Not only has there been a rapid increase in hospice penetration rates but also there is a wide variation in hospice penetration from SA to SA. The numeric need formula set forth in the Rule provides a reasonable and appropriate methodology to project need for additional hospice services. In this case, AHCA's procedures for collecting and analyzing data and for calculating numeric need were consistent with the Rule. Publication of the Fixed Need Pools AHCA initially published the "Florida Need Projections for Hospice Programs: Background for Use in Conjunction with the July 2001 Batching Cycle for the January 2003 Hospice Planning Horizon." The initial publication resulted a numeric need in SA 2B of 340. In other words, there was no net numeric need for an additional hospice program in SA 2B. AHCA subsequently published a revision to the fixed need pool after it was notified of some errors in the data used in the numeric need calculation. The errors principally involved AHCA's failure to update the population data from a previous batching cycle. The necessity of a revised publication created an opportunity for hospices to submit revised admissions data, which was then incorporated into the second computations of the need methodology. Several hospices took advantage of this opportunity. Using the revised data, AHCA determined that the projected number of hospice admissions in SA 2B would be 1209 patients (HPH = 1209). AHCA also determined that the number of patients served by SA 2B's licensed provider, BBH, for the relevant period was 858 patients (HP = 858). The difference between these calculations was 351, indicating a need for an additional hospice program in SA 2B. AHCA published the revised fixed need pool determination on August 17, 2001. Counting Admissions At issue here is the definition and use of the term "admissions" on AHCA's semiannual utilization report form (report form). Item 1 on the report form indicates that hospice providers should show the "[n]umber of patients admitted to your program (unduplicated) for the following categories " The reporting block also indicates that the data to be included are "New Patients Admitted." The term "unduplicated" means admissions in the reporting period, exclusive of those from a prior reporting period. In other words, the same admission is not counted and reported twice. For example, a patient initially admitted in one reporting period, subsequently discharged, and readmitted in the following reporting period should be reported as an admission in the prior reporting period and as an admission in the following reporting period. Likewise, a patient who initially is admitted, discharged, and subsequently readmitted in the same reporting period is counted as two admissions. This is true whether the second admission occurs in the same SA or in a different SA and whether the second admission is to the same or a different hospice provider. The second admission relates to the same patient but is counted as a "new patient admitted" each time the patient is admitted as long as the same admission is not counted twice on a report form. The counting of unduplicated admissions is consistent with the language of the Rule, which requires hospice providers to "indicate the number of new patients admitted during the six- month period . . . ." It also is consistent with the language of the Rule that requires the report form to show "[t]he number of admissions during each of the six months covered by the report by service area of residence." The "service area of residence" is not defined by the Rule. AHCA interprets the term to mean the location of patients when they are admitted regardless of the place that they consider their permanent residence. AHCA's interpretation of the term "service area of residence" is reasonable and appropriate. The fact that admissions are counted for each SA regardless of a patient's normal place of residence, while resident death data is derived from information contained in death certificates showing the deceased person's permanent residence (no matter where the death occurred) does not change this result or improperly skew the hospice use rates. In the course of treatment, a hospice patient may account for two or more admissions to the same or another hospice, in the same or another service area, during a period of time that covers two reporting periods. This could happen for a number of reasons, including but not limited to the following: (a) a patient may temporarily decide that he or she no longer desires hospice services resulting in an admission, a discharge, and second admission to the same or another hospice in the same or another SA; (b) a patient may decide to relocate and receive services in another SA with the same or another hospice resulting in separate admissions in both SAs; and (c) a patient may elect to transfer from one hospice to another hospice in the same SA resulting in a separate admission for each hospice. All Florida hospices, including BBH, count a patient as having generated two admissions when the patient is admitted, discharged, and readmitted to the same hospice in the same SA. They also count a patient as having generated a second admission when the patient transfers or relocates to their hospice from another hospice in the same or another SA. AHCA's report form requires hospices that serve multiple SAs to separate their admissions by SA to enhance the verisimilitude of the counts. Twelve hospice providers, including Covenant, serve multiple SAs in Florida. Under the Rule, multiple SA providers, like Covenant and unlike BBH, count admissions when a patient transfers from the provider's program in one SA to the same provider's program in another SA. The ability to count an admission in both SAs when a patient transfers from one SA to another SA but continues to receive services from the same hospice, does not result in impermissible "double counting" or give multiple SA providers a competitive edge. To the contrary, it is consistent with AHCA's interpretation of an unduplicated admission. More importantly, AHCA's methodology of counting of such admissions is consistent with the method that Medicare uses to count admissions and with the way AHCA counts admissions in determining numeric need for nursing homes, hospitals, and open-heart programs. For the reporting period at issue here, Covenant reported zero admissions based on transfers of its patients between SA 1 and SA 2A. Moreover, there is no persuasive evidence that allowing any multiple SA provider to count transfers of its patients from one of its SAs to another of its SAs as two separate admissions has adversely impacted the fixed need pool determination in this case. Covenant is not the only hospice provider in SA 1 and SA 2A. No doubt, some patients in one of Covenant's SAs transferred to and from Covenant and the alternate providers in SA 1 and SA 2A or other Florida SAs with no corresponding death being recorded in one of Covenant's SAs. Covenant surely served some Alabama patients who sought hospice care in Florida but whose deaths were not counted as resident deaths in any Florida SA. At least for the calendar years 1999 and 2000, Covenant experienced a net in-migration of patients while BBH experienced a net out-migration of patients for the same periods. Even so, there is no persuasive evidence that in- migration and out-migration of patients has affected the validity of the numeric need at issue in this proceeding. AHCA consistently has counted admissions in this manner since the Rule was adopted and implemented. Counting admissions by "service area of residence" as interpreted by AHCA ensures that all patients served are counted, even those who are homeless or have a permanent residence in another state. AHCA's interpretation of an admission based on "service area of residence" also is consistent with Section 400.601(6), Florida Statutes, which provides that hospice services may be provided in "a place of temporary or permanent residence used as the patient's home . . . ." Thus, a patient's residence could be a private home, an assisted living facility, a nursing home, or a hospital regardless of the location of the patient's legal or permanent residence. The State of Florida has an interest in knowing how much hospice care is provided in each SA. The application of the Rule promotes that interest because HPH projects the number of patients in a particular SA who will choose hospice care in the applicable time frame. HP is the number of patients admitted to hospice programs during the most recent 12-month period. HPH and HP measure the utilization of hospice care in a SA and not the number of residents of an SA who will elect hospice care or who are admitted to hospice care. In calculating the numeric need in this case, the number of admissions was based on data for the year ending June 2001. The resident deaths were based on data for the period ending December 2000. The time periods do not match because the Rule requires AHCA to use the most recent mortality data from the Department of Health's Office of Vital Statistics. The time periods are never the same and can differ from six months to one year. Thus, there is no intent under the Rule to have a one-to-one correspondence between the deaths that are used in determining the P factors and the admissions that are multiplied by the factors. Every SA in the state is treated consistently. No SA is disadvantaged by this characteristic of the Rule's need methodology. The batching cycle at issue here is the only one since the Rule was implemented that showed a fixed need for another hospice program in SA 2B. Until now, AHCA has never preliminarily approved any applicant where the net numeric need was only 351. The numeric need projection made in April 2002 showed no fixed need in SA 2B for another hospice program. None of these facts serve to undermine the validity of AHCA's determination of numeric need in this case. The Revised Fixed Need Pool Determination The initial fixed need pool projection published by AHCA did not indicate that there was a numeric need for an additional hospice in SA 2B. However, the initial publication was based on incorrect population projections. AHCA published a revised fixed need pool projection based, in