Findings Of Fact Procedural background: Petitioner, COMMUNITY DIALYSIS CENTERS, INC., d/b/a COMMUNITY DIALYSIS SERVICES OF LAKELAND (CDC), owns and operates a 16- station outpatient kidney dialysis facility in Lakeland, Florida. On February 14, 1984, Respondent, WATSON CLINIC (WATSON), received a certificate of need to operate a four-station outpatient kidney dialysis center in Lakeland, Florida, CON No. 2916, from the DEPARTMENT OF HEALTH AND REHABILITATIVE SERVICES (HRS). Petitioner contests the grant of this certificate of need as an existing provider. Timely notice of the final hearing was issued June 26, 1984, and the final hearing was held as stated above. WATSON presented the testimony of Spero Moutsatos, Dudley Towne, Franklin L. Smith, Carter Fitzgerald, Joy Harrison, Nell Boutwell, Eugene DeBerry (by deposition), Sandra Biller, Dr. James Whitfield, John Dowless, Robert L. Mayer, Don Morris, Marilyn Neff, and Dr. Henry M. Haire. HRS presented the testimony of Ed Carter. CDC presented the testimony of Elaine Feegel, Jan Graff, and Michael Sullivan. CDC presented seven exhibits which were received into evidence, HRS had one exhibit, and WATSON presented into evidence 27 exhibits. The parties stipulated that subparagraphs 6, 7, 10, and 11 of Section 381.494(6)(c), Fla.Stat., are not applicable to this case, but that subparagraphs 1 through 5, 8, 9, 12, and 13 are in dispute in this proceeding. WATSON seeks a certificate of need to provide kidney dialysis for end- state renal disease (ESRD) patients in the western portion of Polk County, District 8, and particularly in the vicinity of Lakeland, Florida. WATSON's proposal would also include training for home hemodialysis and chronic ambulatory peritoneal dialysis (CAPD). WATSON originally applied for ten dialysis stations, HRS Exhibit 1, but amended its application at the hearing to four stations. WATSON Exhibit 14, hereinafter W. Exhibit 14. The area in which WATSON seeks to provide services is now served primarily by the 16 dialysis stations operated by CDC. ESRD patients must either successfully dialyze, obtain a successful kidney transplant, or they will die. Evidence as to need was provided by Spero Moutsatos, Executive Director of the Florida End-Stage Renal Disease Network 19. Network 19 was established in August 1977 as a part of a national network established by Congress, administered by the Health Care Financing Administration. Network 19 gathers data in Florida regarding End-Stage Renal Disease (ESRD) patients, provides data and projections of ESRD dialysis need to the Department of Health and Rehabilitative Services (HRS), assists patients and professionals with information, serves as an ombudsman for patient complaints, and monitors and evaluates the quality of care delivered in dialysis facilities. Network 19 did two evaluations of need with respect to the WATSON proposal, WATSON Exhibits 1 and 2. In the last three years, following the growth in availability generally of renal dialysis facilities in Florida, Network 19 has considered need on the basis of sub-areas within a District in about 75 percent of the cases considered. As of September 1, 1984, most of the ESRD patients residing in Polk County were dialyzing at CDC in Lakeland. CDC Lakeland provided services for 51 patients and one home patient, while the remainder (10 in-clinic patients and 16 home dialysis patients) were treated at Lakeland Regional Medical Center, CDC Winter Haven, CDC Tampa, and BMA of Orlando (one patient). WATSON Exhibit 2. Dialysis often leaves a patient feeling very weak at the end of the dialysis session. Dialysis in-clinic is required at least three times each week and takes about four hours. Emergency services are needed nearby since on occasion a dialysis patient will become unconscious and need immediate attention and hospitalization. Patients needing dialysis frequently are not employed or underemployed and do not have money for extensive travel for dialysis. Based upon the zip code analysis in WATSON Exhibit 2 and the testimony of patients, the appropriate service area for consideration of the need for dialysis facilities in this case is at a minimum in Polk County, and more appropriately, the vicinity of Lakeland. While some Lakeland area patients in the past drove all the way to Tampa for in-center dialysis, this is not a suitable alternative. Only CDC Lakeland and CDC Winter Haven adequately provide in-center dialysis to persons living in the Polk County and Lakeland areas. Lakeland Regional Memorial Center does not provide in-center dialysis, but only provides services for chronic ambulatory peritoneal dialysis (CAPD) Rule 10-5.11(18), F.A.C., establishes the methodology applicable in this case for determining need for chronic renal dialysis facilities. This rule sets forth the method to project the number of patients who will need dialysis one year from the date the application is deemed complete. The number of dialysis stations needed is then computed by using an 80 percent use rate for each station. The rule provides that each station at 100 percent use can dialyze four patients, assuming two shifts, six days each week. (Each patient dialyzes three times during the week.) Evening or third shifts are not counted as a part of capacity. The 80 percent use rate results in a capacity of 3.2 patients per station. The record evidence reflects that 80 percent is a reasonable level of use to set as a maximum justifying additional stations. The 20 percent additional capacity is needed for transient patient dialysis during the winter season, to account for repairs and maintenance on machines, and to provide some leeway when there are staffing problems. The net number of new stations needed is then computed by dividing the number of projected patients by 3.2 stations and subtracting from this the number of existing stations. The use rates for the two in-center dialysis facilities in the Lakeland area for the most recent quarter prior to the hearing show that facilities in the area are over the threshold for expansion: Utilization Month Rate (percent) CDC Lakeland July 1984 78 August 1984 81 September 1984 81 CDC Winter Haven July 1984 85 August 1984 87 September 1984 88 The evidence indicates that the above rates are not unusual, but reflect an upward trend in the area. In 1983, CDC Lakeland operated at an average of 76.5 percent, and CDC Winter Haven operated at 77 percent of its capacity. Network 19 projects a need by September 1, 1985, for six additional in-center dialysis stations for Polk County, and seven additional stations for the Lakeland sub-area. These calculations are explained in WATSON Exhibit 2 and the testimony of Mr. Moutsatos, transcript pages 68-72. The methodology for these projections is to take the ESRD patient census from Net work 19 records as of September 1, 1984, for the particular area, subtract the number of actual home dialysis patients on that date, add the number of patients projected for the area as new patients by September 1, 1985, calculated using 116 new patients per one million of projected population, subtract the number of these new patients expected to go on home dialysis, subtract the projected number of kidney transplants for the coming year, add back 25 percent of these transplant patients as transplant failures, subtract projected deaths of patients, and add back the number of patients on home dialysis which must return for in center dialysis. The final number is the number of patients expected to need in-center dialysis by September 1, 1985. Then, using 3.2 patients as the optimum per station, the number of stations projected as needed by that date, less the existing number, yields the projected net need. These projections of need followed the formula set forth in the rule. Moreover, there was no evidence that the assumptions or data underlying the above methodology was unreasonable, inaccurate, and for any other reason unreliable. Based upon the evidence, there is in fact a need for six in-center kidney dialysis stations for Polk County by September 1, 1985, and a need for seven stations by the same time for the Lakeland sub-area. Polk County is the only county in Florida where all in center dialysis facilities are owned by one owner. That owner is Community Dialysis Centers, Inc., CDC. CDC also owns the only other somewhat near facility in Plant City. Of the 97 patients using in-center dialysis in Polk County on September 1, 1984, 54 percent of these (52 patients) were using CDC in Lakeland. Home dialysis and CAPD are two alternatives to dialysis in-center. These alternatives for certain patients are more desirable due to the greater freedom afforded by these methods. Training and continued assistance, however, is needed to allow use of these methods. CDC Lakeland has not in the last few years provided adequately in this area. CDC's current home training nurse, unit administrator Elaine Feegel, lives in Tampa and must commute to Lakeland each day, thus making it more difficult for her to provide home training. Ms. Feegel further has not been able to provide home training because she has been so busy trying to correct problems at the CDC Lakeland facility. In addition to the lack of home training, the evidence showed that for significant periods of time in the past few years the ESRD patients who have had to use the CDC Lakeland facility as their only reasonable source of dialysis have been subjected to seriously inadequate, and at times, dangerous health care. Several patients who now dialyze at CDC Lakeland, and who have used that facility for several years, testified to the quality of care received. The facility was initially named Kidneycare, and was not opened or operated by CDC. In late 1980 or sometime in 1981, CDC bought Kidneycare and took over the management of the facility. (The precise date was not established by competent non-hearsay evidence, but is irrelevant.) At some time after patients became aware that CDC was managing the Lakeland unit, the quality of care began to decline. The quality of care when the unit was operated as Kidneycare was adequate. Joy Harrison is a resident of Lakeland, Florida, and has depended upon kidney dialysis since 1978 to stay alive. She moved to Lakeland, Florida, in 1981. She is 41 years old and has two children, 12 and 8 years of age. Ms. Harrison dialyzed at CDC from March 29, 1981, until June 1984 when she went on CAPD. Dr. Haire has been her physician since 1981. Her testimony concerned the quality of health care at CDC from 1981 until June 1984. Ms. Harrison testified to the following regarding the quality of care at CDC, all of which were unrebutted and is found to be true: Another patient was dialyzing at the station immediately next to Ms. Harrison. Ms. Harrison, who was then being disconnected from her dialyzer at the end of her session, noticed that the other patient was getting sick. She told the CDC employee on duty. Ms. Harrison had to tell the employee three times, and still the employee failed to respond, continuing to work on disconnecting Ms. Harrison from her dialyzer. By this time, the adjacent patient had passed out and began vomiting. When CDC staff finally responded, it took 20 minutes to revive her. CDC staff failed to turn on the air bubble detector on another occasion when Mrs. Harrison as dialyzing. Air got into the lines. The air bubble came within three inches of entering Ms. Harrison's body when CDC staff stopped it. (The distance is the estimate of the Hearing Officer observing the witness indicate the distance.) Had the air bubble entered her blood stream, it may have killed her. CDC staff failed to observe or record the correct number of bags of saline solution that is normally to be given to a patient at the end of the dialyzing session to restore the correct balance of fluid and weight, and ended up giving her two bags too many. Ms. Harrison got very sick as a result. On another occasion, there was only one nurse on the floor. Ms. Harrison was dialyzing, and her feet began to cramp. Saline solution at times must be injected when cramps occur to prevent cramping. Ms. Harrison called out to the nurse, who was talking on the telephone, to tell her she was cramping and needed saline solution. The nurse continued to talk. A few minutes went by and the pain of the cramps got worse. Again, Ms. Harrison called to the nurse for help. The nurse continued to talk on the telephone. The cramps worsened, and Ms. Harrison's hands started to cramp, and she was in much pain. She then told the nurse that if she did not get off the phone and help, she (Ms. Harrison) was going to pull the dialyzing lines out by herself. The dialyzing lines are inserted into Ms. Harrison's arms with two 16-gauge needles. The nurse finally came to assist her. Ms. Harrison could hear the nurse's conversation on the telephone as she was cramping, and the nurse was "laughing and joking on the phone to somebody." (This testimony is not hearsay, but is admissible as proof of what Ms. Harrison heard, not for the truth of what the nurse said on the phone.) During the dialyzing process, nurses each hour are supposed to take blood pressure, weight, and temperature to insure that the patient's system remains stabilized during the otherwise rather intrusive and disruptive process of having all of their blood circulating outside their body to be cleansed. Nurses at CDC frequently failed to check these vital signs when Ms. Harrison was dialyzing for two and three hours at a stretch. Ms. Harrison later checked her medical record and discovered that weights and blood pressures would be recorded at hourly intervals when in fact no one at CDC had actually observed and taken these readings at these times. On other occasions she was given 5 percent extra saline solution, but CDC staff failed to record this in the record. Someone else came along and read the chart and tried to give her another dose of 5 percent saline solution. Ms. Harrison stopped her. When Ms. Harrison first dialyzed at the Lakeland facility, it was in good location near the hospital. Shortly thereafter, while under the ownership of CDC, it was moved to a small shopping center. The location, as will be discussed in additional findings ahead, was undesirable for two reasons: the outside was trashy, and alcoholics and transients hung around the parking lot and rear of the facility. ESRD patients who must dialyze to remain alive depend upon the continued health of special grafts that are placed in their arms or legs which provide access for the dialyzing needles three times each week. Ms. Harrison lost her arm graft apparently due to the negligence of CDC staff in the insertion of the needle or use of a needle with a burr on it. (Additional findings have been made ahead as to the substantial likelihood that the injury was caused by a needle with a burr on it.) On the day of the injury, Ms. Harrison felt unusual pain during the entire dialyzing process. When CDC staff took the needle out at the end of the dialyzing session, an aneurysm (a sac formed by enlargement of the wall of an artery, caused by disease or injury, Webster's New World Dictionary) had formed in her arm. That night the aneurysm broke and a blood clot came out. Ms. Harrison had to go to the hospital. Her graft was destroyed, and surgeons next created a Bentley button for further dialyzing. A Bentley button is another method of allowing access to the blood stream of an ESRD patient. Ms. Harrison still had some infection in her system from the failed arm graft. It was very important that the Bentley button be kept antiseptic and clean because it is a direct open hole providing access to the patient's blood steam. Ms. Harrison's infection was doing well, responding to antibiotics given to her by her physician. But as she was dialyzing at the CDC facility, the attending nurse failed to use the antiseptic procedure of wearing a mask and using gloves. At the end of the session, the button must be carefully cleaned and Betadine placed in the two holes. The nurse said she was in a hurry and did not carefully clean the Bentley button or put any Betadine in the button. She simply replaced the cap and wrapped gauze around it. By the next treatment several days later, Ms. Harrison's infection was worse, and she had to start again on antibiotics. For the next two months Ms. Harrison could not use the Bentley button. Finally, it failed entirely as a method of dialysis, and it was removed. Ms. Harrison now is on CAPD, but testified it is not working very well, and she does not know what alternative for dialysis she may have if it too fails. CAPD (chronic ambulatory peritoneal dialysis) is a method of dialysis that involves the implantation of a tube into the interior of the peritoneum. A bag of fluid is placed above the point of insertion so that the fluid will slowly drain into the peritoneal area. Blood slowly exchanges its impurities with this fluid. After a few hours, when the bag has drained fully, the process is reversed. The bag is lowered, and the fluid drains out. When the bag is again full, it is discarded, a new bag is attached, and the process begins again. On another occasion, the dialyzing machine was not working properly. A line collapsed, the red light was flashing, and when the line collapses, it hurts the patient. The nurses failed to respond. A technician, who is not supposed to do any work in connection with treatment of a patient, tried to come over and get the machine working again. During the time CDC owned the facility at Lakeland, there was a significant continuing turnover of nurses, thus subjecting patients to new nurses who were not very experienced in dialysis. Some stayed only a few months; others, longer. Ms. Harrison dreaded getting a new nurse because an untrained nurse often took three or four attempts to implant the needle and it hurt. Also, as described above, ESRD patients depend upon the life of their access point for their own life. An untrained nurse who is likely to cause injury to an ESRD patient's access is particularly hazardous to the health of that patient. Ms. Harrison served for a time as a patient representative for patients on her shift. Of the complaints made by patients, CDC only responded to the request that curtains be installed on the back windows to prevent vagrants from looking in at the patients. (A man was seen at the window on one occasion.) Another request, that a particular nurse not pump the blood pressure cuff up so high as to be painful, was not corrected. Nell Boutwell is an ESRD patient who has dialyzed for about seven years. She began her dialysis at Tampa General Hospital, then dialyzed at Tampa BMA. In about August 1978, she began to dialyze at Kidneycare in Lakeland. She had no complaints about the quality of care at the Kidneycare unit. There then came a time, which the witness was unable to establish precisely, when it became generally known among patients and staff that Kidneycare had been purchased by Community Dialysis Centers, Inc. The purchase by CDC occurred before Ms. Boutwell wrote a certain letter dated August 25, 1981. Ms. Boutwell testified to a number of matters concerning the quality of health care at the CDC Lakeland facility. Her testimony was unrebutted and is found to be true: Under Kidneycare, the Lakeland facility was typically staffed at about two nurses for four patients, or six nurses for a shift of 12 patients. When CDC took over, the number of nurses declined until there were only two or three nurses for 11 or 12 patients, about one nurse for four patients, which is approximately 50 percent fewer nurses. One result of having fewer nurses was that patients had to stay on the dialyzer machine longer because a nurse is needed to disconnect that patient, thus causing patient discomfort. The replacement nurses were not well trained. On one occasion, air got into the lines of Ms. Boutwell's machine. The available nurses were busy and failed to respond to her calls for help. A technician came over, and he finally was directed by another patient to turn off the machine. Then a nurse appeared and fixed the machine. Air in the machine is a life-threatening condition, as described above. CDC was short on tape and frequently had no Band Aids to cover the place where the needles are removed at the end of the session. When Kidneycare ran the Lakeland facility, it was clean. When CDC took over, the new location was dirty on the outside: there were bottles, dirt, and Pampers in the parking lot. A streak of blood was on the wall of the reception room a week before the hearing. Blood is sometimes left on the dialysis chairs from the last patient to dialyze, including the arm rest. Ms. Boutwell was concerned about cleanliness due to the risk of infection. A patient with a heart monitor attached during dialysis was left unattended as all nurses left the floor, and the monitor began to "act up", although Ms. Boutwell is not trained in reading such a monitor and could not say what it meant. The needle came out of the arm of one patient and he became unconscious as his blood drained onto the floor. This accident was not discovered by CDC staff, but was first discovered by another patient. The restrooms had no paper towels so that patients who wished to wash their hands had nothing sanitary to dry them on. A CDC nurse by mistake put Clorox into Ms. Boutwell's machine as she was dialyzing. The Clorox was intended for another machine which was being cleaned. Ms. Boutwell caught the error before it harmed her. Ms. Boutwell dialyzes early in the morning now, and in the winter it is dark when she arrives. Having vagrants hanging around the shopping center causes her fear. As will be discussed ahead, the artificial kidney in a dialysis machine is a relatively small tubular filter. After appropriate cleaning, an artificial kidney under some circumstances can be reused. Ms. Boutwell did not want to dialyze with an artificial kidney that had been used before. She had had experience with reused kidneys, and they did not clear her blood as well as new kidneys. Ms. Boutwell's insurance pays for a new kidney for each dialysis. CDC staff brought a consent form for Ms. Boutwell to sign agreeing to reuse. She refused to sign. CDC told her she either had to sign or she would not be allowed to dialyze at CDC Lakeland. Her only other choices involved unreasonable travel (Tampa, Orlando) or facilities owned by CDC (Winter Haven, Plant City) After continuing to refuse to sign the consent form, CDC allowed her to have a new artificial kidney for each dialysis. CDC Lakeland periodically was inspected by outside agencies. For the week or so prior to inspections, Ms. Boutwell observed CDC staff making unusual efforts to clean the facility and bring patient records up-to-date. For four years, Ms. Boutwell worked during the day, and thus had to dialyze at night. The administrator of CDC Lakeland told Ms. Boutwell that CDC was going to discontinue the evening shift. She told Ms. Boutwell that she could come early in the morning to dialyze, drive to Tampa in the evenings after work, or quit work. There were four patients using the evening shift. As a result of the proposal to stop the evening shift, Ms. Boutwell wrote a letter dated August 25, 1981, to Dr. Michael Pickering. Dr. Pickering had been one of the physicians associated with the clinic when it was Kidneycare and knew of the needs of those patients. In the letter, Ms. Boutwell asked for his help to prevent the cessation of the evening shift. She explained that dialysis left her in a weak condition, and that travel home from Tampa at 10:00 p.m. would not be safe, that dialysis at 6:00 a.m. at CDC Lakeland would require too many hours away from her job, that she did not have help for home dialysis, and that CAPD was