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
Findings Of Fact Lawnwood Regional Medical Center is a 225 bed community hospital in Ft. Pierce, Florida. It currently holds a CON to add an additional 50 beds. Lawnwood is owned and operated by Hospital Corporation of America, (HCA). On October 14, 1985, Lawnwood submitted a CON application for authorization to provide cardiac catheterization and open heart surgery programs at the facility. The project for both services would involve a total of approximately 10,000 sq. ft. of construction consisting of both new construction and renovation of the present facility, with a project cost of approximately $3.6 million. Lawnwood developed the project because it found a need therefor as a result of various visits to the administrator by physicians practicing in the area who indicated a growing demand for the services. The physicians in question indicated they were referring more and more patients to facilities out of the immediate area and the services in question were very much needed in this locality. The main service area for Lawnwood consists of the northern four counties of DHRS District IX, including St. Lucie, Martin, Okeechobee, and Indian River Counties. The majority of the cardiology practitioners in this service area find it necessary, because of the lack of cardiac catheterization and open heart surgery programs, to transfer patients to facilities either in Palm Beach County, which are from one to two hours away, or to facilities outside the District, primarily in Miami or the University of Florida area, which are even further. While many heart patients are not severely impacted by this, one specific class of patient, the streptokinase patient is. This procedure, involving the use of a chemical injected by catheter to dissolve a clot causing blockage must he done within a relatively short period of time after the onset of the blockage to be effective. However, this can he done outside a cardiac cath lab. A representative sampling of doctors testifying for Lawnwood indicated that during the year prior to the hearing, one doctor, Kahddus, sent 140 patients outside the district for catheterization procedures and 90 additional patients for open heart surgery. Other physicians referring outside District IX included Dr. Hayes - 4; Dr. Marjieh - 240; and Dr. Whittle - 12. Doctors indicated that the situation was so severe that some physicians practicing in the Palm Beach area, who have cardiac catheter and open heart surgery services available to them in the immediate locale are nonetheless referring patients outside the District for these procedures. No physician who does this testified, however. St. Mary's Hospital is a 358 bed not for profit hospital located in Palm Beach County. It has been issued a CON for a cardiac catheterization lab expected to come on line in April, 1987. Palm Beach Gardens Medical Center is a 204 bed acute care hospital which currently operates a cardiac catheterization laboratory and an open heart surgery program. It, too, is located in Palm Beach County. A second cardiac catheterization laboratory was scheduled to open at this facility in February, 1987. An additional cardiac catheterization laboratory is operating at Delray Community Hospital and this facility, as well as the currently existing facility at PBGMC are the only two currently operating cardiac catheterization laboratories within DHRS District IX. There are, however, other cardiac catheterization labs approved for District IX. These include the aforementioned second PBGMC lab, the aforementioned St. Mary's lab, one at JFK Hospital and one at Boca Raton Community Hospital. These latter four facilities are not yet operational. As to open heart surgery programs, only PBGMC and Delray Community Hospital have open heart surgery programs on line. JFK has been approved for an open heart surgery program. DHRS has promulgated rules for determining the need for cardiac catheterization and open heart surgery programs. These rules are found in Section 10-5.11(15) and (16), F.A.C. and establish methodologies based on use rates to determine need. The use rate for the applicable time period here, July, 1984 through June, 1985, is to be multiplied by the projected population for the District in the planning horizon, (July, 1987) which figure is then divided by 600 procedures per laboratory to determine the need for catheterization labs or 350 open heart procedures to determine the need for additional open heart surgery programs. The difficulty in applying this methodology to the current situation is in the calculation of the "use rate" used to measure the utilization of a service per unit of population. For the rule here, it is expressed as the number of procedures per 100,000 population. There is more than one way to calculate a use rate and the DHRS rules do not specify the method of calculation. An "actual use rate" is determined by applying the actual number of procedures performed within a particular geographical area in a particular time period. Data to determine an actual use rate for catheterization services or open heart surgery is not currently available in District IX, however. Applying the formula cited above to the existing figures, however, reflects a use rate of 62.3 procedures per 100,000 population in District IX. This is far below the 409.7 procedures per 100,000 population statewide. Lawnwood proposes to apply the statewide use rate rather than the District IX use rate because District IX is currently in a start up phase and does not have sufficient historical information available to provide an accurate use rate for the purpose of the need methodology. The lower the use rate, the lower the need will be shown to be. If the lower District IX rate is applied, in light of the numerous other laboratories coming on line approved already, there would clearly be no need for any additional services in either the catheterization or open heart surgery areas. Some experts offer as a potential substitute for the actual use rate a "facility based use rate" which involves determining the number of procedures performed in all hospitals within a particular geographic area for the applicable time period and dividing that number of procedures by the population of that area. DHRS evaluators employed this "facility based use rate" in their need calculations. At least one expert, however, contends that the "facility based use rate" is appropriate only when certain conditions exist. These include an adequate supply of facilities or providers in the area; historical, long-standing experience rather than start-up programs; and a lack of a high number of referrals outside of the particular area. Since these three conditions are not met here, it would seen that the "facility based use rate" would not be appropriate. In determining the statewide use rate of 409.07, Mr. Nelson, consultant testifying on behalf of Lawnwood, derived that figure by compiling utilization data for all hospitals in the state providing cardiac catheterization during the time period in question divided by the statewide population as of January 1, 1985. The resulting figure was thereafter converted into a rate per unit of population. A statewide figure such as this includes patients of all ages and it would appear that this is as it should be. Catheterization and open heart surgery services would be open to all segments of the state population and it would seem only right therefore that the entire population be considered when arriving at figures designed to assess the need for additional services. On the other hand, experts testifying on behalf of the intervenors utilized statistical manipulation which tended to indicated that the need, reflected as greater under Mr. Nelson's methodology, was in fact not accurate and was flawed. He that as it may, it is difficult to conclude which of the different experts testifying is accurate and the chances are great that none is 100 percent on track. More likely, and it is so found, the appropriate figure would be one more extensive than the population figures and resultant use rate for District IX alone and closer to the statewide rate across a broad spectrum of the population. When the fact that the older population of the District IX counties, the age cohort more likely to utilize catheterization and open heart surgery services, is greater in the District IX counties than perhaps in other counties north of that area, the inescapable conclusion must be reached that a use rate significantly higher than 62.3 would be appropriate. This may not, however, require the use of a statewide rate of 409.7. Utilizing, arguendo, the statewide use rate of approximately 409 procedures per 100,000 population results in a projected number of procedures of 4,576 in District IX if the projected population figure of slightly more than 1.1 million holds true. When that 4,576 figure is divided by the minimum number of procedures required by rule prior to the addition of further cardiac catheterization labs, (600),a need for 7.63 labs in District IX is shown. With six labs existing or approved, a net need of two additional labs would appear to exist since DHRS rounds upward when the number is .5 or higher. A similar analysis applied to open heart surgery, using a statewide use rate of 120.94 per 100,000 population results in a procedure number of 1,353 for the same population. Utilizing the DHRS rule minimum of 350 procedures per lab for open heart surgery procedures, a net yield of 3.87 programs would be needed in District IX in January, 1988. Subtracting the three existing or approved programs now in the district, and rounding up, would show a need of one additional open heart surgery program. These are the figures relied upon by Lawnwood. Accepting them for the moment and going to the issue of financial feasibility, DHRS apparently has agreed that the project costs for this facility are reasonable. Lawnwood has shown itself to be a profitable hospital and HCA is a large, well run corporation not known for the establishment of non- profitable operations. If one accepts that the actual utilization will approximate the projected utilization figures, then the operation would clearly be financially feasible. Both intervenors challenged the Petitioner's pro forma statement of earnings, but their efforts were not particularly successful. If Lawnwood can perform a sufficient number of procedures, then it should be able to break even without difficulty. Turning to the question of the impact that the opening of Lawnwood's facilities would have on the other providers or prospective providers in the area, both PBGMC and St. Mary's contend that there would be a substantial adverse impact on their existing services as well as on the prospective units already approved. Lawnwood proposes to service a portion of the indigent population with its two new operations. Were this to be done, indeed an impact would be felt by St. Mary's which is currently a substantial provider of indigent and Medicaid treatment and St. Mary's will be particularly vulnerable since it is in the start-up phase of its cardiac catheterization lab. Currently, PBGMC draws patients in both services from Martin and St. Lucie counties as well as from Palm Beach County. The percentage of patients drawn from these more northern counties is, while not overwhelming, at least significant, being 14 percent from Martin County and 9 percent from St. Lucie. Taken together, this constitutes 23 percent of the activity in these areas. St. Mary's anticipates a loss of 25 percent of its potential catheterization cases and if this happens, it will lose approximately $719,000.00 of its gross revenue in catheterization cases alone. St. Mary's further predicts that if Lawnwood's facility is opened, it will have difficulty recruiting and maintaining qualified personnel. PBGMC, figuring it's loss to be approximately $492,000.00, estimates that a layoff of nursing and other staff personnel or the redirecting them into other areas of the hospital would be indicated. PBGMC also refers to the cumulative impact not only of Lawnwood's proposal but of the other cardiac programs in the District which have been approved but are not yet on line. If all come into operation, PBGMC estimates it could lose as much as 69 percent of its activity in these areas. These negative predictions are not, however, supported by any firm evidence and are prospective in nature. From a historic perspective, it is doubtful that any lasting significant negative impact would occur to either PBGMC or St. Mary's overall operation by the opening of Lawnwood's facility. Turning to the question of staffing and its relationship to the issue of quality of care, there is little doubt that Lawnwood could obtain appropriate staffing for both its services if approved. Of the physicians already on staff at the facility, many are now certified and the hospital and the medical community plans training programs for those who are not. As to nurses and other support personnel, Lawnwood is satisfied that it can recruit from other HCA facilities and will recruit from the open market. It has a full time recruiter on staff. Quality of care is of paramount concern to the administration of Lawnwood. It has a current three year accreditation from the Joint Commission on Hospital Accreditation. It also has a quality control committee made up of both physicians and other staff members and the laboratory is approved by appropriate accrediting agencies. These same types of quality control programs would be applied to both new requested services as well. The rules in question governing the approval of cardiac catheterization laboratories and open heart surgery programs set down certain criteria for the approval of additional services which, as to the question of cardiac catheters states at subparagraph 15(o)1a that there will be no additional adult cardiac catheterization laboratories established in a service area unless the average number of catheterizations performed per year by existing and approved laboratories performing adult procedures in the service area is greater than 600. Much the same qualification relates to open heart surgery programs except that in that latter case, the minimum number would be 350 open heart procedures annually for adults and 130 for pediatric heart procedures annually. Ms. Farr, consultant for DHRS, feels that Petitioner's application would be inconsistent with the minimum standards set forth in the rule because she does not believe the Petitioner would do enough procedures in either cardiac catheterization or open heart surgery to meet the 600/350 criteria. She also contends that the proposal is not consistent with the District Health Plan, because the District plan requires the rule which addresses need be followed. Since, in her opinion, the application of the rule shows no need, there would be a violation of the District Health Plan if these proposals were approved. In the area of cardiac catheterization laboratories, of the six licensed and approved labs in District IX, only that existing currently at PBGMC is presently performing more than 600 procedures per year. Substantial testimony tending to indicate that a well organized cardiac catheterization lab can handle between 1500 and 2000 procedures per year, the 600 figure would tend to be a minimum and was so recognized by the drafters of the rule. No evidence was introduced by any party to show the numbers of open heart surgery procedures currently being performed in the three existing or approved open heart surgery programs in the District. Again, however, it would appear that DHRS criteria of 350 would be a minimum rather than an optimum or maximum figure. The parties have stipulated that as to the travel time criteria set forth in the rule for both procedures, 90 percent of the population of District IX is within two hour automobile travel time from availability to either or both procedures. It would further appear from an evaluation of the evidence, that while difficulty is experienced in arranging treatment for indigent transfer patients outside the District, little if any difficulty is experienced in arranging transfer treatment for those who can pay for the service. Little difficulty is experienced in securing treatment for these individuals in either Miami, Orlando, or elsewhere, and aside from inconvenience, there was no showing that a real, substantial health risk existed as a result of the transfer process. All things taken together, then, though the numerical evaluation under the rule process, applying a statewide use rate, tends to indicate that there is a "need" for this additional service, the subparagraph "o" criteria of 600/350 procedures requirement prior to authorization of additional service is not met.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is, therefore: RECOMMENDED that Lawnwood's application for a CON to add a cardiac catheterization laboratory and open heart surgery program at its facility in Ft. Pierce, Florida, be denied. RECOMMENDED this 16th day of March, 1987 at Tallahassee, Florida. ARNOLD H. POLLOCK Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32301 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 16th day of March, 1987. APPENDIX TO RECOMMENDED ORDER, CASE NO. 86-1539 The following constitutes my specific rulings pursuant to Section 120.59(2), Florida Statutes, on all of the Proposed Findings of Fact submitted by the parties to this case. By Petitioner - Lawnwood 1 & 2. Accepted and incorporated. 3 & 4. Accepted and incorporated. 5. Accepted and incorporated. 6. Accepted and incorporated. 7. Accepted and incorporated. 8. Accepted and incorporated. 9. Accepted and incorporated. 10. Accepted and incorporated. 11. Accepted and incorporated. 12. Accepted and incorporated in substance. 13. Accepted and incorporated in substance. 14. Accepted and incorporated in substance. Rejected as indicating a need for 2 additional cath labs. Rejected as calling for determination of "not normal status for District IX. Accepted in general but rejected insofar as there is an implication that non-indigent patients experience "significant" difficulty securing treatment. Accepted. 19 & 20. Accepted as to the streptokinase patients specifically. Accepted but not considered to be of major significance. Accepted and incorporated. 23 & 24. Accepted and incorporated. 25 & 26. Accepted and incorporated. 27 & 28. Accepted and incorporated. 29. Accepted. 30 & 31. Accepted and incorporated in substance. 32. Rejected as not supported by the best evidence. 33-36. Accepted and incorporated. Rejected as contrary to the evidence. Accepted. 39-42. Accepted. By Intervenor - St. Mary's 1 - 4. Accepted and incorporated. 5 & 6. Accepted and incorporated. 7 - 9. Accepted and incorporated. 10. Rejected as not supported by the best evidence. 11 & 12. Accepted and incorporated. Accepted and incorporated. Accepted and incorporated. Rejected as not supported by the best evidence. Accepted. Accepted. Accepted. 19-21. Merely a summary of testimony. Not a Finding of Fact. 22-24. Summary of testimony. Not a Finding of Fact. Accepted as ultimate Finding of Fact. Rejected. Rejected as a summary of testimony. Not a Finding of Fact. Irrelevant. Accepted. Accepted. Subordinate. 32-36. Rejected as a recitation of testimony and not Finding of Facts. 37-40. Rejected as contrary to the weight of the evidence. 41 & 42. Accepted. 43-46. Accepted. Rejected. Irrelevant. Accepted. Rejected. By Intervenor - PBGMC 1 & 2. Accepted and incorporated. Accepted except for last sentence which is irrelevant. Accepted. Accepted and incorporated. 6 & 7. Accepted and incorporated. Accepted. 9. Accepted and Incorporated. 10 & 11. Accepted and incorporated. 12. Accepted. 13-16. Accepted and incorporated. Accepted. Accepted. Rejected ultimately as contrary to the weight of the evidence. Accepted. Rejected. Accepted. 23 & 24. Accepted. 25 & 26. Rejected as contrary to the weight of the evidence. 27. Accepted. COPIES FURNISHED: Gregory L. Coler, Secretary Department of Health and Rehabilitative Services 1323 Winewood Boulevard Tallahassee, Florida 32301 Thomas A. Sheehan, III, Esquire 9th Floor, Barnett Centre 625 North Flagler Drive West Palm Beach, Florida 33401 R. Bruce McKibben, Esquire 1323 Winewood Blvd. Building 1, Room 407 Tallahassee, Florida 32301 Eleanor A. Joseph, Esquire Harold F.X. Purnell, Esquire 2700 Blairstone Road, Suite C Tallahassee, Florida 32314 Robert S. Cohen, Esquire 306 North Monroe Street Post Office Box 10095 Tallahassee, Florida 32302
The Issue Whether proposed rule amendments to Rule 59C- 1.033(7)(c) and (7)(d), Florida Administrative Code, published in the Notice of Change on June 15, 2001, constitute an invalid exercise of delegated legislative authority. Whether the proposed rule is invalid due to the absence of a provision specifying when the amendments will apply to the review of certificate of need applications to establish open heart surgery programs.
Findings Of Fact The Agency is responsible for administering the Health Facility and Services Development Act, Sections 408.031-408.045, Florida Statutes. The goals of the Act are containment of health care costs, improvement of access to health care, and improvement in the quality of health care delivered in Florida. AHCA initiated the rulemaking process by proposing amendments to existing Rule 59C-1.033, Florida Administrative Code, the rule for determining the need for adult open heart surgery (OHS)1 services, which currently provides, in part, that: Adult Open Heart Surgery Program Need Determination. a new adult open heart surgery program shall not normally be approved in the district if any of the following conditions exist: There is an approved adult open heart surgery program in the district. One or more of the operational adult open heart surgery programs in the district that were operational for at least 12 months as of 3 months prior to the beginning date of the quarter of the publication of the fixed need pool performed less than 350 adult open heart surgery operations during the 12 months ending 3 months prior to the beginning date of the quarter of the publication of the fixed need pool; or One or more of the adult open heart surgery programs in the district that were operational for less than 12 months during the 12 months ending 3 months prior to the beginning date of the quarter of the publication of the fixed need pool performed less than an average of 29 adult open heart surgery operations per month. Provided that the provisions of paragraphs (7)(a) and (7)(c) do not apply, the agency shall determine the net need for one additional adult open heart surgery program in the district based on the following formula: NN =((Uc x Px)/350)) -- OP>=0.5 Where: NN = The need for one additional adult open heart surgery program in the district projected for the applicable planning horizon. The additional adult open heart surgery program may be approved when NN is 0.5 or greater. Uc = Actual use rate, which is the number of adult open heart surgery operations performed in the district during the 12 months ending 3 months prior to the beginning date of the quarter of the publication of the fixed need pool, divided by the population age 15 years and over. For applications submitted between January 1 and June 30, the population estimate used in calculating Uc shall be for January of the preceding year; for applications submitted between July 1 and December 31, the population estimate used in calculating Uc shall be for July of the preceding year. The population estimates shall be the most recent population estimates of the Executive Office of the Governor that are available to the department 3 weeks prior to publication of the fixed need pool. Px = Projected population age 15 and over in the district for the applicable planning horizon. The population projections shall be the most recent population projections of the Executive Office of the Governor that are available to the department 3 weeks prior to publication of the fixed need pool. OP = the number of operational adult open heart surgery programs in the district. Regardless of whether need for a new adult open heart surgery program is shown in paragraph (b) above, a new adult open heart surgery program will not normally be approved for a district if the approval would reduce the 12 month total at an existing adult open heart surgery program in the district below 350 open heart surgery operations. In determining whether this condition applies, the agency will calculate (Uc x Px)/(OP+1). If the result is less than 350 no additional open heart surgery program shall normally be approved. Based on the issues raised by the Petitioner, Bethesda, and the factual evidence presented on these issues, AHCA must demonstrate that its proposed amendments to the existing OHS rule are valid exercises of delegated legislative authority or, more specifically, that it (a) followed the statutory requirements for rule-making, particularly for changing a proposed rule; (b) considered the statutory issues necessary for the development of uniform need methodologies; (c) acted reasonably to eliminate potential problems in earlier drafts of the proposed rule; (d) used appropriate proxy data to project the demand for the service proposed; (e) appropriately included county considerations for a tertiary service with a two-hour travel time standard; and (f) was not required to include a provision advising when CON applications would be subject to the new provisions. Rule challenges and rule development process The existing rule was challenged by IRMH on June 27, 2000, in DOAH Case No. 00-2692RX. Martin Memorial intervened in that case, also to challenge the rule. Like IRMH, Martin Memorial was an applicant for a certificate of need (CON), the state license required to establish certain health care services, including OHS programs, in Florida. Both are located in AHCA health planning District 9, as is the Petitioner in this case, Bethesda. AHCA entered into a settlement agreement with IRMH and Martin Memorial on September 11, 2000, which was presented when the final hearing commenced on September 12, 2000. Prior to the rule challenge settlement agreement, staff at AHCA had been discussing, over a period of time, possible amendments to the OHS rule to expand access and enhance competition. Issues raised by AHCA staff included the continued appropriateness of OHS as a designated tertiary service and the anti-competitive effect of the 350 minimum volume of OHS cases required of existing providers prior to approval of a new provider in the same district. The staff was considering whether the rule was too restrictive and outdated given the advancements in technology and the quality of OHS programs. The relationship of volume to outcomes was considered as various studies and CON applications were received and reviewed, as was the increasing use of angioplasty also known as percutaneous coronary angioplasty, referred to as PTCA or simply, angioplasty, as the preferred treatment for patients having heart attacks. Angioplasty can only be performed in hospitals with backup open heart services. During an angioplasty procedure, a catheter or tube is inserted to open a clogged artery using a balloon-like device, sometimes with a stent left in the artery to keep it open. Discussions of these issues took place at AHCA over a period of years, during the administrations of the two previous Agency heads, Douglas Cook and Reuben King-Shaw. In August 2000, AHCA published notice of a rule development workshop to consider possible changes to the OHS rule. Because it could not get the parties to settle DOAH Case No. 00-2692RX at the time, rather than proceed with the workshop while defending the existing rule, AHCA cancelled the workshop. As a result of the September 11, 2000, settlement agreement, on October 6, 2000, AHCA published a proposed rule amendment and notice of a workshop, scheduled for October 24, 2000. That version of a proposed rule would have changed Subsection (7)(a) of the OHS Rule to allow approval of "additional programs" rather than being limited to approval of one new program at a time in a district. The October proposal would have also eliminated OHS from the list of tertiary health services in Rule 59C-1.002(41). Tertiary health services are defined, in general, in Subsection 408.032(17), Florida Statutes, as follows: "Tertiary health service" means a health service which, due to its high level of intensity, complexity, specialized or limited applicability, and cost, should be limited to, and concentrated in, a limited number of hospitals to ensure the quality, availability, and cost-effectiveness of such service. Examples of such services include, but are not limited to, organ transplantation, specialty burn units, neonatal intensive care units, comprehensive rehabilitation, and medical or surgical services which are experimental or developmental in nature to the extent that the provision of such services is not yet contemplated within the commonly accepted course of diagnosis or treatment for the condition addressed by a given service. The agency shall establish by rule a list of all tertiary health services. With this statutory authority, AHCA adopted Rule 59C- 1.002(41), Florida Administrative Code, to provide a more specific and complete list of tertiary services: The types of tertiary services to be regulated under the Certificate of Need Program in addition to those listed in Florida Statutes include: Heart transplantation; Kidney transplantation; Liver transplantation; Bone marrow transplantation; Lung transplantation; Pancreas and islet cells transplantation; Heart/lung transplantation; Adult open heart surgery; Neonatal and pediatric cardiac and vascular surgery; and Pediatric oncology and hematology. As an additional assurance that tertiary services are subject to CON regulation, the tertiary category is specifically listed in the projects subject to review in Subsection 408.036, Florida Statutes. The October 2000 version included a proposal to increase the divisor from 350 to 500 in the formula in Subsection (7)(b), to represent the average size of existing OHS programs, but to decrease from 350 to 250, the minimum number required of an existing provider prior to approval of a new program in Subsection (7)(a)2. The definition of OHS would have been amended to add an additional diagnostic group, DRG 109, to delete DRG 110 and to eliminate the requirement for the use of the heart-lung by-pass machine during the surgery. Most controversial in the October version was a separate county- specific need methodology for counties which have hospitals but not OHS programs, in which residents are projected to have 1,200 annual discharges with a principal diagnosis of ischemic heart disease. On October 24, 2000, AHCA held a workshop on the proposed amendments. At the workshop, AHCA Consultant, John Davis, outlined the proposed changes. As a practical matter, eight Florida counties are not eligible to provide OHS because they have no hospitals. When Mr. Davis applied the county-specific need methodology, as if it were in effect for the planning horizon of January 2003, six Florida counties demonstrated a need for OHS: Hernando, Martin, Highlands, Okaloosa, Indian River, and St. Johns. Two of these, Martin and Indian River are in AHCA District 9. AHCA has already approved an OHS program for Martin County, at Martin Memorial. Mr. Davis also presented a simplified methodology for reaching the same result. In support of the proposed rule, AHCA received data, although not adjusted by the severity of cases, showing better outcomes in hospitals performing from 250 to 350 OHS, as compared to larger providers. Although the majority of heart attack patients are treated with medications, called thrombolytics, for some it is inappropriate and less effective than prompt, meaning within the so-called "golden hour," interventional therapies. In these instances, angioplasty is considered the most effective treatment in reducing the loss of heart muscle and lowering mortality. Opposing the proposed rule at the October workshop, Christopher Nuland, on behalf of the FSTCS, testified that OHS is still a highly complex procedure, that it requires scarce resources, equipment and personnel, and should, therefore, be available in only a limited number of facilities. In general, however, the opponents complained more about process rather than the substance of the proposal. Having petitioned on October 13, 2000, for a draw-out proceeding instead of the workshop, those Petitioners noted that AHCA had obligated itself to predetermined rule amendments based on the settlement agreement, regardless of information developed in the workshop. The draw- out Petitioners were the Florida Hospital Association, Association of Community Hospitals and Health Systems of Florida, Inc., Delray, Lakeland Regional Medical Center, Punta Gorda HMA, Charlotte Regional Medical Center, JFK, HCA Health Services of Florida, Inc., d/b/a Regional Medical Center Bayonet Point; Tampa General and the FSTCS. While agreeing that OHS is complex and costly, supporters of the proposed rule, particularly the declassification of OHS as a tertiary service, noted that many cardiologists are now trained to do invasive procedures. In support of fewer restrictions on the expansion of OHS programs in Florida, other witnesses at the October workshop discussed delays and difficulties in arranging transfers to OHS providers, possible complications from deregulated diagnostic cardiac catheterizations at non-OHS provider hospitals, and hardships of travel on patients and their families, especially older ones. On December 22, 2000, AHCA published another proposal, which retained most of the October provisions, continuing the elimination of OHS from the list of tertiary services, the addition of DRG 109, the deletion of DRG 110, the elimination of the requirement for the use of a heart-lung by-pass machine, and the authorization for approval of more than one additional OHS program at a time in the same district. The minimum number of OHS performed by existing providers prior to approval of a new one continued from the October 2000 version, to be decreased from 350 to 250, and the divisor in the numerical need formula continued to be increased from 350 to 500. As in the October version, the requirement that existing providers be able to maintain an annual volume of 350 OHS cases after approval of a new program was stricken. The separate need methodology for counties without an OHS program was simplified, as proposed by Mr. Davis, and was as follows: Regardless of whether need for additional a new adult open heart surgery programs is shown in paragraph (b) above, need for one a new adult open heart surgery program is demonstrated for a county that meets the following criteria: None of the hospitals in the county has an existing or approved open heart surgery program; Residents of the county are projected to generate at least 1200 annual hospital discharges with a principal diagnosis of ischemic heart disease, as defined by ICD-9- CM codes 410.0 through 414.9. The projected number of county residents who will be discharged with a principal diagnosis of ischemic heart disease will be determined as follows: PIHD = (CIHD/CoCPOP X CoPPOP) Where: PIHD = the projected 12-month total of discharges with a principal diagnosis of ischemic heart disease for residents of the county age 15 and over; CIHD = the most recent 12-month total of discharges with a principal diagnosis of ischemic heart disease for residents of the county age 15 and over, as available in the agency's hospital discharge data base; CoCPOP = the current estimated population age 15 and over for the county, included as a component of CPOP in subparagraph 7(b)2; CoPPOP = the planning horizon estimated population age 15 and over for the county, included as a component of PPOP in subparagraph 7(b)2; If the result is 1200 or more, need for one adult open heart surgery program is demonstrated for the county will not normally be approved for a district if the approval would reduce the 12 month total at an existing adult open heart surgery program in the district below 350 open heart surgery operations. In determining whether this condition applies, the agency will calculate (Uc X Px)/(OP + 1). If the result is less than 350 no additional open heart surgery program shall normally be approved. County-specific need identified under paragraph (c) is a need occurring because of the special circumstances in that county, and exists independent of, and in addition to, any district need identified under the provisions of paragraph (b). A program approved pursuant to need identified in paragraph (c) will be included in the subsequent identification of approved and operational programs in the district, as specified in paragraph (a). On January 17, 2001, a public hearing was held to consider the December amendments. Opponents complained that the proposals resulted from a private settlement agreement rather than a public rule development workshop as required by law. They noted that declassification of OHS as a tertiary service is contrary to the recommendations of AHCA's CON advisory study group and the report of the Florida Commission on Excellence in Health Care, co-chaired by AHCA Secretary Reuben King-Shaw, created by the Florida Legislature as a part of the Patient Protection Act of 2000. The risk of inadvertently allowing some OHS procedures to become outpatient services was also raised, because of the statute that specifically states that tertiary services are CON-regulated. The reduction from 350 to 250 in the annual volume required at existing programs prior to approval of new ones was criticized for potentially increasing costs due to shortages in qualified staff, including surgical nurses, perfusionists, recovery and intensive care unit nurses, who are needed to staff the programs. The potential for approval of more than one program at a time, under normal circumstances, was viewed as an effort to respond to the needs of two geographically large districts out of the total of eleven health planning districts in Florida. That, in itself, one witness argued demonstrated that more than one approval at a time should be, as it currently is, a not- normal circumstance. The combination of the district-wide and county- specific need methodologies was criticized as double counting. The district formula which relied on the projected number of OHS, overlapped with the county formula, which used projected ischemic heart disease discharges, to the extent that the same patient hospitalization could result in first, the diagnosis, and then the OHS procedure. Approximately, eighteen percent of diagnosed ischemic heart disease patients in Florida go on to have OHS. The county-specific methodology was also characterized as inappropriate health planning based on geo- political boundaries rather than any realistic access barriers. Although 500, the average size of existing programs was the proposed divisor in the formula, and 250 was the threshold number existing providers, the proposal included the deletion of any provision assuring that existing programs maintain some minimum annual volume, which is 350 in subsection 7(e) of the current rule. AHCA representatives testified that the proposal to delete a minimum adverse impact was inadvertent. The combined effect of a district-wide need methodology, an independent but overlapping county need methodology, and the absence of an adverse impact provision, created concern whether approvals based on county need determinations could reduce volumes at providers in adjacent counties to unsafe levels. Some health planners predicted that, as a consequence of adopting the December draft, like the October version, a number of new OHS programs could be coming into service at one time, seriously draining already scarce resources. One witness, citing an article in the Journal of the American Medical Association, testified that higher volume OHS providers, those over 500 cases, do have better outcomes, and that the relationship persists for angioplasties, including those performed on patients having heart attacks. Florida has 63 or 64 OHS programs. Of those, 25 to 30 percent have annual OHS volumes below 350 surgeries a year. The demand for OHS is increasing slowly and leveling off. AHCA was warned, at the January public hearing by, among others, Eric Peterson, Professor of Cardiology, Duke University Medical Center (by videotaped presentation); and Brian Hummel, M.D., a Cardiothoracic Surgeon in Fort Myers, President of the Florida Society of Thoracic and Cardiovascular Surgeons, that simultaneously easing too many provisions of the OHS rule was a risk to the quality of the programs and the safety of patients. Among other specific comments made at the January public hearing related to the December proposal were the following: This change would authorize a county- specific methodology to support approving a program on the theory that that county needs better access to open heart surgery program. Yet there is no inquiry under the proposed provision into how accessible adjacent programs are or, indeed, how low the volumes of adjacent programs are. Most blatantly, the county provision requires double counting and double need projections. (AHCA Ex. 7, p. 14, by Elizabeth McArthur). The proposed rule creates an exemption for counties that are currently without open heart surgery programs. One can only surmise that the purpose of this exemption is to improve access, and certainly improving access is an appropriate goal and it is possible that there are few situations around the state where access to open heart surgery is a concern, but the proposed rule is completely inadequate and a thoroughly inappropriate way to identify which situations those are . . . (AHCA Ex. 7, p. 26, by Carol Gormley). With the county exemption provision, the Agency has stumbled on an entirely new method for estimating need. In fact, the only good thing about this provision is that it demonstrates that the Agency actually can look at some alternative ways to estimate need, and the use of data about incidence of ischemic heart disease might be one of those. Certainly it should be explored if there is ever a valid planning process that addresses open heart surgery. However, the proposed rules cobble together the county- based epidemiology with the district-wide demand based formula, and I believe that this method is not applicable for evaluating access to care. It is not applicable because the provision only considers the population's rate of ischemic heart disease and does not even attempt to assess the extent to which county residents with ischemic disease are, in fact, already receiving open heart surgery. Therefore, a determination that county residents generate at least 1,200 ischemic heart disease discharges annually does nothing to indicate whether or not they experience any barriers to obtaining that needed service. * * * Another problem with county exemption permission [sic: provision] is that the addition of this assessment, quote "regardless of the results of the district need formula," end quote, constitute double counting of a need in districts where counties without programs are located. (AHCA Ex. 7, p. 27-30, by Carol Gormley). * * * As further evidence of the benefits of limiting open heart surgery to a few high volume programs, the Society would like to place into record the following articles. The first one you've heard on several occasions is the Dudley article, "Selective referral to high volume hospitals." The second, from Farley and Osminkowski, is, "Volume-outcome relationships and in- hospital mortality: Effective changes in volume over time," from Medicare in January of 1992. There's another article from Grumbach, et al., "Regionalization of cardiac surgery in the United States and Canada," again from JAMA. Another article from Hannon, et al., "Coronary artery bypass surgery: The relationship between in-hospital mortality rate and surgical volume after controlling for clinical risk factors," Medical Care. Hughes, et al., "The effects of surgeon volume and hospital volume on quality care in hospitals," again from Medical Care; finally, Riley and Nubriz, "Outcomes of surgeries among Medicare aged: Surgical volume and mortality." Each of these scholarly articles comes to the same inevitable conclusion: outcomes improve as the volume of cardiac surgeries in any given program and hospital increases, therefore increasing the number of hospitals in which these services are provided inevitably will lead to an increase in morbidity. (AHCA Ex. 7, p. 83-84, by Christopher Nuland). * * * On or before the January public hearing, AHCA also received the following written comments: Martin Memorial supports the exception provision for Counties that do not have an open heart surgery program and have a substantial number of residents experiencing cardiovascular disease. This provision ensures an even dispersion of programs, and that adequately sized communities are not denied open heart surgery. (Martin Memorial Ex. 6, Letter of 10/24/2000, from Richard M. Harman, Chief Executive Officer, Martin Memorial, to Elizabeth Dudek) * * * Adding new open heart surgery programs to counties that currently lack programs will increase geographic access to coronary angioplasty services as well as open heart surgery. Primary angioplasty is now the treatment of choice for a significant percentage of patients presenting in the emergency department with acute myocardial infarction (patients who would otherwise be treated with thrombolytic drugs to dissolve blood clots in occluded coronary arteries). Thus, the provision