part, on the updated and most current population data. That revision alone would have resulted in a numeric need for an additional hospice program in SA 2B, i.e. HPH - HP equaled 350. However, other corrections also were made based on revisions to semiannual utilization reports of several hospices. BBH's revised report form increased its HP number by four. Another hospice, Hospice of Southwest Florida, reported a substantial revision. The total revisions resulted in a numeric need for one additional hospice program in SA 2B because HPH - HP equaled 351. The revised fixed need pool determination was correctly calculated in accordance with AHCA's application and interpretation of all rules relating to fixed need pool determination. AHCA's interpretation and application of the rules is reasonable and appropriate. Therefore, the fixed need pool projection at issue here is valid and correct. As discussed below, there is no persuasive evidence that BBH over-reported its admissions. BBH's Reported Admissions An admission consists of several components: (a) a physician's diagnosis and prognosis of a terminal illness; (b) a patient's expressed request for hospice care; (c) the informed consent of the patient; (d) the provision of information regarding advance directives to the patient; and (e) performance of an initial professional assessment of the patient. At that point, the patient is considered admitted. A patient does not have to sign an election of Medicare benefits form for hospice care prior to being deemed admitted. BBH reported 858 admissions for the July 2000 through June 2001 reporting period. These admissions included patients who had completed the admission process outlined above. For accounting and billing purposes only, BBH separates its admissions into patients who have authorized the election of Medicare benefits and those who have not made that election. For the latter group, BBH uses the acronym WAP as a billing code. BBH provides WAP patients with services but does not bill them for those services because BBH is unable to report them to Medicare for reimbursement. BBH does not bill patients for services that it has no intention of collecting. In fact, BBH's billing department initially logs all patients in as WAPs. BBH's admission policy states that patients who will not be accepting services immediately should be entered as a WAP with reasons and follow-up dates to initiate regular services. The admission specialist at BBH enters a patient as a WAP then gets the attending physician's signature on the interdisciplinary care plan and certification of terminal illness. The admission specialist also requests the patient's medical record and completes the other admission steps. The WAP designation is not removed until the admission process is complete and the patient has elected the Medicare benefit. The WAP patient is not counted as an admission for purposes of reporting to AHCA until the admission process is complete. Occasionally, a WAP patient dies before the admission process is complete. In that case, the patient is not counted as an admission. Sometimes a WAP patient dies after completing the admissions process but before electing the Medicare benefit or receiving any additional hospice services. It is not necessary for a hospice to develop a plan of care in order for a patient to be considered admitted. An admitted patient has a right to choose or refuse additional services. In such a case, the patient is still counted as an admission for purposes of reporting to AHCA. BBH's practice of including WAP patients who have completed the admission process in its count of admissions is consistent with AHCA's interpretation of the Rule. AHCA's interpretation of the Rule is reasonable and appropriate in this regard. The fact that 10 percent of BBH's admissions are WAP patients while Covenant has no such patients does not change this result. BBH's financial department also is responsible for submitting reports to the Department of Elder Affairs (DEA). Therefore, BBH has filed reports with DEA consistent with its Medicare reports and has not included the WAP patients.
Recommendation Based on the foregoing Findings of Facts and Conclusions of Law, it is RECOMMENDED: That AHCA enter a final order determining the fixed need pool for SA 2B for the January 2003 planning horizon to be one. DONE AND ENTERED this 7th day of November, 2002, in Tallahassee, Leon County, Florida. SUZANNE F. HOOD 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 7th day of November, 2002. COPIES FURNISHED: J. Robert Griffin, Esquire J. Robert Griffin, P.A. 2559 Shiloh Way Tallahassee, Florida 32308 Michael O. Mathis, Esquire Agency for Health Care Administration 2727 Mahan Drive Fort Knox Building Three, Suite 3431 Tallahassee, Florida 32308-5403 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 Lealand McCharen, Agency Clerk Agency for Health Care Administration 2727 Mahan Drive, Mail Stop 3 Tallahassee, Florida 32308 Valda Clark Christian, General Counsel Agency for Health Care Administration 2727 Mahan Drive Fort Knox Building, Suite 3431 Tallahassee, Florida 32308
The Issue The issue presented is whether Petitioner's application for a certificate of need to establish a hospice with a six (6) bed component to be located in Dade County, Florida, should be approved.
Findings Of Fact The Parties Since 1975, Petitioner, Comprehensive Home Health Care, Inc., has been serving the elderly population of Dade County, primarily working with the Hispanic community to provide skilled nursing services and the services of physical therapy, speech pathology, occupational therapy, home health aide and medical social services. Petitioner currently provides its services as a home health care agency licensed by the Department. Respondent, Department of Health and Rehabilitative Services (Department), is a state agency which is responsible for administering Section 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. Petitioner currently does not participate in an approved hospice program. Two hospice programs are licensed by the Department to serve Dade County: Catholic Hospice, Inc., and Hospice, Inc. Neither entity chose to intervene in the instant proceeding. The Application On or about March 27, 1989, Petitioner filed an application with the Department for a CON to implement a six (6) bed hospice service in Dade County, Florida, with no capital expenditure. The application was designated as CON Number 5871. No public hearing was requested. After the submittal of an omissions response, the Department deemed the application complete on May 16, 1989. The application was reviewed as the sole applicant in its batching cycle After review of the application, the Department issued its intent to deny the application in its state agency action report (SAAR) on June 29, 1989. In the application, Petitioner proposes to establish a not-for-profit, full service hospice which includes a six (6) bed inpatient component with beds to be located in the Northwest, Central West and Southwest Dade County, Florida, in three of the following hospitals: AMI Kendall Regional Medical Center Coral Gables Hospital North Gables Hospital Palmetto Hospital Pan American Hospital Westchester Hospital In addition to relying on its application as meeting pertinent statutory and rule criteria- Petitioner asserts that the application demonstrates mitigating and extenuating circumstances which would allow the approval of the application even if the numeric need prescribed by rule were not demonstrated by the application. Further, the application states that Hospice, Inc., as the only provider in Dade County, has a monopoly on the market in Dade County. Petitioner also intends to concentrate on providing service to the Hispanic population and those individuals suffering from AIDS. The application was not presented in the format which the Department usually receives applications for certificate of need. The usual format was not made part of the record in this proceeding. However, the application, as supported at hearing, shows Petitioner's desire to provide hospice services to the residents of Western Dade County. The witnesses testifying on behalf of Petitioner were Teresa Corba Rodriguez, Roger Lane and Rose Marie Marty. Ms. Rodriguez is an experienced registered nurse who worked for Hospice, Inc., from November, 1987, through June, 1989. She is currently employed at Victoria Hospital. Mr. Lane is the director of information and referral at Health Crisis Network in Miami, and Ms. Marty is the Vice President of Petitioner. The Department's primary bases for issuance of its intent to deny the application were the lack of need for additional inpatient hospice beds, and the failure to document sufficiently certain statutory and rule criteria, as discussed in the following paragraphs. The Department offered the testimony of Elizabeth Dudek, who is an employee of the Department, and is an expert in health planning. Compliance with Statutory Criteria In its proposed recommended order, the Department acknowledged that only six statutory criteria in Section 381.705(1), Florida Statutes (1987) are at issue, in addition to Rule 10-5.011(1)(j), Florida Administrative Code. State Health Plan Although the State Health Plan was not offered into evidence, the Department through testimony and the SAAR indicates that the Application conforms to the State Health Plan. Local Health Plan The applicable Local Health Plan is represented by the plan entitled, "1988 District XI Certificate of Need Allocation Factors", adopted on March 3, 1988. This plan, as it relates to hospice services, is composed of a Subsystem Description, a statement of Issues and of Recommendations. The SAAR chose to base its determination of Petitioner's compliance with the local health plan on an evaluation of whether the application fulfilled the several preferences within the recommendations portion of this plan. In so doing, the Department determined in its SAAR that the Petitioner was in partial compliance. The first preference reads as follows "Preference should be given to applicants having a workable plan for training and maintaining a corps of volunteers." Petitioner demonstrated its consistency with this preference by utilizing volunteers who