The Issue Whether the Petitioner, Floretta Allen, is entitled to payment for medical services by the State of Florida Employees' Group Health Self Insurance Plan?
Findings Of Fact The Parties. The Petitioner, Floretta Allen, is the wife of an employee of the State of Florida. Ms. Allen is a participant in the State of Florida Employees' Group Health Self Insurance Plan (hereinafter referred to as the "Insurance Plan"). The Respondent, the Division of State Employees' Insurance, Department of Management Services (hereinafter referred to as the "Department"), is an agency of the State of Florida. Among other things, the Department is administrator of the Insurance Plan. Ms. Allen's Illness. In April of 1992, Ms. Allen was diagnosed as suffering from multiple myeloma. Multiple myeloma is a form of cancer which affects the bone marrow and blood. Ms. Allen was diagnosed by Dr. Mary Alpin. Dr. Alpin specializes in hematology and oncology, disorders of the blood and cancer. Ms. Allen was diagnosed by Dr. Alpin as having Stage III-A Myeloma: "She had a very high total protein in her blood. She already had extensive involvement of her bone marrow. And although a large percentage of people respond to treatment, their prognosis is not very good with that stage of disease. In other words they tend to respond to treatment for a while and then relapse. They may respond to a second treatment, but they eventually succumb to their disease pretty rapidly." Page 42, lines 20-25 and page 43, lines 1-3 of the transcript of the final hearing. Treatment and Referral of Ms. Allen by Dr. Alpin. Because of the stage of Ms. Allen's disease, Dr. Alpin "mentioned to her that there was some evidence suggesting that there were long-term disease remissions and possibly even cures of myeloma with bone marrow transplant." Page 42, lines 2-5 of the transcript of the final hearing. Therefore, Dr. Alpin referred Ms. Allen to the University of Florida medical facility, Shands, because there was a bone marrow transplant unit there. Shands did not perform bone marrow transplants for multiple myeloma. Dr. Alpin then referred Ms. Allen to the H. Lee Moffitt Cancer Center (hereinafter referred to as the "Cancer Center"), at the University of South Florida in Tampa, Florida. Ms. Allen's Treatment at the Cancer Center. Ms. Allen was under the care of Oscar Ballester, M.D. at the Cancer Center. Ms. Allen first saw Dr. Ballester in July or August of 1992. Dr. Ballester confirmed Dr. Alpin's diagnosis of Ms. Allen's illness. At the time of Ms. Allen's referral to the Cancer Center, the Cancer Center was carrying on a Phase I-II Study, Protocol Number 10461 (hereinafter referred to as the "Phase I-II Study"), involving the treatment of multiple myeloma with high dosage chemotherapy and bone marrow transplantation. Dr. Ballester recommended that Ms. Allen agree to participate in the Phase I-II Study to treat her illness. Ms. Allen agreed to the recommended treatment. Initially Ms. Allen underwent approximately six months of chemotherapy. She underwent a short course of intensive chemotherapy after which her peripheral blood stem cells were harvested and then she was admitted for high-dose therapy with busulfan and cyclophosphamide. While undergoing chemotherapy during the end of 1992, a bone marrow donor, one of Ms. Allen's sisters, was found. In August of 1993 Ms. Allen underwent the bone marrow transplant. Denial of Insurance Coverage. Petitioner's exhibits 1 and 2 are examples of booklets provided to employees of the State of Florida. Pursuant to Petitioner's exhibit 1, employees are informed on pages 5 and 6 of certain "exclusions" from coverage under the Insurance Plan. Among other things, "experimental or investigative procedures" are listed as excluded from coverage. Pursuant to Petitioner's exhibit 2, employees are informed on pages 10 through 12 of "exclusions" from coverage. Among other things, the following is listed as excluded: "Any service or procedures which are determined by the Administrator to be experimental or investigative " The Benefit Document for the Insurance Plan also provides that "experimental" procedures or services are excluded from coverage. The Benefit Document defines the terms "experimental or investigative" as follows: W(b) "Experimental or Investigative" means any evaluation, treatment, therapy, or device which involves the application, administration or use, of procedures, techniques, equipment, supplies, products, remedies, vaccines, biological products, drugs, pharmaceuticals, or chemical compounds if, as recommended by the Servicing Agent and determined by the Administrator: such evaluation, treatment, therapy, or device cannot be lawfully marketed without approval of the United States Food and Drug Administration or the Florida Department of Health and Rehabilitative Services and approval for marketing has not, in fact, been given at the time such is furnished to the Insured; reliable evidence shows that such evaluation, treatment, therapy, or device is the subject of an ongoing Phase I, II, or III clinical investigation or under study to determine: maximum tolerated dosage(s), toxicity, safety, efficacy, or efficacy as compared with the standard means for treatment or diagnosis of the condition in question; reliable evidence shows that the consensus of opinion among experts is that further studies, research, or clinical investigations are necessary to determine: maximum tolerated dosage(s), toxicity, safety, efficacy, or efficacy as compared with the standard means for treatment or diagnosis of the Condition question; reliable evidence shows that such evaluation, treatment, therapy, or device has not been proven safe and effective for treatment of the condition in question, as evidenced in the most recently published medical literature in the United States, Canada, or Great Britain, using generally accepted scientific, medical, or public health methodologies or statistical practices; there is no consensus among practicing Physicians that the treatment, therapy, or device is safe and effective for the condition in question; or such evaluation, treatment, therapy, or device is not the standard treatment, therapy or device utilized by practicing Physicians in treating other patients with the same or similar condition. NOTE: "Reliable evidence" is determined by the Administrator to mean: . . . . the written protocol or protocols relied upon by the treating physician or institution or the protocols of another physician or institution studying substantially the same evaluation, treatment, therapy, or device; or the written informed consent used by the treating physician or institution or by another physician or institution studying substantial the same evaluation, treatment, therapy, or device; or . . . . Respondent's exhibit 3-C. Ms. Allen was informed in August of 1992 that her Insurance Plan would not cover the treatment recommended by the Cancer Center because it was considered to be "experimental." By letter dated March 24, 1993, the Cancer Center was informed that treatment pursuant to the Phase I-II Study was not covered by the Insurance Plan because it was considered to be "experimental." Even though aware that the Insurance Plan had taken the position that treatment pursuant to the Phase I-II Study was not covered by the Insurance Plan, Ms. Allen and the Cancer Center proceeded with Ms. Allen's treatment. By letter dated April 23, 1993, Ms. Allen requested that the Department pay for the medical services she had received at the Cancer Center. In a letter dated May 28, 1993, the Department informed Ms. Allen that her request was denied. The Department informed Ms. Allen that Subsection G.28 of the Insurance Plan's Benefit Document excludes "any services or procedures which are experimental or investigative . . . ." The Department informed Ms. Allen that the Cancer Center's treatment of her was under a Phase I-II Study Program of the University of South Florida Health Science Center and was "experimental." Was the Cancer Center's Treatment "Experimental." Dr. Ballester is a member of the Cancer Center's bone marrow transplant division. Dr. Ballester is involved in cancer research at the Cancer Center. Dr. Ballester was a co-investigator for the Phase I-II Study of the Cancer Center. The rationale, purpose and nature of the Phase I-II Study is described in a Protocol, Respondent's exhibit 3F and Respondent's exhibits A and C (Respondent's exhibit C was not effective until December 7, 1993, after Ms. Allen's treatment). The rationale and purpose of the Phase I-II Study contained in the Protocol is hereby incorporated by reference into this Recommended Order. The Phase I-II Study and the Protocol were approved by the Cancer Center on December 2, 1991, and by the University of South Florida on January 6, 1992. The objectives of the Phase I-II Study are described as follows in the Protocol: To confirm the value of the combination of busulfan and cyclophosphamide and allogeneic bone marrow transportation in the treatment of standard risk leukemias, high risk leukemias, lymphomas not eligible for autologous bone marrow transplant, myelodysplasia, and multiple myeloma. To evaluate this combination of chemotherapy with the addition of total lymphoid irradiation for patients undergoing matched unrelated donor transplants for leukemia or lymphoma. To evaluate this combination of chemotherapy for patients with leukemia or myeloma not candidates for allogeneic bone marrow transplants but eligible for autologous peripheral stem cell transplantation. To determine response rates and long term remission rates as measured by disease free survival. To determine the toxicities of this drug combination with and without total lymphoid irraditation. The number of patients that may be treated in the Phase I-II Study is limited to 60. The procedures followed in the Phase I-II Study pursuant to the Protocol are consistent with guidelines for Phase I-II Studies established by the United States Food and Drug Administration. The Protocol provides that all patients participating in the Phase I- II Study pursuant to the Protocol are to sign an informed consent form. See Respondent's exhibit 3E and Respondent's exhibit B. The informed consent form explains in some detail the purpose of the "research study," the procedures involved, the risks, discomforts or side effects that may be expected, possible benefits and alternative procedures or treatment. The Protocol also contains the following: PARTICIPATION AS A RESEARCH SUBJECT: My participation in this study is voluntary and I am free to withdraw consent and stop participation in the study at any time without this decision affecting my medical care. . . . Ms. Allen executed an informed consent form as required by the Protocol. Dr. Ballester explained why he does not believe that the treatment that Ms. Allen received is "experimental." Dr. Ballester, however, did not indicate that he was aware of or took into account the definition of "experimental" for purposes of the Insurance Plan contained in the Benefits Document. Dr. Ballester did not dispute that the services provided to Ms. Allen were part of a Phase I-II Study, that a consent form was required of Ms. Allen to participate in the Phase I-II Study and that the Phase I-II Study was intended to determine the "efficacy and safety" of the drugs involved in the study. The definition of "experimental" contained in the Benefits Document includes evaluations, treatments, therapies and devices which are "subject of an ongoing Phase I, II or III clinical investigation" to determine ". safety, efficacy " Although the treatment received by Ms. Allen may not be considered by some physicians to be experimental, the treatment received by Ms. Allen which is at issue in this case comes with the definition of "experimental" contained in the Benefits Document for purposes of the Insurance Plan.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department of Management Services, Division of State Employees' Insurance, enter a Final Order denying payment for the services received by Ms. Allen pursuant to the Phase I-II Study and dismissing Floretta Allen's petition. DONE AND ENTERED this 3rd day of June, 1994, in Tallahassee, Florida. LARRY J. SARTIN 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 3rd day of June, 1994. APPENDIX Case Number 93-3728 The Department has submitted proposed findings of fact. It has been noted below which proposed findings of fact have been generally accepted and the paragraph number(s) in the Recommended Order where they have been accepted, if any. Those proposed findings of fact which have been rejected and the reason for their rejection have also been noted. Ms. Allen did not file a proposed recommended order. The Department's Proposed Findings of Fact Accepted in 1-2. Hereby accepted. Accepted in 3 and 5. See 4. The specific findings contained in this paragraph are based upon what purports to be an article published in a periodical. It constitutes unsubstantiated hearsay and the article was not properly identified or authenticated for the purpose for which the Department has relied upon it to support the proposed findings of fact contained in this paragraph. Accepted in 6. Accepted in 6. Accepted in 7-8. 8-9 Hereby accepted. Not supported by the weight of the evidence. The specific findings contained in this paragraph are based upon what purports to be an article published in a periodical. It constitutes unsubstantiated hearsay and the article was not properly identified or authenticated for the purpose for which the Department has relied upon it to support the proposed findings of fact contained in this paragraph. Accepted in 9. Accepted in 14. Accepted in 13 and hereby accepted. Accepted in 28 and hereby accepted. 15-16 See 27. Accepted in 29. Accepted in 26. 19-22 Hereby accepted. Not supported by the weight of the evidence. The specific findings contained in this paragraph are based upon what purports to be an articles published in periodicals. They constitute unsubstantiated hearsay and the articles were not properly identified or authenticated for the purpose for which the Department has relied upon them to support the proposed findings of fact contained in this paragraph. Accepted in 34 and hereby accepted. 25-27 Hereby accepted. Accepted in 30 and 32. Hereby accepted. Accepted in 20 and hereby accepted. Hereby accepted. Accepted in 20. Accepted in 21. Accepted in 22. Hereby accepted. COPIES FURNISHED: Arthur R. Shell, Jr., Esquire 502 Northwest 75th Street, Suite 10 Gainesville, Florida 32607 Augustus D. Aikens, Jr. Chief of Bureau of Benefits and Legal Services Division of State Employees' Insurance Department of Management Services 2002 Old St. Augustine Road, B-12 Tallahassee, Florida 32301-4876 William H. Lindner, Secretary Department of Management Services Knight Building, Suite 307 Koger Executive Center 2737 Centerview Drive Tallahassee, Florida 32399-0950 Paul A. Rowell, General Counsel Department of Management Services Knight Building, Suite 312 Koger Executive Center 2737 Centerview Drive Tallahassee, Florida 32399-0950 Alecia Runyon, Director Department of Management Services Division of State Employees' Insurance 2002 Old St. Augustine Road, B-12 Tallahassee, Florida 32301-4876
The Issue Whether the adult open heart surgery rule in effect at the time the applications were filed until January 24, 2002, or the rule as amended on that date applies to this case. Whether either or both, Lifemark Hospital of Florida, Inc., d/b/a Palmetto General Hospital ("Palmetto General") and Miami Beach Healthcare Group, Ltd., d/b/a Aventura Hospital and Medical Center ("Aventura Hospital") demonstrated the existence of not normal circumstances for the issuance of certificates of need ("CONs") to establish adult open heart surgery programs in Dade County.
Findings Of Fact The Agency for Health Care Administration ("AHCA") administers the certificate of need ("CON") program for health care facilities and services in Florida. Section 408.034, Florida Statutes. Aventura Hospital Miami Beach Healthcare Group, Ltd., d/b/a Aventura Hospital and Medical Center ("Aventura Hospital") is the applicant for CON No. 9395 to establish an adult open heart surgery program in Dade County, in AHCA District 11. Aventura Hospital is a 407-bed community hospital located in the recently incorporated City of Aventura in northeast Dade County. It is approximately one mile west of the Atlantic Ocean on U.S. Highway 1, three-tenths of a mile south of the Broward/Dade County line. It is halfway between Fort Lauderdale and downtown Miami. Aventura Hospital is owned by the Hospital Corporation of America ("HCA"), which operates hospitals in 30 states and 3 countries, including 40 hospitals in Florida. The 407 beds at Aventura Hospital include 327 acute care beds, 32 adult psychiatric beds, 24 adult substance abuse beds, and 24 obstetrics beds. Services, in addition to those provided in the specialty beds, include general medical/surgical services, oncology, a breast diagnostic center, children's after-hours walk in clinic, comprehensive cancer center, dialysis, intensive care, orthopedics, inpatient and outpatient surgery, and physical, speech and occupational therapies. It is a Baker Act facility. The Aventura Hospital staff has from 700 to 750 medical doctors, and 1,200 to 1,300 employees. The emergency room ("ER") has approximately 34,000 annual visits. According to one ER physician on the staff, the average age of patients presenting at the Aventura Hospital ER is 84 years old. That results in a higher than average hospital admission rate from the ER, 35 to 40 percent, as compared to 15 percent nationally. The staff includes 52 clinical cardiologists, 27 invasive cardiologists and five cardiovascular thoracic surgeons. They currently perform, at Aventura Hospital, inpatient and outpatient cardiac catheterizations ("caths"), pacemaker implants, echocardiograms, cardiac stress and cardiac nuclear testing, diagnostic and transesophageal echocardiograms, diagnostic and interventional vascular surgeries. For the 12 months ending June 30, 2001, 422 open heart patients left the Aventura Hospital's primary service area for their surgeries, and 1,132 received cardiac cath procedures. At Aventura Hospital, from April 1999 through March 2000, 178 diagnostic cardiac caths were performed. In terms of total cardiology services, Aventura Hospital is the largest non-open heart provider in the District, ranking second to Mount Sinai Medical Center ("Mount Sinai"). In calendar year 2001, there were 3,489 cardiovascular disease discharges from Aventura Hospital. The boundaries of the primary service area, from which Aventura Hospital draws most of its patients, are Hollywood Boulevard to the north, U.S. Highway 441 to the west, the Bal Harbour/Miami Shores communities near 125 Street to the south and the Atlantic Ocean to the east. Parkway Regional Medical Center ("Parkway Regional") in Dade County, and Memorial Regional Medical Center ("Memorial Regional") in Hollywood, in Broward County, are the closest hospitals to Aventura Hospital. The primary service area has a population of approximately 250,000 residents and includes growing retirement communities such as Sunny Isles Beach, Hallandale Beach, Southeast Hollywood, North Miami Beach, part of Miami Shores, and Bal Harbour. Parkway Regional and Aventura reported a combined total of 1,721 ischemic heart diseases (IHD) discharges in calendar year 2000. IHD is the diagnostic category for patients experiencing a narrowing of the arteries who are most likely ultimately to require open heart surgery. An international patient services department at Aventura Hospital assists patients, particularly from Canada, and Central and South America. Aventura Hospital is a member of the Miami Medical Alliance, also known as Salud Miami, which has promoted Miami as a destination for health care. Miami Heart Institute (Miami Heart), Mount Sinai, Baptist Hospital (Baptist), South Miami Hospital (South Miami), Miami Children's Hospital and Jackson Memorial Hospital (Jackson Memorial) are among the members of the Alliance. At the time the CON application was filed, Aventura Hospital was scheduled for expansion with the addition of a three-story tower and other capital projects costing an estimated $50 million. Subsequently, in December 2001, Aventura Hospital received approval from HCA for the expenditure of an additional $80 million to build the tower up to nine stories immediately, with the structure capable of ultimately being increased to 12 stories. It is expected to be able to withstand a direct hit from a Class V hurricane. In the past, Aventura Hospital has been entirely evacuated twice due to hurricane warnings. When construction is complete, the ER will be approximately three times larger, relocated to the first floor of the new tower, and projected to receive 50,000 visits annually. Ten new operating rooms on the second floor will include two that are properly-sized for cardiovascular surgeries. Because of higher ceilings in the new tower, the second floor of the new building will connect to the third floor of the existing building, on which the cardiac cath lab and related diagnostic equipment is located. If the open heart program is approved, a ten-bed cardiovascular intensive care unit ("CVICU") will be added to the second floor of the new building, and a second cardiac cath lab will be constructed. A dedicated elevator will connect the surgery suites to a 42-bed intensive care unit ("ICU") on the third floor. The remaining floors will consist of single patient rooms equipped or capable of being equipped for telemetry monitoring. The projected building cost for the portion of the construction related to the open heart surgery program is $3 million. Mount Sinai which purchased Miami Heart from HCA, has agreed to close one of its two open heart surgery programs within one year following the issuance of an adult open heart surgery CON to Aventura Hospital. Otherwise, Mount Sinai is committed to operate both programs for five years from June 30, 2000. Jeffrey Gregg, the head of the CON program at AHCA testified that he believes that it is "unprecedented" for an applicant to submit a letter from an existing provider committing to close a program. (Tr. 3061). Aventura Hospital has also offered to commit to providing 2.5 percent of the patient days generated by the adult open heart surgery program to Medicaid and charity patients. Palmetto General Lifemark Hospitals of Florida, Inc., d/b/a Palmetto General Hospital ("Palmetto General") is an applicant for CON No. 9394 to establish an adult open heart surgery program, also in Dade County, AHCA District 11. Palmetto General is a 360-bed acute care hospital located in the City of Hialeah in northwest Dade County at the intersection of 122nd Street, Northwest, and the Palmetto Expressway. Palmetto General is an affiliate of the Tenet Health Care Corporation ("Tenet"), which operates 16 hospitals in Florida, five in Dade County. They are, in addition to Palmetto General, Hialeah Hospital, North Shore Medical Center, Parkway Regional in northern communities, and Coral Gables Hospital in the south. Tenet owns Florida Medical Center, which has an adult open heart surgery program in Broward County. Tenet also operates the open heart program at the Cleveland Clinic in Broward County. The 360 beds at Palmetto General are divided into 253 acute care beds (excluding obstetrics and pediatrics), 48 adult psychiatric beds, and 10 neonatal intensive care beds. Services available on the Palmetto General campus include outpatient imaging and surgery, psychiatry, oncology, rehabilitative therapies, and intensive care. Palmetto General has a staff of 600 physicians, 350 of whom are on the active staff, and 1,500 employees. Palmetto General has approximately 40 cardiologists on staff, 19 of whom are invasive cardiologists. The services available include ultrasound, exercise testing, arrhythmia studies, including halter monitoring and electrophysiology, surgical insertions of pacemakers and defibrillators, and diagnostic cardiac caths. For the 12 months ending June 30, 2001, 1,658 cardiac caths and 668 open heart procedures were performed on patients from the Palmetto General primary service area. At Palmetto General, there were 528 diagnostic cardiac caths performed from April 1999 through March 2000, making it the largest cardiac cath provider in Dade County, which does not also have an open heart program. In calendar year 2001, there were 3,089 cardiovascular disease discharges from Palmetto General. The primary service area for Palmetto General includes the communities of Hialeah, Hialeah Springs, Miami Lakes, and portions of Opa Locka. Approximately 450,000, or 22 percent of the 2.2 million people living in District 11, live in the Hialeah area, over 50,000 are over 65 years old. The 65 and older population in the Palmetto General primary service area is projected to increase by 10 percent by 2005. Seventy to 80 percent of the residents of Palmetto General's primary service area are Hispanic, many first-generation. Most of the staff and employees of Palmetto General are Hispanic or speak Spanish. In addition to Palmetto General, the primary service area includes two other hospitals, Hialeah Hospital and Palm Springs General Hospital ("Palm Springs General"). Of the three, only Palmetto General has a cardiac cath lab. About 400 suspected heart attack patients are treated in the ER at Palmetto General each year. The ER has approximately 60,000 annual visits. It is the third busiest ER in the county. Although the use rate for open heart surgery has been flat or declining throughout the district, it has increased in the Palmetto General service area. While District 11 had an absolute increase of 51 open heart cases from 1999 to 2000, there was a 91-case increase in the Palmetto General service area. Together Palmetto General, Hialeah Hospital, and Palm Springs reported 2,206 IHD discharges, 982 of those from Palmetto General. Subsequent to filing the open heart CON application, Palmetto General developed a $23 million master facility plan of capital expenditures to upgrade the facility in response to operational deficiencies and capacity constraints. Tenet approved the expenditure of $6 million in the first year. When entirely implemented, the plan will result in doubling the size of the ER, expanding maternity labor and delivery areas, building a new 18-bed intensive care unit with space to add ten more beds later, and refurnishing existing operating rooms and adding three more. Palmetto General also, in 2002, experienced significant discord among the medical staff which apparently has been resolved with a change in the hospital's senior management. Palmetto General maintains that its master facility plan is independent of its plans for an open heart surgery program, although the master plan supports and facilitates that proposal. Mount Sinai and Aventura Hospital contend that Palmetto General has impermissibly amended the architectural plans for the open heart surgery program. The plans, as submitted in the CON, showed the addition of two open heart operating rooms on the ground floor, with an area of shelled-in space, and mechanical/electrical space, and part of the roof, above that on the first floor, and an elevator and corridor on the second floor within the same area designated as being within the scope of work. A separate area of work, on the schematic drawing of the second floor, showed a four-bed CVICU. On the master facility plan, the two open heart surgery operating rooms are in the same location but reconfigured. The space above is still shown as shelled-in and it may have columns. On the second floor, the four-bed CVICU for open heart patients is no longer a separate unit but is included in an existing ten- bed CVICU. The CVICU is adjacent to the existing cardiac cath lab and to an area shown for cath lab expansion, previously a part of the roof on the CON drawing. As a result of the use of the existing space for the CVICU, the total area devoted to the open heart program is reduced in size. Although the two open heart operating rooms are reconfigured and the four-bed open heart CVICU will not be an entirely separate unit, the concept for the open heart surgery program is essentially unchanged. Construction detailed drawings of the master plan were expected to be completed in January 2003. If the open heart