not suited for her due to her work. Her letter is WATSON Exhibit 17. CDC sent a representative to investigate as a result of her letter. The representative told Ms. Boutwell that CDC was only "talking" about discontinuing the evening shift, but that they were not actually going to do it. This contradicted what the administrator had told Ms. Boutwell initially, leading to the conclusion that either on the first occasion or the second occasion, and more probably the second occasion, the CDC administrative staff was untruthful to one of their patients. On each occasion mentioned above when CDC staff told Ms. Boutwell that she could go somewhere else to dialyze if she did not like the new CDC policy, there was no adequate alternative for Ms. Boutwell to turn to. The suggestion that she could go somewhere else when no reasonable alternative existed was evidence of a callous indifference to her needs as a patient, and was harmful to the trust needed for a healthy clinical patient relationship. Ms. Boutwell had experienced dialysis at CDC since January 1984 when Elaine Feegel became unit administrator. Ms. Boutwell was of the opinion that Ms. Feegel was doing a good job as the new administrator, trying to clean the place up, trying to hire good nurses, and personally on the floor more often than her predecessor checking on the operation of the unit. She felt that she was personally getting good treatment at CDC Lakeland at the time of the hearing, November 6, 1984. The deposition of Eugene DeBerry, another patient who dialyzes at CDC Lakeland, was received into evidence as WATSON Exhibit 18. Petitioner's objections to certain portions of that deposition have been ruled upon in the conclusions of law. Mr. DeBerry began dialysis in January 1977 at Tampa General Hospital. Mr. DeBerry has dialyzed at seven other clinics and CDC Lakeland since he began at Tampa General Hospital. Mr. DeBerry's testimony has not been rebutted and is found to be true with respect to the following matters concerning the quality of care at CDC Lakeland: Of all of the units in which Mr. DeBerry dialyzed, the Lakeland unit operated by Kidneycare was the best, in his opinion. Mr. DeBerry was one of the six initial patients at Kidneycare when it opened on June 22, 1977. Kidneycare operated the clinic for two or three years before CDC purchased it. The original locations of the Kidneycare facilities (there were two) were about a block from the Lakeland General Hospital. The second facility that was used by Kidneycare had a central nurses station that permitted observation of all kidney dialysis stations at one time. About a year after CDC bought the Kidneycare facility, CDC moved it to its present shopping center location. Mr. DeBerry described the same problem with vagrants and trash on the outside of the CDC facility as described by other witnesses. There have been occasions when these vagrants have entered the clinic to use the restrooms, sit in patient chairs, or steal. Mr. DeBerry requires a wheelchair for movement. The restroom at the CDC unit is too small to allow him to use the toilet, that is, it is not accessible to a wheelchairbound person. Similarly, the waiting room for patients is not suitable for wheelchair patients, and Mr. DeBerry has to wait in his wheelchair in the hall. Kidney dialysis patients are restricted on intake of fluids, so being able to have coffee or a soft drink is a special treat. At the beginning of dialysis in the first hour there is an opportunity to drink a liquid. Kidneycare used to provide this treat; CDC cut it out, stating that it was expensive. When CDC took over the unit, the attitude of the nurses changed. The nurses said that CDC was very cost-conscious, and were cutting back on expenses, including nursing staff, that CDC wanted to get rid of four nurses. (This hearsay evidence was corroborative of direct testimony that the staffing under CDC was decreased by about 50 percent compared to Kidneycare staffing.) When CDC took over the unit, it attempted to require all patients to use only one type of artificial kidney, or to stock only a few. ESRD patients, however, have different needs. Some still have a portion of their natural kidneys intact and operative, and need less dialysis, and especially cannot tolerate large losses of fluid during dialysis because this causes painful cramps. Others, like Dr. DeBerry, have no kidneys, and need an artificial kidney that dialyzes more completely. The CDC effort to cut this cost ultimately was blocked by the orders of individual physicians requiring specific artificial kidneys for their patients. Within six months of the CDC takeover, CDC circulated a consent to reuse form among all patients. The form relieved CDC from responsibility for harm that might be caused by reuse of artificial kidneys. Darlene, the CDC unit administrator told Mr. DeBerry that he could either reuse the artificial kidneys or he could dialyze someplace else. Mr. DeBerry did not want to reuse due to the possibility of infection. He had already lost not only his kidneys, but his bladder, prostate, and both legs due to infection. But Mr. DeBerry could not go on home dialysis because it caused him severe hypertension, and travel to Tampa was unacceptable, so he signed the consent form. After about a year of reuse, Mr. DeBerry again discussed his options with the unit administrator, then Pat Segien. Ms. Segien said that the CDC units at Plant City and Winter Haven also required reuse. The CDC unit was often short on important supplies. Mr. DeBerry had to dialyze with the wrong needle and the wrong kidney on occasion. The unit was out of Band Aids, tape, blood lines, and saline solution on a regular basis, and Mr. DeBerry complained about this several times. The CDC facility was not clean inside. Blood would remain on dialysis chairs, the floor, and on walls for a week or more. As a result of these problems with the quality of care at the CDC unit, Mr. DeBerry complained to Senator Lawton Chiles' office. Thereafter, Network 19 came in to inspect and the unit was cleaned up. When CDC took over Kidneycare, they began using a cheaper grade dialysis needle, and Mr. DeBerry began to experience a tearing of the place where the needle was inserted, resulting in bleeding around the needle throughout the four hours of dialysis. Mr. DeBerry complained to his physician. His physician then ordered CDC to provide him with the needle he had formerly used. CDC complied. Mr. DeBerry encouraged other patients who were experiencing the same bleeding to contact their own physicians. Now CDC seems to use the good needles generally throughout the unit. Pat Segien, the unit administrator, told Mr. DeBerry that CDC used the new, inferior, needles because they were cheaper. CDC cut the nurse/patient ratio to 1:4. It had been 1:3 or less under Kidneycare. The problem with having only one nurse for four patients is that nurses routinely during dialysis have to respond to special needs, including sick patients. Mr. DeBerry described the following example of why three nurses cannot adequately handle 12 patients: one patient passed out; two nurses responded. Another patient started vomiting, Mr. DeBarry's line got air in it, and another patient was nearly unconscious due to low blood pressure. The nurses were unable to handle all of this and continue to do the routine work of checking blood pressure of other patients. Mr. Deberry was home trained, and therefore knew to clamp off the incoming air bubble and turn off his blood pump, which he did himself. Mr. DeBerry had seen air enter the lines of other patients on a number of other occasions because CDC staff allowed saline or blood bags to be pumped dry without properly attending to them. Many of the patients sleep during the four hours of dialysis, and thus the attentiveness of CDC staff is very important to their health. Since CDC took over, there has been so much turnover of nurses that many of the nurses are not experienced. Under CDC management, technicians who were not trained as nurses were allowed to do blood pressures, put heparin in the dialysis machine, and mix the formula for the bicarbonate bath. These practices have now been discontinued by CDC. CDC suffered from a frequent lack of soap, towels, and toilet paper in the restrooms, and a lack of soap at the sink at the exit to the isolation room. Nurses had no soap to wash their hands after leaving the isolation room when that room was in use dialyzing a patient that required isolation from the other patients. It took six to eight months for CDC to buy curtains to stop vagrants from looking into the back windows at the patients at night. In May 1984, Mr. DeBerry was mistakenly given a double dose of Desferal, and went into such shock that he could not talk so as to tell the nurses the mistake they had made. CDC has been constantly out of blankets, and once recently was out of sheets. Mr. DeBerry's wife had to buy a sheet to enable him to dialyze on schedule that day. CDC nurses are supposed to keep patient medical records current. On several occasions, Mr. DeBerry was asked to go over and sign his records for as many as four months earlier, which had-not been kept up-to-date. This happened before inspections in particular. Prior to inspections, CDC staff makes a number of improvements, including updating records and cleaning the facility. The front door of the CDC facility is not adequately constructed to allow a wheelchair to enter unless the patient has one person to push him up the ramp and another person to hold the door. Since Elaine Feegel became unit administrator at CDC, the quality of care has improved, but the nurses still need to improve in implementation of sterile procedures. Mr. DeBerry felt that he had received good quality care in the last few months. Sandra Biller is a registered nurse specializing in hemodialysis. She is currently employed by the Lakeland Regional Medical Center. She has specialized in hemodialysis for six and one-half years. She was accepted as an expert witness in ESRD nursing. She has worked in hemodialysis nursing at the Kidneycare facility beginning in 1979 and remained employed there under CDC until October 1982. During the time that the facility was managed as Kidneycare, the quality of care was good. Then CDC purchased the facility and began management thereof. Ms. Biller testified to the following aspects of health care at CDC when she was employed by CDC. The testimony was not rebutted, and is found to be true: When CDC took over the facility, it changed the type of needle used. The new needles had burrs on them that tore the access points in the patients' bodies and prolonged bleeding. Trauma to the access ultimately decreases the life of the access. As was seen by the medical history of Joy Harrison, an ESRD patient depends upon the life of the access for her own continued life. When all accesses and dialysis methods have been exhausted, and dialysis becomes impossible, the patient dies. Moreover, burrs on the needles caused unnecessary pain to the patients. Kidneycare did not have these problems because they used Terumo needles. CDC "frowned" upon use of these needles, and required a special order by the physician to use these needles. The new needles used by CDC were cheaper and were used to save money. Patients and nurses complains about the use of the cheaper needles, but nothing was done about it. A policy was instituted by CDC requiring reuse of artificial kidneys by all patients. Patients were told to dialyze elsewhere if they refused to reuse. Some patients who objected to reuse long enough were allowed not to reuse, but CDC told nurses to keep that fact quiet among other patients, and did not tell other patients about the exceptions. Jerry Bryant, the area administrator for CDC, told Ms. Biller that the reuse policy was premised upon the size of the facility and a goal of having a certain percentage of patients reusing. CDC's reuse policy was initially limited by a standard that the reused kidney function at 80 percent of its initial capacity. This was then changed to 75 percent of initial capacity. At one point reuse was also limited to 12 reuses, but later some artificial kidneys were reused 25 or 30 times. Patients and nurses complained about reuse without success. The primary harm to patients caused by reuse was that Ms. Biller's patients did not feel well at the end of dialysis on a reused kidney. Reused artificial kidneys frequently still had dark brown clots of fibrin in them. CDC reused the parallel plate type of dialyzer, and this type of dialyzer was inappropriate for reuse because it was impossible to inspect between the parallel plates to see if the dialyzer was clean. One patient became septic reusing a parallel plate kidney. Reuse caused an additional health problem or potential health problem for CDC patients because a reused kidney is cleaned with formaldehyde which is toxic to humans and must not be ingested in excessive quantities. Cleaning the dialyzers with formaldehyde released fumes into the air. Although CDC had an instrument to measure the quantities of formaldehyde fumes in the air to insure safety to patients, it did not use it to test the air as required on a regular basis. There are several types of artificial kidneys, and some are more suitable than others for the needs of specific patients. CDC would not provide the type of dialyzers specifically needed by individual patients. Dialyzing machines were not maintained according to the 100- and 500- hour schedules for maintenance that they were supposed to have. Staffing at Kidneycare was two patients per nurse. Under CDC, the staffing ratio ultimately became four patients per nurse, a loss of 50 percent of the nursing staff. It was a dangerous condition for the patients sometimes. Many of the patients were unstable. The nurses did not have enough time to care for sick patients and monitor the equipment properly due to the staffing shortages. When CDC took over, the pay and benefits for nurses was regulated more strictly. All nurses were paid on an hourly basis. Sick leave went from an informal system to a strict accounting policy. CDC refused to carry over certain forms of sick leave earned as employees of Kidneycare. New nurses were placed in charge of direct care of patients without sufficient training. Nurses require four to six weeks not only to learn how to operate the machines, but more importantly, to learn what to look for as trouble signs in a dialyzing patient. Jerry Bryant stated it should not take more than two weeks to train a CDC nurse, and CDC nurses were put onto the floor with less than four weeks' training. One nurse was found to be doing dangerous things, and when Ms. Biller reported this, she was ignored and told to "watch her closely." The nurse was failing to turn on the air bubble detector and failed to close the saline line to prevent an overdose of saline solution. On one occasion a patient was negligently given three liters of saline solution, and this mistake was never documented on the patient's record. This sort of mistake happened more than once. One liter was the normal amount, and probably was not proper for this patient, who usually needed fluid taken off during dialysis. CDC staff generally did not show a professional attitude toward their work. They came in late without correction by the administrator. One nurse, who did the reuse job, wore dirty clothes, and she was handling the dialyzers. Sometimes a nurse would see that a patient was sick and vomiting and would walk right by, failing to stop and care for the patient. All of the nurses who originally worked for Kidneycare have left CDC and most work for Lakeland Regional Medical Center now. Typically, within a period of four years nurses do not leave a good dialysis center. Ms. Biller left CDC due to her dissatisfaction with the quality of health care provided at CDC. Patient charts were supposed to be done at least every two weeks. Sometimes the CDC staff would fail to complete these records for six or eight months, but would do so for an inspection. Charts were not kept current due to the shortage of nursing staff. Dr. de Quesada was the Medical Director of CDC when Ms. Biller was a nurse employed by CDC. He lived in Tampa where he had his practice, and she saw him at the CDC Lakeland facility about once a month. During emergencies, it was sometimes difficult to reach the Tampa physicians until two or three hours later. The Watson Clinic physicians were always available. Watson Clinic nephrologists were seen at the CDC clinic at least every week or so. James Whitfield is a physician specializing in internal medicine and kidney diseases. He practices nephrology with Dr. Haire and has treated ESRD patients who dialyze at the CDC Lakeland facility since July 1983. Dr. Whitfield observed the following matters with respect to the quality of medical care at CDC Lakeland which were not adequately rebutted and are found to be true: The most frequent problem at CDC was failure to achieve the proper weight at the end of the dialysis session. CDC staff is supposed to monitor the process so as to achieve the correct weight at the end. Leaving a patient with either too much fluid or too little fluid is hazardous to the patient. One patient on two successive occasions had too much fluid taken off, causing the patient to go into shock and necessitating emergency procedures to revive the patient. The problem was that the CDC dialysis machine had a part stuck in an open position, thus operating to remove excessive amounts of fluid. Patient records were not maintained in a current condition. Orders were given to CDC to take a blood count at the end of each dialysis because the patient had recurrent internal bleeding. CDC failed to take the blood count. The patient suffered a substantial drop in blood count, and had to be hospitalized for anemia. On another occasion, an order to use a particular type of artificial kidney was not followed by CDC. CDC delayed a long time in providing a bicarbonate dialysis machine, which was needed for several patients. Four or five weeks before the hearing, Dr. Whitfield had a patient that for a two-week period needed to be dialyzed daily. CDC refused to do this, stating that they would only get recompensed for routine dialysis and would not be paid for the extra dialysis. Medicare will pay for non-routine dialysis in certain cases, but in this case, CDC did not apply. In the summer of 1983, Dr. Whitfield performed a rectal examination of a patient, taking a small amount of fecal matter to test for blood. A week later he used the same examination room at CDC Lake land. He found the feces and towel he had used the week before in the same place he left it. CDC had not cleaned it up for a week. CDC has a goal of requiring all patients to reuse artificial kidneys. Formaldehyde is used to clean the kidney for reuse. The long-range toxic effects of formaldehyde are unknown. Many of the leaders in the field of dialysis feel it is inappropriate for ESRD patients to constantly be exposed to formaldehyde. Formaldehyde use also creates a heard of fumes in the air. Moreover, a reused dialyzer is not as efficient as a new one, and results in fluid not being removed properly from the patient, causing the patient to come back the next day for dialysis. On one occasion, a dialyzer that had been reused 15 times was supposed to have removed 10 pounds from a patient, but removed only two pounds, resulting in the discomfort of another dialysis session the next day. Reuse can, for some patients, be beneficial because the reused kidney does not cause a mild allergic reaction suffered by some patients. But the safe level of reuse cannot be established administratively at a single standard or level because the medical needs of patients vary greatly. Supervision of nursing staff at CDC has improved considerably since Elaine Feegel became unit administrator. John Dowless is a hospital consultant/supervisor, Office of Licensure and Certification, Department of Health and Rehabilitative Services. He is a team leader on an interdisciplinary survey of health care team. The team determines if health care facilities in Florida meet federal and state requirements. He has 40 years of experience in health care, and has worked in the above capacity for eight years. He was accepted as an expert in health care surveying. In late March 1983 his office received a request from the Health Care Financing Administration that Mr. Dowless' office conduct an investigation of the CDC Lakeland facility with respect to complaints received about the quality of health care at that facility. Mr. Dowless and Maryanne Judkins, R.N., constituted the survey team that conducted the investigation on or about April 8, 1983. The investigation was an unannounced visit. (Annual routine surveys conducted by HRS are announced in advance.) The purpose of the April investigation was to determine if the CDC Lakeland clinic was in compliance with Medicare regulations. WATSON Exhibit 4 contains the HCFA forms used by Mr. Dowless in conducting this survey. Mr. Dowless found more patient care deficiencies at the CDC Lakeland facility than he had previously found at any other renal dialysis facility. The survey team found three Medicare "conditions" not met by CDC Lakeland. Failure to meet a condition results in disqualification for Medicare participation by the facility. Mr. Dowless at that time was considering decertifying the CDC Lakeland facility as a Medicare provider. CDC then sent a representative from its Atlanta office, and CDC promised to make corrections. On June 20, 1983, a reinspection was made. Mr. Dowless found that the facility had made quite a bit of improvement. The facility did not lose its Medicare certification, and sufficient progress was made toward correcting the deficiencies. The April 1983 survey of CDC Lakeland by HRS found the following substantial deficiencies: One member of the nursing staff did not have a current Florida license. This was a violation of a condition to obtain Medicare participation. The governing body failed to effectively manage. It has no written policy on reuse of dialyzers. Patients were scheduled without an adequate time between treatments. The facility failed to adequately insure that physicians made rounds when the patients were in the facility. Records did not have physician signatures for orders. Patient copies of the grievance procedure did not inform them they could complaint to Network 19. The above cumulatively was a violation of a Medicare condition. There were no written policies regarding patients' rights available to relatives. This was a violation of a Medicare condition. The patient environment was found to be unsafe and unsanitary. A bloody reused kidney was placed on top of a disinfected dialysis machine. Two chairs used by patients for dialysis were soiled with blood. The nursing station had 21 items marked sterile with an expiration date 12 months earlier. Other dusty, dirty, and cluttered items were noted. The floor of the dialyzing area had soiled gauze, cotton, rubber gloves, and paper. A soiled mop and dirty water were stored in the supply room, and the floor of the supply room was dirty and cluttered. The acetate hemodialysis concentrate solution was contaminated. The emergency tray was not fully stocked. The facility had been directed by a written memorandum to discharge patients who refused to reuse dialyzers, in violation of the written discharge policy. CDC failed to recognize individual needs concerning reuse, forcing patients to choose between reuse and traveling 60 miles to Orlando to dialyze, and refusing to allow one patient to reuse who offered to pay for the new kidney. A year later, on April 5, 1984, HRS conducted