are bilingual and who will assist in performing the clerical, visitation, counseling, public relations and community awareness aspects of the program. Petitioner also intends to rely on the volunteer efforts of the servicing hospital, churches, schools, community functions, educational efforts and media to enhance community awareness about the program. The second preference reads as follows, "Preference should be given to those applicants who propose to provide care for the indigent and medically needy." Petitioner demonstrated its consistency with this preference by proposing to provide ten (10) percent of its total patient day for Medicaid recipients, and five (5) percent of its total patient days to the medically indigent, at least, during the first year of operation. The third preference reads as follows, "Preference should be given to those applicants who propose a commitment to serving persons with AIDS." Petitioner demonstrated its consistency with this preference by stating both in the application and through the testimony of its witnesses that it intends to serve the ever-increasing number of patients diagnosed with AIDS. Further, it is one of Petitioner's long range objectives to seek funding sources and grants to provide additional services to AIDS patients. The fourth preference reads as follows: "Preference should be given to those applicants who can demonstrate or have entered contractual agreements with other community agencies to ensure a continuum of care far those in need." Petitioner's application is consistent with this preference by its claim that the hospitals set forth in paragraph 6 intend to participate in the program, and should supplement the home health care system which Petitioner currently maintains. However, no competent proof was offered in support of the proposed arrangements. The fifth preference reads as follows: "Preference should be given to those applicants who have developed specialized innovative services to special sub-population in need within the District." Petitioner demonstrated its partial consistency with this preference by showing its intent to service patients with AIDS, the elderly and the Hispanic sub-populations of Dade County. However, Petitioner failed to show that the service it would provide was different from the service provided by the existing hospices in Dade County, other than the intended geographical location of Petitioner's proposal. Siting in Western Dade County on its own was not shown to be a specialized, innovative offering. The sixth preference reads as follows: "Preference should be given to those applicants who will address specific needs of the culturally diverse minority populations in the District." Petitioner demonstrated its consistency with this preference by showing that it intends to serve the elderly, ethnic minorities, victims of AIDS, and the indigent populations of Dade County. Each of the groups Petitioner has singled out are indeed minority population groups within Dade County, and are elements of, and contribute to the cultural diversity of the area. The seventh preference reads as follows: "Preference should be given to those applicants who propose to have health care personnel on call during night and weekend hours." Petitioner demonstrated its consistency with this preference by showing its intent to provide for home care up to24 hours a day, 7 days a week, to control its patients' symptoms and respond to emergencies as needed. The eighth preference reads as follows: "Preference should be given to applicants who build quality assurance methods into the proposed program." Petitioner demonstrated its consistency with this preference by expressing its plan to install a quality assurance program which will include clinical records review by a registered nurse, ongoing clinical record review, and utilization review. On balance, the Petitioner's application is consistent with the Local Health Plan. Availability, Accessibility and Extent of Utilization Currently there are two hospices that serve the District. The two are located in the Eastern portions of the County. Petitioner intends to locate its beds in the Northwest and Southwest portions of Dade County, whereas the existing beds are housed in the Northeast and Southeast parts of the County. Thus, Petitioner's proposed beds are more geographically accessible to the residents of Western Dade County, which the application asserts is the fastest growing area of the County. By providing beds in the Western portion of the District, and in locations different from the existing beds, Petitioner would make the hospice services in the District more geographically accessible. Hospice, Inc., is currently licensed for twenty- five (25) beds, of which only between fourteen (14) to sixteen (16) are operable. The record is silent as to the availability of the thirty (30) beds approved for Catholic Hospice, Inc. The record does not indicate why the approved beds are not in service, or how the beds requested by Petitioner would improve the availability of hospice service in the District. Quality of Care, Efficiency, Appropriateness and Adequacy The Application suggested that patients suffering from acquired immune deficiency syndrome (AIDS) are underserved, and that Petitioner will fulfill that need. Testimony offered by Petitioner sought to establish that some patients suffering from AIDS, and those of Hispanic origin, had been refused service by the existing hospices, and made vague reference to some credit problems which Hospice, Inc., had experienced If proven, the statements might impact on the quality of care, efficiency, appropriateness and adequacy; however, without a more direct showing this testimony is not considered, substantial, or credible. As to other references concerning the quality of care, efficiency, appropriateness and adequacy, the record is again silent. Availability and Best Use of Resources Petitioner currently operates as a home health care agency. The hospice program would be an extension of the existing service offered by Petitioner and targeted to serve the Hispanic, elderly and terminally ill patients within the District, utilizing existing and voluntary personnel. Without demonstrating more about the current operations, and proof of the market demand for the proposed services, a determination of the best use of resources cannot be made. Financial Feasibility The application projects a financially sound forecast in the short-term through 1991 starting with $75,000 available. The Department through testimony and in the SAAR recognized the short- term financial feasibility of the project. However, the record is silent on financial projections past 1991. Accordingly, a determination of the long-term financial feasibility of the proposal has not been shown. Effects on Competition Petitioner asserted that eligible patients were not being served by the existing facilities, as discussed in above paragraph 24. To the extent these underserved patients exist and were to be provided for by the proposed program, the offering might have an impact on the costs of providing health services in the District. However, as discussed in paragraph 24, the evidence presented did not support Petitioner's claim. Compliance with Rule Criteria Rule 10-5.011(1)(j), Florida Administrative Code, sets forth the Department's methodology for calculating the numeric need for hospice services within a particular service area. Dade County is the pertinent service area for the evaluation of the application. The methodology provides a formula by which the total number of hospice patients for the planning horizon, in this case January, 1991, are to be estimated. The formula takes the cancer mortality rate in the district, and factors in a certain percentage to allow for any other types of deaths, and then factors in considerations of both long-term, and short-term hospital stays to yield the projected number of beds which will be needed in the horizon year. For the batching cycle in which Petitioner's application was reviewed, the projected bed need is fifty-nine (59). From that figure, the number of approved beds is subtracted. At the time Petitioner submitted its letter of intent, the inventory of licensed beds in the District indicated that Catholic Hospice, Inc. was approved for thirty (30) beds, and Hospice, Inc., for twenty-five (25) beds. In other words, the inventory of licensed approved beds applicable to this application is fifty-five (55) beds. Thus, the numeric need for the pertinent batching cycle is four (4) beds. As referenced in paragraph 5, Petitioner requested approval for six (6) hospice beds. The application contains no request for approval of less than six (6) beds, nor did Petitioner raise the issue of a partial award. The Department does not normally approve an application when numeric need is not met unless, in the instance of a request for hospice services, mitigating and extenuating circumstances are proven by demonstrating the following: (1) documentation that the population of the service area is being denied access to existing hospices because the existing hospices are unable to provide service to all persons in need of hospice care and service, and, (2) documentation that the proposed hospice would foster cost containment, discourage regional monopolies and promote competition for all providers in the health service area. Hospice Inc., frequently maintains a waiting list for its hospice beds; however, the reason or reasons for the list was not demonstrated. The census of the hospice beds at Catholic Hospice, Inc., was not discussed at the hearing, or in the application. All of Petitioner's witnessed testified that they believed that the existing hospices were unavailable to potential patients in need of hospice service who lived in the Western portion of the District because the existing hospices were located in the Eastern portion of the District. The travel time from the Southern portion of the District to the Northernmost existing facility can require up to two and one-half hours. The witnesses asserted that the patients and their families do not wish to travel for that period of time to receive the services or to visit patients in the existing hospices. However, no patient or family member testified