surgery program CON is approved, Palmetto General will commit to providing 7.5 percent of open heart and angioplasty services to Medicaid and charity care patients. Existing District 11 Providers Baptist, Cedars Medical Center ("Cedars"), Jackson Memorial, Mount Sinai, Miami Heart, Mercy Hospital ("Mercy"), South Miami, and Kendall Medical Center ("Kendall") are the eight hospitals in Dade County which have open heart surgery programs. Mount Sinai and Miami Heart are, as previously noted, both owned by Mount Sinai. They are located within two miles of each other on Miami Beach, near the Julia Tuttle Causeway. Jackson Memorial which, like Mount Sinai, is a University of Miami Medical School teaching hospital is located in downtown Miami, across the street from Cedars and near Mercy. Kendall is further south and west. South Miami and Baptist are in South Central Dade County. In the summer and fall of 2000, when AHCA published the fixed need pool, and Aventura Hospital and Palmetto General filed their applications, four of the eight open heart programs in Dade County were operating at volumes below 350 cases a year. In 1999, those programs and volumes were Cedars, with 340 surgeries, Jackson Memorial with 332, South Miami at 211, and Kendall with 187. In 2001, Cedars increased to 361 open heart cases and Jackson Memorial reported 513. The programs at Kendall and South Miami have continued to operate below 350 cases a year. The volume at Kendall was 184 in 2000, and 295 in 2001. South Miami reported 175 and 148 in calendar years 2000 and 2001, respectively. Like Aventura Hospital, Cedars, and Kendall are owned by HCA. South Miami and Baptist Hospital, which are 3.5 miles apart, are both affiliated with the Baptist health care system. Because volumes were below 350 at existing programs, AHCA published a numeric need for zero additional programs in District 11 for the January 2003 planning horizon. The rule on numeric need, as revised on January 24, 2002, reduced the minimum volume for existing providers to 300 open heart surgeries for the 12-month period specified in the rule, although it implicitly increased the expected size of each existing program to 500 cases by increasing the divisor in the numeric need formula. Under either rule, the applicants must demonstrate the existence of not normal circumstances for the approval of any additional open heart surgery programs in the district. Under the old rule, with 350 as the divisor in the formula, the numeric calculation, before being reduced to zero because of low volume programs, resulted in a need for 2.1 additional programs. That number is a negative one under the new rule. Aventura Hospital projected that its open heart surgery volumes would be 240, 312, and 347 during the first three years of operations, anticipating these to be the years ending in September of 2004, 2005, and 2006, respectively. Palmetto General projected volumes of 148, 210, and 250 open heart surgeries and 225, 230, and 310 angioplasties, in the first three years. From 1996 to 2001, the total annual volume of open heart surgeries in District 11 declined by 346, from 3,821 in 1996, to 3,421 in 2000, then increased slightly to 3,475 in 2001. Therefore, if Aventura Hospital and Palmetto General achieve projected volumes, it will result largely from redirecting cases from existing providers including one that would close if Aventura's CON is approved. The declining open heart volumes also reflects a technological improvements and a shift to less invasive angioplasty procedures. The number of angioplasties performed in District 11 increased from 6,384 in 2000, to 7,682 in 2001. Mount Sinai and Miami Heart Mount Sinai is one of six statutory teaching hospitals in Florida, with 19 accredited training programs, including residencies and fellowships. The cardiovascular and thoracic surgery residency program is shared with Jackson Memorial. In addition to the University of Miami, Mount Sinai is affiliated with the medical schools at Nova Southeastern University, Barry University, and the University of South Florida. Mount Sinai has the largest open heart volume in District 11, with over 40 percent of the total volume. It also has the broadest geographical draw for patients, with only 60 percent of the cases originating from the District. In the year from April 1999 to March 2000, Mount Sinai reported performing 1,034 adult open heart surgeries and 4,318 adult inpatient cardiac caths. In calendar years 2000 and 2001, the volume of open heart surgeries at Mount Sinai remained virtually constant at 980 and 976, respectively. Angioplasties increased during that same period of time from 1,037 to 1,067. At Miami Heart, from April 1999 through March 2000, 483 open heart surgeries and 4,179 cardiac caths were performed. The combined total of therapeutic cardiac caths or angioplasties performed at Mount Sinai and Miami Heart is approximately 2,500 a year. There is evidence that Mount Sinai has begun to phase-out open heart cases at Miami Heart where the volume dropped to 390 surgeries in 2000, and to 296 in 2001. In a travel time study commissioned by Mount Sinai, the drive time from Palmetto General ER to Mount Sinai ER was 28 minutes to travel the 15.5 miles. From various zip codes within the Palmetto General service area to the Mount Sinai ER, travel times ranged from 14 minutes to 36 minutes. Driving times from Aventura to Mount Sinai ranged from 18 to 37 minutes. Due to its close proximity, to Mount Sinai, it reasonably should take approximately the same driving time to reach Miami Heart. In an Aventura Hospital survey of transfers of high- risk cardiac patients, the average times were estimated to range from 59 minutes from Aventura Hospital to Mount Sinai and 1 hour and 26 minutes from Aventura Hospital to Miami Heart Institute. Those times must include more than actual drive time, otherwise the differences between Mount Sinai and Miami Heart would not be so significant. One would also anticipate that, while under common ownership, transfers from Aventura Hospital to Miami Heart would have been less cumbersome. The accompanying narrative in the CON suggests that time frames may have been counted from the time the decision to transfer is made to the time the patient arrives at the receiving facility. The testimony regarding the data compilation process was vague and inadequate and, therefore, the conclusions are unreliable. The Mount Sinai study showed travel times of 27 minutes to Miami Heart and 28 minutes to Mount Sinai from Palmetto General. That difference of one minute is confirmed in data underlying Aventura Hospital time travel study. Based on projected volumes, prior transfers, referral patterns and market shares, an open heart program at Palmetto General will reduce the volumes at Mount Sinai and Miami Heart by 92 to 107 open heart surgeries a year, for a financial loss of $1.6 million. An open heart program at Aventura is expected to reduce the combined volume at Mount Sinai and Miami Heart by 196 cases. A combined reduction of approximately 300 cases and the closure of one of the programs would leave the remaining Mount Sinai program at approximately 900 open heart cases, with a loss of $4.7 million. Mount Sinai was projected to experience a net loss from operations of $32 million in 2002. There was testimony that overall financial management and the potential for profitable operations have improved. Despite the fact that an Aventura program will have almost double the adverse impact of one at Palmetto General, Mount Sinai, in the asset purchase agreement resulting in its acquisition of Miami Heart from HCA, agreed not to contest the application filed by Aventura Hospital. Jackson Memorial Jackson Memorial is the hospital designated to provide indigent care in Dade County, through a public health trust funded by a portion of sales taxes. In the 12 months ending March 2000, 334 open heart surgeries and 3,644 cardiac caths were performed at Jackson Memorial. In 2000 and 2001, the open heart volume increased to 438 and 513 surgeries, respectively. The Mount Sinai travel time study, showed that the distance from Palmetto General to Jackson Memorial was 10.7 miles and that the average drive took 22 minutes. Jackson Memorial will lose an estimated 46 cases to Palmetto General, in the third year of an open heart program in 2004, and 12 cases to an Aventura Hospital program, or a combined total of approximately 60 cases a year. Mercy Mercy had a volume of 412 open heart surgeries and 2,704 cardiac caths, from April 1999 through March 2000. In calendar year 2000 and 2001, the open heart volumes at Mercy were 492 and 478, respectively. The average driving time from Palmetto General to Mercy ranged from 24 minutes to 38 minutes, averaging 27 minutes in Mount Sinai's expert's study. If Palmetto General is approved, a reduction of 44 open heart cases is expected at Mercy. An Aventura Hospital program is expected to result in a five-case reduction at Mercy. Cedars The volume at Cedars was 316 open heart cases from April 1999 through March 2000. In calendar years 2000 and 2001, the volume increased to 334 and 361 open heart surgeries, and to 1,323 and 1,468 angioplasties, respectively. The average driving time to Cedars, from Palmetto General, was 23 minutes, in the Mount Sinai travel time study, with a range of drive times from 17 minutes (starting at 4:19 a.m.) to 30 minutes (starting at 7:06 a.m.). If Palmetto General is approved to become an open heart provider, Cedars' volume is expected to be reduced by 20 surgeries. If Aventura Hospital becomes an open heart provider, Cedars' volume will be reduced by an estimated 14 cases. Kendall Kendall had a volume of 180 open heart cases for the year ending March 2000. Kendall has consistently been a low volume open heart provider, increasing from 136 surgeries in 1989, to 295 in 2001. Kendall is located in southwestern Dade County, well beyond the primary service areas of Palmetto General and Aventura Hospital. The common feature shared with Palmetto General is that Kendall is also considered an Hispanic or Spanish-speaking hospital, although every hospital in Dade County is staffed to serve Spanish-speaking patients. Mount Sinai's study found the average drive time from Palmetto General to Kendall to be 23 minutes, covering 14.6 miles. Estimates of case reductions at Kendall are six if Palmetto General is approved and one if Aventura Hospital is approved. South Miami and Baptist South Miami reported a volume of 199 open heart cases for the year ending March 2000. The volume of open heart surgeries has been low, over the years, from 132 in 1989, to 148 in 2001, never exceeding 215 cases in any one year. South Miami has become a referral center for complex, multi-vessel angioplasties. Angioplasties increased, at South Miami, from 723 in 2000, to 837 in 2001. Like Kendall, South Miami and Baptist have no overlap with the primary service areas of Aventura Hospital and Palmetto General. If Palmetto General offers open heart services, then South Miami would lose approximately nine cases in the third year of operations. If Aventura Hospital's CON is approved, then South Miami would lose an estimated two cases that year. The volumes at Baptist, from April 1999 through March 2000, were 472 open heart surgeries and 4,730 cardiac caths. The Baptist volume of open heart cases declined to 428 in 2000, and 408 in 2001. Baptist's volume is expected to decline by 14 cases lost to Palmetto General, and two to Aventura Hospital. Existing District 10 Providers Mount Sinai, in its proposed recommended order, suggested that Memorial Regional, the Cleveland Clinic, and Florida Medical Center all in Broward County, are available open heart providers for northern Dade County residents. Tenet operates the open heart program at the Cleveland Clinic, which is 17 miles north of Palmetto General. The average travel time to the Cleveland Clinic, in the Mount Sinai study, was 26 minutes, but that is unreliable because it includes one run where the driver obviously had to speed, at 4:42 a.m., to average over 60 miles per hour. The staff at Cleveland Clinic is not predominantly Spanish-speaking. The medical staff is also closed so that only Cleveland Clinic doctors practice at that hospital. Patients have interruptions in their continuity of care when referred to an entirely different medical staff. In addition, the Cleveland Clinic is a referral hospital drawing patients from outside the area. It does not function as a community hospital. The Cleveland Clinic is not, therefore, an alternative provider for Dade County residents. At Memorial Regional, six miles north of Aventura Hospital, there were 766 open heart surgeries performed in one 12-month period in 1999 and 2000 and 641 in calendar year 2000. Twenty-six percent of the Aventura Hospital primary service area open heart surgeries were performed at Memorial Regional in 2001, as compared to 5 percent from the Palmetto General Area. Over 30 percent of the angioplasties performed on Aventura Hospital service area residents were performed at Memorial Regional in 2001, and less than 4 percent for Palmetto General service area residents. If Aventura Hospital is approved, the loss in volume from Memorial Regional would be approximately 103 cases a year. Aventura Hospital noted that Memorial Regional has experienced capacity problems. In Columbia Hospital Corporation of South Broward vs. AHCA, the administrative law judge found that the proposal to establish a new hospital in Miramar was intended to " . . . allow Memorial Regional and Memorial West the opportunity to decompress and operate at reasonable and efficient occupancies into the foreseeable future without the operational problems caused by the current over-utilization." There is evidence that the relief resulting from the construction of the Miramar Hospital, will not alter the difficulties that Aventura Hospital-based doctors experience in gaining access to the cardiac cath lab at Memorial Regional. Florida Medical Center has approximately 450 open heart surgery cases a year. It is a Tenet facility in Western Broward County. The financial data from Florida Medical Center was used in Palmetto General's projections of income and expenses, but there was no evidence that Florida Medical Center's open heart program is a viable alternative to programs at either Aventura Hospital or Palmetto General. Review Criteria Subsection 408.035(1) - need in relation to applicable district health plan; 59C-1.030(2)(a)-(e) - need that the population has, particularly low income, ethnic minorities, elderly, etc.; relocation of a service; needs of medically underserved, Medicare, Medicaid and indigent persons; and Subsection 408.035(11) - past and proposed Medicaid and indigent care. The District 11 health plan includes preferences for applicants seeking to provide tertiary services who have provided the highest Medicaid and charity care, and who have demonstrated the highest ongoing commitment to Medicaid and indigent patients. Aventura Hospital provided approximately 1 percent charity, 6 to 7 percent Medicaid and 17 percent Medicare in 2001. It qualified as a disproportionate share Medicare hospital. Aventura Hospital's proposed CON commitment is to provide a minimum of 2.5 percent of open heart surgery and angioplasty patient days to Medicaid and charity patients. Palmetto General is and, for at least the last ten years, has been a disproportionate share Medicaid and Medicare provider. Over 20 percent of the total care at Palmetto General has been given to Medicaid patients in recent fiscal years. The care to indigent patients was approximately $8 million in one year. In this regard, Palmetto serves as a "safety net" hospital for poor people, like Jackson Memorial and Mount Sinai. Palmetto General will meet the needs of ethnic minorities, and more Medicaid, low income and indigent patients. Aventura Hospital is serving an older population and, in effect, would be relocating an open heart program from Miami Heart. In a service like open heart surgery, Medicare is the dominant payor. Subsection 408.035(2) - availability, quality of care, accessibility, extent of utilization of existing facilities in the district; Rule 59C-1.033(4)(a) - two-hour travel time; and Subsection 408.035(7) - enhanced access for residents of the district. The applicants contend that the existing programs in the district are geographically maldistributed to the detriment of the residents of northeast and northwest Dade County. They also contend that those access issues outweigh the fact that district residents can reach open heart providers within the two- hour travel time standard in the open heart rule. In its proposed recommended order, Mount Sinai noted that if Dade County is divided in half using " . . . State Road 836 (also known as the Palmetto Expressway), which runs east-west in the center of the County, near Miami International Airport . . . ," there are four existing open heart providers in the north and four in the south. This statement must be inaccurate because Palmetto General's location was described as being on the Palmetto Expressway with no existing open heart providers in the same service area. The existing programs in District 11 are inappropriately dispersed geographically to serve the population, as it is distributed throughout Dade County. The Hialeah area, with 22 percent of the population, is larger than 14 counties in Florida which have at least one open heart surgery program. The population in the Aventura Hospital primary service area, 250,000 residents, is roughly half that of Hialeah, but is equal to or larger than five counties in Florida which have open heart surgery programs. If the applicants' patients are not transferred to other hospitals, then the volume of open heart procedures at those hospitals will decline. The medical literature and experts in the field demonstrate a relationship between volume and quality. In Florida, the old rule and new rule set the minimums for existing providers at 350 and 300, respectively. If Aventura Hospital's open heart CON is approved, almost 200 surgeries will be lost from Miami Heart and Mount Sinai, approximately half of that from the program that will be closed, and just over 100 from Memorial Regional. The effect on the low volume providers will be negligible, one lost case to Kendall and two from South Miami. Based on its projections, Aventura Hospital expects to reach 347 open heart surgeries in its third year of operation. Even assuming that most of the cases would be redirected from other providers, the projection is aggressively based on the assumption that Aventura Hospital will have a market share of 87 percent of its primary service area. If Palmetto General's open heart CON is approved, the greatest impact will also be on Mount Sinai and Miami Heart, a loss of approximately 100 surgeries a year, and on Jackson Memorial, a loss of 46 surgeries a year. Palmetto General projected that it would reach a volume of 250 open heart surgeries by the end of the third year of operations. South Miami would lose nine and Kendall would lose six open heart cases. Neither an Aventura nor a Palmetto area program will keep the existing low volume providers below 300 or 350 open heart surgeries. With or without them, South Miami and Kendall are expected to continue to operate below the objective set by the open heart rule. The absence of a material adverse impact on low volume providers is the result of the absence of any overlap in the service areas of the applicants and South Miami and Kendall. In District 11, only Cedars is likely to end up having open heart surgery volumes in a range between 300 and 350 cases as a result of the approval of both programs. Difficulties and delays in patient transfers for open heart or angioplasty services were raised as possible not normal circumstances in Dade County. Aventura Hospital witnesses presented anecdotal evidence of patients who could have benefited from the availability of angioplasty and open heart case without transfers. The evidence was inadequate to demonstrate that access to existing facilities is not available within a reasonable time. Palmetto General provided a review of medical charts to show patients whose outcomes would have been improved if it had an open heart program. Physicians who testified about those patients differed in their conclusions concerning the urgency of transfers, the need for primary angioplasty or thrombolytics, and the causes of delays. No medical records indicated patient outcomes after they were transferred. Aventura Hospital and Palmetto General also contend that the residents of their primary service area are at a disadvantage by not having timely access to primary angioplasty for patients who are having heart attacks. Treatment in their ERs is limited to administering thrombolytic or clot-busting drugs in an effort to save heart muscle. Increasingly, research has shown the benefits of primary angioplasty over thrombolytics as the most effective treatment to restore blood flow to heart muscle. The benefits include lower mortality rates and few complications, and are enhanced if the "door-to-balloon" time is less than 90 minutes. In Dade County, transfer times typically range from two to five hours, including the time to contact a receiving facility, to find a receiving physician, to receive insurance authorization, to summon an ambulance, and to prepare the patient medically for transfer, as well as the actual travel time. Research also shows that the quality of an open heart surgery program continues to be linked to its volume. In Florida, AHCA has not revised its rules either to provide for angioplasty services without open heart surgery back-up, or to reduce the tertiary designation of open heart surgery programs. Therefore, the need for more timely access to angioplasty is rejected as a not normal access issue. Palmetto General, due to operational difficulties is unlikely to meet the 90-minute reperfusion goal. In fact, most hospitals with open heart programs do not. Palmetto General does not plan to construct a second cardiac cath lab for use at the time it establishes an open heart program. Mount Sinai witnesses questioned the ability of a hospital with one cath lab to provide emergency primary angioplasty services. An additional cath lab is not required in the open heart rule and, while difficulties in scheduling are likely to occur, successful open heart programs have been operated with one cath lab initially, including Tenet-operated Delray Medical Center. Palmetto General can, when needed, construct a second cardiac cath lab in approximately six months without CON review. AHCA has not revised the open heart surgery rule to respond to the development of primary angioplasty as a preferred treatment. By its adoption of a new rule maintaining the link between angioplasty and open heart surgery, and maintaining the tertiary nature of open heart surgery, AHCA has placed the State of Florida on the side of the debate which is more concerned about the link between volumes and quality in open heart programs. Palmetto General also attempted to demonstrate the existence of access constraints at Jackson Memorial. The evidence showed discrepancies in lengths of stay, with indigent patients generally hospitalized longer. But those discrepancies were subject to other interpretations, including the possibility that indigent patients are more sick because lengths of stay were longer before and after indigent patients are transferred to and from Jackson Memorial. The maldistribution of open heart programs in Dade County as compared to the areas of significant population growth is a not normal circumstance affecting the availability, access, extent of utilization, and quality of care of existing facilities in the district. The commitment to the closure of an existing program is also a not normal circumstance in favor of the Aventura Hospital proposal. Subsection 408.035(3) - applicant's quality of care; Rule 59C- 1.030(2)(f) - accessibility of facility as a whole; Subsection 408.035(10) - costs and methods of construction. The parties stipulated that both Aventura Hospital and Palmetto General have a record of providing quality care with regard to the scope and intensity of services provided historically, and that both are accredited by the Joint Commission on Accreditation of Health Care Organizations. The parties also stipulated that both applicants can establish quality perfusion services and recruit qualified perfusionists at the costs identified in their applications. Palmetto General failed to identify any surgeons who would staff their proposed open heart program. Two cardiac surgeons in a group which submitted a letter of interest included in the Palmetto General CON application were killed in a car accident a month before the final hearing. While the absence of named surgeons affects the certainty of referrals, there is no requirement, in AHCA rules, that surgeons be named in CON applications. One board-certified and a second at least board-eligible surgeon must be on the hospital staff if it starts an open heart program. Tenet has the resources and the senior management at Palmetto General has the experience to recruit qualified medical and nursing staff. The plan for a four-bed CVICU at Palmetto General was criticized as allocating too few beds for open heart surgery patients. Using the normile statistical methodology, one expert witness testified that a six-bed CVICU is required to accommodate the expected patient census in the third year of an open heart program. Using an average daily census of 1.43 patients and a target occupancy rate of 70 percent in the four-bed CVICU, however, only two beds are needed in the first year. Subsequently, as needed, acute care beds may be converted to ICU beds without CON review. Subsection 408.035(4) - needs that are not reasonably and economically accessible in adjoining areas. Mount Sinai contends that the residents of the Aventura and Hialeah areas reasonably and economically receive open heart services in Broward County. The statistical data and evidence of capacity constraints, even after the Miramar hospital is constructed, and the closure of one of the programs that residents of the Aventura Hospital primary service area have relied on and its relocation to their area, is more appropriate than increasing their reliance on Memorial Regional. The evidence does not demonstrate that the residents of the Palmetto General service area have reasonable access to Cleveland Clinic, Memorial Regional or any other Broward County hospital with an open heart surgery program. Subsection 408.035(5) - needs of research and educational facilities. Aventura Hospital is not a statutory teaching hospital. It does have podiatry, nursing, and occupational and physical therapy students training at the hospital. Residents and interns from the primary care program at Nova Southeastern University, from the Barry University School of Podiatry, and area nursing and technical schools receive some of their training at Palmetto General. Although one rating service places Palmetto General in the category of a teaching hospital, it is not a statutory teaching hospital. A program at Aventura Hospital will have a greater adverse effect on Mount Sinai, while one at Palmetto General will have a greater adverse effect on Jackson Memorial. Both Mount Sinai and Jackson Memorial are statutory teaching hospitals. Subsection 408.035(6) - management personnel and funds for project accomplishment; Subsection 408.035(8) - immediate and long term financial feasibility. Both Aventura Hospital and Palmetto General have adequate funds and experienced management to establish open heart surgery programs. In the pre-hearing stipulation, the parties agreed that the applicants have sufficient available funds for capital and operating expenses to initiate open heart surgery programs and to operate the programs, in the short term, until financially self- sufficient. Aventura Hospital reasonably projected net profits of approximately $543,000 from an open heart program in the first year of operation, and $1 million in the second year. Aventura Hospital reasonably relied on the experiences of other HCA open heart providers in the area, particularly Miami Heart and JFK Medical Center in Palm Beach County. Mount Sinai questioned the reasonableness of Palmetto General's projection that it will generate higher