its annual survey for Medicare certification. Annual surveys are announced beforehand, and as prior testimony indicated, CDC would make a special effort to clean up and correct deficiencies before such surveys. This annual survey found no discernible deficiencies. As a result of complaints about the quality of care at CDC Lakeland, Network 19 also conducted an investigation of the facility on May 2, 1983. The report of that investigation is contained in WATSON Exhibit 4. The report was acted upon by the executive committee of Network 19 and transmitted to HCFA for its information and action. The site visit was announced ahead of time to CDC. Network 19 concludes in the report that the problems existed at CDC due to lack of leadership at all management levels and poor communication. It also concluded that the physician director appeared to have no direct or deciding input into unit operations, and the new unit administrator was following corporate policy changes. It was reported to Network 19 that CDC had instituted changes to correct these deficiencies. Finally, after recommending that the physician director become more involved in directing the unit, the report concluded with the finding that there was no direct evidence that the health and safety of the patients were then being compromised. It is evident from the findings above that between the unannounced inspection by HRS on April 8, 1983, and the announced inspection by Network 19 on May 2, 1983, CDC made improvements. Dr. Alejandro de Quesada is the Medical Director of CDC Lakeland and CDC Winter Haven. He originally became involved with the Lakeland unit as an owner and investor, as well as a physician having ESRD patients treated three. He is responsible for delivery of medical care, but is not directly responsible for machine maintenance, purchasing of supplies, or personnel matters, including hiring and firing. In these areas, he becomes only involved to the extent that the Lakeland staff tells him about problems they have identified. Dr. de Quesada lives and works in Tampa and is an Associate Professor of Medicine at the University of South Florida as well. Dr. Tapia is Associate Director of the unit and he is located in Lakeland. Dr. de Quesada has been Medical Director at the Lakeland facility either in the fall of 1983 or 1982; he could not state precisely when. Neither Dr. de Quesada or Dr. Tapia attended the hearing, and Dr. de Quesada's testimony was made a part of the record by deposition. Dr. de Quesada admitted in general terms many of the problems found above (loss of experienced nurses, reuse of dialyzers, problems with needles) but did not have any detailed knowledge of these problems, did not state whether he felt the problems were serious or minor, did not elaborate on the cause of the problems, and asserted that each one had been corrected. He admitted that at about the time he became Medical director, there was a large turnover of nurses and medical care was not "optimum." The location and external condition of the CDC facility in Lakeland is very unpleasant. WATSON Exhibits 19, 20, and 21 are photographs taken during the work week (October 19, 22, and 26, 1984) and very close to the date of the hearing. The CDC facility is located in a small strip shopping center. Immediately next door is a grocery store. Drunks and vagrants hang around the shopping center. Thus, CDC dialysis patients must come three times every week to a place not associated with health care, but with vagrants and groceries. For two years CDC has received complaints about unsightly trash outside the CDC facility. Yet, one week before the final hearing these photographs show a dishearteningly filthy collection of debris in the gutter immediately in front of the door into the CDC facility. For patients who are so critically vulnerable to infection, this array of trash at the entrance to the place they depend upon for cleansing of their blood directly erodes their confidence in the CDC facility and is demeaning to them. Dr. Henry M. Haire lives in Lakeland and is a nephrologist. Since early in 1980, he has both been on the staff of Watson Clinic and a member of the treating staff at Kidneycare and CDC. He was accepted as an expert in nephrology. Dr. Haire wrote the original certificate of need application for WATSON. The original application for a certificate of need was the result of Dr. Haire's assessment in January or February of 1983 that it was unsafe for his patients to dialyze at CDC Lakeland due to the quality of care at that facility. Dr. Haire testified to the following matters concerning the quality of health care at the CDC Lakeland clinic. These matters were not adequately rebutted by the Petitioner and are found to be true: The quality of health care at CDC Lakeland has been like a roller coaster for the last four years, with poor care followed by improvement and then another decline in care. Care improved after the HRS and Network 19 investigation in April-May 1983, and then declined again. Since July 1984 the quality of care has again improved. There have been occasions when the Tampa treating physicians could not be located in emergencies, and Dr. Haire had to respond for their patients at CDC. Some patients need a bicarbonate dialysis machine to reduce acid levels. Dr. Haire waited 18 months after he requested CDC to obtain one of these machines before they did so. CDC on two occasions transferred patients of Dr. Haire without prior notification to him. One patient was transferred to Tampa when the night shift was discontinued. Two other patients were transferred to Winter Haven one month before the hearing. One of these patients was very unstable and needed to be dialyzed near Dr. Haire. Dr. Haire had her transferred to a physician in Winter Haven. As recently as July 1984, Dr. Haire had found that CDC staff had failed to take weights and record other data in the charts. On one occasion, Dr. Tapia, the Associate Medical Director at CDC who lives in Lakeland, was not available to handle an emergency involving evacuation of patients due to formaldehyde fumes in the room, and Dr. Haire had to fill in for him. Based upon the foregoing findings, the following additional findings are made: End-State Renal Disease (ESRD) patients are captive consumers. Without continuing adequate renal dialysis they will die. ESRD patients are particularly vulnerable in a variety of ways. Loss of the use of one's kidneys demands a major psychological readjustment for the patient. Confidence in the quality of health care is critical to the readjustment. Some ESRD patients are frail, confused, disabled in other ways, elderly, and cannot adequately protect themselves from inadequate health care during dialysis. Further, ESRD patients have a well justified fear of infection, since loss of dialysis access may mean loss of ability to dialyze and death. Dialysis is uncomfortable and painful under the best circumstances, and is easily made more uncomfortable and more painful if treating staff is overworked, untrained, or indifferent. The quality of health care at the Lakeland facility since 1980 when CDC purchased it and began to manage it has been inadequate in a number of ways. From 1980 until 1984, despite repeated complaints from patients, physicians, and nursing staff, the quality of care at CDC for substantial periods of time was inadequate. Improvements have been made in 1984. The current administrator, who took that job in July 1904, is doing an excellent job. She is well- qualified for the job and has shown a genuine interest in improving CDC Lakeland. The current regional administrator is equally well-qualified, and has also demonstrated a sincere desire to improve the Lakeland facility. But problems persist. A few instances of questionable care occurred within a few months of the November 1984 hearing. The outside of the facility remains trashy as of ten days before the hearing and the location of the facility continues to suffer from proximity to vagrants. From 1980 to 1984, the health care at CDC Lakeland has been erratic and unstable, improving only in response to an investigation under threat of loss of Medicare money, annual inspections, or the potential of competition that may occur as a result of this certificate of need proceeding. Health care which is erratic and unstable is unreliable and, for that reason, inadequate, and the health care provided by CDC Lakeland for this additional reason has not been adequate. The Watson Clinic was started in 1926. Today, it is a large specialty hospital providing a wide range of services, from primary care to open-heart surgery. It has 22 departments and specialty services. The Clinic has 75 affiliated physicians, all of whom, with the exception of two, are specialists. Of these, 67 physicians are partners in the partnership which owns and manages the Clinic. The organization of the Clinic as a multispecialty group practice was derived from the Mayo Clinic example. Major decisions are made by the full partnership. Day to-day management is committed to an Executive Committee and to the Clinic Manager, Dudley Towne. The Clinic is located in Lakeland, Florida, in Polk County. The Watson Clinic currently has approximately 265,000 outpatient visits annually. As of January 31, 1984, Watson Clinic had current assets of $3,084,200.36, of which more than 50 percent was in cash deposits. For the year ended January 31, 1984, the Watson Clinic collected over $27 million in fees and distributed more than $12 million to its 67 partners. The Watson Clinic partnership, through its Executive Committee and by vote of the partnership, approved the plan to seek a certificate of need for a kidney dialysis center. Watson Clinic's amended application for a certificate of need seeks a four-station unit. The Watson Clinic partnership will pay for the purchase of equipment of the proposed dialysis center, will pay all start-up costs, and will continue to absorb all losses until the dialysis center becomes profitable. The dialysis center would be managed as another one of the entities of the Watson Clinic. Watson Clinic does not necessarily plan to do more than break even in its operation of the dialysis center. From a fiscal perspective, the Watson Clinic frequently undertakes to provide a new service to its patients that itself may only be marginally profitable but that furthers the goal of the Clinic to be a full-service multi-specialty clinic. WATSON Exhibit 14 is WATSON's amended certificate of need application. The amendments were primarily to conform the application to the number of dialysis stations initially approved by HRS. WATSON originally requested ten stations, but HRS approved only four. The projected staffing for the dialysis center is one head nurse who would administer the unit, two staff registered nurses, one licensed practical nurse, and part-time assistance from a dietician, a social worker, and a secretary/receptionist. Watson Clinic is currently aware of six registered nurses with some background in nephrology who might fill one of the three nursing positions, and four licensed practical nurses. Of these, only one (one LPN) is currently on the staff of CDC Lakeland. There was no rebuttal evidence on these facts, and it thus appears that the new center could be staffed reasonably soon, and without causing a loss of staff to CDC. The projected salaries for staff were reasonable and sufficiently high to attract reasonably qualified staff. The total cost of the project is projected to be $81,500, and the underlying costs which make up this figure are reasonable. Two additional costs not included in the above figure were identified. Legal fees have been incurred in the amount of about $25,000, and this is paid by the Watson Clinic partnership, and future fees will be paid in a like manner. Most renovation costs will be of minimal expense. The dialysis center will be in a building owned by the Watson Clinic partnership directly across the street from the Clinic. The only cost not identified in the application that may be substantial is the cost of putting in plumbing. This, however, does not affect the financial feasibility of the project since the Watson Clinic clearly has sufficient assets to absorb the costs of plumbing renovation. The projected utilization of the new dialysis center is reasonable based upon the projected need data discussed above. It is projected that the new center will have ten patients the first month and will grow to a maximum of 16 patients by the seventh month, October 1985. Thereafter, the center is projected to operate at full capacity of 16 patients. WATSON Exhibit 2, page 3, shows a predicted 75 ESRD patients needing dialysis in the Lakeland sub-area by September 1, 1905. If 16 of these dialyzed at the WATSON dialysis unit, the remaining 59 would dialyze at CDC Lakeland, which would be seven or eight more patients at CDC than are currently using that facility. The data of projected ESRD patients from Network 19 were corroborated by evidence provided by Dr. Haire. Dr. Haire and his partners are currently following 12 patients with renal problems and expect six of these will need dialysis in the next four or five months. Dr. Haire estimated that initially four of his 22 patients now using CDC would immediately transfer to the new unit, and that later in the year another one or two would transfer. Dr. Haire finally estimated that the remaining six patients of the 12 mentioned above as having renal problems would need dialysis by the end of the year. Thus, the majority of the projected patients were in fact known to Dr. Haire by name and their projected needs currently identified. The projected operating revenues were based upon reasonable assumptions from experience in reimbursement and payment in dialysis centers in the industry and actual reimbursement experience at Watson Clinic. The operating expenses were likewise based upon experience in the industry and are found to be reasonable projections. Attached to WATSON Exhibit 14 are computer-generated pro forma financial statements. These statements project net income and operating profit for the new facility for a two-year period, and are premised upon the patient utilization rates discussed above, as well as projected revenues and expenses, including the expense of amortizing the initial project cost. The first year operating profit is projected to be $19,809, with a pretax profit of $428. The second year has a projected operating profit of $20,790 and a pretax profit of $13,126. The financial statements erroneously show a corporate income tax, which does not exist since the Clinic is a partnership, so the pretax profit is the same as the net income. The financial statements are conservative in that they presume that all patient revenue will come from patients who dialyze in the unit. Medicare pays for home dialysis as well, to encourage that form of dialysis, but since operating expenses are less for home dialysis, the new center will enjoy greater net revenue (approximately $6,000 more per patient per year) for each patient on home dialysis. Dr. Haire and his partners in their practice have historically placed great emphasis on home dialysis, and it is reasonably certain that the center will have greater net revenue as a result of their efforts to train new patients on home dialysis. The projected revenues are conservative for another reason: they are based on patient visits at a 90 percent rate during the year, rather than 100 percent of the available dialysis days. The 10 percent shortfall was used to account for missed appointments or hospitalization. For example, there are three dialysis days per week, or 156 dialysis days per year for 52 weeks. Thus, at 100 percent 16 patients would generate 2,496 revenue visits. WATSON's second year projection of revenue, however, is based upon 2,254 visits, or 90 percent of 2,496. Elaine Feegel, CDC's current administrator, however, testified that "very few" patients ever miss a dialysis visit. The willingness of the Watson Clinic, with its clearly ample resources, to absorb all losses from the new dialysis unit in order to provide a full range of services, means that the unit will always have a resource to turn to during the start-up phase and during lean periods. The evidence in the record also shows that the facility will be self-supporting in a reasonable period of time and therefore is financially feasible. The facility will break even in the first year based upon an average of 14.25 patients per month. While this utilization rate is somewhat high, it is supported by the evidence. First, Network 19 projects 75 patients needing dialysis in the Lakeland area by September 1, 1985. If 14 of these patients use the Watson unit, the remaining 61 can use the CDC unit, putting CDC at 95 percent of its capacity of 64 patients. Given the record of inadequate care at CDC and the fact that the Watson unit will be brand new, coupled with the association of the Watson unit with the adjacent Watson Clinic, it is very likely that the Watson unit will have from 14 to 16 patients regularly using the facility by the end of the first year. CDC's expert on accounting, Michael Sullivan, sought to discredit the financial feasibility of the proposed four station dialysis center, but his testimony was not persuasive. The portion of his testimony based upon the original CON application data was not relevant because the data was altered by the amended application. Mr. Sullivan also excluded pharmacy and EKG revenue from his calculations of revenue. The main Watson Clinic has both a pharmacy and EKG that will be used by the dialysis center. It is unclear on this record whether the revenues from these activities will, for accounting purposes, be treated as separate revenues of the dialysis center, or revenue of the Watson Clinic. The point is irrelevant, however, since the Watson Clinic will cover all losses that may occur at the dialysis center, and can use these center generated revenues to do so. Moreover, the amounts in question are relatively small. The annual projected EKG revenue is only about $600, and the annual projected pharmacy revenue is only about $7,000. If Watson Clinic successfully has three patients on home dialysis, it will enjoy $18,000 in additional revenue annually, which will more than cover any overstatement of pharmacy or EKG revenue. Mr. Sullivan's criticism that there was no expense indicated for fees of the medical director was not relevant since Dr. Haire will provide those services without charge until the center becomes financially self-sustaining. Mr. Sullivan's further criticism that administrative costs were not accounted for was similarly not correct. A portion of the rental fee will cover administrative services to be provided by the Watson Clinic. Further, the current plan is to computerize much of the billing, and the cost of the computer equipment is included in the financial statements. In summary, the evidence shows that the proposed dialysis center will be financially feasible. The quality of care that will be delivered by the proposed four- station center will with a reasonable probability be adequate. There was a substantial amount of evidence as to the qualifications of persons who will be involved in delivery of that health care, and no rebuttal of any consequence from CDC. WATSON intends to offer complete dialysis services consistent with the current state of the art, with new equipment, properly trained staff, professional operating and management procedures. a patients' bill of rights, adequate professional supervision, and adequate staffing. Dr. Haire, who will be the Medical Director, is well-qualified for the job. Initial planning and consultation will be provided by a professional consulting firm. The medical staff will be open staff. The proposed center will place great emphasis on self care and home dialysis since Dr. Haire and other nephrologists at the Watson Clinic actively encourage these techniques. Additionally, the Watson Clinic plans to offer a full range of support services, including dietary counseling, rehabilitation services, social services, and the like. When the new Watson facility opens, CDC Lakeland should experience some loss of patients, but will not suffer harm in the long run. Dr. Haire will continue to use CDC Lakeland for some of his 24 patients, since the new facility can only handle 16 patients at its maximum capacity. By September 1, 1985, there will be enough new patients in the Lakeland area that even if WATSON served 16 of these, CDC Lakeland still would be needed to serve the remaining 51 patients and would at that time be operating at 92 percent of its capacity. The new clinic will, over the long run, compete with CDC Lakeland for staff, but as discussed ahead, competition will be beneficial to patients and should result in better health care in dialysis in the area. Initially, however, as found above, the Watson facility could be staffed without "raiding" the staff at CDC since there is an adequate, identified pool of potential staff other than current CDC staff. Since CDC Lakeland has enjoyed a virtual monopoly over dialysis services in the Lakeland area for the last few years, and the quality of health care provided by CDC has been so unreliable, there is a great need for the Watson Clinic facility to provide CDC Lakeland with competition. Patients at CDC tried to persuade the management of CDC to improve, but when these patients objected to CDC policies and sought change, they were told to dialyze elsewhere if they were dissatisfied. Having the Watson Clinic facility available will enable CDC patients to make that choice, which should then result in sustained and real improvement at CDC. In sum, the need is such that the new facility will not really be duplicative of services provided by CDC, but to the extent it may be duplicative, the competition that will result will be beneficial, not detrimental, to ESRD patients. The parties may have proposed other findings of fact which have not been considered in the paragraphs above. Many of these are subordinate to findings stated above, are cumulative, or are irrelevant to the above findings and this case. Those of marginal relevance are considered in the following paragraphs: WATSON proposes that a finding be made as to the accidental infusion of formaldehyde and bleach into two patients on two separate occasions. This proposed finding was based solely upon hearsay, and therefore cannot be made on this record. WATSON proposes that a finding be made that formaldehyde causes cancer. There is no evidence in the record to support this finding. CDC Lakeland proposes a finding that the fluctuations in health care occurred as a natural consequence of change in management. This finding is contrary to the evidence and has no evidence to support it. CDC Lakeland proposes a finding that the absence of any projected cost for accounting or legal fees shows the project to be financially not feasible. The evidence does show that Watson Clinic has incurred about $25,000 to date in legal fees, and that it intends to pay these costs without attribution to the dialysis center. The issue, however, is basically irrelevant, since the Watson Clinic, which has sufficient funds to underwrite this project, intends to fund all costs until the project is self-sustaining. CDC Lakeland proposes a finding that Watson Clinic might expand to three shifts. There is no evidence to support this finding, and the only evidence on the evidence on the point is to the contrary.
The Issue Whether the Petitioner University Community Hospital's certificate of need application to establish a cardiac catheterization laboratory and open heart program in Tampa, Florida, should be approved.