that the travel time or location of the existing hospice were a hindrance to care. The testimony presented concerning the patients and their families is not competent or corroborated by competent evidence. Further, Petitioner's witnesses asserted that doctors who had treated patients eligible for hospice service had told the witnesses that the physicians hesitated to refer the patients to the existing hospices because the doctors might not have staff privileges at the hospitals which house the existing beds. Again, no physicians were available to corroborate the statements of the witnesses or offer competent testimony in support of these assertions. Although Hospice, Inc., is Licensed for twenty- five (25) beds, it has chosen to operate only between fourteen (14) to sixteen (16) of those beds. The reasons Hospice, Inc., has chosen not to operate all of its licensed beds were not offered in the record. The District has the largest number of AIDS diagnosed cases of any county in Florida. The number of cases in the District is doubling, more or less on a yearly basis. The incidence of AIDS cases adds to the number of person in need of hospice care in the District. Rule 10-5.011(1)(j) does not single out AIDS-related deaths in its calculation; however, deaths from other than cancer are factored into the formula. Again, no competent testimony was presented that the existing hospices were unable to serve patients suffering from AIDS. The methodology set out in Rule 10-5.011(1)(j) determines the initial need for hospice within the District. Once a hospice has been approved, it can increase the number of beds that it has without certificate of need approval as long as the hospice keeps a patient mix of twenty (20) percent inpatient to eighty (80) percent outpatient. The factors asserted in findings 33-37 would go to show mitigating and extenuating circumstances, if proven by competent substantial proof. However, from the evidence presented, it cannot be determined that the existing hospices are unable to provide service to those in need of hospice care. The evidence presented to document that the proposal would foster cost containment, discourage regional monopolies, and promote competition is discussed in paragraphs 25-28 above, and is lacking in substance to show the premise raised here.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is: RECOMMENDED that the Department of Health and Rehabilitative Services issue a Final Order which denies CON Application Number 5871. DONE AND ENTERED in Tallahassee, Leon County, Florida,, this 13th day of February, 1990. JANE C. HAYMAN 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 February, 1990.
The Issue The issue is whether certificate of need No. 4370 should be issued to the Visiting Nurse Association of Broward County to operate a hospice program, which will include five inpatient beds. STIPULATON CONCERNING APPLICABLE STATUTES The joint stipulation filed by the parties indicates that not all statutory criteria for evaluating certificate of need applications for hospices apply to this case. Section 381.494(6)(c)6, 10, and 11, Florida Statutes, do not apply. Section 400.601, et. seq. Florida Statutes, and Rules 10A- 5.001(1)(j), 10- 5.011(1)(b), and Rule 10A-12.001, et. seq., Florida Administrative Code, apply. There is a dispute over whether Section 381.494(6)(d), Florida Statutes, applies.
Findings Of Fact General Procedural Background The Visiting Nurse Association of Broward County, Inc. Community Hospital (VNA) applied on December 12, 1985, for a certificate of need to operate a hospice program, including five inpatient beds, in Broward County, Florida. A State Agency Action Report was issued by the Department of Health and Rehabilitative Services (HRS) preliminarily approving the application, which was published in Volume 12, No. 21 of the Florida Administrative Weekly on May 23, 1986, at page 1966. Hospice, Inc., Broward County (Hospice) and Hospice Care of Broward County, Inc. (Hospice Care) filed petitions to contest the preliminary approval of the application, and those petitions were consolidated for hearing. Brief Description of the Parties Visiting Nurse Association VNA is a not-for-profit charitable organization established in 1959. It is a Medicare and Medicaid certified home health agency which provides comprehensive home health services to residents of Broward County regardless of age, ability to pay, or payor source. VNA has a somewhat complex corporate structure. The parent corporation is Visiting Nurse Health Services, Inc. This corporation provides management, administrative support and consultative services to its subsidiary corporations which are: The Visiting Nurse Association of Broward County Foundation, Inc., a not-for-profit corporation which raises funds to fulfill VNA's goal of providing health care to the indigent. Visiting Nurse Home Care, Inc., a Florida not-for-profit corporation which provides private duty nursing care, physical therapy and other home health services, including homemaker services and personal care services to non-Medicare patients in Broward County. Visiting Nurse Association of Dade County, a not-for-profit Medicare and Medicaid certified home health agency which provides comprehensive home health services in Dade County. VNA Foundation, a not-for-profit corporation which raises funds for VNA's operations in Dade County. Visiting Home Services, Inc., a licensed home health agency which provides services to non-Medicare patients in Dade County, Florida. VNA is governed by a board made up of community members who serve voluntarily. VNA has provided service to indigents even before inception of the Medicare program. VNA has maintained long term relationships with publicly funded hospitals, with particular emphasis on providing continuity of care to patients and providing alternatives to hospital care. In fulfillment of its mission, VNA has contracted with the North Broward Hospital District to provide a full range of services to indigent Medicaid patients in the northern two-thirds of Broward County, where that District operates three hospitals, North Broward Medical Center, Broward General Medical Center and Imperial Point Medical Center. VNA employs nurses who work with the district hospitals to improve the accessibility of health care to indigents by assisting in planning care for indigents after discharge from the hospital. In 1985 and 1986 VNA served about 2,900 patients each year. VNA also receives referrals from other hospitals in Broward County, including hospitals operated by Humana Corporation; Memorial Hospital, which is operated by the South Broward Hospital District; and Pembroke Pines General Hospital. It receives referrals in Dade County from Jackson Memorial Hospital, the public hospital for Dade County operated by the Public Health Trust, and the Veterans Administration Medical Center. VNA operates special pediatric programs for children whose health care is covered by Medicaid. VNA also had assisted the Public Health Trust to develop in Dade County a comprehensive proposal seeking a grant from the Robert Woods Johnson Foundation for the treatment and prevention of Acquired Immune Deficiency Syndrome. VNA has operated a specialized subunit since 1984 which provides palliative care. This unit is staffed with registered nurses who are experienced in working in hospices, in symptom control for terminally ill patients and in providing supportive therapy for the patients and their families. In 1985 the palliative care unit provided services to about 129 patients; approximately 63 percent were Medicare patients and 10 percent were Medicaid patients. The program's average daily census was approximately 30 patients. In 1986 the palliative care unit provided service to approximately 134 patients; 68 percent Medicare patients and 14 percent Medicaid patients. The number of physicians referring patients to the palliative care unit has increased from fewer than 100 to more than 150 currently. Referring physicians include internists, surgeons, general practitioners and oncologists (physicians specializing in the treatment of cancer). After only three months of operation, the patient census reached 35 patients. The greatest concentration of the palliative care patients reside in the areas near North Broward Medical Center and Broward General Medical Center, which are also the areas with high indigent populations. VNA's palliative care unit will serve patients in Broward County who have physicians who are located in Dade County, and also will serve patients having no family members or others to serve as caretakers. It also has treated a number of terminally ill pediatric patients. The palliative care program is not as diverse a program as a hospice, in that it does not offer inpatient care or bereavement services to the families of the terminally ill, and the palliative care unit's access to funding from the government or third party payors is limited without a certificate of need to operate a hospice program. About 60 percent of the patients currently cared for in the palliative care unit would qualify for hospice services if VNA were authorized to provide those services. About 21 of VNA's home health patients chose to enter a hospice program out of the 263 patients seen during the first few years of operation of the palliative care unit. 2. Hospice, Inc. Hospice, Inc. is authorized to operate in Broward County, and has a 20-bed inpatient unit with an average daily census of 11 patients. About 10 percent of its services are inpatient services. Eleven percent of Hospice, Inc's patients are charity patients; that is, patients who are provided services without charge. Other patients have reimbursement sources which are not adequate to cover the cost of providing care. Hospice, Inc. does not discriminate on the basis of inability to pay. The two different kinds of indigent are those poor to start with and those who become medically indigent because they have paid all of their money to fight their disease. Hospice, Inc. has worked with AIDS patients since the early 1980's and has continually cared for AIDS patients, beginning with Haitian refugees. Hospice, Inc. has been called upon to write the policy and protocols for AIDS care for hospices nationally by the National Hospice Organization and is the only hospice in Florida with a specific contract to provide service to AIDS patients. That contract is with the State of Florida through Jackson Memorial Hospital and the Public Health Trust using State dollars. Hospice, Inc.'s programs in Dade and Broward Counties were selected as demonstration sites by the federal government to demonstrate the efficacy, including cost effectiveness, of hospice services, in a study conducted by the Health Care Financing Administration between 1980 and 1983. 