profits than Aventura Hospital with lower case volumes. It also questioned Palmetto General's ability to attain the volumes projected. Palmetto General projected a net profit of just over $700,000 in the first year, $1.18 million in the second year, and $1.5 million in the third year, with 148 open heart cases in the first year, 210 in the second year, and 250 in the third year. By comparison, Aventura Hospital's first three-year projections for open hearts were 240, 312, and 347. Aventura's projected volume was potentially overstated in view of the experience at HCA facility Columbia Westside in Broward County which has achieved approximately half the open hearts projected. But the differences in projections reasonably reflect Aventura's draw from a smaller but older population and Palmetto General's draw from a larger, poorer but younger population. Palmetto General's projected volumes are reasonable considerating the number of actual open heart surgeries, 668, originating from its primary service area in the 12-months ending in June 2001. Palmetto General reasonably and conservatively based its reimbursement rates on those received at Florida Medical Center in Broward County, which actually has a lower reimbursement rate than Dade County. Mount Sinai also demonstrated that charges at three South Florida Tenet facilities, Delray Medical Center, North Ridge Medical Center, and Florida Medical Center were significantly higher than those at Mount Sinai. But those facilities operate successfully in competitive markets in Districts 9 and 10, which supports the testimony that, for open heart surgery, charges are not very relevant. Most compensation is derived from fixed-rate reimbursement from Medicare. Subsection 408.035(9) - extent to which proposal fosters competition that promotes quality and cost effectiveness. In the District, HCA, the parent of Aventura Hospital, after the sale of Miami Heart, continues to operate Cedars, which has exceeded 350 cases for the first time in 2001, and Kendall, which at 295 cases in 2001, has been a chronically low volume open heart provider. That would raise doubts about the projected volumes at Aventura Hospital, but for the demographics of its location and the closure and, in effect, proposed relocation of the Miami Heart program to a more geographically appropriate area of the District. The relocation, therefore, makes the proposal a "wash" resulting in no net increase in programs or competition in the District. By contrast, the approval of a program operated by Tenet which has five Dade County hospitals, none with an open heart program, does introduce a new provider into the market in a location with special needs due to the larger critical mass of people, their ethnicity, relative poverty and fewer, more distant alternate open heart providers. Subsection 408.035(12) - nursing home beds. The criterion related to nursing home beds, by stipulation of the parties, is inapplicable to this case. Summary of Findings On balance, Palmetto General is preferable as the hospital with the larger critical mass of population, the status as a disproportionate share provider of Medicaid and Medicare, the improved geographical access for a large ethnic group with relatively high IHD and heavy demands for services, including cardiac care services in its ER and in the ERs of other hospitals within its primary service area. In addition, the detriment to existing providers, predominantly Mount Sinai and Jackson Memorial will not reduce the volumes below 350 open heart cases. On balance, the Aventura Hospital proposal, while less compelling, because it is not a Medicaid disproportionate share hospital, is not a new entrant to the market, and has a population which is half that in the Palmetto General primary service is also entirely approvable. The hospital has facilities superior to those at Palmetto General. It is better prepared to implement an open heart program, with plans to open a second cardiac cath lab immediately and with the cardiothoracic surgeons identified for the program. Within its service area population, Aventura Hospital has a large population of elderly people, who present to its hospital with symptoms of heart attacks. The troubling adverse impact on Memorial Regional is offset by the evidence of crowding and scheduling difficulties specifically in the Memorial Regional cardiac cath lab. The troubling adverse impact on the combined Miami Heart and Mount Sinai programs is offset by the Asset Purchase Agreement which contemplated the relocation of at least a portion of the Miami Heart cases to Aventura Hospital. Even with the additional loss of 100 open heart cases to Palmetto General, Mount Sinai will remain the largest Dade County provider, retaining from 900 to 1,000 annual open heart cases. The approval of both applications will improve access to open heart surgery and angioplasty care in District 11.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a final order be entered issuing CON Application No. 9394 to Lifemark Hospitals of Florida, Inc., d/b/a Palmetto General Hospital, and CON Application No. 9395 to Miami Beach Healthcare Group, Ltd., d/b/a Aventura Hospital and Medical Center. DONE AND ENTERED this 14th day of April, 2003, in Tallahassee, Leon County, Florida. ELEANOR M. HUNTER Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 14th day of April, 2003. COPIES FURNISHED: Valda Clark Christian, General Counsel Agency for Health Care Administration 2727 Mahan Drive Building Three, Suite 3431 Tallahassee, Florida 32308-5403 Lealand McCharen, Agency Clerk Agency for Health Care Administration 2727 Mahan Drive Building Three, Suite 3431 Tallahassee, Florida 32308-5403 Michael O. Mathis, Esquire Agency for Health Care Administration 2727 Mahan Drive Building Three, Suite 3431 Tallahassee, Florida 32308-5403 C. Gary Williams, Esquire Michael J. Glazer, Esquire Ausley & McMullen 227 South Calhoun Street Post Office Box 391 Tallahassee, Florida 32302 Geoffrey D. Smith, Esquire Sandra L. Schoonover, Esquire Blank, Meenan & Smith, P.A. 204 South Monroe Street Post Office Box 11068 Tallahassee, Florida 32302-3068 Stephen A. Ecenia, Esquire R. David Prescott, Esquire Rutledge, Ecenia, Purnell & Hoffman, P.A. 215 South Monroe Street, Suite 420 Post Office Box 551 Tallahassee, Florida 32302-0551
Findings Of Fact Respondent St. Augustine Artificial Kidney Center, Inc. (AKC) filed an application for a certificate of need with Respondent Department of Health and Rehabilitative Services (HRS) on June 2, 1980, to construct and operate an eight-station outpatient free standing hemodialysis center at St. Augustine, Florida, for an estimated capital expenditure of $144,650. Petitioner University Hospital Academic Fund, Inc. (Academic Fund) also filed an application with Respondent on June 16, 1980, to construct a similar facility at St. Augustine, with a proposed project cost of $138,131.64. The Academic Fund application stated that it was in the process of incorporating a separate entity to operate the proposed facility. By letter of July 28, 1980, the Academic Fund informed HRS that it planned to form a new corporation named St. Johns Renal Services, Inc. to operate the facility and that any certificate of need which might be granted should be issued in the name of that corporation. However, no such corporation has yet been formed. (Testimony of Goldberg, Exhibits 1-2) The two applications were comparatively reviewed by the Health Systems Agency of Northeast Florida, Area 3, Inc. (HSA) during July 1980. The review consisted of evaluation at various agency levels and culminated in a determination by the HSA Board of Directors on July 24, 1980, that the application of the Academic Fund should be recommended to HRS for approval. The HSA reports on the two applications were transmitted to HRS by a letter of Fred J. Huerkamp, Executive Director of the HSA, dated August 7, 1980. Although the HSA Board of Directors did not specifically vote to deny the application of AKC, the HSA report on the AKC application stated that inasmuch as the Board of Directors had adopted the recommendations of its Health Needs and Priorities Committee recommendations to approve the Academic Fund application, it had also adopted the implicit denial of the AKC application by the committee. The HSA report itself recommended denial of the AKC application. The HSA found that there was a need for an eight-station dialysis facility in St. Augustine under its Health Systems Plan because only three such dialysis facilities are located in the applicants' proposed service areas, two of which are in Jacksonville and one in Daytona Beach, thus necessitating considerable present travel to prospective patients residing in St. Johns County and contiguous portions of adjacent counties. One of the Jacksonville facilities is an inpatient unit at University Hospital. The HSA also found that the two applicants were virtually equal with respect to probable quality of service, financial resources, and costs of operation. The HSA decided that the Academic Fund application should be approved because funds received for operation of the facility could, in part, be utilized to enhance the overall patient care capabilities of University Hospital, particularly with medical staff teaching expenses. The Academic Fund is a nonprofit corporation which provides a billing service for professional fees of the physicians who are salaried employees of University Hospital and who participate in a University of Florida teaching program there. The organization is comprised of these physicians and operates in a manner similar to a medical group practice plan. A percentage of fund assets are donated to University Hospital to support its teaching program. The hospital is a tax-supported indigent care facility. (Testimony of Dewberry, Goldberg, Huerkamp, Exhibits 1- 3) The two competing applications also were reviewed by the Florida End Stage Renal Disease Network 19, Inc., (Network 19) , a federally funded organization under the Department of Health and Human Services which performs a planning function to determine the need for new or expanded services with respect to dialysis and kidney transplants in Florida. It makes recommendations to the federal Health Care Finance Administration in such matters for determination of eligibility of a provider for participation in the Medicare and Medicaid reimbursement programs. By agreement with HRS, Network 19 also provides review and recommendations as to certificate of need applications submitted by proposed dialysis facilities. HRS considers such recommendations during its certificate of need review process as "other pertinent data" under Rule 10-5.10(5), F.A.C. On July 29, 1980, Network 19 transmitted its recommendation to HRS which stated that although it had found both applications to be essentially equal under the Network's review criteria and standards, AKC was chosen over the Academic Fund in light of the fact that it had submitted the first application and because of its expected greater cost efficiency of operation. The organization projected a need for eight dialysis stations in St. Augustine by mid-1982. The basis for the finding that AKC would be more cost efficient was that the AKC application projected a profit during the first year of operation whereas the Academic Fund application indicated a deficit for the initial year. (Testimony of Moutsatsos, Hudson, Exhibit 4) HRS reviewed the two applications, together with the recommendations of Network 19 and the HSA, and determined that the AKC application should be approved. By a letter of October 3, 1980, the Administrator of HRS' Office of Community Medical Facilities transmitted a certificate of need to AKC, subject to any request for a hearing filed pursuant to Chapter 10-5, F.A.C. By letter of the same date, the Administrator advised the Academic Fund that its application had not been favorably considered because the proposed project did not demonstrate "favorable feasibility" when compared with the financial aspects of the AKC proposal, and that it presented a less favorable alternative method of providing services in St. Augustine. The Administrator also informed the HSA by letter of the same date that the HSA recommendation had been rejected for reasons contained in an attached "State Agency Report." Both the Academic Fund and HSA thereafter filed appeals of the HRS decision. (Exhibits 1-3) The HRS medical facilities consultant, Nancy E. Hudson, who reviewed the applications and made the initial staff recommendation, favored the AKC proposal as being more financially feasible in that it planned to charge the Medicare "screen" or maximum of $138 per treatment, as opposed to the Academic Fund's plan to charge $133, plus a $5 laboratory fee. She was of the opinion that the Fund's proposed charges would be less cost effective because experience showed that laboratory fees would normally exceed $5, and thus require either an additional charge to patients or obtaining an exception to the Medicare "screen." She further found that AKC had considerable experience in the field of free standing dialysis facilities since its principals operated several other facilities in Florida, whereas the Academic Fund had not involved itself in such an enterprise apart from its members' participation in the dialysis unit at University Hospital. Although Hudson recognized that the Academic Fund's proposal stated overall lesser project costs, she testified that she could not adequately assess the resources of the applicant, particularly due to the fact that it had indicated its intention to form a new corporation to operate the facility. She also felt that competition in the area would be adversely affected if the Academic Fund, which was affiliated with University Hospital, was granted approval to set up the facility at St. Augustine. The Administrator of HRS' Office of Community Medical Facilities accepted the staff recommendations and approved the AKC application. He, too, was of the opinion that the AKC experience factor was important and placed reliance on the recommendations of Network 19, even though he did not view the fact that AKC had filed its application first to constitute a valid reason for preference. (Testimony of Hudson, Forehand, Exhibits 1-3) AKC plans to spend $144,650 to establish its proposed facility and begin operations, whereas the Academic Fund intends to allocate $138,131.64 for its project. AKC estimates a first-year net income of $16,476, while the Academic Fund estimates a first year net loss of some $42,000. Financial statements submitted by both applicants show that they will have sufficient financial resources to meet the projected initial costs of establishment and operation of the planned facility. AKC shows a proposed cost of $35 for supplies per treatment and the Academic Fund estimates a $50 per treatment cost of supplies. The difference in expected costs is explained by the fact that AKC intends to obtain bulk negotiated discount prices from various manufacturers as its principals have done in past operations, compared to the Academic Fund's plan to seek out the "best list" prices it can obtain. AKC plans to purchase necessary equipment in the amount of an estimated $115,350, but the Academic Fund plans to expend only $96,105. The discrepancy between these figures is, in part, based upon the fact that AKC plans to install individual television sets at each dialysis station which it considers essential for the comfort of patients. Additionally, the Academic Fund plans to purchase generally less expensive equipment for its facility than does AKC. AKC believes that for essentially the same treatment costs, it will offer a better center for patients, and that efficiency in controlling costs will maintain a high quality of care. The Academic Fund is somewhat pessimistic concerning the number of patients who will use its services during the first year, thus providing a basis for the anticipated first-year loss in revenues. Approximately fifteen patients in the proposed service area reasonably can be expected to transfer to a facility in St. Augustine. However, the Academic Fund expects to gradually acquire about three to twelve patients during its first year of operation, whereas AKC estimates that it will have some twelve patients at the outset, primarily due to the accessibility of the new facility. (Testimony of Levy, Dewberry, Anderson, Cunio, Exhibits 1-4) The applicants have made satisfactory arrangements for ancillary services, including acute backup, kidney transplant, and home training services with qualified medical facilities. Both plan to use University Hospital at Jacksonville as a backup hospital and Shands Teaching Hospital at Gainesville for any necessary transplant services. The Academic Fund intends to use University Hospital for home training services and AKC will utilize Dialysis Clinics, Inc. of Jacksonville. Both applicants plan to have a nephrologist available at the facility and other personnel staffing proposed is sufficient for proper operation. AKC plans to utilize a smaller staff than the Academic Fund, thus reducing expenses. (Testimony of Levy, Dewberry, Anderson, Cunio, Exhibits 1-3) Both of the applicants reasonably can be expected to offer a satisfactory quality of care in the operation of a dialysis facility. Academic Fund will draw upon its staff of experienced physicians who operate the 24- station unit at University Hospital. Their association with the Hospital assures ready access to that "backup" facility in the event of acute need. Both applicants plan to use the two local St. Augustine hospitals for routine hospitalization requirements. AKC's principals, Doctors Cunio and Anderson, have had extensive experience in the ownership of free standing dialysis facilities. Dr. Cunio is the Director of the Mercy Hospital Dialysis Unit in Miami and has had a close affiliation with the South Florida Artificial Kidney Center and Dade Dialysis Center in Miami. Dr. Anderson is the Medical Director of the South Florida AKC and its satellite unit in Fort Myers. He has been affiliated in the management and direction of the Dade Dialysis Center, Hialeah Dialysis Center and Indian River Artificial Kidney Center in Stuart. He is also the operator and owner of Suncoast Artificial Kidney Center in Naples. The South Florida Artificial Kidney Center was commended by the Mayor of Metropolitan Dade County, Florida, in 1977, in a proclamation that November 7th of that year would be "South Florida Artificial Kidney Center Day," in recognition of its ten years of success in the treatment of patients. Although the University Hospital dialysis unit received an unfavorable report as the result of a state Medicare survey in 1980, the deficiencies were primarily housekeeping in nature and did not directly reflect unfavorably upon the quality of medical services provided to patients. (Testimony of Dewberry, Cunio, Anderson, Exhibits 1-2, 5-0)
Recommendation Case No. 80-2137: That the petition of the Health Systems Agency of Northeast Florida, Area 3, Inc. be DISMISSED. Case No. 80-2138: That the application of St. Augustine Artificial Kidney Center, Inc. for a certificate of need to establish an eight-station free standing dialysis center in St. Augustine, Florida be APPROVED, and that the competing application of the University Hospital Academic Fund, Inc. for a similar facility be DENIED. DONE and ENTERED this 14th day of July, 1981, in Tallahassee, Florida. THOMAS C. OLDHAM 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 14th day of July, 1981. COPIES FURNISHED: Honorable Alvin J. Taylor, Secretary Department of HRS 1317 Winewood Boulevard Tallahassee, Florida 32301 Eric J. Haugdahl, Esquire Assistant General Counsel Department of HRS 1317 Winewood Boulevard Tallahassee, Florida 32301 Eleanor Hunter, Esquire 702 Lewis State Bank Bldg. Post Office Box 471 Tallahassee, Florida 32301 E. G. Boone and Richard Whitton, Esquires 1001 Avenida del Circo Post Office Box 1596 Venice, Florida 33595 Health Systems Agency of Northeast Florida, Area 3, Inc. 1045 Riverside Avenue, Suite 260 Jacksonville, Florida 32204
The Issue Whether the adult open heart surgery rule in effect at the time the certificate of need (CON) applications were filed, and until January 24, 2002, or the rule as amended on that date is applicable to this case. Which, if any, of the applications filed by Martin Memorial Medical Center, Inc. (Martin Memorial); Bethesda Healthcare System, Inc., d/b/a Bethesda Memorial Hospital (Bethesda); and Boca Raton Community Hospital, Inc. (BRCH) meet the requirements for a CON to establish an adult open heart surgery program in Agency for Health Care Administration (AHCA) Health Planning District 9, for Okeechobee, Indian River, St. Lucie, Martin, and Palm Beach Counties, Florida.
Findings Of Fact The Agency for Health Care Administration (AHCA) is the agency which administers the certificate of need (CON) program for health care facilities and programs in Florida. It is also the designated state health planning agency. See Subsection 408.034(1), Florida Statutes. For health planning purposes, AHCA District 9 includes Indian River, Okeechobee, St. Lucie, Martin, and Palm Beach Counties. See Subsection 408.032(5), Florida Statutes. AHCA published a fixed need pool of zero for additional open heart surgery programs in District 9, for the January 2002, planning horizon. The mathematical need formula in the rule, using the use rate for open heart surgery procedures in the district as applied to the projected population growth, indicated a gross numeric need for 7.9 programs in District 9. After rounding off the decimal and subtracting four, for the number of existing District 9 open heart surgery programs, the formula showed a numerical need for four additional ones. The need number defaulted to zero, however, because one of the existing programs, at Lawnwood Medical Center, Inc., d/b/a Lawnwood Regional Medical Center (Lawnwood), had not reached the required minimum of 350 surgeries a year, or 29 cases a month for 12 months prior to the quarter in which need was published. Having initiated services in March 1999, the Lawnwood program had not been operational for 12 months at the time the applications were filed in October 1999. The other existing providers of adult open heart services in District 9, in addition to Lawnwood, are Palm Beach Gardens Community Hospital, Inc., d/b/a Palm Beach Gardens Medical Center (PBGMC); Columbia/JFK Medical Center Limited Partnership, d/b/a JFK Medical Center (JFK); and Tenet Healthsystem Hospitals, Inc., d/b/a Delray Medical Center (Delray). All are intervening parties to this proceeding. In the Pre-Hearing Stipulation, the parties agreed that the Intervenors have standing to participate in this proceeding. Despite the publication of zero numeric need, five hospitals in District 9 applied for CONs to establish new adult open heart programs asserting need based on not normal circumstances. Three of those applications are at issue in this case: CON Number 9249 filed by Martin Memorial Medical Center, Inc. (Martin Memorial); CON Number 9250 by Bethesda Healthcare System, Inc., d/b/a Bethesda Memorial Hospital (Bethesda); and CON Number 9248 by Boca Raton Community Hospital, Inc. (BRCH). AHCA initially reviewed and denied all of the applications. After changing its position before the final hearing, AHCA supports the approval of the applications filed by Martin Memorial and BRCH. Martin Memorial Martin Memorial, the only hospital in Martin County, and the only party/applicant not located in Palm Beach County, operates two facilities, a total of 336 beds, on two separate campuses under a single license. The larger hospital, in Stuart, has 236 beds and is located approximately 20 miles south of Lawnwood and 30 miles north of PBGMC. Martin Memorial owns and maintains, at the hospital, its own ambulance service used exclusively for hospital-to-hospital transfers. The drive from Martin Memorial to Lawnwood averages 38 minutes. The drive time to PBGMC averages 48 minutes. By helicopter, it takes 11 or 12 minutes to get from Martin Memorial to PBGMC. The remaining 100 Martin Memorial Hospital beds are located on its southern campus, approximately six miles south of the Stuart facility. Martin Memorial is a private not-for-profit hospital, established in 1939. The parent corporation also operates an ambulatory care center, physician group, billing and collection company, and a foundation. Martin Memorial is applying to operate an open heart program at its Stuart location, where it currently offers cardiology, hematology, nephrology, pulmonary, infectious disease, pathology, blood bank, anesthesiology, diagnostic nuclear medicine, and intensive care services. Martin Memorial has a 25-bed telemetry unit, a 14-bed medical intensive care unit, a nine-bed surgical intensive care unit, and a 22-bed progressive care unit, with an identically equipped 16-bed overflow unit used only for high seasonal occupancy, from approximately December to April. If its CON is approved, Martin Memorial will dedicate four surgical intensive care unit beds and six progressive care beds for post-open heart surgery patients. Martin Memorial agreed to condition its CON on the provision of 2.4% of the project's gross revenues for charity care and 2% for Medicaid. The total estimated project cost is $6.5 million. Martin Memorial intends to affiliate with the University of Florida and its teaching facility, Shands Hospital, to assist in establishing the program and training staff. The cardiovascular surgeon is expected to be a full-time faculty member who will live and work in Martin County. Although initially opposed, AHCA now supports Martin Memorial’s application primarily because (1) it has the largest cardiac catheterization (cath) program at any hospital in this state which does not also provide open heart services; (2) it has a medium size and growing Medicare population, which constitutes the age group most likely to require open heart surgery and related services; (3) Martin County residents now must receive open heart and related services at hospitals outside Martin County, primarily in areas ranging from Palm Beach County south to Dade County; (4) emergency heart attack patients who present at Martin Memorial-Stuart could receive primary angioplasties without transfer; and (5) it is a not-for-profit hospital, while all of the existing open heart providers in the District are for- profit corporate subsidiaries. Of the applicants, Martin Memorial is also located the greatest distance from the existing providers. Bethesda Memorial Bethesda has 362 licensed beds located in Boynton Beach. JFK is nine miles north or an average drive of 18 minutes from Bethesda. Delray is nine miles south or an average drive of 17 minutes from Bethesda. Established in February 1959, Bethesda is a not-for- profit subsidiary of Bethesda Health Care Systems, Inc., which also operates some for-profit subsidiaries, including Bethesda Medical/Surgical Specialists, Bethesda Management Services, and Bethesda Comprehensive Cancer Institute. Bethesda is a disproportionate share provider of Medicaid and Medicare services. The services currently available at Bethesda include obstetrics, Level II and III neonatal intensive care, cardiology, orthopedics, pediatrics, neurological and stroke care, peripheral vascular surgery, wound care, pulmonary and infectious disease care. Bethesda recently eliminated a 20-bed unit for adult psychiatric services, and a 20-bed skilled nursing unit. Currently, at Bethesda, the sickest patients are placed in a 10-bed critical care unit. The hospital also operates a 12- bed surgical intensive care unit, an eight-bed medical intensive care unit, and 30 and 25-bed telemetry units. Bethesda was planning to open a 20-bed extension to the telemetry unit, all in private rooms, in January 2002. If an open heart surgery program is established, Bethesda, will add an eight-bed cardiovascular intensive care unit to care post-operatively for the patients. Bethesda offered to condition its CON on the provision of 3% of total open heart surgeries to Medicaid and 3% of total open heart surgeries to indigent patients. Bethesda's estimated total project cost is $4 million, $1.7 million for equipment, and $2.24 for construction. Bethesda will receive assistance from Orlando Regional Medical Center in training personnel and developing protocols for an open heart program. At