Findings Of Fact On August 11, 1982, the Petitioner University Community Hospital, a non-profit hospital, (hereafter Petitioner or UCH) filed an application for a certificate of need (hereafter CON) to expend some $934,000 to establish cardiac catheterization and open heart surgical services at its 404 bed facility located at 3100 East Fletcher Avenue, on the north side of Tampa, approximately 9 miles from the Intervenor Tampa General Hospital (hereafter TGH or Tampa General). Petitioner's CON application was reviewed by the Respondent Department of Health and Rehabilitative Services (hereafter Respondent or Department) under Rule 10-5.11, Florida Administrative Code, and compared with other facilities in the Health Systems Agency, Region IV, which consisted of Pasco, Pinellas, Manatee and Hillsborough Counties. On November 30, 1982, the Department denied the Petitioner's application. The basis for the Department's denial as reflected in the State Agency Action Report, was that two hospitals in Health Services Area IV, Medical Center and Morton Plant, were below the 350 open heart procedures threshold required by Rule 10-5.11(16), Florida Administrative Code. Since Petitioner was not entitled to a CON for open heart surgery, it was not entitled to a CON for cardiac catheterization because Rule 10-5.11(15), Florida Administrative Code, which was in existence when Petitioner's application was reviewed, required that an applicant for cardiac catheterization must be able to offer open heart surgery. Following the Department's denial of Petitioner's application and prior to the final hearing, the Legislature abolished the Health Systems Agency Regions and provided instead that health planning be based on HRS Districts. Intervenor TGH, a 611 bed public hospital located on Davis Island in downtown Tampa, in the same service area as the Petitioner, and presently offering cardiac catheterization and open heart surgical services, intervened in this proceeding on the side of the Department. The Need for Cardiac Catheterization Services In the Service District Prior to the final hearing, the Department admitted to the need for an additional cardiac catheterization laboratory in Hillsborough and Manatee counties. See Petitioner's Exhibit 17. There are presently three adult cardiac catheterization labs in Hillsborough-Manatee, two at TGH and one at St. Joseph's Hospital. In the five- county area, Lakeland Regional has an approved and existing program for a total of four programs. Applying the methodology set forth in Rule 10-5.11(15), Florida Administrative Code, the Petitioner has established that a need exists for at least one additional cardiac catheterization lab regardless of whether the service district is defined to include two or five counties. As projected and calculated by Thomas Porter, a Department witness who utilized the rule methodology, five catheterization labs are need in the five-county area by the year 1985. However, based on historical data, the need formulated pursuant to the rule is probably understated. Porter's testimony was confirmed by Dr. Warren Dacus, a hospital planning consultant, who after obtaining population and projection figures from the Department and the University of Florida, Bureau of Business and Economic Research, concluded that a need existed for one additional catheterization lab in 1985 in Hillsborough and Manatee Counties. On June 16, 1983, the Department approved a CON application filed by Tampa Heart Institute (hereafter THI) which authorized the establishment of three cardiac catheterization labs. The Department's proposed agency action to award a CON to THI was challenged by the Intervenor Tampa General and St. Joseph's Hospital and is presently the subject of a pending administrative proceeding. The CON granted to THI was based on the Department's assumption that most, if not all, of its patients would come from Latin America. THI's CON application presented a unique set of circumstances which fell outside the methodology normally considered during CON reviews. Since the CON proposed to be granted to THI was administratively challenged and was based on the assumption that patients would be drawn from outside any defined service district, it is logically inconsistent and legally inappropriate to consider THI's three cardiac catheterization labs in the instant proceeding. If the CON is granted to the Petitioner, there will be sufficient utilization of the cardiac catheterization laboratory to insure quality of services as required by Rule 10-5.11(15)(i), Florida Administrative Code. Based on previous referrals to other hospitals and historical data obtained from other hospitals in the district, the Petitioner can expect to perform in excess of 300 cardiac catheterization procedures annually for the next three years following initiation of the service. The Need for an Open Heart Surgical Program in the Service District In the Hillsborough-Manatee Service District, two open heart programs presently exist, one program is located at St. Joseph's Hospital, the other is at Tampa General. The formula found at Rule 10-5.11(16), Florida Administrative Code, provides that the number of open heart procedures projected to be done in a future year is determined by multiplying the number of procedures per 100,000 population performed in the service area in 1981 by the projected population in the service area in the future year. No additional programs will normally be approved if such program will reduce the volume of an existing program below 350 surgery cases. In the service distract represented by the two-county area, there is a need for four open heart surgical programs by 1985. Using the methodology found at Rule 10-5.11(16), Florida Administrative Code, the two-county area requires the capacity to perform 1,433 open heart surgeries in 1985, which establishes a need for four programs. Although the addition of an open heart program at UCH would draw certain patients from both St. Joseph's and Tampa General, the number of open heart surgeries performed at St. Joseph's and Tampa General would not fall below 350 per year if UCH were granted a CON. In the five-county area which includes Hillsborough, Manatee, Polk, Highlands and Hardee counties, 1,587 open heart surgical procedures are projected for 1984 and 1,623 for 1985. Applying the rule methodology a need exists for five open heart programs in 1984 and 1985. Three programs, Tampa General, St. Joseph's and Lakeland Memorial Medical Center, presently exist or are approved in the five-county area. The petitioner has demonstrated a sufficient projected volume of open heart surgeries to assure quality of service under Rule 10-5.11(16)(e)(4), Florida Administrative Code. UCH can expect to perform in excess of 200 adult open heart surgical procedures during its first year of operation and within three years after initiation of the service. Moreover, UCH's surgery program will be capable of providing 500 open heart operations per year. In 1981, Lakeland Memorial performed 81 open heart surgical procedures which is significantly below the 350 procedures required by the rule. UCH's proposed program would have little if any effect on the open heart program at Lakeland Memorial, or its ability to meet minimum service levels now or in the foreseeable future. The 350 procedures per year threshold is required to ensure that cardiac surgery teams and staff remain proficient so that patient care is not jeopardized. If, due to the low number of procedures performed at Lakeland Memorial, patient care is being jeopardized, the purpose of the rule is not served by denying a CON to the Petitioner on such a basis since the grant or denial of the instant CON would have no effect on Lakeland Memorial's ability to meet the threshold. UCH's non-invasive coronary procedures including echocardiograms, stress testing and halter monitoring have been utilized by patients to a noteworthy degree. The levels of utilization for these non-invasive tests at UGH in comparison to Tampa General and St. Joseph's are as follows for the period July, 1980 to June, 1981: echocardiogram, UCH 1021, Tampa General 1,175, St. Joseph's 539; stress testing, UCH 598, Tampa General 490, St. Joseph's 371; halter monitoring, UCH 618, Tampa General 328, and St. Joseph's 290. A direct relationship exists between the volume of non-invasive coronary procedures and invasive catheterization procedures that can be expected to be performed at UCH. Approximately 30 percent of the patients at UCH are referred to other hospitals for invasive procedures following non-invasive testing. Transferring patients between hospitals for invasive procedures after non-invasive testing lessens the quality of patient care and increases the probability of duplication of testing, thus increasing health care costs. The Adequacy of she Petitioner's Proposed Facility UCH's proposed facilities for open heart and cardiac catheterization services are adequate for their intended purposes. The proposed plans and equipment lists for the cardiac catheterization lab and open heart surgical program are acceptable from a medical and planning perspective, and are similar to other facilities offering such services. UCH has or if the CON is approved will have, the necessary staff and equipment to meet the requirements of Rules 10-5.11(15)(g) and 10-5.11(16)(c), Florida Administrative Code. The Petitioner will provide the training programs set forth at Rule 10-5.11 (15)(i)(3), Florida Administrative Code. The catheterization lab will maintain the hours of operation specified in Rule 10-5 11 (15)(h)(2), Florida Administrative Code, and the open heart surgery program will operate in accordance with the requirements of Rule 10- 5.11(16)(d)(2) and (3), Florida Administrative Code. The Petitioner is accredited by the Joint Commission on Accreditation of Hospitals as required by Rules 10-5.11 (15)(i)(1) and 10-5.11 (16)(e)(1), Florida Administrative Code. The Petitioner has a written plan projecting case loads, and projecting space, support, equipment and supply needs as required by Rule 10- 5.11(16)(e)(5), Florida Administrative Code. The Financial Feasibility of the Petitioner's Proposed Cardiac Program UCH's proposed open heart surgery program and cardiac catheterization lab are financially feasible. Funds for the project are available and no long term debt exists since the projects are to be funded out of cash. Projected net income from the service is in the 5 percent range which is conservative for a not-for-profit hospital which requires a degree of profitability to ensure that sufficient revenue is generated to meet expenses. The projected costs for the proposed cardiac catheterization lab are reasonable. The proposed renovation of the lab is part of a general large scale renovation for which UCH has secured a binding contract for the amount specified in the application. The equipment and personnel budget for the lab is also reasonable. Based upon a comparison of the proposed charges at UCH with the projected 1984 charges at Tampa General, UCH offers the least costly alternative for providing cardiac catheterization and open heart surgery services. For example, at Tampa General, the projected charge for cardiac surgery, exclusive of charges for room and ancillary services, is $1,711 compared to $1,244.81 at UCH. For cardiac catheterization, the projected 1984 charge at Tampa General is $1,338 as compared to $1,093.75 at UCH. The Petitioner's charges and proposed charges for cardiac catheterization, open heart surgery and other hospital services are comparable to other similar hospitals in the service district, and accordingly, the Petitioner has established that the requirements of Rules 10-5.11(15)(j) and 10- 5.11(16)(f)(2), Florida Administrative Code have been met. Petitioner's Proposed Cardiac Program and its Effect on Tampa General The Hillsborough County Hospital Authority, a public agency which was created by special act of the Legislature, see Chapters 67-1498 and 80-510, Laws of Florida, is required by law to treat indigent patients who are in need of immediate or emergency medical treatment. Hillsborough County is required to reimburse the Hospital Board of Trustees for the full cost 2/ of any hospital or related services provided patients properly certified as indigent. Tampa General has experienced severe monetary problems as a result of its role as provider of free medical care to indigent residents of Hillsborough County. Unfunded patients have averaged 80-100 admissions per week at a cost of $280,000-$350,000 per week to the hospital. Approximately 30 percent of the claims that the hospital files with Hillsborough County for reimbursement of indigent expenses are rejected. As a result, Tampa General has been forced to subsidize its cost of providing indigent care through added charges passed on to paying patients. Since the Hospital Authority has no taxing power, Tampa General is dependent upon funds provided by the County. Among public hospitals in Florida's major urban areas, Tampa General receives the least amount of financial assistance from local government. Tampa General has budgeted $24 million worth of free care for 1984 and this amount is projected to increase through 1988. The amount of free care provided to indigents at Tampa General is approximately 16 percent of gross revenues. Tampa General utilizes the profits it derives from the operation of its cardiac programs to subsidize the considerable amount of free care that it provides to indigent residents of Hillsborough County. In 1981, Tampa General embarked on an ambitious expansion program in order to attract additional paying patients and to remain competitive with other private hospitals in the community. In order to finance this project, the Authority issued bonds in the amount of $160,260,000. In deciding to issue these bonds, the Authority considered the revenues generated by the hospital's cardiac programs which constitute 17-18 percent of total net revenues and the relative lack of competition from other coronary programs in the Hillsborough area. In the absence of adequate funding by the State and/or County, Tampa General's cardiac program is an essential element in the hospital's plan to continue to provide free care to indigents. The subsidization or contribution margin of the cardiac program helps offset the bad debt of indigent costs which are not being reimbursed by local government. The amount of subsidization or contribution margin for each cardiac procedure performed at Tampa General in 1984 was $3,721 and is projected to increase to nearly $5,700 in 1988. However, notwithstanding the monies projected by Tampa General which it expects to be contributed by its cardiac program, it is likely that third- party payers will follow the federal government in adopting a prospective payment system based on diagnosis related groups of illnesses which will limit the amount of revenues which can be collected from private pay patients. Assuming that this occurs, the amount of subsidization derived from cardiac programs at Tampa General will be significantly decreased regardless of the outcome of the instant proceeding. The evidence regarding the effect of UCH's proposed cardiac program on Tampa General's existing program is unclear. Unquestionably, some of the patients which would have gone to Tampa General for cardiac care will go to UCH if its program is established. However, since cardiac catheterizations are increasing in volume and a direct relationship exists between cardiac catheterizations and open heart surgery, it can be concluded that while Tampa General's rate of growth would decrease, it is unclear whether its present volume would decrease significantly below existing levels. No evidence was presented that Tampa General's cardiac catheterization and open heart programs would decline below the thresholds established by rule if UCH's application were granted. The financial problems facing Tampa General are clearly serious. The hospital has taken drastic steps to attempt to control costs including eliminating staff positions and severely restricting indigent access to health care. Tampa General's problems existed prior to UCH's application for a CON and will likely continue regardless of whether the Petitioner's CON is approved. The long-term solution of Tampa General's financial problems should not be dependent upon whether UCH prevails in this proceeding. If Tampa General is to fulfill its mission as a public hospital, it must be assured of reliable and consistent course of funding for all of its operations. In enacting Chapter 80-510, Laws of Florida, the Legislature intended that the cost of indigent hospital care in Hillsborough County be borne by all of the citizens of the County, and not primarily by paying patients who by circumstance or otherwise, find themselves at Tampa General. Tampa General's reliance on its cardiac programs to finance its long- term debt and offset its indigent care losses is dependent on the existence of two factors: first, Tampa General must maintain what is essentially a monopoly on the services to be guaranteed a supply of paying cardiac patients and second, it must have the ability to pass on to its paying cardiac patients the amount needed to subsidize its other operations. Tampa General, however, no longer maintains a monopoly on cardiac programs in the Hillsborough area as evidenced by the certificate of need awarded to St. Joseph's. Moreover, the Department has stated its intention to authorize another open heart program and three catheterization labs at Tampa Heart Institute. The prospective reimbursement system implemented by the federal government which is expected to be followed by private insurers will further limit Tampa General's ability to generate excess revenues from private-pay coronary patients. The result of the inability of Tampa General to secure a long-term solution to its problems of unreimbursed indigent care is reflected in the institution of a policy limiting indigent admissions to the most serious cases. Due to this new policy limiting admissions at Tampa General to emergencies, Tampa General's and UCH's policies regarding coronary care for indigents are essentially the same. The Petitioner's Compliance with Section 381.494(6)(c), Florida Statutes It was uncontroverted that UCH's proposed cardiac services are consistent with the state health plan. Since the Department has not yet promulgated as a rule the health systems' plan for the District, the parties agree that the question of the Petitioner's compliance with the local plan is not an issue in this case. See Section 381.494(6)(c)(1), Florida Statutes. The proposed cardiac program has been approved by UCH's Board of Directors, and is an appropriate progression considering the size of UCH and the mix of cardiologists and patients at the facility. See Rule 10-5.11(2), Florida Administrative Code. The Petitioner has carried its burden by demonstrating a need for cardiac catheterization and open heart surgical services regardless of whether the service district is defined as a two or five-county area. See Section 381.494 (6)(c)(2), Florida Statutes. Utilizing a two-county area including Hillsborough and Manatee counties, the projected population in 1985 is 890,000. The 1981 use rate was 276.4 cardiac catheterization procedures per 100,000 population. Multiplying the 1981 use rate by the projected population, 2,640 catheterization procedures are projected for 1985. Dividing 2,460 by the threshold number 600, results in a need for 4.1 catheterization labs in Hillsborough and Manatee counties in 1985. Presently, three existing and approved catheterization laboratories exist in Hillsborough and Manatee counties, one at St. Joseph's and two at Tampa General. A need, therefore, exists for an additional catheterization laboratory in the two-county area. 3/ In the five-county area which includes Hillsborough, Manatee, Polk, Hardee and Highlands counties, the projected population for 1985 is 1,330,400. The 1981 use rate was 207 procedures per 100,000 population. A total of 2,693 and 2,754 procedures are projected for 1984 and 1985, respectively. Dividing 2,754 by 600 demonstrates a need in 1985 for five laboratories while four presently exist or are approved in the five-county area, one at St. Joseph's, two at Tampa General and one at Lakeland Memorial. Petitioner has therefore demonstrated a need for an additional cardiac catheterization services in the five-county area. In considering the need for open heart surgery services in the two- county area and utilizing the projected population of 890,000 and a use rate of 160.99, the projected number of open heart procedures in 1985 is 1,433. When 1,433 is divided by 350, a need exists for four open heart surgery programs in Hillsborough and Manatee counties in 1985. Since there are only two existing and approved programs in the two-county area, the Petitioner has demonstrated a need for two additional open heart surgical programs by 1985. In the five-county area, the projected 1985 population is 1,330,400. The 1981 use rate was 122 procedures per 100,000 population. Multiplying the projected population by the use rate results in 1,623 open heart procedures projected in 1985. When 1,623 is divided by 350, a need is established for five open heart surgical programs by 1985. Since only three existing or approved programs are in place, the Petitioner has demonstrated a need for two additional open heart programs in the five-county area by 1985. The Petitioner presently performs a significant number of non-invasive cardiac procedures. It was uncontroverted that UCH provides quality of care to its patients. If the Petitioner's application is approved, it can be assumed that present acceptable quality of care standards will be met in the operation of the program. See Section 381.494(6)(c)(3), Florida Statutes. The proposed project is financially feasible, and UCH has the ability to attract sufficient nurses and support staff to operate both programs. See Section 381.494(6)(c)(8) and (9), Florida Statutes. The Petitioner has argued throughout this proceeding that the initiation of cardiac service at its facility will foster competition thereby reducing health care costs in Hillsborough County. If price competition in fact existed under the present system of health care delivery, lower costs would be expected. However, with rare exception, health care consumers do not select hospitals nor do they pay their own hospital bills. Rather, third-party payers, including the federal government and private insurance companies, are responsible for reimbursing hospitals for patient costs and physicians generally determine which hospital is utilized by a patient. In an understandable effort to control health care costs, the federal government and the state have enacted a complex regulatory scheme for health care providers which limits competition and places the burden on providers of establishing that a need exists in a given area for a proposed service. To a significant extent, this scheme protects the financial interests of existing providers. This process can have an unfortunate side-effect of limiting the choices available to health care consumers and eventually could result in a diminished quality of health care. 4/ While the presence of additional hospitals in an area does not necessarily result in lower health care costs, it does create potential competition for patients through physician referrals. Hospitals have an incentive to provide quality care including state of the art equipment and competent staff, to ensure that they attract their share of patients. As a result, the preferences of physicians and health care consumers should have a greater impact in an area where health care services exist at more than one facility. The difficulty encountered in CON proceedings is attempting to balance the legitimate needs of health care consumers with the state's efforts to control costs by discouraging the duplication of unnecessary services. The Petitioner has demonstrated that its proposal is cost-effective, and should foster innovation and improvement in the delivery of health services in the service area as required by Section 381.494(6)(c)(12), Florida Statutes. The assertion by Tampa General that the expansion of its facility represents a less costly alternative is too speculative to be considered in this proceeding. While TGH is in the process of a $300,000 conversion of a pediatric catheterization lab to an adult lab, this fact was apparently either unknown or not considered by the Department at the time of the final hearing since HRS witnesses stated that Tampa General has only two adult labs.
Recommendation Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED: That the Department of Health and Rehabilitative Services enter a Final Order granting a CON to Petitioner University Community Hospital to establish a cardiac catheterization laboratory and open heart surgical program in Tampa, Florida. DONE and ENTERED this 5th day of March, 1984, in Tallahassee, Florida. SHARYN L. SMITH 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 5th day of March, 1984.