3. Hospice Care Hospice Care is a not-for-profit hospice program licensed in Broward County which operates five inpatient beds. It does not have a parent company and is supported by donations raised in Broward County. It provides an array of nursing, pastoral and spiritual services to its patients and necessary medical care. The program has a Medical Director, Nurses Aides, Licensed Practical Nurses, a Coordinator of Education and Bereavement, a Director of Volunteers, and a Patient Care Coordinator. About 125 volunteers provide emotional support and assistance which a family might need while the patient is in the hospice program; the program offers the family ongoing bereavement support after the patient's death. Hospice Care also offers homemaker services, pharmaceutical services and occupational and physical therapists, at no extra cost to the patient. A pastor or minister provides spiritual assistance to the patient and family on request. Hospice Care accepts AIDS patients (it served approximately 17 in 1986) and provides support for families of those patients. Hospice Care also is developing a program to educate single people about AIDS. As is the case with other hospices, Hospice Care participates with the Robert Woods Johnson Foundation. Hospice Care provides educational materials regarding hospice programs throughout Broward County. Brochures are sent to physicians in Broward County four times a year. A newsletter is distributed quarterly. Hospice Care provides in service educational programs for its registered nurses and seminars for its social workers. Hospice Care accepts patients without regard to the patient's ability to pay, and places a patient in a program within 24 to 48 hours of referral. Hospice Care became Medicaid-certified in January of 1987 and accepts Medicaid patients. During fiscal year 1986, Hospice Care served 227 patients. It could serve additional patients without adding additional staff. During fiscal year 1986 approximately 25 patients treated by Hospice Care were referred to it from North Broward Hospital District hospitals. Based upon referral patterns, Hospice Care would probably lose some patients to VNA if VNA's application is approved. Hospice Care received at least one referral from VNA's palliative care unit last year. Hospice Care refers patients to other hospices in Broward and Palm Beach Counties based on the needs of those patients. 4. Hospice-By-The-Sea Another hospice operating in Broward County is Hospice-By-The-Sea. It has received a certificate of need and operates as a non-profit program. It was Medicare certified in January of 1987. Hospice-By-The-Sea accepts patients from Palm Beach and Broward counties, as it is authorized to do under its certificate of need. Its program is similar to that of Hospice Care and consists of nurses, social workers, clergy, volunteers, homemaker aides, home health aides, a clinical psychologist and a hospice physician. Its nurses receive specific training in the care of terminally ill children. Hospice-By-The-Sea has a bereavement program for family members for a minimum of one year following a patient's death. Hospice-By-The-Sea also offers the services of a dietician, a physical therapist, a speech therapist and an occupational therapist, as well as providing pharmacological and medical supplies and services. Pastoral counselors meet with patients and their families regularly. It has never denied a prospective patient admission to its program for inability to pay. The program accepts AIDS patients and works with the Robert Woods Johnson Foundation. During fiscal year 1986 Hospice-By-The-Sea served 263 patients, and had an average daily census of between 35 and 45 patients. It could increase the number of patients served without the increase in inpatient beds. Hospice-By-The-Sea does not have a waiting list and places new patients in its program within 24 to 48 hours after referral. Hospice-By-The-Sea refers patients to other hospices based upon the patient's need. Since about 1985 Hospice-By-The-Sea has had a program to educate the community about the availability of hospice services. The testimony of Ms. Webb, that the market for hospice services has leveled out, and now is saturated, is not accepted. In the Hospice-By-The-Sea program, inpatient beds play a minor role in its overall program. Only six patients since 1980 have used inpatient services. Volunteers are an important component of the Hospice-By-The-Sea program. About 25 to 30 percent of hospice volunteers reside in Broward County. Hospice-By-The Sea may experience some increase difficulty attracting volunteers if an additional hospice program is approved in Broward County but there is insufficient proof that it would not be able attract an adequate number of volunteers to continue a quality program. Hospice-By-The-Sea receives funds on an annual basis from Palm Beach and Broward county communities. About 30 percent of its fund raising monies comes from Broward County. The approval of the VNA hospice might make it somewhat more difficult for Hospice-By-The-Sea to attract funds. The Hearing Officer is not persuaded that competition for fund raising will result in either Hospice-By-The-Sea or VNA providing less than a quality program. 5. Hospice Of The Gold Coast Hospice Of The Gold Coast is another not-for-profit hospice which holds a certificate of need to serve Palm Beach and Broward counties which is Medicare certified. It has four licensed inpatient beds located at Holy Cross Hospital in Broward County. The hospice is licensed separately from its parent corporation, Gold Coast Home Health Services, a Broward County home health agency. As with the other hospices, the Gold Coast program offers a wide array of services to patients and their families. These include a medical director who serves as the consultant to the patient's primary care physician, who may assume total care for the patient when the primary physician chooses not to provide terminal care. Gold Coast has a team of nurses available 24 hours a day, seven days a week to meet the medical and psychological needs of patients. The nurses provide pain and symptom control, and are trained in providing psychological care to the patient and the patient's family. The Gold Coast home health aides provide personal and respite care to the patient. A psychologist provides counseling services to the patient and the family, while a bereavement specialist works under the direction of the hospice psychologist in a program which can last for a year or longer after the patient's death. Volunteers are trained to work with the terminally ill. Volunteers are an integral part of the hospice team. Gold Coast has 80 active volunteers. Clergymen on Gold Coast staff provide spiritual care to the patient and family. A medical social worker sees each family to be sure that community resources available to the patient and family are obtained. Gold Coast offers homemaker services which are used to maintain the patient's household. Physical therapy services are provided if required by a patient. Hyperalimentation can also be provided if needed. Hyperalimentation is a supplemental feeding done intravenously. The hospice may also provide morphine drips for pain control where required. Gold Coast accepts patients terminally ill from the AIDS virus, and has no policy which would discourage the admission of such patients. It participates in the activities funded to the Robert Woods Johnson Foundation in the southeast Florida area for AIDS patients. During calendar year 1986 Gold Coast received about 26 patient referrals from North Broward Hospital District hospitals. During calendar year 1986 Gold Coast served 304 patients and had an average daily census of between 50 to 55. A substantial number of additional patients could be served without adding additional inpatient beds, for only five percent of the patients served used inpatient beds. About 15 to 20 additional patients could be served without adding additional staff. Gold Coast does not experience a waiting list of patients and serves them within 24 hours after a physician's referral. Gold Coast will refer patients to other hospices in Broward and Palm Beach Counties if those hospices are closer and therefore could better meet the patient's needs. Gold Coast Home Health Agency provides administrative and other support to the Gold Coast hospice. The experience of Gold Coast in admission to its hospice program of those served by the home health agency is that many patients eligible for hospice services do not wish to obtain them. In 1986, of 139 patients the home health agency served with diagnoses which would make them eligible for hospice services, 39 chose the hospice program. Gold Coast makes efforts to educate the community about the availability of hospice services. Methods include lectures given by the hospice's executive director to local nursing college students and to psychology courses on death and dying. Gold Coast also publishes a newsletter distributed throughout the community and participates in health fairs, distributing brochures on hospice care. Factual Findings Concerning Rule Criteria Against Which The Application Must Be Evaluated Rule 10-5.011(1)(j), Florida Administrative Code, contains the rule methodology governing hospice services. It is the same methodology used by the U.S. Office of Management and Budget and other states in determining the appropriate level of hospice care in a community. All parties have stipulated that this methodology shows a need for five additional hospice beds in Broward County. The Broward Regional Health Planning Council calculates a need for 45.8 hospice beds in Broward County. With the current hospice beds of Hospice