Orlando Regional, a statutory teaching hospital, the number of open heart cases ranges from 1,300 to 1,600 a year. Bethesda has a contract with a physicians' group to provide a board-certified cardiovascular surgeon to serve as medical director for the open heart program. AHCA’s position is that the Bethesda application is "approvable" but, of the Palm Beach County applicants, less desirable than that of BRCH. By contrast, Bethesda's experts emphasized (1) the absence of any overlap with the Lawnwood market; (2) the greater need for a new program, based on the volume of cases, in Palm Beach County than elsewhere in the District; (3) the size, growth, and age of the population within Bethesda's market area, and (4) the ability of Bethesda to enhance access for underserved groups, particularly Medicaid patients. Boca Raton Community Hospital BRCH is licensed for 394 beds. Located in southern Palm Beach County, close to the Broward County line, BRCH is from eight to nine miles south of Delray and approximately 15 miles north of North Ridge Medical Center (North Ridge), in adjacent Broward County. On average, the drive from BRCH to Delray takes 20 minutes. The drive from BRCH to North Ridge takes about 25 minutes. Founded in the late 1960's, BRCH operates as a not-for- profit corporation. BRCH has a staff of 750 physicians and 1,600 employees. Services at BRCH include cardiology, a 10-bed Level II neonatal intensive care unit, hematology, nephrology, pulmonology, radiology, nuclear medicine, and neurology. If approved and issued a CON for adult open heart surgery, BRCH will build a new facility for the program, including two new cath labs, an electrophysiology lab and 12 intensive care beds. In the CON, the estimated construction cost was $16.5 million and the estimated equipment cost was $2.7 million of the $20 million estimated for the total project. BRCH agreed to having conditions on its CON (1) to provide 5% of open heart cases in year two to uninsured patients, (2) to establish an outreach program to increase the utilization of open heart services among the uninsured, and (3) to relinquish the CON if it fails to perform at least 350 open heart surgery procedures a year in any two consecutive years after the end of the second year of operations. AHCA determined that it should change its initial position opposing the approval of the BRCH application to one of approval because of (1) the large Medicare population in the service area; (2) the volume of emergency room heart attack patients; (3) the district out-migration for services primarily to North Ridge; (4) the large, well-developed interventional cardiology program; and (5) the not-for-profit organizational structure. When AHCA decided to support the approval of the BRCH application, it did so, in part, based on erroneous data. The cath lab volume was assumed to be approximately 1,800 caths a year, as compared to the actual volume of 667 caths for the year ending March 2001. Having considered the corrected data, AHCA’s expert described BRCH’s application as significantly less compelling, but still preferable to that of Bethesda. BRCH is the largest hospital in number of beds in Florida which does not have an open heart surgery program. AHCA also responded favorably to identified "cultural" access issues, described as underservice to demographic groups, based on race, gender, and class. BRCH presented a plan to equip a mobile unit to provide diagnostic screenings and primary care in underserved areas. Pre-Hearing Stipulations The parties stipulated that all of the applications met the statutory requirements concerning the application content and filing procedures of Sections 408.037 and 408.039, Florida Statutes (1999), and Rule 59C-1.033, Florida Administrative Code. Martin Memorial, Bethesda, and BRCH have a history of providing quality care. See Subsection 408.035(1)(c), Florida Statutes (1999). There are no existing outpatient, ambulatory or home care services which can be used as alternatives to inpatient adult open heart and angioplasty services. See Subsection 408.035(1)(d), Florida Statutes (1999). Martin Memorial and Bethesda have sufficient available funds for capital and operating expenses required for their proposed open heart surgery programs. See Subsection 408.035(1)(h), Florida Statutes (1999). Martin Memorial complied with the requirements related to costs and methods of construction, and equipment for the proposed project. Except for the contention that it omitted $1,687,180 in fixed equipment costs and that the proposed construction project is excessively large and expensive, the parties stipulated that BRCH reasonably estimated construction and equipment costs, including costs and methods of energy provision. See Subsection 408.035(1)(m), Florida Statutes (1999). The parties agreed that Subsections 408.035(1)(p), and 408.035(2)(e), Florida Statutes, related to nursing home beds, are not at issue at in this proceeding. If Bethesda, BRCH, and Martin Memorial can recruit the necessary, competent nursing and surgical staff, they will meet the requirements of Rule 59C-1.033(3), (4)(b), (4)(c), and (5)(c), Florida Administrative Code. Adult open heart surgery services are currently available to District 9 residents within the two-hour travel standard of Rule 59C-1.033(4)(a), Florida Administrative Code. Bethesda, BRCH, and Martin Memorial are accredited by the Joint Commission on Accreditation of Healthcare Organizations (JCAHO), assuring quality as required by Rule 59C-1.033(5)(a), Florida Administrative Code. The parties agreed that if Bethesda, BRCH, and Martin Memorial can recruit the necessary nursing and surgical personnel, their programs would meet the requirements of Rule 59C-1.033(4)(b), (4)(c), (5)(b), and (5)(c), Florida Administrative Code, except that JFK and Lawnwood did not agree that the applicants satisfied the requirements related to cardiovascular surgeons. Martin Memorial will be able to obtain perfusionist services, as required by Rule 59C-1.033(5)(b)5, Florida Administrative Code. Bethesda and BRCH projected reasonable staffing patterns, in their CON schedules 6A, given projected census levels, although the ability to recruit staff and adequacy of projected salaries are at issue. The rule criteria related to pediatric open heart surgery are not applicable to this proceeding. Disputed Statutory and Rule Criteria The following statutory criteria and applicable in this case: Subsections 408.035(1)(a), (b), (c) - for comparison; (e), (f), (g), (h) - related to funding for BRCH, and related to staff recruitment and salaries; (i), (j), (k), (l), (m) - for Bethesda, and related to the size, scope, and fixed equipment cost for BRCH, (n), and (o); and Subsections 408.035(2)(a), (b), (c), and (d), Florida Statutes. The criteria in Rules 59C-1.030, and of Rule 59C-1.033(5)(b) - related to staffing, except as stipulated - are at issue. The parties have also raised the issue of whether AHCA is consistent in applying its agency rules related to open heart cases. The District 9 health plan contains two preferences for open heart applicant hospitals, the first for hospitals with established cardiac cath programs, the second for applicants with a documented commitment to serve patients regardless of their ability to pay or county of residence. All of the applicants have established diagnostic cardiac cath programs and related cardiology services. During the cardiac cath procedure, a catheter is inserted into a cardiac chamber to diagnose heart disease. During a therapeutic cardiac cath procedure, or angioplasty, the catheter with a balloon-tip is inserted into a coronary artery and inflated to open blockages. The latter requires open heart surgery back-up in case a vessel is ruptured and thus, an open heart surgery certificate of need. Martin Memorial operates the largest cardiac cath program at a hospital in Florida which does not also offer open heart surgery. At Martin Memorial, 1,885 inpatient and outpatient caths were performed in 1999, 1,770 in 2000, and 1,286 in the first nine months of 2001. Cardiac caths are only performed at the Stuart facility. Non-invasive cardiology services began in the 1970's at Martin Memorial. A CON to establish the first cardiac cath lab was issued in 1989, and a second, CON-exempt cath lab opened in 1998. Martin Memorial also offers pacemaker implants and peripheral angioplasties to eliminate clots in other areas of the body, for example, in the legs, electrocardiography, echocardiography, stress tests, and cardiac rehabilitation. Neither electrophysiology studies nor defibrillator implants are performed at Martin Memorial. Martin Memorial has an open staff of cardiologists, meaning that its cath lab is available for use by any of the invasive cardiologists on staff. The facilities include two cardiac cath procedure rooms, a control room for the laboratory, a five-bed holding room and a two-bay inpatient recovery area. Bethesda also has an established cardiac cath program with an open staff. Seventeen cathing physicians were listed on the Bethesda roster for the month of March 2001. Of those, five were also the only cardiologists allowed to perform caths at the closed lab at JFK. Some of these cardiologists are permitted to perform emergency angioplasties at Bethesda. Bethesda has, at least, two cardiovascular surgeons on staff. From 1995 to 1998, the volume of cardiac caths at Bethesda increased over 60%, from 133 to 213. For the 12 months ending August 31, 2000, Bethesda cardiologists performed 428 caths. For the 12 months ending September 30, 2001, the cath volume was 506 cases. Currently, cath procedures at Bethesda are performed in one lab with recently upgraded digital equipment. As part of the planned expansion of the hospital, the existing lab will be relocated and a second one added. Permanent pacemakers are implanted at Bethesda, but internal cardioverter defibrillator procedures, electrophysiology, and table studies are not performed. Cardiac cath services, at BRCH, started in 1987. Two cath labs with state-of-the-art digital equipment are used. In the 12 months ending March 31, 2001, there were 667 inpatient and outpatient caths performed at BRCH. Currently, cardiac services at BRCH are the largest source of admissions, approximately 20% of total admissions. The available services include echocardiography, tilt table studies, electrocardiography, stress tests, cardiac wellness and rehabilitation programs, electrophysiology studies, and internal cardioverter defibrillator implants. Each year, one or two "rescue" or salvage angioplasties are performed in extreme, life- threatening circumstances at BRCH. Forty-nine cardiologists are on the closed "invitation-only" medical staff at BRCH, 47 are board-certified and approximately half are invasive cardiologists. The staff also includes seven electrophysiologists, five of whom are board-certified, and seven thoracic surgeons, five of whom perform open heart surgeries at other hospitals. For the first two years of operating an open heart program, BRCH intends to have a closed program, by virtue of an exclusive contract with a single group of cardiovascular surgeons. Subsection 408.035(1)(a) - district health plan preference for serving patients regardless of county of residence or ability to pay; and Subsection 408.035 (1)(n) - history of and proposed services to Medicaid and indigent patients Martin Memorial, Bethesda, and BRCH will serve patients regardless of residence and, they contend, will enhance access for Medicaid, indigent, charity and/or self-pay patients. Each applicant has offered to care for patients in some of these categories as a condition for CON approval. The proposed conditions, are, for Martin Memorial, 2.4% of total project revenues for charity and 2% of admissions for Medicaid patients. Martin Memorial provides a number of services without charge, including follow-up education to former inpatients to assist them in managing diseases such as asthma, diabetes, congestive heart failure and chronic obstructive pulmonary disease. Obstetric care includes one free home visit by a nurse/midwife to check the health of newborns and mothers. Office space is provided for a free clinic for the "working poor" of Martin County, which receives approximately 10,000 annual visits from a patient base of about 2,000 patients. Over $100,000 a year is provided for an indigent pharmacy program. Combining the outreach services with other charitable contributions, including charity care, Martin Memorial valued "community benefits" at $24 million in 1998, $30.5 million in 2000. When Martin Memorial received an inpatient cardiac cath CON, it agreed to provide a minimum of 2.5% of total cardiac caths to Medicaid patients and 3% to charity care. Due to changes in state regulation, Medicaid and charity care for cardiac caths no longer needs to be reported to the state. That data, representing as it does, the base of patients from which open heart cases will come, is useful in evaluating Martin Memorial's projections. In 1999, seven-tenths of one percent of the patients in Martin Memorial's cath lab were Medicaid and four-tenths of one percent were indigent. In 2000, seven-tenths of one percent were Medicaid and two-tenths of one percent were indigent. Martin's cath lab data indicates that its projected open heart levels of Medicaid and indigent care are not attainable. Bethesda offered a commitment to provide 3% of total open heart cases for Medicaid patients and 3% to indigent patients annually. Historically, Bethesda has cared for a relatively large number of Medicaid, minority, and indigent patients. It is recognized as a disproportionate share provider of Medicaid care under the Florida program and of Medicare under the Federal program. The Palm Beach County Health Department provides approximately $1 million a year to Bethesda for charity care. As a percentage of gross revenue, Bethesda provided 8.8% Medicaid and 3.46% charity care in 1999. Approximately 54% of the charity care is attributable to obstetrics and pediatric services. Bethesda's younger patient base and the number of adult open heart Medicaid cases from Bethesda's service area, 2.4% or 7 cases in the year ending September 2000, raise the issue of its ability to generate sufficient cases to meet the proposed commitment. In 1995, 20 of the 36 total resident Medicaid open heart surgeries were performed at the three providers in District 9, Delray, JFK, and PBGMC. In 1999, when Lawnwood began open heart care, the Medicaid volume at the District providers increased to 51 of the 64 total Medicaid resident cases. In 2000, the four programs treated a net number of 56 of 60 resident Medicaid cases. A program at Bethesda also could reasonably be expected to increase the number of Medicaid and charity cases performed in the District, in volume and by reversing outmigration, but the patients must come from a base of patients with cardiac diagnoses. For the year ending September 2000, in Bethesda's service area, 4.9% of cardiac patients were Medicaid and charity patients combined, 1.6% Medicaid and 3.3% charity. Assuming that the same proportions could be maintained for open heart surgeries, Bethesda cannot achieve 3% Medicaid and, although unlikely, has a chance of reaching 3% charity only in the best case scenario. If approved, BRCH commits to providing 5% of total OHS in the second year to uninsured patients and to establish an outreach program to increase utilization by uninsured patients. BRCH has, over the past three and a half years, established outreach programs, which include having nurses and social workers in schools, providing free physical examinations to children who do not have primary care doctors, and performing echocardiograms for high school athletes, equipping police and fire rescue units with portable defibrillators, and operating mobile units for mammography screenings and vans to transport patients to and from their homes for hospital care. A free dental screening program is operated in conjunction with Nova Southeastern University. BRCH also operates a family medical center approximately seven miles west of the hospital. Recently, the Foundation for BRCH purchased, for $1.8 million, a large bus to equip as a mobile clinic. The mobile diagnostic unit is intended to reach uninsured patients to provide primary care and ultimately open heart surgery care to those who might not otherwise be screened, diagnosed and referred. No information was available and no decisions had been made about the staff and equipment, or service areas for use of the van. Because of the lack of more specific plans, it is impossible to determine whether the outreach effort has any reasonable prospects for success in meeting any unmet need. For the years ending June 1996, 1997, and 1998, BRCH provided six-tenths of one percent, and five-tenths of one percent of gross revenues for charity care. In 2000, BRCH provided one-half of one percent for charity care and, in 2001, twenty-seventh hundreds of a percent. The historical levels do not support the proposed commitment of 5% of open heart surgeries for uninsured patients in the second year of the program. Although worded to apply only to the second year, BRCH's President and CEO testified concerning the condition without limiting it to the second year. In Boca Raton Community Hospital, Inc.'s Proposed Recommended Order (Reformatted), filed on July 5, 2002, the condition is described as follows: 49. As conditions of CON approval, Boca will, beginning in the second year of operation of the program and continuing thereafter, provide a minimum of five percent each year of OHS cases to uninsured patients, and establish an outreach program to locate and provide OHS and cardiology services to uninsured patients in Palm Beach County. (Boca Ex. 3 at Schedule C; Pierce, 1899). Boca reasonably decided to focus on the needs of the uninsured, rather than Medicaid patients, because of the low volume of Medicaid patients who require OHS services. (Pierce, 1902). At BRCH, Medicaid and Medicaid health maintenance organization (HMO) care as a percent of total ranged from 1.3% to 1.4% from 1996 through 1998. BRCH projected serving 1.2% to 1.3% open heart Medicaid cases, or four patients in the first year and 1.5% to 1.6%, or seven Medicaid patients in the second year. The projections are consistent with its history although BRCH offered no Medicaid condition. Bethesda and BRCH also claimed not normal circumstances exist in District 9 due to the disparity in open heart care for uninsured and Medicaid patients as compared to the insured. For uninsured residents of Palm Beach County during the twelve months ending June 30, 2000, the use rate was 4.7 per 1000, as compared to 21.8 per 1,000 for insured open heart patients. For angioplasty patients, the insured use rate was 38.2, but the uninsured rate was only 8.9. Assuming that the use rates should not be so different, the discrepancy in access for the uninsured is significant and unfortunate but was not shown to be a not normal circumstance in the health care delivery system. The applicants' proposals, unlikely as they are to meet even the proposed conditions, are inadequate to increase access materially for the uninsured. Comparisons of the level of Medicaid provided statewide to that provided in District 9 without consideration of other factors, including age and income levels, were not useful in analyzing access. Assertions that any discrepancy in care for potential Medicaid open heart patients constitutes a not normal circumstance are not substantiated by this evidence. Subsection 408.035(1)(b) and (2)(b) - availability, quality of care, efficiency, appropriateness, accessibility, extent of utilization and adequacy of like and existing facilities in District Nine In 2006, the population in District 9 is projected to reach 1.2 million people, of which approximately 992,378 will reside in Palm Beach County, 119,573 in Martin County, 181,406 in St. Lucie County, 106,790 in Indian River County, and 31,140 in Okeechobee County. In District 9, throughout Florida, and in the United States, heart disease is the leading cause of death. In 2000, heart disease was the cause in 522 of 1,560 total deaths in Martin County, and 4,337 of 12,795 total deaths in Palm Beach County. From 1995 to 2000, the number of Florida residents having open heart surgeries increased 15.1%. During the same period of time, the number of District 9 resident cases, regardless of where the surgeries were performed, increased from 3,119, to 3,938, an increase of 755 OHS cases, or 24%. Palm Beach County residents represented 427 of the 755 increase, and 2,633 of the total of 3,938 resident cases. The distribution of the remaining 1,305 District resident cases by county was as follows: 597 from St. Lucie, 339 from Martin, 269 from Indian River, and 100 from Okeechobee County. More recent data, however, indicates trends towards a leveling off or even decline in the number, but an increase in the complexity of open heart procedures. Some experts describe open heart volumes having reached a "plateau" in the United States, in Florida, and in District 9. Last year, the number of open heart surgeries in the United States declined 22%. The statewide volume of cases was 32,199 in 1996, 33,507 in 1997, 34,013 in 1998, and 32,097 in 1999. At District 9 hospitals, open heart volumes were 1,670 in 1994, 1,841 in 1995, 2,152 in 1996, 2,407 in 1997, 2,527 in 1998, 2,656 in 1999, and 2,650 in 2000. Cardiac Catheterizations and Angioplasties The major reason given for the stable and declining open heart volume is the increase in the utilization of angioplasty, or therapeutic cardiac cathing, an alternative which costs less and is less invasive. Angioplasty procedures increased from 1995-2000, by over 2,500 cases for District 9 residents, and over 2,600 cases in District 9 hospitals, from 2,104 cases in 1995, to 4,714 in 2000. Among the procedures generally referred to as angioplasties are percutaneous transluminal angioplasty (PTCA) or balloon angioplasty, percutaneous transluminal coronary rotational atherectomy (PTCRA), and the insertion of scaffolding- like devices, called stents, to prevent re-occlusion of coronary arteries. In Florida, diagnostic cardiac caths may be performed at facilities which do not have angioplasty and open heart surgery programs, but angioplasties must be performed, except in rare emergency circumstances, only at hospitals which are licensed to provide open heart services, in case back-up surgery is needed. Lawnwood Regional Lawnwood is located in Fort Pierce, in St. Lucie County, which is second to Palm Beach County in population and in District 9 resident open heart cases. Lawnwood is owned by a subsidiary of HCA, the Hospital Corporation of America, formerly known as Columbia. HCA is a for-profit, investor-owned corporation which owns and operates approximately 200 hospitals in the United States. A $17 million addition at Lawnwood, designed for the open heart program, includes two dedicated operating rooms and a 12-bed intensive care unit. The Lawnwood program has a full-time staff of two surgeons and one additional surgeon who divides his time between Lawnwood and PBGMC. Lawnwood, having opened its program early in 1999, is not considered a mature program. In addition, Lawnwood has had some difficulties with accreditation and disputes with cardiologists. Lawnwood reported one open heart case in the first quarter of 1999, and 143 or 144 for the year. In calendar year 2000, between 330 to 340 open heart surgeries were performed at Lawnwood. In calendar year 2001, the volume was between 333 and 336 cases. Depending on the source of the data, the volume at Lawnwood was reported to be as high as 364 for the twelve months ending September 30, 2000; in a range from 336 to 396 for the twelve months ending March 31, 2001; and up to 412 for the twelve months ending July 2001. The variances result from seasonal patient utilization, and from AHCA’s use, for the fixed need pool, of the most current available data which it receives from the various local health councils. That data is submitted on handwritten or typed forms which are not uniform across districts. Subsequently, the hospitals provide electronic data tapes directly to AHCA, which if properly decoded, should provide more accurate statistics. While there may be variances either way, in this case, the lower volumes for Lawnwood were derived from the more reliable electronic tapes. Based on that data and the testimony of the cardiac surgeon who is the director of the program at Lawnwood, the annual volume of open heart surgeries was approximately 330 in 2000, and 348 in 2001. The new rule, adopted on January 24, 2002, reduces the minimum number required for existing programs to 300 a year, or 25 adult operations a month. The number of angioplasties performed at Lawnwood increased from 465 in 1999, to 845 in 2000. Palm Beach Gardens Medical Center South of the four relatively small northern counties in District 9, PBGMC has 204 beds located in northern Palm Beach County. It is a subsidiary of Tenet Healthsystem Hospitals (Tenet). Adult open heart surgery has been available at PBGMC since 1983. The surgeries are typically performed in two or three of the 11 operating rooms, although five are equipped to handle open heart cases. PBGMC has 94 telemetry beds, and 32 intensive care beds, eight designated for cardiovascular intensive care patients. PBGMC has four cardiac cath labs and separate electrophysiology labs. The medical staff of approximately 400 physicians includes about 200 cardiologists, 24 invasive cardiologists and seven cardiac surgeons. The number of open heart cases at PBGMC was 700 in 1994, 801 in 1995, 913 in 1996, 1,028 in 1997, 1,045 in 1998, 1,124 in 1999, 940 in 2000, and 871 in 2001. The number of angioplasties increased from 552 in 1994, to 1,019 in 1997, to 1,431 in 2000. JFK JFK, which has 387 beds, is located roughly in the center of Palm Beach County, in the City of Lake Worth. Like Lawnwood, JFK is an HCA's subsidiary, having been purchased by that corporation in 1995. Open heart services and cardiac cath services began simultaneously at JFK in 1987. JFK has three open heart operating rooms. JFK, after a major expansion, has a separate entrance to its three cardiac cath laboratories, a dedicated electrophysiology suite, for treatment of arrhythmias, and 17- patient holding area. JFK provides all cardiac services, except heart transplants. The average age of patients at JFK is 74 years old. The medical staff of 504 board-certified or board- eligible physicians includes 25 cardiologists, five invasive cardiologists, two electrophysiologists, and three cardiac surgeons. JFK has recently accepted applications from but not yet extended privileges to three additional cardiovascular surgeons. Volumes of open heart cases at JFK were, with some variances depending on the data source, approximately 428 in 1994, 434 in 1995, 630 in 1996, 674 in 1997, 711 in 1998, 613 in 1999, 621 in 2000, and 610 in 2001. The number of angioplasties ranged from 709 in 1994, to 1,152 in 1997, to 1,281 in 2000. Delray Delray, with 343 beds, in Delray Beach, is the trauma center for southern Palm Beach County. Open heart care began at Delray in 1986. The surgeries are currently performed in three of ten, but soon to be a total of twelve operating rooms with shelled-in spaces set aside for two more. Patients recover in a 15-bed surgical intensive care unit. The Delray medical staff of over 600 physicians has close to 60 cardiologists, including 15 invasive cardiologists and six cardiovascular surgeons. Delray has three cath lab rooms and seven bays for holding patients pre- and post-procedure. For the years 1994 through 2001, open heart volumes at Delray were 542, 606, 609, 705, 771, 758, 759, and 738, respectively. During the same period of time, the annual number of angioplasty procedures increased from 591 in 1994, to 810 in 1997, to 929 in 2000. The existing CON-planned and approved programs in the District are well distributed geographically and allocated appropriately based on population. Considering the declining utilization, the like and existing open heart surgery programs are available and accessible. Subsection 408.035(1)(f) - services that are not reasonably and economically accessible in adjoining areas Over 30% of District 9 resident open heart cases are performed in other districts, the vast majority at North Ridge