of the proposed regulations that addresses the need for open heart surgery at a county level will also increase access to life-saving invasive cardiology services. The effect of the proposed rule changes is to slightly broaden the circumstances in which the Agency would see presumed need for new programs. Initially, the increase in the number of programs presumed to be needed would be only five. These potential new approvals would be in counties which currently have no programs. This is consistent with the reasoning that supports removing open heart surgery from the list of tertiary procedures. All else equal, distributing new programs to counties where they already exist is reasonable in light of the goal of improving geographic accessibility of advanced cardiology services. As with the other draft proposed rule changes, there is no certainty that any programs will be approved on the basis of the county-specific need formula in (7)(c). These proposed programs would still have to meet the statutory and rule criteria. As discussed above, a number applications for programs have been ultimately denied even when presumed need was shown by the need formula. We recommend adoption of this additional formula for demonstrating need. (IRMH Ex. 1, p. 25, Comments of Ronald Luke, J.D., Ph.D., 10/24/2000) In what could be interpreted as an admission that the process resulting in the development of the earlier drafts was flawed, Jeff Gregg, Chief of the AHCA CON Bureau, concluded the January public hearing by saying, . . . in terms of the analysis that the Agency did about the proposed rule, I would simply have to tell you that CON staff was not involved in that analysis, and that's CON staff including myself. So I cannot elaborate on what went into it. But having said that, I do want to assure you that CON staff will be involved in further analysis and we will do our best to consider all the points that have been made and present them as clearly and concisely as we can in assisting the Agency to formulate its response to this hearing. (AHCA Ex. 7, p. 86). The December draft was also challenged by a number of Petitioners in DOAH Case No. 01-0372RP, filed on January 26, 2001, and ten other consolidated cases. In response to the criticism that the adverse impact provision should not have been deleted and because that omission was unintended, AHCA published another proposed amendment to the OHS rule, on May 4, 2001, reinstating a minimum adverse impact volume, this time set at 250 OHS operations, down from 350 in the existing rule. On May 31, 2001, AHCA and the other parties to DOAH Case No. 01-0372RP and the consolidated cases entered into another settlement agreement, which provided: that in an effort to avoid further administrative proceedings, without conceding the correctness of any position taken by any party, and in response to materials received in to the record on or before the public hearing, the Agency for Health Care Administration agrees to publish and support . . . The Notice of Change . . . (Bethesda Ex. 34, p. 2-3). In upholding that agreement, AHCA superseded or revised all prior drafts and published a notice of change on June 15, 2001. In this final version, AHCA limited normal approval of a new OHS program to one at a time, used 500 as the numeric need formula divisor, increased the required prior-to-approval OHS minimum volume at mature existing providers from 250 in the October version to 300 (down from 350 in the existing rule) and for non- mature programs from a monthly average of 21 in the October draft to 25 (down from 29 in the existing rule), retained the classification of OHS as a tertiary service, and altered the separate, independent county need methodology to make it a county preference. The June 15th version, containing Subsections 7(c) and 7(d), which are challenged in this case is as follows: Adult Open Heart Surgery Program Need Determination. An additional open heart surgery programs shall not normally be approved in the district if any of the following conditions exist: There is an approved adult open heart surgery program in the district; One or more of the operational adult open heart surgery programs in the district that were operational for at least 12 months as of 3 months prior to the beginning date of the quarter of the publication of the fixed need pool performed less than 300 adult open heart surgery operations during the 12 months ending 3 months prior to the beginning date of the quarter of the publication of the fixed need pool; One or more of the adult open heart surgery programs in the district that were operational for less than 12 months during the 12 months ending 3 months prior to the beginning date of the quarter of the publication of the fixed need pool performed less than an average of 25 adult open heart surgery operations per month. * * * Provided that the provisions of paragraphs (7)(a) do not apply, the agency shall determine the net need for an additional adult open heart surgery programs in the district based on the following formula: NN=[(POH/500)-OP]> 0.5 where: NN = the need for an additional adult open heart surgery programs in the district projected for the applicable planning horizon. The additional adult open heart surgery program may be approved when NN is 0.5 or greater. POH = the projected number of adult open heart surgery operations that will be performed in the district in the 12-month period beginning with the planning horizon. To determine POH, the agency will calculate COH/CPOP x PPOP, where: COH = the current number of adult open heart surgery operations, defined as the number of adult open heart surgery operations performed in the district during the 12 months ending 3 months prior to the beginning date of the quarter of the publication of the fixed need pool. CPOP = the current district population age 15 years and over. PPOP = the projected district population age 15 years and over. For applications submitted between January 1 and June 30, the population estimate used for CPOP shall be for January of the preceding year; for applications submitted between July 1 and December 31, the population estimate used for CPOP shall be for July of the preceding year. The population estimates used for COP and PPOP shall be the most recent population estimates of the Executive Office of the Governor that are available to the agency 3 weeks prior to publication of the fixed need pool. OP = the number of operational adult open heart surgery programs in the district. In the event there is a demonstrated numeric need for an additional adult open heart surgery program pursuant to paragraph (7)(b), preference shall be given to any applicant from a county that meets the following criteria: None of the hospitals in the county has an existing or approved open heart surgery program; and Residents of the county are projected to generate at least 1200 annual hospital discharges with a principal diagnosis of ischemic heart disease, as defined by ICD-9- CM codes 410.0 In the event no numeric need for an additional adult open heart surgery program is shown in paragraphs (7)(a) or (7)(b) above, the need for enhanced access to health care for the residents of a service district is demonstrated for an applicant in a county that meets the criteria of paragraph (7)(c)1. and 2. above. An additional adult open heart surgery program will not normally be approved for the district if the approval would reduce the 12 month total at an existing adult open heart surgery program in the district below 300 open heart surgery operations. Bethesda objects to Subsections 7(c) and 7(d) as invalid. It challenges the rule promulgation process as a sham, having resulted from settlement negotiations rather than from statutorily mandated considerations and processes. That charge was, in effect, conceded by AHCA, as related to the October draft. That version carried over into the December draft, essentially unchanged, but did gain support at the October workshop. The October and December versions are not at issue in this proceeding. The proposed rule amendments at issue in this proceeding must have been supported by information provided to AHCA before or during the January public hearing. The proposal at issue differs substantially from the terms of the September settlement agreement, but is precisely what was attached to the May 31, 2001, settlement agreement. For example, the settlement agreement of September 11, 2000, included a proposal to reduce the prior minimum volume of cases at existing OHS providers from 350 to 250, but in May and June, that number was set at 300. AHCA, in the September settlement agreement, was to eliminate any limitation on the number of additional programs approved at a time, but the May and June version retains the one-at-a-time provision of the existing rule. AHCA agreed to determine county numeric need independent of and in addition to district numeric need, in September, but that provision is, in the May 31st and June 15th version, a preference. In September 2000, AHCA agreed to delete adult OHS from the list of tertiary services in Rule 59C-1.002(41), but it is a tertiary service in the May and June version. Bethesda is correct that the records of the October workshop and January public hearing contained criticisms of the county need methodology but no specific proposal to modify it into a preference. The first draft of that concept is the May 31, 2001, settlement agreement. (See Findings of Fact 26 and 27). Statutory rule-making issues Subsection 408.034(3), Florida Statutes, provides that: The Agency shall establish, by rule uniform, need methodologies for health care services and health facilities. In developing uniform need methodologies, the agency shall, at a minimum, consider the demographic characteristics of the population, the health status of the population, service use patterns, standards and trends, geographic accessibility, and market economics. As required by statute, AHCA considered the demographics and health status of the population and examined, as a part of the rule adopting process, age-specific calculations of ischemic heart disease. AHCA relied on statistical evidence of the relationship of ischemic heart disease and OHS. In 1999, for example, there were 33,027 OHS in Florida, and 25,257 of those patients had a primary diagnosis of ischemic heart disease. Consideration of service use patterns, and standards and trends related to OHS led AHCA to increase the divisor in the numeric need formula to maintain the average size of 500 surgeries for existing providers. The availability of more reliable data than that collected when the existing rule was promulgated allowed AHCA to propose reliance on residential use rates. The trend towards the use of angioplasty, as a preferred treatment for heart attack patients, and the need for timely geographical access to care are major factors for AHCA's proposal to consider a county services within the normal need analysis or as a not normal indication of a need for enhanced access when a county has a critical mass of heart disease patients. Geographical accessibility is also addressed in the travel time standard in the existing rule, which the proposal would not change. AHCA received testimony on the issue of market economics and health status, related to care for indigent and minority patients in not-for-profit, county-funded hospitals, and related to reimbursement formulas. The record demonstrates that AHCA was provided with evidence on the effect of scare resources on the costs of operating OHS programs. County-specific need methodology in earlier drafts as compared to the county preference in 7(c) and the need for enhanced access in 7(d) Bethesda alleges that the county preference in the June version is essentially another need methodology, like the county-specific need methodology in the earlier versions of the proposed rule. Bethesda also contends that a preference for a hospital because it is in a county which does not have an open heart program over a reasonably accessible facility in an adjoining county in the same district is irrational health planning which could lead to a maldistribution of programs. The county-specific need methodology was first included in the September settlement agreement, and the preference in 7(c) and need for access in 7(d), originated after the January 17, 2001, public hearing. During the public hearing, counsel for the Florida Hospital Association complained that the county-specific need methodology precluded any inquiry into accessibility and volumes at adjoining programs. Another representative of the Florida Hospital Association surmised that the goal of the county exemption was improved access but explained that it was an inappropriate means to identify access concerns. For example, while Hernando County would qualify for need with the separate methodology, most of its residents, 97 percent receive OHS services at a hospital in another district which is only 13 miles from the population center. (See Finding of Fact 26). The preference under normal circumstances in Subsection 7(c) and finding of need for enhanced access in Subsection 7(d), must be supported by evidence that county boundaries, in general, do create valid access issues. On or before the January workshop, information provided to AHCA indicated that some special inquiry into access issues related to CON applications for programs in counties without OHS programs is warranted. See Finding of Fact 27). AHCA found correctly that counties matter for several reasons. First is the fact that emergency services are funded and organized by counties, in general, and operated by municipal and county agencies. Approximately 60 percent of heart attack patient discharges in Florida are admitted through emergency rooms. Emergency heart attack patients who live in counties with OHS programs are twice as likely to be taken to a hospital with OHS as those who live in counties without an OHS provider. Second, whether a patient is taken to an OHS provider affects the care received. The probability of having an angioplasty performed is almost 50 percent greater for residents of counties with OHS programs as compared to those in counties without an OHS program. Third, some health care reimbursement plans and health care districts are operated within counties, limiting financial access to out-of-county hospitals. AHCA has always considered whether or not a county has an OHS program as a part of access issues. The issue of greater access to OHS was the basis for AHCA's initial consideration of the possibility of easing the OHS rule. With the May and June draft, it has codified and specified when that policy will apply. AHCA's deputy secretary noted that geographic access in the absence of numeric need was the basis for approvals of OHS CONs for Marion County, and for hospitals located in Naples and Brandon. In each instance, the applicants argued a need for enhanced access. AHCA has experience in applying preferences as a part of balancing and weighing criteria from statutes, rules and local health plans, particularly to distinguish among multiple applicants. In the totality of the review process, other factors which Bethesda's expert testified should be considered, including financial, racial and other potential access barriers, are not precluded. Preferences related to specific locations within health planning areas are included in CON rules governing the need for nursing home beds and hospices. Bethesda noted that these are not tertiary services, suggesting that a county location preference is inappropriate for tertiary services, but similar preferences for OHS exist in some of the local health plans. In AHCA District 1, the CON allocation factors for OHS and cardiac catheterization services include a preference for applicants proposing to locate in a county which does not have an existing OHS program. In District 4, the preference favors an applicant located in a concentrated population area in which existing programs have the highest area use rates. District 5 is similar to District 4, supporting OHS projects in areas of concentrated population with the highest use rates. The District 8, like District 1, preference goes to the applicant located in a county without an OHS program. There is no evidence that the existing preferences have been difficult to apply within the context of other CON criteria for the review of OHS applications. In effect, the proposed amendments establish an uniform state-wide county preference which is more concrete in terms of the requirements for a potential patient base. Bethesda has questioned the rationale for standards which are, in effect, different in Subsection 7(c) as compared to Subsection 7(d). The lower requirement, according to Bethesda, 1200 ischemic heart diagnoses, in 7(d), applies when there is no numeric need. But, the 500 divisor and 300 minimum at existing providers, when combined with 1200 ischemic heart diagnoses is a heavier burden to meet in 7(c), although under normal circumstances. Bethesda did not adequately explain reasons for this objection to the proposed rule. In addition, it is not inconsistent logically for AHCA to require applicants to demonstrate lower numeric need in situations in which AHCA has determined that these will be, in general, a greater need for enhanced access. Bethesda also raised a concern for the eventual maldistribution of programs as a result of the county preference. In 1999, Palm Beach county residents received 2700 OHS, or an average of 900 cases for each of the three programs. The total for District 9 was 3800 cases in 1999. When 500 St. Lucie County resident cases, in which Lawnwood is an OHS provider, are combined with 2700 Palm Beach resident cases, that leaves only 650 resident cases from Okeechobee, Indian River and Martin Counties. If programs are approved in all three, then the total will be inadequate for each to reach 300 cases, while, presumably, the demand in Palm Beach could be increasing disproportionately and not be met adequately. Disproportionate need, the appropriate dispersion of programs, and the benefits of enhanced competition are among the factors which AHCA can consider along with county need when choosing among competing applicants. 1200 ischemic heart disease discharges The proposed amendments require a projection that residents will reach a threshold of 1200 cases of ischemic heart disease discharges as a condition for the entitlement to the numeric need preference or to demonstrate a not normal need for enhanced access. In general, ischemic heart disease, which is also known as coronary heart disease, is characterized by blocked arteries which, in turn, limit blood to heart muscles causing first the onset of angina from acute coronary syndrome, progressing on to acute myocardial infarction, or a heart attack. The use of heart disease as a proxy for OHS utilization is consistent with AHCA's use of live births in pediatric open heart surgery and pediatric cardiac catheterization rules, deaths in the hospice rule, and related diagnoses in organ transplantation rules rather than actual utilization. It was supported by information received during or before the January workshop (See Finding of Fact 26 and 27). Bethesda's criticism of the use of a proxy per se is also not well-founded because any single statistical approach could be misleading. For example, historic use rates can understate future use with a growing service or an artificially imposed access limit. Using heart disease data in a preference or a need for enhanced access as opposed to a need formula or conclusive finding allows more flexibility in determining need in conjunction with other significant factors. One of Bethesda's expert health planners was also critical of the use of 1200 ischemic heart disease diagnoses as inadequate for projecting OHS cases, and for not equating to approximately 300 annual OHS cases, the minimum required of existing providers in Subsection 7(a) and the minimum adverse impact allowed in Subsection 7(e). Based on actual historical Florida data, 1200 ischemic heart disease diagnoses on average resulted in 207 OHS in 1997, 203 in 1998, and 203 in 1999. Ischemic heart disease has approximately an 18 to 20 percent conversion rate to OHS, and results in a total of 76 to 80 percent of all OHS cases. OHS cases from other diagnoses added statistically another 54 OHS in 1997, 59 in 1998, and 61 in 1999, to those from ischemic heart disease, giving, in each year a total less than 300. Bethesda presented evidence of wide variations in the ischemic heart disease to OHS conversion ratios from county-to- county. For example, only 14 percent of Bradford County ischemic heart diseases converted to OHS, and only 11 percent of the 700 cases in Columbia County converted to OHS. In Columbia County, the average state conversion rate of 20 percent yields 140 cases but, in reality, there were only 78 OHS cases from Columbia County in 1999. Bethesda's expert concluded that conversion ratio discrepancies resulting in the approval of a program that cannot achieve 300 OHS, as required in Subsection 7(a)2. and 7 (e), of the proposed rule, could bar the approval of new programs when needed in the district and would not be of minimum required quality. Bethesda also proved that the accuracy of projected OHS cases can also be affected by patterns of patient migration for health care, particularly if in- and out-migration do not offset each other. In counties with OHS programs, the average out-migration for acute care is 10.7 percent, varying widely from 3.8 percent in Alachua County to 70 percent in Seminole County. In counties without an OHS provider, average out- migration for acute care is 44 percent, but ranges from 17.6 percent in Indian River County to 98 percent in Baker County. An average of 18 percent of the residents of Florida counties with OHS programs have their surgeries performed elsewhere. Like out-migration, in-migration for acute care, for ischemic heart disease care, and for OHS varies from county to county in Florida. Counties without OHS programs have acute care in-migration from lows of 5.3 percent for Flagler County up to highs of 40 percent for Columbia County. In counties with OHS, in-migration for acute care is as low as 8 percent for Brevard and Polk, and as high as 60 percent for Alachua County. Similarly, in-migration, as determined by ischemic heart disease discharges averages 19.4 percent in counties without OHS programs and approximately 25 percent in those with OHS. In-migration for OHS, averages 35.7 percent for the state, but that is derived from a range from 9.2 percent in Pinellas County to 74 percent in Alachua and Leon Counties. Bethesda demonstrated, patterns of migration for health care vary throughout Florida, but there are trends due to the presence of OHS programs. Average net in-migration to counties with OHS is 29 percent, and is positive in sixteen of the twenty-four counties with OHS programs. All of these differences can be considered within the regulatory scheme proposed by AHCA. The issue of whether 1200 residential ischemic heart disease diagnoses is, in fact, the critical mass of prospective OHS patients needed or is deceptive due to migration patterns, due to access to alternative providers or any other review criteria listed in rule or statutes can be considered on a case-by-case basis with the proposed amendments. Bethesda's specific concern is that Indian River with well over 1200 ischemic heart disease discharges could be approved even though that represented only 255 OHS cases, and that if Indian River is approved under the county preference provision, then Bethesda would not be approved under normal circumstances until Indian River achieved and was projected to maintain 300 OHS cases a year. That Bethesda may be delayed in meeting the requirements for normal need is likely, but that appears to be a function of its location as compared to existing providers as much as it is the result of the county preference. Bethesda is not precluded, however, under either the existing or proposed rules from demonstrating not normal circumstances in District 9 for the issuance of an OHS CON to Bethesda. Bethesda's assumption that 300 is the minimum volume required for adequate quality is not supported by studies from various professional societies. The American College of Cardiology, the American Heart Association, and the Society of Thoracic Surgeons set minimums of 200 to 250 annual hospital cases as the volumes necessary to maintain the skills of the staff. The American College of Surgeons, in 1996, published their opinion that 100 to 125 cases per hospital is sufficient for quality, while at least 200 cases a year are needed for the economic efficiency of a program. AHCA has never used the required and protected volumes as the volume which must also be projected for a new programs. In the current OHS rule, the volume required is 350 a year for existing programs but that has not been required of applicants. In the recent approval of an OHS CON for Brandon Regional Hospital, the applicant projected reaching 287 cases in the third year of operation. County preference, tertiary classification and travel time Bethesda argued that the tertiary classification, suggesting a regional approach, is inconsistent with having a county access provision. Bethesda correctly noted that the county provision first appeared in a draft which included the elimination of OHS from the list of tertiary services. But AHCA proposes to establish the county preference and to maintain OHS on the list of tertiary services under Rule 59C-1.002(41), and to maintain the two-hour drive time standard in Rule 59C- 1.033(4)(a). Substantial information, mostly from medical doctors and studies linking morbidity to low volume, supports the view that OHS continues to be a complex service. Obviously, those services in the tertiary classification range in complexity and availability from OHS at the lower level to organ transplantation at the upper level. The tertiary classification is justified to assure AHCA's continued closer scrutiny of OHS CON applications. It is also consistent with the increase in the need formula divisor to 500, which together serve as restrains on the approval of additional programs. AHCA reasonably concluded, based on case law and precedents with local health plan that it is not inconsistent to apply county preferences to OHS while it is classified a tertiary service. The two-hour travel time standard, is as follows: Adult open heart surgery shall be available within a maximum automobile travel time of 2 hours under average travel conditions for at least 90 percent of the district's population. The counties most likely qualify for the preference, based on meeting or exceeding 1200 residential ischemic heart disease diagnoses, are Citrus, Martin, Hernando, St. Johns, Highlands, Indian River, and Okaloosa. The population centers in each of these counties are well within two hours of an existing provider. Citrus County, in which there is an approved but not yet operational OHS program, is about an hour's drive from Marion County. Hernando is approximately 25 minutes from the Pasco County provider. The population center of St. Johns County is approximately 40 minutes away from Duval County OHS providers. Okaloosa County is approximately a one-hour drive away from Escambia County OHS providers. In District 9, Indian River is approximately a 30- minute drive from the Lawnwood OHS program. Martin Memorial, is an approved provider, is approximately 20 miles or 35 minutes from Lawnwood and 30 miles or 40 minutes from Palm Beach Gardens, another existing OHS provider. In the next three to five years, it is foreseeable that Okeechobee County in northwestern District 9 could qualify for the county preference. Adjacent to Okeechobee, Highlands County's population can drive either an hour and thirty minutes to a Charlotte County OHS program or an hour and twenty minutes to a Polk County facility. The evidence related to travel times, according to one of Bethesda's experts, demonstrates that the county preference is not needed to assure access which is already provided for each and every likely qualifying county. But the population centers in the entire state of Florida are all within the two- hour travel standard, and there has been no suggestion that Florida cease approval of new OHS programs. Bethesda's contention that no need exists for enhanced access if the travel time standard is met, and its claim that the rule is internally inconsistent with a county preference and two-hour drive time are rejected. Two hours is, as the rule clearly states, a "maximum" not a bar, and has never been interpreted by AHCA as a bar, to more proximate locations. Any other interpretation is an impossibility considering the numerous counties across the state with multiple programs, including Dade, Broward, Palm Beach, Hillsborough, Pinellas, Orange, Volusia, Duval, and Escambia, among others. AHCA can appropriately and consistently establish reasonable guidelines for choosing among applicants to enhance access within the maximum travel standard. There is no language in the proposed rule indicating when it will take effect. Although the issue was raised in Bethesda's petition, it failed to provide evidence or legal arguments at hearing or subsequently to support its objection to the omission. AHCA's deputy secretary testified that the agency reviews applications using need methodology rules in effect when the applications are filed. Before new rules are applied, applicants are given the opportunity to reapply to address new provisions in a rule.
The Issue Whether this case presents "not normal circumstances" that lead to award to St. Anthony's Hospital, Inc., of a certificate of need for an Open Heart Surgery program?
Findings Of Fact The parties and existing programs in District 5. St. Anthony's Hospital, Inc., the applicant for CON No. 7418 (the subject of this proceeding), is a not-for-profit corporation. Its facility, St. Anthony's Hospital, at which the adult open heart surgery program would be operated if CON No. 7418 were granted, is a 427-bed licensed general community hospital providing adult acute medical services in surgery, psychiatry and obstetrics. Located south of Ulmerton Road in Pinellas County, (generally considered "South Pinellas County,") St. Anthony's also provides home health care, family medicine clinics, outreach education, health screening and occupational health. Also located in South Pinellas County are Bayfront Medical Center, All Children's Hospital, and Northside Hospital. Northside is not a party to this proceeding although it recently received approval for a CON to provide open heart surgery services. Northside is located 6-1/2 to 7 miles from St. Anthony's and provides services in the same service area. Bayfront Medical Center, Inc., is one of two intervenors in this proceeding. Its facility, Bayfront Medical Center is a 518-bed, acute care, not-for-profit hospital located within the limits of the city of St. Petersburg and 1.7 miles from St. Anthony's. It offers cardiac, cancer and emergency services as well as a Level II trauma center. Bayfront also maintains a large women's and children's program, a rehabilitation center and a neurology program. Its cardiology program includes adult and pediatric cardiac catheterization, angioplasty and open heart surgery. But the open heart surgery program is shared with All Children's Hospital. Pre-operative and post-operative patient care is Bayfront's responsibility. The actual surgery takes place on the premises of All Children's. All Children's Hospital is a research hospital affiliated with the University of South Florida College of Medicine. Most importantly, and certainly most pertinent to this case, it is a dedicated Class II pediatric specialty hospital, one of two pediatric specialty hospitals in Florida, and one of only 47 in the nation. It provides, therefore, primary, secondary and tertiary care for children, in addition to the open heart surgery services it provides adults. Its cardiac surgery program was grandfathered under CON law to begin children's cardiac surgery in 1975. At the time of the grandfathering, All Children's was asked by state officials to consider adult cardiac surgery services as well. The hospital trustees and medical staff agreed and began a combined pediatric/adult open heart surgery program in 1976. As explained, above, the adult program is shared with Bayfront. All Children's Hospital is not a party to this proceeding. Largo Medical Center, Inc.'s facility, Largo Medical Center is a 256- bed, acute-care hospital specializing in cardiology and open heart surgery. Largo, the other intervenor in the proceeding, is located in AHCA's District 5 but outside South Pinellas County, as are two other open heart surgery programs: a program at Morton F. Plant Hospital in Clearwater and a program at HCA Bayonet Point/Hudson Medical Center located in Hudson in Pasco County. Morton F. Plant Hospital and HCA Bayonet Point/Hudson Medical Center are not participants in this proceeding. The Agency for Health Care Administration is the single state agency authorized by Section 408.034(1), Florida Statutes, to issue or deny certificates of need, "written statements ... evidencing community need for a new ... health service [such as an adult inpatient cardiac catheterization program.]" Section 408.032(2), Florida Statutes. Standing of the Intervenors. Over half of Largo's open heart surgery patients originate from St. Anthony's defined service area and 35 percent from South Pinellas County. If St. Anthony's achieves its projected volume, Largo likely will lose 35 percent of its open heart surgery patients in the third year of operation. A loss of that number of patients will contribute to a substantial loss of revenue to Largo. As concerns Bayfront's standing to intervene in this proceeding, St. Anthony's purpose in seeking a CON for an open heart surgery program is to obtain authorization for a program to take the place of the All Children's/Bayfront adult open heart surgery program. As counsel for St. Anthony's made clear in oral representation during hearing, whether made clear from the face of St. Anthony's application or not, the application is a "replacement application for Bayfront/All Children's [open heart surgery program]." (Tr. 208.) Filing of the CON application Under cover of a certification of its authorized agent dated September 17, 1993, St. Anthony's Hospital, Inc., filed an application for Certificate of Need 7418 with the Agency for Health Care Administration. The application seeks expansion of existing cardiology services at St. Anthony's health care facility in Pinellas County to include an on-site program for adult open heart surgery. d . Background This is not the first time St. Anthony's has initiated proceedings to obtain a CON for open heart surgery. It has filed applications before because of its concern that South Pinellas County is not being served appropriately by the adult open heart services program shared by Bayfront Medical Center and All Children's Hospital. In the application in this case, St. Anthony's describes its previous attempts in this way: ... St. Anthony's has on eight occasions, since 1987, applied for a Certificate of Need to provide open heart surgery services. Each application has either been denied, or was withdrawn by St. Anthony's based on represent- ations St. Anthony's received that All Children's/Bayfront shared program was adequate and appropriate to meet the needs of south Pinellas adult open heart patients. St. Anthony's has historically deferred to All Children's so as not to unnecessarily duplicate services. St. Anthony's Ex. 1, p 27. In CON application 7396, filed July 14, 1993, All Children's Hospital requested AHCA to allow the hospital "to discontinue services to the adult cardiac surgery population effective June 30, 1994 ...". St. Anthony's Ex. No. 20, attachment at p.7. The reason for the request was that All Children's had experienced and projected to continue to experience growth in its pediatric surgery caseload. Since "All Children's mission and legal responsibility lies with Florida's children ... the [hospital's] obvious difficulty ... [was] how to continue dealing with a growing pediatric patient load with decreasing availability of facilities." Id. At the same time, although not increasing as rapidly as children's surgery, the growth of the caseload for adult open heart surgery, as of the summer of 1993, was continuing in St. Petersburg. As a licensed pediatric hospital, All Children's opined in CON Application 7396, [W]e are unable to expand the adult program in even a moderate fashion and are unable to provide the true continuum of adult cardiac care that adult cardiologists and surgeons believe to be needed in the community. Only an adult licensed hospital can provide those services and allow for future growth. Id., at 8. With regard to the growing pediatric patient load threatened by decreasing availability of facilities, the application projected, "a true crisis within one year in the surgery, SICU area if adjustments are not made to alleviate the situation." Id. The crisis, however, did not materialize. As of June 20, 1994, nearly one year after the filing of the withdrawal application, the President and Chief Executive Officer of All Children's Hospital was of the opinion that there was not a crisis in the care of pediatric patients. Nor was there a crisis in the care of adult open heart surgery patients. In fact, adult open heart surgery patients were receiving very high quality care within one year of the projection of crisis made in the application. The application to terminate the open heart surgery program was withdrawn prior to June 20, 1994. All Children's withdrew the application in response to wishes expressed in the community that the program be continued. Nonetheless, St. Anthony's viewed the representations made by All Children's in CON application 7396 to "impeach any continued suggestion by All Children's or Bayfront that the existing shared services agreement is a normal or appropriate setting for adult open heart services." St. Anthony's Ex. No. 1, pg. 27. It filed, therefore, the application that initiated this proceeding. Transfer Stress and Limitations of the All Chidren's/Bayfront OHS program. After pre-operative care at Bayfront, adult open heart surgery patients are transferred through an enclosed corridor connecting Bayfront to All Children's. The same corridor is used to transfer the patients back to Bayfront for appropriate post- operative care following the surgery and intensive care at All Children's. Patients typically suffer stress when being transferred from one institution to another. They certainly suffer "transfer stress" when being transferred from St. Anthony's to Bayfront for open heart surgery in the All Children's/Bayfront program, just as they would suffer stress in transfers from Bayfront to St. Anthony's were St. Anthony's application to be granted and were the St. Anthony program to take the place of the All Children's/Bayfront program. Typical transfer time, however, between Bayfront and All Children's is only about five minutes. Most patients do not realize they are going from one institution to another. Although the arrangement is less than ideal, it is doubtful that open heart surgery patients suffer stress due to the transfers from Bayfront to All Children's and back again. There are, however, some drawbacks with regard to angioplasty patients in the All Children's adult program. Ambulation of angioplasty patients cannot be appropriately observed postoperatively at All Children's because there are not telemetry facilities available at All Children's for observation. There are such facilities at Bayfront and the patients may be observed there post- operatively once out of the intensive care unit at All Children's. Carlos M. Estevez, M.D., is a cardiologist with St. Petersburg Medical Clinic with active privileges at St. Anthony's, Bayfront, All Children's and Edward White Hospital. Beds have been unavailable postoperatively for adult therapeutic anigoplasty patients of his on occasion at All Children's. The patients have been required to be transferred to Bayfront or back to St. Anthony's, with French sheaths in their groin, a less- than-ideal situation. Dr. Estevez' therapeutic anigoplasty patients requiring open heart backup at All Children's are typically discharged from All Children's after spending the night in the intensive care unit. For the average angioplasty patient, intensive care services are an overutilization of services. Dr. Estevez believes "crisis" would be a fair term to describe the current situation for his angioplasty patients in the All Children's/Bayfront program. Not Normal Circumstances Part of CON review is to look for factors the application shows to be "beyond the norm," or "any unusual circumstances." AHCA's interrogatory answer responded with regard to defining "not normal circumstances," in this way: There is no definition for "not normal circum- stances." In the absense (sic) of a projected numeric need pursuant to a fixed pool publication, an applicant may demonstrate valid need, justi- fiable evidence of situations or occurrences in a service area which are not accounted for such as access problems, which may support approval. St. Anthony's Ex. 7, p. 9. Circumstances of the All Children's/Bayfront Program. As a dedicated Class II pediatric specialty hospital, All Children's, alone, cannot provide the continuum of care needed by adult open heart surgery patients. Its provision of services, as stated above, is limited to surgery and postoperative intensive care. Other services in the continuum of care required by adult open heart surgery patients include admission to an emergency room, and pre-operative coronary care as well as post-operative care (other than intensive care) all the way through cardiac rehabilitation. The components of the continuum other than the actual surgery and post-op intensive care are provided by Bayfront and other hospitals. Despite All Children's inability to provide "continuum of care," by itself, to adult open heart surgery patients, the care provided the open heart surgery patient in the All Children's/Bayfront program is of high quality. All Children's physical site is limited for future growth both as to the adult open heart program and its pediatric programs. The physical outer limits of the hospital building are right on the property line, "all the way around. It has no room to expand." St. Anthony's Ex. No. 20. But for physical limitations, All Children's pediatric services would expand because the need for expansion in the pediatric program exists. The inability of the pediatric programs to expand compromises All Children's mission: pediatric care in a hospital dedicated to pediatrics. The adult open heart surgery program, if withdrawn, would free All Children's somewhat for further pediatric program growth both as to resources and space. But All Children's is no longer trying to withdraw from the program. All Children's board of trustees believes that only an adult licensed hospital can provide the continuum of care needed for adult open heart surgery patients and allow for future growth. Moreover, it is not possible to put together a competitive adult open heart pricing structure for the continuum of care that one hospital could provide when adult open heart surgery patients are being transferred from All Children's to and from other hospitals in order to provide the full continuum of care. AHCA's Response to the Application. AHCA's response to the application was denial based on a determination of no need to support the application. After review, AHCA determined that the application did not demonstrate that St. Anthony's could support sufficient volume even were the All Children's/Bayfront program to become non-operational. There was, however, an even more fundamental objection to granting the application on the part of the agency. As Elizabeth Dudek, Chief of the Certificate of Need and Budget Review sections of the agency, explained with regard to St. Anthony's premise that the application seeks to have its program "replace" the All Children's/Bayfront adult open heart surgery program, I don't understand that premise. I don't understand it because, one, the All Children's/ Bayfront program is still operational. There is no indication that the All Children's/Bayfront program has somehow indicated that it would relinquish its program volume to St. Anthony's. dditionally, ... by law they wouldn't be able to [accomplish a transfer] through the CON program, you can't transfer [or replace] a program ... Tr. 1534, ll. 2-12. Need. For those in need of open heart surgery services in South Pinellas County, there is another facility in South Pinellas County at which the services can be obtained: Northside. As for all of AHCA District 5, there are other facilities at which open heart surgery services are available. There is no evidence, despite the inability of the All Children's/Bayfront adult program to expand, that the needs of those requiring high quality open heart surgery services in South Pinellas County or AHCA District 5 are going unmet.
The Issue Whether there is need for a new Pediatric Heart Transplant program in Organ Transplant Service Area (OTSA), 4 and, if so, whether Certificate of Need (CON) Application No. 10421, filed by Variety Children’s Hospital, d/b/a Nicklaus Children’s Hospital (NCH,) to establish a Pediatric Heart Transplant program, satisfies the applicable statutory and rule review criteria for award of a CON to establish a Pediatric Heart Transplant program at NCH.