Care, Hospice-Of The Gold Coast, Hospice, Inc., and Hospice-By-The-Sea, there are 33 beds now licensed. The rule methodology understates the actual need for hospice services. It was developed before the increased number of terminally ill patients as a result of Acquired Immunity Deficiency Syndrome. Twenty percent of all AIDS patients in Florida are Broward County residents. The representatives of Hospice-By-The-Sea, Hospice Care and Hospice Of The Gold Coast all anticipate an increased need for hospice services for AIDS patients in Broward County. The incidence of cancer is substantially higher in Broward County than in Florida generally. Broward County's population is older than the national population. Twelve percent of the population nationwide is over age 65. Almost 24 percent of Broward County's population is over 65. The most current reliable data available demonstrates that the hospice-eligible population exceeds the population now being served. The rule methodology would indicate there should be at least 400 hospice-eligible patients more than are actually being served currently. Unlike rule methodologies for other health services, minimum utilization thresholds do not apply to hospice services. The inpatient component of the hospice program is used for acute care and respite care. The availability of the beds at times of peak demand is more important than the average daily census of inpatient hospice beds filled on a given day. Statutory Criteria For Evaluating The Application Under Section 381.494(6)(c), Florida Statutes. Consistency with the State Health Plan and the Local Health Plan. Section 381.494(6)(c)1., Florida Statutes. The State Health Plan does not address the need for hospice services. The testimony and cross-examination of Kurt Blair, the planning supervisor for the Broward Regional Health Planning Council, establishes that the VNA proposal is not inconsistent with the Local Health Plan. Availability, Utilization, Efficiency, Geographic And Economic Accessibility Of Facilities In The District. Section 381.494(6)(c)2., Florida Statutes. The utilization of hospice services in Broward County is less than the rule methodology would project. The first step of the methodology estimates a hospice eligible population, and that estimate is that between 1,400 and 1,450 people are hospice eligible. Currently, approximately 955 are being provided hospice care. Thus, under the rule methodology there are approximately 400 people in Broward County who are hospice eligible and who may be receptive to hospice services if appropriate additional education were provided. In addition, the second portion of the rule which determines hospice inpatient bed need shows the need for at least the five additional inpatient beds which this application proposes. The rule utilizes the assumption that about 20 percent of hospice patients will be inpatients. In Broward County, only about 10 percent are inpatients. Unlike rule methodologies for other health services, the hospice rule does not use minimum utilization thresholds as a proxy for quality, or for financial viability. The fact that current utilization of inpatient beds is less than the rule would predict does not mean there is not a need for additional programs in Broward County. The reason for the lower inpatient utilization in Broward is not clear but inpatient services are only a portion of the total continuum of services provided by a hospice, so that the lower inpatient utilization cannot be properly thought to show a lack of need. The VNA will operate hospice education for groups that are currently underserved, especially indigents. VNA provides a substantial amount of care to indigents, providing over $740,000 of free care in 1986. Physicians refer a substantial number of indigent patients to VNA for services. VNA's ability to provide care to indigents is enhanced by the array of services that VNA offers through the VNA network. Moreover, the indigent patient population has less awareness of the availability of hospice services, and increased education regarding these services for both patients and their physicians is likely to result in additional persons choosing hospice care. VNA's palliative care unit's physician referral base is highly concentrated in the geographic areas close to the North Broward Hospital and Broward General Medical Center, which are operated by the North Broward Hospital District. An unmet need for hospice services exists in the geographic area served by the North Broward Hospital District, especially in zip code area 33311, which has a high concentration of indigent persons. The VNA hospice would be more accessible because it will accept patients without an identified family member or care giver to assist in the program, while other hospices believe that such patients are not appropriate for hospice care. Other hospices also will not accept a patient whose physician is located in Dade County. When a physician refers a patient to VNA for care, options are discussed with the patient. If the VNA cannot give appropriate care and the patient chooses another community provider, the patient is referred to another provider of care. While other providers do exist in Broward County to serve the unmet need for hospice services in Broward County, VNA's existing relationships with the North Broward Hospital District and physicians serving indigent patients positions it especially well to serve that need. The Ability To Provide Quality Care, Section 381.494(6)(c)3., Florida Statutes. VNA employs several registered nurses with hospice experience who are well qualified to provide a hospice program. Registered nurses are the backbone of the hospice program because they are responsible for pain and symptom control, providing emotional support to patients and families, and education regarding medications. VNA therefore has an existing corps of nursing staff from which the hospice program could begin. Moreover, VNA's palliative care unit provides a quality program which is similar to (though more limited than) a hospice program, which also gives reason to believe it can provide a quality program. The VNA program will also foster a continuity of care because patients have ready access to other VNA programs, and all programs have uniform recordkeeping and assessment techniques. The VNA conducts inter-team conferences to ensure continuity of care between programs. This continuity is helpful because it avoids the dislocations which can occur when a patient and family begin to be served by a different provider after the decision to utilize hospice care has been made. Economies of Scale. Section 381.494(6)(c)5., Florida Statutes. The VNA network will help create an efficient hospice program since management services such as accounting, marketing, billing and collection, and administration are done by the parent organization which spreads the cost of these services across the subsidiaries while avoiding duplication of effort. The placement of the proposed hospice program within the VNA network allows it to benefit from the economies of scale that result from such organization. The presence of VNA community liaisons within the North Broward Hospital District facilities should also increase the efficiency by which VNA can guide patients appropriately into hospice programs earlier which should lower the overall cost of in-hospital care. Availability Of Resources For Project Accomplishment And Operation. Section 381.494(6)(c)8., Florida Statutes. The VNA has been very successful in obtaining grants and other forms of financial assistance from a variety of local, state and federal sources including the Area-wide Agency on Aging and the Community Care For the Elderly Program. The fundraising mechanism for the VNA, the VNA Foundation, raised $31,000 in private contributions in 1986, and it is projected that this amount will increase as a result of implementation of more aggressive fundraising activities. The Visiting Nurse Association movement in the United States has historically been heavily supported by the United Way. The VNA received $273,000 from the Broward County United Way in both 1985 and 1986 and anticipates receiving approximately $300,000 for 1988. Susan Telli, Executive Director of Hospice Care of Broward, acknowledged VNA's strong fundraising capacity. The VNA initially anticipates receiving funds for its hospice program from the United Way and the VNA Foundation. The VNA would be able to handle any unanticipated decrease in revenue or unanticipated increase in expenses through the solicitation of additional charitable contributions or renegotiations of its hospital contract. Financial Feasibility In The Short And Long Terms. Section 381.494(6)(c)9., Florida Statutes. The VNA hospice program is financially feasible in both the short term and long term. The project involves no capital expenditure. Mr. Robert Simione is an expert in health care financial planning and management, and is a principal with Simione and Simione, a certified public accounting firm. Many of the firm's clients are home health agency and hospices. Mr. Simione has extensive experience in the development of hospice programs including budgeting, financial feasibility analysis and financial management. He has recently completed an extensive survey of ten hospices nationwide. Subsequent to VNA's preparation and submission of its hospice certificate of need application, Simione and Simione merged with- the accounting firm of Holstein and Lechner, which therefore had not been involved in either the preparation or submission of the certificate of need application. In November, 1986, after Simione and Simione merged with Holstein and Lechner, the VNA asked Mr. Simione to conduct a feasibility analysis of its proposed hospice program in preparation for both the final hearing and implementation of the program, and to account for extrinsic changes that occurred subsequent to the preparation and submission of the application in October of 1985. The extrinsic changes included an increase in Medicare reimbursement rates for hospice services on or about April 1, 1986, and the availability of Medicaid reimbursement for hospice services in Florida as of January 1, 1987. 