in District 10 (Broward County). The district outmigration for a service when excessive or difficult can indicate access or quality concerns and constitute a not normal circumstance for approval of a new program. In this case, with adequate available services in District 9 and its close proximity, the outmigration to North Ridge, which is 15 miles or 25 minutes from BRCH is not a not normal circumstance. There is also substantial overlap in the medical staff at both hospitals which allows continuity of care for patients despite transfers. The argument that families, particularly an older spouse, will necessarily have to drive farther to visit the patient is rejected, since that depends on where in the district the person resides not on the distances between hospitals. North Ridge has 391 licensed beds, with 260 to 270 acute care beds in use. At North Ridge, cardiovascular surgeons usually use three OHS operating rooms, although a fourth is also available. Open heart patients recover in a six-bed cardiovascular intensive care unit. The reported volumes of open hearts at North Ridge have been from 1994 through 2001, respectively, 864, 935, 893, 826, 882, 890, 905, and 795. The total number of open heart cases in District 10 has been declining since 1998. The volume of angioplasties at North Ridge increased from 793 in 1994, to 829 in 1997, to 1,155 in 2000, consistent with a rising District 10 use rate from 2.95 to 3.66 over the same period of time. The staff at North Ridge includes 107 cardiologists, 27 interventional cardiologists, and 17 cardiovascular surgeons, many of whom also regularly perform open heart surgeries at Holy Cross, which is approximately a mile south of North Ridge in Fort Lauderdale. At Holy Cross, which also has established referral networks from District 9, open heart volumes declined from a high of 753 in 1998 to 693 in 2000. All of the open heart services proposed by the applicants are reasonably available in adjoining areas, in Districts 10 and 11 to the south and in the other districts to the north. Subsection 408.035(1)(c) - comparisons of quality; and Subsection 408.035(1)(e) - joint, cooperative or shared resources; and Subsection 408.035(1)(g), (h), and (k) - need for research, educational and training programs or facilities for medical and health care professionals; and Subsection 408.035(1)(h) and Rule 59C-1.033 - recruitment, training and salaries for staff The parties stipulated that the applicants have a history of providing quality care. Martin Memorial was accredited with commendation by the JCAHO in 1997, which is now called accreditation without Type I Recommendations. That was followed, in July 2001, with a score of 93 on survey items with some follow-up improvements required related to patient assessment and nutrition. Martin Memorial offers internships, and residencies for training non-physician medical personnel from Barry University, Indian River Community College, and Florida Atlantic University. The cancer center at Martin Memorial is affiliated with the Moffitt Center. Despite the absence of an open heart program, Martin Memorial has participated in clinical trials of cardiac drugs. The Shands Healthcare System of nine affiliated hospitals, including two research and teaching hospitals, is the model for the relationship proposed with Martin Memorial. The partnerships are intended to upgrade the care available in community hospitals and to establish, for complex cases, referral networks for the Shands teaching hospitals. Shands has already satisfied itself that Martin Memorial meets its due diligence test for the quality of its existing program and philosophical compatibility. If Martin Memorial's CON is approved, Shands will assist in training staff for the program. Initially, the program will have one cardiovascular surgeon, a University of Florida medical school faculty member, in Martin County. When that surgeon is ill or on vacation, others from the University of Florida will be available. The logistics of the plan raises questions about the adequacy of coverage to meet the 24-hour requirements of Rule 59C-1.033, Florida Administrative Code. In the JCAHO survey process, Bethesda received a score of 97, as a result of its survey in June 2000, and was accredited for the maximum allowable time, three years. Personnel for a Bethesda program can be appropriately trained at Orlando Regional, a statutory teaching hospital with a high volume open heart program. In June 2000, BRCH received a JCAHO score of 96. BRCH maintains a scholarship program for new nurses making a two-year commitment, and an on-site educational department with a preceptorship for training operating room and emergency room nurses. Nursing students from Florida Atlantic University (FAU), which is located across Glades Road from BRCH, rotate at BRCH. FAU is in the process of establishing a medical school. There is a severe shortage of nurses in the United States, in Florida, and in District 9. All of the hospitals in District 9 have resorted to highly competitive and innovative recruitment and retention strategies, including international recruiting, signing bonuses, child care and, of course, rising salaries and benefits. The demand is greater and shortages more severe in highly specialized areas, such as critical care, telemetry and open heart surgery nursing. The average age of nurses has also increased to 46 or 47 years old, while enrollment in nursing schools and the number of nursing school professors have declined. All of the applicants concede that recruiting and retaining nurses for new open heart program will be a challenge. The likely results are a loss of experienced nurses from existing programs, an increase in total health care costs, an increase in vacancies, and, at least temporarily a decline in the quality of experienced nursing care in existing open heart programs. At this time, there is no evidence that declining open heart utilization will eventually alleviate the shortage of experienced nurses. It has, so far, only eased the need to resort as frequently to other extreme and expensive alternatives, including pay overtime, contracting with private agencies, and bringing in traveling nurses. Subsection 408.035(1)(m) - size, scope and fixed equipment cost at BRCH; Subsection 408.035(2)(c) - alternatives to new construction; and Subsection 408.035(1) (h) - funding for BRCH BRCH plans to construct a 74,000 square-foot cardiac care facility, which will include two open heart operating rooms and two cardiac cath labs, an electrophysiology lab, 12 cardiovascular intensive care beds, and 18 cardiac cath lab bays. Only 18,568 square feet are attributable to the open heart operating rooms and cardiovascular intensive care unit which compares favorably with Bethesda's estimate of 17,759 square feet for the same functions. It is not possible, therefore, to conclude that the size of the BRCH project is excessive as compared to that proposed by Bethesda. BRCH underestimated the cost for fixed equipment for the open heart project by approximately $1.6 million. That omission resulted in understated estimates of depreciation by approximately $275,000. The total project cost for BRCH is approximately $2.2 million when almost $2 million in omitted equipment costs is added to the original estimate of $20 million. All pending capital projects, as shown on Schedule 2 of the BRCH application, total $54 million. With combined cash and investments of $160 million, the BRCH foundation has sufficient funds for the hospital's projects. Although BRCH earned profits of $6.6 million and $7.3 million in 1998 and 1999, respectively, the hospital lost $30 million from operations due to billing and collection errors in 2000. BRCH has a donor who has stated a willingness to donate $20 million for the cardiac care center. BRCH has the funds necessary to build the facility. With Medicare capital cost reimbursement completely phased out, there is insufficient evidence of a direct impact on health care costs based on this proposed capital expenditure. Subsection 408.035(1)(i) - short and long term financial feasibility Martin Memorial initially projected that its program would perform 360 open heart surgeries in year one and 405 in year two. As a result of changes in the use rate, Martin Memorial lowered its second year projection to 375 surgeries while increasing staffing levels. Even if projected open heart surgery revenues of $264,000 in the second year decline in proportion to expected lower utilization, estimated angioplasty revenues of $468,000, are sufficient to make up the deficit and to keep the combined program financially feasible in the short and long term. Bethesda projected volumes of 165 open heart surgeries in the first year and 270 in the second year. Assuming Bethesda's revenues are 90% of the district average, the combined net profit for open heart and angioplasty services is reasonably expected to be approximately $750,000 in the second year operations. The project is profitable, therefore, financially feasible in the short and long term. BRCH's expert projected volumes of 308 open heart surgeries and 289 angioplasties in the first year, and 451 open heart surgeries and 422 angioplasties in the second year. If utilization projections are correct, then BRCH will receive incremental net income of $1.6 million from the open heart surgery program and $825,000 from the angioplasty services. Factoring in claims that the Medicare case weight was overstated and depreciation underestimated, the BRCH project is, nevertheless, financially feasible for the short and long term. Typically, any open heart surgery program that can reach volumes in the range of 200 to 250 cases, will be financially feasible. The establishment of an open heart program also has a "halo effect," for the hospital, attracting more patients to the cardiac cath labs and other related cardiology services. Open heart surgery and angioplasty tend to be profitable, generating revenue which hospitals use to offset losses from other services. Subsection 408.035(1)(j) - needs of HMOs All of the applicants will enter into contracts with, but none is a health maintenance organization. Subsection 408.035(1)(l) - probable impact of fostering competition to promote quality assurance and cost-effectiveness Hospitals with higher volumes of open heart surgeries and angioplasties usually have higher quality as measured by lower mortality rates and fewer complications. The open heart surgery rule, in effect at the time the applications were filed, established a minimum volume of 350 annual admissions for existing providers. In the rule as amended on January 24, 2002, the minimum volume for existing programs was reduced to 300. The divisor in the formula for determining need, which represents the average size of a program in the district, was 350 prior to amendment and 500 subsequently. The minimum and average volumes in the rule set, in effect, the protected range for existing programs, not the optimal size, or "cut point" at which outcomes are worse below and better above. According to the American College of Cardiology and American Heart Association (ACC/AHA) the evidence is clear that outcomes are better if an individual performs at least 75 procedures at a high volume center with more than 400 cases. The ACC/AHA guidelines indicate, although more controversial and less clearly established, that acceptable outcomes may be achieved if the individual operator performs at least 75 procedures in centers with volumes from 200 to 400 cases. Because the relationship between higher volumes and better outcomes is continuous and linear, and because research showing the benefits of primary angioplasty with or without open heart surgery back-up is preliminary and limited, the position of the ACC/AHA is, in summary, as follows: The proliferation of small angioplasty or small surgical programs to support such angioplasty programs is strongly discouraged. (Journal of the American College of Cardiology, Vol. 37, no. 8 June 15, 2001, pp. 2239xvii (Tenet Exhibit 5)) An open heart program at Martin Memorial will redirect cases that would otherwise have gone to Lawnwood, PBGMC, and JFK. The proposed Martin Memorial Service area overlaps that of Lawnwood in southern St. Lucie County, an area which generates one quarter of the open heart cases at Lawnwood. Lawnwood is reasonably expected to lose 56 open heart cases a year with total volume going down below 300, resulting in loss of $1.8 million, or 20% of its total revenues. Lawnwood would have unacceptably low volumes threatening the quality of the open heart program. PBGMC, as a result of a new program at Martin Memorial, will lose approximately 170 and 180 open heart cases annually and an equal number of angioplasties reducing its open heart volume to approximately 700 a year. The financial loss would range from $4 to $5 million a year, as compared to total net income which was between $20 and $30 million a year for past three years. PBGMC would not suffer an adverse impact sufficient to threaten either the quality or the financial feasibility of the open heart program or total hospital operations. JFK, which currently receives most of the angioplasty referrals from Martin Memorial, is expected to lose from 25 to 30 open heart cases, and 65 to 70 angioplasties each year during the first two years of a Martin Memorial program. The estimated financial loss to JFK is $1.7 million, a significant detriment when compared to $2.8 million in net income from operations in calendar year 2000. Approval of open heart program at Bethesda will adversely affect case volumes at JFK and Delray. Bethesda projected that, in its first year, 75% of its cases would have gone to Delray and 25% to JFK, and that by the third year, the split would be even at 50% from Delray and 50% from JFK. JFK, depending on the approach to the impact analysis, will lose from 40 to 60 open heart cases in the first year, from 90 to 110 in the second year, and from 115 to 170 in the third year of a program at Bethesda. The volumes of lost angioplasties is expected to be slightly higher. The resulting combined open heart and angioplasty financial loss is $6.6 million, far greater than the significant detriment expected from a Martin Memorial program alone. The annual volume of open heart cases at JFK would be approximately 400 to 500, assuming flat not continued declining utilization. If Bethesda offered the service, Delray's open heart volumes would decline by 124 cases in the first year and by 248 cases in the third year of operations, decreasing total volume to 500 or 600 annual surgeries. Delray had a net income from operations of approximately $24.7 million in 2000, which would indicate that neither quality nor financial stability would be significantly adversely affected. If an open heart program is approved for BRCH, the volumes of cases at Delray and North Ridge will decline. Delray would be expected to lose 163 open heart cases and 235 in years one and two, respectively, and equal numbers of caths and angioplasties, resulting in annual open heart cases reduced from the low 700s to approximately 500 cases. Delray's pre-tax revenue was $39 million in 2001. In terms of quality and financial stability, Delray can withstand the adverse impact of a new program at BRCH. North Ridge would lose approximately 124 open heart cases in year one and 178 in year two, and similar numbers of caths, reducing open heart volumes from the upper 700s to approximately 600 annual cases. North Ridge's pre-tax income was $21 million for the year ending May 31, 2001. It appears that North Ridge could, even with the adverse impact of BRCH, maintain a quality, financially viable open heart program. Subsection 408.035(l) - probable impact on costs The applicants, all not-for-profit corporations, contend that the fact that District 9 has only for-profit open heart hospitals affects charges and is a not normal circumstance for the approval of one or more not-for-profit. District 9 is the only district in Florida in which all open heart providers are for-profit corporations. Statewide, not-for-profit open heart hospitals charge 31% less than for-profit. Martin Memorial's CON proposal includes a charge structure below that at existing programs. Bethesda's planned charges are 10% less than the District 9 average for open heart and angioplasty services. BRCH is the applicant which is most likely to increase competition in District 9, based on the Herfindahl-Hirschman Index (HHI). The HHI's measurement of competition in a market used by economists frequently to analyze anti-trust issues. Charges are not a factor in up to 75% of open heart/angioplasty cases reimbursed by payors, such as Medicare, at set flat rates. In approximately 10% of cases, including complex "outlier" cases exceeding the range for flat rate reimbursement and for other payors on a percent-of-charges basis, charges are not irrelevant. But, the evidence to demonstrate lower charges were applicable to patients of the same severity was questionable. Subsection 408.035(1)(o) - continuum of care There is insufficient evidence the any applicant is preferable based on its ability to promote a continuum of care in a multilevel system. Subsection 408.035(2)(a) - alternatives to inpatient services There are no alternatives to inpatient services for open heart surgery and angioplasty patients. Subsection 408.035(2)(d) - patients who will experience serious problems in the absence of the proposed new service The applicants and AHCA determined that new open heart surgery programs are needed mainly to provide emergency or "primary" angioplasty to patients suffering heart attacks (acute myocardial infections). Primary angioplasty is an alternative to "clot busting" medications, or thrombolytics, and to open heart surgery. Performed on an emergency basis, the three different treatments are used to restore blood flow before heart muscle dies. Because "time is muscle," patients benefit only if treated within a relatively short time after the onset of symptoms. The goal is 90 minutes from door-to-balloon for angioplasty. The decision to treat a patient with a particular therapy is based on a number of factors assessed during triage. Paramedics in consultation with ER doctors at the receiving hospital frequently begin triage and administering medications and oxygen in ambulances equipped with sophisticated diagnostic equipment. As the statistical data demonstrates, angioplasty, whether scheduled or emergency, is increasingly becoming the preferred therapy. Some studies have shown improved outcomes, higher survival rates and fewer complications, from primary angioplasty as compared to thrombolytics. Comparisons have not been made over extended periods of time, and the apparent benefits of angioplasty have not been duplicated in community hospitals as compared to clinical trials in high volume research centers. Estimates of the number of people who could benefit from the availability of angioplasty services at the applicants vary based on the number of elderly in the service area, the number of non-traumatic chest pain ER visits, delays in transfers of emergency patients, and the number of patients being transferred to existing providers for angioplasties or open heart surgeries. Martin Memorial selected five patients as examples of those who could be served in an open heart program at Martin Memorial. The anecdotal evidence of transfer "delays" is insufficient to demonstrate bed unavailability or capacity constraints. Martin Memorial-Stuart and Martin Memorial South transferred 240 heart attack patients to open heart surgery hospitals. Only 18 of the emergency heart attack patients who presented at the Martin Memorial ER were transferred from the ER. Approximately ten patients a year are so unstable that an intra- aortic balloon pump is required during transfer. Martin Memorial presented evidence of delays of two hours or more in transfers of 84 patients from its cath labs to open heart surgery hospitals. The transfer records, created for subsequent certificate of need litigation, were of questionable probative value. The case studies were inadequate to establish whether "delays" were reasonable or not. Factors such as physician consultation time, time to stabilize a patient for transfer and the assumed travel time seem to have been included in the time periods. Bethesda transferred 270 patients for cardiac care from October 1999 through September 2000. Thirty patients were transferred, from November 2000 to July 2001, for angioplasties or open heart surgery after having cardiac caths at Bethesda. Bethesda failed to establish that transfers were delayed due to capacity problems at existing hospitals because emergency patients were not classified separately, and the causes of the time lapses were not identified. Of the applicants, BRCH has the busiest ER, with 50,000 to 52,000 annual visits compared to approximately 48,000 at the two Martin Memorial locations combined. BRCH admitted 439 heart attack patients through its ER during the year ending June 30, 2000. The majority of patients are treated with thrombolytics at BRCH. BRCH transfers approximately one emergency heart attack patient a week on average, or from 30 to 50 a year, for interventional cardiac procedures. BRCH's presentation of evidence of delays in transfers was flawed. The data was collected and used only for litigation, and was incomplete. Some patient records were lost and others were deleted due to inaccurate data. Of the applicants, BRCH is located in an area with the largest percentage of the population age 65 and older, approximately 35%, as compared to 24% in Martin Memorial's service area. Agency Consistency Martin Memorial, through expert witness testimony, compared its situation to that of Brandon, a hospital in AHCA District 6, which was issued an open heart surgery CON in 2001. The expert noted that Martin Memorial and Brandon are both in five county health planning districts, and that they are 19 and from 15 to 17 miles, respectively, from the nearest open heart provider. Three of the counties in District 6 have open heart programs, including Hillsborough County where Brandon is located, as compared to two District 9 counties, St. Lucie and Palm Beach, but not Martin. The Martin Memorial primary service area projected population is 238,861 for 2004, 24.1% aged 65 and older. The Brandon service area population projection is 309,000 for 2004, with 10.5% aged 65 and older. Brandon has 255 beds, Martin Memorial-Stuart has 236. Brandon had 53,000 emergency room visits, and Martin Memorial, at both locations, had 48,503 in 1999. Before defaulting to zero, the numerical formula yielded a need for 3.27 additional open heart programs in District 6 as compared to 3.9 in District 9. Other specific comparisons favorable to Martin Memorial included the number of heart attack patients presenting at its ER, cath lab volumes, patient transfers for open heart and angioplasty procedures. Among others, there are several significant distinguishing facts in Florida Health Sciences Center, Inc. v. Agency for Health Care Administration, Case No. 00-0481CON, (R.O. Mar. 30, 3001, F.O. Oct. 17, 2001) aff'd per curiam sub nom, University Community Hospital v. Agency for Health Care Administration, Case No. 1DO1-3592, et al. (Fla. 1st DCA Sept. 19, 2002), the Brandon case. In that case, the two existing providers performing fewer than 350 cases a year, Blake Medical Center, and Manatee Memorial Hospital, both in Manatee County, were mature programs located 40 miles from Brandon with no service area overlap. By contrast, Lawnwood which is not a mature program and, therefore, has not reached its potential volume, is 20 miles from Martin Memorial, and has an overlapping service area. Martin Memorial's ER volume and the number of transfers from its ERs are the combined experience from two locations. The more accurate comparison is 27,000 ER visits at Martin Memorial-Stuart to 53,000 at Brandon. Emergency heart attack patients presenting at Martin Memorial South would continue to require transfers for primary angioplasty. Finally, the decision in Brandon was based, in large part, on transportation difficulties, inadequate interfacility ambulances and traffic congestion, which are not factors in District 9. Factually, the case of Halifax Hospital Medical Center, d/b/a Halifax Medical Center v. Agency for Health Care Administration, et al., Case No. 95-0742 (AHCA Jan. 14, 1997) is also distinguishable. The applicant could have no effect on the low volume providers located 80 miles to the north. That was one not normal circumstance. Need existed because of another not normal circumstance, i.e., capacity constraints at the only other provider in the same primary service area. In Oak Hill Hospital v. AHCA, Case No. 00-3216CON (R.O. Oct. 4, 2001, F.O. Jan. 22, 2002), appeal dismissed sub nom Hernando HMA, Inc. v. HCA Services of Florida, Inc., Case No. 1DO2-854 (Fla. 1st DCA June 6, 2002), the two approved applicants were in separate counties which constituted entirely separate health care markets. Neither applicant would adversely affect the low volume providers. After the Administrative Law Judge recommended approval of the Citrus County applicant, AHCA, engaging in what appears to be a comparative review of the two remaining applicants from Hernando County, approved a second applicant from the same district at the same time. Some facts are similar to those in this case: The average drive time between hospitals was 30 minutes; transfers and admissions procedures required additional time; there was a recognition of increasing preferences for reperfusion of heart muscle using primary angioplasty; patients and families experience stress and anxiety as a result of transfers. Institution-specific issues included the transfer of 600 cardiac patients by ambulance from Oak Hill, the size of the cardiology and cardiac cath programs (1,641 caths in 1999), the larger elderly population in the service area, and the hospital's size.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Agency for Health Care Administration enter a final order denying Certificate of Need Application Number 9248 filed by BRCH, Certificate of Need Application Number 9249 filed by Martin Memorial, and Certificate of Need Application Number 9250 filed by Bethesda. DONE AND ENTERED this 11th day of November, 2002, in Tallahassee, Leon County, Florida. S ELEANOR M. HUNTER Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 11th day of November, 2002. COPIES FURNISHED: Lealand McCharen, Agency Clerk Agency for Health Care Administration Fort Knox Building 3, Suite 3431 2727 Mahan Drive Tallahassee, Florida 32308-5403 Valda Clark Christian, General Counsel Agency for Health Care Administration Fort Knox Building 3, Suite 3431 2727 Mahan Drive Tallahassee, Florida 32308-5403 Gerald L. Pickett, Esquire Agency for Health Care Administration 525 Mirror Lake Drive, North Sebring Building, Suite 310K St. Petersburg, Florida 33701 Lori C. Desnick, Esquire Agency for Health Care Administration Fort Knox Building 3, Suite 3431 2727 Mahan Drive Tallahassee, Florida 32308-5403 Stephen A. Ecenia, Esquire David Prescott, Esquire Rutledge, Ecenia, Purnell & Hoffman, P.A. 215 South Monroe Street, Suite 420 Post Office Box 551 Tallahassee, Florida 32302-0551 W. David Watkins, Esquire R. L. Caleen, Jr., Esquire Watkins & Caleen, P.A. 1725 Mahan Drive, Suite 201 Post Office Box 15828 Tallahassee, Florida 32317-5828 H. Darrell White, Esquire William B. Wiley, Esquire McFarlain & Cassedy, P.A. 305 South Gadsden Street Post Office Box 2174 Tallahassee, Florida 32316-2174 Paul H. Amundsen, Esquire Amundsen, Moore & Torpy, P.A. 502 East Park Avenue Post Office Box 1759 Tallahassee, Florida 32302 Robert D. Newell, Jr., Esquire Law Firm of Newell & Terry, P.A. 817 North Gadsden Street Tallahassee, Florida 32303-6313 C. Gary Williams, Esquire Michael J. Glazer, Esquire Ausley & McMullen 227 South Calhoun Street Post Office Box 391 Tallahassee, Florida 32302 Seann M. Frazier, Esquire Michael J. Cherniga, Esquire Greenberg Traurig, P.A. 101 East College Avenue Tallahassee, Florida 32302
The Issue Whether the Certificate of Need (CON) Application No. 10420 submitted by Baptist Hospital of Miami, Inc. (Baptist Hospital or Baptist), to establish a new adult autologous and allogeneic bone marrow transplant (BMT) program in Florida’s Organ Transplant Service Area 4 (TSA 4) should be approved.