Findings Of Fact Orlando Regional Healthcare System, Inc. ("ORHS") filed a letter of intent to apply for certificate of need ("CON") 8039 for the approval of a bone marrow transplantation program. ORHS also submitted a Notice of Filing the letter of intent for publication in The Orlando Sentinel newspaper. The notice, which is as follows, did not include the capital expenditure cost of the project. PUBLIC NOTIFICATION NOTICE OF FILING The applicant, Orlando Regional Healthcare System, Inc., which is authorized to operate Orlando Regional Medical Center, announces its intent to file a certificate of need application on March 22, 1995 with the Agency for Health Care Administration to establish Bone Marrow Transplantation Services at Orlando Regional Medical Center, located in Orlando, FL, the Agency's District 7, Orange County Subdistrict, which is designated as Organ Transplant Planning Area 3 by the Agency's Certificate of Need Program Office. The project, if granted is expected to become operational in 1996. Signed: /s/ Garry J. Singleton Garry J. Singleton Vice President of Acute Care Operations Orlando Regional Healthcare System, Inc. 1414 Kuhl Avenue Orlando, Fl. 32806 The Agency For Health Care Administration ("AHCA") is the state agency that administers the CON program. AHCA published notice of receiving ORHS' letter of intent in Vol. 21, Number 10 of Florida Administrative Weekly on March 10, 1995. AHCA's notices do not contain cost estimates. AHCA deemed ORHS' application incomplete and withdrew it from consideration due to omission of capital costs from the published notice in the newspaper. AHCA relied on the requirements on Rule 59C-1.008(1)(i) and (j), Florida Administrative Code. See, Conclusion of Law 11, infra. There is no evidence that The Orlando Sentinel made an error in the publication of the Notice of Filing. Capital expenditure costs, when estimated in letters of intent and in notices of filing letters of intent, are often inflated. That is done because CON applications, filed subsequently with higher capital expenditure costs than those stated in the letter of intent, are rejected. Rule 59C-1.008(1)(k)3, Florida Administrative Code. Because the capital costs are often inflated in letters of intent, ORHS' expert concluded that notices of capital expenditure costs are meaningless, and that the omission of such costs from the newspaper notice is insignificant. Therefore, he asserts that the ORHS' notice of filing its letter of intent substantially complied with the requirements of the rule. ORHS' expert also notes that the publication rule requires the notice to include eleven different items, and that ORHS' notice omitted only one of the eleven. AHCA does not always require letters of intent or newspaper notices. They are not required for expedited applications, and errors in notices are excused if made by the newspaper and not the applicant. However, there are no batching cycles or comparative review of expedited CON applications.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that AHCA enter a final order withdrawing from consideration CON application 8039 filed by ORHS. DONE AND ENTERED this 11th day of August, 1995, in Tallahassee, Leon County, Florida. ELEANOR M. HUNTER Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 11th day of August, 1995. APPENDIX TO RECOMMENDED ORDER, CASE NO. 95-3059 To comply with the requirements of Section 120.59(2), Florida Statutes (1993), the following rulings are made on the parties' proposed findings of fact: ORHS' Proposed Findings of Fact. Accepted in Findings of Fact 1. Accepted in Findings of Fact 3. Subordinate to Findings of Fact 3. Accepted in Findings of Fact 3. Accepted in or subordinate to Findings of Fact 5 (as $5,000,000 each in proposed project costs in Exhibit 3 and approximately $5,000 total actual costs in Exhibit 4). Accepted in or subordinate to Findings of Fact 7. Accepted in Findings of Fact 5. Accepted in or subordinate to Findings of Fact 2 and conclusions of law 11. Accepted in Findings of Fact 5. Rejected in conclusions of law 13. 11-13. Accepted in Findings of Fact 5. Accepted in or subordinate to Findings of Fact 5 (as $5,000,000 each in proposed project costs in Exhibit 3 and approximately $5,000 total actual costs in Exhibit 4). Accepted in Findings of Fact 5 and Conclusions of Law 13. 16-17. Accepted in Findings of Fact 8. Accepted. Conclusion rejected in conclusions of law 11. See, 5 supra. AHCA's Proposed Findings of Fact. Accepted in Findings of Fact 2. Accepted in Findings of Fact 3 and 4. 3-5. Accepted in Findings of Fact 5-8. COPIES FURNISHED: John Gilroy, Esquire Senior Attorney Agency for Health Care Administration 2727 Mahan Drive Fort Knox Building 3, Suite 3431 Tallahassee, Florida 32308-5403 James M. Barclay, Esquire Cobb, Cole & Bell 131 North Gadsden Street Tallahassee, Florida 32301 R. S. Power, Agency Clerk Agency for Health Care Administration 2727 Mahan Drive Fort Knox Building 3, Suite 3431 Tallahassee, Florida 32308-5403 Tom Wallace Assistant Director Agency For Health Care Administration 2727 Mahan Drive Fort Knox Building 3, Suite 3431 Tallahassee, Florida 32308-5403
The Issue Whether osteochondral autograft transplant surgery should be authorized for Petitioner pursuant to Workers' Compensation Law.
Findings Of Fact In 1998, Jackson fell at work and sustained an injury to her left knee. Jackson made a workers' compensation claim for the treatment of the injuries. She underwent treatment for her injuries, and her treating physician requested authorization from Jackson's Employer/Carrier to perform a surgical procedure commonly referred to by the trade name of OATS, but also known as mosaicplasty. The Employer/Carrier denied the authorization on the ground that OATS was investigative or experimental within the meaning of Rule 59B-11.002, Florida Administrative Code, and referred the request to the Agency for a determination under Section 440.13(1)(m), Florida Statutes, and Rule 59B-11.002(4), Florida Administrative Code. The Agency requested Dr. B. Hudson Berrey, the Chair of the Department of Orthopedics and Rehabilitation at Shands Hospital and Clinic at the University of Florida, to review Jackson's case to determine whether the procedure was investigative and whether the procedure would provide significant benefits to the recovery and well-being of Jackson. Dr. Berrey has been board certified in orthopedic surgery since 1982. After three years of practice, he took a fellowship in orthopedic oncology at Massachusetts General Hospital in Boston, Massachusetts. He then served as Chief of Orthopedic Oncology and, later, as Chief of Orthopedic Surgery at Walter Reed Army Medical Center in Washington, D. C. After his retirement in 1993, he served on the faculty of the University of Texas Southwestern Medical Center. He has been the Chair of the Department of Orthopedics and Rehabilitation at the University of Florida College of Medicine since 1996. In addition to his teaching duties, he continues to see patients weekly and to perform orthopedic surgery twice a week. His duties require him to keep abreast of developments in the field of orthopedic surgery. In preparation for rendering his opinion for the Agency, Dr. Berrey reviewed the medical literature, seeking articles discussing clinical trials of OATS. A clinical trial is an investigation in which patients with a certain condition may receive a treatment under study if they meet certain objective standards for inclusion. The treatment parameters are defined and outcomes are assessed according to objective criteria. Dr. Berrey found very little in peer-reviewed literature discussing clinical trials of OATS or mosiacplasty. Instead he found retrospective reviews and case reports. Based on his review of the medical literature, Dr. Berrey formed the opinion that mosaicplasty may be safe and efficacious; however, because the procedure has not been subjected to clinical trials, the procedure remains investigative. OATS involves the transfer of a patient's cartilage from one portion of the knee that is not considered weight- bearing or that is considered as having a minimal weight-bearing load to an area that receives greater force or is more weight- bearing. Dr. Berrey is of the opinion that OATS may be effective to treat isolated chondral defects on the weight- bearing surface of the knee. He describes the type of injury for which the procedure is effective as a focal lesion in an otherwise normal knee. Three components comprise the knee: the patella, the femoral articulating surface, or femoral condyle, and the tibial articulating surface or tibial plateau. The femoral condyle and tibial plateau are bony structures lined with articular cartilage that provide the gliding surface of the knee. The patella articulates with the femur at the patellar femoral joint, and the tibia articulates with the femur at the tibial femoral joint. The tibial femoral joint is made up of medial and lateral components. Other structures present in and about the knee include the menisici, the cruciate ligaments, and the collateral ligaments. Jackson's medical records, including the MRI report, show that there is a subchondral cyst and/or osteochondral defect on the anterior articular margin of the mid-media femoral condyle. There are subchondral cysts along the posterior portion of the mid-tibial plateau. In addition, there is a prominent osteochondral defect involving the patella. Jackson has articular damage to all three compartments of the knee: the femoral condyle, the patella, and the tibial plateau. Based on the degenerative changes in all three compartments of the knee, Jackson's changes are probably generalized. She does not have a focal defect of the articular cartilage of the knee. Her symptoms relate primarily to the patellar femoral joint. Her medical records describe her injuries as including chondromalacia of the patella. The term "chondromalacia" applies to a continuum of deterioration of the articular cartilage of the patella, from softening to frank fraying to fibrillation where the cartilage may be worn down to the bare bone. OATS or mosiacplasty is designed to address a localized, focal lesion. Because of the generalized nature of the diseased condition of Jackson's knee and the probability that her symptoms are related to the deterioration of her patellar femoral joint, the proposed procedure is not likely to improve her condition or to enable her to return to work.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a final order be entered denying authorization for the OATS or mosaicplasty to be performed on Virginia Jackson. DONE AND ENTERED this 14th day of June, 2000, in Tallahassee, Leon County, Florida. SUSAN B. KIRKLAND Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 14th day of June, 2000. COPIES FURNISHED: Michelle L. Oxman, Esquire Agency for Health Care Administration 2727 Mahan Drive, Mail Stop 3 Building 3, Suite 3421 Tallahassee, Florida 32308-5403 Virginia Jackson 5555 Northwest 17th Avenue Apartment 2 Miami, Florida 33142 Sam Power, Agency Clerk Agency for Health Care Administration Fort Knox Building 3, Suite 3431 2727 Mahan Drive Tallahassee, Florida 32308-5403 Julie Gallagher, General Counsel Agency for Health Care Administration Fort Knox Building 3, Suite 3431 2727 Mahan Drive Tallahassee, Florida 32308-5403
Findings Of Fact At all times relevant hereto Respondent was licensed to practice medicine in the State of Florida and was issued License No. ME 0027980 (Exhibit 6). During the period 1984-86 Respondent operated Tampa Family Practice Center as Gold Plus HMO. He owned the clinic or at least totally controlled the clinic by closely supervising the doctors who worked for him at the clinic, requiring his approval of all medications prescribed for patients, for any referrals of patients to a consultant, or for hospitalization, all in an attempt to keep costs down. This clinic operated as a family practice clinic, and doctors were required to schedule up to 40 patients per day. No nephrologist or internal medicine specialists worked at the clinic. L. M. received a kidney transplant in 1983 through the aegis of the Tampa Transplant Clinic and, following the transplant, was monitored by the clinic for several months on a routine basis. In 1984, L. M. applied to join Respondent's Gold Plus HMO and was accepted as a patient by Respondent, after L. M. disclosed that he had received a kidney transplant in 1983. L. M.'s reason for joining the HMO was to save money on his medications. L. M. was told by Respondent that the clinic would not normally accept kidney patients, but because L. M. had received a transplant he was no longer considered a renal patient. L. M. was treated at Respondent's clinic for approximately twenty months during which period he was never referred to a nephrologist, nor were L. M.'s medical records requested from the doctors who had treated L. M. following his kidney transplant. At his clinic visits, his temperature, blood pressure and weight were taken, and his prescriptions for the drugs he was taking when he enrolled in Gold Plus were renewed. During the final three months L. M. was treated at Respondent's clinic he lost approximately 40 pounds and started to feel poorly with nausea and lowering of his blood pressure. Despite the lowering of L. M.'s blood pressure, his medication to combat high blood pressure was continued. L. M. also suffered from diabetes and required insulin. Had L. M. been referred to a nephrologist before his condition became critical, blood tests would have shown that the kidneys were not functioning normally and that some of the medications he was receiving were contra- indicated. It would also have shown he needed additional medication. L. M.'s condition deteriorated rapidly, and he "crashed". He was transported to Carrollwood Community Hospital by ambulance as Respondent's patient, but he was not seen at the hospital by Respondent. However, a representative from Respondent's clinic went to the hospital to induce L. M. to sign a paper disenrolling himself from Gold Plus. Despite, or because of, his serious illness at this time, L. M. did not sign the release. As L. M.'s condition appeared critical to the nurses at Carrollwood Community Hospital, the head nurse called Dr. Goldstein, a nephrologist who had treated L. M. before his transplant, to advise him L. M. was a patient in critical condition, and Respondent wasn't providing any help. Dr. Goldstein telephoned Respondent to tell him L. M. should not be at a community hospital where renal patients cannot be adequately treated without dialysis facilities and that L. M. should be transferred to Tampa General Hospital to the care of the renal transplant team. Respondent said he would try to arrange for the transfer of L. M., but needed to work out some financial arrangements. When Dr. Goldstein learned a few hours later that L. M.'s transfer to Tampa General had not been ordered, he again called Respondent to demand that L. M. be transferred to Tampa General. Shortly thereafter L. M. was transferred, and upon his arrival an acute hemodialysis was done. At this time, L. M. had fluid in his lungs, a pulmonary infection, a blood count showing no kidney function and liver damage. Without dialysis L. M. would not have survived. Following his discharge from Tampa General L. M.'s transplanted kidney is working but not as well as it had before the inadequate treatment led to his crash. Because of this setback, L. M. will likely require a regrafting of another kidney in the future. Another patient of Respondent was E. J., an end stage renal patient who, once he enrolled in Gold Plus, was never referred to a nephrologist for consultation, nor were E. J.'s records obtained by the clinic from the nephrologist who had earlier treated E. J. E. J. had been admitted to Carrollwood Community Hospital several times before May, 1985 when he was admitted by Respondent suffering from kidney disease. Shortly after admission, E. J.'s condition deteriorated to the point the nurse became apprehensive for his survival. On the morning of May 22, 1985, the floor nurse was very concerned about E. J. and called in her supervisor. The only treatment that had been ordered by Respondent for E. J. was oxygen to help his breathing. The head nurse observed E. J. to be short of breath and afraid he was dying. She called Respondent to relay the patient's condition and requested Respondent's presence. Respondent repeated this order for oxygen and told the nurse to put Johnson on "no code". The nurse told Respondent that "no code" would not be accepted by the hospital over the phone and that he would have to personally sign the order at the hospital. Respondent told the nurse to call E. J.'s family and have them come to the clinic. When the nurse called Respondent again shortly thereafter, he hung up on her. "No code" is the status reserved for terminally ill patients with no hope of recovery and a very short time to live. "No code" means that emergency measures will not be adopted to keep the patient alive and is ordered only after the doctor has discussed the patient's condition with the family and with the patient if he is capable of understanding, and all agree that is best for the patient. Fearing the patient would die, the nurse then called Dr. Goldstein and requested he look in on E. J. A few minutes later, the nurse again called Dr. Goldstein to request he come as soon as possible. Dr. Goldstein arrived at Carrollwood Community Hospital shortly thereafter. Upon his arrival, Dr. Goldstein found E. J. short of breath but sufficiently alert to say he didn't want to die. Dr. Goldstein recognized that E. J. needed dialysis as soon as possible and arranged to have the patient transferred to St. Joseph Hospital where hemodialysis was performed. E. J. recovered. E. J.'s medical records showed that while under the care of Respondent he had been admitted several times to Carrollwood Community Hospital with the same symptoms, but no nephrologist had ever been consulted on this patient. The patient had been given treatment and prescriptions to treat the symptoms of his problem, but was never referred to a dialysis center for the hemodialysis he needed until the intervention of Dr. Goldstein. No competent evidence was submitted that Respondent told L. M. that he could use no other physician while a member of Gold Plus. The hearsay testimony to this effect was not corroborated by the testimony of L. M. or any other witness who heard such instruction given. Competent evidence was presented regarding Respondent's reluctance to admit patients to hospitals, even for emergencies, and his close monitoring and approving of prescriptions that the doctors working at Gold Plus issued to patients. This evidence clearly demonstrates that Respondent exercised influence on the patients in such a manner as to exploit them for financial gain. A physician trained in family practice only is not competent to treat an end stage renal patient without referring the patient to a nephrologist for consultation. No evidence was submitted that Respondent had training in nephrology other than what he received while in medical school or as an intern. A nephrologist who does not work frequently, if not exclusively, with renal transplant patients is not competent to treat a transplant patient without consultation with a transplant specialist. Changes in the field of transplant and immunosuppressant medications are occurring so rapidly that a physician needs to work in this field almost daily to remain current and qualified to safely treat and monitor such patients.
The Issue Whether the Certificate of Need (CON) Application No. 10420 submitted by Baptist Hospital of Miami, Inc. (Baptist Hospital or Baptist), to establish a new adult autologous and allogeneic bone marrow transplant (BMT) program in Florida’s Organ Transplant Service Area 4 (TSA 4) should be approved.