1. Patient Census Projections The VNA hospice application, filed with the Department in October of 1985, included a two-year financial projection. The projection was broken into two periods and assumed a projected patient census of 30 for the first six months of operation and 50 thereafter for the next 18 months. Mr. Simione's reliance at final hearing on an anticipated census of 40 during the second period of the analysis (rather than 50) was based on management decisions, and was not intended to reflect the availability of patients or need for hospice services. The proposed patient census in the application is reasonable as a result of the following: The VNA is not starting from "ground zero"; it has systems in place and existing resources and capabilities that would facilitate development of a high quality hospice program. The VNA has experience in implementing its palliative care unit, including community education. The VNA has existing ties and relationships with various charitable and other organizations in Broward County, as well as Dade County. Since 1952, the VNA has historically had large numbers of patient and family contacts throughout Broward County. The VNA has mature relationships with publicly funded entities such as the Public Health Department. Other hospices in Broward County have realized significant patient growth experience during the previous two years. Broward County's morbidity and mortality rates demonstrate demand for hospice services. 2. Outpatient-Inpatient Ratio The VNA hospice certificate of need application, filed with the Department in October of 1985, included financial projections assuming an 80 percent outpatient population and 20 percent inpatient population (80:20 ratio). Projected out-patient to inpatient care ratio of 80:20 reflects a Medicare-imposed ceiling for inpatient care. A 90:10 ratio is more likely in Broward County. The proposed 80:20 ratio is reasonable for planning purposes because: The VNA's existing palliative care unit's statistical experience reflects high inpatient utilization by these patients. The VNA's historical experience with the North Broward Hospital District, as a result of a demonstration project and otherwise, reflects longer hospitalization for Broward patients that come from low income families, often due to their overall poor health status, both nutritionally and physically. The federal government, based on the results of a Medicare demonstration project, has adopted regulations that allow for an 80:20 inpatient hospital ratio for hospice programs. Certificate of need applications recently submitted by other applicants for hospice programs in Broward County utilized an 80:20 ratio. Indeed, Hospice, Inc.'s certificate of need application filed in 1980 projected an outpatient-inpatient ratio of 80:20. The proposed 80:20 ratio had been commonly used by other hospices for financial planning at the time the VNA prepared its certificate of need application. The survey conducted by Mr. Simione revealed that the inpatient utilization component of a participating hospice was as high as 19 percent. 3. Revenue Projections The experience of the palliative care unit supports the VNA's projected payor mix for its hospice program as indicated by the 1986 VNA breakdown by payor source: Medicare 76.8 percent Medicaid 9.0 percent Private Insurance 6.1 percent Private Pay 5.6 percent (sliding scale used) Veteran's Administration 1.2 percent The payor mix projected by Mr. Simione for the VNA hospice is as follows: Medicare 75 percent Medicaid 7 percent Insurance and Private Pay 10 percent Indigent 8 percent Mr. Simione's projections regarding payor mix are not significantly different from those set forth in the VNA certificate of need application, and reflect the availability of Medicaid funding for hospice care. The VNA's projection that ten percent of its projected revenue will be "insurance and private pay" is reasonable because: The amount is supported by VNA's history and the projections of other visiting nurse associations that have recently established hospice programs. An increasing number of private and commercial insurance carriers, including carriers providing coverage in Broward County, are offering hospice benefits. Hospice, Inc. projected that 11 percent of revenue would be "insurance and private pay" in its application for hospice beds in Palm Beach County. As many as 35 percent of Hospice Care of Broward's patients are privately insured for hospice services. Ten percent of Hospice-By-The Sea patient census is composed of private pay patients. The VNA's projections regarding Medicare and Medicaid reimbursement are reasonable in light of the following: As testified by Ella Charland, Executive Director of Hospice Of The Gold Coast, 90 percent of its patients are Medicare reimbursable. Contractual adjustments are not normally considered for projected Medicare revenues since Medicare reimburses hospice on a prospective flat rate. A 2.5 percent Medicare and/or 5 percent Medicaid contractual allowance, if necessary, will not have a significant impact on the financial feasibility of the VNA's proposed hospice program. Use of a wage index of 1.11249 as opposed to 1.1105 in calculating Medicare or Medicaid rates amounts to a difference of .0079 percent of total revenue in Mr. Simione's financial feasibility study. The impact of a .0079 percent discrepancy in calculating Medicare and Medicaid rates for the VNA's proposed hospice program is insignificant. 4. Other Projections The projection of an average length of stay (ALOS) of either 45 or 50 days for a hospice program is consistent with the national average for hospices as stated by the National Hospice Organization and with a survey done by the CPA firm of Simione and Simione. Ambulance costs are not normally a "line item" in a hospice's budget, but if there were any, they would be insignificant in light of its overall operation. The VNA's projection of a .25 full-time equivalent (FTE) for an M.D. Consultant is consistent with projections relied on by other hospices and not violative of any state or federal requirements. The VNA's hospice program does not require an Inpatient RN Coordinator position or a full-time Admissions Assistant since responsibilities inherent in these positions could be assumed by employees budgeted for by the VNA. Impact of VNA Hospice Section 381.494((6)(c)12., Florida Statutes Reverend Westbrook does not believe "...that one single organization could do a good job of caring for all the hospice patients." The VNA will be a positive competitive force vis-a-vis quality, accessibility to indigents, public education, cost effectiveness, and training. Mr. Gates acknowledges that the entry of a new competitor will generally not have a negative effect on existing providers when the new competitor meets unmet needs or provides services the existing providers are not designed to meet. Competition and Regional Monopolies. Section 381.494(3), Florida Statutes. Statutory Intent The only health service for which the Florida statutes explicitly encourage competition and discourage regional monopolies is hospice care. Section 381.494(3), Florida Statutes, encourages competitive forces in the market. The statute provides that the state need methodology should discourage regional monopolies and promote competition. Existing Market Share Hospice, Inc., the largest of all existing hospice competitors in Broward, has captured 60 percent of the Broward County hospice market, and has a market share that is greater than all three existing competitors combined. Hospice Care of Broward retains 16.4 percent of the market share in Broward County. Hospice Gold Coast retains approximately 20.6 percent of the market share in Broward County. Hospice-By-The-Sea retains less than four percent of the market share in Broward County. Hospice, Inc. has obtained certificate of need approval for hospice programs in Broward, Dade and Monroe Counties. Hospice, Inc. is the only hospice in Dade County. Hospice, Inc. has filed a certificate of need application for two hospice beds in Palm Beach County. Hospice, Inc. intends to open and operate additional hospices. HCI, Hospice, Inc.'s management corporation, was capitalized in 1983 for $3.5 million. Venture capitalists who invested in HCI anticipate a reasonable return on their investment. Accordingy, there exists an expectation that profits are to be maximized by HCI, and its related entities, including Hospice, Inc. Hospice, Inc.'s Income Statement dated September 30, 1986, for Hospice, Inc.'s Broward division for fiscal year ending 9/30/85 reflects the following: Total Revenue $1,445,032.28 Total Operating Expenses 1,252,065.18 Division Income $ 192,967.10 Hospice, Inc.'s Income Statement dated September 30, 1986, for Hospice, Inc.'s Broward division fiscal year ending 9/30/86 reflects the following: Total Revenue $2,773,242.48 Total Operating Expenses 2,568,972.14 Division Income $204,270.34 Hospice, Inc. experienced a 92 percent increase in the total revenue from fiscal year ending 9/30/85 to fiscal year ending 9/30/86. In addition to management fees, Hospice, Inc. incurs substantial managerial and administrative costs relating to salaries and wages, director's fees, contract services, and consulting fees.