Findings Of Fact OVERVIEW Blood and Marrow Transplant BMT is the infusion of blood progenitor cells, generally referred to as “blood stem cells,” into a patient after the patient has received high-dose chemotherapy to treat a blood cancer or disorder.1/ Blood stem cells are hematopoietic, or blood-producing progenitor cells that manufacture the cellular components of blood, i.e., white blood cells, red blood cells, and platelets. While high-dose chemotherapy may cure a patient’s blood cancer or disease, it also eliminates the body’s ability to produce normal blood cells. The ability to produce normal blood cells may be restored by the infusion of blood progenitor stem cells after the patient has completed high-dose chemotherapy treatment. Standard of Care Once considered experimental, over the past 20 to 30 years, BMT has become the standard of care for an increasing number of blood cancers and disorders, including leukemia, lymphoma, multiple myeloma, myelodysplastic syndrome, myelofibrosis, myeloproliferative neoplasm, paroxysmal nocturnal hemoglobinuria, primary amyloidosis, severe aplastic anemia, testicular cancer, Waldenstrom’s macroglobulinemia, essential thrombocytosis, and Ewing’s sarcoma. In most instances, the goal of BMT therapy is cure. Autologous Transplant “Autologous” transplant involves the extraction or collection of a patient’s own stem cells through a process known as “apheresis” prior to treating the patient with high-dose chemotherapy. Once collected, the patient’s stem cells must be frozen and stored while the patient is undergoing high-dose chemotherapy, after which the cells are reinfused. After reinfusion, the stem cells migrate to the bone marrow, where they produce normal blood. All autologous transplants require freezing (cryopreservation) and storage of the patient’s stem cells for preservation while the patient is receiving high-dose chemotherapy. In most cases, the time from collection and preservation of the patient’s stem cells to the time of complete recovery is approximately six weeks. Allogeneic Transplant “Allogeneic” transplant is a blood stem cell transplant using stem cells from either a related or unrelated donor, which may be necessary for certain cancers and disorders in which the patient's own stem cells cannot be used. Allogeneic transplant is the standard of care for acute myeloid leukemia. Potential candidates for allogeneic transplant are often identified very early on in their disease. The first and most important goal of therapy in such cases is to put the patient’s cancer into complete remission. Once a patient is verified as in complete remission, the transplant process must proceed as rapidly as possible, including the identification of a donor. The process of finding a donor may take two to three months, and does not begin until the patient is seen by a transplant center. Thus, the sooner the patient has access to a transplant center, the greater the chance of a successful allogeneic transplant. Most patients requiring allogeneic transplants will not have a donor within their family. Siblings are the most likely donors, but have only a 25-percent chance of being an appropriate “match.” The search for a donor is worldwide. Donors are initially identified through national and international BMT donor registries, and confirmed through human leukocyte antigen tissue-typing performed on a DNA sample collected by buccal swab or a blood sample. In allogeneic transplants, the blood stem cells are not usually frozen. Rather, the stem cells remain in the donor while the patient is undergoing high-dose chemotherapy. Donors frequently are found as far as halfway across the world from the patient's location, and it is standard practice to have the donor’s stem cells collected in a transplant facility local to the donor when the patient is ready to accept them and to transport the cells by specialized overnight air service for infusion “fresh” into the patient. Medical Advances in Blood and Marrow Transplant Remarkable progress has been made in the field of hematologic malignancies in the past five years. A major advancement is the ability to induce remission in cases in which remission previously was not possible. A number of new technologies have emerged in the past few years that are making it easier for doctors to move forward with transplants, and it is known that transplant is a treatment modality that time and again, in appropriately selected patients, offers the only hope for cure. Whether the transplant is autologous or allogeneic, timeliness of access is important. Outcomes are best when transplants are done when the patient is in a state of complete remission, or when their disease is optimally controlled. For many patients with aggressive diseases, for which transplant is the only potentially curative therapy, it may be a relatively short window of time between achievement of remission or control of the disease and the opportunity for transplant. Patients who are put into remission in anticipation of transplant, who then must wait a prolonged period of time, may relapse. After relapse, most often the disease becomes more aggressive and more difficult to get back into remission. The CON Application The Application proposes to establish a six-bed inpatient BMT unit within Baptist Hospital in Miami, Florida, TSA 4, to serve autologous and allogeneic BMT patients. Under the Application, the proposed inpatient unit will be integrated with outpatient BMT services facilities to be located in the MCI on the campus of Baptist Hospital. THE PARTIES Baptist Hospital of Miami, Inc. Baptist Hospital is a large not-for-profit secondary and tertiary acute care hospital with over 700 inpatient beds, located at 8900 North Kendall Drive in Miami, Florida, TSA 4, and is the Applicant for CON No. 10420. Baptist is part of Baptist Health South Florida (BHSF), the largest not-for-profit, community-based health care system in the region, comprised of six acute care hospitals, over 30 outpatient centers, and Baptist Health Medical Group. In addition to Baptist Hospital (which includes Baptist Children’s Hospital), the six BHSF hospitals include Mariner’s Hospital in Monroe County, Doctors Hospital in Broward County, and West Kendall Hospital, South Miami Hospital, and Homestead Hospital in Miami-Dade County. Baptist originated as a faith-based community service organization and “principally exists to provide high quality, cost-effective, compassionate health services to all comers, irrespective of religion, creed, race or national origin, or ability to pay.” The Baptist mission and vision include the commitment “to serve as a lifeline for uninsured people,” to “be the preeminent health care provider in the communities, the organization that people instinctively turn to for their health care needs,” and to be a “national and international leader in health care innovation.” The BHSF hospitals are recognized by national evidence-based survey and benchmarking organizations for high quality of care, with a focus on patient satisfaction. Baptist Hospital was named the “Best Full-Service Hospital in South Florida” by U.S. News & World Report, and was awarded service- specific awards in 12 specialties, including oncology. BHSF is ranked fifth among the 18 top-performing hospitals and academic medical centers in the United States in patient satisfaction and is the only community health system in the nation to be ranked among the top 18. Baptist has a reputation for physician and employee satisfaction. Among the 500 hospitals participating in the HealthStream national survey group, BHSF ranks No. 1 with respect to physician satisfaction. Among the more than 400 hospitals participating in a national survey of employee satisfaction, BHSF again ranked No. 1. BHSF’s inpatient oncology programs, primarily located at Baptist Hospital, Baptist Children’s Hospital, and South Miami Hospital, recently were awarded the Outstanding Achievement Award by the American College of Surgeons Commission on Cancer, the highest accolade an inpatient cancer program can achieve. Baptist Hospital has approximately 1,500 physicians on its medical staff, covering all specialties. Baptist Health Medical Group is a large specialty physician group practice comprised of approximately 200 employed specialist and subspecialists, including a large number of medical, surgical, and radiation oncologists, as well as orthopedic surgeons, cardiac surgeons, neurosurgeons, primary care physicians, and hospitalists. The specialized oncology services within Baptist Health Medical Group include hematologic malignancies (including two physicians experienced in BMT), lung cancer, gastrointestinal malignancies, breast cancer, head and neck cancer, genitourinary cancer, and gynecological malignancies. MCI is a comprehensive outpatient oncology facility formed by the consolidation, expansion, and programmatic standardization of all of BHSF’s existing outpatient oncology services and oncology clinical research programs into a new $430 million, 400,000-square foot oncology research and clinical care facility located on the campus of, and physically attached to, Baptist Hospital. The new MCI facility is comprised of two physically connected buildings, one designated as the “research building” that is designed to house state-of-the-art technology and proposed clinical research facilities, and the other focused on clinical care. The first floor of the research building houses MCI’s proton and radiation therapy. The three-gantry proton therapy installation at MCI is one of only a handful in the nation, the only one in South Florida, and will be used for both clinical research and interventional therapy. The second floor of the research building is designed to house a BMT outpatient services facility, with all related equipment, including apheresis and infusion areas, for the collection and infusion of blood stem cells for outpatient BMT. It is anticipated that the medical staff of MCI will be open to BHSF physicians and community physicians. Membership on the MCI medical staff, however, requires additional evidence- based physician credentialing standards and obligations that are set forth in the aspects of care. At the time of the final hearing, Baptist anticipated that MCI would begin serving patients in the new facility in January 2017. MCI has recruited Dr. Minesh Mehta, a nationally recognized radiation oncologist and clinical research scientist to head MCI’s radiation oncology program. Dr. Mehta’s expertise is in brain tumors and in proton therapy and research. Proton therapy is the latest, highest technology radiation therapy that exists. BHSF, however, does not expect that its oncology proton therapy and research program will be immediately financially viable and acknowledges that it may take 15 years before the program begins to break even. MCI has also hired Dr. Michael Zinner, a preeminent surgical oncologist and clinical researcher who has published more than 230 academic papers in the field of surgical oncology, to serve as CEO and executive medical director of MCI. Dr. Zinner has an expertise in an emerging model of cancer care known as the "hybrid academic-community cancer center." The hybrid academic-community model is a relatively new concept and is based on the concept of taking the best of the community hospital setting and affiliating with a teaching hospital or clinical research institution to form a hybrid academic- community cancer center that supports advanced translational research and offers patients local access to more and earlier- phase clinical trials. Baptist plans to establish the next hybrid academic-community cancer center in South Florida. MCI also recruited Dr. Miguel Villalona-Calero, a nationally and internationally recognized medical oncologist and scientist known for his innovative work in the field of medical oncology and translational research, who has special expertise in integrating academic clinical research in a community hospital setting. Dr. Villalona will lead MCI’s planned Phase I Laboratory and direct translational research, as well as MCI’s Clinical Research Program. Dr. Villalona is in the process of developing an expanded clinical trials office at MCI designed to expand clinical research programs. The expansion of the MCI Clinical Trials Office is occurring in phases, and the office currently is budgeted for 50 non-physician positions, 20 of which have been filled. So far, Dr. Villalona has successfully recruited a number of experienced personnel to staff MCI’s Clinical Trials Office. BHSF has provided Dr. Villalona with resources to support his work at MCI, and also has facilitated the relocation of Dr. Villalona’s personal basic research laboratory, including key personnel, from the James Cancer Research Institute in Ohio to Florida International University (FIU). MCI hired Dr. Jeff Boyd to serve as director of Translational Research and director of the Center for Genomic Medicine at MCI. Dr. Boyd also serves as professor and chair of the Department of Human and Molecular Genetics and associate dean for Basic Research and Graduate Programs at the Herbert Wertheim College of Medicine at FIU. Dr. Boyd is nationally and internationally recognized for his work in molecular diagnostics, translational research, and gynecologic and breast cancer research. In the past, Dr. Boyd established the gynecologic and breast cancer research lab at Memorial Sloan Kettering Cancer Center, and founded and directed the Cancer Genome Institute at Fox Chase Cancer Center in Philadelphia, an NCI-designated cancer center. He is also a founding member of the National Comprehensive Cancer Network. MCI’s resources and successful recruitment of Dr. Boyd places BHSF at the forefront of this precision therapy endeavor. BHSF has provided all necessary resources, including highly specialized next-generation technology and equipment, and dedicated space and staffing for MCI’s Center for Genomic Medicine. BHSF also has relocated Dr. Boyd’s personal oncology basic research laboratory to FIU. It is planned that resources of MCI’s Center for Genomic Medicine will be made available to Baptist’s proposed BMT program and other institutions. Approval of the Application is conditioned on the successful recruitment of a fully qualified adult allogeneic and autologous BMT medical director, meeting all allogeneic and autologous criteria requirements. While Baptist asserts that, through MCI, it has already identified a preeminent BMT physician scientist currently serving in a leadership role at a national cancer center to assume leadership of the BMT program, contingent on issuance of a CON to Baptist for an autologous and allogeneic adult BMT program, the name of that person was not revealed in the Application or at the final hearing. University of Miami, d/b/a University of Miami Hospital and Clinics. UM is a prominent university established in Florida in 1925. It is a single corporate, not-for-profit organization whose mission focuses on education, including the awarding of scholarships, basic and applied research activities, and delivery of public health and medical services. UM has a school of medicine, i.e., the Miller School of Medicine, a national research institution. UM does not operate its various programs under subsidiaries, but rather organizes its operations under divisions within the UM corporate entity. UM operates its health care services and facilities under various fictitious names, including "University of Miami Hospital and Clinics," "University of Miami Hospital," and "Sylvester Comprehensive Cancer Center." The University of Miami Hospital and Clinics is a comprehensive cancer treatment service and program that UM operates in TSA 4. The facilities used by UM to deliver those services include Sylvester Comprehensive Cancer Center (Sylvester), a specialty-licensed hospital, and a group of five satellite outpatient clinics. The northernmost clinic is on the southern border of Palm Beach County, and the southernmost clinic is located in the southern portion of Miami Dade County, in the Kendall Area. Sylvester is a 40-bed, Class III specialty cancer hospital that, by virtue of its limited size and its separation from the UM academic medical center, is exempt from the acute care Prospective Payment System (PPS). Under PPS, hospitals are paid a flat rate for services regardless of the actual cost of care. Sylvester, exempt from PPS, receives substantially higher, “cost-based” reimbursement for providing the same services. Sylvester has 12 beds dedicated to BMT services and an additional six intensive care beds at Sylvester available for BMT patients. Sylvester does a significant amount of clinical research, and has extensive laboratory space, clinical research space, and academic offices. At one time Sylvester was a National Cancer Institute (NCI)-designated comprehensive cancer center, but lost its NCI designation. Regaining that NCI designation is currently a focus for Sylvester. All of the approximately 300 researchers and physicians at Sylvester are employed directly by UM and are faculty members of various UM schools or the UM Miller School of Medicine, which are all part of the UM university system. The University of Miami Hospital is UM's in-house, statutorily-designated teaching hospital. The facility is a 560-bed general acute care hospital across the street from Sylvester. UM's medical facilities (the Miller School of Medicine, University of Miami Hospital, Sylvester and Anne Bates Leach Eye Center) are located on a medical campus that is co-located adjacent to Jackson Memorial Hospital (Jackson Memorial or Jackson), Miami-Dade County's “safety net” hospital. Jackson Memorial is a significant provider of transplant services in South Florida. Sylvester works in collaboration with Jackson, providing the entire physician staffing for cancer care to Jackson. UM also provides the staffing and outpatient pre- transplant and post-transplant services to the pediatric BMT program at Jackson. There are many other academic, clinical and research initiatives and services in which the two programs collaborate. The medical campus includes a 13-story medical research building called the Don Soffer Clinical Research Center, with laboratories and staffed by various cancer center researchers. UM also has an interdisciplinary Stem Cell Institute doing basic research on stem cells, which works in collaboration with Sylvester. Sylvester is part of the Comprehensive Cancer Center Consortium for Quality Improvement, which is a network of 19 preeminent national cancer centers, including notable institutions such as Dana-Farber, Memorial Sloan-Kettering, MD Anderson, and Duke University that review various clinical best practices and regularly share data and outcomes. UM has been operating an adult allogeneic and autologous BMT program at Sylvester since 2008, when it was awarded a CON to transfer the existing adult BMT program at Jackson (who had the program since 1994). The first census of BMT patients at Sylvester began in 2010. Agency for Health Care Administration. AHCA is the state agency responsible for administering the state CON program. Following review and analysis of Baptist’s Application, and independent analysis of state BMT utilization data, AHCA preliminarily determined that there is a need for an additional adult autologous and allogeneic BMT program in TSA 4 and that, considering the applicable statutory and rule criteria on balance, Baptist’s Application should be approved. STATUTORY AND RULE REVIEW CRITERIA Pursuant to section 408.036(1)(f), Florida Statutes,2/ AHCA has designated BMT programs as a tertiary health care service subject to the requirements of CON application and review. Section 408.032(17) defines a tertiary health care service as a health care service which, "due to its high level of intensity, complexity, specialized applicability, and cost, should be limited to, and concentrated in a limited number of hospitals to ensure the quality, availability, and cost- effectiveness of such service." Florida Administrative Code Rule 59C-1.044, entitled “Organ Transplantation,” requires AHCA to review the establishment of organ transplantation programs under the CON program pursuant to the review criteria in section 408.035, including need determination criteria. Need for BMT services is not determined by health service planning districts as defined by section 408.032(5). Rather, rule 59C-1.044(2)(f) aggregates health planning service on a regionalized basis. TSA 4 consists of District 10 (Broward County), District 11 (Miami-Dade County), a portion of District 8 (Collier County), and a portion of District 9 (Palm Beach County). The current inventory of approved BMT programs by service areas is as follows: TSA 1, Mayo Clinic (Jacksonville) and Shands Hospital (Gainesville); TSA 2, H. Lee Moffitt Cancer Center (Tampa); TSA 3, Florida Hospital (Orlando); TSA 4, Good Samaritan (West Palm Beach), Memorial West (Pembroke Pines) and UM (Miami). TSA 4, with three programs, has more adult BMT programs than any other service area in Florida. Section 408.035(1)(a), Florida Statutes: The Need for the Health Care Facilities and Health Services Being Proposed AHCA does not publish a fixed-need pool projection for BMT programs. Rule 59C-1.008(2)(e) provides that if no need methodology exists for a proposed project, the applicant is responsible for demonstrating need through a needs assessment methodology, which must include consideration of (1) population demographics and dynamics; (2) availability, utilization and quality of like services in the district; (3) medical treatment trends; and (4) market conditions. These criteria are largely subsumed within section 408.035(1)(a), (b), and (f) and were addressed under those provisions in the Application. Rule 59C-1.044(9) requires applicants for BMT programs to be able to project at least 10 allogeneic and 10 autologous transplants for the third year of operation. Utilization of BMT Services in Florida and in TSA 4 The provision of BMT services typically involves both inpatient and outpatient care. In general, autologous BMT involves a shorter inpatient stay, while allogeneic services require an extended inpatient stay. AHCA maintains two distinct databases of information reflecting utilization of BMT services in Florida. The first is “local health council” data, which combines, but does not distinguish between inpatient and outpatient, or autologous and allogeneic utilization. The second data set, known as “AHCA discharge data,” differentiates between autologous and allogeneic BMT procedures and, by definition, reflects only inpatient utilization. Neither database captures the number of Florida residents who leave the state to obtain BMT services. Both AHCA datasets show growth in overall utilization of BMT services statewide and in TSA 4. The compound average growth rate (which is an average annual growth rate over a multi-year time frame) for BMT services in Florida for the 5-year period from January 2010 to December 2015 was +8.5 percent per year, and the corresponding average yearly growth in actual BMT case volume was +73 cases per year. In addition to the growth in the number of BMT cases, the rate of utilization of BMT services increased statewide, with the greatest percentage of growth occurring in TSA 4, which saw a +27 percent overall growth in utilization of BMT services from June 2012 to June 2015, with a compound average annual growth rate of +29.8 percent per year over the 5-year period ending December 2015. The AHCA data is consistent with the independent data collected by the Center for International Blood and Marrow Transplant Research. Even though there has been an increase in utilization of BMT services in TSA 4, the overall volume of BMT cases in TSA 4 is below the case volume that would be expected by applying the statewide average use rate to TSA 4. Sylvester performed 170 BMTs in 2015, all of which were inpatient cases. Moffitt Cancer Center in Tampa is also experiencing increases in BMT case volume. 2. Population Dynamics The population age 15+ in South Florida is increasing at a rate of one to two percent per year, which reflects growth, but not substantially greater than the growth in population age 15+ statewide. Accordingly, the rate of growth in utilization of BMT services in TSA 4, which is greater than the rate of growth in utilization of BMT services statewide, is attributable to an increase in the actual use rate of BMT services in TSA 4, rather than straight population growth. 3. Market Trends for BMT Services in TSA 4 Baptist assessed the overall market, or volume of BMT cases arising within TSA 4 using AHCA utilization data, and verified the analysis using BMT use rates. The AHCA data shows that 284 adult BMTs, both inpatient and outpatient, were performed by facilities in TSA 4 in calendar year 2015. In addition to the 284 inpatient and outpatient procedures performed in TSA 4, an additional 51 residents of TSA 4 out- migrated from TSA 4 to receive inpatient BMT services at Moffitt Cancer Center (Moffitt), located approximately 300 miles away in Tampa, Florida. In addition, it is known that a number of patients out-migrated from TSA 4 for outpatient BMT services at facilities in other TSAs in Florida in 2015. There is no publicly available database showing the precise number of residents of TSA 4 who received outpatient BMT services in other TSAs. Baptist’s health planning expert estimated the volume of outpatient out-migration to other TSAs in Florida at 16 to 20 outpatients in 2015, by multiplying the 51 TSA residents known to have out-migrated to Moffitt for inpatient BMT services by approximately 30 percent. While it is reasonable to conclude that an additional number of residents of TSA 4 out-migrated from TSA 4 to receive BMT services at transplant centers outside the state of Florida, because this data is not reported to any publicly available database, Baptist did not include these patient volumes in its utilization projections. Based on the AHCA data, Baptist estimated the 2015 BMT case volume (net market size), for both inpatient and outpatient BMT services in TSA 4, at 343 to 347 BMT cases (i.e., 284 cases performed in TSA 4, minus 8 cases of in-migration, plus 51 inpatient cases that out-migrated to Moffitt, plus 16 to 20 outpatient cases that out-migrated from TSA 4 to receive outpatient BMT services). Baptist verified its assessment of the 2015 TSA 4 market size for BMT services by applying the 2015 average statewide use rate for BMT services for the population age 15+ (66.5 cases per million population) to the 2015 age 15+ population in TSA 4, resulting in a calculation of approximately 344 BMT cases in TSA 4 for calendar year 2015, which is consistent with its analysis of AHCA utilization data showing 343 to 347 cases for the same time period. 4. Forecast of 2020 BMT Case Volume in TSA 4 Using its calculated 2015 net market size for BMT in TSA 4, Baptist projected a net market size in BMT case volume for TSA 4 for the year 2020, using both the national compound average annual growth rate of +5 percent per year and the higher Florida growth rate of +8.5 percent per year, resulting in a projection of 439 to 517 BMT cases in TSA 4 in 2020. This estimate does not use the higher TSA 4 compound average growth rate observed in BMT utilization in TSA 4. Although Baptist projects growth rate for both inpatient and outpatient BMT procedures, the two AHCA databases utilized by Baptist do not specifically identify outpatient procedures. Therefore, Baptist’s health planner devised a method for estimating the number of outpatient procedures. For purposes of the projection, Baptist’s health planner assumed that the vast majority of the gap between the “local health council” data and the “AHCA discharge data” constitutes outpatient utilization. To approximate that gap, he doubled the reported inpatient autologous cases and used that number as the estimate for outpatient cases used in Baptist’s projections. However, as explained by the credible testimony of Dr. Claudio Anasetti, chair of Moffitt Cancer Center and Research Institute’s Department of Blood and Marrow Transplantation, Baptist’s methodology of estimating outpatient procedures by arbitrarily doubling autologous cases is inaccurate. The actual ratio of outpatient procedures observed at Moffitt is only between 10 to 20 percent of all transplant activity. While Baptist’s method may reflect current numbers, utilization of that methodology, in light of actual outpatient experience at Moffitt, is questionable as a method of projecting future utilization. Baptist’s projections directed no analysis exclusively to adult inpatient procedures, which is the focus of Baptist’s Application. In fact, outpatient procedures are not material to the Application. Because Baptist’s projection methodology doubles the number of autologous procedures to estimate the number of outpatients in the total procedures calculation, less than half of the projected total procedures are pertinent to inpatient procedures for BMT residents. Under Baptist’s projection methodology,3/ less than half of the 439 to 517 BMT patients projected for TSA 4 in 2020 will be inpatient procedures, yielding about 220 to 259 total inpatient cases. After subtracting 51 inpatient cases out- migrating to Moffitt used in calculating the baseline number for year 2015, Baptist’s projected volume for inpatient BMT cases in TSA 4 for 2020 is approximately 169 to 208. This number of inpatient cases is within the current capacity of UM and the other two adult BMT service providers in TSA 4. Under Baptist’s projections, while it appears that Baptist’s proposed program could serve at least 10 allogeneic and 10 autologous transplants for the third year of operation as required by rule 59C-1.044(9), that service would be at the expense of existing TSA 4 providers. Section 408.035(1)(b): The Availability, Quality of Care, Accessibility, and Extent of Utilization of Existing Health Care Facilities and Health Services in TSA 4 Availability, Utilization, and Quality of Existing BMT Programs in TSA 4 Sylvester is the dominant provider of BMT services in TSA 4. Baptist does not take issue with the quality of care Sylvester provides to BMT patients once the patient is admitted to Sylvester, but argues that the rate of out-migration of TSA 4 residents to obtain BMT services is evidence of problems in the availability and accessibility of existing BMT services within TSA 4. Out-migration of 51 BMT inpatient TSA 4 residents to Moffit in 2015 does not establish need for Baptist's adult BMT program. The 2015 inpatient out-migration is slightly less than the number in 2008. The percentage of out-migration from TSA 4 over the years has been decreasing, to about 22 percent of total inpatient procedures in 2015. In fact, the number of TSA 4 adult inpatient cases going to Moffitt is actually declining, from 67 in 2013, 62 in 2014, to 51 in 2015. Current out- migration is not excessive in relation to other TSAs. Baptist's primary argument as to out-migration is that it is an imposition on patients from South Florida to have to travel to Moffitt given the length of time that one has to be on-site during the primary course of treatment. Nothing in Baptist's proposal, however, significantly alleviates this concern and no real harm to patients in South Florida was demonstrated. Some out-migration can be explained by the complexity of patient cases, and possibly by referral preference of Baptist’s physicians. Out-migration to Moffitt can also be explained by the fact that Moffitt is a preeminent cancer center. It is currently the only NCI-designated cancer center in Florida, with the third highest volume of cancer patients in the country. Moffitt is ranked sixth in the country in overall performance as a cancer center. AHCA's health care planner, Marisol Fitch, recognized that out-migration is not proof of need and acknowledged the preference of some residents to receive BMT services outside the TSA 4. Out-migration of TSA 4 residents to nationally prominent centers is unavoidable, and some out-migration is expected to continue even as the use rate for TSA 4 residents increases. 