Findings Of Fact Based upon the demeanor and credibility of the witnesses and other evidence presented at the final hearing and on the entire record of this proceeding, the following Findings of Fact are made: The Parties The Applicant, NCH NCH, formerly Miami Children's Hospital, was established in 1950 by Variety Club International. NCH is South Florida’s only licensed specialty hospital exclusively for children, with more than 650 attending physicians and 130 pediatric subspecialists. NCH has 289 licensed beds, of which 218 are acute care, 20 are child psychiatric, 21 are Level II neonatal intensive care unit (NICU), and 30 are Level 3 NICU. NCH is part of the Miami Children’s Health System, a not- for-profit corporation. NCH does not deliver any babies. Thus, many children that have been treated at NCH have been referred to NCH based upon its excellent reputation in the community. NCH is continually recruiting additional physicians in order to expand the pediatric subspecialty coverage it is able to offer. Dr. Leonard Feld, the President of Pediatric Specialists of America (NCH’s employed physician group), came to NCH a little over a year ago, after a distinguished clinical and administrative career involving pediatric kidney transplant. He was drawn to NCH because of the depth and breadth of the existing medical staff and the administration’s commitment to advance the field of pediatric medicine through innovation and subspecialization. Dr. Feld is responsible for ensuring NCH’s quality of care from a medical perspective. He is confident NCH will implement a world-class PHT program if its CON is approved. NCH has several nationally-recognized subspecialty programs, including eight programs listed by U.S. News and World Report as Top 50 Programs, and two Top 10 Programs. NCH’s pediatric cardiac surgery program is currently ranked 40th by U.S. News and World Report, but this number is artificially suppressed because NCH does not provide heart transplants. NCH is the highest ranked cardiac program on the U.S. News and World Report ranking that does not have a PHT program. NCH is a leader in clinical research, with its staff being published in over 800 medical journals in the last half dozen years, over 200 ongoing clinical trials, and 49 active cardiac studies. NCH’s Accreditation Council for Graduate Medical Education (ACGME) accredited pediatric residency and fellowship program is the largest in the southeastern United States, and has a 95-percent, first-time Board pass rate, which is a testament to its quality. NCH is focused on providing pediatric patients in Miami-Dade County with the right care, in the right setting, at the right time. To this end, NCH has expanded its urgent and ambulatory care centers throughout Miami-Dade County to ensure that patients have convenient access to pediatric outpatient and subspecialty care. NCH is a world-renowned, international heart center. NCH’s cardiac team has cared for children from 39 countries and has performed 4,643 open-heart operations since 1995, more than any other program in Florida. NCH has invested hundreds of millions of dollars in creating a telehealth program to allow access to pediatric subspecialists in areas where subspecialists are in short supply. NCH’s transport team, which consists of six ambulances and two helicopters owned by NCH and additional contracted transports, such as fixed wing aircraft, transports approximately 3,000 children per year. Recently, the transport team received the field’s most prestigious honor when it was named the Association of Air Medical Services’ Neonatal Transport Team of the Year. NCH has established relationships with Lee Memorial Health System, in Lee County, and Jupiter Medical Center, in Palm Beach County. These relationships will create access portals for transplant if NCH’s CON application is approved. NCH’s excellent reputation and excellent outcomes have made it the largest pediatric cardiac surgery program in the state, performing 25 percent of all pediatric cardiac surgeries in Florida. In OTSA 4 and Miami-Dade County, NCH is the overwhelming provider of choice, performing 62.2 percent of the pediatric cardiac surgeries in OTSA 4 and 72.7 percent of those in Miami-Dade County. It is noteworthy that the pediatric cardiac surgery program at NCH has a higher surgical volume than any of the four existing Florida PHT centers. NCH is on the forefront of technology and innovation. NCH physicians have pioneered surgical techniques and developed pediatric surgery tools and equipment used throughout the industry. NCH also has found innovative ways to use existing technology to improve care. For example, NCH uses social media to improve communication between families and caregivers, uses 3D printed hearts and virtual reality to better plan surgeries, posts real-time outcomes on the Internet for transparency, and photographs and digitally records every cardiac surgery to eliminate guesswork in the event of future surgeries on the same patient. NCH’s cardiac programs operate on the most challenging cases, including, in some instances, when other providers have determined the patient was inoperable and terminal. In 2016, NCH opened a six-story, state-of-the-art advanced pediatric intensive care tower. Technical advances located in the new tower include an intraoperative MRI, which allows the physicians to take an MRI without moving the patient from the operating room table, and one of the most advanced cardiac catheterization laboratories in the country, which allows NCH to perform pediatric heart catheterizations that cannot be performed in other hospitals. NCH has a robust pediatric cardiology physician team, including 14 pediatric cardiologists, five pediatric cardiac intensivists, and three pediatric cardiac surgeons. Either during training or prior to coming to NCH most, if not all, of these physicians have had experience working in hospitals with pediatric transplant programs, and all of them are currently exposed to patients at NCH that are candidates for heart transplant. NCH’s Chief of Pediatric Medicine, Dr. Redmond Burke, is a Harvard-trained pediatric cardiac surgeon who has been instrumental in many advances in pediatric cardiac surgery. He performed the first endoscopic cardiac surgery and the first casual ring division. He invented the venous pole circuit, a less invasive, less traumatic form of cardiopulmonary bypass, and he also invented the first portable extracorporeal membrane oxygenation (ECMO) machine to transport critically ill patients to NCH for care. Dr. Burke has been a pioneer in pediatric cardiac surgery technology. Dr. Hannan, another one of NCH’s pediatric cardiac surgeons, also trained at Harvard Medical School. He has performed approximately 2,000 open-heart operations at NCH. He was part of the team that created the Society of Thoracic Surgeons (STS) database reporting program, revolutionizing outcome monitoring in pediatric cardiac surgery. Recently, NCH recruited a third pediatric cardiac surgeon, Dr. Kristine Guleserian, who is one of the highest volume pediatric heart transplant surgeons in the country. Dr. Guleserian trained at Harvard Medical School. Dr. Guleserian is a world-renowned pediatric heart transplant and cardiac surgeon. In 2006, she performed the world’s youngest surviving combined heart/liver transplant on a three-year-old girl. She has performed 133 pediatric cardiac transplants, including transplant on one of the smallest pediatric patients to ever receive an artificial heart. Dr. Guleserian serves on numerous boards and committees dedicated to improving and advancing the field of pediatric cardiac surgery and heart transplant. Beyond its pediatric cardiac surgeons, NCH has developed the infrastructure of a world-class pediatric cardiac program, including several physicians who are nationally recognized industry leaders in their subspecialties. For example, Dr. Cecilio Lopez is one of the foremost experts in the country in echocardiography. He is currently on the Board of Directors for the American Society of Echocardiography, International Society for the Nomenclature of Pediatric and Congenital Heart Disease, and the Intersocietal Accreditation Commission, and is also the immediate past President of the Society of Pediatric Echo. Dr. John Rhodes is the former director of the cardiac catheterization lab at the world- renowned PHT program at Duke Children’s Hospital and Health Center. He is currently involved in cutting-edge clinical trials that involve the closing of large atrial septal defects and transcatheter valve replacement. Dr. Rhodes’ involvement in all major pediatric cardiac trials allows him to provide his patients with treatment options that other hospitals cannot. Finally, Dr. Anthony Rossi was one the first and is one of the most experienced pediatric cardiac intensivists in the country, and was instrumental in developing the concept of using a dedicated pediatric cardiac intensive care unit (CICU). In addition to the physicians already on staff, NCH has plans to recruit two additional pediatric cardiac intensivists and a pediatric cardiac heart failure specialist. The Intervenor, Jackson Jackson is the public safety net hospital system for Miami-Dade County and has been in existence since 1918. Its mission is centered on a mandate to treat all Miami-Dade County residents regardless of their ability to pay. Its main campus, Jackson Memorial Hospital, includes the Holtz Children’s Hospital (Holtz) and the Women’s Hospital. Pediatric cardiac services provided by Jackson, via Holtz, include PHT and pediatric heart failure, as well as cardiac surgery and cardiology services. Holtz provides services for patients 21 years of age and under through its affiliation with the University of Miami, which provides physician services to JMH. Holtz cares for patients with all types of diseases, including, but not limited to, chronic illness; congenital heart disease; cardiology; cardiovascular, liver, kidney and intestinal disease; burn; trauma; neurology; and solid organ and bone marrow transplantation. Holtz has 373 beds, including 60 Level II NICU beds and 66 Level III NICU beds. The NICU at Holtz cares for the most complex infants, high-risk patients, and births. In addition, Holtz has a 30-bed pediatric intensive care unit (PICU) consisting of individual, separate patient rooms, fully equipped and capable of treating critically ill children. The PICU cares for pediatric pre- and post-operative transplant, cardiac, burn, trauma, and surgical patients, among others. Patients in the PICU have highly acute conditions, frequently requiring ventilator support, ECMO support for cardiac patients, and access to subspecialty care. PICU nursing for the most critical patients is provided on a one-to-one ratio. Adjacent to the PICU on the same floor are two pediatric operating rooms, the pediatric cardiac catheterization laboratory, and the transplant unit. Patients are assigned to the transplant unit based on the type of organ transplanted and the patient’s acuity. Holtz has dedicated pediatric and neonatal pharmacies. Pharmacy, nursing, rehabilitation, and dietary services are provided by specialists in pediatrics and neonatology. Holtz offers a wide variety of child life services, including diversionary techniques to alleviate pain and promote child development and therapies to provide a sense of normalcy in the lives of pediatric patients cared for at Holtz. In addition, Holtz provides pediatric palliative care through its Pedi Pals program which provides care for pediatric patients who are critically ill and have frequent hospitalizations or care needs at home. Services include pain management, bereavement services, and pastoral care as needed or indicated by families. Holtz also provides a Prescribed Pediatric Extended Care program (PPEC) that offers day care type services for children with complex medical conditions, including cardiac patients. This allows the patients’ parents and caregivers the ability to work while their children are cared for in a medically supervised setting. JMH’s transplant program has been in operation for over 45 years. Holtz and JMH provide a wide range of solid organ transplantation in conjunction with the Miami Transplant Institute (MTI) and the University of Miami (UM). MTI is a joint program between JMH and UM, employing nearly 300 people and 40 physicians dedicated to transplantation. It is the third largest transplant program, and the second largest pediatric transplant program, in the United States. In the past year, MTI performed over 420 adult and over 70 pediatric solid organ transplants, all at JMH. Pediatric transplant programs at JMH include heart, kidney, pancreas, kidney/pancreas, liver, lung, intestinal, and multi-visceral. JMH also performs bone marrow transplants. Due to the scope of both pediatric and adult solid organ transplant services offered at JMH, pediatric patients are easily transitioned into adult services for uninterrupted treatment at JMH. PHT recipients will require lifelong care and follow up, frequently retransplantation, and adult services as they age. The cardiothoracic surgery program at JMH has existed for over 50 years. It is multidisciplinary, caring for both children and adults with heart, lung, and mediastinal disease and includes a robust transplant and assistive device program. The program has a team of cardiothoracic surgeons, four of whom have PHT experience. Dr. Eliot Rosenkranz is JMH’s primary pediatric heart transplant surgeon. He has been at JMH since 2000. The PHT team also includes Dr. Matthias Loebe and Dr. Nicolas Brozzi, who both have extensive experience in transplanting solid organ pediatric patients, teenagers, and young adults, and who provide support to Dr. Rosenkranz, whenever needed. JMH has a heart failure program that includes a multidisciplinary team of physicians, nurses, therapists, and other providers who review the best modalities to treat and medically manage patients with heart failure. In addition to cardiology services, the heart failure program includes the cardiac transplant service. JMH’s pediatric heart failure program, led by Dr. Paolo Rusconi, was only the eighth program in the U.S. to be accredited by the Health Care Colloquium, and the only program in Florida to receive such designation for programs demonstrating quality in heart failure patient management. Other cardiac-related services provided at JMH include interventional cardiology, under the direction of Dr. Satinder Sandhu; echocardiography and non-invasive imaging; electrophysiology, diagnostic pediatric and cardiothoracic radiology; and general cardiology. Agency for Health Care Administration AHCA is the state health planning agency that is charged with administration of the CON program as set forth in sections 408.031-408.0455, Florida Statutes. Context of the PHT Application Pursuant to Florida Administrative Code Rule 59C- 1.044, AHCA requires applicants to obtain separate CONs for the establishment of each adult or pediatric organ transplantation program, including: heart, kidney, liver, bone marrow, lung, lung and heart, pancreas and islet cells, and intestine transplantations. “Transplantation” is “the surgical grafting or implanting in its entirety or in part one or more tissues or organs taken from another person.” Fla. Admin. Code R. 59A- 3.065. “Heart transplantation” is defined by rule 59C- 1.002(41) as a “tertiary health service,” meaning “a health service which, due to its high level of intensity, complexity, specialized or limited applicability, and cost, should be limited to, and concentrated in, a limited number of hospitals to ensure the quality, availability, and cost effectiveness of such service.” AHCA rules define a “pediatric patient” as “a patient under the age of 15 years.” Fla. Admin. Code R. 59C-1.044(2)(c). However, the United Network for Organ Sharing (UNOS), which regulates, monitors, and reports organ transplant and procurement data, defines pediatric patients as the age group 0–17. The STS, which reports risk-adjusted cardiac surgery data, also defines pediatric patients as the ages 0–17. As a practical matter, none of the clinicians that testified for either party limited their definition of pediatric patients to ages 0–15. Heart transplantation is considered a last resort for patients with end-stage heart disease who may have no other medical or surgical therapies available. Typically, persons listed for heart transplantation have a life expectancy of less than one year. These patients often have significant limitations of their activity and lifestyle prior to transplantation. At hearing, the cardiologists who testified agreed that whenever possible, PHT should be delayed as long as medically possible, since transplanted hearts typically have a limited, yet greatly variable period of viability, ranging from under a year to possibly decades. However, in any event, retransplantation is frequently necessary. The two most common causes of end-stage heart disease requiring a transplant in children are cardiomyopathy, which is a progressive deterioration of the function of the heart muscle, and congenital heart defects that are not amenable to further surgical correction. The conditions that require heart transplantation in children are different across age cohorts (and from adults). Infants or neonates requiring transplantation typically have congenital heart defects that require surgical intervention relatively soon after birth. These conditions are typically dealt with anywhere from infancy to seven or eight years of age. With the older pediatric age group (eight years of age to adolescence), the indications for transplant are different. Many children are perfectly healthy until then, and then contract a serious illness, such as viral cardiomyopathy. In this condition, the heart enlarges and children develop restrictive cardiomyopathy, leading to sudden heart failure or progressive decline of their function, ultimately requiring a transplant. ECMO, also known as extracorporeal life support (ECLS), is an extracorporeal technique of providing both cardiac and respiratory support to persons whose heart and lungs are unable to provide an adequate amount of gas exchange to sustain life. Generally it is only used in the later treatment of a person with heart or lung failure as it is solely a life- sustaining intervention. Congress, through the National Organ Transplant Act, established the Organ Procurement Transplant Network (OPTN) to manage a national list of organ donors and available organs, along with the collection of data regarding organ transplant. OPTN administers these duties through a contract with UNOS. Patients exhibiting symptoms of possible heart failure are referred to the heart failure team for initial evaluation. The evaluation includes assessment of the patient’s medical history and anatomy, imaging, and review of alternative treatments to transplantation by various medical specialists. Because the goal recognized by most physicians is to delay or avoid PHT, in many cases, patients are not listed for PHT or may be removed from the waitlist when continued medical management or other palliative surgical intervention is proper. If PHT is required, patients and their parents will meet with the PHT surgeon to discuss the procedure. All information from the assessment is reviewed by the multidisciplinary transplant review committee, which includes pertinent medical and surgical specialists, social workers, financial counselors, and other members necessary for decision- making. Upon approval by the transplant committee, and consent from the patient’s family, patients are listed with UNOS according to severity of disease, how soon the patient will require a new organ, and the expectation of their survival without a new organ. Donor information, including donor location/region, blood type, age, donor size, and other factors that are used to identify potential organ matches, is provided by the donor hospital to the organ procurement agency. When a potential match is identified, the recipient hospital with the highest priority patient is provided the donor information or provided an “offer.” At that time, the recipient hospital reviews the donor information to confirm whether the organ is appropriate for the matched recipient. In some infrequent circumstances, a donor is not appropriate due to both the condition of the donor and the condition of the recipient. If the donor is appropriate, the process for the transplant procedure begins. AHCA rules divide Florida into four OTSAs, corresponding generally with the northern, western central, eastern central, and southern regions of the state. Fla. Admin. Code R. 59C-1.044(2)(f). The program at issue in this proceeding will be located in OTSA 4, which is comprised of Broward, Collier, Miami-Dade, Monroe, and Palm Beach Counties. For purposes of CON review, Florida is divided into 11 health planning districts. § 408.032(5), Fla. Stat. The CON at issue in this proceeding will be in District 11. Currently, there are two providers of PHT in OTSA 4: DiMaggio and Jackson. As discussed below, historically Jackson’s PHT volumes have been extremely low. Jackson is located in District 11. DiMaggio is located in District 10. In addition to these two programs, there are only two other PHT providers in Florida: UF Health Shands Hospital (Shands), located in Gainesville, OTSA 1, District 3; and Johns Hopkins All Children’s Hospital (All Children’s) located in St. Petersburg, OTSA 2, District 5. The incidence of PHT in Florida, as compared to other types of solid organ transplants, is relatively small. The chart below sets forth the number of pediatric (ages 0-17) heart transplant discharges by year for the four Florida PHT programs during Calendar Years (CY) 2013 through 2015: HOSPITAL HEART TRANSPLANT CY 2013 CY 2014 CY 2015 All Children’s Hospital 7 14 9 UF Health Shands Hospital 6 8 9 Memorial Regional Hospital 5 5 5 Jackson Health System 2 2 1 Total 20 29 30 History and Utilization of Existing Providers of PHT in OTSA 4 The Jackson Program At JMH, the surgical component of a PHT is a small piece of a very complex process. The critical components of the PHT process, managed by the cardiology and heart failure team at JMH, include timely referral for transplant, heart failure and transplant evaluation, pre- and post-operative transplant care (inpatient and outpatient), heart transplantation, and lifelong immunosuppression management. JMH is approved by OPTN and UNOS to provide PHT. JMH’s adult and PHT programs are certified by the Centers for Medicare and Medicaid Services (CMS) under a single certification. Certification with CMS requires OPTN membership and regulation compliance. Jackson has a long history of running extremely low- volume pediatric and adult transplant programs, and has had a series of regulatory violations stemming from its failure to support and grow its adult and pediatric transplant programs, the consequence of which includes being under a federal Medicare/Medicaid System Improvement Agreement. For several years, Jackson was unable to meet the Children’s Medical Services’ volume thresholds for a pediatric cardiac program, resulting in the program being placed on probation. The evidence demonstrated that currently and historically, Jackson has not performed 90 “on-pump” (heart/lung bypass) pediatric heart surgeries on an annual basis. Jackson’s transplant volume for young children, infants, and neonates is nearly nonexistent. Jackson has not done a transplant on a patient under 30 days of age since 1998. Since 2007, Jackson has done no transplants on patients aged one to five. In the past six years, Jackson has only done five transplants on patients under 10 years of age. Unlike NCH, Jackson is concentrated on providing cardiac surgery primarily to adults. In CY 2015, JMH had 37 pediatric (age 0-17) cardiac surgery cases, representing only 3.9 percent of its total cases. By contrast, during the same period NCH had 201 pediatric cardiac surgery cases, representing 21.2 percent of its total cases. The difference in focus between JMH and NCH is even more pronounced when it comes to cardiac surgeries on neonates. In 2016, NCH did 200 on-pump pediatric cardiac surgeries, of which 52 were performed on neonates, meaning neonates accounted for 26 percent of NCH’s on-pump cases. During the same period, Jackson only performed 42 on-pump cases, of which only seven were neonates, meaning neonates only accounted for 16 percent of Jackson’s on-pump cases. Jackson is also performing about two times the national average in terms of the percentage of its cases that are performed on adult patients. Performing pediatric cardiac surgery on neonates is typically more complex than performing congenital heart defect surgery on adult patients. Jackson only has one pediatric cardiac surgeon. Jackson advised Children’s Medical Services it intended to recruit a second pediatric surgeon in 2012, but this did not occur. Jackson’s low cardiac surgery and transplant volumes make it difficult, if not impossible, for it to recruit a highly skilled pediatric cardiac and transplant surgeon. Dr. Rosenkranz testified that there is no need to recruit a second pediatric heart surgeon. Jackson and NCH treat very different universes of patients. Jackson has not performed a PHT on a Miami-Dade County resident in the last three years; whereas, NCH performs 73 percent of the pediatric cardiac heart surgeries for Miami- Dade County residents and expects a significant percentage of its transplant cases to come from this patient population. Jackson concentrates predominantly on pediatric cardiomyopathy cases. NCH is more focused on pediatric congenital heart defects and anticipates these patients will represent a significant portion of its transplant patients. Jackson’s patients tend to be older patients, whereas a significant percentage of NCH’s patients are neonates and infants. In pediatric cardiac surgery, 25 percent of NCH patients are neonates (under 30 days), and 30 percent are infants (31 days to one year). Jackson has not done a transplant on a neonate since 1988. In fact, Jackson has only performed three transplants on infants and no transplants on any patients between one and five years old since 2008. Jackson tends to be risk averse, whereas NCH treats the most complex patients. For example, Jackson has not had a single transplant patient on ECMO, whereas, based upon NCH’s 20 years of historical data, it expects to have a pool of approximately 10 patients a year on ECMO that may benefit from transplant. In August 2011, AHCA sent JMH a letter advising JMH that it had abandoned both its pediatric heart and pediatric lung transplant programs due to not performing a single pediatric heart or lung transplant for over twelve consecutive months in 2010. The letter, addressed to JMH’s President and CEO, stated: Re: Abandonment of Pediatric Heart Transplant Program Dear Mr. Migoya: In the course of our regular data collection and analysis responsibilities, Agency staff has confirmed that your pediatric heart transplant program has been idle, i.e. no transplants have been performed, for a period in excess of 12 consecutive months, from January 2010 through December 2010. Accordingly, pursuant to Certificate of Need rule sections 59C-1.002(41)(a),59C-1.004(1}, 59C-1.0085(5), and 59C-1.020 Florida Administrative Code, and section 408.036(1), Florida Statutes, the re-establishment of a pediatric heart transplant program in the future will require a new certificate of need. The program will be removed from the Agency's inventory of authorized transplant programs. Within 14 days of receipt of this letter, please advise this Agency if the above findings are inaccurate. Should you have any questions regarding this request, please contact Steve Love of my office at (850)412- 4345. Sincerely, /S/ Jeffrey N. Gregg, Chief Bureau of Health Facility Regulation (NCH Ex. 46). Following receipt of the above letter, JMH drafted a response in which JMH did not take issue with the accuracy of the data cited in AHCA’s letter. Rather, JMH’s letter recited the reasons for its low PHT volume, including “low regional volumes, financial challenges in the system resulting in bad publicity, and intense competition from a new start-up program . . . .” It is unclear whether the draft response was ever sent to AHCA, however, no witness at hearing disputed the accuracy of the data contained in AHCA’s letter. AHCA’s representative, Marisol Fitch, testified that the letter did not revoke or rescind JMH’s CON, which is evidenced by the fact that AHCA did not notify JMH of its right to dispute a revocation or rescission pursuant to chapter 120, Florida Statutes. Ms. Fitch further advised that there was no final order revoking JMH’s CON, nor had it ever been voluntarily surrendered by JMH. Either of these actions would have been required to delete services from the program inventory. According to AHCA, JMH has an active PHT program, is currently listed in AHCA’s inventory of PHT programs, and at no time has AHCA taken further steps to terminate JMH’s PHT license. At hearing, and again in its PRO, JMH objected to the legal status of its PHT program being placed at issue in this proceeding. JMH is correct that this proceeding is not concerned with the validity of JMH’s PHT license, however, consideration of the past volumes of PHT being provided at JMH and AHCA’s documentation of periods of time when no PHTs were provided, is relevant to the statutory review criteria to be applied to the NCH application. The DiMaggio Program DiMaggio is also licensed to perform PHT services within OTSA 4. DiMaggio is part of the Memorial Healthcare System (Memorial) in Broward County, Florida. DiMaggio offers pediatric and adult congenital heart surgery and PHT. DiMaggio also offers a heart failure program that includes both medical management and surgical services. Adult heart transplant is also offered by Memorial on the same campus. DiMaggio received its CON for PHT services in 2009 and received UNOS approval in 2010, performing its first transplant in December 2010. DiMaggio has provided PHT related services and heart failure management since that time. DiMaggio’s PHT surgeon is Dr. Frank Scholl and its pediatric heart failure program is led by Dr. Maryanne Chrisant. During CY 2013 through CY 2015, Memorial performed five PHTs each year. The Proposed NCH Program As noted, NCH proposes to establish a PHT program on its hospital campus in Miami, OTSA 4, District 11. Due to its robust pediatric cardiac program, NCH already has most of the infrastructure in place to support the transplant program. NCH has a staff of pediatric cardiac physicians with expertise in caring for patients with end-stage diseases requiring transplants, clinical staff and nurses with experience caring for chronically ill children and families, nutritionists, respiratory therapists, social workers, psychologists, and psychiatrists. The NCH staff and physicians are available on a 24-hour basis at NCH’s dedicated cardiac intensive care unit. NCH also has educational and training opportunities available for staff, patients, and families. NCH has a very well trained and experienced nursing staff, many with advanced certifications and specialized pediatric training. NCH has an excellent nurse training program in place to grow the skills of its nursing staff. NCH has been an American Nurses Credentialing Center (ANCC) Magnet Program institution for three consecutive years, a statistic only seven percent of hospitals across the country have been able to achieve. NCH uses cardiac-dedicated nurses to care for its cardiac patients, and only uses dedicated cardiac advanced registered nurse practitioners to care for post-surgical cardiac patients in its dedicated CICU. NCH’s dedicated CICU has recently been relocated to the new advanced pediatric intensive care tower. There are distinct advantages to having a dedicated CICU when it comes to caring for complex cardiac patients, including transplant patients. It allows NCH to have extremely seasoned physician cardiac intensivists, cardiac nurse practitioners, cardiac nurses, and other support staff such as dieticians and social workers, who treat a high volume of pediatric cardiac surgery patients and understand their unique issues and complications. The constant exposure to complex cardiac patients allows NCH’s team to recognize complications sooner and react quicker, resulting in better care and shorter lengths of stay. In contrast to NCH’s dedicated pediatric CICU, Jackson does not have a dedicated CICU. Heart transplant patients are placed in the same ICU as all other pediatric critical care patients. The cardiac surgeons at NCH use innovative technology to improve their patients’ outcomes and reduce patients’ length of stay in the hospital. One way NCH has earned its reputation for excellence is by operating on the toughest cases. NCH is the place where patients turn when other hospitals refuse to operate because the case is too complex. NCH is willing to take “hits” to its mortality/morbidity statistics to give the sickest patients a chance to live. Despite having the highest volume of pediatric cardiac surgeries in Florida, NCH cannot perform PHT on its patients. These patients and their families must choose to continue alternative treatment at NCH, or be transferred away from their team who has been caring for them through the events that led up to the transplant, which often includes multiple prior heart surgeries. It is difficult on patients and families to lose continuity of care at this stage in their disease process. While Jackson raised some criticisms of NCH not having an adult cardiac program for continuity of care after patients reach adulthood, the evidence shows the largest and best pediatric heart programs in the United States are often located in pediatric-only programs, with no immediately available adult programs. Dr. Rhodes and Dr. Guleserian testified that even at places like Duke and Texas Children’s that have adult programs, the two programs are completely separate. Moreover, NCH has a relationship with the Cleveland Clinic to transition patients when they need an adult program. Dr. Rhodes also refuted JMH’s claim that there needed to be a back-up adult interventional cardiologist on-site to run a quality interventional program. This is contrary to the Society of Cardiac Angiography and Intervention’s recommendation. Further, Dr. Rhodes performs catheterizations on adults and has this training should it be necessary. There are also other adult interventional cardiologists on staff at NCH. Jackson also argued NCH’s program would be inferior because NCH does not offer other solid organ transplant services. However, as Dr. Guleserian explained, kidney and liver transplants are very different than heart transplants. Even in hospitals where both heart and other solid organ transplants are offered, the heart program is separated because it is unique. Heart transplant patients are much more similar to cardiac surgery patients than other solid organ transplant patients. Dr. Guleserian does not endorse comingling heart transplant patients with other solid organ transplant patients. After evaluating NCH’s existing cardiac infrastructure, Cassandra Smith-Fields, accepted as an expert in transplant program development and operation, concluded that NCH had everything necessary to establish a PHT program, with the exception of recruiting a heart failure specialist. Ms. Smith- Field’s expert opinion, which is credited, and is based on 32 years of professional experience working in transplant programs, is that NCH will be able to implement a high-quality PHT program. AHCA’s Preliminary Decision Following AHCA’s review of NCH’s application, as well as Jackson’s written Letter of Opposition, AHCA determined to preliminarily deny the application. The Agency’s decision was memorialized in a SAAR, dated February 19, 2016. The SAAR is mostly a restatement of the information presented in the NCH application. There is only one paragraph in the entire document that purports to explain why the Agency chose to preliminarily deny the application: The Agency indicates that OTSA 4 has relatively low but stable pediatric heart transplant volume for the four-year period ending June 30, 2015 and no outmigration for the 12-month period ending June 30, 2015, therefore it is reasonable to