Recommendation It is RECOMMENDED that a certificate of need be granted to VNA to operate a hospice program in Broward County, which includes five inpatient beds. DONE AND ORDERED this 31st day of December, 1987, at Tallahassee, Florida. WILLIAM R. DORSEY, JR. Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32301 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 31st day of December, 1987. APPENDIX TO RECOMMENDED ORDER The following are my rulings on the proposed findings of fact submitted by the parties pursuant to Section 120.59(2) Florida Statutes (1985). As a preliminary matter I am constrained to point out that I generally found the testimony of the witnesses for VNA persuasive. While the testimony of the opponents was no doubt sincere, it was colored by undue pessimism about their ability to operate in a more competitive environment but the reasons stated for their fears about licensure of an additional competitor were unpersuasive. While initially the Hearing Officer had some doubt about the financial viability of the project, after a review of the testimony of Mr. Semeoni I am satisfied that the reasons he gave to support his opinion that the project is financially viable and the short and long term, and that the projections found in the application are reasonable, is credible, and should be accepted. In rulings on the proposals filed by VNA and HRS. Rejected as unnecessary. Covered in Finding of Fact 1 Covered in Finding of Fact 21. Covered in Finding of Fact 16. Covered in Finding of Fact 103. Covered in Finding of Fact 112. Rejected as unnecessary. 8-10. Covered in Finding of Fact 2. 11-13. Covered in Finding of Fact 3. Covered in Finding of Fact 4. Covered in Finding of Fact 5. Covered in Finding of Fact 6. Covered in Finding of Fact 7. Covered in Finding of Fact 8. Covered in Finding of Fact 9. 20-22. Covered in Finding of Fact 10. 23. Covered in Finding of Fact 11. 24-27. Covered in Finding of Fact 12. 28-29. Covered in Finding of Fact 13. Covered in Finding of Fact 14. Covered in Finding of Fact 15. Rejected as unnecessary. Covered in Finding of Fact 79. Rejected as subordinate to Finding of Fact 71. Covered in Finding of Fact 84. Rejected as subordinate to Finding of Fact 84. 37-40. Rejected as unnecessary. 41-42. Covered in Finding of Fact 53. 43. Covered in Finding of Fact 54. 44-45. Covered in Finding of Fact 55. 46-49. Covered in Finding of Fact 56. 50-52. Covered in Finding of Fact 57. 53-55. Covered in Finding of Fact 61. 56-57. Rejected as a recitation of testimony not a finding of fact. 58-59. Covered in Finding of Fact 59. 60. Rejected as unnecessary. 61-64. Covered in Finding of Fact 63. 65. Rejected as redundant. 66-67. Covered in Finding of Fact 63. 68-73. Rejected as unnecessary. 74-75. Covered in Finding of Fact 64. 76. Rejected as redundant. 77-80. Covered in Finding of Fact 65. Covered in Finding of Fact 66. Covered in Finding of Fact 60. 83-88. Covered in Finding of Fact 60. 89-91. Rejected as unnecessary. 92-103. Rejected because there are no adequate alternatives to hospice care for persons in need of hospice care. The findings are therefore unnecessary. See Conclusions of Law concerning section 381.494(6)(c)4. 104-105. Rejected as unnecessary. 106. Covered in Findings of Fact 10 and 68. 107-108. Covered in Finding of Fact 69. 109-119. Rejected as unnecessary. 120-122. Covered in Finding of Fact 70. 123-125. Rejected as unnecessary. Covered in Finding of Fact 72. Covered in Finding of Fact 71. Rejected as redundant. Covered in Finding of Fact 79. Covered in Finding of Fact 80. Covered in Finding of Fact 81. Covered in Finding of Fact 82. Rejected as unnecessary. Covered in Finding of Fact 83. 135-136. Covered in Finding of Fact 84. Rejected as cumulative to Finding of Fact 79. Covered in Finding of Fact 85. Covered in Finding of Fact 86. Covered in Finding of Fact 87. Rejected as unnecessary. Covered in Finding of Fact 88. Covered in Finding of Fact 89. Covered in Finding of Fact 90. Covered in Finding of Fact 91. Covered in Finding of Fact 92. Covered in Finding of Fact 93. Covered in Finding of Fact 94. Covered in Finding of Fact 95. Covered in Finding of Fact 96. 151-152. Covered in Finding of Fact 97. Covered in Finding of Fact 98. Covered in Finding of Fact 99. Covered in Finding of Fact 73. Covered in Finding of Fact 74. Covered in Finding of Fact 75. Covered in Finding of Fact 76. Rejected as unnecessary. Covered in Finding of Fact 76. Covered in Finding of Fact 77. Covered in Finding of Fact 78. Covered in Finding of Fact 103. Covered in Finding of Fact 104. Covered in Finding of Fact 105. Covered in Finding of Fact 106. Covered in Finding of Fact 107. Covered in Finding of Fact 108. Covered in Finding of Fact 109. Covered in Finding of Fact 110. Covered in Finding of Fact 111. Covered in Finding of Fact 112. Covered in Finding of Fact 113. Covered in Finding of Fact 114. 175-176. Rejected as unnecessary. Covered in Finding of Fact 115. Covered in Finding of Fact 100. Covered in Finding of Fact 101. Covered in Finding of Fact 102. Rulings on Finding of Fact proposed by Hospice Care of Broward County, Inc. Rejected as inapplicable. Covered in the Conclusions of Law. 3-4. Covered in Finding of Fact 40. 5-6. Rejected as unnecessary. Covered in Finding of Fact 41. Covered in Finding of Fact 42. Covered in Finding of Fact 43. Covered in Finding of Fact 44. Covered in Finding of Fact 45. Covered in Finding of Fact 45. Covered in Finding of Fact 46. Covered in Finding of Fact 47, to the extent necessary. Covered in Finding of Fact 48. Rejected as unnecessary. 17-18. Covered in Finding of Fact 49. Covered in Findings of Fact 50 and 51. Covered in Finding of Fact 52. Rejected because the new hospice, while in competition with hospice of the Gold Coast which necessarily means that its programs would duplicate those of Gold Coast. 22-24. Rejected as unnecessary. Covered in Finding of Fact 30. Covered in Finding of Fact 31. Covered in Finding of Fact 32. Covered in Finding of Fact 33. Covered in Finding of Fact 34. Covered in Finding of Fact 35. Covered in Finding of Fact 36. Covered in Finding of Fact 37. Covered in Finding of Fact 38. Covered in Finding of Fact 39. Rejected as unnecessary. 36-37. Covered in Finding of Fact 21. Covered in Findings of Fact 21, 22, and 23. Covered in Finding of Fact 24. Covered in Finding of Fact 25. Covered in Finding of Fact 26. Covered in Finding of Fact 27. Covered in Finding of Fact 28. Covered in Finding of Fact 29. Rulings on proposed findings of fact from Hospice, Inc. Rejected as unnecessary. Covered in Findings of Fact 2, 16, 21, 40, and 55. Rejected because whether Broward has fewer or more hospices than other counties, HRS service districts or more per person than any county is not relevant, the relevant considerations are those set forth in applicable statutes and rules. Covered in Finding of Fact 54 or rejected as unnecessary. Rejected because I have found the need for an additional hospice program. Rejected for the reasons stated in Finding of Fact Rejected inconsistent with my view of the evidence. Rejected as unnecessary. Rejected for the reasons stated in Finding of Fact Covered in Finding of Fact 49, to the extent necessary. 11-12. Covered in Finding of Fact 27, to the extent necessary. Rejected as argument, not a finding of fact. Rejected as inconsistent with my view of the testimony of Mr. Blair. The local plan does not state that there is a need for a hospice in South Broward, but that if there were two competing applications, preference would be given to the hospice proposing to locate in South Broward, which is not at issue here. Covered in Finding of Fact 60. Rejected as inconsistent with my view of the evidence. Rejected for the reasons given for rejecting finding of fact 3. Rejected as unnecessary. Rejected as unnecessary, the criteria for approving a new hospice is not that existing hospices must have waiting lists. Rejected as unnecessary. To the extent necessary covered in Finding of Fact 87(f). Rejected as unnecessary. To the extent that Broward presents a "not normal" situation, see Findings of Fact 56 and 57. Rejected as unnecessary. Rejected as a recitation of testimony not a finding of fact. Rejected as unnecessary. Covered in Finding of Fact 15. Rejected as recitation of testimony not a finding of fact. Rejected for the reasons stated in Findings of Fact 61 through 67. Rejected as unnecessary because I do not believe that the VNA application should be approved because of unique "high tech" care to be available from it alone. Rejected as unnecessary. To the extent necessary covered in Finding of Fact 17. Covered in Finding of Fact 18. Covered in Finding of Fact 19. 34a. Covered in Finding of Fact 20. Rejected as unnecessary. Rejected as cumulative to the Finding of Fact made in the description of the parties for each of the existing hospices. Rejected as inconsistent with my view of the evidence. Rejected as inconsistent with my view of the evidence. Rejected because hospices may be approved without evidence of "serious problems" seeking admission to hospice programs. Rejected as inconsistent with the evidence which I have credited. See Findings of Fact 73 through 78. Rejected because I do not accept Mr. Nelson's premise that approval of additional hospice means that that a new hospice will have to cut into the existing market share of current hospices. The rule methodology provides reason to believe that there is a substantial pool of unmet need from which patients may be drawn. Rejected as unnecessary. Rejected because I do not share Hospice Care's pessimistic view of the potential loss of revenue it would experience if the VNA hospice were granted. As a general matter, I found the testimony of Mr. Simeone on the reasonableness of the projections in the VNA more persuasive than the criticisms of the application by Reverend Westbrook. No useful purpose will be served by going through a line by line analysis of proposed findings 46 through 92 which generally relate to criticism of the financial projections made by VNA because I have resolved the disputes in favor of VNA's application and against the criticisms of the application raised by Hospice. Inc. The projections of VNA is financially feasible in the long and short terms. See Findings of Fact 79 through 99. COPIES FURNISHED: Howard Hochman, Esquire Gerald M. Cohen, Esquire Wood, Lucksinger & Epstein 200 South Biscayne Boulevard Suite 3700 Miami, Florida 33131-2359 Kenneth Hoffman, Esquire Martha Edenfield, Esquire OERTEL & HOFFMAN, P.A. 2700 Blair Stone Road Post Office Box 6507 Tallahassee, Florida 32314-6507 John Rodriguez, Esquire Department of Health and Rehabilitative Services 1323 Winewood Boulevard Building One, Room 407 Tallahassee, Florida 32399-0700 Sam Power, Clerk Department of Health and Rehabilitative Services 1323 Winewood Boulevard Building One, Room 407 Tallahassee, Florida 32399-0700 John Miller, Esquire Acting General Counsel Department of Health and Rehabilitative Services 1323 Winewood Boulevard Tallahassee, Florida 32399-0700 Charles Stampelos, Esquire 215 South Monroe Street Suite 666 Tallahassee, Florida 32301 Gregory L. Coler, Secretary Department of Health and Rehabilitative Services 1323 Winewood Boulevard Tallahassee, Florida 32399-0700 =================================================================