2. Alleged Underutilization The Application includes an analysis of the use rate of BMT services in TSA 4 reflecting that the observed BMT case volume in TSA 4 is lower than would be expected by applying the statewide average-use rate for BMT services to the TSA 4 population. According to Baptist, the lower-use rate suggests that BMT services in TSA 4 are not equally accessible or available when compared to accessibility of services elsewhere in the state. Instead of indicating accessibility or availability problems in TSA 4, however, the evidence established that BMT use rate is somewhat skewed in favor of TSA 2, where Moffitt is the only provider. There is no question that Moffitt, because of its prominence, has an extraordinary draw of patients to its facility. Moffitt draws two-thirds of its BMT patient volume from outside of the Tampa Bay area. Under the circumstances, comparing use rates is not indicative of lack of accessibility or availability, and is not a good predictor of need. To the contrary, the evidence indicates that the vast majority of Florida residents who need BMT services are currently being served by existing Florida BMT programs. In addition, there is credible evidence that inpatient BMT use rates are likely to decrease because of an increase in outpatient care and a new, alternative technology known as “CAR-T cell therapy.” 3. Accessibility--Alleged Capacity Constraints According to Baptist, AHCA’s inpatient utilization data shows that Sylvester, a 40-bed hospital, is currently operating at capacity. Indeed, at present, UM is using the equivalent of 10 beds annually out of the 12 beds designated to accommodate BMT patients. There are an additional six intensive care beds at Sylvester that are presently considered available for BMT patients. UM also has available another entire floor (the second floor) with 22 beds at Sylvester, which is already hepa-filtered and otherwise meets all of the physical plant requirements for delivering BMT services. UM has capacity without any changes to its current facilities, to accommodate 250 transplants a year. UM is already repurposing beds in University of Miami Hospital across the street to accommodate commercial pay cancer patients, in order to allow Sylvester's beds to be used for BMT patients. In sum, UM's BMT physical facilities have room to accommodate new growth in BMT program services for the next five years of the growth forecast by Baptist health planners. Ample capacity at Sylvester and the fact that TSA 4 has the largest number of BMT providers in the state support the SAAR’s finding that Baptist had not shown lack of availability or accessibility in TSA 4 for the proposed BMT services. 4. Accessibility--Alleged Delays and Problems with Intake in TSA 4 At the final hearing, Baptist physicians testified that they are generally satisfied with the quality of care provided by Sylvester’s BMT program once their patients were admitted to Sylvester, but expressed frustration with delays in getting patients seen or admitted at Sylvester. They attributed the delay to lack of adequate communication after patient referral. Baptist’s Application did not advance the theory that poor referral communications resulted in lack of accessibility to BMT services in TSA 4. Therefore, that theory is not properly considered. Even with consideration of that theory, the evidence does not support a finding that communication errors caused lack of access. While there was evidence of occasional communication issues in referring BMT patients to UM, the evidence was not sufficient to reasonably infer lack of quality of care or accessibility for BMT inpatient services in TSA 4. Handoff communication issues among health care personnel are globally true. However, at the final hearing, UM demonstrated that personnel involved in its BMT program proactively engage in marketing, program monitoring, auditing, and prospective patient counseling efforts to reduce barriers to admission and reduce the time between patient referral and initial consult. As for physician communications, the evidence indicated that BMT physicians at UM regularly consult with their referring physicians at Baptist. Consistent with these findings is the fact that surveys of patient experience for the last two years have ranked UM in the 91st percentile and the 97th percentile ranking against other hospitals of similar size for BMT services. Section 408.035(1)(c), Fla. Stat.: The Ability of the Applicant to Provide Quality of Care and the Applicant’s Record of Providing Quality of Care Baptist is a well-regarded community hospital in Miami, with over 700 beds and over 1,800 nurses. Baptist's ability to provide quality health care in the areas where it is already providing care was not questioned. However, at the final hearing, Dr. Claudio Anasetti expressed concern about quality of care during the start-up period of Baptist’s proposed BMT program. Those start-up concerns, as well as questionable future program volume estimates, are issues that would confront any applicant for a new BMT program in TSA 4. Nevertheless, consideration of Baptist’s patient- focused care initiatives, “House ARNP” staffing model, oncology navigation program, and nursing program, supports a finding that Baptist has the ability to establish a new program with a focus on quality of care. Whether Baptist’s acumen for quality of care translates into the ability to establish a new adult autologous and allogeneic BMT program in TSA 4, however, depends on its ability to fulfill all of the statutory and rule criteria. Section 408.035(1)(d): The Availability of Resources, Including Health Personnel, Management Personnel, and Funds for Capital and Operating Expenditures, for Project Accomplishment and Operation Baptist did not demonstrate that it has the requisite resources and health or management personnel to implement the service. The specifics of the deficiencies are discussed under heading III, J, entitled “Florida Administrative Code Rule 59C-1.044, ,” infra. Section 408.035(1)(e), Fla. Stat.: The Extent to Which the Proposed Services Will Enhance Access to Health Care for Residents of the Service District As previously discussed under headings III. A. and B., above, lack of access or availability that would support the need for a new adult BMT program in TSA 4 has not been shown. Access to BMT clinical services is currently met by existing programs. TSA 4 has more BMT programs and facilities than any other TSA in Florida. The proposed services will not enhance clinical access to health care for residents of TSA 4. Further, it was not shown that the proposed program will enhance transportation or geographic access. Baptist plans to consolidate all of its cancer services currently provided at its hospital chain's facilities disbursed throughout southern Miami-Dade County into MCI. Although there is a bus line, it is anticipated that most transportation to MCI will be by automobile. Lack of financial access to current BMT programs in TSA 4 was not demonstrated. A facility's reimbursement is "driven by a patient's health insurance." Dr. Feinstein acknowledged that the low-volume numbers achieved during his nine years as program director at the Broward County Memorial West BMT program was because delay in obtaining Foundation for Accreditation of Cellular Therapy (FACT) accreditation. FACT accreditation assures that reimbursement can be obtained from all payers, including Medicare, Medicaid, and commercial. Unless the proposed new program obtains FACT accreditation, the proposal will actually provide less financial access. Baptist acknowledged that there would be a delay in obtaining FACT accreditation for its proposed program. Although Baptist suggested that it had access to some managed health care providers that were not accessible to UM, Baptist did not demonstrate any gaps in managed care coverage that would be filled by Baptist’s proposal, or that UM was not effective in assisting its patients in obtaining coverage. Rather, the evidence indicated that personnel at Sylvester have developed expertise over the years to resolve financial coverage issues for its BMT patients. Section 408.035(f), Fla. Stat.: The Immediate and Long-Term Financial Feasibility of the Proposal UM’s financial expert, Tom Davidson, testified that the Baptist’s proposed BMT program is not financially feasible because the Application leaves out costs for several leadership and clinical positions that must be filled. Salary costs for a program director and staff omitted from the Application exceed one million dollars. A comparison of Baptist’s cost estimates for its proposal against UM’s actual costs for Sylvester’s BMT operations reveals significant discrepancies. For example, Baptist projects $178 a day in laboratory costs per patient, while UM expends $1,000 a day. For pharmacy costs, Baptist projects $450 per day while UM’s pharmacy costs are $2,000 a day. While UM’s costs include expenditures for outpatient services and Baptist’s estimates do not, the discrepancies are still significant, especially considering the fact that BMT services are paid on a global, flat fee basis that takes into account all services, including post-procedure outpatient care. Baptist acknowledges that it does not currently have requisite skilled and experienced staff for much of the program, but proposes that nursing and other professionals will be given extensive training. Baptist’s projected costs do not include many of the costs for training staff and other startup costs which will have to be incurred to have a functioning BMT program. Further, delay in FACT accreditation, which Baptist acknowledged may take up to two years to achieve, will interfere with Baptist’s ability to achieve reimbursement. Considering these factors, Mr. Davidson’s analysis projected a 1.6 million dollar deficit instead of a $500,000 surplus projected by Baptist for year 2 of its proposed BMT program. Mr. Davidson’s analysis is credited. Even considering Mr. Davidson’s analysis with projected deficits, Baptist’s proposed BMT program is financially feasible in the short-term. Baptist is a large hospital system that could take on the costs associated with the proposed BMT program. The Application included a complete listing of all capital projects approved, underway, pending approval, or planned by Baptist Hospital at the time of submission of the Application. Baptist Hospital’s audited financial statements included in the Application demonstrate that Baptist Hospital has the financial wherewithal to implement the project. Whether short-term ability will translate into long-term feasibility is less certain, especially considering the capacity of existing programs to meet future BMT needs in TSA 4. Section 408.035(1)(g), Fla. Stat.: The Extent to Which the Proposal Will Foster Competition that Promotes Quality and Cost- Effectiveness As concluded by AHCA in the SAAR, the proposed project “will not likely foster the type of competition generally expected to promote quality and cost effectiveness.” In explaining the rationale for this conclusion, the SAAR listed a number of barriers to competition in the health care industry, including the fact that: 1) price-based competition is limited due to Medicare and Medicaid’s impact on pricing, accounting for over 41 percent of hospital charges in Florida; 2) most users do not shop around for pricing because 87.1 percent are covered by Medicaid, Medicare, or managed-care plans; and 3) lack of information available to consumers regarding quality measures that could affect choice. Contrary to AHCA’s conclusion, Baptist contends that approval of the Application will introduce both additional capacity and patient choice for BMT services within TSA 4, which will promote quality and cost-effectiveness. However, considering the fact that TSA 4 has more BMT programs than any other TSA in Florida, as well as the capacity of existing TSA 4 BMT programs to serve projected need, Baptist’s contention must fail. In addition, UM demonstrated that cases lost to Baptist’s new program would negatively affect UM’s program. UM’s expert reasonably estimated that the cases lost to Baptist would result in a loss between $6.2 million and $14 million in revenue over a three-year period. Section 408.035(1)(h): The Costs and Methods of the Proposed Construction, Including the Costs and Methods of Energy Provision and the Availability of Alternative, Less Costly, or More Effective Methods of Construction The parties stipulated that Baptist's BMT facility design, construction cost, and timeline are reasonable and appropriate for the autologous and allogeneic transplant program proposed by Baptist Hospital, in satisfaction of rule 59C- 1.044(9)(b)5. and (c)5. and rule 59C-1.044(3)(c). I. Section 408.035(i), Fla. Stat.: The Applicant’s Past and Proposed Provision of Health Care Services to Medicaid Patients and the Medically Indigent Baptist Hospital has a long-established commitment and history of providing care to Medicaid, medically indigent, and charity care patients. Approximately 19 percent of Baptist Hospital’s total acute care hospital activity consists of services provided to Medicaid patients, and an additional five to six percent consists of unreimbursed charity care. In 2013, BHSF contributed more than $292 million for total charity care, community clinics, and community benefit, serving more than 24,000 charity care patients. The Application includes, as a condition of approval, Baptist Hospital’s commitment to provide at least 10 percent of its BMT case volume on an annual basis to Medicaid, charity, and self-pay patients. J. Florida Administrative Code Rule 59C-1.044 Rule 59C-1.044, entitled “Organ Transplantation,” provides that, in addition to review under applicable criteria in section 408.035, organ transplant programs must meet the minimum requirements set forth in the rule. Subsections (3) and of rule 59C-1.044 set forth minimum requirements for personnel, equipment, and support services for all transplantation programs. Subsections 9(b) and 9(c) provide specific clinical and program requirements for adult allogeneic and autologous BMT program applicants, respectively. Research Criteria In the last sentence of its initial subsection, rule 59C-1.044(1) states in pertinent part: The following organ transplantation programs shall be restricted to teaching or research hospitals: . . . adult allogeneic bone marrow . . . . This restriction is reiterated in subsection (9)(b) of rule 59C-1.044, which states, in pertinent part: (b) Adult Allogeneic Bone Marrow Transplantation Programs. Adult allogeneic bone marrow transplantation programs shall be limited to teaching and research hospitals. Additional research requirements for adult allogeneic BMT programs are found in rule 59C-1.044(9)(b)9. and 10., which require applicants to have: An ongoing research program that is integrated either within the hospital or by written agreement with a bone marrow transplantation center operated by a teaching hospital. The program must include outcome monitoring and long-term patient follow-up; An established research-oriented oncology program; . . . . At the final hearing, the parties stipulated that none of the hospitals under BHSF’s umbrella are teaching hospitals. Subsection (2) of rule 59C-1.044 sets forth applicable definitions. Rule 59C-1.044(2)(d) defines research hospital as: A hospital which devotes clearly defined space, staff, equipment, and other resources for research purposes, and has documented teaching affiliations with an accredited school of medicine in Florida or another state. “Research Program” is defined in rule 59C-1.044(2)(e) as: An organized program that conducts clinical trial research, collects treatment data, assesses outcome data, and publishes statistical reports showing research activity and findings. Neither Baptist nor other hospitals in the Baptist Health System are generally regarded as being a research hospital. None of Baptist’s promotional and marketing materials disseminated to the public and contained in the Application make any claim that any hospital in BHSF’s system is a research hospital. While the Application points out BHSF’s many accolades and honors as a community hospital system, the evidence did not show its hospitals have received distinctions for research activities. BHSF’s financial statements do not indicate expenditures for research and its mission statement does not mention pursuit of a research hospital designation. Rather, Baptist’s mission statement and accompanying value statements are consistent with a religious-based community hospital and business model. In support of its contention that it is a research hospital, Baptist asserts the following: (1) A teaching affiliation with FIU; (2) Baptist has more than 220 active clinical research studies; (3) Cancer research is a major portion of Baptist’s research activity with over 90 current cancer studies underway; (4) Baptist’s hospital system has a unit entitled "The Center for Research & Grants"; (5) MCI has a research building under construction to be completed in the summer of 2017; (6) BHSF has recently hired researchers--one to be the scientific officer of MCI (Dr. Miguel A. Villalona- Calero), one to be director of translational research and genomic medicine at MCI (Dr. Jeffery Boyd), Dr. Michael Zinner as the director of MCI, and Dr. Minesh Mehta as chief of radiation oncology; and (7) BHSF has a rigorous "nurse research" program. The evidence supports some of these assertions better than others. There is, indeed, a teaching affiliation between BHSF and FIU. Graduate medical education is occurring at the West Kendall Baptist Hospital, with a family medicine residency program, and at Doctors Hospital, which has a sports medicine fellowship program. The evidence did not indicate how many physicians with staff privileges at Baptist are FIU faculty members. As to clinical studies, Baptist presented a listing of "220+ active clinical research studies" and made a claim that of those studies, "90+ current cancer studies are underway." The number of clinical trials, however, both in aggregate and specific to "cancer studies" did not match the government reporting data base entitled “clinicaltrials.gov” from the federal regulatory body that requires registration of clinical trials. Only seven trials in adult oncology were registered. There were also some trials in the data base designated as "not yet accruing,” without sufficient information regarding whether they were open or not. MCI recently created a clinical trials office different from BHSF’s research and grants program. While it is reasonably expected that MCI’s new program will someday administer clinical trials to patients in a safe manner with new protocols, when Dr. Villalona-Calero arrived to set up the new program, he stopped accrual of clinical trials. MCI is in the process of recruiting, but at the time of the final hearing had not yet hired, a medical director for its new clinical trials office. MCI’s first clinical scientific review committee meeting for the new clinical trials office was September 14, 2016. MCI just finished screening their medical oncology patients for eligibility to participate in clinical trials and still had several other patient populations to screen. Baptist’s evidence revealed some effort to acquire staff for research activities. While 50 persons were designated as support for anticipated research activities, at the time of hearing, only 20 persons were employed. The credible testimony of Dr. Michael Andrew Samuels cast doubt on the sufficiency of those designated by Baptist to support the claimed portfolio size of 220+ active hospital-based clinical trials. Further, of the 220+ clinical trials listed in the Application, most were national trials that would be generally available to a community hospital, and were trials produced by other investigators at other institutions. Many of the listed clinical trials appear to be observational or quality improvement initiatives. In addition, many of the trials had very old dates and no information was provided as to whether the listed trials were active and registering patients. The Application provides that support infrastructure for Baptist’s current research activities is provided by a group called "The Center for Research & Grants." At the hearing, however, Baptist provided information that support and administrative services for research are provided by a unit called “Baptist Health South Florida Research Enterprise,” a federally recognized parent institution. That institution is not mentioned in the Application. Further, no specific or detailed evidence was provided as to what space or equipment is currently being dedicated for research activities, at either Baptist’s facilities or anywhere in the Baptist health care system. As to future research facilities, it was acknowledged that no portion of any research activities would be housed at Baptist facilities. Rather, Baptist described MCI as the place where all the research capabilities will be housed. Those "research facilities" will not be opened until the summer of 2017. The MCI facility designated as the "research building" will have, as its third floor, outpatient facilities to operate the Baptist’s BMT outpatient program described in the Application; and the fourth floor would be dedicated to conducting pharmaceutical company-sponsored phase 1 clinical drug trials, a molecular diagnostic lab, and the bio-specimen depository. Other than one laboratory for Dr. Boyd (on the fourth floor), no other laboratory space was identified for the research building. Any research hospital or program is expected to have a significant amount of laboratory space. However, there is no laboratory space dedicated anywhere to the proposed BMT program or any other oncology research activities. No laboratory space will be made available for the processing and handling of stem cell products, which the Application states will be commercially acquired from OneBlood. Dr. Michael Zinner, Dr. Minesh Mehta, Dr. Miguel A. Villalona-Calero and Dr. Jeffery Boyd, all have significant research credentials. While they may be inclined to continue pursuit of their research interests, their new positions are now essentially administrative, with significant duties that would distract them from pursuing hospital-based clinical research. There was testimony indicating that certain Baptist nurses engage in research activities that are assigned an Institutional Review Board number. The nature of that nursing “research” activity, however, can best be described as quality assurance and customer satisfaction research as opposed to the high-level oncology research that would benefit patient outcomes. Baptist’s nursing research does not show that Baptist is a research hospital or that it has a research program. Baptist further asserts that combining with MCI would satisfy the research criteria by the creation of a “hybrid” cancer center that is both a community hospital and research center. The anticipated research to be undertaken at Baptist's concept of a hybrid cancer center will be primarily composed of reimbursed pharmaceutical trials. Expert testimony presented by UM demonstrated that research takes a tremendous amount of time for physicians and for investigators, and raised doubt as to Baptist’s ability to follow through on claims that it will be able to change the current corporate culture of Baptist from a community hospital to a research hospital. In reviewing the Application for AHCA, CON supervisor and health planning expert, Marisol Fitch, felt as though Baptist “had made a point that they were a research hospital, not a community hospital just having a research program.” In support of this contention, in addition to mentioning Baptist Health System’s teaching activity with FIU, the SAAR cites Baptist’s access to clinical trials and ongoing studies, as well as MCI’s announcement of its intention to affiliate with Memorial Sloan Kettering Cancer Center. Baptist, however, has not shown that it is presently a research hospital, nor can BHSF currently make that claim. While it is apparent that MCI anticipates an affiliation with Memorial Sloan Kettering, Baptist failed to provide sufficient evidence of the nature of that relationship. Instead of providing a copy of an agreement between MCI and Memorial Sloan Kettering, at the final hearing, Baptist attempted to introduce a highly redacted version of an agreement between the two institutions. The proffer, even if accepted into evidence, is insufficient to prove the nature of the purported relationship.4/ The redacted version omitted the operative terms of the arrangement. The only language available for review was the recital portion of the alleged agreement. While there was some testimony by Baptist witnesses as to such affiliation, it was insufficient to explain the true nature or extent of the anticipated relationship. Therefore, the evidence does not support the SAAR's recognition of such affiliation as a factor qualifying Baptist as a research hospital. In sum, the evidence did not demonstrate that Baptist qualifies as a research hospital, that it has an ongoing research program that is integrated either within the hospital or by written agreement with a BMT center operated by a teaching hospital, or that it has a an established research-oriented oncology program to satisfy the research hospital or research criteria set forth in rule 59C-1.044(1) or rule 59C- 1.044(9)(b)9. and 10. Autologous BMT programs are not restricted to only teaching or research hospitals. Rule 59C-1.044(9)(c)7. and 8., applicable to applicants for autologous BMT programs, have somewhat redundant research requirements as required of autologous program applicants under subsection (9)(b). Rule 59C-1.044(9)(c)7. and 8. provide: c) Adult Autologous Bone Marrow Transplantation Programs. Adult autologous bone marrow transplantation programs can be established at teaching hospitals or research hospitals; or at community hospitals having a research program, or who are affiliated with a research program, as defined in this rule. An ongoing research program that is integrated either within the hospital or by written agreement with a bone marrow transplantation center operated by a teaching hospital; or the applicant may enter into an agreement with an outpatient provider having a research program, as defined in this rule. Under the agreement, the outpatient research program may perform specified outpatient phases of adult autologous bone marrow transplantation, including blood screening tests, mobilization of stem cells, stem cell rescue, chemotherapy, and reinfusion of stem cells; and, An established research-oriented oncology program As previously discussed, rather than demonstrating an active research program, the evidence indicates that Baptist had suspended its clinical trials programs and activities. Further, the evidence did not show a written agreement between Baptist and a BMT center operated by a teaching hospital. The evidence does not otherwise support a finding that there is an "established research-oriented oncology program" at Baptist. The productivity and output from Baptist’s past oncology research activities has been low, even by community hospital standards. While the physician staff identified as researchers in the Application had appropriate training, evidence of their academic, research, and laboratory investigative productivity was lacking. Rather than showing that Baptist has existing research program capabilities, the evidence demonstrated Baptist Health System’s intention of building a future research program at MCI by constructing facilities, pursuing administrative activities and hiring leadership. Much of the evidence was aspirational or conceptual as opposed to demonstrative of an existing research program. 