conclude that a third provider in OTSA 4 would likely reduce already relatively low volumes at the existing pediatric heart transplantation provides in OTSA 4. Marisol Fitch, supervisor of AHCA’s CON and commercial-managed care unit, testified for the Agency. Ms. Fitch testified that AHCA does not publish a numeric need for transplant programs, as it does for other categories of services and facilities. Rather, the onus is on the applicant to demonstrate need for the program “based on whatever methodology that they present to the Agency for our analysis.” In addition to the applicant’s need methodology, “we (AHCA) look at availability and accessibility of service in the area to determine whether there is an access problem.” With respect to whether NCH had demonstrated need for its PHT program, Ms. Fitch testified: The Agency did not feel that the applicant demonstrated need for the project in organ transplant area four. We did not find that there was an underserved population or that there were financial issues at stake or a quality issue, and so we did not feel that the applicant demonstrated that need for the project was produced within the four corners of the application. Statutory Review Criteria Section 408.035(1)(a): The need for the health care facilities and health services being proposed. The statutory criteria for the evaluation of CON applications, including applications for organ transplantation programs, are set forth at section 408.035, Florida Statutes, and rule 59C-1.044. However, neither the applicable statutes nor rules have a numeric need methodology that predicts future need for PHT programs. Thus, it is up to the applicant to demonstrate need in accordance with rule 59C-1.044. To quantify the need for a new PHT program in District 11, NCH used the two need methodologies described in detail below. Methodology 1: Ratio of Transplants to Cardiac Surgeries NCH’s first need methodology evaluates the ratio of PHT volume at the four existing Florida transplant centers to the volume of pediatric cardiac surgeries. It then applies this ratio to NCH’s cardiac surgery volume to determine the internal demand for this service at NCH. There is a positive correlation between the number of pediatric cardiac surgeries and the number of PHTs. The more pediatric cardiac surgeries a hospital performs, the more need there will be for PHTs. Conversely, low-volume pediatric cardiac surgery providers, such as Jackson, are also low-volume PHT providers. Using data from STS and UNOS, NCH determined that during CY 2014: All Children’s Hospital performed 146 cardiac surgeries and 14 transplants for a percentage of 9.6%; UF Health Shands Hospital performed 84 cardiac surgeries and 8 transplants for a percentage of 9.5%; Memorial Regional Hospital performed 61 cardiac surgeries and 5 transplants for a percentage of 6.0%; and Jackson performed 55 cardiac surgeries and 2 transplants for a percentage of 3.6%. The above data strongly suggests there is a correlation between the number of pediatric cardiac surgeries performed and the number of transplants performed. This correlation is supported by AHCA’s rule 59C-1.044(6)(b)4., which sets forth minimum volume thresholds for pediatric cardiac surgeries (125) and cardiac catheterizations (200), and with data reflecting that nationally, PHT programs are located in hospitals with the largest pediatric cardiac surgery programs. To forecast pediatric cardiac surgical volume in OTSA 4, NCH used AHCA’s CY 2014 discharge rates for OTSA 4 residents and applied those to the forecasted pediatric population for each of the planning years. This resulted in a forecast of 259 pediatric cardiac surgeries for the 12-month period ending June 30, 2018, increasing to 261 cases during the 12 months ending June 30, 2020. Using CY 2014 AHCA data, NCH then determined that it had a 62.2 percent market share of all pediatric cardiac surgeries performed in OTSA 4 on OTSA 4 patients. Applying this market share to the forecasted surgeries, NCH determined that it would perform 161 pediatric cardiac surgeries on OTSA 4 residents during the 12 months ending on June 30, 2018; 162 during the 12 months ending on June 30, 2019; and 163 during the 12 months ending on June 30, 2020, i.e., more than any other provider is currently performing. NCH assumed a 25 percent in-migration percentage, and provided a conservative ramping-up ratio of three percent PHT to cardiac surgery for the 12-month period ending June 30, 2018; six percent for the 12-month period ending June 30, 2019; and seven percent for the 12-month period ending June 30, 2020. The assumption used is significantly lower than All Children’s or Shands’ ratios, despite the fact that NCH is forecasted to have significantly more pediatric cardiac surgeries than either of those two hospitals. Applying these conservative assumptions, NCH could reasonably expect to perform six PHTs for the 12-month period ending June 30, 2018; 14 for the 12-month period ending June 30, 2019; and 15 for the 12-month period ending June 30, 2020. Jackson criticized NCH’s surgical ratio analysis, pointing out that AHCA defines pediatric as 0-14, not 0-17. However, as discussed above, STS and UNOS define pediatric as 0-17. Thus, the use of this age group is appropriate when considering the likely patients to be served. Moreover, the difference in the results using 0-14 data, versus 0-17 data, is de minimus. As a result of Jackson’s criticisms, NCH’s health care planner re-ran her analysis using 0-14 AHCA data. This resulted in almost the same outcome, with six PHTs projected for the 12-month period ending June 30, 2018; 13 for the 12-month period ending June 30, 2019; and 15 for the 12-month period ending June 30, 2020. Jackson’s argument that there is no positive correlation between the number of pediatric cardiac surgeries performed and the number of PHTs likely to accrue from that surgical volume is rejected. While there is a not a specific ratio, or “magic” number which can be reliably applied to each institution, there is a range within which the ratio of cardiac surgery to PHTs will fall. According to Dr. Gulesarian, whose testimony is credited, for any particular institution, that ratio will likely vary from year to year depending upon a number of variables, most importantly, the complexity of the cardiac surgeries being performed. Specifically, the more complex and higher risk the surgeries, the more likely a heart transplant will be necessary. Methodology 2: Ratio of Transplant Volume to Common Indicators NCH’s second need methodology evaluates the most common indications for PHTs and compares that to the cases by hospital and resident origin to determine the need for a PHT program at NCH. To do this, NCH’s health care planner worked with NCH’s physicians to compile a list of the 24 most common indicators for PHT, and to determine their corresponding International Classification of Disease, 9th Revision (ICD-9) codes. Using AHCA data, NCH then determined that in 2014, there were 499 pediatric cases in Florida with the target ICD-9 codes. NCH had the most cases with 121, constituting 24.2 percent of all cases in Florida. The second greatest, All Children’s, only had 66, constituting 13.2 percent. In OTSA 4, for the years 2012–2014, NCH had a total of 296 patients with these common indicators, accounting for 55.6 percent of the volume for all OTSA 4 hospitals. Notably, the two existing PHT providers in OTSA 4, Jackson and DiMaggio, only had volumes of 51 and 125, respectively, during this same time period. Combined, these two hospitals still had a significantly lower volume of the targeted ICD-9 codes than did NCH. Using AHCA data, NCH then determined that, from 2012 through 2014, an average of 11.2 percent of patients at the four existing transplant hospitals that had a primary diagnosis of one of the identified ICD-9 codes received a transplant. Using just 2014 data, this average was 15.2 percent. This increase was due to DiMaggio, which opened in 2010, increasing from 3.4 percent in 2012 to over 11 percent in 2014. Using NCH’s market share in OTSA 4 and the population forecasts, NCH was able to determine its forecasted volume of patients with these common indicators. NCH then applied a very conservative ramping up ratio of ICD-9 volume to PHTs of five percent in 2018, eight percent in 2019, and 10 percent in 2020 to forecast the number of PHTs NCH could expect. When the above ratios are applied to the expected ICD-9 volumes, the result is six PHTs for the 12-month period ending June 30, 2018; 11 for the 12-month period ending June 30, 2019; and 13 for the 12-month period ending June 30, 2020. At hearing, Jackson criticized NCH’s common indicators methodology, pointing out variability where All Children’s volume of common indicators only went from 64 to 66 between 2013 to 2014, yet the number of transplants doubled from seven to 14. However, as Ms. Greenberg explained, NCH looked at multiyear trends, not a single point in time. A single point in time may have large fluctuations due to things like what occurred at All Children’s: the head pediatric cardiology surgeon left, which shifted patients from All Children’s to Shands. A change in surgery personnel was one of the factors identified by Dr. Gulesarian as potentially affecting PHT volumes. Criticism was also raised regarding NCH’s use of ICD-9, instead of the newer ICD-10, codes because the conversion resulted in the inclusion of certain indicators, e.g., Eisenmenger Syndrome, Coronary Artery Disease, and Ehlers-Danlos Syndrome, as being among the list of most common indicators for heart transplant. NCH’s planner demonstrated that any differences due to the inclusion of these ICD-10 codes was de minimus or nonexistent. Thus, even had the newer codes been used, they would not have materially affected the volume projections for the proposed PHT program. Jackson is correct that both need methodologies put forth by NCH are “institution specific,” and are better characterized as an internal demand analysis than as a need methodology. Neither method identifies either an unserved population or an access issue. Rather, they project a volume of patients NCH anticipates would be available to receive a PHT at NCH if approved. Section 408.035(1)(b): The availability, quality of care, accessibility, and extent of utilization of existing health care facilities and health services in the service district of the applicant. Section 408.035(1)(e): The extent to which the proposed services will enhance access to health care for residents of the service district. Disparity in Use Rates OTSA 4 represents 32 percent of Florida’s pediatric population. The five-county OTSA is home to more than 1.3 million residents age 17 and under. Yet, despite having approximately one-third of the pediatric population, OTSA 4 only provides one-tenth of the state’s PHTs. The chart below presents the PHT use rates in Florida by OTSA for CY 2013 through CY 2015: 1 10.1 11.2 13.3 11.6 2 10.7 5.8 8.6 8.4 3 9.6 15.4 9.3 11.4 4 3.9 3.1 3.1 3.3 Statewide 8.2 8.1 8.0 8.1 Average Use Rates per 1,000,000, Age 0 to 17 OSTA CY2013 CY2014 CY2015 3-Yr Avg (NCH Ex. 75). As can be seen from the above, the three-year average use rate in OTSA 4 (CY 2013 through CY 2015) is 3.3 percent, compared to OTSA 1 at 11.6 percent, OTSA 2 at 8.4 percent, and OTSA 3 at 11.4 percent for the same time period. There was no evidence that there was anything unique about the pediatric patients in Miami-Dade County to justify this disparity in PHT use rates. To the contrary, Dr. Rosenkranz conceded that he did not know of anything that would justify any disparity in the use rate in OTSA 4, and he would expect it to match the rest of Florida: Q. . . . So for those counties in OTA 4, from a clinical perspective, are you aware of anything unique about those counties that would make the prevalence of pediatric heart disease or heart malfunctions that result in transplant any different than any other parts of Florida? A. Nothing that I'm aware of. Q. You would expect it to be similar to other parts of Florida, correct? A. Yes, I would. (NCH Ex. 176; pp. 25). Dr. Rhodes similarly testified there was no clinical reason for the relatively low use rate in South Florida, other than the fact that the largest pediatric cardiac surgery provider in the state (NCH), which is doing 25 percent of the pediatric cardiac surgeries in the state, does not have a PHT program. Dr. Feld echoed these opinions and testified that if NCH’s CON application is approved, with the addition of Dr. Guleserian, NCH will be able to rectify the disparate use rate. Ms. Greenberg testified that the PHT use rate data shows a disparity that would indicate that residents of OTSA 4 have an access issue to PHT because many children are going without the service. On cross-examination, however, she conceded that patients who leave OTSA 4 in order to receive a PHT could also at least partially explain the disparity. But in either case, she concluded, whether it was lack of service or due to out migration, the low use rate indicated an access issue in OTSA 4. The most convincing explanation for the disparate use rate came from Cassandra Smith-Fields who testified that the use rate disparity has resulted from the PHT programs being placed in the wrong hospitals. This opinion was echoed by Dr. Rhodes, who cited data showing that transplant programs across the nation were usually located at high-volume pediatric surgery providers. NCH presented compelling data based upon its sheer volume of pediatric cardiac surgeries that approving NCH’s PHT application will have a substantial impact in resolving the current disparity in PHT use rates. As noted previously, NCH performs 25 percent of all pediatric cardiac surgeries in Florida, 62.2 percent of those performed in OTSA 4, and 72.7 percent of those done in Miami-Dade County. Inability to Transfer NCH Patients on ECMO Several NCH cardiologists testified there are a significant number of their patients that are simply too sick to be transferred from NCH to another facility to receive a PHT. Many of these patients do not even get listed for a heart transplant since they likely would not survive the necessary transfer. Dr. Burke provided 20 years of data showing 275 post- surgical pediatric heart patients that had been placed on ECMO after surgery. One hundred and forty-seven of those children died. While he could not opine as to exactly which of those patients’ lives could have been saved if NCH had been able to offer them a PHT, he testified that each of those children were a potential candidate for a PHT in order to have a chance to save their lives. Dr. Rossi explained the difficulties of moving patients on ECMO. Patients must be chemically paralyzed while on ECMO, because the slightest movement of the patient can cause the cannula to shift, potentially resulting in death. The risk of moving ECMO patients is so serious that when a patient is going to be taken off ECMO, the operation is performed at the patient’s bedside because it is too risky to even move the patient down the hall to the operating room. Dr. Rossi explained that the only time one would ever transport a patient on ECMO is when not moving the patient would result in certain death. Despite NCH’s award-winning transport team, its experience with patients transported on ECMO is that two-thirds of the patients die during the transport. Multiple NCH physicians discussed the inherent dangers of just moving a patient on ECMO down the hall for procedures. While some patients are too sick to transport, they may yet be appropriate candidates for PHT. Approximately five percent of Dr. Guleserian’s transplant patients have been patients transplanted while on ECMO. Ms. Smith-Fields testified that in her program, when there is a high-risk pediatric surgery taking place, the patient will often be pre-cleared as a PHT patient so that if the surgery is not a success, the patient can be supported on ECMO and immediately listed for transplant without any processing delays. While NCH did pioneer a portable ECMO machine to transfer patients on ECMO, it has only been used to bring patients to NCH. Those patients were certain to die if they were not transported on ECMO, and one-third of them lived because of those transports. However, when that risk is contrasted with the risk of transporting NCH patients on ECMO to be listed for PHT, the risk of transport is greater than the risk of waiting to see if the patient recovers on ECMO. Approximately half of NCH’s cardiac surgery patients who go on ECMO after a failed surgery survive. It would not be advisable to take the risk of transport on ECMO because the odds of the patient dying are increased. Credible testimony established that there are significant risks to a patient being transported while on ECMO. Thus, even assuming that transporting a patient on ECMO from NCH to a transplant facility was an option, forcing a patient to accept the high, and potentially fatal, risks of this transport presents a major access issue. Organ Out-migration from OTSA 4 The evidence did not establish that there is currently significant out-migration of PHT patients from OTSA 4 or Miami-Dade to other Florida or out-of-state PHT programs. Considering the risks inherent in transport discussed above, this is not surprising. However, there is a demonstrated out- migration of donor hearts from Florida. During CY 2010 through August 2015, there were 205 pediatric hearts recovered throughout Florida. In 2014, specifically, there were 38 hearts recovered and 29 pediatric heart transplants performed the same year. Because there were more hearts recovered than transplanted in the state, Florida is a net exporter of donor pediatric hearts. At hearing, Jackson asserted that its low volume of PHTs was caused by the lack of viable pediatric hearts to be transplanted in OTSA 4. However, this argument was inconsistent with the SRTR data showing approximately 25 percent of the adult and pediatric donor hearts harvested in Florida in 2015 (41 hearts) were being sent out of state, many to children’s hospitals. The data also reflects that OTSA 4 is a net exporter of donor hearts. To the extent there is any merit to Jackson’s claim about the lack of viable pediatric hearts, however, the evidence also showed that adding PHT programs to an area increases the number of hearts procured in that region. This is known as the “push/pull phenomenon.” As explained by Ms. Smith-Field, the push/pull phenomenon results when the presence of transplant centers within a given donor service area “pushes” the designated organ procurement organizations to a better job of procuring organs. Quality of Jackson’s PHT Program Based upon persuasive evidence presented at hearing, there is a strong positive correlation between the number of pediatric cardiac surgeries a hospital performs and its PHT volumes. Not surprisingly, nationally PHT programs are almost universally located in the hospitals with the highest volume of pediatric cardiac surgery. For procedures such as cardiac surgery, the number of procedures performed directly correlates to the quality of the outcomes. Generally speaking, surgeons and facilities with higher volumes experience higher quality. This volume-outcome relationship is expressly recognized by AHCA in several of its CON rules which require minimum projected volumes, including organ transplantation. Jackson has struggled with low pediatric cardiac surgery volumes since at least 2012, when it was unable to meet the Children’s Medical Services pediatric cardiac volume requirements and was placed on probationary status. The compelling evidence showed that in both its pediatric cardiac surgery program and its PHT program, Jackson has been a chronically low-volume provider. Indeed, it was undisputed that Jackson has the lowest PHT volume in the state. Jackson’s PHT waitlist activity indicates continued low volume. Ms. Smith-Fields compared Jackson’s waitlist additions to her program’s experiences and concluded Jackson’s waitlist additions are not indicative of an active program: And so the other thing I guess that really stood out for me when I looked at this was how many patients were put on the waitlist? So this says that they added two patients to the waitlist in 2014. That's telling me that's not a very active program. In my own program in 2015, where we did 15 transplants, we put 24 candidates on the list that year. Lucille Packard did 20 transplants last year, they put 32. So I just run the ratios, if I put two patients on the list, I am only expecting to do one or two transplants, that's going to keep you being a very small program. Several NCH physicians discussed the correlation between volume and quality, and expressed concerns that Jackson’s PHT program was just too low volume for them to feel comfortable recommending patients go there. Ms. Smith-Fields examined Jackson’s PHT scorecards and had several concerns about the quality of Jackson’s PHT program, including: Jackson taking too long to waitlist patients; having patients on the waiting list too long; and putting patients on inactive status for unusually long periods of time. She agreed that risk aversion is a common phenomenon in small transplant programs. Jackson unconvincingly attempted to explain its perennially low PHT volumes by suggesting that Dr. Rusconi was better at medically managing patients to avoid transplant. In response, Dr. Guleserian testified that all PHT programs do everything they can to medically manage their patients in an effort to avoid transplantation. According to Dr. Guleserian, to believe that Jackson has found some magic formula to avoid transplantation, but is somehow hiding this secretly away from the rest of the transplant world, is not plausible. She explained that she sits on various national committees and boards dedicated to PHT, and if such an approach had been developed with those kinds of results, she would be aware of it. Moreover, there is no evidence of record to suggest that all four Florida PHT programs do not have heart failure programs at least as robust and successful as Jackson’s program. Jackson’s contention that its low PHT volume is the product of a particularly successful heart failure program is not credible. While it is undisputed that PHT should be considered the intervention of last resort, the evidence also established that for some children, there is no alternative to PHT. This is reflected by the fact that in CY 2015 a total of 30 PHTs were performed in the four Florida PHT programs. Whatever the reason(s) for its consistently low PHT volumes, the fact remains that during CY 2010 through CY 2015, Jackson performed a total of only seven PHTs, by far the lowest volume of any of the PHT providers in the state. During this same period of time, the other three Florida PHT programs performed a combined total of 121 PHTs. Given the well- documented relationship between volume and outcome of surgical procedures, Jackson’s low PHT volume alone raises legitimate quality of care concerns. Adverse Impact on Jackson and DiMaggio The evidence demonstrated NCH only rarely refers PHT candidates to Jackson and DiMaggio. Jackson only presented evidence of one potential transfer patient it claimed was referred by NCH in the last several years. However, no specific referring cardiologist was identified, no NCH witnesses corroborated the referral, and no records were produced to corroborate the referral was from NCH. NCH presented evidence of two of its patients that sought transplant at Jackson. One of these patients died without being listed for transplant (despite at least one of the cardiologists at Jackson fighting to get the patient either listed or transferred to Shands), and the other patient ultimately received their transplant at Shands. The consistent testimony from NCH physicians was that they are hesitant to refer PHT patients to Jackson because of its low volume and other perceived quality issues. This is particularly concerning since NCH’s patients represent 60 percent of the pediatric cardiac surgeries performed in OTSA 4, and many of these patients have congenital heart defects that will eventually result in them requiring a PHT. Jackson argued that NCH referring its patients to Shands and All Children’s, rather than Jackson, was the reason why Jackson had been unable to grow its transplant program. Some Jackson witnesses intimated NCH was intentionally sabotaging Jackson’s program by not referring its patients because of prior fallings-out between the hospitals and their physicians. While the evidence showed there had been several failed attempts for NCH and Jackson to work collaboratively with pediatric cardiac patients, it did not show that this was the reason why NCH physicians rarely refer patients to Jackson. Rather, the lack of referrals was based upon quality concerns. Indeed, credible testimony established that NCH physicians are advising their patients about the correlation between volume and quality as documented in the medical literature, resulting in those PHT candidates, who have the financial means and clinical ability to travel, choosing to pursue their PHTs at higher- volume programs. Given, NCH’s dominant market position and quality concerns, these referral patterns do not appear likely to change. The greater weight of the evidence established that approval of the NCH PHT program would have minimal, if any, impact on the volume of PHTs being performed at Jackson. For the same reasons identified with respect to Jackson, approval of the NCH program will likely have minimal, if any, impact on the volume of PHTs performed at DiMaggio. Section 408.035(1)(c): The ability of the applicant to provide quality of care and the applicant’s record of providing quality of care. NCH has a demonstrated record of providing quality cardiac services to its patients. NCH’s cardiology and heart surgery program is ranked 40th in the United States by U.S. News and World Report. In addition, NCH has more pediatric programs ranked among “America’s Best” by U.S. News and World Report than any other hospital in Florida. NCH’s dedicated CICU, staffed with a dedicated cardiac team, will be able to provide high quality care for PHT patients. NCH’s cardiac nursing staff has an average of 12 years’ experience caring for heart patients. NCH’s cardiac physicians are all highly qualified, with decades of experience. Jackson alleged quality deficiencies related to NCH’s staffing, clinical review committee, protocols and procedures, laboratory and pathology services, and staff and patient family educational programs. However, none of these alleged deficiencies persuasively shed doubt on NCH’s ability to provide excellent quality of care to its PHT patients. Section 408.035(1)(d): The availability of resources, including health personnel, management personnel, and funds for capital and operating expenditures, for project accomplishment and operation. Short Term Financial Feasibility The parties stipulated to NCH’s ability to initially fund the project. Availability of Health and Management Personnel NCH’s existing management personnel will oversee the proposed project. Given the relatively small size of the project, the existing management staff is more than capable of overseeing and managing this additional program. Based upon its PHT volume projections, which are credible, NCH is expecting its average daily census (ADC) of cardiac patients to increase by only one to two patients a day as a result of the PHT program. NCH currently has a dedicated cardiac clinical staff of 16 to 20 registered nurses, nurse practitioners, and technicians who are more than capable of handling the projected increase in ADC. In addition, NCH currently has eight registered nurses and four advanced nurse practitioners that have dedicated heart transplant experience. Upon approval of the program, NCH will ensure that all staff is properly trained and educated prior to the implementation of the PHT program. This includes the training to prepare both a nutritionist and a transplant coordinator. With the successful recruitment of Dr. Guleserian, who has performed 133 pediatric heart transplants, NCH’s surgeons and other physicians are more than capable of staffing the PHT program. NCH will not have any difficulty recruiting a high- quality heart failure specialist given NCH’s reputation, cardiac surgery volumes and market shares, and reputable physician team already in place. Section 408.035(1)(f): The immediate and long-term financial feasibility of the proposal. As noted, the parties stipulated that NCH has the financial ability to fund the proposed program. As to long-term financial feasibility, NCH has $586 million in net assets with a net operating income of $100 million per year. NCH is well-positioned to absorb any potential losses that the PHT program might incur, and is dedicated to maintaining the program, regardless of profit or loss, due to its commitment to meeting the needs of the community. NCH has a history of funding financially unprofitable programs when there is a critical need for them in the community. An example is NCH’s LifeFlight program, which generates no profit for NCH and, in fact, operates at a $3 million per year loss. Jackson raised issues regarding errors in NCH’s financial schedules attached to the CON application. Ms. Greenberg incorrectly included a full-time physician’s salary in the financial schedule, at the wrong amount. Physicians are not employed directly by NCH and should not have been included. Ms. Greenberg’s third-year financial projection, while correctly listing staffing costs as a line item, failed to include that cost in the final total. However, correcting for these minor errors shows that this program will still be profitable. It is also worth noting that when AHCA is evaluating transplant programs, it looks at the financial health of the entire applicant, not just the program under CON review in a vacuum. As Ms. Fitch explained: THE COURT: Okay. I have heard testimony today, and you may have heard it as well, from Mr. Balsano regarding an addition error that apparently existed on the NCH pro formas. You have testified that the Agency found the project to be financially feasible in the long-term. At the time the Agency made that determination, had that addition error been revealed to the Agency? THE WITNESS: Not that I know of. But I will say, in terms of the Agency, typically we don’t see that transplant programs are necessarily profitable on their own. We do look at the entire system to determine whether a facility can maintain a program. We have seen a number of programs come in that, on their own, are not financially feasible but in an entire health system, it is a feasible feat for an application. So I heard Mr. Balsano’s testimony, and while I think that’s a significant addition error, I don’t know that that would have necessarily changed the review. I don’t want to speak for the financial analysis unit, but I have seen programs that on their own are not financially feasible but the Agency determines that the health system can support it, based on their total system. Given the overall financial strength of NCH, and its commitment to continue to fund the PHT program regardless of its profitability, the long-term financial feasibility of the program is not in question. Section 408.035(1)(g): The extent to which the proposal will foster competition that promotes quality and cost- effectiveness. As detailed above, there is an unexplained use rate disparity between Miami-Dade County, OTSA 4, and the rest of the state with regard to PHT. This disparity is a strong indicator that there is an access issue for residents of District 11. The evidence established that Jackson has not performed a PHT on any Miami-Dade County resident in the past three years. The access issue is particularly pronounced for complex cases, both because Jackson appears to be reluctant to list and transplant complex cases, and because a significant population of critically ill children cannot be safely transferred from NCH to Jackson. Approval of NCH’s application will provide residents of District 11 and OTSA 4 access to a high-volume, high-quality cardiac program for PHT, something they do not have access to now. There is no question that approval of the NCH program will foster competition. As Dr. Burke testified, in his experience approval of a new PHT provider serves as a stimulus to existing providers. There is also little question that once established, the NCH program will be high-volume, particularly relative to the volumes of PHT being done at Jackson and DiMaggio. Section 408.035(1)(g): The costs and methods of the proposed construction, including the costs and methods of energy provision and the availability of alternative, less costly, or more effective methods of construction. NCH did not propose construction for this project. This criterion is not in dispute. Section 408.035(1)(g): The applicant’s past and proposed provision of health care services to Medicaid patients and the medically indigent. NCH has a long history of providing health services to Medicaid patients and the medically indigent. In CY 2013 and CY 2014 NCH provided $2,327,848 and $1,193,660 in charity care, respectively, representing 2.1 and 2.5 percent of its net patient revenue. NCH provided $106,941,948 in conventional Medicaid and $134,616,815 to patients under Medicaid Managed Care in CY 2014. NCH's projects that annually, over 60 percent of the PHT patient days will be Medicaid. This payor mix is based on NCH’s complex cardiac patient payor mix, and is reasonable. NCH has and will continue to provide health care services to Medicaid patients and the medically indigent. Inasmuch as the majority of pediatric patients qualify for Medicaid, and NCH has a history of providing care to Medicaid patients and the medically indigent, both Jackson and AHCA concede the proposal’s compliance with this criterion is not in dispute.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a final order be entered approving CON Application No. 10421 filed by Variety Children’s Hospital, d/b/a Nicklaus Children’s Hospital, subject to the conditions contained in the applications. DONE AND ENTERED this 15th day of May, 2017, in Tallahassee, Leon County, Florida. S W. DAVID WATKINS Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 15th day of May, 2017. COPIES FURNISHED: Richard Joseph Saliba, Esquire Kevin Michael Marker, Esquire Agency for Health Care Administration Mail Stop 3 2727 Mahan Drive Tallahassee, Florida 32308 (eServed) Geoffrey D. Smith, Esquire Susan Crystal Smith, Esquire Stephen B. Burch, Esquire Smith & Associates Suite 202 1499 South Harbor City Boulevard Melbourne, Florida 32901 (eServed) Thomas Francis Panza, Esquire Panza, Maurer, & Maynard, P.A. Suite 905 2400 East Commercial Boulevard Fort Lauderdale, Florida 33308 (eServed) Elizabeth L. Pedersen, Esquire Panza, Maurer & Maynard, P.A. Suite 905 2400 East Commercial Boulevard Fort Lauderdale, Florida 33308 (eServed) Paul C. Buckley, Esquire Panza, Maurer & Maynard, P.A. Suite 905 2400 East Commercial Boulevard Fort Lauderdale, Florida 33308 (eServed) Angelina Gonzalez, Esquire Panza, Maurer, & Maynard, P.A. Suite 905 2400 East Commercial Boulevard Fort Lauderdale, Florida 33308 (eServed) Christopher Charles Kokoruda, Esquire Eugene Shy, Jr., Esquire Laure E. Wade, Esquire Miami-Dade County West Wing, Suite 109 1611 Northwest 12th Avenue Miami, Florida 33136 (eServed) Abigail Price-Williams, Esquire Miami-Dade County West Wing, Suite 109 1611 Northwest 12th Avenue Miami, Florida 33136 Richard J. Shoop, Agency Clerk Agency for Health Care Administration 2727 Mahan Drive, Mail Stop 3 Tallahassee, Florida 32308 (eServed) Justin Senior, Secretary Agency for Health Care Administration 2727 Mahan Drive, Mail Stop 1 Tallahassee, Florida 32308 (eServed) Stuart Williams, General Counsel Agency for Health Care Administration 2727 Mahan Drive, Mail Stop 3 Tallahassee, Florida 32308 (eServed) Shena L. Grantham, Esquire Agency for Health Care Administration 2727 Mahan Drive, Mail Stop 3 Tallahassee, Florida 32308 (eServed) Thomas M. Hoeler, Esquire Agency for Health Care Administration 2727 Mahan Drive, Mail Stop 3 Tallahassee, Florida 32308 (eServed)
The Issue The issue is whether the application made by Plantation General Hospital for certificate of need number 5736 for an open heart surgery program should be granted.