Findings Of Fact OVERVIEW Blood and Marrow Transplant BMT is the infusion of blood progenitor cells, generally referred to as “blood stem cells,” into a patient after the patient has received high-dose chemotherapy to treat a blood cancer or disorder.1/ Blood stem cells are hematopoietic, or blood-producing progenitor cells that manufacture the cellular components of blood, i.e., white blood cells, red blood cells, and platelets. While high-dose chemotherapy may cure a patient’s blood cancer or disease, it also eliminates the body’s ability to produce normal blood cells. The ability to produce normal blood cells may be restored by the infusion of blood progenitor stem cells after the patient has completed high-dose chemotherapy treatment. Standard of Care Once considered experimental, over the past 20 to 30 years, BMT has become the standard of care for an increasing number of blood cancers and disorders, including leukemia, lymphoma, multiple myeloma, myelodysplastic syndrome, myelofibrosis, myeloproliferative neoplasm, paroxysmal nocturnal hemoglobinuria, primary amyloidosis, severe aplastic anemia, testicular cancer, Waldenstrom’s macroglobulinemia, essential thrombocytosis, and Ewing’s sarcoma. In most instances, the goal of BMT therapy is cure. Autologous Transplant “Autologous” transplant involves the extraction or collection of a patient’s own stem cells through a process known as “apheresis” prior to treating the patient with high-dose chemotherapy. Once collected, the patient’s stem cells must be frozen and stored while the patient is undergoing high-dose chemotherapy, after which the cells are reinfused. After reinfusion, the stem cells migrate to the bone marrow, where they produce normal blood. All autologous transplants require freezing (cryopreservation) and storage of the patient’s stem cells for preservation while the patient is receiving high-dose chemotherapy. In most cases, the time from collection and preservation of the patient’s stem cells to the time of complete recovery is approximately six weeks. Allogeneic Transplant “Allogeneic” transplant is a blood stem cell transplant using stem cells from either a related or unrelated donor, which may be necessary for certain cancers and disorders in which the patient's own stem cells cannot be used. Allogeneic transplant is the standard of care for acute myeloid leukemia. Potential candidates for allogeneic transplant are often identified very early on in their disease. The first and most important goal of therapy in such cases is to put the patient’s cancer into complete remission. Once a patient is verified as in complete remission, the transplant process must proceed as rapidly as possible, including the identification of a donor. The process of finding a donor may take two to three months, and does not begin until the patient is seen by a transplant center. Thus, the sooner the patient has access to a transplant center, the greater the chance of a successful allogeneic transplant. Most patients requiring allogeneic transplants will not have a donor within their family. Siblings are the most likely donors, but have only a 25-percent chance of being an appropriate “match.” The search for a donor is worldwide. Donors are initially identified through national and international BMT donor registries, and confirmed through human leukocyte antigen tissue-typing performed on a DNA sample collected by buccal swab or a blood sample. In allogeneic transplants, the blood stem cells are not usually frozen. Rather, the stem cells remain in the donor while the patient is undergoing high-dose chemotherapy. Donors frequently are found as far as halfway across the world from the patient's location, and it is standard practice to have the donor’s stem cells collected in a transplant facility local to the donor when the patient is ready to accept them and to transport the cells by specialized overnight air service for infusion “fresh” into the patient. Medical Advances in Blood and Marrow Transplant Remarkable progress has been made in the field of hematologic malignancies in the past five years. A major advancement is the ability to induce remission in cases in which remission previously was not possible. A number of new technologies have emerged in the past few years that are making it easier for doctors to move forward with transplants, and it is known that transplant is a treatment modality that time and again, in appropriately selected patients, offers the only hope for cure. Whether the transplant is autologous or allogeneic, timeliness of access is important. Outcomes are best when transplants are done when the patient is in a state of complete remission, or when their disease is optimally controlled. For many patients with aggressive diseases, for which transplant is the only potentially curative therapy, it may be a relatively short window of time between achievement of remission or control of the disease and the opportunity for transplant. Patients who are put into remission in anticipation of transplant, who then must wait a prolonged period of time, may relapse. After relapse, most often the disease becomes more aggressive and more difficult to get back into remission. The CON Application The Application proposes to establish a six-bed inpatient BMT unit within Baptist Hospital in Miami, Florida, TSA 4, to serve autologous and allogeneic BMT patients. Under the Application, the proposed inpatient unit will be integrated with outpatient BMT services facilities to be located in the MCI on the campus of Baptist Hospital. THE PARTIES Baptist Hospital of Miami, Inc. Baptist Hospital is a large not-for-profit secondary and tertiary acute care hospital with over 700 inpatient beds, located at 8900 North Kendall Drive in Miami, Florida, TSA 4, and is the Applicant for CON No. 10420. Baptist is part of Baptist Health South Florida (BHSF), the largest not-for-profit, community-based health care system in the region, comprised of six acute care hospitals, over 30 outpatient centers, and Baptist Health Medical Group. In addition to Baptist Hospital (which includes Baptist Children’s Hospital), the six BHSF hospitals include Mariner’s Hospital in Monroe County, Doctors Hospital in Broward County, and West Kendall Hospital, South Miami Hospital, and Homestead Hospital in Miami-Dade County. Baptist originated as a faith-based community service organization and “principally exists to provide high quality, cost-effective, compassionate health services to all comers, irrespective of religion, creed, race or national origin, or ability to pay.” The Baptist mission and vision include the commitment “to serve as a lifeline for uninsured people,” to “be the preeminent health care provider in the communities, the organization that people instinctively turn to for their health care needs,” and to be a “national and international leader in health care innovation.” The BHSF hospitals are recognized by national evidence-based survey and benchmarking organizations for high quality of care, with a focus on patient satisfaction. Baptist Hospital was named the “Best Full-Service Hospital in South Florida” by U.S. News & World Report, and was awarded service- specific awards in 12 specialties, including oncology. BHSF is ranked fifth among the 18 top-performing hospitals and academic medical centers in the United States in patient satisfaction and is the only community health system in the nation to be ranked among the top 18. Baptist has a reputation for physician and employee satisfaction. Among the 500 hospitals participating in the HealthStream national survey group, BHSF ranks No. 1 with respect to physician satisfaction. Among the more than 400 hospitals participating in a national survey of employee satisfaction, BHSF again ranked No. 1. BHSF’s inpatient oncology programs, primarily located at Baptist Hospital, Baptist Children’s Hospital, and South Miami Hospital, recently were awarded the Outstanding Achievement Award by the American College of Surgeons Commission on Cancer, the highest accolade an inpatient cancer program can achieve. Baptist Hospital has approximately 1,500 physicians on its medical staff, covering all specialties. Baptist Health Medical Group is a large specialty physician group practice comprised of approximately 200 employed specialist and subspecialists, including a large number of medical, surgical, and radiation oncologists, as well as orthopedic surgeons, cardiac surgeons, neurosurgeons, primary care physicians, and hospitalists. The specialized oncology services within Baptist Health Medical Group include hematologic malignancies (including two physicians experienced in BMT), lung cancer, gastrointestinal malignancies, breast cancer, head and neck cancer, genitourinary cancer, and gynecological malignancies. MCI is a comprehensive outpatient oncology facility formed by the consolidation, expansion, and programmatic standardization of all of BHSF’s existing outpatient oncology services and oncology clinical research programs into a new $430 million, 400,000-square foot oncology research and clinical care facility located on the campus of, and physically attached to, Baptist Hospital. The new MCI facility is comprised of two physically connected buildings, one designated as the “research building” that is designed to house state-of-the-art technology and proposed clinical research facilities, and the other focused on clinical care. The first floor of the research building houses MCI’s proton and radiation therapy. The three-gantry proton therapy installation at MCI is one of only a handful in the nation, the only one in South Florida, and will be used for both clinical research and interventional therapy. The second floor of the research building is designed to house a BMT outpatient services facility, with all related equipment, including apheresis and infusion areas, for the collection and infusion of blood stem cells for outpatient BMT. It is anticipated that the medical staff of MCI will be open to BHSF physicians and community physicians. Membership on the MCI medical staff, however, requires additional evidence- based physician credentialing standards and obligations that are set forth in the aspects of care. At the time of the final hearing, Baptist anticipated that MCI would begin serving patients in the new facility in January 2017. MCI has recruited Dr. Minesh Mehta, a nationally recognized radiation oncologist and clinical research scientist to head MCI’s radiation oncology program. Dr. Mehta’s expertise is in brain tumors and in proton therapy and research. Proton therapy is the latest, highest technology radiation therapy that exists. BHSF, however, does not expect that its oncology proton therapy and research program will be immediately financially viable and acknowledges that it may take 15 years before the program begins to break even. MCI has also hired Dr. Michael Zinner, a preeminent surgical oncologist and clinical researcher who has published more than 230 academic papers in the field of surgical oncology, to serve as CEO and executive medical director of MCI. Dr. Zinner has an expertise in an emerging model of cancer care known as the "hybrid academic-community cancer center." The hybrid academic-community model is a relatively new concept and is based on the concept of taking the best of the community hospital setting and affiliating with a teaching hospital or clinical research institution to form a hybrid academic- community cancer center that supports advanced translational research and offers patients local access to more and earlier- phase clinical trials. Baptist plans to establish the next hybrid academic-community cancer center in South Florida. MCI also recruited Dr. Miguel Villalona-Calero, a nationally and internationally recognized medical oncologist and scientist known for his innovative work in the field of medical oncology and translational research, who has special expertise in integrating academic clinical research in a community hospital setting. Dr. Villalona will lead MCI’s planned Phase I Laboratory and direct translational research, as well as MCI’s Clinical Research Program. Dr. Villalona is in the process of developing an expanded clinical trials office at MCI designed to expand clinical research programs. The expansion of the MCI Clinical Trials Office is occurring in phases, and the office currently is budgeted for 50 non-physician positions, 20 of which have been filled. So far, Dr. Villalona has successfully recruited a number of experienced personnel to staff MCI’s Clinical Trials Office. BHSF has provided Dr. Villalona with resources to support his work at MCI, and also has facilitated the relocation of Dr. Villalona’s personal basic research laboratory, including key personnel, from the James Cancer Research Institute in Ohio to Florida International University (FIU). MCI hired Dr. Jeff Boyd to serve as director of Translational Research and director of the Center for Genomic Medicine at MCI. Dr. Boyd also serves as professor and chair of the Department of Human and Molecular Genetics and associate dean for Basic Research and Graduate Programs at the Herbert Wertheim College of Medicine at FIU. Dr. Boyd is nationally and internationally recognized for his work in molecular diagnostics, translational research, and gynecologic and breast cancer research. In the past, Dr. Boyd established the gynecologic and breast cancer research lab at Memorial Sloan Kettering Cancer Center, and founded and directed the Cancer Genome Institute at Fox Chase Cancer Center in Philadelphia, an NCI-designated cancer center. He is also a founding member of the National Comprehensive Cancer Network. MCI’s resources and successful recruitment of Dr. Boyd places BHSF at the forefront of this precision therapy endeavor. BHSF has provided all necessary resources, including highly specialized next-generation technology and equipment, and dedicated space and staffing for MCI’s Center for Genomic Medicine. BHSF also has relocated Dr. Boyd’s personal oncology basic research laboratory to FIU. It is planned that resources of MCI’s Center for Genomic Medicine will be made available to Baptist’s proposed BMT program and other institutions. Approval of the Application is conditioned on the successful recruitment of a fully qualified adult allogeneic and autologous BMT medical director, meeting all allogeneic and autologous criteria requirements. While Baptist asserts that, through MCI, it has already identified a preeminent BMT physician scientist currently serving in a leadership role at a national cancer center to assume leadership of the BMT program, contingent on issuance of a CON to Baptist for an autologous and allogeneic adult BMT program, the name of that person was not revealed in the Application or at the final hearing. University of Miami, d/b/a University of Miami Hospital and Clinics. UM is a prominent university established in Florida in 1925. It is a single corporate, not-for-profit organization whose mission focuses on education, including the awarding of scholarships, basic and applied research activities, and delivery of public health and medical services. UM has a school of medicine, i.e., the Miller School of Medicine, a national research institution. UM does not operate its various programs under subsidiaries, but rather organizes its operations under divisions within the UM corporate entity. UM operates its health care services and facilities under various fictitious names, including "University of Miami Hospital and Clinics," "University of Miami Hospital," and "Sylvester Comprehensive Cancer Center." The University of Miami Hospital and Clinics is a comprehensive cancer treatment service and program that UM operates in TSA 4. The facilities used by UM to deliver those services include Sylvester Comprehensive Cancer Center (Sylvester), a specialty-licensed hospital, and a group of five satellite outpatient clinics. The northernmost clinic is on the southern border of Palm Beach County, and the southernmost clinic is located in the southern portion of Miami Dade County, in the Kendall Area. Sylvester is a 40-bed, Class III specialty cancer hospital that, by virtue of its limited size and its separation from the UM academic medical center, is exempt from the acute care Prospective Payment System (PPS). Under PPS, hospitals are paid a flat rate for services regardless of the actual cost of care. Sylvester, exempt from PPS, receives substantially higher, “cost-based” reimbursement for providing the same services. Sylvester has 12 beds dedicated to BMT services and an additional six intensive care beds at Sylvester available for BMT patients. Sylvester does a significant amount of clinical research, and has extensive laboratory space, clinical research space, and academic offices. At one time Sylvester was a National Cancer Institute (NCI)-designated comprehensive cancer center, but lost its NCI designation. Regaining that NCI designation is currently a focus for Sylvester. All of the approximately 300 researchers and physicians at Sylvester are employed directly by UM and are faculty members of various UM schools or the UM Miller School of Medicine, which are all part of the UM university system. The University of Miami Hospital is UM's in-house, statutorily-designated teaching hospital. The facility is a 560-bed general acute care hospital across the street from Sylvester. UM's medical facilities (the Miller School of Medicine, University of Miami Hospital, Sylvester and Anne Bates Leach Eye Center) are located on a medical campus that is co-located adjacent to Jackson Memorial Hospital (Jackson Memorial or Jackson), Miami-Dade County's “safety net” hospital. Jackson Memorial is a significant provider of transplant services in South Florida. Sylvester works in collaboration with Jackson, providing the entire physician staffing for cancer care to Jackson. UM also provides the staffing and outpatient pre- transplant and post-transplant services to the pediatric BMT program at Jackson. There are many other academic, clinical and research initiatives and services in which the two programs collaborate. The medical campus includes a 13-story medical research building called the Don Soffer Clinical Research Center, with laboratories and staffed by various cancer center researchers. UM also has an interdisciplinary Stem Cell Institute doing basic research on stem cells, which works in collaboration with Sylvester. Sylvester is part of the Comprehensive Cancer Center Consortium for Quality Improvement, which is a network of 19 preeminent national cancer centers, including notable institutions such as Dana-Farber, Memorial Sloan-Kettering, MD Anderson, and Duke University that review various clinical best practices and regularly share data and outcomes. UM has been operating an adult allogeneic and autologous BMT program at Sylvester since 2008, when it was awarded a CON to transfer the existing adult BMT program at Jackson (who had the program since 1994). The first census of BMT patients at Sylvester began in 2010. Agency for Health Care Administration. AHCA is the state agency responsible for administering the state CON program. Following review and analysis of Baptist’s Application, and independent analysis of state BMT utilization data, AHCA preliminarily determined that there is a need for an additional adult autologous and allogeneic BMT program in TSA 4 and that, considering the applicable statutory and rule criteria on balance, Baptist’s Application should be approved. STATUTORY AND RULE REVIEW CRITERIA Pursuant to section 408.036(1)(f), Florida Statutes,2/ AHCA has designated BMT programs as a tertiary health care service subject to the requirements of CON application and review. Section 408.032(17) defines a tertiary health care service as a health care service which, "due to its high level of intensity, complexity, specialized applicability, and cost, should be limited to, and concentrated in a limited number of hospitals to ensure the quality, availability, and cost- effectiveness of such service." Florida Administrative Code Rule 59C-1.044, entitled “Organ Transplantation,” requires AHCA to review the establishment of organ transplantation programs under the CON program pursuant to the review criteria in section 408.035, including need determination criteria. Need for BMT services is not determined by health service planning districts as defined by section 408.032(5). Rather, rule 59C-1.044(2)(f) aggregates health planning service on a regionalized basis. TSA 4 consists of District 10 (Broward County), District 11 (Miami-Dade County), a portion of District 8 (Collier County), and a portion of District 9 (Palm Beach County). The current inventory of approved BMT programs by service areas is as follows: TSA 1, Mayo Clinic (Jacksonville) and Shands Hospital (Gainesville); TSA 2, H. Lee Moffitt Cancer Center (Tampa); TSA 3, Florida Hospital (Orlando); TSA 4, Good Samaritan (West Palm Beach), Memorial West (Pembroke Pines) and UM (Miami). TSA 4, with three programs, has more adult BMT programs than any other service area in Florida. Section 408.035(1)(a), Florida Statutes: The Need for the Health Care Facilities and Health Services Being Proposed AHCA does not publish a fixed-need pool projection for BMT programs. Rule 59C-1.008(2)(e) provides that if no need methodology exists for a proposed project, the applicant is responsible for demonstrating need through a needs assessment methodology, which must include consideration of (1) population demographics and dynamics; (2) availability, utilization and quality of like services in the district; (3) medical treatment trends; and (4) market conditions. These criteria are largely subsumed within section 408.035(1)(a), (b), and (f) and were addressed under those provisions in the Application. Rule 59C-1.044(9) requires applicants for BMT programs to be able to project at least 10 allogeneic and 10 autologous transplants for the third year of operation. Utilization of BMT Services in Florida and in TSA 4 The provision of BMT services typically involves both inpatient and outpatient care. In general, autologous BMT involves a shorter inpatient stay, while allogeneic services require an extended inpatient stay. AHCA maintains two distinct databases of information reflecting utilization of BMT services in Florida. The first is “local health council” data, which combines, but does not distinguish between inpatient and outpatient, or autologous and allogeneic utilization. The second data set, known as “AHCA discharge data,” differentiates between autologous and allogeneic BMT procedures and, by definition, reflects only inpatient utilization. Neither database captures the number of Florida residents who leave the state to obtain BMT services. Both AHCA datasets show growth in overall utilization of BMT services statewide and in TSA 4. The compound average growth rate (which is an average annual growth rate over a multi-year time frame) for BMT services in Florida for the 5-year period from January 2010 to December 2015 was +8.5 percent per year, and the corresponding average yearly growth in actual BMT case volume was +73 cases per year. In addition to the growth in the number of BMT cases, the rate of utilization of BMT services increased statewide, with the greatest percentage of growth occurring in TSA 4, which saw a +27 percent overall growth in utilization of BMT services from June 2012 to June 2015, with a compound average annual growth rate of +29.8 percent per year over the 5-year period ending December 2015. The AHCA data is consistent with the independent data collected by the Center for International Blood and Marrow Transplant Research. Even though there has been an increase in utilization of BMT services in TSA 4, the overall volume of BMT cases in TSA 4 is below the case volume that would be expected by applying the statewide average use rate to TSA 4. Sylvester performed 170 BMTs in 2015, all of which were inpatient cases. Moffitt Cancer Center in Tampa is also experiencing increases in BMT case volume. 2. Population Dynamics The population age 15+ in South Florida is increasing at a rate of one to two percent per year, which reflects growth, but not substantially greater than the growth in population age 15+ statewide. Accordingly, the rate of growth in utilization of BMT services in TSA 4, which is greater than the rate of growth in utilization of BMT services statewide, is attributable to an increase in the actual use rate of BMT services in TSA 4, rather than straight population growth. 