2. Criteria Applicable to All Types of Transplant Programs Not specific to BMT, subsections (3) and (4) of rule 59C-1.044 set forth general transplant requirements, regardless of the transplant program, and apply to both allogeneic and autologous BMT programs. Rule 59C-1.044(3)(a) requires that applicants for all types of transplant programs have: Staff and other resources necessary to care for the patient’s chronic illness prior to transplantation, during transplantation, and in the post-operative period. Services and facilities for inpatient and outpatient care shall be available on a 24-hour basis. As to these criteria, Baptist proposes to use current staff and hire additional staff. And, for all of the specialty blood product evaluation, processing, and storage capabilities unique to BMT programs, Baptist proposes to use a contract vendor named “OneBlood.” Because Baptist has hired Memorial West’s BMT program director, head nurse, lead ARNP, and pharmacist, it demonstrated the capability to at least address those criteria as they apply to an autologous BMT program. However, as no other proposed physician, nursing, or ancillary staff were shown to have BMT experience or skills, additional training would be required to adequately meet these criteria for autologous BMTs. As for an allogeneic program, however, as further discussed below, many of these criteria were not met. Rule 59C-1.044(3)(d), (e), and (f), requires all transplant program applicants to have: (3)(d) A clinical review committee for evaluation and decision-making regarding the suitability of a transplant candidate. (3)(e) Written protocols for patient care for each type of organ transplantation program including, at a minimum, patient selection criteria for patient management and evaluation during the pre-hospital, in- hospital, and immediate post-discharge phases of the program. (3)(f) Detailed therapeutic and evaluative procedures for the acute and long term management of each transplant program patient, including the management of commonly encountered complications. Clinical review committees require a critical mass of people actively engaged in patient decisions. Review committees for established BMT programs typically schedule weekly meetings of between 10 and 20 people, half of whom are physicians, to discuss the feasibility of proposed BMT transplants. At the time of the Application and final hearing, Baptist only identified four to eight competent staff members available to serve on a clinical review committee for the proposed program. With regard to the requirements for written protocols and evaluative procedures required by rule 59C-1.044(3)(e) and (f), while there are apparently some draft protocols, the evidence indicates that the actual written protocols have not yet been developed. Subsections (h) and (i) of rule 59C-1.044(3) require all transplant program applicants to have: (3)(h) An on-site tissue-typing laboratory or a contractual arrangement with an outside laboratory within the State of Florida, which meets the requirements of the American Society of Histocompatibility. (3)(i) Pathology services with the capability of studying and promptly reporting the patient's response to the organ transplantation surgery, and analyzing appropriate biopsy material. Baptist does not have an on-site tissue-typing laboratory. The rule allows an applicant without an on-site laboratory to contract with an outside laboratory located within the state of Florida. While the Application claims that Baptist would contract with OneBlood to provide tissue typing for histocompatibility, OneBlood is not certified, licensed, or otherwise capable of performing histocompatibility lab services. Without the requisite certification, Baptist would not be able to bill Medicare for OneBlood to perform histocompatibility services. While it was suggested at the final hearing that Baptist could perhaps contract with LabCorp for the histocompatibility services, the evidence did not show that such services would be performed by a laboratory located within the state of Florida. With regard to the requisite pathology services, the Application states: "This in house expertise and infrastructure, combined with OneBlood external resources, will ensure that all BMT patients will have the required laboratory support to optimally meet their needs." Baptist's nursing expert testified at hearing that pathology services would be involved in diagnosis of graft versus host disease. However, both the testimony and Application were lacking specifics as to how these complex services would be provided. Rule 59C-1.044(3)(j) requires transplant program applicants to have “[b]lood banking facilities.” Baptist’s Application provides that this criterion will be met by existing blood banking facilities, and that OneBlood would provide a "centralized blood collection, storage and distribution hub." Baptist's blood banking capabilities were not explained. As to reliance on OneBlood, there was no evidence of an existing contract or of OneBlood's capability to provide the required services. Rule 59C-1.044(3)(k) and (l) require transplant program applicants to have: (3)(k) A program for the education and training of staff regarding the special care of transplantation patients. (3)(1) Education programs for patients, their families and the patient's primary care physician regarding aftercare for transplantation patients. Baptist proved its ability to establish a program for staff training and education. BHSF has a clinical learning department. The Application states that BHSF’s resources will be used to establish a comprehensive training program for the proposed BMT program. BHSF, through MCI, has developed a BMT program education plan. Although the Application lists more than 30 clinicians who support the clinical learning department, none have experience in BMT. While BHSF's training program will undoubtedly be able to adjust to meet the requirements of rule 59C-1.044(3)(k), it stands to reason that lack of immediate experienced staff may cause some delay in implementation. Likewise, regarding rule 59C-1.044(3)(1) requirements for educational programs for BMT patients, families, and patient's primary care physicians, while Baptist introduced an exhibit entitled “Transplant Basics” that addresses issues confronting transplant patients, families and caregivers, there was no elaboration as to whether the training programs have been developed. Rule 59C-1.044(4)(a), relating to staff requirements for all transplant program applicants, requires applicants to have: (a) A staff of physicians with expertise in caring for patients with end-stage disease requiring transplantation. The staff shall have medical specialties or sub-specialties appropriate for the type of transplantation program to be established. The program shall employ a transplant physician, and a transplant surgeon, if applicable, as defined by the United Network for Organ Sharing (UNOS) June 1994. The UNOS definitions are incorporated herein by reference. A physician with one year experience in the management of infectious diseases in the transplant patient shall be a member of the transplant team. The only physician staffing that Baptist identified for its proposed BMT program is Dr. Lyle Feinstein. He was hired in September 2015 by Baptist Health System. Dr. Feinstein is the former BMT program director and physician for the Memorial Health System program located in Broward County, also in TSA 4. Dr. Citron was the only other physician identified as having any experience in performing BMT procedures. However, his medical group stopped doing BMT, around 1999, when it was no longer indicated as the standard of care for breast cancer. While the Application and SAAR note that there are 19 certified hematologists and oncologists on Baptist's staff, only four of the 19 are hematologists. Further, as correctly noted in the SAAR, “the Application did not address the infectious disease criteria.” The evidence at the final hearing did not further expound on how Baptist would address the infectious disease criteria. Rule 59C-1.044(4)(b) requires transplant program applicants to have: A program director who shall have a minimum of 1 year of formal training and 1 year of experience at a transplantation program for the same type of organ transplantation program proposed. Provided, however, that an applicant for a bone marrow transplantation program shall meet the requirements in subsection (9). While Baptist is in the process of recruiting, a program director with all the required experience and training was not identified either in the Application or at the final hearing. Baptist is recruiting outside the BHSF organization. As previously noted, the salary expense on the staffing schedule in the Application does not show this position funded or filled for the 2019 year of operation. Rule 59C-1.044(4)(d) requires applicants to have: (4)(d) A staff of nurses, and nurse practitioners with experience in the care of chronically ill patients and their families. Baptist met this criterion with evidence showing that it has sufficient nursing staff to treat patients with other forms of cancer and with experience in the care of chronically ill patients and their families. Rule 59-C 1.044(4)(e) requires all transplant program applicants to have: (4)(e) Contractual agreements with consultants who have expertise in blood banking and are capable of meeting the unique needs of transplant patients on a long term basis. Again, Baptist identifies OneBlood as satisfying this criteria. The evidence, however, did not show that Baptist has a contract with OneBlood. No representative from OneBlood testified as to any of its capabilities or whether it could provide the services needed for either an allogeneic or autologous BMT program. As further discussed below, OneBlood does not have the capabilities, facilities, or licensures to provide services for an allogeneic program. Subsections (f), (g), and (h) of rule 59C-1.044(4), require transplantation program applicants to have: Nutritionists with expertise in the nutritional needs of transplant patients; Respiratory therapists with expertise in the needs of transplant patients; and, Social workers, psychologists, psychiatrists, and other individuals skilled in performing comprehensive psychological assessments, counselling patients, and families of patients, providing assistance with financial arrangements, and making arrangements for use of community resources. With regard to subsection (f), the Application lists a core group of three registered and licensed dietician/nutrition staff, plus three additional credentialed nutritional support team members. However, as noted in the SAAR, Baptist does not state whether the listed nutritionists have experience in meeting the needs of transplant patients. The drug regimens required to be delivered by respiratory therapists to allogeneic transplant patients are unique and complex. Baptist states in the Application that it has 83 registered respiratory therapists in its respiratory department. As noted in the SAAR, however, the Application does not affirmatively state whether any of its respiratory therapists have expertise in the respiratory needs of transplant patients. While the Application states that the respiratory therapists who will provide services to BMT patients will receive additional education, Baptist did not adequately address its ability to provide adequate respiratory therapist services for BMT procedures. As to the requirements of rule 59C-1.044(4)(h), Baptist does not currently have social workers to assist families concerning the impacts of a BMT. However, UM does not contest Baptist’s ability to meet that requirement and the Application and evidence otherwise demonstrated Baptist’s capability of fulfilling those requirements in the future. 3. Additional Criteria for Allogeneic BMT Program Applicants In addition to the minimum projections of 10 allogeneic transplants each year required by rule 59C- 1.044(9)(b)1., and the research requirements set forth in rule 59C-1.044(9)(b)9. and 10., addressed above, rule 59C- 1.044(9)(b)1. through 8. and 10. through 12. have additional requirements that applicants for adult allogeneic BMT programs must meet. Rule 59C-1.044(9)(b)2. requires allogeneic BMT program applicants to have: A program director who is a board certified hematologist or oncologist with experience in the treatment and management of adult acute oncological cases involving high dose chemotherapy or high dose radiation therapy. The program director must have formal training in bone marrow transplantation. These criteria for a program director are essentially the same as set forth in rule 59C-1.044(4)(b) and rule 59C- 1.044(9)(c)2. As previously discussed, Baptist has not hired a program director. Rule 59C-1.044(9)(b)3. requires applicants for allogeneic BMT programs to have: Clinical nurses with experience in the care of critically ill immuno-suppressed patients. Nursing staff shall be dedicated full time to the program; Baptist identified two nurses with experience in treating BMT patients. Baptist did not specify the number of nurses with the requisite experience to be transferred from other areas or the number who will be new hires for the proposed BMT program. 161. Rule 59C-1.044(9)(b)4. requires: An interdisciplinary transplantation team with expertise in hematology, oncology, immunologic diseases, neoplastic diseases, including hematopoietic and lymphopoietic malignancies, and non- neoplastic disorders. The team shall direct permanent follow-up care of the bone marrow transplantation patients, including the maintenance of immunosuppressive therapy and treatment of complications. While Baptist identified the physicians and nurses who came from Memorial West with experience in BMT procedures, it did not provide evidence of who would comprise an "interdisciplinary transplantation team." Further, Baptist did not identify staff that would provide services for "maintenance of immunosuppressive therapy and treatment of complications" for allogeneic patients. While Baptist has 1,800 nurses on staff, only two have BMT experience, both of whom were recruited away from the Memorial West BMT program. Baptist has not identified any other staff ready to perform allogeneic BMT services. Rather, Baptist proposes to train staff to comprise the interdisciplinary team. Nurse Rios, who will be doing the training for Baptist, testified that, at Memorial West, it took one year before they performed their first outpatient autologous transplant, and three years before Memorial West applied for a CON for an inpatient and allogeneic transplant program. This evidence calls into question Baptist's proposed ability to implement an allogeneic program in 18 months. Under rule 59C-1.044(9)(b)6., applicants must have: A radiation therapy division on-site which is capable of sub-lethal x- irradiation and total lymphoid irradiation. The division shall be under the direction of a board certified radiation oncologist. Radiation therapy is a highly skilled and complex service for BMT patients. Baptist failed to demonstrate, either in the Application or at the final hearing, that it has the requisite staff to handle this service for BMT patients. 166. Rule 59C-1.044(9)(b)7. requires: A laboratory equipped to handle studies including the use of monoclonal antibodies, if this procedure is employed by the hospital, or T-cell depletion, separation of lymphocyte and hematological cell subpopulations and their removal for prevention of graft versus host disease. This requirement may be met through contractual arrangements. The Application addresses the requirement of 59C- 1.044(9)(b)7. by explaining that, "Cellular processing services will be provided by OneBlood or other external specialty providers with applicable accreditation and certification." The Application also cites a letter from OneBlood to support a claim that it can perform T-Cell depletion. Review of the letter, which was introduced as an exhibit during the final hearing and is otherwise hearsay, indicates that OneBlood can perform T-Cell subsets, not T-Cell depletion. There was no evidence demonstrating OneBlood's ability to perform T-Cell depletion. T-Cell depletion is a preventative measure against Graft versus Host disease, a serious and anticipated complication of an allogeneic BMT. And yet, it is not anticipated that T-Cell depletion will initially be available for Baptist's proposed program. At the final hearing, when Baptist's nursing witness, Ms. Rios, was asked how Baptist will comply with 59C- 1.044(9)(b)7., she replied, "I don't know at this point." When Baptist's counsel followed up and asked how Memorial West complied with this criterion, Ms. Rios replied, "We did not do T-Cell depletion at Memorial." Further, the evidence did not demonstrate that OneBlood is FACT-accredited to do the blood processing services, like T-Cell depletion, which are required for allogeneic BMT programs. Baptist's reliance on OneBlood to perform services is contrary to objective evidence as to what OneBlood can actually perform. Baptist failed to demonstrate that it has a feasible proposal to provide for T-Cell depletion. Rule 59C-1.044(9)(b)8. requires allogeneic BMT program applicants to have: An on-site laboratory equipped for the evaluation and cryopreservation of bone marrow. The Application does not provide for and Baptist does not plan to have an on-site laboratory equipped for the evaluation and cryopreservation of bone marrow. Rather, the Application states that "[b]one marrow evaluation and cryopreservation will be provided by the OneBlood organization." Baptist’s intent in this regard was confirmed by testimony. The requirement is that the laboratory be on-site. Instead, Baptist proposes to ship blood product to a OneBlood facility more than 40 miles from Baptist. When blood product is cryopreserved, its temperature is extremely low and very susceptible to fractures. Serious complications could occur if there are any issues with the transport of a donor's blood. Baptist’s proposed contractual arrangement with OneBlood is not in compliance with the rule requirement for an on-site laboratory for allogeneic BMT transplants. The SAAR does not address Baptist’s failure to meet this requirement for an on-site lab. When confronted with the issue at the final hearing, AHCA’s expert, Ms. Fitch, took the position that language under the recitation on page 26 of the SAAR, that an “on-site tissue- typing laboratory or a contractual arraignment with an outside laboratory within the State of Florida, which meets the requirements of the American Society of Histocompatibility,” was an acknowledgment that Baptist met the requirement in rule 59C- 1.044(9)(b)8. Ms. Fitch testified that the above quote from the SAAR was borrowed from language used for evaluations of past applications, and that contractual arrangements should be sufficient. A comparison of that language from the SAAR, however, with the general requirement under rule 59C-1.044(3)(h) applicable to all types of transplantation programs, makes it clear that Ms. Fitch confused the two laboratory requirements. The general requirement for all transplant programs under 59C- 1.044(3)(h) is for an “on-site tissue-typing laboratory or a contractual arrangement with an outside laboratory within the State of Florida, which meets the requirements of the American Society of Histocompatibility.” The requirement for an on-site laboratory for allogeneic BMT programs under 59C-1.044(9)(b)8., however, does not allow for contracting with an outside laboratory, but simply provides that an applicant shall have “[a]n on site laboratory equipped for the evaluation and cryopreservation of bone marrow.” While Ms. Fitch testified that none of the rule requirements were “100 percent mandatory,” allowing Baptist to meet the requirement for an on-site laboratory through contractual arrangement with an outside laboratory would violate the express terms of rule 59C-1.044(9)(b)8. Rule 59C-1.044(9)(b)11. requires allogeneic BMT program applicants to have: A patient convalescent facility to provide a temporary residence setting for transplant patients during the prolonged convalescence. Baptist meets this requirement with a new facility adjacent to Baptist Hospital and MCI, charging standard rates for the facility as would be paid in comparable area hotels. Rule 59C-1.044(9)(b)12. requires allogeneic program applicants to have: An outpatient unit for close supervision of discharged patients. Baptist proposes to provide those outpatient services at MCI, and is closing its outpatient cancer facilities at its other hospitals, except for its chemotherapy unit at Mariner Hospital in Monroe County, so that they will all be housed under MCI. Specific information as to how the outpatient unit at MCI will be staffed is lacking. In particular, there are no specifics as to the staffing and qualifications for those at MCI who will be providing the "collection and reinfusion of stem cells." Collection and reinfusion of stem cell is accomplished with the use of an apheresis machine. While the evidence indicates this activity will be undertaken on the third floor of MCI’s “research building,” Schedule 6 of the Application does not identify nursing or other staff or personnel. 4. Allogeneic BMT Program Applicant Criteria Rule 59C-1.044(9)(c) contains requirements specific to autologous BMT program applicants. Subsections (c)2., (c)3., and (c)6. of that rule are the same requirements for allogeneic programs provided in rule 59C-1.044(9)(b)2., (b)3., and (b)6., addressed above. The requirements under 59C-1.044(9)(c)4., are the same as for allogeneic programs under 59C-1.044(9)(b)4., except (c)4. does not require “the maintenance of immunosuppressive therapy and treatment complications” as required for allogeneic programs. While additional staff training will be required, Baptist has demonstrated the capability to commence autologous BMT transplants in the not-so-distant future. This capability was largely acquired by hiring away the primary BMT medical professionals who conducted that program at Memorial West. Many of Baptist’s other clinical requirements for an autologous program will have to be acquired. While Baptist will depend on contractual agreements with OneBlood, corroborating evidence from OneBlood regarding its capabilities in that regard was not provided, nor was there evidence of an existing contractual agreement with OneBlood. As for the clinical proposal to deliver autologous BMT transplants, while attainable, Baptist’s proposed program does not add any new clinical capabilities or experience that are not already being provided in the service area. As far as an allogeneic program, rather than demonstrating current capability, the evidence indicates that Baptist would start with autologous transplants, and begin allogeneic transplants only after sufficient institutional skills and staff training are obtained. A specific timetable as to when such skills would be acquired was not supplied. ADVERSE IMPACT UM demonstrated that it will lose $111,019 of revenue per transplant episode for each procedure not served by UM. There was credible, expert opinion that projected a range of total financial adverse impact to UM in the form of income loss between $6.2 million and $14 million over a three-year period. As demonstrated by the fact that Baptist has hired away Memorial West's program director, head nurse, one of its most skilled ARNPs, and its main pharmacist, approval of Baptist’s program could also adversely impact UM by drawing staff and personnel away from UM. Baptist has already undermined the services available in TSA 4 by depleting the staffing at the BMT program of Memorial West at the expense of Memorial West’s BMT program. A new program in TSA 4 will also adversely affect the capability for effective research efforts in existing programs. The relatively small population of BMT patients makes program volume critical for clinical research. The small patient population is also characterized by having significant subgroups with individual uniqueness by patient. By disbursing this small population among yet another provider, advancements in research are hampered by reducing the critical and varied mass of patients who present to a given set of physicians and staff, thereby diluting those researchers’ ability to learn by experience, experimentation, and observation. This same phenomenon occurs with the dilution of BMT candidates for clinical trials. The de-concentration of research, experimentation, and clinical effort for this specialized transplant service is contrary to the statutory and public policy contained in section 408.032(17), which recognizes that tertiary health services, (which include BMT programs), “due to [their] high level of intensity, complexity, specialized or limited applicability, and cost, should be limited to, and concentrated in, a limited number of hospitals to ensure the quality, availability, and cost- effectiveness of such service.”
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Agency for Health Care Administration enter a final order denying CON Application No. 10420. DONE AND ENTERED this 30th day of March, 2017, in Tallahassee, Leon County, Florida. S JAMES H. PETERSON, III Administrative Law Judge Division of Administrative Hearings The Desoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 30th day of March, 2017.
Conclusions Sovereign immunity extends to “corporations primarily acting as instrumentalities . . . of the state, county, or municipalities.” See § 68.28(2), F.S.; Pagan v. Sarasota County Public Hospital Board, 884 So.2d 257 (Fla. 2d DCA 2004). MRHS was deemed to be an instrumentality of the hospital district by the Attorney General in an opinion dated December 8, 2006 and the circuit court in Marion County has reached the same conclusion in several cases. As a result, MRHS is entitled to sovereign immunity under § 768.28, F.S. The public policy basis for extending sovereign immunity to private entities such as MRHS has recently been questioned by two appellate courts. See University of Florida Board of Trustees v. Morris, 32 Fla. L. Weekly D1803 (Fla 2d DCA July 27, 2007) (Altenbernd, J., concurring), rev. denied, 2008 Fla LEXIS (Fla. Jan. 7, 2008); Andrews v. Shands at Lakeshore, Inc., 33 Fla. L. Weekly D30 (Fla 1st DCA Dec. 20, 2007). The nurses are employees of MRHS and they were acting within the scope of their employment when providing services to Tyler. As a result, the nurses’ negligence is attributable to MRHS. The nurses had a duty to provide competent medical care to Tyler. They breached this duty and violated the standards of care for nursing personnel by failing to report the cyanotic episodes to Dr. Pierre and by failing to properly perform the four-extremity blood pressure test. The nurses’ actions and inactions contributed to the delayed diagnosis of Tyler’s heart condition. However, Dr. Pierre’s failure to order an immediate cardiology consultation when she detected a heart murmur shortly after Tyler’s birth also contributed to the delayed diagnosis of Tyler’s heart condition. The delayed diagnosis of Tyler’s heart condition led to his “crash” on December 16 because it is more likely than not that Tyler would have been transferred to Shands or another tertiary facility had his condition been diagnosed sooner. Tyler was not a candidate for the second and third stages of the Norwood procedure because of the damage caused by the “crash,” and he also suffered brain damage during the “crash” that caused his developmental delay. The amount of damages agreed to by MRHS is reasonable, even though Dr. Pierre likely shares some of the responsibility for Tyler’s condition. Indeed, the life care plan prepared for Tyler reflects that the cost of a transplant is between $650,000 and $700,000 and Tyler is expected to require multiple transplants over the course of his life. Moreover, the non-economic damages (e.g., pain and suffering) of Tyler and his parents could very well have exceeded the settlement amount had the case gone to jury trial. LEGISLATIVE HISTORY: This is the first year that this claim has been presented to the Legislature. ATTORNEYS’ FEES AND LOBBYIST’S FEES: The claimants’ attorney provided an affidavit stating that that attorney’s fees will be capped at 25 percent of the amount awarded by the claim bill in accordance with §768.28(8), F.S. Lobbyist’s fees are not included in the 25 percent attorney’s fees. Lobbyist’s fees will be an additional 4 percent of the amount awarded by the claim bill, which would be $28,000 based upon the $700,000 claim. The Legislature is free to limit the fees and costs paid in connection with a claim bill as it sees fit. See Gamble v. Wells, 450 So. 2d 850 (Fla. 1984). The bill does so by stating that “[t]he total amount paid for attorney’s fees, lobbying fees, costs and other similar expenses relating to this claim may not exceed 25 percent of the amount awarded [by the bill].” If this language remains in the bill (and the bill is amended as recommended below to reflect the allocation approved by the circuit court), the claimants will receive a total of $525,000, with $393,750 going into Tyler’s special needs trust and $131,250 going to his parents. The remaining $175,000 will go to attorney’s fees, costs, and lobbyist’s fees. If this language was not in the bill (and the bill is amended as recommended below to reflect the allocation approved by the circuit court), the claimants would receive approximately $362,000, with approximately $271,500 going into Tyler’s special needs trust and approximately $90,500 going to his parents. The claimants’ attorney would receive a total of approximately $310,000 ($175,000 for attorney’s fees and approximately $135,000 for costs), and the lobbyist would receive $28,000. OTHER ISSUES: The bill identifies the Marion County Hospital District as the entity responsible for payment of the claim. The parties agree, and I recommend that the bill be amended to reflect MRHS as the entity responsible for payment because it is responsible for operating the hospital pursuant to a lease from the hospital district. The bill requires the entire claim to be paid into Tyler’s special needs trust. The parties agree, and I recommend that the bill be amended to require payment of the claim in accordance with the allocation approved by the circuit court, i.e., 75 percent into Tyler’s special needs trust and 25 percent to his parents. The bill requires any funds remaining in Tyler’s special needs trust upon his death to revert to the General Revenue Fund. The parties agree, and I recommend that the bill be amended to remove this language because the bill is being paid from the hospital’s funds, not State funds. The bill should be also amended to include the standard language requiring payment of Medicaid liens prior to disbursing any funds to the claimants. See § 409.910, F.S. RECOMMENDATIONS: For the reasons set forth above, I recommend that Senate Bill 68 (2008) be reported FAVORABLY, as amended. Respectfully submitted, cc: Senator Charlie Dean Representative Marcelo Llorente Faye Blanton, Secretary of the Senate T. Kent Wetherell Senate Special Master House Committee on Constitution and Civil Law Tony DePalma, House Special Master Counsel of Record
Findings Of Fact Galencare, Inc., d/b/a Northside Hospital ("Northside") and NME Hospitals, Inc., d/b/a Palms of Pasadena Hospital ("Palms") were litigants in administrative proceedings concerning the Agency For Health Care Administration's ("AHCA's") preliminary action on certificate of need applications. Northside moved to dismiss Palms' application based on defects in the corporate resolution. The resolution is as follows: RESOLVED, that the Corporation be and hereby is authorized to file a Letter of Intent and Certificate of Need Application for an adult open heart surgery program and the designation of three medical/surgical beds as a Coronary Intensive Care Unit as more specifically described by the proposed Letter of Intent attached hereto. RESOLVED, that the Corporation is hereby authorized to incur the expenditures necessary to accomplish the aforesaid proposed project. RESOLVED, that if the aforedescribed Certificate of Need is issued to the Corporation by the Agency for Health Care Administration, the Corporation shall accomplish the proposed project within the time allowed by law, and at or below the costs contained in the aforesaid Certificate of Need Application. RESOLVED, that the Corporation certifies that it shall appropriately license and immediately there- after operate the open heart surgery program. In its Motion, Northside claimed that the third and fourth clauses in the Resolution are defective, the third clause because it does not "certify" that the time and cost conditions will be met and the fourth for omitting "adult" to describe the proposed open heart surgery program. Northside relies on the language of the statute requiring that a resolution shall contain statements . . .authorizing the filing of the application described in the letter of intent; authorizing the applicant to incur the expenditures necessary to accomplish the proposed project; certifying that if issued a certificate, the applicant shall accomplish the proposed project within the time allowed by law and at or below the costs contained in the application; and certifying that the applicant shall license and operate the facility. Subsection 408.039(2)(c), Florida Statutes. Northside also relies on Rule 59C-1.008(1)(d), which is as follows: The resolution shall contain, verbatim, the requirements specified in paragraph 408.039 (2)(c), F.S., . . . Palms' filed the Motion For Sanctions against Northside on November 15, 1993, pursuant to Subsection 120.57(1)(b)5 for filing a frivolous motion for an improper purpose, needlessly increasing the cost of the litigation, with no legal basis. Northside's claims that the Resolution was defective were rejected in the Recommended Order of Dismissal of January 11, 1994, amended and corrected on January 26, 1994, and not discussed in AHCA's Final Order of March 15, 1994.