Findings Of Fact General. Procedural background and description of the parties. Plantation General Hospital filed a letter of intent with the Department of Health and Rehabilitative Services (Department) and the local planning agency noticing its intention to file an application for a certificate of need for an adult open heart surgery program on August 28, 1988. Its application for certificate of need No. 5736 was filed on September 28, 1988. On October 10, 1988, the Department notified Plantation of omissions from its application, which were supplemented in a response filed November 14, 1988, and the Department deemed the application complete on November 16, 1988. The Department issued its notice of intent to deny the application on January 30, 1989, and Plantation requested a hearing on that denial. Florida Medical Center, North Ridge General Hospital and Broward General Hospital intervened in the proceeding. Broward General sought to intervene shortly before the hearing was to begin, and its participation was limited. By notice dated May 31, 1989, the Department announced that it had reconsidered its position and would support Plantation's application. Plantation General Hospital is a 264-bed general medical surgical hospital located in the City of Plantation, Broward County, Florida. It is owned by Hospital Development and Services Corporation which in turn is owned by Healthtrust, Inc. It offers acute care services, except for open heart surgery and burn treatment. It does not propose to perform pediatric open heart surgery. It does offer cardiac catheterization and other non-invasive cardiac services such as EKG, stress testing and other procedures. It also has services which would support an open heart surgery program such as radiology, pathology, anesthesiology, neurology, intensive care, and an emergency room. Plantation received a certificate of need in 1984 to operate a cardiac catheterization laboratory, which opened in April of 1985. It now performs a large number of catheterizations, so that there is pressure to offer an open heart surgery program. Diagnostic catheterizations often reveal that a patient could benefit from open heart surgery. Patients prefer to have surgery done at the hospital where the catheterization is done. Conversely, patients often choose a hospital for catheterization that has the capability to perform open heart surgery. Patients having therapeutic catheterization (angioplasty) must be served at a hospital approved to offer open heart surgery. Therapeutic catheterization itself sometimes triggers the need for immediate heart surgery. Plantation is currently constructing a new wing for its obstetrical patients and proposes to convert part of its present obstetric space for use by the open heart surgery program. The proposed open heart area would have a single operating room, a recovery area, a pump room for the heart-lung oxygenator pump, a sub-sterile storage area and a nurses' station. Existing beds near the proposed open heart area are monitored beds which could be converted to cardiovascular intensive care unit beds at a lower cost than would be the case for wholly new construction. That conversion would not require certificate of need review. The project Plantation General proposes involves the renovation of 2,229 square feet at a projected cost of $267,480. Equipment is projected to cost an additional $300,000. Plantation General anticipates the total project cost will be $599,970. Plantation is not a teaching or research hospital and does not propose to offer teaching or research as part of its open heart surgery program. The hospital does not contend that there is an unmet need for indigent open heart health services which its project would fill. It has historically provided some medical service to Medicaid patients and to the medically indigent. Plantation does not contend, however, that the level of its medical services historically provided to the medically indigent, the extent to which it proposes to provide open heart surgery to underserved population groups, or to Medicaid patients enhances its application. These items are neutral factors which have no impact on the need determination. The Intervenors acknowledged that Plantation would provide minimally appropriate open heart services for the indigent. Plantation General's owner, Healthtrust, Inc., has created a limited partnership to become the new owner of its hospital; Hospital Development and Services Corporation will serve as the general partner, and a number of doctors will be limited partners. The partnership offering is closed, and the approvals, transfers, and other activities created by the closing of the partnership are ongoing. It is anticipated that after receipt of all approvals and transfers the partnership will be deemed to have been in effect as of June 1, 1989. Florida Medical Center is a 459 bed acute hospital located in Fort Lauderdale, Broward County, Florida. It provides a full array of cardiac services, with the exception of heart transplants. It offers cardiac catheterization services, and was the first hospital to offer open heart surgery in Broward County. North Ridge Medical Center presented no testimony about its size or location because its standing had been stipulated. It provides a full array of cardiac services including cardiac catheterization and open heart surgery, but not heart transplants. North Ridge performs the largest volume of open heart surgery procedures in Broward County. Broward General Hospital is the largest facility of the four facilities operated by the North Broward Hospital District, an independent special taxing district. Broward General has 744 acute care beds, and is located in Fort Lauderdale, Florida. It operates an array of cardiac services, including cardiac catheterization, coronary angioplasty, cardiac electrophysiology studies, intra-aortic balloon pumping, and insertion of temporary and permanent pacemakers. Its physical plant consist of one open heart surgery suite, one cardiac catheterization laboratory, and cardiac and progressive care beds. On January 26, 1989, North Broward Hospital District entered into a contract with the Cleveland Clinic Florida which will permit the clinic to provide its cardiac services exclusively at Broward General. Broward General is in the process of expanding its open heart surgery suites from one suite to two, its catheterization labs from one to two, and adding 16 coronary care and 24 progressive care beds. Broward General has 29 staff cardiologists, three of whom are Cleveland Clinic Florida physicians who hold interim privileges. Eight cardiovascular surgeons are on its staff, two of whom are Cleveland Clinic Florida physicians. Statutory Criteria for Evaluating Certificate of Need Applications. Consistency with the state health plan and local health plan. Section 381.705(1)(a), Florida Statutes. The Department is required to consider The need for the health care services and hospices being proposed in relation to the applicable district plan and state health plan, except in emergency circumstances which pose a threat to the public health. Section 381.705(1)(a), Florida Statutes. Plantation General does not contend that there are emergency circumstances in Broward County which threaten the public health and require approval of its application. Prehearing stipulation, paragraph 12. There is no applicable state health plan because the last plan was specifically drafted to cover the period 1985-87. That last plan does contain a goal stating that it is the state's desire to "ensure the appropriate availability of . . . open heart surgery services at a reasonable cost" and the goal is implemented by an objective, number 4.2, which is "to maintain an average of 350 open heart procedures per program in each district through 1990." This objective is predicated upon the assumption that the Department will interpret subparagraph 11 of Rule 10-5.011(1)(f), Florida Administrative Code, infra, to permit a new program if the existing programs, on the average, provide 350 open heart procedures per year. The correctness of that interpretation is discussed in Findings 60 and 61, as well as in the Conclusions of Law. The state health plan also states that applicants proposing cardiac surgery must make those services available to all segments of the population regardless of their ability to pay. Section 381.705(1)(n). The parties stipulated that Plantation has provided medical services to Medicaid patients and to the medically indigent and the extent to which Plantation proposes to provide open heart services is neither an enhancement nor detraction from its application. Currently five facilities in Broward County provide open heart surgery: Broward General, Florida Medical Center, North Ridge, Holy Cross, and Memorial Hospital. There are no facilities which have not yet opened, but which have obtained certificate of need approval for open heart surgery. During the period of July 1987 - June 1988, current providers had the following volume of procedures: Hospital Broward General Number of Procedures 143 Florida Medical Center 382 North Ridge 781 Holy Cross 362 Memorial 478 Total Dividing the number of procedures 2,146 by the five existing providers yeilds an average of 431 procedures per program. The average number of procedures therefore exceeds 350, which is consistent with the provisions of the old state health plan. The local health plan has three criteria which bear upon the application. It requires that the application be consistent with accreditation standards, the hospital must be willing to accept patients from all payor classes, and must comply with the Department's rules. It is stipulated that Plantation General has full accreditation and if approved will obtain accreditation for its open heart surgery program. Plantation accepts Medicare, Medicaid, private pay, and indigent patients. At page 70, its application states that the hospital will provide 2% of its open heart surgery to indigent patients, 67% of its patients will be Medicare patients and 31% will be private pay patients. The hospital has not projected any Medicaid utilization because open heart surgery is typically performed on older patients, and most of those patients will qualify for Medicare rather than Medicaid due to their age. No Medicaid open heart surgery was reported in HRS District X (Broward County) for the year preceding Plantation's application. The application is consistent with the last state health plan and the local health plan. Availability, utilization, geographic accessibility and economic accessibility of facilities in the district. Section 381.705(1)(b), Florida Statutes. Open heart surgery is available to all residents in Broward County within two hours normal driving time; it is therefore geographically accessible. Plantation does not propose to provide a substantial portion of its open heart services to individuals who reside outside of HRS Service District X (Broward County). Plantation does not contend that there is a pool of patients who are denied access to open heart surgery on financial grounds. The increased access to indigents which Plantation would provide is negligible (only about six surgeries per year), and the parties have stipulated that its commitment to provide services to the medically indigent neither enhanced nor detracted from its application. There is no evidence of any waiting list at facilities which provide open heart surgery which would be alleviated by the approval of Plantation General's application. Plantation's argument that service availability has been a problem for some patients at Plantation who need open heart or emergency angioplasty services is rejected. It can provide diagnostic catheterizations but not angioplasty because it lacks open heart surgery certification. With respect to emergency angioplasty, there is an inherent service availability problem when a hospital such as Plantation establishes a catheterization lab, when it is not approved to provide open heart surgery. Angioplasty can have the unfortunate side effect in a small number of cases of triggering an immediate need from open heart surgery. A patient must be immediately transferred, or the open heart surgery must be performed at Plantation, even though it is not approved for that service. Those problems are problems which Plantation knowingly assumed when it began its catheterization lab knowing that it was not approved for open heart surgery. It is not significant that at times of peak demand at Florida Medical Center there may be no beds available for a patient from Plantation who needs open heart surgery. Patients are commonly transferred to Florida Medical Center because it is the nearest hospital to Plantation. More than one half of its patients who were transferred went to Memorial Hospital, however, not Florida Medical Center. There is no evidence that another hospital in Broward County has not had a bed available for a patient from Plantation who needed open heart surgery when Florida Medical Center's unit was full. The issues of efficiency and the extent of utilization raise the question whether there is additional capacity in existing open heart programs which should be used in preference to opening a new program at Plantation General. This is related to the need calculation made in Rule 10-5.011(1)(f)8, Florida Administrative Code, discussed at Finding 60. An efficiency standard of 350 procedures per year is found in Rule 10-5.011(1)(f)11a(I), Florida Administrative Code. That utilization standard is met by all facilities in Broward County except for Broward General, see, Finding 14, supra. It provided only 143 open heart procedures in the year July 1987-June 1988. Broward General has been providing open heart surgery for 16 years and has not yet approached the 350 procedures per year. Broward General is in the process of substantially expanding its cardiac program, through its association with the Cleveland Clinic, and the addition of a second open heart surgery operating room. That expansion could accommodate the volumes Plantation seeks to achieve. Florida Medical Center already has two open heart surgery rooms in operation and is adding a third. Based upon its current volumes and the fact that there is no reasonable likelihood of real future growth in the use rate for open heart surgery, Broward General and Florida Medical Center have existing capacity to serve the demand for surgeries which Plantation projects it would perform during its first two years of operation. North Ridge provides approximately 600 surgeries per year, and utilizes more than one operating room. It also has capacity to contribute to District X (Broward County), especially given the reduced demand in Broward caused by the reduction in Palm Beach County residents coming to Broward County for open heart surgery. Open heart surgery programs in Palm Beach County hospitals have recently come on line, and are providing surgery for Palm Beach County residents who formerly traveled to Broward. There is no evidence that existing open heart surgery programs lack the capacity to sufficiently handle future demand. There is no proof that existing facilities are being over utilized, which is consistent with the prior finding that there is no waiting list at any provider. All candidates for open heart surgery are currently being served. There is little overlap in the medical staffs of Plantation General and Broward General, and Plantation referred no cases to Broward General for open heart surgery in 1987 and only three in 1988, but the additional capacity of Broward General is an important consideration. Part of the reason for the certificate of need process is to control and reduce capital expenditures, and, through that control to indirectly reduce associated labor costs and other ancillary costs which arise from the proliferation of medical services. To the extent that other institutions, especially Broward General, could provide additional surgery through its approved open heart surgery program, restraining an increase in the number of providers will eventually have the effect of directing patients to hospitals with lower utilization. This might not be the case if there were proof that Broward General did not provide quality care, and residents voted with their feet and shunned the program to seek care elsewhere. The parties have stipulated, however, that there are no quality of care problems with any of the existing open heart surgery programs in the county, including Broward General. Efficiency considerations therefore weigh against approval of the Plantation General application. There are no geographic accessibility problems, nor any reason to believe that access to open heart surgery by medically indigent or other underserved populations would be enhanced by the Plantation General proposal. Ability of applicant to provide quality care. Section 381.705(1)(c), Florida Statutes. Plantation General is fully accredited by the Joint Commission on the Accreditation of Hospitals. It provides quality care in the services now available at Plantation General. Plantation intends to implement its open heart surgery program by forming a steering committee to direct its development, with responsibility to assure that the program will comply with all applicable rules and provide high quality services. In an effort to keep the cost of its program low, the Plantation General application has sought to minimize the renovations, expansions, and the equipment attributable to the program. This attempt at cost effectiveness has serious quality of care implications. It will be difficult to provide a quality open heart program operating at a reasonable surgical volume with a single operating room; the application also proposes only to have one oxygenator pump, which is inadequate. Plantation General is likely to encounter difficulty in finding a sufficient number of skilled personnel to provide a quality program. It assessing the adequacy of a single open heart surgery operating room, it is necessary to keep in mind that Plantation will also be providing therapeutic catheterization, or angioplasty, which requires immediate access to open heart surgery as a back up. The volume of angioplasties will affect the hospital's ability to schedule open heart surgery in its single operating room, for angioplasty cannot take place if there is no operating room available for open heart surgery should the patient require it. Plantation projects it will handle between 203 and 271 angioplasties in the first year its open heart surgery program will operate, and between 218 and 291 angioplasties in the second year. The average time for an angioplasty is 3 to 3.5 hours. The open heart surgery team and other staff also must be available on site while angioplasty proceeds in case they are needed. In terms of the staff necessary to perform open heart surgery, the Plantation application indicates that there will be one surgical team. Each team consists of two surgeons, one anesthesiologist, a circulating nurse, a perfusionist to operate the heart-lung oxygenator pump, and two scrub nurses. Plantation did not adequately explain how its staffing projections would enable the open heart surgery service to cover the projected number of surgeries and angioplasties, given the substantial overtime that would have to be incurred if both the open heart and angioplasty programs operate. In order to provide angioplasty coverage, by 1991-92, Plantation's open heart surgery schedule will have to provide 654 to 873 hours of angioplasty back-up coverage, based on a three hour average angioplasty. In turn, this means that 12.5 to 17 hours of such coverage will be necessary each week based upon an average time of 3 hours for each angioplasty. The cardiac surgeons on staff at Plantation will require about 5 1/2 hours to perform open heart surgery without including clean up or set up time. For Plantation's open heart surgery program during its second year of operation, its health care planner, Mr. Nelson, assumes six operations per week during the first three-quarters of the year and eight per week in the last quarter of the year. The normal operating hours for the program will be 8 to 9 hours per day. Thus, for the first three quarters of 1991-92, open heart surgery will occupy the time available in the single operating room at least three days a week. The 4 to 5 angioplasties still must be covered, which will require at least 2 days of the dedicated open heart surgery room's time. By the last quarter of the second year of operation, the open heart surgery suite will be utilized at least 4 days a week for actual surgery, leaving only one day available for the necessary angioplasty back up coverage. Thus, the single operating room proposed will require the hospital surgical staff to regularly work well beyond normal operating hours and will create substantial scheduling problems to accommodate both open heart surgery and angioplasties. What this means is that it is not likely that the configuration for the open heart surgery program proposed by Plantation will work out. Plantation will have to add staff, and probably renovate and equip another operating room. The Intersociety Commission on Heart Disease Resources guidelines recommend that an open heart program have two fully equipped open heart operating rooms, or a designated open heart operating room immediately adjacent to a general surgical suite which also has the necessary equipment in place to provide open heart surgery. Plantation's proposal would violate these guidelines because it has only a single operating room and only enough equipment in to handle one operating room. Plantation's witness, Mr. Webb, did testify that he has worked in two other facilities with only one open heart operating room, that the rooms were not dedicated solely to open heart, and no serious problems were encountered with these programs, but his testimony did not deal with the problems likely to be encountered by Plantation given its projected open heart volumes and likely angioplasty volumes. It may be true that after the open heart surgery program is implemented, additional operating rooms might be added without requiring additional certificate of need review, but it is improper for the institution to low-ball its application projections, on the assumption that it can later make &*an inadequate proposal sufficient by additional capital expenditures for construction or reconfiguration of operating rooms, acquisition of additional equipment or hiring additional staff. Such a piecemeal process defeats the purpose of certificate of need review; it causes a review of selected portions of a program, rather than the program as it will actually operate. Plantation's intention to purchase a single heart-lung oxygenator pump is a serious deficiency. A single pump is likely to suffer occasional mechanical breakdown, and no other pump will be available in an emergency. More importantly, the pump will certainly need routine maintenance, and the heavy schedule of use for the operating suite based upon the projected volumes of open heart and angioplasty cannot be maintained with a single pump. The pump should not be moved from room to room because of the increased risks of contamination caused by movement. With respect to the configuration of the overall unit, the operating suite will have four cardiovascular intensive care unit beds in its open heart surgery area. This is an adequate design, even though most of the cardiovascular intensive care beds will be on the third floor. Plantation General's ability to provide quality care is also questionable based upon the limited partnership it has formed with its doctors. Since the advent of diagnostic related groups (DRGs), the reimbursement to hospitals from federal sources has been limited to a flat fee arrangement. It is in the interest of the hospital to discharge patients as quickly as possible, to maximize the value of that payment. On the other hand, doctors refer, admit and discharge patients from the hospital, hospital administrators do not. Hospitals therefore seek ways to encourage doctors to share the hospital's financial incentives to make a profit within the payment constraints of diagnostic related groups. One way to do this is to have doctors share in the profitability of the hospital. Plantation General has formed a limited partnership with some of its doctors. Those limited partners must be on the active staff of Plantation. The general partner is Hospital Development and Services Corporation, the owner of Plantation General Hospital. The partnership will lease the hospital, and the limited partners will be paid, based on their units of ownership, upon the operating cash flow of the hospitals. If doctors refer more patients to the hospital, the cash flow will be greater and distributions should be larger. This arrangement is fraught with the potential for abuse which is highlighted in the prospectus for the limited partnership, which states: Prospective Payment System. The Social amendments of 1983 established a prospective payment system for Medicare and amended Section 1866(a)(1)(F) of the Social Security Act (the "Act") to specify that hospitals seeking reimbursement under the prospective payment system must enter into agreements with a utilization and quality control peer review organization ("PRO"). Section 1886(f)(2) of the Act specifies that the Secretary of the Department of Health and Human Services may deny payment or require a hospital to take corrective action if a PRO provides the Secretary of the Department of Health and Human Services with documentation that a hospital has attempted to circumvent the prospective payment system through unnecessary admissions or overutilization. Fraud and Abuse. The Act imposes criminal penalties upon persons who make or receive kickbacks, rebates in connection with the Medicare prog anti-fraud and abuse rules prohibit prov others from soliciting, offering, receiving o directly or indirectly, any remuneration in r either making a referral for a Medicare-covere or item or ordering any covered service Violations of these rules may be punished by up to $25,000 or imprisonment for up to five both. In addition, the Medicare a and Program Protection Act of 1987 makes it a civil offense to violate these prohibitions, punishable by exclusion from the Medicare and Medicaid programs. The Limited Partners are to receive cash distributions based upon the available cash flow, if any, of the Partnership generated through the provision of services to patients admitted to the Hospital by physicians, some of whom will be Limited Partners. The Limited Partners therefore may receive a greater amount of distributions if physicians admit a greater number of patients to the Hospital. Individual investors share in the Partnership's cash flow only in proportion to their respective investments in the Partnership and not in accordance with the number of referrals or admissions each makes. Arguably, therefore, the investors' sharing of Partnership profits would not be a prohibited kickback or rebate. The Third Circuit United States Court of Appeals has recently held that the fraud and abuse rules are violated if one purpose (as opposed to a primary or sole purpose) of a payment to a provider is to induce referrals. U.S. versus Greber, 760 F. 2d 68 (1985). The Greber case involved the payment of fees for alleged professional services. Although the Greber holding (i.e., the one purpose test) casts an extremely wide net, its application to the present facts is not clear. Although as stated above, the present arrangement, which involves the allocation of cash flow on the basis of ownership interests held, arguably is not objectionable on these grounds, it is clear that as the number of referrals and admissions increase, revenues and, potentially, available cash flow will increase. It is not inconceivable, therefore, that the Partnership's activities may be held to violate the anti-fraud and abuse rules and subject the Partnership and the Partners to criminal and civil sanctions. The federal government has announced a policy of scrutinizing and evaluating joint ventures among healthcare providers under the fraud and abuse rules, and this area of the law is in a state of rapid development and change. Because of the changing state of the law and the lack of clear authority, it is not possible to give a more precise analysis of the application of the fraud and abuse provisions to the Partnership. The hospital's limited partnership arrangement is also probably contrary to the Code of Ethics of the American College of Physicians. It states: The physician should avoid any business arrangement that might, because of personal gain, influence his decision in patient care. . . In the case of personal conflicts, the moral edict is clear, the physician must avoid any personal commercial conflicts of interest that might compromise his loyalty in treatment of patients. Collusion with nursing homes, pharmacists, or colleagues for personal financial gain is morally reprehensible. For a physician to own shares in a drug company or in a hospital in which he practices does not constitute an unethical behavior of itself, but it does make him vulnerable to the accusation that his actions are influenced by such ownership. The safest course would be to avoid any such potentially compromising situation. Unfortunately, the application here has the direct effect of promoting compromising situations of this type. Moreover, this type of arrangement has been the subject of a "special fraud alert" from the Office of the Inspector General of the U. S. Department of Health and Human Services. One of the factors that the Inspector General looks to is "whether investors are chosen because they are in a position to make referrals." Under the prospectus for the Plantation General limited partnership, only medical staff can become limited partners and "physicians expected to make a large number of referrals may be offered greater investment opportunity in the joint venture than those anticipated to make fewer referrals." (Tr. 520) Moreover, "investors may be required to divest their ownership interest if they cease to practice in the service area, for example, if they move, become disabled, or retire." (Id) While it is understandable that the owner of the hospital may find the limited partnership to be an attractive means to bond physicians to its profit motivation, this set-up creates inherent conflicts of interest which have serious implications for quality of care. This innovation should not be condoned through certificate of need approval. Availability of health manpower and the extent to which the proposed services will be accessible to all residents of the District. Section 381.705(1)(h), Florida Statutes. An applicant must demonstrate that there is adequate health manpower to meet the staffing needs of the project. There is a current nursing shortage nationally, and recent graduates from nursing school do not posses the training necessary to perform in an open heart operating room or critical care after surgery. One of the means Plantation proposes to fill its nursing positions is to use agency nurses, nurses provided by pool services from temporary placement agencies. (Tr. 70, Plantation's proposed finding 31). While such nurses may be valuable in other parts of the hospital, these sort of temporary nurses should not be used in an open heart program. Hospitals in general and open heart surgery programs in particular suffer an acute shortage of qualified nursing staff. Florida Medical Center has found it necessary to establish its own training program because it cannot find adequately trained nurses in Southeast Florida, including Dade, Broward, and Palm Beach Counties. Even North Ridge Hospital, which has a reputation for high staff retention, has a nursing turn-over rate of 20 to 25%. When Delray Hospital in Palm Beach County opened its open heart surgery program its program was under substantial pressure because of its high nursing turn-over rate, its inability to find nurses to cover a 24 hour period of time and nurse "burn out" from excessive overtime. The Broward County nursing shortage contributes substantially to increased health care costs because of the marketing and monetary incentives related to recruiting and retaining nurses. New open heart programs must raid nurses from competing programs, which exerts a upward pressure on nurse salaries. If the Plantation program were to be approved, the existing open heart programs would probably lose nurses, which has an adverse impact on the present system. None of the foregoing should be construed as a reason to deny nurses the economic advantages which arise from a nursing shortage. The issue is whether, taken as a whole, the benefits of the application justifies the upward pressure on health care costs implicit in the approval of an additional program when there is additional capacity in current providers. On balance here, there is inadequate reason to do so. Immediate and long term financial feasibility. Section 381.705(1)(i), Florida Statutes. Many of the elements of financial feasibility are not in dispute. The parties have stipulated that Healthtrust, the parent corporation for Plantation General, has access to $600,000 and will make those funds available if this application is approved. They also stipulated that if one operating room and one pump are adequate and appropriate, the $300,000 in equipment cost shown in Table 3 of the application adequately covers necessary equipment costs; that the 2,229 gross square feet to be renovated, as shown in the line drawing in the application, is adequate for creating the room shown in the drawing,(i.e., one operating room, one recovery room, a pump room, an observation room, a sub-sterile storage area, a scrub area, and a nurses station), and the renovations can be accomplished for $299,970. The parties also stipulated that Plantation General's bad debt projections, policy adjustments and contractual adjustments contained in is pro forma are reasonable if the gross revenue projection is accurate. The salary projections per full- time equivalent found on Table 11 for staff are reasonable but the parties did not agree that the number of positions or the distribution of staff is appropriate. The perfusionist charge is reasonable, and the depreciation cost is correctly stated in the application. The projections of the percentage of utilization by payor class found in the application is reasonable. The areas of contention are the long and short term feasibility of the project based upon Plantation's projected charges, and the accuracy of Plantation's projected expenses. Plantation projects it will perform 184 open heart surgeries in its first year of operation and 312 in the second year. The anticipated average charges are $34,860 in the year beginning July, 1990 and $36,603 in the year beginning July, 1991. These charges were calculated by an outside consultant who has no control over the actual charges which the hospital may establish if the program is implemented. The average charge was predicated upon an examination of Florida Health Care Cost Containment Board data pertaining to the DRGs for open heart surgery reported by the five Broward open heart providers during the third quarter of 1986. The charges ranged from a low of $29,063 at North Ridge to a high of $39,208 at Hollywood Memorial. The projection of average charges is inherently imprecise, but is useful to analyze whether, if Plantation charged patients an amount within the range of the average actual charges within the district, the project would be financially feasible. Plantation does not guarantee that its charges will be no more than the average charges. Its total income will vary based upon the mix of cases and the types of patients it serves. Based on the anticipated charges, Plantation calculated the incremental cost associated with the project. The incremental revenue to the hospital (that is, the revenue generated by the facility with the open heart surgery program as opposed to revenue that will be realized without the program) should be $6,414,240 in the first year and as much as $11,420,136 in the second year. This calculation is necessary in order to determine whether costs would exceed the likely charges, which would clearly affect the financial feasibility of the project. Plantation projected that these costs and deductions from revenue would be $2,919,293 the first year and $5,286,554 in the second year. It is quite likely that Plantation would perform 184 surgeries during the first year and it is reasonable to assume it could achieve the projected 312 surgeries in the second year. Plantation's average charges as set forth in the application may be low. Plantation General's charges are, on balance, about 20% higher than the charges at North Ridge. This would mean that the average charge for Plantation General's first year of operation would be $42,708 rather than $34,860. It might have been better if Plantation General had developed a charge comparison taking into account the cost per adjusted admission by using the case mix index published by the Florida Health Care Cost Containment Board. The failure to use that adjustment is not that significant given the inherent "softness" in the projection of patient charges. Plantation General's projected charges found in Finding 42 are reasonable. What is much more significant is the questionable nature of Plantation General's expenses. The Intervenors have argued that the applicant's cost projections fail to include costs associated with non-revenue producing Departments, such as pharmacy, laboratory, X-ray, nuclear medicine, respiratory therapy, EKG, cardiac catheterization and pathology, dietary and medical records. In essence, the Intervenors claim that the only expenses which are acknowledged by Plantation General are incremental costs from instituting the open heart program, but not the true cost. Plantation General presented the testimony of Mr. Tharpe, who prepared the cost analysis. He testified that he included the cost of supplies, laboratory and all other ancillary areas that provide services to patients by taking the projected income from the open heart surgery program, and comparing it to the projected income of the entire hospital. The actual 1988 hospital revenues were inflated by 5% a year to estimate the hospital's 1990-91 revenue. Open heart revenues would then constitute about 7% of total hospital revenues. He used this percentage to estimate the cost that would be associated with using non-revenue generating departments. This 7% ratio was not applied to fixed overhead cost such as the mortgage costs or the cost of hospital administration, because those costs would be incurred whether or not Plantation operated an open heart program. Neither did he apply the 7% ratio to other cost centers such as the obstetrics or pediatrics departments. In this way, Mr. Tharpe claimed he allocated the cost for all routine and ancillary areas which would provide services to open heart patients. This analysis is unpersuasive. Followed it to its logical conclusion, no new program would ever have to account for its share of the ongoing cost of the hospital imbedded in fixed overhead, such as mortgage, administration, power, or interest charges. It provides a convenient excuse for the hospital to understate expenses and thereby make a new service look more profitable, and therefore more likely to be financially viable in both the short and long terms. A better way to perform cost analysis is to use a step-down cost analysis. This procedure allocates overhead of non-revenue departments to revenue departments to get fully costed figures for delivering services within each hospital department. This step-down cost analysis is a generally accepted accounting procedure and is one required by Medicare. The statistical basis of step-down cost analysis avoids the inherent oversimplification in the assumption that costs are linear, i.e., that all costs and charges have the same relationship to each other within the hospital. Without necessarily accepting Mr. Newman's projection that the fully allocated cost of open heart surgery at Plantation General would be $22,800 per case and not $12,800 per case, the is persuasive that the expense projections of Plantation General are unrealistic, and understated. It is not possible, based on the record made, to determine what the actual expense would be. Due to this failure of proof, it is therefore impossible to determine whether the project is feasible in the long or short term. While open heart surgery is often a very profitable service, in the absence of persuasive evidence on the cost of providing open heart surgery services, it would be inappropriate to assume that the project would be sufficiently profitable that it would be financially feasible in the short or long terms. Needs and circumstances of facilities providing a substantial portion of their services to persons not residing in the service area. Section 381.705(1)(k), Florida Statutes. The prehearing stipulation states that this criteria is an issue, but it really is not. Although other hospitals such as North Ridge and Florida Medical Center provide services to patients from Palm Beach County, the effect of the project on them is not relevant under this criteria. This criteria focuses on the effect of the establishment of a new service at Plantation General on other providers located outside District X, Broward County. There is no proof that it will have any such effect. Probable impact of the proposed project on the cost of providing the service, including the effect on competition. Section 381.705(1)(l), Florida Statutes. The introduction of another provider of open heart surgery will provide the potential for additional price and non-price competition among providers of open heart surgery services. The major purchasers are really not the individuals who have surgery, but the managed care plans, such as HMOs and PPOs, which negotiate with hospitals on behalf of their subscribers. Plantation General currently has contracts with about 25 managed care plans and receives about 30% of its revenue from those plans. This is an indication that the market regards Plantation as a competitive provider. On the other hand, Florida Medical Center, which is its closest competitor geographically, is not actively seeking managed care contracts and has not added any for the last eighteen months. The addition of Plantation General would be consistent with the statutory directive to foster increased competition among health care providers. The Hearing Officer also accepts Dr. Zaretsky's testimony that even if all 184 surgeries which Plantation General projects it will perform during its first year were drawn from Florida Medical Center or, in the alternative, from North Ridge, neither hospital would suffer such a significant loss of revenue which should weigh against the approval of Plantation General's open heart surgery program. The analysis does not end there, however. Plantation General is likely to enter the market for open heart surgery with a substantial market share, a share equal to the number of surgeries it now refers out to existing providers. In that case, Florida Medical Center's number of open heart surgeries will fall below the 350 per year quality standard during both the first and second year of Plantation General's new program. Florida Medical Center will only stay above the 350 surgery standard if it increases its market share substantially, or if Plantation fails to meet its own market share projections. Both are unlikely. Based upon the Department's Rule 10- 5.011(1)(f)11b: No additional open heart surgery programs shall be approved which would reduce the volume of exis heart surgery facilities below 350 o procedures annually for adults . . . . Plantation General's program therefore conflicts with this portion of the Department's rule. Costs and methods of construction. Section 381.705(m), Florida Statutes. Based on the stipulation of the parties, the proposed renovations represent conventional construction methods that are not unreasonable. Neither the cost nor the methods of construction for the renovation of the 2,229 gross square feet have been put in issue. The costs are, however, understated to the extent that they do not provide for adequate construction, i.e., the need for a second operating room. See, Findings 31 and 32, above. Applicants past and proposed provision of services to Medicaid and indigents clients. Section 381.705(1)(n), Florida Statutes. According to the stipulation of the parties, the extent of Plantation General's commitment to make open heart surgery available to Medicaid or medically indigent neither enhances nor detracts from its project. (Stipulation at paragraph 25). Less costly, more efficient alternatives. Section 381.705(2)(a), Florida Statutes. There is no alternative to open heart surgery when it is medically indicated. It is more efficient to deny Plantation General's application and let existing providers absorb whatever increase there may be in the population seeking open heart surgeries. This is especially significant because the proposal would drop Florida Medical Center below the 350 surgeries per year and because Broward General is not currently operating with an existing current volume of 350 adult open heart surgeries per year. See, Rule 10- 5.011(1)(f)11.a.(I), b., Florida Administrative Code. Appropriateness and the efficiency of the existing facilities. Section 381.795(2)(b), Florida Statutes. The existing open heart surgery programs in Broward County have the capacity to perform additional open heart surgeries. See, Findings 20-22 above. The expansion of those facilities, especially in view of Broward General's failure to meet the 350 surgery minimum volume requirement of Rule 10- 5.011(f)11.a.(I), Florida Administrative Code, weighs against approval of the application. The denial of Plantation's application may have an effect on Broward General's number of surgeries, for a limitation on the number of providers should have the effect of directing more surgeries to Broward General. This assumption is inherent in the rule. Alternative to new construction. Section 381.705(2)(c), Florida Statutes. As with the preceding paragraph, the expansion of existing services such as that of Broward General is an alternative to the capital expenditures and related labor costs incident to the opening of an open heart surgery program at Plantation General. Problems facing patients in the absence of this proposal Section 381.705(2)(d), Florida Statutes. There is no evidence of any problem of geographic access, and no evidence that the opening of this program will improve, in any substantial degree, financial access to underserved populations, nor is there evidence of a need for additional programs because the existing programs are at capacity. That, from time to time, Florida Medical Center is unable to admit patients who doctors at Plantation General would like to transfer there does not show that there is a problem obtaining open heart surgery in the service district. Florida Medical Center is not the only other provider of open heart surgery. The problem which patients having catheterization at Plantation General face if they need open heart surgery is inherent in Plantation General's decision to establish the cardiac catheterization program when it did not also have approval for open heart surgery, and cannot be used to bootstrap the present application. Rule Criteria for Evaluating Certificate of Need Applications. Need. Rule 10-5.011(1)(f)2, 8, and 11, Florida Administrative Code. The rule on open heart surgery states, in part that: The department will not normally approve applications for new open heart surgery programs unless the conditions of sub-paragraphs 8. and 11. below, are met. There is no persuasive proof that the situation in Broward County is abnormal, due to an unavailability or inaccessibility to open heart surgery services. There is no over-crowding at existing providers, or some quality of care problem with an existing provider which causes potential patients to shun a program. Neither is there a monopoly in the district which should be broken up to provide consumers of health care choice and generate competition. The only circumstance which might be characterized as abnormal is the recognition that Broward General has had its program for a substantial time but has not yet achieved an annual volume of 200 open heart procedures, the volume which is the ordinary minimum for a quality program. See Rule 10-5.011(1)(f)5d., Florida Administrative Code . There is no testimony that the care offered by Broward General is inadequate, or that it is somehow inaccessible, which accounts for the low number of procedures. The rule provides a mathematical calculation for the need for additional open heart providers in a service area. Rule 10-5.011(1)(f)8., Florida Administrative Code. It calculates a base period: The twelve-month period beginning 14 months prior to the filing of the hospital's letter of intent. This is the period July 1, 1987, through June 30, 1988. During the base period, 2,146 open heart surgeries were performed in Broward County. (See, Finding 14.) The population of the county at the mid-point of this period, January 1, 1988, was 1,198,243 persons. This results in a use rate in Broward County of 179.1 open heart surgeries per 100,000 population. Based upon an anticipated opening of services in July 1990, the county population at that time is projected to be 1,247,226 persons. Multiplying the use rate by the projected population yields a need for 2,233 open heart surgeries in Broward County in 1990. This number is then divided by 350 procedures per facility to assess the number of facilities needed; there is a need for 6.4 open heart programs and there are presently five open heart providers. According to the formula in sub- subparagraph 8 one additional provider may be approved. This need assessment, however, is not controlling. Other portions of the rule place limits on the need for additional programs, even when the need calculation in subparagraph 8 supports adding a provider. Rule 10-5.011(1)(f)11, Florida Administrative Code, states in pertinent part: There shall be no additional open heart surgery programs established unless: The service volume of each existing and approved open heart surgery program within the service area is operating at and is expected to continue to operate at a minimum of 350 adult open heart surgery cases per year..., b. No additional open heart surgery program shall be approved which would reduce the volume of open heart surgery facilities below 350 open heart procedures annually.... The text of the rule requires "each" provider to operate at 350 cases per year before another program is approved. There is no mention of any averaging of the total number of cases under sub-subparagraph 11a in determining whether the requirement is met. Averaging the number of open heart surgeries in each program makes little sense in the context of the entire rule. There would be no need for both sub-subparagraphs 11a(I) and b, for if there is a need in the district, each existing and approved open heart surgery program in a district must be handling 350 procedures on average. The 350 surgery standard in the rule was adopted based upon the National Health Planning Guidelines issued in March, 1978. These guidelines approved recommendations of the Intersociety Commission on Heath Disease Resources, which state: In order to prevent duplication of costly resources which are not fully utilized, the opening of new units should be contingent upon existing units operating and continuing to operate at a level of least 350 procedures per year. Those Guidelines also state that additional open heart surgery services should not be permitted unless existing services are operating at, and will continue to operate at a minimum of 350 surgeries per year. Sub-paragraph 11 of the rule is clear; each provider must operate at a level of 350 cases annually before another applicant will be approved. Plantation General's application fails in two respects: Broward General is currently providing less that 350 surgeries per year, and if Plantation is approved, both Broward General and Florida Medical Center will fall below the 350 standard. Plantation General has failed to prove that any circumstances at Broward General are so abnormal that the "not normal" fail-safe provision of Rule 10-5.011(f)2., Florida Administrative Code, should come into play. Mr. Nelson, the health planner for Plantation General attempted to show that the opening of the program at Plantation should not cause the annual number of surgeries done at Florida Medical Center to fall below 350. That testimony was not as credible as the testimony of Ms. Lamb, or especially the testimony of Dr. Luke. Mr. Nelson's analysis assumed that the open heart surgery use rate would continue to increase at the same rate that it had increased in the past. This is not a reasonable assumption. It is likely that the use rate in Broward County will decline, not increase, for a number of reasons, including the prevention of heart disease through wellness trends, the increased use of alternative therapy such as angioplasties, and the affect that utilization reviews and cost containment measures have had on the number of open heart surgery. Moreover, Broward County has a higher use rate than the state average, which is also substantially higher than the use rate in Palm Beach County, although the populations of both counties are similar. The primary reason for Broward's high use rate has been that until recently Palm Beach County residents had to come to Broward County hospitals for open heart surgery. The opening of open heart surgery programs in Palm Beach County will continue to depress the Broward County use rate. Taken as a whole, the need methodology found in the rule, consisting of the need determination in Rule 10-5.011(1)(f)8, and the further cutoff provisions found in sub-subparagraphs 11a and b show that there is no need for an additional open heart surgery program in Broward County. Service availability. Rule 10-5.011(1)(f)3, Florida Administrative Code. By use of a single operating room, Plantation General's proposed program is not capable of providing 500 open heart operations per year, as required by Rule 10-5.011(1)(f)3d, Florida Administrative Code. Theoretically the program could serve two cases per day, five days a week for 52 weeks a year, and thus handle a total of 520 cases. This ignores, however, the necessity to leave the single operating room available for open heart backup when angioplasty procedures are going on. The hospital projects and should achieve a substantial volume of angioplasty if the open heart program is approved. (See, Finding 26, above.) Even Plantation General, in its proposed recommended order, acknowledged "that it is most unlikely that Plantation could actually do 500 cases per year in a one operating room open heart program." (Proposed Finding 66.) Plantation General argues, however, that it is only necessary that the room have "the capacity to do that many [500] cases." Id. If Plantation had proposed to use the room solely for open heart surgeries, without also having to make its operating room available for its projected volume of angioplasty, Plantation General's argument might prevail. Because Plantation General does propose a substantial volume of angioplasties, the backup time necessary for those cases must be taken into account. The proposal it has made does not meet the rule requirement that its program be capable of providing 500 surgeries per year. Service accessibility. Rule 10-5.011(1)(f)4, Florida Administrative Code. The rule requires that "open heart surgery shall be available to all person in need." Rule 10-5.011(1)(f)4d, Florida Administrative Code. The level of commitment to indigent care in Plantation General's application neither enhances nor detracts from its application. This has been stipulated by all parties. Travel time for surgery is not a problem in Broward County, and the service would meet the requirement for hours of operation. Rule 10- 5.011(1)(f)4a, and b, Florida Administrative Code. The single operating room with a single heart-lung oxygenator pump means that emergency procedures cannot be done within a maximum of 2 hours waiting time. An open heart operation takes more than 5 hours, an angioplasty takes 3 hours or more. Once the operating suite is committed to one of those procedures, no emergency procedure can be performed within 2 hours. The proposal fails to meet Rule 10-5.011(1)(f)4c, Florida Administrative Code. Service quality. Rule 10-5.011(1)(f)5, Florida Administrative Code. The application meets the requirements of Rule 10-5.011(1)(f)5a that the hospital be accredited by the Joint Commission on the Accreditation of Hospitals. It has not met the requirement of Rule 10-5.011(1)(f)5b that "any applicant proposing to establish an open heart surgery program must document that adequate numbers of properly trained personnel will be available to perform in the following capacities...." The application only states that the necessary personnel will be available (Application, at 21-22), but does not reveal how Plantation General proposes to staff its program, especially with experienced nurses. Similarly, another subportion of the rule on service quality requires that "any hospital proposing or operating an open heart surgical program shall have a written plan specifying projected caseloads and projected space, support, equipment and supply needs for the open heart surgical procedures and patients." Rule 10-5.011(1)(f)5e, Florida Administrative Code. No such plan was included in its application; instead Planation proposes to draft its plan following the approval of its certificate of need. (Application at 22). This is improper, for the adequacy of the plan cannot be analyzed as the application is being considered. This is especially significant in terms of a plan for operating the program with a single heart-lung oxygenator pump. How the hospital expects to operate the program with no second pump for emergencies, or for use while the first pump is under ordinary maintenance is a significant deficiency. The application therefore fails to meet this portion of the rule. Cost effectiveness. Rule 10-5.011(1)(f)6, Florida Administrative Code. It is likely that the charges made by Plantation General will be in line with those from other competitive providers of open heart surgery in the Broward County area. Market forces would prevent Plantation from charging more than the going rate. There is insufficient evidence, based on Plantation General's present charge structure, to find that its charges would be appreciably below the cost of other providers. There is no undertaking in its application to charge no more than the $34,860 per case found in Table 8 of its application. (Application page 71). The application meets Rule 10- 5.011(1)(f)6b, Florida Administrative Code. Consistency with state and local health plans. Rule 10-5.011(1)(f)7, Florida Administrative Code. The plan is consistent with the state and local health plans. See, Finding 16, above.
Recommendation It is RECOMMENDED that the application of Plantation General for certificate of need No. 5736 to implement an open heart surgery program in HRS District X be denied. DONE AND ENTERED in Tallahassee, Leon County, Florida, this 29th day of June, 1990. WILLIAM R. DORSEY, JR. 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 29th day of June, 1990. APPENDIX Rulings on findings proposed by the Petitioner, Plantation General Hospital. 1. Adopted in Finding of Fact 1. 2. Adopted in Finding of Fact 3. 3. Adopted in Finding of Fact 4. 4. Adopted in Finding of Fact 2. 5. Adopted in Finding of Fact 7. 6. Adopted in Finding of Fact 8. 7. Adopted in Finding of Fact 9. 8. Adopted in Finding of Fact 12. 9. Adopted in Finding of Fact 14, with a correction for the number of procedures at Memorial Hospital. To the extent necessary, adopted in Findings of Fact 12 and 13. Adopted in Finding of Fact 15. Adopted in Finding of Fact 67. Adopted in Finding of Fact 15. Rejected as subordinate to other findings. Adopted in Finding of Fact 16. Adopted in Finding of Fact 17. Rejected for the reasons stated in Findings of Fact 18 and 19. Discussed in Findings of Fact 20 through 23. Rejected because there is no service availability problem and the economic access of Plantation would add as minimal. Generally adopted in Finding of Fact 24. Rejected as argument. Rejected for the reasons stated in Finding of Fact 32. Rejected, the proposal to have only one heart-lung pump is a serious deficiency, especially due to the failure to have developed as part of the application the written plan required by Rule 10-5.011(1)(f)5d, Florida Administrative Code. To the extent necessary, discussed in Finding of Fact 34. Rejected for the reasons stated in Findings of Fact 37 and 38. Rejected for the reasons stated in Findings of Fact 37 and 38. The testimony of Ms. Levine that staff could be hired without substantial difficulty is rejected. Rejected as unnecessary. Rejected as unnecessary, the prior application is not at issue. It is true and no competing service would be required to shut down its operations do to the inability to hire skilled nurses. Otherwise rejected for the reasons found in Findings of Fact 37 and 38. Rejected, the salaries are reasonable, but the new program is likely to raid other programs and cause an upward pressure on salaries as explained in Finding of Fact 39. To the extent necessary, discussed in Finding of Fact 37, especially as related to hiring recent nursing graduates or using agency nurses. Rejected as unnecessary, see Finding of Fact 39. Adopted in Finding of Fact 15. Rejected as unnecessary. Sentences 1 and 2 adopted in Finding of Fact 40. Dr. Lukes' testimony with respect to intending to spend 5 million dollars on the open heart program is not persuasive. Adopted in Finding of Fact 40. (As amended), generally adopted in Findings of Fact 42 and 44. The 184 surgeries is adopted in Finding of Fact 42; Plantation's evidence with respect to likely charges is accepted in Findings of Fact 42 and 46. The Intervenors' argument has been accepted, see Findings of Fact 47 and 48. Rejected for the reasons stated in Finding of Fact 48. Rejected as unnecessary. Rejected for the reasons stated in Finding of Fact 48. Rejected for the reasons stated in Finding of Fact 48. Discussed in Finding of Fact 48, but rejected. Rejected as unnecessary. Rejected because the question is not whether the intervenors proved that the proposed program is not financially feasible. The question is whether Plantation General proved that the program is financially feasible, and its proof is not persuasive. Rejected for the reasons stated in Finding of Fact 49. Accepted in Finding of Fact 50. Adopted in Finding of Fact 50. Rejected as unnecessary. Adopted in Finding of Fact 50. Generally accepted in Finding of Fact 50. Rejected; the testimony of Mr. Knapp has not been accepted on Doctor Zaretsky's cost analysis. Rejected, see Finding of Fact 35. Rejected as unnecessary. Adopted in Finding of Fact 52. To the extent necessary, covered in Finding of Fact 53. Sentence 1, adopted in Finding of Fact 54. The remainder rejected as unnecessary. Discussed in Finding of Fact 54. Discussed in Findings of Fact 20 through 22 and 55 and 56. Adopted in Finding of Fact 57. Rejected because there is insufficient proof patients would face serious problems in obtaining open heart surgery if Plantation's program is not approved. See Finding of Fact 19. Not an issue. Rejected as unnecessary. Rejected as unnecessary. Rejected for the reasons stated in Finding of Fact 64. Adopted in Finding of Fact 17. Rejected for the reasons stated in Finding of Fact 66. Rejected as cumulative. Rejected for the reasons stated in Finding of Fact 67, although Plantation would exceed 200 cases per year within 3 years of instituting service. Rejected, see Findings of Fact 20-23. Adopted as modified in Finding of Fact 68. Adopted in Finding of Fact 69. Adopted in Finding of Fact 60. Adopted in Finding of Fact 14, final sentence rejected as unnecessary. The averaging technique is rejected, see Finding of Fact 61. Rejected for the reasons stated in Finding of Fact It is not clear what factors were used by Hollywood Memorial to justify its open heart program. It is a major indigent care provider, which Plantation General is not. Rejected, see Findings of Fact 56 and 63. Rejected for the reasons stated in Finding of Fact 63. Rejected for the reasons stated in Finding of Fact Dr. Luke's testimony about the reduction in use rates was persuasive. Rejected as unnecessary. Rejected, it is not likely that the use rate in Broward County will continue to grow, or that a use rate for western Broward County should be separately calculated or analyzed. Rejected for the reasons stated in Finding of Fact 63. Rejected for the reasons stated in Finding of Fact 63. Rejected because the drop below 350 is significant according to the text of the rule and is not entitled to more than "slight" weight; other factors also weigh against the application. Rejected as unnecessary. Rulings of findings proposed by North Ridge General Hospital. 1-3. Rejected as unnecessary. Adopted in Finding of Fact 1. Adopted in Finding of Fact 1. Adopted in Finding of Fact 1. Adopted throughout the Findings of Fact. Adopted in the preliminary statement. Rejected as unnecessary. Rejected as a restatement of the rule. Rejected as a restatement of the rule. Rejected as a restatement of the rule. Rejected as a conclusion of law. Adopted in Finding of Fact 60. Adopted in Finding of Fact 60. Rejected as a statement of argument. Rejected as a statement of argument.' Rejected as unnecessary, see also Finding of Fact 63. Rejected as unnecessary. Rejected as inconsistent with the Department's current view of law. Rejected as unnecessary. Adopted in Finding of Fact 62. Rejected as unnecessary. The projection of 184 cases is adopted in Finding of Fact 42. The use rate is discussed in Finding of Fact 63. Rejected as unnecessary. Rejected as unnecessary, see Finding of Fact 63. The testimony of Dr. Luke on the point was the most persuasive. Rejected as unnecessary. Rejected, see Finding of Fact 60. Rejected as unnecessary. Discussed in Finding of Fact 63. 31-56. Generally discussed in Finding of Fact 60 as it relates to the proper calculation of need under the rule. See also Finding of Fact 51 concerning Florida Medical Center falling below 350 surgeries. Discussed in Finding of Fact 15. Discussed in Finding of Fact 12. Rejected as unnecessary. Discussed in Finding of Fact 64. Generally adopted in Findings of Fact 20 through 22. Adopted in Findings of Fact 10 and 23. Adopted in Finding of Fact 21. Adopted in Finding of Fact 22. Adopted in Finding of Fact 23. Stipulated by the parties. Adopted in Finding of Fact 17. The quality of care was stipulated by the parties. Rejected as unnecessary. Rejected as unnecessary. Rejected as unnecessary. Rejected as unnecessary. Rejected as unnecessary. Adopted in Finding of Fact 3. 75-90. Rejected as unnecessary. The question of demand is resolved in Finding of Fact 19. While cardiologists at the hospital may wish to provide angioplasty, which requires open heart surgery, that desire is not relevant. See Finding of Fact 18. Similarly, the testimony of Dr. Honderick that a facility which offers cardiac catheterization should have the ability to render surgical intervention in case of a complication is not relevant. Plantation General knew when it establishes a catheterization lab, without open heart approval, that such problems would occur. The hospital cannot bootstrap these problems into a justification for open heart surgery. They were problems that the hospital knowingly assumed. 91-98. Addressed in Findings of Fact 26 through 31. 99 Adopted in Finding of Fact 32. 100. Rejected as unnecessary. 101. Adopted in Finding of Fact 33. 102. Adopted in Finding of Fact 25. 103. Adopted in Finding of Fact 67. 104. Rejected as unnecessary. 105. Addressed in Finding of Fact 66. 106. Addressed in Findings of Fact 37 and 38. 107. Addressed in Finding of Fact 31. 108-111. Adopted in Finding of Fact 38. 112. Adopted as modified in Finding of Fact 37. 113. Adopted as modified in Finding of Fact 37. 114. Adopted in Finding of Fact 42 and 43. 115. Adopted in Finding of Fact 42 and 43. 116. Adopted in Finding of Fact 44. 117. Adopted in Finding of Fact 44. 118. Rejected as unnecessary. 119. Rejected as unnecessary. 120. Adopted as modified in Finding of Fact 46. 121-131. Discussed in Findings of Fact 46 and 50. 132. Adopted in Finding of Fact 59. 133. Discussed in Finding of Fact 59. 134. Discussed in Finding of Fact 59. 135. Rejected as unnecessary. 136. Addressed in Finding of Fact 59. Rulings on findings proposed by Florida Medical Center. Covered in preliminary statement. Covered in Finding of Fact 12. Covered in Finding of Fact 1 Discussed in Finding of Fact 12. Rejected as unnecessary. Adopted in Findings of Fact 17 and 18. To the extent appropriate, discussed in Findings of Fact 19 and 21. Covered in Finding of Fact 19. Adopted in Finding of Fact 23. 10-13. Discussed, to the extent appropriate, in Finding of Fact 46. Rejected because although true, the magnitude of the income resulting from those DRGs was not explained sufficiently. The matter of charges is more significant in determining financial feasibility than efficiency here. Implicit in Findings of Fact 44 and 46. Implicit in Finding of Fact 23. Adopted in Finding of Fact 17. Rejected as unnecessary. Adopted in Finding of Fact 17, but the second sentence is rejected as unnecessary in view of the stipulation. Generally adopted in Findings of Fact 14, 32 and 64. Adopted in Findings of Fact 18 and 23. Implicit in Finding of Fact 23. Adopted in Finding of Fact 23. Adopted in Findings of Fact 6 and 35. Adopted in Finding of Fact 35. Adopted in Finding of Fact 35. Adopted in Finding of Fact 33. Rejected as unnecessary. Adopted in Findings of Fact 37 and 38. Adopted in Finding of Fact 48. Adopted in Finding of Fact 42. Rejected as unnecessary. The legal expense would be minimal. Adopted in Finding of Fact 48. Generally adopted in Finding of Fact 48. Adopted in Finding of Fact 48. Discussed in Finding of Fact 48. Adopted in Finding of Fact 48. Rejected as unnecessary. Adopted in Finding of Fact 51. Subordinate to Finding of Fact 63. Adopted in Finding of Fact 51. Rejected as unnecessary. Rejected as unnecessary. Rejected as unnecessary. It is stipulated that Florida Medical Center has standing. Rejected as unnecessary. Adopted in Finding of Fact 17. Addressed in Finding of Fact 58. Adopted in Finding of Fact 49. Adopted in Finding of Fact 49. Adopted in Finding of Fact 49. Discussed in Finding of Fact 59. Discussed in Finding of Fact 64. Adopted in Finding of Fact 17. Adopted in Finding of Fact 67. Adopted in Finding of Fact 67. Discussed in Finding of Fact 60. The division by 350 is implicit in the structure of the rule to determine the number of programs. The use rate proposed by Mr. Nelson has been rejected. The appropriate calculation is found at Finding of Fact 60. Adopted in Finding of Fact 63. Adopted in Finding of Fact 63. Adopted in Finding of Fact 63. Adopted in Finding of Fact 60. Adopted in Finding of Fact 61. Rejected as irrelevant. Adopted in Findings of Fact 60 and 63. COPIES FURNISHED: Jay Adams, Esquire 1519 Big Sky Way Tallahassee, FL 32301 Richard C. Bellak, Esquire FOWLER, WHITE, GILLEN, BOGGS, VILLAREAL & BANKER, P.A. 101 North Monroe Street Suite 910 Tallahassee, FL 32301 Richard A. Patterson, Esquire Department of Health and Rehabilitative Services 2727 Mahan Drive Tallahassee, FL 32308 Eric B. Tilton, Esquire 214B East Virginia Street Tallahassee, FL 32301 Michael J. Cherniga, Esquire ROBERTS, BAGGETT, LAFACE & RICHARD 101 East College Avenue Post Office Drawer 1838 Tallahassee, FL 32302 Jack M. Skelding, Esquire PARKER, SKELDING, LABASKY & CORRY 318 North Monroe Street Post Office Box 669 Tallahassee, FL 32302 Sam Power, Agency Clerk Department of Health and Rehabilitative Services 1323 Winewood Boulevard Tallahassee, FL 32399-0700 John Miller, General Counsel Department of Health and Rehabilitative Services 1323 Winewood Boulevard Tallahassee, FL 32399-0700
The Issue Whether there is a need for a new Pediatric Heart Transplant (PHT) program in Organ Transplant Service Area (OTSA) 3, and, if so, whether Certificate of Need (CON) Application No. 10518, filed by Orlando Health, Inc., d/b/a Arnold Palmer Medical Center (APMC), to establish a PHT program, satisfies the applicable statutory and rule review criteria for award of a CON to establish a PHT program at the Arnold Palmer Hospital for Children (APH).