3. Market Trends for BMT Services in TSA 4 Baptist assessed the overall market, or volume of BMT cases arising within TSA 4 using AHCA utilization data, and verified the analysis using BMT use rates. The AHCA data shows that 284 adult BMTs, both inpatient and outpatient, were performed by facilities in TSA 4 in calendar year 2015. In addition to the 284 inpatient and outpatient procedures performed in TSA 4, an additional 51 residents of TSA 4 out- migrated from TSA 4 to receive inpatient BMT services at Moffitt Cancer Center (Moffitt), located approximately 300 miles away in Tampa, Florida. In addition, it is known that a number of patients out-migrated from TSA 4 for outpatient BMT services at facilities in other TSAs in Florida in 2015. There is no publicly available database showing the precise number of residents of TSA 4 who received outpatient BMT services in other TSAs. Baptist’s health planning expert estimated the volume of outpatient out-migration to other TSAs in Florida at 16 to 20 outpatients in 2015, by multiplying the 51 TSA residents known to have out-migrated to Moffitt for inpatient BMT services by approximately 30 percent. While it is reasonable to conclude that an additional number of residents of TSA 4 out-migrated from TSA 4 to receive BMT services at transplant centers outside the state of Florida, because this data is not reported to any publicly available database, Baptist did not include these patient volumes in its utilization projections. Based on the AHCA data, Baptist estimated the 2015 BMT case volume (net market size), for both inpatient and outpatient BMT services in TSA 4, at 343 to 347 BMT cases (i.e., 284 cases performed in TSA 4, minus 8 cases of in-migration, plus 51 inpatient cases that out-migrated to Moffitt, plus 16 to 20 outpatient cases that out-migrated from TSA 4 to receive outpatient BMT services). Baptist verified its assessment of the 2015 TSA 4 market size for BMT services by applying the 2015 average statewide use rate for BMT services for the population age 15+ (66.5 cases per million population) to the 2015 age 15+ population in TSA 4, resulting in a calculation of approximately 344 BMT cases in TSA 4 for calendar year 2015, which is consistent with its analysis of AHCA utilization data showing 343 to 347 cases for the same time period. 4. Forecast of 2020 BMT Case Volume in TSA 4 Using its calculated 2015 net market size for BMT in TSA 4, Baptist projected a net market size in BMT case volume for TSA 4 for the year 2020, using both the national compound average annual growth rate of +5 percent per year and the higher Florida growth rate of +8.5 percent per year, resulting in a projection of 439 to 517 BMT cases in TSA 4 in 2020. This estimate does not use the higher TSA 4 compound average growth rate observed in BMT utilization in TSA 4. Although Baptist projects growth rate for both inpatient and outpatient BMT procedures, the two AHCA databases utilized by Baptist do not specifically identify outpatient procedures. Therefore, Baptist’s health planner devised a method for estimating the number of outpatient procedures. For purposes of the projection, Baptist’s health planner assumed that the vast majority of the gap between the “local health council” data and the “AHCA discharge data” constitutes outpatient utilization. To approximate that gap, he doubled the reported inpatient autologous cases and used that number as the estimate for outpatient cases used in Baptist’s projections. However, as explained by the credible testimony of Dr. Claudio Anasetti, chair of Moffitt Cancer Center and Research Institute’s Department of Blood and Marrow Transplantation, Baptist’s methodology of estimating outpatient procedures by arbitrarily doubling autologous cases is inaccurate. The actual ratio of outpatient procedures observed at Moffitt is only between 10 to 20 percent of all transplant activity. While Baptist’s method may reflect current numbers, utilization of that methodology, in light of actual outpatient experience at Moffitt, is questionable as a method of projecting future utilization. Baptist’s projections directed no analysis exclusively to adult inpatient procedures, which is the focus of Baptist’s Application. In fact, outpatient procedures are not material to the Application. Because Baptist’s projection methodology doubles the number of autologous procedures to estimate the number of outpatients in the total procedures calculation, less than half of the projected total procedures are pertinent to inpatient procedures for BMT residents. Under Baptist’s projection methodology,3/ less than half of the 439 to 517 BMT patients projected for TSA 4 in 2020 will be inpatient procedures, yielding about 220 to 259 total inpatient cases. After subtracting 51 inpatient cases out- migrating to Moffitt used in calculating the baseline number for year 2015, Baptist’s projected volume for inpatient BMT cases in TSA 4 for 2020 is approximately 169 to 208. This number of inpatient cases is within the current capacity of UM and the other two adult BMT service providers in TSA 4. Under Baptist’s projections, while it appears that Baptist’s proposed program could serve at least 10 allogeneic and 10 autologous transplants for the third year of operation as required by rule 59C-1.044(9), that service would be at the expense of existing TSA 4 providers. Section 408.035(1)(b): The Availability, Quality of Care, Accessibility, and Extent of Utilization of Existing Health Care Facilities and Health Services in TSA 4 Availability, Utilization, and Quality of Existing BMT Programs in TSA 4 Sylvester is the dominant provider of BMT services in TSA 4. Baptist does not take issue with the quality of care Sylvester provides to BMT patients once the patient is admitted to Sylvester, but argues that the rate of out-migration of TSA 4 residents to obtain BMT services is evidence of problems in the availability and accessibility of existing BMT services within TSA 4. Out-migration of 51 BMT inpatient TSA 4 residents to Moffit in 2015 does not establish need for Baptist's adult BMT program. The 2015 inpatient out-migration is slightly less than the number in 2008. The percentage of out-migration from TSA 4 over the years has been decreasing, to about 22 percent of total inpatient procedures in 2015. In fact, the number of TSA 4 adult inpatient cases going to Moffitt is actually declining, from 67 in 2013, 62 in 2014, to 51 in 2015. Current out- migration is not excessive in relation to other TSAs. Baptist's primary argument as to out-migration is that it is an imposition on patients from South Florida to have to travel to Moffitt given the length of time that one has to be on-site during the primary course of treatment. Nothing in Baptist's proposal, however, significantly alleviates this concern and no real harm to patients in South Florida was demonstrated. Some out-migration can be explained by the complexity of patient cases, and possibly by referral preference of Baptist’s physicians. Out-migration to Moffitt can also be explained by the fact that Moffitt is a preeminent cancer center. It is currently the only NCI-designated cancer center in Florida, with the third highest volume of cancer patients in the country. Moffitt is ranked sixth in the country in overall performance as a cancer center. AHCA's health care planner, Marisol Fitch, recognized that out-migration is not proof of need and acknowledged the preference of some residents to receive BMT services outside the TSA 4. Out-migration of TSA 4 residents to nationally prominent centers is unavoidable, and some out-migration is expected to continue even as the use rate for TSA 4 residents increases. 2. Alleged Underutilization The Application includes an analysis of the use rate of BMT services in TSA 4 reflecting that the observed BMT case volume in TSA 4 is lower than would be expected by applying the statewide average-use rate for BMT services to the TSA 4 population. According to Baptist, the lower-use rate suggests that BMT services in TSA 4 are not equally accessible or available when compared to accessibility of services elsewhere in the state. Instead of indicating accessibility or availability problems in TSA 4, however, the evidence established that BMT use rate is somewhat skewed in favor of TSA 2, where Moffitt is the only provider. There is no question that Moffitt, because of its prominence, has an extraordinary draw of patients to its facility. Moffitt draws two-thirds of its BMT patient volume from outside of the Tampa Bay area. Under the circumstances, comparing use rates is not indicative of lack of accessibility or availability, and is not a good predictor of need. To the contrary, the evidence indicates that the vast majority of Florida residents who need BMT services are currently being served by existing Florida BMT programs. In addition, there is credible evidence that inpatient BMT use rates are likely to decrease because of an increase in outpatient care and a new, alternative technology known as “CAR-T cell therapy.” 3. Accessibility--Alleged Capacity Constraints According to Baptist, AHCA’s inpatient utilization data shows that Sylvester, a 40-bed hospital, is currently operating at capacity. Indeed, at present, UM is using the equivalent of 10 beds annually out of the 12 beds designated to accommodate BMT patients. There are an additional six intensive care beds at Sylvester that are presently considered available for BMT patients. UM also has available another entire floor (the second floor) with 22 beds at Sylvester, which is already hepa-filtered and otherwise meets all of the physical plant requirements for delivering BMT services. UM has capacity without any changes to its current facilities, to accommodate 250 transplants a year. UM is already repurposing beds in University of Miami Hospital across the street to accommodate commercial pay cancer patients, in order to allow Sylvester's beds to be used for BMT patients. In sum, UM's BMT physical facilities have room to accommodate new growth in BMT program services for the next five years of the growth forecast by Baptist health planners. Ample capacity at Sylvester and the fact that TSA 4 has the largest number of BMT providers in the state support the SAAR’s finding that Baptist had not shown lack of availability or accessibility in TSA 4 for the proposed BMT services. 4. Accessibility--Alleged Delays and Problems with Intake in TSA 4 At the final hearing, Baptist physicians testified that they are generally satisfied with the quality of care provided by Sylvester’s BMT program once their patients were admitted to Sylvester, but expressed frustration with delays in getting patients seen or admitted at Sylvester. They attributed the delay to lack of adequate communication after patient referral. Baptist’s Application did not advance the theory that poor referral communications resulted in lack of accessibility to BMT services in TSA 4. Therefore, that theory is not properly considered. Even with consideration of that theory, the evidence does not support a finding that communication errors caused lack of access. While there was evidence of occasional communication issues in referring BMT patients to UM, the evidence was not sufficient to reasonably infer lack of quality of care or accessibility for BMT inpatient services in TSA 4. Handoff communication issues among health care personnel are globally true. However, at the final hearing, UM demonstrated that personnel involved in its BMT program proactively engage in marketing, program monitoring, auditing, and prospective patient counseling efforts to reduce barriers to admission and reduce the time between patient referral and initial consult. As for physician communications, the evidence indicated that BMT physicians at UM regularly consult with their referring physicians at Baptist. Consistent with these findings is the fact that surveys of patient experience for the last two years have ranked UM in the 91st percentile and the 97th percentile ranking against other hospitals of similar size for BMT services. Section 408.035(1)(c), Fla. Stat.: The Ability of the Applicant to Provide Quality of Care and the Applicant’s Record of Providing Quality of Care Baptist is a well-regarded community hospital in Miami, with over 700 beds and over 1,800 nurses. Baptist's ability to provide quality health care in the areas where it is already providing care was not questioned. However, at the final hearing, Dr. Claudio Anasetti expressed concern about quality of care during the start-up period of Baptist’s proposed BMT program. Those start-up concerns, as well as questionable future program volume estimates, are issues that would confront any applicant for a new BMT program in TSA 4. Nevertheless, consideration of Baptist’s patient- focused care initiatives, “House ARNP” staffing model, oncology navigation program, and nursing program, supports a finding that Baptist has the ability to establish a new program with a focus on quality of care. Whether Baptist’s acumen for quality of care translates into the ability to establish a new adult autologous and allogeneic BMT program in TSA 4, however, depends on its ability to fulfill all of the statutory and rule criteria. Section 408.035(1)(d): The Availability of Resources, Including Health Personnel, Management Personnel, and Funds for Capital and Operating Expenditures, for Project Accomplishment and Operation Baptist did not demonstrate that it has the requisite resources and health or management personnel to implement the service. The specifics of the deficiencies are discussed under heading III, J, entitled “Florida Administrative Code Rule 59C-1.044, ,” infra. Section 408.035(1)(e), Fla. Stat.: The Extent to Which the Proposed Services Will Enhance Access to Health Care for Residents of the Service District As previously discussed under headings III. A. and B., above, lack of access or availability that would support the need for a new adult BMT program in TSA 4 has not been shown. Access to BMT clinical services is currently met by existing programs. TSA 4 has more BMT programs and facilities than any other TSA in Florida. The proposed services will not enhance clinical access to health care for residents of TSA 4. Further, it was not shown that the proposed program will enhance transportation or geographic access. Baptist plans to consolidate all of its cancer services currently provided at its hospital chain's facilities disbursed throughout southern Miami-Dade County into MCI. Although there is a bus line, it is anticipated that most transportation to MCI will be by automobile. Lack of financial access to current BMT programs in TSA 4 was not demonstrated. A facility's reimbursement is "driven by a patient's health insurance." Dr. Feinstein acknowledged that the low-volume numbers achieved during his nine years as program director at the Broward County Memorial West BMT program was because delay in obtaining Foundation for Accreditation of Cellular Therapy (FACT) accreditation. FACT accreditation assures that reimbursement can be obtained from all payers, including Medicare, Medicaid, and commercial. Unless the proposed new program obtains FACT accreditation, the proposal will actually provide less financial access. Baptist acknowledged that there would be a delay in obtaining FACT accreditation for its proposed program. Although Baptist suggested that it had access to some managed health care providers that were not accessible to UM, Baptist did not demonstrate any gaps in managed care coverage that would be filled by Baptist’s proposal, or that UM was not effective in assisting its patients in obtaining coverage. Rather, the evidence indicated that personnel at Sylvester have developed expertise over the years to resolve financial coverage issues for its BMT patients. Section 408.035(f), Fla. Stat.: The Immediate and Long-Term Financial Feasibility of the Proposal UM’s financial expert, Tom Davidson, testified that the Baptist’s proposed BMT program is not financially feasible because the Application leaves out costs for several leadership and clinical positions that must be filled. Salary costs for a program director and staff omitted from the Application exceed one million dollars. A comparison of Baptist’s cost estimates for its proposal against UM’s actual costs for Sylvester’s BMT operations reveals significant discrepancies. For example, Baptist projects $178 a day in laboratory costs per patient, while UM expends $1,000 a day. For pharmacy costs, Baptist projects $450 per day while UM’s pharmacy costs are $2,000 a day. While UM’s costs include expenditures for outpatient services and Baptist’s estimates do not, the discrepancies are still significant, especially considering the fact that BMT services are paid on a global, flat fee basis that takes into account all services, including post-procedure outpatient care. Baptist acknowledges that it does not currently have requisite skilled and experienced staff for much of the program, but proposes that nursing and other professionals will be given extensive training. Baptist’s projected costs do not include many of the costs for training staff and other startup costs which will have to be incurred to have a functioning BMT program. Further, delay in FACT accreditation, which Baptist acknowledged may take up to two years to achieve, will interfere with Baptist’s ability to achieve reimbursement. Considering these factors, Mr. Davidson’s analysis projected a 1.6 million dollar deficit instead of a $500,000 surplus projected by Baptist for year 2 of its proposed BMT program. Mr. Davidson’s analysis is credited. Even considering Mr. Davidson’s analysis with projected deficits, Baptist’s proposed BMT program is financially feasible in the short-term. Baptist is a large hospital system that could take on the costs associated with the proposed BMT program. The Application included a complete listing of all capital projects approved, underway, pending approval, or planned by Baptist Hospital at the time of submission of the Application. Baptist Hospital’s audited financial statements included in the Application demonstrate that Baptist Hospital has the financial wherewithal to implement the project. Whether short-term ability will translate into long-term feasibility is less certain, especially considering the capacity of existing programs to meet future BMT needs in TSA 4. Section 408.035(1)(g), Fla. Stat.: The Extent to Which the Proposal Will Foster Competition that Promotes Quality and Cost- Effectiveness As concluded by AHCA in the SAAR, the proposed project “will not likely foster the type of competition generally expected to promote quality and cost effectiveness.” In explaining the rationale for this conclusion, the SAAR listed a number of barriers to competition in the health care industry, including the fact that: 1) price-based competition is limited due to Medicare and Medicaid’s impact on pricing, accounting for over 41 percent of hospital charges in Florida; 2) most users do not shop around for pricing because 87.1 percent are covered by Medicaid, Medicare, or managed-care plans; and 3) lack of information available to consumers regarding quality measures that could affect choice. Contrary to AHCA’s conclusion, Baptist contends that approval of the Application will introduce both additional capacity and patient choice for BMT services within TSA 4, which will promote quality and cost-effectiveness. However, considering the fact that TSA 4 has more BMT programs than any other TSA in Florida, as well as the capacity of existing TSA 4 BMT programs to serve projected need, Baptist’s contention must fail. In addition, UM demonstrated that cases lost to Baptist’s new program would negatively affect UM’s program. UM’s expert reasonably estimated that the cases lost to Baptist would result in a loss between $6.2 million and $14 million in revenue over a three-year period. Section 408.035(1)(h): The Costs and Methods of the Proposed Construction, Including the Costs and Methods of Energy Provision and the Availability of Alternative, Less Costly, or More Effective Methods of Construction The parties stipulated that Baptist's BMT facility design, construction cost, and timeline are reasonable and appropriate for the autologous and allogeneic transplant program proposed by Baptist Hospital, in satisfaction of rule 59C- 1.044(9)(b)5. and (c)5. and rule 59C-1.044(3)(c). I. Section 408.035(i), Fla. Stat.: The Applicant’s Past and Proposed Provision of Health Care Services to Medicaid Patients and the Medically Indigent Baptist Hospital has a long-established commitment and history of providing care to Medicaid, medically indigent, and charity care patients. Approximately 19 percent of Baptist Hospital’s total acute care hospital activity consists of services provided to Medicaid patients, and an additional five to six percent consists of unreimbursed charity care. In 2013, BHSF contributed more than $292 million for total charity care, community clinics, and community benefit, serving more than 24,000 charity care patients. The Application includes, as a condition of approval, Baptist Hospital’s commitment to provide at least 10 percent of its BMT case volume on an annual basis to Medicaid, charity, and self-pay patients. J. Florida Administrative Code Rule 59C-1.044 Rule 59C-1.044, entitled “Organ Transplantation,” provides that, in addition to review under applicable criteria in section 408.035, organ transplant programs must meet the minimum requirements set forth in the rule. Subsections (3) and of rule 59C-1.044 set forth minimum requirements for personnel, equipment, and support services for all transplantation programs. Subsections 9(b) and 9(c) provide specific clinical and program requirements for adult allogeneic and autologous BMT program applicants, respectively. Research Criteria In the last sentence of its initial subsection, rule 59C-1.044(1) states in pertinent part: The following organ transplantation programs shall be restricted to teaching or research hospitals: . . . adult allogeneic bone marrow . . . . This restriction is reiterated in subsection (9)(b) of rule 59C-1.044, which states, in pertinent part: (b) Adult Allogeneic Bone Marrow Transplantation Programs. Adult allogeneic bone marrow transplantation programs shall be limited to teaching and research hospitals. Additional research requirements for adult allogeneic BMT programs are found in rule 59C-1.044(9)(b)9. and 10., which require applicants to have: An ongoing research program that is integrated either within the hospital or by written agreement with a bone marrow transplantation center operated by a teaching hospital. The program must include outcome monitoring and long-term patient follow-up; An established research-oriented oncology program; . . . . At the final hearing, the parties stipulated that none of the hospitals under BHSF’s umbrella are teaching hospitals. Subsection (2) of rule 59C-1.044 sets forth applicable definitions. Rule 59C-1.044(2)(d) defines research hospital as: A hospital which devotes clearly defined space, staff, equipment, and other resources for research purposes, and has documented teaching affiliations with an accredited school of medicine in Florida or another state. “Research Program” is defined in rule 59C-1.044(2)(e) as: An organized program that conducts clinical trial research, collects treatment data, assesses outcome data, and publishes statistical reports showing research activity and findings. Neither Baptist nor other hospitals in the Baptist Health System are generally regarded as being a research hospital. None of Baptist’s promotional and marketing materials disseminated to the public and contained in the Application make any claim that any hospital in BHSF’s system is a research hospital. While the Application points out BHSF’s many accolades and honors as a community hospital system, the evidence did not show its hospitals have received distinctions for research activities. BHSF’s financial statements do not indicate expenditures for research and its mission statement does not mention pursuit of a research hospital designation. Rather, Baptist’s mission statement and accompanying value statements are consistent with a religious-based community hospital and business model. In support of its contention that it is a research hospital, Baptist asserts the following: (1) A teaching affiliation with FIU; (2) Baptist has more than 220 active clinical research studies; (3) Cancer research is a major portion of Baptist’s research activity with over 90 current cancer studies underway; (4) Baptist’s hospital system has a unit entitled "The Center for Research & Grants"; (5) MCI has a research building under construction to be completed in the summer of 2017; (6) BHSF has recently hired researchers--one to be the scientific officer of MCI (Dr. Miguel A. Villalona- Calero), one to be director of translational research and genomic medicine at MCI (Dr. Jeffery Boyd), Dr. Michael Zinner as the director of MCI, and Dr. Minesh Mehta as chief of radiation oncology; and (7) BHSF has a rigorous "nurse research" program. The evidence supports some of these assertions better than others. There is, indeed, a teaching affiliation between BHSF and FIU. Graduate medical education is occurring at the West Kendall Baptist Hospital, with a family medicine residency program, and at Doctors Hospital, which has a sports medicine fellowship program. The evidence did not indicate how many physicians with staff privileges at Baptist are FIU faculty members. As to clinical studies, Baptist presented a listing of "220+ active clinical research studies" and made a claim that of those studies, "90+ current cancer studies are underway." The number of clinical