Findings Of Fact Based upon the credibility of the witnesses and evidence presented at the final hearing and on the entire record of this proceeding, the following Findings of Fact are made: The Parties Orlando Health, Inc., d/b/a Arnold Palmer Medical Center OH was originally formed by two community physicians 100 years ago as a 20-bed hospital in downtown Orlando. Today, OH is a large not-for-profit healthcare system with more than 3,300 beds serving Central Florida and beyond. Comprised of nine wholly-owned or affiliated hospitals and rehabilitation centers, OH serves as the region’s only Level One Trauma Center and Pediatric Trauma Center, and is a statutory teaching hospital system offering graduate medical education and clinical research in both specialty and community hospitals. OH has been actively involved in clinical research since the beginning of its graduate medical education and residency programs in the 1950s. OH’s primary service area includes approximately 2.2 million people, with a greater service area of Central Florida, which encompasses more than three million people today and is rapidly growing. OH experiences about 100,000 inpatient admissions and 1.5 million ambulatory visits each year. OH has 24,000 employees, including 2,000 physicians and 8,000 nurses. OH has long been recognized as the safety net provider for the Central Florida region. APMC is comprised of two hospitals, APH and Winnie Palmer Hospital for Women and Babies (WPH). APMC was founded on the premise that the close integration of specialty inpatient pediatrics and obstetrics services improves quality and outcomes. APMC is the single largest acute care facility in the nation dedicated to women and children. APH has achieved national ranking as a Top 50 Children’s Hospital by U.S. News and World Report, based on quality data metrics that focus on process, structure, and outcomes, for the past eight consecutive years for key programs, including pediatric cardiology. Since 2015, APH has been the only pediatric hospital in Florida to receive the Top Hospital award from Leapfrog, an achievement based on evaluation of numerous quality metrics, including outcomes data over time. APH has been a Magnet-designated facility since 2013. APH’s primary service area covers 25 counties. APH’s pediatric trauma center and dedicated pediatric emergency department receive approximately 55,000 visits per year. The Heart Center at APH (the Heart Center) is nationally ranked among the top pediatric cardiac programs in the country for its outcomes in complex congenital heart surgery. Dr. William DeCampli, APH’s chief of Pediatric Cardiac Surgery, and Dr. David Nykanen, APH’s chief of Cardiology, serve as the medical directors of the Heart Center. Dr. DeCampli and Dr. Nykanen will continue to serve as the medical directors of the Heart Center following implementation of APH’s proposed PHT program. The Heart Center is on the third floor of APH in the “corner pocket” of the hospital. It is intentionally designed so that the pediatric cardiovascular intensive care unit (CVICU), cardiovascular operating suite, and cardiac catheterization suite are in close proximity to each other, to promote the integration of care between the units and to ensure the safe transition of pediatric patients. APH’s 20-bed CVICU is more advanced than the intensive care units of most pediatric cardiac programs across the country. APH established a freestanding dedicated CVICU in January 2005, and was one of the first in the nation to do so. APH CVICU clinical staff are dedicated to the CVICU and specifically trained to care for the special needs of pediatric cardiac patients. Unlike many other pediatric cardiac programs in the country, APH’s CVICU has 24/7/365 attending physician in- house coverage which leads to better access for patients and better outcomes. APH’s commitment to this continuous on-site physician presence reflects a standard that all pediatric cardiac programs aspire to, but few have achieved. APH has three employed pediatric cardiac anesthesiologists providing 24/7/365 in-house coverage, rare among pediatric cardiac programs. The specialty of pediatric cardiac anesthesia is distinct from the specialty of general pediatric anesthesia. Pediatric cardiac anesthesiologists specialize in the complex defects and anatomy of the cardiovascular system in patients with congenital heart disease (CHD) for whom anesthesia and sedation poses heightened risk. Pediatric cardiac anesthesiologists provide anesthesia for cardiac procedures as well as for any non-cardiac procedures the CHD patient may require. APH is the highest ranked program in Florida in outcomes for the most complex category of congenital heart surgery. In 2007, the Heart Center’s surgical team published more than three times the number of investigational papers than the state’s leading academic pediatric cardiac surgery program. Nationally, APH has the highest neonate population with the lowest mortality rate. APH has a state-of-the-art echocardiography (echo) program with the entire infrastructure necessary for PHT. Echo is essential at every stage of diagnosing, treating, and evaluating the response to therapies and interventions in pediatric cardiac care, including PHT. Dr. Riddle, an echocardiologist at APH, has extensive experience in diagnosing and evaluating complex congenital heart anomalies, including patients requiring PHT. APH’s echo program is comprised of multiple components: the facility, the equipment, the physicians, the sonographers, the protocols, and the quality. APH’s echo lab is the “mission control center” for the program, with four large screens that enable clinicians to watch and discuss echos as they are being performed, and to review echos in meticulous detail, sometimes spending hours looking at complex echos. APH’s culture is the tremendous differentiator among pediatric cardiac programs. APH’s goal is to know every aspect of a patient’s care and anatomy, and APH clinicians, with the full support of administration, spend significant time doing that. All APH sonographers are certified and APH has weekly didactic sessions for sonographers, along with quality improvement and quality review sessions. All APH echo readers are dedicated echo physicians, with extensive training, who also are involved in constant didactic lectures and immersion in quality improvement measures. APH’s director of echo, Dr. Craig Fleishman, is nationally recognized and serves as the chair of the Scientific Sessions of the American Society of Echocardiography, the national governing and education body for echo. APH is the only pediatric heart program in Central Florida to achieve accreditation from the American Society of Echocardiography in transthoracic, transesophageal, and fetal echo. APH is highly skilled at diagnosing complex congenital heart anomalies, including those in fetuses when the patient’s heart may be no larger than a grape. APH’s echo surgical correlations, in which the echo gradients are compared to actual measurements during surgery, are “phenomenal.” Similar correlations occur in coordination with the APH cardiac catheterization lab. APH has used printed 3D heart modeling, but printed 3D modeling includes only data obtained from a computerized tomography (CT) scan or magnetic resonance imaging (MRI) , and does not show all of the finer complex structures of the heart and valves; thus, it has limited utility in evaluating treatment options for complex CHD. However, APH is implementing a virtual reality 3D modeling system that combines data from echo, CT, and MRI data, and even surgical images, to create a complete virtual 3D model of the heart that includes the fine details, including valve attachments. Unlike a printed 3D model, which once cut open, no longer represents the heart and cannot be put back together for further evaluation, virtual 3D modeling enables clinicians to evaluate multiple potential interventions and observe responses and to repeat as many times as may be necessary, using the same model. APMC has a large maternal fetal medicine program staffed by seven employed perinatologists specializing in high- risk pregnancies. The program is expected to have 10 employed perinatologists by the end of 2018. Agency for Health Care Administration AHCA is the state health-planning agency charged with administration of the CON program as set forth in sections 408.31-408.0455, Florida Statutes. Context of the Arnold Palmer Application Approximately one in 100 babies are born with CHD. The majority of these disorders can be treated, at least initially, with reconstructive surgery. The earlier a congenital heart defect can be repaired, the better the chances the patient has to not only survive but to grow normally in infancy and thrive. However, some children with CHD have a severity level such that current methods of reconstructive surgery are not adequate to produce what might be called a cure. Treatment of such cases is called “palliation.” As a result of medical and surgical advances in palliation, children are now surviving complex CHD in numbers that previously were not thought possible. However, in the most severe cases, the palliation is fairly short-term. Many children who receive palliative surgery ultimately will progress to end-stage heart failure despite having had multiple operations and extensive medical management, as their heart will eventually begin to have decreased function due to the underlying anomaly. Prior to the advances in palliative care, many children born with complex CHD simply did not survive long enough to receive a PHT. Today, the number of children who face heart failure later in life, rather than earlier, is increasing. Successful palliation has resulted in significantly more CHD patients requiring PHT at age 10, 15, or 20, rather than as infants or young children. Another category of children requiring PHT are those who do not have CHD, but who have an acquired problem known as cardiomyopathy. Children with cardiomyopathy may present in heart failure at any time and at any age, having gone from a state of completely normal function--exercising, growing, doing well in school--to within two or three days having end stage heart failure. About half of these children recover with medication and intensive care--which APH does extremely well on a regular basis. But those who do not recover will require a PHT. Patients with CHD tend to be more medically and surgically complex and higher risk than patients with cardiomyopathy with respect to PHT. On a percentage basis, and because of advancements in palliation, there are more CHD patients and fewer cardiomyopathies in the teenage cohort requiring PHT today than there were 10 years ago. Pursuant to Florida Administrative Code Rule 59C- 1.044, AHCA requires applicants to obtain separate CONs for the establishment of each adult or pediatric organ transplantation program, including: heart, kidney, liver, bone marrow, lung, lung and heart, pancreas and islet cells, and intestine transplantations. “Transplantation” is “the surgical grafting or implanting in its entirety or in part one or more tissues or organs taken from another person.” Fla. Admin. Code R. 59A- 3.065. Heart transplantation is defined by rule 59C-1.002(41) as a “tertiary health service,” meaning “a health service which, due to its high level of intensity, complexity, specialized or limited applicability, and cost, should be limited to, and concentrated in, a limited number of hospitals to ensure the quality, availability, and cost effectiveness of such service.” AHCA rules define a “pediatric patient” as “a patient under the age of 15 years.” Fla. Admin. Code R. 59C- 1.044(2)(c). AHCA rules divide Florida into four OTSAs, corresponding generally with the northern, western central, eastern central, and southern regions of the state. Fla. Admin. Code R. 59C-1.044(2)(f). If approved, the proposed program at issue in this proceeding would be located in OTSA 3, which is comprised of Brevard, Indian River, Lake, Martin, Okeechobee, Orange, Osceola, Seminole, and Volusia Counties. Currently, there are no providers of PHT in OSTA 3. However, that does not mean that OTSA 3 residents lack access to these transplant services. In fact, the unrefuted evidence demonstrated that pediatric residents of OTSA 3 have received transplants at Shands, by way of example. At hearing, APMC agreed that OTSA 3 residents are accessing these services at existing providers in Florida, with APH referring a few of these patients on average to Shands every year for these services. The incidence of PHT in Florida, as compared to other types of solid organ transplants, is relatively small. The chart below sets forth the number of pediatric (aged 0-14) heart transplant discharges by year for the four existing Florida PHT programs during the reporting period from June 30, 2013, to June 30, 2017: HOSPITAL HEART TRANSPLANT FY 12/13 FY 13/14 FY 14/15 FY 15/16 FY 16/17 UF Health Shands Hospital 13 4 17 12 9 John Hopkins All Children’s Hospital 6 13 10 9 7 Memorial Regional Hospital 5 3 4 11 4 Jackson Memorial Hospital 1 2 1 3 1 TOTAL 25 22 32 35 21 The above historic data demonstrates that the incidence of PHT statewide is relatively rare and does fluctuate from program to program and from year to year. As seen above, only 21 PHTs were performed statewide during the 12-month period July 1, 2016, to June 30, 2017, for an average program volume of only 5.25 cases for the four existing programs. There are four existing and one CON-approved PHT programs in Florida. This is more than every state in the country except California, which also has five programs but more than double the pediatric population of Florida. And three of the California programs have a volume of five per year or less. Texas, another geographically large state with over 1.4 million more children than Florida, has only two centers. The number of PHTs is also impacted by a national shortage in donor hearts. Unfortunately, there are not enough donor hearts to meet the demand for pediatric heart patients in the United States. While the total number of PHTs in the United States increased between 2012 and 2015, it has more recently declined from 2015 to 2017. Based on population, the number of PHTs in Florida is higher than the national average. Thus, while fortunately its incidence is rare, Florida residents in need of PHT are currently able to access this life-saving procedure. Arnold Palmer’s “Readiness” to Implement a PHT Program APH has over 14 years of experience performing complex congenital heart surgery and has met the majority of the demand for complex pediatric cardiac surgery in Central Florida for the past 25 years. In that time, APH has performed thousands of heart operations and achieved extraordinary outcomes, which are most dramatically apparent in the highest acuity levels. APH is the largest pediatric cardiac surgical program in Central Florida. Because WPH and APH are regional centers of excellence for neonatal and pediatric cardiac care, APH has a large proportion of complex, single-ventricle patients in its existing pediatric cardiac program. In turn, approximately 70 percent of the patients who ultimately require PHT have complex, single-ventricle physiologies. In addition, APH is a regional referral center for patients presenting with cardiomyopathies that may require PHT services. APH voluntarily participates in the Society for Thoracic Surgeons (STS) National Congenital Heart Surgery Database (the “STS database”). The STS is the official organ for the collegial development of the field of thoracic and cardiac surgery, both adult and pediatric. There are over 75,000 physician and institutional members of the STS. The STS maintains the largest worldwide data collection of multiple variables and data points pertaining to every cardiac surgery performed by its members. The data is rigorously analyzed to measure the actual and risk-adjusted expected performance and quality of each member facility, and to support quality improvement projects, as well as original research in the field. The STS is a national organization, and its publishing arm, the Annals of Thoracic Surgery, is one of the top-ranked journals in the world. Once a year, the STS updates a running, four-year cumulative tally of outcomes for each participating institution in the country and publishes a one-page report summarizing the facility’s performance.1/ The STS stratifies cardiac surgical cases by “STAT” level, which is a measure of acuity, complexity and risk.2/ STAT 1 is the simplest kind of congenital heart defect that generally requires a straightforward surgical repair, while STAT 5 reflects complex, high-acuity, and high- risk conditions and surgeries. The STS public report contains four columns. The first lists the STAT levels. The second column lists the facility’s number of deaths divided by the number of patients operated on at that facility within the given STAT category. The third column, “Expected” reflects the STS’ expectation of mortality within the reporting institution’s program based on the relative acuity of the cases performed at that institution and if the reporting hospital performs consistent with the national average for that STAT level. The data in the third column reflects the very high acuity level of APH’s CHD patient population, i.e., the risk factors for the patient not surviving their congenital heart defect and surgery. The fourth column, “Observed/Expected” (the “O/E ratio”), divides the program’s actual mortality by its expected mortality. The O/E ratio is widely accepted as the standard metric for evaluating performance in pediatric cardiac programs because in contrast to reporting raw mortality, the STS O/E ratio is risk-adjusted using multivariable regression models which enable the STS to risk adjust each institution’s mortality and compare it against the national norm; i.e., to produce a model containing every case that every program did within the four-year time period measured. An O/E ratio of less than one means the facility is doing better than the overall STS database. For STAT 2 cases, APH’s O/E ratio is 0.58, meaning that APH has achieved close to one-half the mortality that STS expects APH to have for APH’s STAT 2 cases. Even more impressive, however, is APH’s STAT 5 O/E ratio of 0.24. The analysis conducted by the STS shows that, statistically speaking, a patient in the highest risk STAT 5 category has a four-fold less risk of dying after an operation at APH than at an average pediatric cardiac surgery program in the country. APH has consistently achieved outstanding outcomes in its pediatric cardiac program, on a national basis, for more than a decade. AHCA has recognized APH as first in the state for overall pediatric heart surgery mortality. Mechanical cardiopulmonary support or cardiac extracorporeal membrane oxygenation (ECMO) (referred to as “CPS” within the APH pediatric cardiac program) is a very short-term method of sustaining life when a patient has rapid onset end- stage heart failure.3/ To place a patient on CPS, the cardiac surgeon makes an incision in the base of the neck to expose the main artery to the brain and the main vein draining from the brain. The vessels are controlled by the surgeon and opened, and cannulas are inserted into the vessels and advanced into the heart, or if the chest is open, may be placed directly into the heart, then sutured into place and connected to a heart-lung machine. Often the procedure is done while a baby is sustaining a cardiac arrest. CPS is not the preferred intervention for patients in heart failure who require PHT. Complications from CPS develop exponentially with each 24 hours on the circuit. Thus, CPS can be a contraindication for PHT. Complications from CPS include bleeding from fresh suture lines in the heart, arteries, pericardium, or chest wall; bleeding in the brain, or at IV line locations; and clotting caused by the CPS lines, which can be devastating if the clot travels to the brain, kidneys, bowel, or heart. There also is significant risk in moving a patient on CPS. Particularly in neonates, the movement of a cannula by even a few millimeters can obstruct circulation, or cause thrombus or ventilator issues. CPS thus is not a sustainable method for bridging a patient to PHT, when the majority of patients face long periods on a waitlist. The proper method for bridging to PHT is the use of ventricular assist device (VAD) therapy, relatively recently approved for use in pediatric patients. A VAD is a device that does not mechanically process or oxygenate the blood, and does not require transfusion, and, thus, provides far more stable and longer-term maintenance of life while a patient waits for PHT. In contrast to CPS, which cannot safely be used more than a few days to, at most, two weeks, a heart failure patient may safely remain on a VAD for months in the hospital while they await a donor heart. The ability to implement VAD therapy enhances quality of care for patients and increases a patient’s eligibility for PHT. Currently, the standard of care is that hospitals that do not provide PHT should not provide VAD therapy. Consequently, patients at APH with rapid onset heart failure do not have access to VAD therapy and must be placed on CPS. There is no question that OH has built a mature, high quality pediatric cardiac program at APH over the past 14 years. The organization has the demonstrated experience and success in complex reconstructive heart surgery and medical management of patients with heart disease. With the additional staffing described below, APH would be able to successfully implement a PHT program, assuming need for such a program is demonstrated. The Arnold Palmer Application APMC is proposing to establish a PHT program in Orlando, which is located in OTSA 3. The application was conditioned on APMC promoting and fostering outreach activities for pediatric cardiology services, which will include the provision of pediatric general cardiology outpatient services at satellite locations within OTSA 3. This condition is not intended to include any outreach activities beyond establishing outpatient clinics in OTSA 3. There is currently no PHT provider in OTSA 3. There are, however, three providers of pediatric open-heart surgery and pediatric cardiac catheterization within the OTSA. APMC proposes that Dr. William DeCampli and Dr. David Nykanen, who currently staff its pediatric cardiac program, would also staff the proposed transplant program. However, neither has worked in a transplant program in over 14 years. APMC acknowledges its need to recruit additional nurses to staff the program. It also concedes that it might recruit nurses without transplant experience, who may need to obtain necessary training at a different facility. Additionally, APMC has not yet recruited a physician specializing in pediatric heart failure, which the applicant agrees is necessary to implement the program. At hearing, much of APMC’s case focused on its readiness and desire to offer a full spectrum of services to cardiac patients at its hospital. This is reflected in the testimony of Sharon Mawa, a nurse operations manager in APMC’s CVICU: And I feel Arnold Palmer is ready. We—it’s all encompassed. When you have a heart program, you—you want to do it all . . . . And the only piece that we are unable to provide, that we’re—that we haven’t been ready for, and I feel like we’re ready for now, is heart transplant. And I think to do a heart program well, you should be able to do all of it for that patient. However, as detailed further below, such arguments do not demonstrate community need for the proposed service, but instead represent an institutional desire to expand the facility’s service lines. A public hearing was held in Orlando on January 8, 2018, pertaining to APMC’s PHT application. APMC participated in support of the application at this hearing. About one year earlier, on January 10, 2017, a public hearing was held in Orlando pertaining to a CON application to establish a PHT program submitted by Nemours Children’s Hospital (Nemours), which is also located in Orlando. OH/APMC participated at that hearing in opposition to the Nemours application. OH/APMC submitted written opposition to the Nemours PHT program at that time, urging the Agency to deny Nemours’ proposal. OH/APMC’s 2017 opposition to the Nemours PHT application included argument related to access and need for the service in OTSA 3. OH/APMC’s written opposition to the proposed Nemours program included letters of opposition authored by Dr. DeCampli and Dr. Nykanen. In urging the denial of the Nemours’ PHT application, Dr. Nykanen told AHCA: For the past 14 years at Arnold Palmer Hospital for Children we have referred our patients requiring advanced heart failure management, including cardiac transplantation, predominantly to Shands Children’s Hospital. We have been the largest referral source of these patients in the region over the past decade. Many of our patients have had the opportunity to be evaluated as outpatients, which is always preferable. The management of this patient population is medically intense but surgery is rarely an emergency. The geographic proximity of Gainesville to our region is not a significant barrier with respect to transport from one facility to the other. The availability of organs for transplantation mandates the time from assessment to surgery which is measured in weeks to months. The Shands team has been readily accessible to us day or night and I am aware of no financial or programmatic barriers to providing this specialized care to our patients. We have been pleased with the outcomes achieved. (emphasis added). In December 2017, several months after opposing Nemours’ PHT proposal, APMC submitted its own PHT application to AHCA. UF Health Shands UF Health-Shands Hospital (Shands), as an existing provider of PHT in OTSA 1, participated extensively in this proceeding notwithstanding its acknowledged lack of standing to formally intervene.4/ Shands is located in Gainesville, Florida and is the sole provider of PHT in OTSA 1. OTSA 1 extends from Pensacola to Jacksonville, south to Gainesville and west to Hernando County. AHCA called numerous witnesses affiliated with Shands in its case-in-chief. The scope of the testimony presented by Shands-affiliated witnesses was circumscribed by Order dated June 18, 2018 (ruling on APMC’s motion in limine), that: At hearing, the Agency may present evidence that the needs of patients within OTSA 3 are being adequately served by providers located outside of OTSA 3, but may not present evidence regarding adverse impact on providers located outside of OTSA 3. Baycare of Se. Pasco, Inc. v. Ag. for Health Care Admin., Case No. 07-3482CON (Fla. DOAH Oct. 28, 2008; Fla. AHCA Jan. 7, 2009). Shands is located in Gainesville, Florida. Shands Children’s Hospital (SCH) is an embedded hospital within a larger academic health center. SCH has 202 beds and is held out to the public as a children’s hospital. SCH occupies multiple floors of the building in which it is located, and the children’s services are separated from the adult services. SCH has its own separate entrance and emergency department. SCH is nationally recognized by the U.S. News and World Report as one of the nation’s best children’s hospitals. SCH has its own leadership, including Dr. Shelley Collins, an associate professor of Pediatrics and the associate chief medical officer of SCH who was called as a witness by the Agency. As a comprehensive teaching and research institution, SCH has between 140 to 150 pediatric specialists who are credentialed. It has every pediatric subspecialty that exists and is also a pediatric trauma center. In the area of academics and training, SCH has over 180 faculty members and approximately 50 residents, and 25 to 30 fellows in addition to medical students. SCH has 72 Level II and III Neonatal Intensive Care Unit (NICU) beds. It also has a dedicated 24-bed pediatric intensive care unit, as well as a dedicated 23-bed pediatric cardiac intensive care unit, both of which are staffed 24/7 by pediatric intensive care physicians, pediatric intensive care nurses, and respiratory therapists. As a tertiary teaching hospital located in Gainesville, Shands is accustomed to caring for the needs of patients and families that come from other parts of the state or beyond. Jean Osbrach, a social work manager at Shands, testified for the Agency. Ms. Osbrach oversees the transplant social workers that provide services to the families of patients at SCH. Ms. Osbrach described how the transplant social workers interact with the families facing transplant from the outset of their connection with Shands. They help the families adjust to the child’s illness and deal with the crisis; they provide concrete services; and help the families by serving as navigators through the system. These social workers are part of the multi-disciplinary team of care, and they stay involved with these families for years. Shands is adept at helping families with the issues associated with receiving care away from their home cities. Shands has relationships with organizations that can help families that need financial support for items such as lodging, transportation, and gas. Shands has 20 to 25 apartments in close proximity to the hospital that are specifically available for families of transplant patients. Shands also coordinates with the nearby Ronald McDonald House to secure lodging for the families of out-of-town patients. Ms. Osbrach’s ability to empathize with these families is further amplified because her own daughter was seriously ill when she was younger. As Ms. Osbrach testified, while she was living in Gainesville, she searched out the best option for her child and decided that that was actually in Orlando. She did not hesitate to make those trips in order to get the highest level of care and expertise her child needed at that time. SCH accepts all patients, including pediatric heart transplant patients, regardless of their financial status or ability to pay. At final hearing, both Ms. Osbrach and Dr. Pietra testified at length about the different funding sources and other resources and assistance that are available to families from lower social economic circumstances that have a child who may need a transplant. SCH is affiliated with the Children’s Hospital Association, the Children’s Miracle Network, the March of Dimes, and the Ronald McDonald House Charities. Both Shands and APMC witnesses agreed that the quality of care rendered by SCH is excellent. ShandsCair Shands operates ShandsCair, a comprehensive emergency transport system. ShandsCair operates nine ground ambulances of different sizes, five helicopters, and one fixed wing jet aircraft. It owns all of the helicopters and ambulances so it never has to wait on a third-party vendor. ShandsCair performs approximately 7,000 ground and air transports a year. ShandsCair selects the “best of the best” to serve on its flight teams. ShandsCair has been a leader in innovation, implementing a number of state-of-the-art therapies during transport, such as inhaled nitrous oxide and hypothermic for neonates that are at high risk for brain injury. ShandsCair is one of just three programs in the country that owns an EC-155 helicopter, which is the largest helicopter used as an air ambulance. This helicopter is quite large, fast, and has a range of approximately 530 miles one way. This makes it easier to transport patients that require a significant amount of equipment, including those on ECMO. The EC-155 has room for multiple patients and the ability to transport patients on ventricular assist devices, ventilators, and other larger medical equipment. The Orlando area is well within the operational range of both ShandsCair’s ground and air transport assets. Transporting Pediatric Patients on ECMO In its CON application, one of the reasons APMC contended that its application should be approved is that it is too dangerous to transport patients on ECMO. Timothy Bantle, a certified respiratory therapist and the manager of the ECMO program at Shands, was called as a witness by the Agency. The ECMO program at Shands was established in 1991, and Shands has supported over 500 patients on ECMO. When Mr. Bantle began working in the Shands ECMO program in 2008, all ECMO patients at Shands were supported by an ECMO machine that utilized a roller head pump. In addition to the machine’s bulky size and weight, there was an inherent risk of the occlusion pressure causing a rupture. In 2014, Shands began using a newer, much smaller CARDIOHELP ECMO machine. In addition to weighing at most 20 pounds, the CARDIOHELP ECMO machine utilizes a centrifugal pump, instead of a roller head pump, which eliminates the risk of circuit ruptures. The technology in the CARDIOHELP ECMO machines is outstanding, and it is much easier to manage patients on the newer machines than the older machines. Shands now has nine of the newer and far more compact CARDIOHELP ECMO machines. Shands uses the CARDIOHELP ECMO machine for both veno-arterial (VA) and veno-venous (VV) ECMO and for every patient population, including infants. In the current fiscal year, Shands has had 67 patients on the CARDIOHELP ECMO machine. Shands has safely transported both adult and pediatric patients on ECMO. When transporting a patient on ECMO, the transport team includes a physician, an ECMO primer, a nurse, and a respiratory therapist. In addition to being highly trained, the transport team discusses the specifics of each patient en route, including discussing the situation with the referring doctor so they arrive fully prepared. Mr. Bantle persuasively testified that a properly trained team, using the newer CARDIOHELP ECMO machine, can transport these patients safely. ShandsCair has safely transported numerous pediatric patients on VA- and VV-ECMO by both ground and air, including pediatric heart transplant candidates. The newer CARDIOHELP ECMO equipment makes transport of ECMO patients much easier. ShandsCair has flown simultaneous, same day ECMO transports to the Grand Cayman Islands and to Miami. Transporting ECMO patients on the CARDIOHELP ECMO machine has become so routine that Dr. Weiss does not go on those flights. ShandsCair has also safely transported small infants on VA-ECMO, including a three-kilogram infant who was recently transported from Nemours on VA-ECMO, and after arrival at Shands was transitioned to a VAD and is now awaiting a heart transplant. The testimony of Dr. Weiss and Mr. Bantle regarding Shands’ ability to safely transport pediatric patients on ECMO was substantiated by the testimony of Drs. Fricker, Pietra, and Collins. The overwhelming evidence established that ShandsCair can safely transfer pediatric patients, including infants, on ECMO by both ground and by air. Shands’ Pediatric Heart Program The congenital heart program at Shands includes two pediatric heart surgeons, and a number of pediatric cardiologists, including Dr. Jay Fricker and Dr. Bill Pietra, both of whom testified for the Agency. Dr. Fricker did much of his early work and training at the Children’s Hospital of Pittsburgh, and came to the University of Florida in 1995. He is a professor and chief of the Division of Cardiology in the Department of Pediatrics. He is also the Gerold L. Schiebler Eminent Scholar Chair in Pediatric Cardiology at UF. He has been involved in the care of pediatric heart transplant patients his entire career. Dr. Bill Pietra received his medical training in Cincinnati and then went to Denver, specifically to do transplant training under Dr. Mach Boucek, who was one of the pioneers in pediatric infant transplant. He came to the University of Florida and Shands in August 2014, and he is now the medical director for the UF Health Congenital Heart Center. Shands performed its first PHT in 1986. Shands provides transplants to pediatric patients with both complex congenital conditions and cardiomyopathy patients. Shands takes the most difficult PHT cases, including those that other transplant centers will not take. PHT patients are referred to Shands from throughout the state, with many patients coming from central and north Florida. Every patient that is referred for transplant evaluation is seen and evaluated by Shands. While transplantation is not an elective service, it also is very rarely done on an emergent basis. Some conditions are diagnosed well in advance of the need for a transplant. It is not uncommon for a patient to be seen by a Shands physician for a number of years before needing a transplant. Pediatric transplant patients now survive much longer, and frequently well into adulthood. Unlike APH, Shands has the ability to continue to care for those patients as they transition from childhood to becoming adults. The Congenital Heart Center at Shands has a good relationship with APH. Physicians at APH have not only referred patients to Shands for transplant evaluation, they have also specifically recommended Shands to parents of children in need of a heart transplant. Shands operates a transplant clinic at Wolfson Children’s Hospital in Jacksonville. Approximately once a month a Shands transplant physician, a transplant coordinator, and nurses will go to Wolfson to evaluate patients with PHT issues. Wolfson personnel, such as ECHO techs and nurses, are also involved. Before APH filed its CON application, Dr. Pietra twice asked Dr. Nykanen about the possibility of Shands establishing a similar joint clinic at APH. Dr. Nykanen replied by stating he would need to confer with his colleagues, but never otherwise responded to these inquiries. Dr. Pietra testified that he would not be opposed to a joint venture clinic with APMC. Managed care companies are now a significant driver of where patients go for transplantation services. Managed care companies identify “centers of excellence” as their preferred providers for services such as pediatric heart transplantation. Shands is recognized by a majority of the major managed care companies that identify pediatric transplant programs as a center of excellence. In addition, the congenital heart surgery program at Shands has a three-star rating, which is the highest rating possible, and one that only 10 percent of such programs achieve. The quality of care provided by the PHT program at Shands is superb. The most recent Scientific Registry of Transplant Recipients data for Shands, for pediatric transplants performed between February 1, 2014, and December 31, 2016, is excellent. There is no credible evidence of record that any pediatric patient in OTSA 3 was denied access or unable to access an existing transplant program. To the contrary, the evidence established that UF Health Shands and ShandsCair are currently serving the needs of OTSA 3 residents who need a PHT. The APMC CON application was not predicated on any argument that a new program is needed because of poor quality care at any of the existing pediatric transplant programs in Florida. Rather, Dr. Nykanen, the co-director of The Heart Center at APH, testified that Shands provides outstanding medical care, and that he has been “happy with the care” received by the patients he has referred to Shands for PHT. At hearing, APMC witnesses suggested that the Shands program is unduly conservative in accepting donor hearts from beyond 500 miles, and may have some “capacity” issues in its pediatric cardiac intensive care unit (CICU). These statements, made by persons with no first-hand knowledge of the operations of the Shands program, are not persuasive. APMC called Cassandra Smith-Fields as an expert witness. Ms. Smith-Fields is the administrative director for the transplant program and dialysis services at Phoenix Children’s Hospital. Phoenix Children’s Hospital is the only PHT center in Arizona. Notably, two states bordering Arizona, Nevada and New Mexico, do not have PHT centers. Ms. Smith- Fields noted that the volume of transplants at Shands had recently declined from 18 to 11. However, in 2016, by volume, Phoenix Children’s Hospital was the second largest pediatric heart transplant center in the country with 24 transplants, but in 2017, its volume had dropped to 14. Ms. Smith-Fields agreed that “you have to always be careful drawing inferences from numbers that are low in any matter.” Ms. Smith-Fields testified that based upon her review of Scientific Registry of Transplant Recipients data for Shands, Shands did not appear to be aggressive in terms of accepting donor hearts beyond 500 miles. However, that criticism was based upon a one-year period when Shands’ PHT volume was lower than normal, and during which Shands was able to obtain donor hearts from within a 500-mile radius. Stephan Moore, director of the solid organ transplant and VAD programs at Shands, prepared an exhibit, which showed the location (by state and distance) of Shands donor hearts and lungs recovered from March 2, 2014, through March 18, 2018. This exhibit showed numerous trips by Shands beyond 500 miles to retrieve a donor organ, including trips to Texas, New Jersey, Illinois, and Ohio. During this four-year period, 27.6 percent of the organs recovered by Shands came from within Florida, and the remaining 72.3 percent were obtained from out of state. This data not only refutes Ms. Smith-Fields’ testimony on this issue, it also again illustrates why, due to the variability of PHT heart program volumes and availability of donor hearts, one should be extremely cautious in drawing conclusions based upon a single year of data. In addition, Dr. Pietra testified about the complexity of these cases and how an organ that might be acceptable for one patient would not be acceptable for another, for a host of reasons. Consequently, being conservative and cautious in choosing the right heart for each patient are good and important traits for a pediatric heart transplant program, particularly for one that wants the organ to work well for the patient long- term. Dr. Elise Riddle, a cardiologist practicing at APMC, testified that she was aware of instances when there had been a delay in obtaining a bed at Shands for a patient being referred for transplant services. However, Dr. Pietra testified that Shands has never refused a patient because a bed was not available, and that any delay would have been at most a matter of hours. In addition, Dr. Collins, who regularly reviews the throughput numbers of Shands CICU, testified that there was no need to expand the size of the unit. APMC did not question Dr. Collins about the unit’s occupancy rate, nor did it make any attempt to otherwise obtain that information. Dr. Riddle also testified that she had not been informed when a former patient had returned to the Orlando area following a successful PHT at Shands. However, Dr. Pietra testified at length about how Shands coordinates care with the patient’s primary care doctor and referring cardiologist post discharge, and works to develop a team to assist with follow care. Dr. Pietra testified: But we try to, again, develop a team and the team has to include like a local physician and usually a family practice or a pediatrician as the captain. If the patient’s got that, you feel a lot better about having a patient leave the local area and return to their hometown, as you say, so that they can be seen kind of in conjunction or collaboration with us in their hometown. If they have a referring cardiologist, that makes it that much easier sometimes to have a more sophisticated follow up done if needed. But again, the patient belongs to the transplant program in the long run, and so you are going to continue to offer them follow-up care basically for life. Since coming to Shands in August 2014, Dr. Pietra has updated many of the program’s protocols, including the protocols for immunosuppression, frequency of follow-up visits, and what is included in follow-up visits. Dr. Pietra has also initiated more written contracts between a prospective patient’s parents and the program, which make it very clear what the expectations are for the family. Two parents, one of whom lives in Clermont (one hour and 40 minute drive from Gainesville) and one of whom lives in Cocoa Beach (two hours and 35 minute drive from Gainesville) testified that their child had received a PHT at Shands in Gainesville, and that there were no issues with follow-up care for their children post-transplant. Volume/Outcome Relationship in Pediatric Heart Transplantation At the final hearing, experts for both sides agreed that there is a positive relationship between PHT volume and outcomes. In complex, highly specialized areas involving patients with rare diseases or conditions, volume provides experience not only for the surgeons but for the entire team. This is particularly true for pediatric heart transplantation, where higher volume keeps the entire team and ancillary staff functioning at a very high level. Both Dr. Pietra and Ms. Smith-Fields agreed that a minimum of 10 or more PHTs annually is a good standard for maintaining the proficiency of the entire transplant team. In Calendar Year 2017, there were only 32 PHTs in Florida. Both Dr. Pietra and Dr. Fricker testified about how the statewide volume made it very difficult to justify approving a sixth program in the State, and that the proliferation of programs would result in most of the programs not able to achieve the 10 or more transplants per year goal. Indeed, during the 12-month period of July 1, 2016, through June 30, 2017, none of Florida’s four existing PHT programs met the minimum volume standard of 10 PHTs. In addition, PHT programs are measured based on outcomes, and a single fatality in a small program can be devastating to that hospital’s quality metrics. As such, small programs are often less willing to take more complicated patients. Ironically, adding more programs that dilute volumes may decrease rather than increase access because of the fear a small program might have for taking more complex patients. Johns Hopkins All Children’s Hospital Johns Hopkins All Children’s Hospital (JHACH) is located in St. Petersburg, OTSA 2, AHCA District 5. According to reported AHCA data, JHACH performed seven PHTs during the 12 months ending June 2017. Several APMC witnesses made references to possible issues with the PHT program at JHACH based upon newspaper articles they had read. Such articles are hearsay, were not specifically identified or discussed by any witness, and accordingly, cannot form the basis of any finding of fact. Only one of APMC’s witnesses, Dr. Riddle, had any personal knowledge about JHACH, and she has not worked there or been involved in the care of any patients there since February 2016. The only APMC witness who actually looked at any data for JHACH, Ms. Smith-Fields, testified that JHACH had no deaths on its waiting list, that it was aggressive in retrieving donor hearts beyond 500 miles, and that had transplanted two patients during the first four months of this calendar year. When the Centers for Medicare and Medicaid Services (CMS) identifies a program as having deficient outcomes, it will send a peer review team to thoroughly assess the program. If necessary, CMS will enter a systems improvement agreement, which may include the appointment of a quality administrator to help the program improve its operations. There was no evidence presented that CMS had taken any such steps with JHACH. As discussed above, it was uncontroverted that there is a positive correlation between volumes and outcomes, and that a minimum of 10 transplants a year is an important volume threshold in order to maintain a high-quality program. With Florida already having five existing and approved programs, it is currently not possible for all five programs to achieve 10 transplants a year. Approving a new program in the State based upon rumors about the status of an existing program would in all likelihood only reduce the average volume even further below the 10 transplants per year standard, and lead to poorer outcomes. AHCA’s Preliminary Decision Following AHCA’s review of APMC’s application, as well as consideration of comments made at the public hearing held on January 8, 2018, and written statements in support of and in opposition to the proposals, AHCA determined to preliminarily deny CON application 10518. AHCA’s decision was memorialized in a SAAR dated February 16, 2018. Marisol Fitch, supervisor of AHCA’s CON and commercial-managed care unit, testified for AHCA. Ms. Fitch testified that AHCA does not publish a numeric need for transplant programs, as it does for other categories of services and facilities. Rather, the onus is on the applicant to demonstrate need for the program. In addition to need methodologies presented by an applicant, AHCA also looks at availability and accessibility of services in the area to determine whether there is an access problem. Additionally, an applicant may attempt to demonstrate that “not normal” circumstances exist in the proposed service area sufficient to justify approval. Statutory Review Criteria Section 408.035(1), Florida Statutes, establishes the statutory review criteria applicable to CON Application No. 10518. The parties have stipulated that APMC’s CON application satisfies the criteria found in section 408.035(1)(f) and (h). The Agency believes that there is no need for the PHT program that APMC seeks to develop, because the needs of the children in the APMC service area are being met by other providers in the State, principally Shands and JHACH. Section 408.035(1)(a) and (b): The need for the health care facilities and health services being proposed, and the availability, quality of care, accessibility, and extent of utilization of existing health care facilities and health services in the district of the applicant. Florida Administrative Code Rule 59C-1.044(6)(b)5/ The criteria for the evaluation of CON applications, including applications for organ transplantation programs, are set forth at section 408.035 and rule 59C-1.044. However, neither the applicable statutes nor rules have a numeric need methodology that predicts future need for PHT programs. Thus, it is up to the applicant to demonstrate need in accordance with section 408.035 and rule 59C-1.044. There are four OTSAs in Florida, numbered OTSA 1 through OTSA 4. APMC is located in OSTA 3, which includes the following counties: Seminole, Orange, Osceola, Brevard, Indian River, Okeechobee, St. Lucie, Martin, Lake, and Volusia Counties. (See § 408.032(5), Fla. Stat; Fla. Admin. Code R. 59C-1.044(2)(f)3.). OTSA 3 also generally corresponds with the pediatric cardiac catheterization and open heart surgery service areas defined by AHCA rule. (See Fla. Admin. Code R. 59C- 1.032(2)(g) and 59C-1.033(2)(h)). Currently, there is no provider of PHT in OTSA 3, but there are three providers of pediatric cardiac catheterization and pediatric open-heart surgery: APH, Florida Hospital for Children, and Nemours. There are four existing providers and one approved provider of PHT services in Florida: Shands in OTSA 1; JHACH in OTSA 2; Jackson Memorial Hospital in OTSA 4; and Memorial Regional Hospital, d/b/a Joe DiMaggio’s Hospital in OTSA 4; and an approved program in OTSA 4, Nicklaus Children’s Hospital, which received final approval from AHCA in August 2017. APMC’s Need Methodology 1: Ratio of Pediatric Cardiac Surgery Volume to PHT Case Volume To quantify need for a new PHT program in AHCA District 7, OTSA 3, APMC presented two “need methodologies.” According to the applicant, there is an observed correlation between a PHT center’s volume of congenital heart surgery and its PHT case volume. It should be noted that consistent with the rest of the application--which was focused on APH’s capabilities rather than community need for the service--both methodologies were designed to support the assertion that APMC could potentially attain a volume of 12 transplants by year two of operation. While APMC’s ability to generate 12 transplant cases is pertinent under rule 59C-1.044(6)(b), it is not indicative of unmet community need for this service. For example, if APMC retains or diverts patients who would otherwise have had access to these services through an existing provider, then they may be improving convenience whilst failing to satisfy any unmet community need. The first numeric methodology advanced by APMC in support of its proposal relied on an assumed correlation or a ratio between open-heart surgery cases and PHTs performed by the four existing PHT programs in Florida for calendar year 2016. The applicant then assumed that it would perform the mean rate experienced by the existing programs, in its second year of operation. When applied to APMC’s forecasted cardiac surgeries during the second year of operation (167), it arrived at a projected PHT volume of 11.7 by year two of operation. There are several issues with this methodology. The 11.7 projection is still below the threshold 12 transplants required under rule 59C-1.044(6)(b). The methodology also relied on figures for the 0-17 age cohort. APMC did not apply either methodology considering only 0-14 age data.6/ Additionally, APMC failed to demonstrate that there is any statistically predictive link between the two variables. The data presented in APMC’s application suggests that the correlation is weak, at best. For example, Bates page 0053 of the application reports Shands as having performed 140 pediatric cardiac surgeries and 15 pediatric heart transplants in 2016, while Memorial Regional Hospital performed more surgeries at 170, but less than half the transplants at seven for the same year. While APMC attempts to control for this variability by utilizing averages, such variability itself calls the causal relationship into question. Indeed, APMC’s own cardiac surgeon did not believe cardiac surgery volume and PHT volume to be directly related. An additional problem with APMC’s first methodology is that many of the numbers relied upon to reach its calculated forecast of 11.7 appear to be inflated. The 7 percent average, which APMC applies to its own facility, is not an accurate reflection of the true average rate among the four existing centers for 2016. While the 2016 transplant volume used represented the statewide total, APMC considered only the cardiac surgery volume reported by these four centers. Stated differently, APMC calculated a ratio considering the entire universe of one variable but not the other. The actual total number of cardiac surgeries performed statewide for 2016 for aged 0-14 was 1,216, not 491, as utilized as the denominator in calculating the ratio. As Ms. Fitch testified, when one uses the 1,216 surgeries in the formula, the ratio would be roughly 2.8 percent, not the 6.9 percent used by APMC. Then, applying APMC’s proffered number of 167 cardiac surgeries as representing its facility, the forecast would be about five PHTs, not 11.7. APMC only considered the open-heart surgeries performed at the four PHT hospitals, but certainly, the PHT patients, if they had open-heart surgery at all, may have had such surgeries at other facilities. As a pediatric OHS provider, APH is itself a good example of this, having provided 99 pediatric open-heart surgeries in 2016 that were not considered in the denominator of the formula. APMC’s Need Methodology 2: Ratio of PHT Volume to Common Indicators for PHT. APMC’s second need methodology is based on the identification of the International Classification of Disease (ICD) ICD-10 codes that are the most common indicators for PHT, taking into account acuity and based on APH’s actual experience. Starting with an analysis of ICD-9 codes and updating to ICD-10 codes as the most currently available model, APMC attempted to correlate the ICD-10 codes with the incidence of PHT in Florida hospitals using data from the AHCA inpatient database. This analysis produced an average ratio of the “most frequent indicators” to PHT cases, of 0.187. APMC then identified the volume of patients within OTSA 3 discharged under the top “most frequent” ICD-10 code indicators for PHT. Applying a conversion rate of 0.100 to this potential pool of PHT patients results in a forecast of 8.2 potential PHT cases in year 1 of APH’s PHT program. Holding constant the baseline potential patient volume in OTSA 3 and applying a conversion rate of 0.180 to years two and three resulted in a forecast of 14.8 PHT cases in OTSA 3 in years two and three. As with the previous methodology, this methodology is rejected, both as being an unreasonable basis for forecasting 12 PHTs by year 2, and as not being indicative of community need in OTSA 3 for this service. APMC presented no evidence that a link between the identified diagnosis codes and an eventual PHT exists or is predictive for any individual or group of individuals. Indeed, its health planner admitted that no statistical analysis was undertaken to test the validity of a causal relationship between these variables. Further, it is unconvincing that the average performance of the four existing long-established transplant programs over three recent calendar years is a reliable predictor of the prospective future performance of a new program by its second year of operation. This methodology, similar to the first, examined the age-range 0-17, even though rule 59C- 1.044 defines a pediatric patient as one aged 0-14. In considering the numbers of patients who presented at the four hospitals with one of the selected ICD-10 codes compared to the number of transplants, APMC acknowledged the variability in the ratios among the years and between the providers. This is evident from a review of the figures in the chart on Bates page 0055 of the APMC application. For example, according to the table, from 2014 to 2015, the number of inpatients with one of the ICD-10 codes decreased by one at Shands, but the number of PHTs performed over this same period doubled from 10 to 20. Such variability in the ratios suggests that there is no predictive link, and that it is instead other variables that affect PHT volume. Additionally, while this methodology considers diagnoses of patients actually treated in the four transplant hospitals to come up with a ratio, it then relies on average ICD volume of three Orlando hospitals instead of its own volume, without explanation. If APMC applied the ratio to its own ICD-10 volume of 138, as appears on Bates page 0056, without adding the other hospitals, its projected transplant volume would be 24.8 by year two, which is higher than any existing provider in the state. Or, if APMC applied only its own average ICD-10 volume over 2014-2016 of 46, it would result in a projected volume of 8.3 transplants at year two. While APMC’s approach is the one that gets it closest to a projected case volume of 12, it appears arbitrary and lacks credibility. Pediatric Population Growth in OTSA 3. In its application, and at hearing, APMC repeatedly referenced the growing pediatric population in central Florida as a factor supporting approval of its application. For example, APMC pointed out that OTSA 3 experienced the fastest growth rate for the 0-17 age cohort among all of the OTSAs for 2014, 2015, and 2016, and has a very robust projected annual growth rate of 2.7 percent through 2022. Moreover, each of the 10 counties in OTSA 3 is projected to experience rapid growth in the pediatric population, with the most dramatic growth rates in Orange, Osceola, and St. Lucie counties, at 10.3 percent, 12.4 percent, and 9.0 percent respectively. While the projected growth of the pediatric population in OTSA 3 is significant, such growth does not, in itself, demonstrate unmet demand or need for the project. Any increased demand for PHT due to population growth was not quantified by APMC in its application or at hearing, as APMC elected not to utilize a population and use rate analysis as a need methodology. No evidence of population demographics was presented to substantiate APMC’s transplant volume projections. On this issue, the following exchange from Dr. Nykanen’s deposition is informative: Q. When you referred to population information, is it your position that population demographics or population changes are in part a reason for the need for this project? A. As the population of Central Florida and as the population of this district increases the demand for cardiac services increases. So to the extent that you are serving more people, then I would agree, yes, that’s part of the – that’s part of the equation. Is it the tipping point? No. We don’t – we didn’t – nowhere in my discussions with Dr. DeCampli or administration was there the thought that, hey, the population is growing here so we need to provide this service. I think that the – it was more a question of, our program has grown to such a position that we need to provide this service in order to be able to be a quality program offering what we believe to be quality care for our patients. The fact that there are more people here is really not driving the need for it. That doesn’t drive the need, but it just – it does state that there may be more demand. That’s kind of the way that I feel about that. The above exchange, besides downplaying population growth as a significant argument for a PHT program, also reiterates the theme of APMC’s application and entire case, which is a focus on APMC and its institutional desire to expand the services it can provide to its patients. Another argument made by APMC in its application and at hearing is that approval of its program could reduce outmigration of PHT patients. By definition, because there is no existing PHT program in OTSA 3, all patients leave OTSA 3 for this service. However, that alone does not establish need for a new program. As discussed herein, APMC has not demonstrated a sufficient need or an access problem that justifies approval of its application. Outmigration of Donor Hearts There are four Organ Procurement Organizations (OPOs) in Florida, geographically distributed so that there is one OPO centrally located in each of the four OTSAs. The OPO in OTSA 3 has done well in procuring donor hearts notwithstanding the lack of a PHT program in its region. The establishment of a PHT program within an OPO region is known to positively correlate with an increase in the number of donor hearts that the OPO is able to procure. The number of hearts procured in Florida varies annually. In 2016, Florida OPOs procured 30 donor organs. Over 50 percent of the hearts procured in Florida leave the state. However, donor hearts also migrate into the state. With regard to the outmigration of organs from Florida, APMC has suggested that since Florida is a net exporter of organs, this is an additional reason for approval. However, organs harvested in one state are commonly used in another. There is nothing unusual or negative about that fact. There is a national allocation system through the United Network for Organ Sharing (UNOS) and this sharing, as explained by Dr. Pietra, facilitates the best match for organs and patients. UNOS divides the country into regions for the purpose of allocation of donor organs, with Florida being one of six states in Region 3. The evidence of record did not establish that approval of the APMC application would result in the reduction of organs leaving Florida, or even that such would be a desirable result. APMC also argues that approving its application would increase the number of donor organs that are both procured and transplanted within Florida. Specifically, the applicant suggested that its proposed program would increase public awareness of the need for donor hearts; and, by doing so, increase the supply of donor hearts. However, no record evidence was produced in an effort to demonstrate that the proposed program would increase the supply of organs in Florida. In fact, an APH pediatric cardiologist testified that it is unlikely that adding the proposed PHT program would impact the availability or supply of organs. Rule 59C-1.044(6)(b) Volume Standards Rule 59C-1.044(6)(b) includes additional criteria that must be demonstrated by an applicant. Subsection (6)(b)4. provides that an application for PHT include documentation that the annual duplicated cardiac catheterization patient caseload was at or exceeded 200, and that the duplicated cardiac open heart surgery caseload was at or exceeded 125 for the calendar year preceding the CON application deadline. Cardiac programs in Florida report their open-heart surgery volumes quarterly to a local health council, and the Agency publishes the calendar year totals. In the applicable baseline calendar year of 2016, APH’s duplicated OHS case volume for patients aged 0-14 was 139 OHS cases, satisfying the minimum OHS volume requirement.7/8/ APH also met the catheterization volume threshold by performing 227 cardiac catheterizations for patients aged 0-14 in the baseline 2016 calendar year. Geographic Access There is no evidence of record that families living in Central Florida are currently being forced to travel unreasonable distances to obtain PHT services. Indeed, there are five existing or approved programs within the state, with at least two located very reasonably proximate to OTSA 3. There was agreement that patients that need a PHT are approaching the end-stage of cardiac function, and in the absence of a PHT will very likely die. Accordingly, it is reasonable to infer that the parents of a child living in central Florida and needing a PHT will travel to St. Petersburg, Gainesville, or OTSA 4 for transplant services rather than let their child die because the travel distance is too far. To the contrary, the evidence in this record, as well as common sense, is that families will go as far as necessary to save their child. The notion that there is some pent-up demand for PHT services among central Florida residents (especially when there is no evidence of a single instance of an OTSA 3 patient being turned down or unable to access a PHT) is without support in this record. The parents of two pediatric patients that received PHT at Shands testified on behalf of the Agency at the final hearing.9/ Their testimony substantiated AHCA’s position that residents of the greater Orlando area have reasonable access to PHT services. One of the testifying parents lives in Brevard County, which is directly east of Orlando. Her daughter likely had a heart defect since birth, but it was not diagnosed until she was six years old. That patient was asymptomatic at the time of diagnosis but deteriorated over a period of years. When she was first seen at Shands, her condition was not emergent and the family had the time and researched other prominent institutions, including Texas Children’s Hospital, Boston Children’s Hospital, Children’s Hospital of Pittsburgh, and the Mayo Clinic in Rochester, Minnesota. Their goal was to find a program that did a good volume of transplants with above average survival rates. After doing this research, they chose Shands. Their daughter received her heart transplant at Shands, is doing well, and is now considering where to go to college. This family did not find the distance to be a problem. This parent also persuasively spoke of her concerns about further diluting the volumes of the existing programs that could result from approval of a sixth PHT program in Florida. This parent also observed that because of the shortage of donors, adding more transplant centers does not necessarily mean there will be more PHTs performed. The other lay witness is the parent of a very young boy who went from appearing to be perfectly healthy to almost dying, and being placed on life support within a 24-hour period. This family lives in Clermont, which is near Orlando. Shortly after her son’s two-month old check-up, the witness took her son to the local hospital thinking he had a urinary tract infection. The hospital sent him to APH for evaluation. As soon as he arrived there, he went into respiratory distress. An echocardiogram was done and showed he had a severely enlarged heart. APH recommended that he be transferred to Shands. Before being transferred, the mother spoke with her sister who coincidentally is a nurse in Chicago who works on the transplant floor. She also highly recommended Shands. Her son was safely transported to Shands by ShandsCair just over 24 hours after being first admitted to APH. When they arrived at Shands, both Dr. Bleiweiss and Dr. Fricker gave the parents their cell numbers and were always there to answer any questions. The infant was placed on a Berlin heart machine until an appropriate donor heart became available. This patient was able to undergo a transplant approximately three weeks after admission, and also had an excellent outcome. This mother testified that the distance to Shands was not a problem, that the social workers and nurses were always available to help, and that follow-up care at Shands has not been an issue. In fact, the patient is now able to have his labs done in Orlando. It is also notable that this patient’s transfer was uneventful and that the patient had no difficulties in being immediately admitted to Shands’ CICU. It is clear from the testimony of these parents that nothing about having a gravely ill child is “convenient.” But it was also clear that for both of these families, having an experienced provider care for their child was much more important to them than geographic proximity. The following exchange summarizes how the young boy’s mother felt about the inconvenience of having to travel from Clermont to Gainesville: Q If you want to hypothetically encounter a family who expressed to you a concern that their child needed a transplant, they resided in Orlando or the Orlando area, but they were concerned about having to travel to Gainesville to receive that service, what would you say to them? A That’s where they need to be and that everything will fall in place, but the most important thing is the care that your child needs. While transplantation is not an elective service, it is not done on an emergent basis. As noted, the number of families affected is, quite fortunately, very small. While having a child with these issues is never “convenient,” the travel issues that might exist do not outweigh the weight of the evidence that fails to demonstrate a need for approval of the APMC application. The Orlando area, being centrally located in Florida, is reasonably accessible to all of the existing providers. Most appear to go to Shands, which is simply not a substantial distance away. The credible evidence is that families facing these issues are able to deal with the travel issues. The testimony of the two parents supports the Agency’s position that obtaining the best possible outcome for the child is the parents’ primary motivation in choosing a PHT program. Financial Access APMC asserts that approval of its proposed program will enhance financial access to care. APMC currently serves patients without regard to ability to pay and will extend these same policies to PHT recipients. APMC’s application indicates that Medicaid/Medicaid HMO will account for 26.8 percent of total patient days in years one and two of the proposal. Self- pay is expected to account for 9.0 percent of patient days in years one and two. However, there was no competent evidence of record that access to PHT services was being denied by any of the existing transplant providers because of a patient’s inability to pay. Not Normal Circumstances APMC alleged the existence of “not normal circumstances” in support of its application. They are categorized as “‘not normal’ circumstances relating to access to PHT for residents of OTSA 3,” and can be summarized as follows: APMC has the one of the largest NICUs under one roof in the country, resulting in a disproportionate volume of newborns at [APH] with complex forms of congenital heart disease; There are patients at APMC who are placed on ECMO or other heart-assist devices after surgery who are too sick to be transferred from APMC to another facility to receive transplant; Forcing patients to accept the high and potentially fatal risks of transport on ECMO presents a major access issue; Post-transplant follow-up care for patients is life-long and can be time- critical, and the ability to provide 24/7 rapid access to specialized transplant urgent care is medically optimal. The first argument related to the size of APMC’s NICU, does not speak to community need. Regardless of how many newborns APH sees, if the needs of these newborns are currently being met by existing programs, then it is difficult to see how this circumstance bears upon need or accessibility to this service. Additionally, to the extent that APMC suggests that the size of its NICU will correlate with a similarly large number of PHT patients, the proposition is unsupported by the record evidence. In fact, APMC admits that its pediatric cardiac surgery program is at the border of the lowest tercile of STS programs by volume. If APH’s NICU yields only a modest to medium cardiac surgery volume, there is no reason to conclude that this NICU will, by virtue of its size alone, yield a high PHT volume. Next, APMC argued that it has had patients who could have potentially benefitted from transplant but who did not receive such services due to their being too sick or otherwise unable to transfer. It is noteworthy that APMC did not identify these patients or provide data in any fashion to bolster this claim. The application referenced 33 NICU patients on ECMO in four years, but APMC conceded that most of these are babies on respiratory or “VV ECMO,” who eventually wean off. The application also references 11 CVICU patients placed on bypass at APMC in the last four years, but no testimony was presented as to the actual number of patients alleged to be unable to transfer. APMC did not maintain at hearing that any of its pediatric patients have died as a result of being unable to transfer to a transplant facility. In fact, any incidence of children being too sick or acute to transfer outside the OH system to a transplant facility appears to be a product of APH clinical decision-making about appropriateness for transplant referral, rather than that such patients were refused at a transplant center or could not have been transferred at an earlier time. At his deposition, Dr. Nykanen discussed the issue: I think that I do agree that patients— pediatric patients in Central Florida can get a heart transplant. And I have sent patients—my patients to Gainesville for a transplant because I felt at least in the patient’s [sic] that they’ve transplanted I can support that I’m doing the right thing for my patient. In answering that question, there are patients that I do not refer for transplant because I just feel that they are not a candidate for traveling for a transplant, medically a candidate for traveling without— for a transplant. So the term reasonable is—is it reasonably accessible. It is accessible, indeed, for the majority of the patients that I feel need a heart transplant. They can travel and get a transplant. However, for some patients it’s not an option for them. Either due to their medical complexity, risks that I consider with transport, and rarely family situation. APMC emphasized the risks of moving pediatric cardiac patients while on ECMO. However, as noted earlier, the credible testimony of witnesses presented by the Agency was that while there are always risks inherent with the treatment of critically ill children, with modern advancements in technology, these transports are done routinely and safely. It is also significant that while APMC cited various risks associated with ECMO transports and underscored the danger to the patient, no APMC witness could point to a single example of a patient that died due to complications with ECMO during a transport. The Agency in its preliminary decision noted that the application lacked any data illustrating mortality or negative outcomes related to pediatric ECMO transports, and no such evidence was forthcoming at hearing. APMC presented no evidence demonstrating that children of OTSA 3 who are transplanted at an existing provider are denied or otherwise unable to access follow-up care. The two mothers that testified for the Agency both stated that they have not had issues accessing follow-up care at Shands. APMC relies instead in its application on theoretical claims about emergent complications that could arise and the challenges of accessing a center. However, these arguments are unconvincing. Both parties agreed that transplant centers can and do work with a patient’s local providers so that patients can receive urgent medical care closer to home and then return to their transplant center as necessary. Dr. Pietra testified that Shands works with primary physicians and providers post- transplant. Shands has developed a thorough protocol for all of its patients, which includes frequent follow-ups. Additionally, Ms. Smith-Fields agreed that at her facility in Arizona (the only PHT provider in that state) the program coordinates with providers local to patients to ensure rapid acute care is accessible, if needed. APMC’s cardiologist, Dr. Riddle, testified that APH does provide acute care and other necessary care to children post-PHT, and that it competently does so. APMC maintained at hearing that post-transplant care is life-long, and that in the event of an emergent situation, immediate access is critical. However, the evidence indicates that existing transplant centers plan for these events. There are more frequent follow-up visits to a transplant center during the period immediately following the transplant. Both Dr. DeCampli and Dr. Riddle testified that organ rejection is more likely to occur during the first year after transplant. Additionally, diagnostic testing can often detect signs of rejection in advance, to allow a transplant center to respond before an acute episode occurs. Indeed, one of the functions of echocardiograms is to scan the heart and detect abnormalities or episodes of rejection. The record reflects that transplant centers, such as Shands, are capable of properly and safely monitoring these patients and dealing with issues of rejection. The evidence in this record does not support the proposition that geographic distance to existing centers is a barrier to patients receiving necessary follow-up care. Orlando Health’s Prior Position APMC’s claim that there is an accessibility issue or a need for PHT services in OTSA 3 is further undermined by its own contrary position on these issues just a few months prior to the submission of its application. In January 2017, OH and APH presented written opposition to Nemours Children’s Hospital’s attempt to establish a PHT program in Orlando. APH also presented oral argument from Drs. Nykanen and DeCampli in opposition to the proposed Nemours PHT program being approved by the Agency. The written statement of opposition, identified on its face to be on behalf of OH and APH for Children, unequivocally advanced the position that PHT services are not needed in OTSA 3, and that they are reasonably available to residents of the service area: Nothing supports the theory in the [Nemours] applications that the proposed services are unique or not otherwise available, or that there is a need for them among the population. * * * Specifically, CON application no. 10471 [Nemours’ PHT application] does not provide any facts that would lead the Agency to conclude that existing pediatric heart transplant services are not reasonably available to residents of the service area. For example, the data shown in CON application no. 10471, Exhibit 15, p. 75, does not reflect time travel distances; existing providers are within the typical two hour drive time standard accepted by health planning experts and the Agency for tertiary services. The personal letter authored by Dr. Nykanen and included as part of the APH opposition was unequivocal and specific in its conclusion that access to these services for residents of OTSA 3 is not a problem. Dr. Nykanen stood by his statement in this proceeding, testifying in his deposition: So we would—we would do anything for our child. I’d travel around the world, you know, halfway around the world if I thought that something would benefit my child. So geographic proximity in that sense probably doesn’t matter. And it doesn’t matter. If I’m an outpatient and I can get in my car and I can go to Gainesville. * * * And I don’t think that it—I honestly don’t think that a two-hour drive is that much of a barrier. It’s a pain and it’s inconvenient. * * * So I think what I intended with that statement and believe it to be true today is that if my child needed a transplant and I could travel to Gainesville and I could get there, I’ll do it, as a family. Is that an inconvenience, yes. Is it a huge barrier, probably not. Because if it, in the balance of things, meant that my child would survive or not, then I would do it. I’d go to London, England if I had to. APMC attempted to justify its prior position as mere concern about the inexperience of the Nemours cardiac program. However, this is contradicted by the record evidence in this case. Dr. Nykanen testified that, at the time of the Nemours public hearing, his expressed position was that there was not a need for PHT services in central Florida. The unambiguous statements by APMC opposing a local competitor’s attempt to establish the same health service that it now claims the children of central Florida need, further undermines the credibility of APMC’s current position, and underscores APMC’s focus on its own interests. The prior position taken by APMC with respect to need and accessibility in OTSA 3 was made with the intent that it be received and considered by the Agency in its decision on the Nemours application. AHCA witness, Marisol Fitch, found this clinical and health planning testimony to be persuasive, and APMC’s prior position that need and accessibility do not support approval of a new PHT program are in line with the record evidence. The glaring inconsistency in APMC’s past and current assertions calls into serious question the credibility of the general, theoretical, and unsubstantiated access problems that are alleged in APMC’s application. Section 408.035(1)(c): The ability of the applicant to provide quality of care and the applicant’s record of providing quality of care; Section 408.035(1)(d): The availability of resources, including health personnel, management personnel, and funds for capital and operating expenditures, for project accomplishment and operation; and Rule 59C-1.044(3-4). Quality in the delivery of health care is APMC’s first and foremost strategic imperative. APMC defines “quality” as the simultaneous achievement of excellence in three areas: patient outcomes, patient experience, and patient access. APMC is very deliberate in its approach to metric- driven performance in quality and safety. APMC is the highest- rated system in all of Central Florida within the CMS rating system, which analyzes data for 66 quality improvement metrics. Similarly, APMC is the highest ranked Truven-rated health care system in Central Florida, and is ranked first among the over 30 hospitals analyzed and ranked by Vizient Southeast. The metrics analyzed by these rating organizations include, but are not limited to, mortality rates, readmission rates, cost containment, patient experience scores, emergency department wait times, and infection rates. Through deliberate focus and a compulsive commitment to quality, the APH Heart Center has performed at the highest levels with respect to quality of care and patient outcomes for well over a decade. For its part, the Agency does not dispute that the applicant is a quality provider. However, AHCA does maintain that approval of an unneeded sixth provider of PHT services in Florida could lead to or correlate with negative patient outcomes. Given the relatively low PHT volumes statewide, and agreement that volume is positively correlated with quality and outcome in transplantation, splitting state volume among six providers could negatively impact the quality of this service, as it concerns the residents of OTSA 3 and Florida more broadly. This service is defined by Florida law as a tertiary service of limited concentration. Indeed, APMC agrees that there should not be a PHT program in every hospital, particularly since organs are a limited resource. APMC failed to credibly demonstrate that it would achieve the PHT volumes it projected unless it diverts significant volumes from other Florida providers. Approval of a new program will not create transplant patients that do not exist or are not currently able to reasonably access services. The applicant has not demonstrated that it will achieve volume sufficient to reasonably assure quality care. Rule 59C-1.044(4) requires that applicants meet certain staffing requirements, including: “The program shall employ a transplant physician, and a transplant surgeon, if applicable, as defined by the United Network for Organ Sharing (UNOS) June 1994.” The applicant concedes that it still needs to hire a transplant surgeon and a cardiologist specializing in heart failure, to staff the proposed program. While APH has had difficulty recruiting and retaining a bone marrow transplant physician to implement the bone marrow program approved in 2014, given its outstanding reputation for quality it is likely that APMC would ultimately be successful in recruiting a PHT surgeon and an advanced heart failure cardiologist. Section 408.035(1)(e): The extent to which the proposed services will enhance access to health care for residents of the service district. Approval of APMC’s proposed program would likely improve physical access to PHT services for the very few residents of OTSA 3 that need them. Generally speaking, adding an access point for a service will make that service more convenient and geographically proximate for some. However, given the rarity of PHTs, approval of the APMC program would not result in enhanced access for a significant number of patients. Moreover, there was no credible evidence presented at hearing that any resident of OTSA 3 that needed PHT services was unable to access those services at one of the existing PHT programs in Florida. Based upon persuasive record evidence, there is also clearly a positive relationship between PHT volume and outcomes. As with any complex endeavor, practice makes perfect. In this instance, maintaining a minimum PHT case volume provides experience to the clinicians involved and helps maintain proficiency. According to the credible testimony of Dr. Pietra, maintaining a volume of no fewer than 10 PHTs per year is critical, “because your relative risk for the next patient that you do is at its lowest” if you stay above that volume. The clear intent of the minimum volume requirement of 12 heart transplants per year contained in rule 59C- 1.044(6)(b)2. is to ensure a sufficient case volume to maintain the proficiency of the transplant surgeons and other clinicians involved in the surgical and post-surgical care of PHT patients. In the 12 months ending in June 2016, there were only 35 PHT’s performed in Florida. By the end of June 2017, that number had dropped to 21, with none of the four operational PHT programs meeting the 10-case minimum volume. And when the approved PHT program at Nicklaus Children’s Hospital becomes operational, the per-program volume of PHTs is likely to drop even further. Given the lack of demonstrated need for a sixth program, and low volume of PHT’s statewide, the undersigned is unable to recommend approval of the APMC program knowing that it would further dilute the pool of PHT patients, potentially adversely affecting the quality of care available at the existing programs. Adequate case volume is also important for teaching facilities, such as Shands, to benefit residents of all the OTSAs by being able to train the next generation of transplant physicians. There was no persuasive evidence of record that approval of APMC’s application would meaningfully and significantly enhance geographic access to transplant services in OTSA 3. The modest improvement in geographic access for the few patients that are to be served by the program is not significant enough to justify approval in the absence of demonstrated need. There is no evidence that approval of the APMC application will enhance financial access, or that patients are not currently able to access PHT services because of payor status. Section 408.035(1)(g): The extent to which the proposal will foster competition that promotes quality and cost- effectiveness. It is clear that establishing and maintaining a transplant program is expensive and entails a significant investment of resources. Given the limited pool of patients, the added expense of yet a sixth Florida program is not a cost- effective use of resources. Section 408.035(1)(i): The applicant’s past and proposed provision of health care services to Medicaid patients and the medically indigent. OH is the designated safety net provider for the Central Florida region. In 2016, OH provided approximately $437 million in unreimbursed charity care. OH’s commitment to provide health care services to its entire community without regard to ability to pay continues today. Fifty-five percent of the patients served by APH are Medicaid beneficiaries, and 5-7 percent are self-pay or uninsured. If approved, OH’s mission and role as a safety net provider would extend to its proposed PHT program.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a final order be entered denying CON Application No. 10518 filed by Orlando Health, Inc., d/b/a Arnold Palmer Medical Center. DONE AND ENTERED this 26th day of December, 2018, in Tallahassee, Leon County, Florida. S W. DAVID WATKINS Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 26th day of December, 2018.
The Issue Whether the proposed amendments to Florida Administrative Code Rule 10- 5.011(1)(f), the "open heart rule", constitute an invalid exercise of delegated legislative authority.
Findings Of Fact Based upon the oral and documentary evidence adduced at the final hearing and the entire record in this proceeding, the following findings of fact are made. On January 18, 1991, HRS published proposed rule changes (the "Proposed Amendments") to Rule 10-5.011(1)(f), Florida Administrative Code, in the Florida Administrative Weekly, Volume 17, No. 3 at page 163. These consolidated cases were brought pursuant to Section 120.54, Florida Statutes, to challenge these Proposed Amendments to the administrative rules for the Certificate of Need program. As a preliminary matter, it is important to understand the background of the rule and the Proposed Amendments. Rule 10-5.011(1)(f), regulates the provision of open heart surgery throughout the eleven HRS service districts in Florida. HRS' stated purpose in promulgating the Proposed Amendments was to "clarify" certain provisions of the existing rule. The original version of the open heart surgery rule was drafted in 1982, and was modeled after the National Guidelines for Health Planning, (hereinafter the "National Guidelines"). At the time the existing rule was adopted, the Florida Certificate of Need Program closely tracked the National Guidelines. Prior to adopting the existing rule, HRS reviewed the relevant literature regarding open heart surgery programs. In addition, a task force was convened to review numerous issues, including certain criticisms received from the health care industry that the National Guidelines were too restrictive. In 1985, the open heart rule was amended in response to evidence demonstrating that the incidence rate of adult open heart surgery had increased. The rule was amended to project need based upon the actual use rate experienced. The amended rule provided that the use rate would be adjusted for every batch of applications based on the most recent twelve month data available. In 1987, the open heart surgery rule was challenged by St. Mary's pursuant to Section 120.56, Florida Statutes. The primary issue in that rule challenge was whether the 350 minimum volume operations standard in the rule was too high. Following a three day hearing which included the presentation of extensive expert testimony, the rule was declared to be a valid exercise of delegated authority. See, St. Mary's Hospital v. Department of Health and Rehabilitative Services, DOAH Case No. 87-2729R, 9 F.A.L.R. 6159. (This subject matter is discussed in more detail in Findings of Fact 91-92 below.) In 1989, HRS published what it considered to be proposed technical amendments to the open heart surgery rule to resolve certain issues regarding the publication of the fixed need pool and to clarify some other aspects of the rule. No work group was convened for these proposals because HRS did not consider the proposed changes to be substantive. However, a number of challenges were filed to the proposed rule amendments. In April of 1990, HRS decided to withdraw the amendments and seek further input from the health care industry and other affected persons regarding possible changes to the rule. A work group (the "Work Group") was convened on June 18, 1990 to discuss the issues raised in the various challenges to the 1989 proposed rule amendments and to consider other matters raised by the various industry representatives and other concerned parties. Representatives from numerous Florida hospitals, as well as representatives from the Association of Voluntary Hospitals, the Florida League of Hospitals and the Florida Hospital Association participated in the Work Group. The participants included hospitals that have open heart surgery programs and those that do not, including several who had applied or who have an interest in offering those services. The minutes of the Work Group Meeting were transcribed and are contained in the rule promulgation file which was accepted into evidence as HRS Exhibit 5. Elfie Stamm, the HRS planner primarily responsible for the original development and subsequent amendments of the open heart surgery rule was an active participant in the Work Group. She also oversaw the development of Volume 3 of the State Health Plan in 1988 and 1989. This volume deals with certificate of need matters and contains detailed research and analysis of open heart surgery trends and developments. Thus, Ms. Stamm was very familiar with the issues and current research in the area. Based upon the evidence deduced during the Work Group Meeting and a review of the research in the area, HRS decided to promulgate the Proposed Amendments which it considered to be "technical" changes to the rule that were intended to not change the impact on current and prospective providers. HRS specifically decided not to make any changes that would modify the current overall need projections. Prior to publication, the Proposed Amendments were circulated for internal review, approval and signoff, and were sent to the House Health Care Committee and the Senate HRS Committee. The Proposed Amendments were also sent to all the members of the Work Group, who were advised that it would be published on January 18, 1991. As noted above, the Proposed Amendments were published in the Florida Administrative Weekly on January 18, 1991. Only one public comment (dated January 24, 1991, and received by HRS on January 28, 1991,) was submitted in response to the January 18, 1991 publication of the Proposed Amendments. That comment suggested clarifying language to Subparagraph 7(a) II of the Proposed Amendments. In response to this letter, HRS caused to be published a Notice of Change in the February 1, 1991 edition of the Florida Administrative Weekly. The January 18, 1991 Notice provided that a public hearing on the Proposed Amendments would be conducted on February 11, 1991 at 10:00 a.m. if requested. No public hearing was requested and, therefore, none was held. St. Mary's has insinuated that the Notice was somehow deficient because the public hearing was scheduled more than 21 days after the notice of rulemaking was published in the Florida Administrative Weekly. The evidence indicates that such scheduling is customary in order to assure that a request can be made right up until the last possible moment without the necessity of holding two public hearings. Overview of the Proposed Amendments Proposed Section 10-5.011(1)(f) is a new section entitled "Departmental Intent." This section states that certificates of need for open heart surgery programs will not normally be approved unless the applicant meets the relevant statutory criteria, including the need determination criteria in the rule. This Section also provides that separate certificates of need will be required in order to establish either an adult or pediatric open heart surgery program. As discussed in more detail below, the existing rule does not expressly state that separate CONs must be obtained to implement adult and pediatric programs. The proposed rule amendments do not specifically address the provision of adult and pediatric open heart surgery within the same program. Proposed Section 10-5.011(1)(f)2 sets forth several new definitions. Subparagraph 2j establishes for the first time pediatric open heart service areas which are made up of combined HRS districts and are thus much larger than adult open heart service areas. Proposed Section 10-5.011(1)(f)3 mandates that pediatric open heart surgery programs must have the same services and procedures as adult programs, including intraaortic balloon assists. Subparagraph 3c requires that pediatric open heart surgery programs shall only be located in hospitals with inpatient cardiac catheterization programs. Proposed Section 10-5.011(1)(f)4 contains the travel time standard which applies to adult open heart surgery service accessibility, and the maximum waiting period for open heart surgery team mobilization for adult and pediatric programs. There is no travel time standard for pediatric services in the Proposed Amendments. Proposed Section 10-5.011(1)(f)4d requires applicants for adult or pediatric open heart surgery programs to document the manner in which they will provide open heart surgery to all persons in need. Proposed Section 10-5.011(1)(f)7 is entitled "Adult Open Heart Surgery Program Need Determination". Subparagraph (a) essentially recodifies and restates existing Rule 10-5.011(f)11 and provides that each and every adult open heart surgery program within a district should be performing 350 adult open heart surgery operations per year prior to there being a calculated net need for a new program in that district. The section does not contain an explanation or delineation of "not normal" circumstances that HRS will consider in the absence of a net numeric need. Currently, Rule 10-5.011(1)(f)11., provides: There shall be no additional open heart surgery programs established unless: The service volume of each existing and approved open heart surgery program within the service area is operating at and is expected to continue to operate at a minimum of 350 adult open heart surgery cases per year or 130 pediatric heart cases per year. As discussed in more detail in Findings of Fact 89-97 below, from approximately early 1985 through January 22, 1990, HRS interpreted this section to require that the volume of procedures provided by all existing programs in each service district be averaged to determine whether need existed for a new open heart surgery program (the "averaging method"). This averaging method allowed HRS to find numeric need when the average total of procedures per program in the district equaled 350 or more. After this interpretation was rejected in several cases, HRS abandoned the "averaging" approach and has been requiring "each and every" existing program in a district to meet the 350 minimum standard before a new adult program will normally be approved. Subparagraph (b) of Proposed Section 10-5.011(1)(f)7 mandates that only one program shall be approved at a time, and contains the numeric need calculation formula for adult open heart surgery programs. Subparagraph (c) states that, regardless of whether need is shown according to the formula, if an incoming provider will reduce an existing provider's volume below 350, the applicant will not normally be approved. Proposed Section 10-5.011(1)(f)8 contains a new method for calculating need for pediatric open heart surgery programs. Pursuant to this proposal, need would be calculated based on the number of resident live births in a pediatric open heart surgery program service area. The proposal would require at least 30,000 resident live births per pediatric program. The economic impact statement (EIS) which accompanied the Proposed Amendments states that, other than administrative and word processing costs, there will be no additional annual or operating costs associated with the implementation of the Proposed Amendments. The EIS contains no statement of the impact upon potential applicants or existing providers due to the changes in either the adult or pediatric portions of the rule. WHETHER PARAGRAPH 1 OF THE PROPOSED AMENDMENT IS INVALID BECAUSE IT REQUIRES A SEPARATE CERTIFICATE OF NEED FOR AN ADULT OPEN HEART SURGERY PROGRAM AND PEDIATRIC OPEN HEART SURGERY PROGRAM. The existing rule does not expressly require separate certificate of need applications for pediatric and adult open heart surgery programs. However, HRS' policy for at least the last year has been to require hospitals to obtain separate certificates of need for adult open heart surgery programs and pediatric open heart surgery programs. See Findings of Fact 135 below. In other words, the proposed amendment codifies HRS' current interpretation of the existing rule. The Work Group which assisted in the development of the Proposed Amendments examined the issue of whether HRS should require hospitals to obtain separate CONs for adult open heart surgery programs and pediatric open heart surgery programs. In addition, HRS reviewed the available literature, including the National Guidelines and the Guidelines for Pediatric Cardiology Diagnostic and Treatment Centers (hereinafter the "Pediatric Guidelines"). Comments were also solicited from the Children's Medical Services Program Office which regulates certain aspects of pediatric cardiac surgery. Based upon a review of this information, HRS concluded that (1) pediatric and adult open heart surgery programs are generally and properly operated as separately organized programs and (2) pediatric programs are and should be staffed by personnel specially trained to provide pediatric care. There are significant differences between providing open heart surgery to adults and providing open heart surgery to children. Adults generally have acquired heart disease, while children generally have congenital heart problems. The transfer process and approach to open heart surgery differs between adults and children. Pediatric open heart patients are more labile in certain situations than adult open heart surgery patients. People who work with adult open heart surgery patients often lack the ability to work with pediatric open heart surgery patients. In sum, the evidence established that pediatric open heart surgery is a complex service which requires a team dedicated to that service. With the possible exception of one program, all the pediatric open heart surgery programs in Florida are offered in separately organized programs. The incidence rate of pediatric open heart surgery is significantly lower than that for adult open heart surgery. The latest data reflects that from October 1989 to September 1990 there were only 545 pediatric heart surgeries performed in the state of Florida as compared to nearly 21,000 adult open heart surgeries during the same period. Nothing in the Proposed Amendments prohibits an applicant from applying for both adult and pediatric open heart surgery. The rule does have separate requirements, including separate need methodologies, which would normally have to be satisfied as a predicate to the award of either program. St. Mary's voiced a concern that the Economic Impact Statement did not address the additional costs to applicants, (i.e. duplicate application fees) that will result from this provision of the Proposed Amendments which requires separate certificates of need for adult and pediatric programs. As noted above, such costs are already necessary under HRS' interpretation of the existing rules. In any event, St. Mary's has not demonstrated that such additional costs would be other than minimal. WHETHER THE CLASSIFICATION OF OPEN-HEART SURGERY BY THE DIAGNOSTIC RELATED GROUPS LISTED IN SUB-PARAGRAPH 2.g. OF THE PROPOSED AMENDMENT IS VAGUE, ARBITRARY AND CAPRICIOUS. Subparagraph 2.g. of the proposed amendments reads as follows: "Open Heart Surgery Operation". Surgery assisted with a heart-lung by-pass machine that is used to treat conditions such as congenital heart defects, heart and coronary artery diseases, including replacement of heart valves, cardiac vascularization, and cardiac trauma. One open heart surgery operation equals one patient admission to the operating room. Open heart surgery operations are classified under the following diagnostic related groups: DRGs 104, 105, 106, 107, 108 and 110. Diagnostic related groups or "DRGs", are a health service classification system used by the Medicare System. The existing rule does not include the reference to DRG classifications. Some confusion had been expressed by applicants as to whether certain organ transplant operations which utilized a bypass machine during the operation should be reported as open heart operations or as organ transplantation operations. The amendment was intended to clarify that only when the operation utilizes the bypass machine and falls within one of the enumerated categories should it be considered an open heart surgery operation. The inclusion of the listed DRGs was meant to clarify the existing definition by limiting the DRG categories within which open heart surgery services may be classified. There is no dispute that the primary factor in defining an open heart surgery procedure is the use of a heart-lung machine. Florida Hospital argued that the proposed definition is ambiguous and vague because not all procedures which fit into the listed DRG categories necessarily involve open heart surgery. Florida Hospital's fear that the new language would seem to indicate that each procedure falling into the listed DRGs qualifies as an open heart surgery operation is unfounded. While the provision could have been written in a simpler and clearer manner, the definition adequately conveys the intent that the use of a heart-lung by-pass machine is an essential element to classifying an operation as open-heart surgery. WHETHER SUBPARAGRAPH 2.j. OF THE PROPOSED AMENDMENT IS INVALID BECAUSE IT ESTABLISHES PEDIATRIC OPEN HEART SERVICE AREAS WHICH ARE LARGER THAN ADULT OPEN HEART SERVICE AREAS WHICH MAY RESULT IN DEPRIVATION OF NEEDED OPEN HEART SURGERY PROGRAMS IN SOME SERVICE AREAS. The Proposed Amendments will regulate pediatric open heart surgery on a regional basis. Five "Services Areas" are created by combining HRS service districts. In establishing these Service Areas, HRS considered the extent to which patients would have geographic access to pediatric open heart surgery services. The Service Areas were organized geographically in a manner intended to result in one pediatric open heart surgery program in each Service Area. Section 20.19(7), Florida Statutes, provides that "[t]he Department shall plan and administer its programs of health, social, and rehabilitative services through service districts and subdistricts ... ." This statute sets forth the geographic composition of each district and subdistrict through which HRS is to administer its programs. Section 20.19(7)(a), Florida Statutes. St. Mary's contends that no statutory authority exists for combining "service districts" to create "service areas." However, no prohibition against combining districts for tertiary services exists in the statute and, indeed, the nature of tertiary services mandates such an approach in some instances. As indicated below, HRS has combined districts for other programs. Section 381.702(20) defines "tertiary health services" and authorizes HRS to establish by rule a list of tertiary health services. Tertiary health care services are complex services which involve high consumption of hospital resources. Due to the low incidence of those medical conditions which require tertiary services, there is a benefit in limiting those services to select facilities in order to maximize volume at those facilities. This approach is known as the regionalization of health care services. HRS has promulgated a list of tertiary health services in Rule 10- 5.002(66) (previously 10-5.002(40), Florida Administrative Code. Subsection 9 of this Rule includes "neonatal and pediatric cardiac and vascular surgery." Thus, pediatric open heart surgery is a tertiary health care service. HRS regulates other tertiary services, including burn units, organ transplants programs, and pediatric cardiac catheterization services, on a regional basis. See e.g., Rules 10-5.043, and 5.044 Florida Administrative Code. Regionalization of tertiary services at a central point has been used by HRS to encourage an appropriate volume level at each center. The evidence established that there is a correlation between volume and outcome in pediatric open heart programs. HRS has concluded that pediatric open heart surgery should be limited to and concentrated in a limited number of hospitals to ensure the quality, availability, and cost effectiveness of the service. No persuasive evidence was presented to rebut this conclusion. The evidence indicates that pediatric open heart surgery services are currently delivered in Florida on a regional basis. A limited number of hospitals scattered throughout the state are serving the state's population. Of the eight hospitals which are included among the HRS inventory of hospitals providing pediatric open heart surgery services, only 5 perform a significant volume of cases. Each of those five hospitals is either a teaching hospital or a specialty pediatric hospital. The other three hospitals listed on the inventory have large adult open heart surgery programs, but perform a very low volume of pediatric cases. The evidence did not establish that the existing providers are currently unable to meet the need for services in the state. Based upon a review of the existing research and literature, HRS has concluded that a facility should perform approximately 100 pediatric heart surgeries annually in order to retain proficiency. As discussed in Findings of Fact 132 below, the 30,000 annual live births standard will, over time, result in approximately 100-130 pediatric open heart surgery cases per year among the population base from birth to age 21. In Service Area 1, the resident live births in 1988 were 16,142. (Service Area 1 combines HRS Districts 1 and 2.) Thus, the number of live births in this Service Area would have to almost double before a new program could meet this standard. While Petitioners object to this result, no persuasive evidence was presented to establish that HRS has acted arbitrarily in establishing the Service Area. The rule requires a pediatric program in each Service Area. However, only one of the Service Areas established by this Proposed Amendment meets the 30,000 live birth standard. St. Mary's contends that this discrepancy renders the proposed amendment internally inconsistent. However, there are significant countervailing considerations which militate against closing an existing program and justify the continuation of established programs in these areas. These considerations include the need to insure geographic access, the reluctance to disturb existing referral patterns and a reluctance to disturb programs with demonstrated proficiency. The HRS Work Group which assisted in the development of the Proposed Amendments addressed the issue of regulating pediatric open heart surgery services on a regional basis. No persuasive evidence was presented in opposition to this approach. WHETHER PARAGRAPH 3 OF THE PROPOSED AMENDMENT IS INVALID BECAUSE IT REQUIRES SERVICES AND PROCEDURES WHICH ARE NOT NECESSARY TO THE SAFE EFFECTIVE PROVISION OF PEDIATRIC OPEN HEART. The Proposed Amendments will require hospitals seeking to provide pediatric open heart surgery to have the ability to provide certain specified services. The requirements contained in paragraph 3 of the Proposed Amendments are the same as those contained in the existing rule. They are considered by HRS to be minimum standards for the provision of both adult and pediatric open heart surgery. The evidence established that it is desirable to have those services available, even if they are infrequently used. Dr. Byron testified that some of the procedures such as intra-aortic balloon assists, prolonged myocardial bypass and the repair and replacement of heart valves are performed less commonly in children. However, he did agree that these procedures are occasionally necessary and a pediatric program should have the ability to provide those services. Requiring a pediatric open heart program to have the capability to provide those services if necessary is consistent with the goal of regionalization of pediatric open heart surgery. There was no adverse public comment received during development of the Proposed Amendments regarding these requirements and no persuasive testimony or other evidence was offered during the Work Group or the hearing in this cause to establish that these minimum requirements are not appropriate and/or should be deleted. WHETHER PARAGRAPH 3c VI OF THE PROPOSED AMENDMENT, WHICH REQUIRES THAT IN ORDER TO BE AWARDED A PEDIATRIC OPEN HEART PROGRAM THE APPLICANT MUST ALSO HAVE PEDIATRIC CARDIAC CATH, CREATES A "CATCH 22" WHEN READ IN CONJUNCTION WITH THE CARDIAC CATH RULE WHICH REQUIRES AN APPLICANT FOR PEDIATRIC CARDIAC CATH TO OFFER PEDIATRIC OPEN HEART, AND IS THEREFORE INVALID. The Proposed Amendments require that in order to be awarded a certificate of need for a pediatric open heart surgery program, an applicant must have a pediatric cardiac catheterization ("cardiac cath") program. A similar requirement can be implied from the current open heart surgery rule and, indeed, HRS has interpreted the current rule is this manner. The cardiac cath rule requires that an applicant for a pediatric cardiac cath program must have a pediatric open heart surgery program. The Services Areas and the need methodologies in the proposed pediatric portion of the open heart surgery rule and the amended pediatric portion of the cardiac catheterization rule are the same. St. Mary's contention that applicants are placed in a "Catch 22" is rejected. If a facility wants to offer pediatric open heart, it is going to have to simultaneously apply for cardiac cath. There is nothing in this section, or anywhere else in the rule, which prohibits an applicant from applying for pediatric cardiac cath and pediatric open heart contemporaneously. In fact, such a simultaneous application is exactly what HRS is trying to encourage. The two services, pediatric open heart and pediatric cardiac cath, should only be offered in combination with each other. St. Mary's own witness, Dr. Harry Byron, a pediatric cardiologist, agreed that a facility that offers an open heart surgery program in pediatrics should also have pediatric cardiac cath capabilities. Every facility in the state of Florida which provides pediatric cardiac cath also provides pediatric open heart surgery. During the hearing, it was suggested that Hollywood Memorial Hospital is performing pediatric open heart without offering pediatric cardiac cath. However, an examination of the CON issued to Hollywood Memorial reveals that it was awarded both services simultaneously. St. Mary's contends that the Proposed Amendments to the open heart rule are deficient because they cross-reference the cardiac cath rules and there is some question as to the status of the cardiac cath rules. St. Mary's argues that HRS' predecessor cardiac catheterization rule is the current cardiac catheterization rule because proposed amendments to the cardiac cath rule were prevented from becoming final as the result of timely challenges. As best can be determined from the evidence in this case, there is no inconsistency between the Proposed Amendments and the cardiac cath rules. The evidence regarding the status of the cardiac cath rules was inconclusive. Amendments to the cardiac cath rule were published on April 22, 1988, but never became effective because of rule challenges which were eventually settled. When the rule amendments were republished on July 29, 1988 with certain agreed upon changes, timely challenges brought pursuant to Section 120.54(4), Florida Statutes, prevented those changes from becoming effective. However, the Final Order in the case challenging the procedural adequacy of the July 29, 1988 amendments upheld a large portion of that proposed rule, including the sections pertinent to this case. See, Florida Medical Center v. Department of Health and Rehabilitative Services, Case No. 88-3970R (DOAH Final Order entered June 30, 1989). Thus, it appears that St. Mary's contention is without merit. WHETHER SUBPARAGRAPH 4.a. OF THE PROPOSED AMENDMENT IS INVALID BECAUSE IT DOES NOT CONTAIN A TRAVEL TIME STANDARD FOR PEDIATRIC OPEN HEART SURGERY. The Proposed Amendments do not contain a travel time standard for pediatric open heart surgery services. St. Mary's contends that the proposed rule should include a travel time standard for pediatric patients who need emergency procedures. There is no dispute that the longer a pediatric patient has to wait to have open heart surgery, the greater the chance of a negative outcome. Moreover, transporting pediatric patients is often more complicated and dangerous than transporting an adult patient because infants are more labile and closer attention must be paid to their glucose levels, to the environmental temperature and similar matters. In the course of its deliberations concerning the Proposed Amendments, HRS considered whether it should include a travel time standard relating to pediatric open heart surgery. No persuasive evidence was presented to HRS during the rule development process that an appropriate travel time standard could or should be adopted. HRS elected not to provide for a travel time standard out of concern that such standard would have suggested a "need" for programs in geographic areas which would not generate a sufficient case load to allow the program to maintain proficiency. A travel time standard such as that contained in the rule for the provision of adult open heart surgery programs would not be appropriate for the provision of pediatric open heart surgery programs because of the highly tertiary nature of the service. Had HRS used a two-hour travel time standard for pediatrics as it did for adult open heart, a need may have been shown for more programs than the volume of operations could support, resulting in programs with lower volumes than desired from a quality of care standpoint. Some pediatric patients in need of open heart surgery may have to travel as much as six hours by car if the need methodologies and Service Areas in the Proposed Amendments are adopted. In most instances, however, the travel time would be substantially less and most areas of the state will be within two to three hours by car to a pediatric open heart surgery center. Geographical location was one of the factors considered in the establishment of the Service Areas. However, the need to insure an adequate volume of cases for each program was an overriding concern. While it is certainly desirable to minimize travel and distance for pediatric patients as much as possible, these concerns must be counterbalanced against the need to insure that each center performs enough procedures to maintain proficiency. The evidence was insufficient to establish that HRS was arbitrary and/or capricious in dealing with these sometimes conflicting goals. WHETHER SUBPARAGRAPH 4.c. OF THE PROPOSED AMENDMENT REQUIRING TEAM MOBILI- ZATION FOR EMERGENCY OPERATIONS WITHIN A MAXIMUM WAITING PERIOD OF TWO HOURS IS CONTRARY TO THE EXCLUSION OF A TRAVEL TIME STANDARD FOR PEDIATRIC OPEN HEART. As indicated above, there is no travel time standard for pediatric open heart surgery in the Proposed Amendments. There is, however, a requirement that a hospital be able to mobilize an open heart surgery team within a maximum time limit of two hours. Proposed Rule 10-5.011(1)(f)4. The purpose of the team mobilization standard is to assure rapid mobilization within the hospital once the baby has arrived at the hospital. This requirement is contained in the existing open heart rule and no adverse public comment was received regarding it. St. Mary's contends that having a two hour team mobilization standard for pediatric open heart surgery but no travel time standard for pediatric patients is inconsistent and reflects a disregard for pediatric accessibility or geographic accessibility. This criticism is rejected. The emergency mobilization standard addresses the applicant facility's ability to render emergency open heart surgery services subsequent to a patient's arrival at the facility. It is an internal requirement. A travel time standard addresses the extent to which the Service Area population has access to services. It is a requirement external to any specific hospital. For the reasons set forth in Findings of Fact 57-60 above, a travel time standard is not appropriate for pediatric open heart programs. However, these reasons do not negate the benefits of an emergency mobilization standard. WHETHER SUBPARAGRAPH 4.d. OF THE PROPOSED AMENDMENT IS INVALID BECAUSE HRS IS WITHOUT STATUTORY AUTHORITY TO REQUIRE APPLICANTS TO DOCUMENT HOW OPEN HEART WILL BE MADE AVAILABLE TO ALL PERSONS IN NEED. The existing rule mandates that open heart surgery be available to all persons in need regardless of the ability to pay. This provision remains intact in subparagraph 4.d. of the amended rule, but is clarified in part as follows: Applicants for adult or pediatric open heart surgery programs shall document the manner in which they will meet this requirement. HRS currently requires evidence of an applicant's past record with regard to Medicaid and indigent care, as well as statistical projections for the provision of such care upon implementation of its program. In fact, the language added to paragraph 4.d. simply reflects the Department's existing method of reviewing CON applications pursuant to the guidelines of Section 381.705, Florida Statutes, which requires consideration of an applicant's past and proposed provision of health care services to Medicaid patients and the medically indigent. Section 381.704(4), Florida Statutes (1989) gives HRS the authority to adopt rules necessary to implement Sections 381.701-381.715. Section 381.705, Florida Statutes (1989) requires HRS to review certificate of need applications in context with "(n) The applicant's past and proposed provision of health care services to Medicaid patients and the medically indigent," "(h)... the extent to which the proposed services will be accessible to all residents of the service district", and "(b) the ... accessibility of like and existing health care services and hospices in the service district of the applicant." The Petitioners have not established any inconsistencies between the Proposed Amendments and the statutory standards of review. WHETHER PARAGRAPH 5 OF THE PROPOSED AMENDMENT, SERVICE QUALITY STANDARDS, IS ARBITRARY AND CAPRICIOUS BECAUSE THE STANDARDS ARE UNRELATED TO PEDIATRIC OPEN HEART. The standards contained in Subsection 5 are minimum quality of care standards which apply to programs providing pediatric as well as adult open heart surgery. These requirements do not significantly change the existing rule. St. Mary's suggested that the standards were only applicable to an open heart program servicing adults and that pediatric programs should have different standards. No persuasive evidence was provided to establish that any of the requirements are unrelated or unnecessary to pediatric open heart programs. In fact, St. Mary's own witness, Dr. Bryon, testified that he had no objection to the provisions of paragraph 5. WHETHER PARAGRAPH 7 OF THE PROPOSED AMENDMENT IS INVALID BECAUSE IT DOES NOT PROVIDE AN OPPORTUNITY TO DEMONSTRATE "NOT NORMAL" CIRCUMSTANCES. Subparagraph 7b of the proposed rule amendments establishes a need determination formula. Application of this formula is governed by minimum volume and utilization standards established under subparts a and c of paragraph 7. Subparagraph 7e of the proposed amendments provides as follows: a. A new adult open heart surgery program shall not normally be approved in the HRS District if any of the following conditions exist: There is an approved adult open heart surgery program in the HRS District; One or more of the operational adult open heart surgery programs in the HRS District that were operational for at least twelve months as of six months prior to the beginning date of the quarter of the publication of the fixed need pool performed less than 350 adult open heart surgery operations during the twelve months ending six months prior to the beginning date of the quarter of the publication of the fixed need pool; or, One or more of the adult open heart surgery programs in the HRS District that were operational for less than twelve months during the twelve months ending six months prior to the beginning date of the quarter of the publication of the fixed need pool performed less than an average of 29 adult open heart surgery operations per month. * * * (c) Regardless of whether need for a new adult open heart surgery program is shown in subparagraph b. above, a new adult open heart surgery program will not normally be approved for an HRS district if the approval would reduce the 12 month total at an existing adult open heart surgery program in the HRS district below 350 open heart surgery operations. (emphasis added) The need determination formula includes a presumption against approval of a new provider if there is already an approved program within a district, or any existing program within a district is operating at less than 350 procedures annually. HRS has recognized that the need determination formula cannot take into account all factors within a district which may affect actual need. Accordingly, the rule implicitly allows consideration of "not normal" circumstances in determining need. If circumstances are "normal", then a failure to satisfy the conditions in paragraph 7 will mean that the application is denied. However, by proving that circumstances are "not normal", a new adult open heart surgery program can be approved despite the failure to satisfy the conditions in paragraph 7. The "not normal" provision is also found in the statement of Departmental Intent, subparagraph 1 of the Proposed Amendments. That provision proclaims that an application will "not normally" be approved unless the applicant meets relevant statutory criteria, including the standards and need determination criteria. HRS perceived its current rule and the Proposed Amendments as providing applicants with the opportunity to demonstrate need for a new adult open heart surgery program by demonstrating numeric need under paragraph 7 or by demonstrating "not normal" circumstances. HRS can and will approve an application in the absence of quantified need where the other statutory review criteria are met and the applicant demonstrates that a need for a new program exists. The current rule provides a similar presumption against approval if there is already an approved program in the district, or if any existing program in the district is operating at less than 350 procedures annually. This rule has been interpreted to allow applicants to demonstrate actual need by demonstrating circumstances that transcend the numeric calculation. For example, an open heart program was recently approved by HRS for Marion County even in the absence of numeric need as determined by the rule. It is impossible to list all of the circumstances where a new program could be approved even in the absence of "numeric need." Examples of not normal circumstances include a showing of inaccessibility, excessive utilization of a particular facility, or an intentional action by an existing provider to keep its utilization below 350 annual procedures. Other factors may include exceptional circumstances as they relate to the review criteria listed in Section 381.705, Florida Statutes, evidence of an unusual payor mix, established referral patterns among existing providers, or evidence to suggest that an existing program could not reach the 350 minimum procedure volume because of poor quality of care. In sum, Paragraph 7 of the Proposed Amendments does not preclude an applicant from attempting to demonstrate that its application should be approved in the absence of quantified need. The "not normally" language will enable HRS to consider all the statutory review criteria in its review of applications even in the absence of numeric need under paragraph 7. The Petitioners challenging the "not normal" language in paragraph 7 of the Rule have failed to provide any credible evidence to demonstrate that the "not normal" provisions are arbitrary or capricious or unduly vague. Similar provisions have been upheld in prior cases. See, Humana, Inc., v. Department of Health and Rehabilitative Services, 469 So.2d 889, 891, (Fla. 1st DCA, 1985); North Broward Hospital District v. Department of Health and Rehabilitative Services, DOAH Case No. 86-1186R (Final Order issued July 18, 1988.) WHETHER SUBPARAGRAPH 7.a. IS INVALID FOR THE FOLLOWING REASON: Existing programs could block a proposed program by keeping the number of open heart operations performed in a given year below 350. As indicated above, the Proposed Amendments provide that a new adult open heart surgery program will not normally be approved in a service district if any of the existing programs in the district performed less than 350 adult open heart surgery operations during the 12 months ending 6 months prior to the beginning date of the quarter of the publication of the fixed need pool. The challengers claim that the Proposed Amendments to paragraph 7a are invalid because they allow existing programs to bar approval of new programs by keeping their volume below 350. This issue was considered by HRS in its rule amendment promulgation deliberations. No evidence was presented during those deliberations or at the hearing in this cause that there has been a deliberate attempt by any existing provider to keep the number of operations performed below 350 per year. Indeed, such an attempt is unlikely because it would require physicians to intentionally turn away patients requiring open heart surgery when a facility's numbers reach close to 350 operations on an annual basis. The existing rule has a similar provision. As discussed in more detail below, a Section 120.56 rule challenge was filed in 1987 against this provision in the existing rule alleging the possibility that an existing provider could block a proposed adult open heart surgery program by deliberately keeping its annual adult open heart surgery volume below 350 cases. These charges were rejected as speculative and unsubstantiated. St. Mary's Hospital v. Department of Health and Rehabilitative, 9 F.A.L.R. 6159, DOAH Case No. 87- 2729R. The Proposed Amendments would not prohibit the award of a CON if a deliberate pattern or scheme to keep volume low to lockout new providers was demonstrated. Because it protects market share which is anticompetitive and contrary to statute; is unconstitutional in that it denies equal protection and due process, and because it is contrary to agency policy through 1989. Paragraph 7.a. of the Proposed Amendments is based upon a substantially similar provision found in the National Guidelines. The National Guidelines were adopted by the Federal Department of Health, Education and Welfare following an extensive consultation and review process in 1978. The National Guidelines are one of the key resource materials used by local and state health planning agencies in developing certificate of need regulations. The state of Florida conforms to the National Guidelines in most areas. According to the National Guidelines, a new open heart program should not ordinarily be approved if an existing program is operating at less than 350 operations annually. Specifically, Section 121.107(3) of the "Rules and Regulations" of the National Guidelines, entitled "Open Heart Surgery" published at Vol. 43, No. 60 of the Federal Register, provides at page 262: There should be no additional open heart units initiated unless each existing unit in the health service area(s) is operating and is expected to continue to operate at a minimum of 350 open heart surgery cases per year in adult services or 130 pediatric open heart cases in pediatric services. According to the "Discussion" at Section (b) of the Rules and Regulations for open heart surgery in the National Guidelines: In order to prevent duplication of costly resources which are not fully utilized, the opening of new units should be contingent upon existing units operating, and continuing to operate, at a level of at least 350 procedures per year. (emphasis added) The 350 service volume requirement has been a part of HRS' open heart surgery certificate of need rule since its adoption in 1982. As discussed in more detail below, there is a substantial body of literature which concludes that there is a relationship between volume and outcome in the provision of adult open heart surgery services. The literature contains data which demonstrates that, as a general rule, hospitals which provide higher volumes of adult open heart surgery cases achieve better patient outcomes. Based upon this research, the optimum efficiency standard, both from quality of care and economy of scale perspective, is believed to be approximately 500 procedures per year. The 350 minimum volume standard reflects HRS' desire that each existing and approved facility be operating at 75% of this optimum standard before any additional programs are approved within an HRS District. The 350 standard assumes that each facility can provide an average of seven operations per week, a schedule judged to be feasible in most institutions which provide open heart surgery services. As a matter of health planning policy, HRS adopted the 350-standard in an effort to prevent duplication of costly services which are not fully utilized, both as to facility resources and manpower. This standard is intended to assure both quality of care and efficiency in the operations of adult open heart surgery programs. For several years after the rule was originally adopted in 1982, the rule was interpreted by HRS to require a showing that each existing program was at or above 350 procedures annually before a new program could normally be approved. However, as discussed below, sometime around 1984 or 1985, HRS began "interpreting" the 350 standard to be an average, i.e., the average utilization of all existing programs in a district had to be at or above 350 before a new program would normally be approved. From approximately early 1985 through January 22, 1990, HRS interpreted the existing rule in accordance with the "averaging method". This averaging method allowed HRS to find numeric need when the average total of procedures per program in the district equaled 350 or more. In 1987, a Section 120.56 rule challenge was brought against the then existing open heart rule. In that case, the 350 standard was directly attacked as being too high as a minimum procedure threshold. In the 1987 challenge to the open heart rule, HRS explained the rule utilizing the averaging approach. St. Mary's Hospital v. Department of Health and Rehabilitative Services, supra, 9 FALR at 6174. HRS witness Elfie Stamm testified during that hearing in support of the rule as it was being interpreted at that time. Extensive testimony was presented regarding the 350 standard. It is not clear whether any of the parties challenged the averaging approach as part of that case. Ultimately the rule, including the 350 standard was, upheld. The Final Order presumes that the averaging approach would be used and does not specifically address the validity of that approach. None of the Petitioners in this case have provided persuasive evidence that the 350 standard has become obsolete or inappropriate. Indeed, as discussed in more detail below, the evidence indicates that the 350 standard is still the most widely accepted standard. During 1989, several Orders were entered by the Division of Administrative Hearings rejecting HRS' interpretation that the existing rule permitted the averaging method. In Lakeland Regional Medical Center v. HRS, 11 FALR 6463 (DOAH Final Order November 15, 1989), a hearing officer declared the HRS "averaging policy" to be inconsistent with the language of the existing rule and an invalid exercise of delegated legislative authority because it had not been adopted in accordance with Section 120.54, Florida Statutes. In a subsequent 120.57 proceeding involving the proposed issuance of a CON for a new open heart surgery program, the Recommended Order rejected HRS' averaging policy and concluded that it could not be applied because it was inconsistent with the existing rule. Hillsborough County Hospital Authority v. HRS, 12 FALR 785 (Final Order, January 23, 1990). In the Recommended Order in the Hillsborough County case, the hearing officer did not address the relative merits of the averaging policy versus the each and every method. He found that "the incipient policy constitutes an impermissible deviation from the terms of an existing rule and cannot be used in this proceeding. In view of this conclusion, it is unnecessary to determine whether an adequate record foundation exists to support that [averaging approach]." Although HRS had argued in favor of the averaging policy at the hearing in the Hillsborough County case, the Secretary of HRS in his Final Order in that case accepted the "each and every" interpretation declaring that "it is good health planning to allow newly approved providers to become operational and reach the 350 procedure level as soon as possible and before new programs are authorized." Id. at 787. In subsequent final orders on other open heart surgery CON applications, HRS has followed this original interpretation of its existing open heart surgery rule and agreed that, as written, the rule requires that the 350 standard be met by each existing and approved facility before a new program can normally be approved. See, Mease Health Care v. Department of Health and Rehabilitative Services, 12 FALR 853 (Final Order dated January 23, 1990); Humana of Florida, Inc. d/b/a Humana Hospital Lucerne v. Department of Health and Rehabilitative Services and Central Florida Regional Hospital Inc. d/b/a Central Florida Regional Hospital. 12 FALR 823 (Final Order dated January 23, 1990), reversed on other grounds 16 F.L.W. 1515 (Fla. 5th DCA 1991); Hospital Development and Services Corporation d/b/a Plantation General Hospital v. Department of Health and Rehabilitative Services, 12 FALR 3462 (Final Order dated July 27, 1990.) In sum, since January, 1990, the Department has abandoned its former policy of averaging utilization on a district-wide basis and applied the Rule literally to require that "each and every" facility perform the required threshold number of procedures before a new program will normally be approved. HRS uses the averaging method to determine need for other programs such as cardiac catheterization, nursing homes, rehabilitation services, psychiatric and substance abuse services, and neonatal intensive care. The challengers contend that it is arbitrary for HRS to use an averaging approach to determine numeric need for some services and not use it for open heart programs. The mere fact that an averaging approach is used for other services does not in and of itself establish that HRS is acting arbitrarily in refusing to follow that approach with open heart surgery programs. The evidence established that HRS treats open heart surgery services differently because the existing research indicates a direct tie between volume and outcome. HRS has not found a similar demonstrated connection between volume and outcome in any of those other services. In fact, in certain of those services, such as psychiatric care, the volume/quality of care correlation may be a negative one. The Proposed Amendments do not change the 350 standard in the existing rule, except in the case where an existing program has been operational for less than a year. Whereas the existing rule would not normally authorize a new program before an existing program is providing 350 procedures per year, the Proposed Amendments relax the standard by allowing a new program to be approved if a program that has been operational for less than one year achieves an average monthly volume of 29 operations. The challengers contend the Proposed Amendments to paragraph 7a are anticompetitive and serve to protect the market shares of existing providers. To the contrary, the more persuasive evidence indicates that the purpose of the 350 standard is not to thwart competition, but, rather, to ensure quality care and efficiency. The Petitioners did not establish that the 350 standard is inappropriate or does not tend to promote quality and efficient care. Without a doubt, HRS' conclusions and the Proposed Amendments reflect a preference for large volume open heart surgery providers and consequently serve to restrict new providers from entering the market. As set forth below, this preference is supported by the existing research in this area. While the correlation between large volume and quality of care is not absolute, the evidence did not demonstrate that HRS has acted arbitrarily in adopting a policy which is aimed at encouraging all open heart programs an opportunity to grow to the 350 level. HRS has adopted a rule designating adult open heart surgery as a tertiary health service. See, Rule 10-5.002(66)8. (previously 5.002(41)8,) Florida Administrative Code. A tertiary health service is defined in Section 381.701(20), as follows: "Tertiary health service" means a health service which, due to its high level of intensity, complexity, specialized or limited applicability, and cost, should be limited to, and concentrated in, a limited number of hospitals to ensure the quality, availability, an cost-effectiveness of such service. To the extent that the 350 standard may work in some instances to favor greater use of existing providers over approval of a new competitor, that result is consistent with the nature of open heart surgery services as a tertiary health service. There is no question that several existing adult open heart surgery programs, including the programs of some of the intervenors in this case who are defending the Proposed Amendments, were approved after numeric need was found using the averaging policy. In many, if not all of those cases, need would not have been found if the "each and every" approach was used. See, Central Florida Regional Hospital, Inc. v. Department of Health and Rehabilitative Services, 16 F.L.W. 1515 (Fla. 5th DCA 1991). The challengers contend that they are being denied equal protection and/or that the "each and every" approach is being used to protect existing providers. As indicated above, the Petitioners have not established that the standards set forth in the National Guidelines are obsolete or inappropriate. The evidence of record in this case was insufficient to conclude that HRS is acting arbitrarily by reenacting standards that are consistent with the National Guidelines. HRS' temporary application of the averaging approach was not consistent with the language of the existing rule or the original interpretation given to the rule by HRS at the time it was adopted. While no evidence was presented that quality of care diminished during the period of time the averaging approach was used, HRS' policy decision to return to standards established in the National Guidelines can not be characterized as arbitrary and capricious. The research contained in the HRS 1988 and 1989 rule promulgation files supports the 350 standard as set forth in Paragraph 7.a. of the Proposed Rule. Most of this research indicates that there is a strong correlative relationship between the volume of open heart surgery performed by a program and the resulting quality of care, both in terms of morbidity and mortality. Specifically, studies performed by Dr. Harold Luft, suggest a relationship between volume of procedures and quality of care. The Luft studies suggest that mortality and morbidity tend to increase as a percentage of total procedures performed when volume is reduced. In contrast, morbidity and mortality tend to decrease as the annual number of procedures is increased. The Challengers have presented no persuasive evidence to rebut these studies. Given the undisputed relationship between the quality and economic efficiency of an open heart surgery program and its volume, HRS reasonably concluded that it is sound health planning policy to normally allow approved providers to achieve and sustain the 350 procedure level before new programs are authorized. The Work Group which assisted in the development of the Proposed Rule Amendments addressed the "each and every" versus "averaging" approach to the 350 standard. Representatives of hospitals which do not offer open heart surgery services were in attendance at the Work Group. No member of the Work Group presented evidence to support the "averaging" approach to the 350 standard nor was any evidence presented to rebut the data contained in the Luft studies. The evidence presented at the hearing in this matter did not establish that the "averaging approach" would in any way improve or contribute to quality assurance. Indeed, it could lead to problems in districts with established high volume open heart surgery providers. For example, if one provider in a service district performs 600 cases and another performs 100 cases, the service district would meet a "350" average standard However, the lower volume provider would be operating at well below the minimum necessary to insure quality of care. In other words, using an averaging approach, need could be found in a district containing an extremely low volume provider, which would probably inhibit the ability of the struggling existing provider to raise its service volume and could be detrimental to the overall quality of care in the district. The National Guidelines and Intersociety Study establish a minimum quality of care threshold at 200 annual procedures per open heart team. The existing rule provides, under the heading "Service Quality" for a "Minimum Service Provision" which requires 200 procedures to be performed annually within 3 years of initiation of service by an open heart program. Rule 10- 5.011(1)(f)5.d., Florida Administrative Code. The 200 procedure requirement was intended to ensure that a new program would operate at a minimum quality of care level. The Proposed Amendments delete this requirement. The challengers contend that HRS is inappropriately substituting the 350 procedure requirement contained in the Proposed Amendments as a new quality of care standard to be applied to open heart programs. The 350 standard is not intended by HRS to be a per se indicator of quality of care, nor is it intended to create a presumption that a program operating below 350 annual procedures provides poor quality of care. While the Petitioners claim that the 350 requirement in the National Guidelines was primarily an economic efficiency provision and was not a quality of care issue, the evidence indicates that the 350 standard was developed with both quality of care and efficiency in mind. Efficiency standards are important to allow a program to be doing enough operations to justify the staffing ratios, the inventory of supplies, and the utilization of the rooms themselves. While the challengers believe that the 350 standard is too high, the evidence was insufficient to establish that there is a more reasonable figure let alone that HRS' reliance upon the National Guidelines was arbitrary. Approximately seven districts would have shown need for a new program in 1993 if an averaging approach was used. However, under the "each and every" interpretation, HRS found there to be zero program need. The challengers point out that HRS has no authority to revoke a CON for a hospital operating an open heart surgery program with a low service volume. They contend that, due to referral patterns, quality of care problems, a shift in demographics, or similar reason, a hospital may be unable to generate a volume of 350 procedures which could preclude the addition of a new program even if there is a need in the district. The calculation of numeric need is only one of many criteria which the Department is required to consider under Section 381.705, Florida Statutes when reviewing applications for open heart surgery certificates of need. The Health Facility and Services Department Act sets forth many criteria which the department must consider when making a determination on an application for certificate of need including its need for the proposal, the existing availability of the proposed service of facility, the impact of the proposal on the cost of providing the service, and the quality of care provided by existing providers and proposed by the applicant. These criteria are consistent with the statutory aim as expressed in Title 42 - Public Health, Chapter 1 Public Health Service, Department of Health, Education and Welfare, Part 121 - National Guidelines for Health Planning which provides: "Equal access to quality health care at a reasonable cost ... Cost savings may be achieved without sacrificing the quality of or access to care through more efficient utili- zation of existing resources and increased emphases on ambulatory and community services. Moreover, limitations of certain resources, such as open heart units, can lead to improve- ments in the quality of care while at the same time containing costs." Federal Register, Vol. 43, No. 60., page 254. It is important to keep in mind that the 350 standard does not prohibit the approval of a new open heart program if an existing program in the district does not meet this standard. The proposed amendments, as well as existing HRS policy, simply provide that an application for a new program will "not normally" be approved. In other words, the burden of showing need for a new program is shifted to the applicant. The challengers contend that acquiring a CON when there is no numeric need calculated in accordance with the rule is next to impossible. Without question, an applicant's burden in such a situation would be substantially more difficult. However, the evidence does not support the contention that such approval is impossible. In conclusion, the 350 standard is a reasonable threshold criterion to presume need under normal circumstances. It is neither anti-competitive nor unconstitutional to require an applicant to allege and demonstrate the existence of not normal circumstances to overcome this presumption. Because no new program can be added when there is an outstanding approved but yet operational program in existence which could take an undue amount of time coming on line thereby preventing the approval of a new program. The challengers claim that requiring approved programs to become operational before a new program will normally be approved is unreasonable because of the length of time it could take for a newly approved program to come on line. HRS is generally aware of the length of time it takes an approved program to become operational. HRS reasonably resolved the balance of competing considerations by deciding that it should not approve a second new program in a district while there is still an approved program that has not yet become operational. HRS has concluded that it is preferable to allow programs to grow to a volume of 350 annual operations to assure quality and efficiency before adding a new program. The challengers have not established that this decision was arbitrary or that it would be in any way beneficial to allow simultaneous development of two or more adult open heart surgery programs within a service district. There are time restrictions on the implementation of a newly approved program and HRS has authority to void a CON when those restrictions are not met. See, Rule 10-5.018(2), Florida Administrative Code. Approved providers may not simply retain their CONs for open heart surgery services indefinitely without implementing them. If for some reason an approved program failed to commence operations within a reasonable time to the point of creating problems of service accessibility, an applicant could raise this issue as a "not normal" circumstance. The provision in the Proposed Amendments which would normally prevent approval of a new program when there is an outstanding approved but not yet operational program in existence is consistent with HRS' interpretation of the existing rule. WHETHER SUBPARAGRAPH 7.b OF THE PROPOSED AMENDMENT IS ARBITRARY AND CAPRICIOUS BECAUSE ONLY ONE NEW PROGRAM CAN BE APPROVED AT A TIME. Paragraph 7.b. of the Proposed Amendments provides that even where the numeric need calculation results in a projected need for more than one new adult open heart program, only one new program per service district may be approved in a given batching cycle. The only evidence presented concerning this issue was the testimony of Ms. Stamm, who asserted that the practice of approving one program at a time ensures that only one new provider will compete with established facilities within a service district and that a new program will have an opportunity for rapid start-up growth in order to reach a safe volume level in a short period of time. By limiting approval to only one new program per planning horizon, the volume and quality of care at existing programs is protected and the continued viability of new providers is assisted. The challengers claim that this provision is arbitrary and capricious because it could prevent the approval of a new open heart surgery program even when numeric need, as determined by the Rule, is present. However, as indicated above, the calculation of numeric need is based upon desired, not maximum levels of operation. Thus, even if numeric need is shown in accordance with the Rule, a new program is not automatically required. Petitioners have not established that HRS' balancing of the conflicting concerns on this issue was arbitrary or capricious. The requirement that only one new program be approved at a time is consistent with HRS' interpretation of the existing rule. WHETHER PARAGRAPH 8 IS ANTICOMPETITIVE, UNDULY RESTRICTIVE, ARBITRARY AND CAPRICIOUS. Paragraph 8 of the Proposed Amendments sets forth a new quantitative need formula for pediatric open heart surgery services programs. It provides: 8.9. Pediatric Open Heart Surgery Program Need Determination. The need for pediatric open heart surgery programs shall be deter- mined on a regional basis in accordance with the pediatric open heart surgery program service areas as defined in sub-subparagraph 2.1. A new pediatric open heart surgery program shall not normally be approved unless the total of resident live births in the pediatric open heart surgery service area, for the most recent calendar year available from the department's Office of Vital Statistics at least 3 months prior to publication of the fixed need pool, minus the number of existing and approved pediatric open heat surgery programs multiplied by 30,000, is at or exceeds 30,000. The 30,000 live birth standard is based upon and consistent with the standards adopted by the American Academy of Pediatrics, Section on Cardiology, for use by health planning agencies and health service organizations to evaluate existing pediatric cardiac centers and to establish the need for the development of new centers. The 30,000 live birth standard is set forth in the "Guidelines for Pediatric Cardiology, Diagnostic and Treatment Centers," published in Volume 62, No. 2, American Academy of Pediatrics (1978) (the "Pediatric Guidelines"). Those guidelines were updated in 1990 and the 30,000 live birth standard was retained in the updated version. The Pediatric Guidelines, like the National Guidelines, is a well-respected and readily available research tool that health planners customarily rely upon in evaluating the need for health care programs. The 30,000 live birth standard is also contained in the HRS Children's Medical Services administrative rules and this methodology is consistent with the minimum service volume standards found in the National Guidelines. Unlike the methodology utilized to project need for adult open heart surgery programs, the methodology proposed to project need for pediatric open heart surgery does not utilize a "use rate." This pediatric need methodology assumes a constant use rate and attributes increased need to population growth. St. Mary's argues that the 30,000 live birth standard should not be utilized because the incidence rate of pediatric open heart surgery (the number of procedures per 30,000 births) may change and the standard does not take into account such changes which could be based on advances in medicine, etc. This criticism is highly speculative and does not provide a basis for rejecting the 30,000 live birth standard. While the use rate for adult open heart surgery has generally increased since the open heart rule was adopted in the early 1980s, there is no evidence that the use rate for pediatric open heart surgery programs has increased. St. Mary's contends that the 30,000 live birth standard only takes into account the pediatric population in the neonatal or newborn time period. However, this contention was not supported by the evidence. The 30,000 live birth standard assumes that in the years prior to attaining 30,000 live births, a service area experienced something less than 30,000 live births each year and will experience approximately 30,000 live births in subsequent years, so that an age pyramid is building. The Florida data indicates that if this standard is applied over 14 years, approximately 75 pediatric open heart surgery cases per year would be generated based upon multiple years of approximately 30,000 volume base. Approximately 100-130 cases can be expected if the age cohort is increased to 21. St. Mary's proposed an alternative methodology based upon comments appearing in an article titled "Trends in Cardiac Surgery" from the Journal of Thoracic and Cardiovascular Surgery, 1980. That article suggested that a 380,000 pediatric population base from age 0-14 can be expected to generate 75 pediatric open heart surgery operations. Utilizing the 1970 United States age mix, which indicates that 27.5 percent of all persons are under the age of 14, St. Mary's suggests that the 380,000 pediatric population should be grossed up to a 1.38 million total population base and this total population figure is an appropriate standard for determining when to add a new pediatric program. Serious questions were raised regarding the validity of St. Mary's proposed standard. For example, it appears that the age mix in Florida is significantly different than the age mix figures used by St. Mary's. In sum, the evidence did not establish that St. Mary's proposed standard was more appropriate to use, let alone that HRS acted arbitrarily in adopting the 30,000 live birth standard. Indeed, the evidence established that the 30,000 live birth standard employed in the Proposed Amendments as a basis to project need for pediatric open heart surgery programs is a reasonable basis upon which to plan for pediatric open heart surgery programs. WHETHER THE PROPOSED AMENDMENT PROHIBITS AN APPLICANT FROM APPLYING FOR BOTH PEDIATRIC AND ADULT OPEN HEART SURGERY AND FOR THAT REASON IS INVALID. Proposed Rule 10-5.011(1)(f)1. states that providers must apply for separate certificates of need for adult and pediatric open heart surgery programs. The existing rule does not expressly state that separate certificates of need are necessary. However, Rule 10-5.008(1)(a), Florida Administrative Code, requires separate letters of intent for each type of service having a separate need methodology, even if the projects are within the same facility. Thus, separate applications are necessary under both the present rule and the proposed amendments because a separate need methodology is stated in both. As discussed above, the Proposed Amendments do not prohibit an applicant from applying for a certificate of need for pediatric open heart surgery services and adult open heart surgery services simultaneously. WHETHER THE PROPOSED AMENDMENT IS ARBITRARY AND CAPRICIOUS BECAUSE IT DOES NOT SET FORTH A MINIMUM NUMBER OF MIXED PEDIATRIC AND ADULT OPERATIONS WHICH MUST BE PERFORMED IN A MIXED PROGRAM AS A PREDICATE TO THE AWARD OF ANOTHER ADULT PROGRAM. Neither the existing rule nor the Proposed Amendments to the rule specifically address the minimum number of annual operations which must be performed in a "mixed" program before an additional adult program may be added. Thus, any "mixed" adult/pediatric open heart surgery program would have to be performing at least 350 adult procedures before there would be a calculated need for an additional adult open heart program in the district. St. Anthony's argues that this requirement should not apply to "mixed" programs and/or that a lower volume standard should have been adopted for hospitals that operate "mixed" programs. There is considerable confusion as to how to define a "mixed" program. St. Anthony's contends that a "mixed" open heart surgery program is any program that provides open heart surgery services to both adult and pediatric patients. HRS contends that if the programs are separately organized and staffed, the fact that a hospital has both programs is irrelevant to assessing the appropriate volume capacity. HRS considers a "mixed program" as one in which a single team is performing both pediatric and adult open heart surgery. Under this view, a hospital can have both an adult open heart surgery program and a pediatric open heart surgery program without necessarily being considered a "mixed" program. Applying this definition, there is apparently only one program in the state which is a "mixed" program. That program is located at Bayfront/All Children's Hospital. St. Anthony's contends that there are other programs in this state that offer both pediatric and adult open heart surgery. However, the evidence was insufficient to establish that any of these other programs meets the HRS definition of a mixed program. St. Anthony's cites to a provision in the National Guidelines which provides that the minimum number of open heart surgery procedures that should be performed in a "mixed" program is 200, of which 75 should be for children. However, HRS has reasonably concluded that this provision in the National Guidelines was not intended to establish a threshold for the addition of a new adult program. The studies which were the source of this provision did not attempt to address the number of procedures that should be performed in a "mixed" program before a new adult program should be awarded. In view of the extremely small number of "mixed" programs and the lack of clear evidence regarding the optimal number of procedures that should be performed in such programs, HRS has elected to not address "mixed" programs in the existing rule or the Proposed Amendments. For a true "mixed" program, it may not be reasonable or desirable to expect 350 adult surgeries per year. However, the available data is inconclusive and St. Anthony's has not presented persuasive evidence of a more realistic number. Thus, HRS' decision to not adopt a rule of general applicability to address this issue, is not arbitrary or capricious. An applicant in a district with a "mixed" program that is not performing 350 adult procedures per year can apply on a "not normal" basis. WHETHER THE PROPOSED AMENDMENTS ARE INVALID BECAUSE HRS HAS FAILED TO PREPARE A DETAILED ECONOMIC IMPACT STATEMENT, AN ESTIMATE OF THE IMPACT ON COMPETITION, OR DETAILED STATEMENT OF THE DATA AND METHODOLOGY USED IN MAKING THE PROPOSED RULES, THE FAILURE OF WHICH IMPAIRED THE CORRECTNESS OF THE ACTION TAKEN BY THE AGENCY. Section 120.54(2), Florida Statutes, requires the Department to prepare an Economic Impact Statement (EIS) containing the economic impact of the proposed rule on all persons directly affected. HRS assessed the economic impact of its proposed amendments and concluded that there would be no impact because the proposed amendments do not change the projected need for either adult or pediatric programs. As discussed in more detail above, the Proposed Amendments clarify that the 350 target volume must be achieved by each and every existing and approved program before a new program will be approved. The existing rule has been interpreted to require the same thing. While HRS followed an averaging interpretation for a period in the past, that interpretation has been rejected in a series of final orders. Since the averaging interpretation was deemed invalid before these Proposed Amendments, the Proposed Amendments do not change the way need is assessed under the existing rule. Thus, there is no economic impact by reason of the inclusion in the Proposed Amendments of the 350 standard. Likewise, the new methodology for calculating need for pediatric open heart surgery does not change the calculations made under the existing rule. None of the other changes to the existing rule have been shown to have a significant impact on existing providers or applicants. None of the challengers showed that they are able to obtain an economic benefit now that they will be deprived of under the rule as amended nor have they demonstrated any prejudice by reason of HRS' conclusion that the Proposed Amendments would not have an adverse economic impact.