trials, however, both in aggregate and specific to "cancer studies" did not match the government reporting data base entitled “clinicaltrials.gov” from the federal regulatory body that requires registration of clinical trials. Only seven trials in adult oncology were registered. There were also some trials in the data base designated as "not yet accruing,” without sufficient information regarding whether they were open or not. MCI recently created a clinical trials office different from BHSF’s research and grants program. While it is reasonably expected that MCI’s new program will someday administer clinical trials to patients in a safe manner with new protocols, when Dr. Villalona-Calero arrived to set up the new program, he stopped accrual of clinical trials. MCI is in the process of recruiting, but at the time of the final hearing had not yet hired, a medical director for its new clinical trials office. MCI’s first clinical scientific review committee meeting for the new clinical trials office was September 14, 2016. MCI just finished screening their medical oncology patients for eligibility to participate in clinical trials and still had several other patient populations to screen. Baptist’s evidence revealed some effort to acquire staff for research activities. While 50 persons were designated as support for anticipated research activities, at the time of hearing, only 20 persons were employed. The credible testimony of Dr. Michael Andrew Samuels cast doubt on the sufficiency of those designated by Baptist to support the claimed portfolio size of 220+ active hospital-based clinical trials. Further, of the 220+ clinical trials listed in the Application, most were national trials that would be generally available to a community hospital, and were trials produced by other investigators at other institutions. Many of the listed clinical trials appear to be observational or quality improvement initiatives. In addition, many of the trials had very old dates and no information was provided as to whether the listed trials were active and registering patients. The Application provides that support infrastructure for Baptist’s current research activities is provided by a group called "The Center for Research & Grants." At the hearing, however, Baptist provided information that support and administrative services for research are provided by a unit called “Baptist Health South Florida Research Enterprise,” a federally recognized parent institution. That institution is not mentioned in the Application. Further, no specific or detailed evidence was provided as to what space or equipment is currently being dedicated for research activities, at either Baptist’s facilities or anywhere in the Baptist health care system. As to future research facilities, it was acknowledged that no portion of any research activities would be housed at Baptist facilities. Rather, Baptist described MCI as the place where all the research capabilities will be housed. Those "research facilities" will not be opened until the summer of 2017. The MCI facility designated as the "research building" will have, as its third floor, outpatient facilities to operate the Baptist’s BMT outpatient program described in the Application; and the fourth floor would be dedicated to conducting pharmaceutical company-sponsored phase 1 clinical drug trials, a molecular diagnostic lab, and the bio-specimen depository. Other than one laboratory for Dr. Boyd (on the fourth floor), no other laboratory space was identified for the research building. Any research hospital or program is expected to have a significant amount of laboratory space. However, there is no laboratory space dedicated anywhere to the proposed BMT program or any other oncology research activities. No laboratory space will be made available for the processing and handling of stem cell products, which the Application states will be commercially acquired from OneBlood. Dr. Michael Zinner, Dr. Minesh Mehta, Dr. Miguel A. Villalona-Calero and Dr. Jeffery Boyd, all have significant research credentials. While they may be inclined to continue pursuit of their research interests, their new positions are now essentially administrative, with significant duties that would distract them from pursuing hospital-based clinical research. There was testimony indicating that certain Baptist nurses engage in research activities that are assigned an Institutional Review Board number. The nature of that nursing “research” activity, however, can best be described as quality assurance and customer satisfaction research as opposed to the high-level oncology research that would benefit patient outcomes. Baptist’s nursing research does not show that Baptist is a research hospital or that it has a research program. Baptist further asserts that combining with MCI would satisfy the research criteria by the creation of a “hybrid” cancer center that is both a community hospital and research center. The anticipated research to be undertaken at Baptist's concept of a hybrid cancer center will be primarily composed of reimbursed pharmaceutical trials. Expert testimony presented by UM demonstrated that research takes a tremendous amount of time for physicians and for investigators, and raised doubt as to Baptist’s ability to follow through on claims that it will be able to change the current corporate culture of Baptist from a community hospital to a research hospital. In reviewing the Application for AHCA, CON supervisor and health planning expert, Marisol Fitch, felt as though Baptist “had made a point that they were a research hospital, not a community hospital just having a research program.” In support of this contention, in addition to mentioning Baptist Health System’s teaching activity with FIU, the SAAR cites Baptist’s access to clinical trials and ongoing studies, as well as MCI’s announcement of its intention to affiliate with Memorial Sloan Kettering Cancer Center. Baptist, however, has not shown that it is presently a research hospital, nor can BHSF currently make that claim. While it is apparent that MCI anticipates an affiliation with Memorial Sloan Kettering, Baptist failed to provide sufficient evidence of the nature of that relationship. Instead of providing a copy of an agreement between MCI and Memorial Sloan Kettering, at the final hearing, Baptist attempted to introduce a highly redacted version of an agreement between the two institutions. The proffer, even if accepted into evidence, is insufficient to prove the nature of the purported relationship.4/ The redacted version omitted the operative terms of the arrangement. The only language available for review was the recital portion of the alleged agreement. While there was some testimony by Baptist witnesses as to such affiliation, it was insufficient to explain the true nature or extent of the anticipated relationship. Therefore, the evidence does not support the SAAR's recognition of such affiliation as a factor qualifying Baptist as a research hospital. In sum, the evidence did not demonstrate that Baptist qualifies as a research hospital, that it has an ongoing research program that is integrated either within the hospital or by written agreement with a BMT center operated by a teaching hospital, or that it has a an established research-oriented oncology program to satisfy the research hospital or research criteria set forth in rule 59C-1.044(1) or rule 59C- 1.044(9)(b)9. and 10. Autologous BMT programs are not restricted to only teaching or research hospitals. Rule 59C-1.044(9)(c)7. and 8., applicable to applicants for autologous BMT programs, have somewhat redundant research requirements as required of autologous program applicants under subsection (9)(b). Rule 59C-1.044(9)(c)7. and 8. provide: c) Adult Autologous Bone Marrow Transplantation Programs. Adult autologous bone marrow transplantation programs can be established at teaching hospitals or research hospitals; or at community hospitals having a research program, or who are affiliated with a research program, as defined in this rule. An ongoing research program that is integrated either within the hospital or by written agreement with a bone marrow transplantation center operated by a teaching hospital; or the applicant may enter into an agreement with an outpatient provider having a research program, as defined in this rule. Under the agreement, the outpatient research program may perform specified outpatient phases of adult autologous bone marrow transplantation, including blood screening tests, mobilization of stem cells, stem cell rescue, chemotherapy, and reinfusion of stem cells; and, An established research-oriented oncology program As previously discussed, rather than demonstrating an active research program, the evidence indicates that Baptist had suspended its clinical trials programs and activities. Further, the evidence did not show a written agreement between Baptist and a BMT center operated by a teaching hospital. The evidence does not otherwise support a finding that there is an "established research-oriented oncology program" at Baptist. The productivity and output from Baptist’s past oncology research activities has been low, even by community hospital standards. While the physician staff identified as researchers in the Application had appropriate training, evidence of their academic, research, and laboratory investigative productivity was lacking. Rather than showing that Baptist has existing research program capabilities, the evidence demonstrated Baptist Health System’s intention of building a future research program at MCI by constructing facilities, pursuing administrative activities and hiring leadership. Much of the evidence was aspirational or conceptual as opposed to demonstrative of an existing research program. 2. Criteria Applicable to All Types of Transplant Programs Not specific to BMT, subsections (3) and (4) of rule 59C-1.044 set forth general transplant requirements, regardless of the transplant program, and apply to both allogeneic and autologous BMT programs. Rule 59C-1.044(3)(a) requires that applicants for all types of transplant programs have: Staff and other resources necessary to care for the patient’s chronic illness prior to transplantation, during transplantation, and in the post-operative period. Services and facilities for inpatient and outpatient care shall be available on a 24-hour basis. As to these criteria, Baptist proposes to use current staff and hire additional staff. And, for all of the specialty blood product evaluation, processing, and storage capabilities unique to BMT programs, Baptist proposes to use a contract vendor named “OneBlood.” Because Baptist has hired Memorial West’s BMT program director, head nurse, lead ARNP, and pharmacist, it demonstrated the capability to at least address those criteria as they apply to an autologous BMT program. However, as no other proposed physician, nursing, or ancillary staff were shown to have BMT experience or skills, additional training would be required to adequately meet these criteria for autologous BMTs. As for an allogeneic program, however, as further discussed below, many of these criteria were not met. Rule 59C-1.044(3)(d), (e), and (f), requires all transplant program applicants to have: (3)(d) A clinical review committee for evaluation and decision-making regarding the suitability of a transplant candidate. (3)(e) Written protocols for patient care for each type of organ transplantation program including, at a minimum, patient selection criteria for patient management and evaluation during the pre-hospital, in- hospital, and immediate post-discharge phases of the program. (3)(f) Detailed therapeutic and evaluative procedures for the acute and long term management of each transplant program patient, including the management of commonly encountered complications. Clinical review committees require a critical mass of people actively engaged in patient decisions. Review committees for established BMT programs typically schedule weekly meetings of between 10 and 20 people, half of whom are physicians, to discuss the feasibility of proposed BMT transplants. At the time of the Application and final hearing, Baptist only identified four to eight competent staff members available to serve on a clinical review committee for the proposed program. With regard to the requirements for written protocols and evaluative procedures required by rule 59C-1.044(3)(e) and (f), while there are apparently some draft protocols, the evidence indicates that the actual written protocols have not yet been developed. Subsections (h) and (i) of rule 59C-1.044(3) require all transplant program applicants to have: (3)(h) An on-site tissue-typing laboratory or a contractual arrangement with an outside laboratory within the State of Florida, which meets the requirements of the American Society of Histocompatibility. (3)(i) Pathology services with the capability of studying and promptly reporting the patient's response to the organ transplantation surgery, and analyzing appropriate biopsy material. Baptist does not have an on-site tissue-typing laboratory. The rule allows an applicant without an on-site laboratory to contract with an outside laboratory located within the state of Florida. While the Application claims that Baptist would contract with OneBlood to provide tissue typing for histocompatibility, OneBlood is not certified, licensed, or otherwise capable of performing histocompatibility lab services. Without the requisite certification, Baptist would not be able to bill Medicare for OneBlood to perform histocompatibility services. While it was suggested at the final hearing that Baptist could perhaps contract with LabCorp for the histocompatibility services, the evidence did not show that such services would be performed by a laboratory located within the state of Florida. With regard to the requisite pathology services, the Application states: "This in house expertise and infrastructure, combined with OneBlood external resources, will ensure that all BMT patients will have the required laboratory support to optimally meet their needs." Baptist's nursing expert testified at hearing that pathology services would be involved in diagnosis of graft versus host disease. However, both the testimony and Application were lacking specifics as to how these complex services would be provided. Rule 59C-1.044(3)(j) requires transplant program applicants to have “[b]lood banking facilities.” Baptist’s Application provides that this criterion will be met by existing blood banking facilities, and that OneBlood would provide a "centralized blood collection, storage and distribution hub." Baptist's blood banking capabilities were not explained. As to reliance on OneBlood, there was no evidence of an existing contract or of OneBlood's capability to provide the required services. Rule 59C-1.044(3)(k) and (l) require transplant program applicants to have: (3)(k) A program for the education and training of staff regarding the special care of transplantation patients. (3)(1) Education programs for patients, their families and the patient's primary care physician regarding aftercare for transplantation patients. Baptist proved its ability to establish a program for staff training and education. BHSF has a clinical learning department. The Application states that BHSF’s resources will be used to establish a comprehensive training program for the proposed BMT program. BHSF, through MCI, has developed a BMT program education plan. Although the Application lists more than 30 clinicians who support the clinical learning department, none have experience in BMT. While BHSF's training program will undoubtedly be able to adjust to meet the requirements of rule 59C-1.044(3)(k), it stands to reason that lack of immediate experienced staff may cause some delay in implementation. Likewise, regarding rule 59C-1.044(3)(1) requirements for educational programs for BMT patients, families, and patient's primary care physicians, while Baptist introduced an exhibit entitled “Transplant Basics” that addresses issues confronting transplant patients, families and caregivers, there was no elaboration as to whether the training programs have been developed. Rule 59C-1.044(4)(a), relating to staff requirements for all transplant program applicants, requires applicants to have: (a) A staff of physicians with expertise in caring for patients with end-stage disease requiring transplantation. The staff shall have medical specialties or sub-specialties appropriate for the type of transplantation program to be established. The program shall employ a transplant physician, and a transplant surgeon, if applicable, as defined by the United Network for Organ Sharing (UNOS) June 1994. The UNOS definitions are incorporated herein by reference. A physician with one year experience in the management of infectious diseases in the transplant patient shall be a member of the transplant team. The only physician staffing that Baptist identified for its proposed BMT program is Dr. Lyle Feinstein. He was hired in September 2015 by Baptist Health System. Dr. Feinstein is the former BMT program director and physician for the Memorial Health System program located in Broward County, also in TSA 4. Dr. Citron was the only other physician identified as having any experience in performing BMT procedures. However, his medical group stopped doing BMT, around 1999, when it was no longer indicated as the standard of care for breast cancer. While the Application and SAAR note that there are 19 certified hematologists and oncologists on Baptist's staff, only four of the 19 are hematologists. Further, as correctly noted in the SAAR, “the Application did not address the infectious disease criteria.” The evidence at the final hearing did not further expound on how Baptist would address the infectious disease criteria. Rule 59C-1.044(4)(b) requires transplant program applicants to have: A program director who shall have a minimum of 1 year of formal training and 1 year of experience at a transplantation program for the same type of organ transplantation program proposed. Provided, however, that an applicant for a bone marrow transplantation program shall meet the requirements in subsection (9). While Baptist is in the process of recruiting, a program director with all the required experience and training was not identified either in the Application or at the final hearing. Baptist is recruiting outside the BHSF organization. As previously noted, the salary expense on the staffing schedule in the Application does not show this position funded or filled for the 2019 year of operation. Rule 59C-1.044(4)(d) requires applicants to have: (4)(d) A staff of nurses, and nurse practitioners with experience in the care of chronically ill patients and their families. Baptist met this criterion with evidence showing that it has sufficient nursing staff to treat patients with other forms of cancer and with experience in the care of chronically ill patients and their families. Rule 59-C 1.044(4)(e) requires all transplant program applicants to have: (4)(e) Contractual agreements with consultants who have expertise in blood banking and are capable of meeting the unique needs of transplant patients on a long term basis. Again, Baptist identifies OneBlood as satisfying this criteria. The evidence, however, did not show that Baptist has a contract with OneBlood. No representative from OneBlood testified as to any of its capabilities or whether it could provide the services needed for either an allogeneic or autologous BMT program. As further discussed below, OneBlood does not have the capabilities, facilities, or licensures to provide services for an allogeneic program. Subsections (f), (g), and (h) of rule 59C-1.044(4), require transplantation program applicants to have: Nutritionists with expertise in the nutritional needs of transplant patients; Respiratory therapists with expertise in the needs of transplant patients; and, Social workers, psychologists, psychiatrists, and other individuals skilled in performing comprehensive psychological assessments, counselling patients, and families of patients, providing assistance with financial arrangements, and making arrangements for use of community resources. With regard to subsection (f), the Application lists a core group of three registered and licensed dietician/nutrition staff, plus three additional credentialed nutritional support team members. However, as noted in the SAAR, Baptist does not state whether the listed nutritionists have experience in meeting the needs of transplant patients. The drug regimens required to be delivered by respiratory therapists to allogeneic transplant patients are unique and complex. Baptist states in the Application that it has 83 registered respiratory therapists in its respiratory department. As noted in the SAAR, however, the Application does not affirmatively state whether any of its respiratory therapists have expertise in the respiratory needs of transplant patients. While the Application states that the respiratory therapists who will provide services to BMT patients will receive additional education, Baptist did not adequately address its ability to provide adequate respiratory therapist services for BMT procedures. As to the requirements of rule 59C-1.044(4)(h), Baptist does not currently have social workers to assist families concerning the impacts of a BMT. However, UM does not contest Baptist’s ability to meet that requirement and the Application and evidence otherwise demonstrated Baptist’s capability of fulfilling those requirements in the future. 3. Additional Criteria for Allogeneic BMT Program Applicants In addition to the minimum projections of 10 allogeneic transplants each year required by rule 59C- 1.044(9)(b)1., and the research requirements set forth in rule 59C-1.044(9)(b)9. and 10., addressed above, rule 59C- 1.044(9)(b)1. through 8. and 10. through 12. have additional requirements that applicants for adult allogeneic BMT programs must meet. Rule 59C-1.044(9)(b)2. requires allogeneic BMT program applicants to have: A program director who is a board certified hematologist or oncologist with experience in the treatment and management of adult acute oncological cases involving high dose chemotherapy or high dose radiation therapy. The program director must have formal training in bone marrow transplantation. These criteria for a program director are essentially the same as set forth in rule 59C-1.044(4)(b) and rule 59C- 1.044(9)(c)2. As previously discussed, Baptist has not hired a program director. Rule 59C-1.044(9)(b)3. requires applicants for allogeneic BMT programs to have: Clinical nurses with experience in the care of critically ill immuno-suppressed patients. Nursing staff shall be dedicated full time to the program; Baptist identified two nurses with experience in treating BMT patients. Baptist did not specify the number of nurses with the requisite experience to be transferred from other areas or the number who will be new hires for the proposed BMT program. 161. Rule 59C-1.044(9)(b)4. requires: An interdisciplinary transplantation team with expertise in hematology, oncology, immunologic diseases, neoplastic diseases, including hematopoietic and lymphopoietic malignancies, and non- neoplastic disorders. The team shall direct permanent follow-up care of the bone marrow transplantation patients, including the maintenance of immunosuppressive therapy and treatment of complications. While Baptist identified the physicians and nurses who came from Memorial West with experience in BMT procedures, it did not provide evidence of who would comprise an "interdisciplinary transplantation team." Further, Baptist did not identify staff that would provide services for "maintenance of immunosuppressive therapy and treatment of complications" for allogeneic patients. While Baptist has 1,800 nurses on staff, only two have BMT experience, both of whom were recruited away from the Memorial West BMT program. Baptist has not identified any other staff ready to perform allogeneic BMT services. Rather, Baptist proposes to train staff to comprise the interdisciplinary team. Nurse Rios, who will be doing the training for Baptist, testified that, at Memorial West, it took one year before they performed their first outpatient autologous transplant, and three years before Memorial West applied for a CON for an inpatient and allogeneic transplant program. This evidence calls into question Baptist's proposed ability to implement an allogeneic program in 18 months. Under rule 59C-1.044(9)(b)6., applicants must have: A radiation therapy division on-site which is capable of sub-lethal x- irradiation and total lymphoid irradiation. The division shall be under the direction of a board certified radiation oncologist. Radiation therapy is a highly skilled and complex service for BMT patients. Baptist failed to demonstrate, either in the Application or at the final hearing, that it has the requisite staff to handle this service for BMT patients. 166. Rule 59C-1.044(9)(b)7. requires: A laboratory equipped to handle studies including the use of monoclonal antibodies, if this procedure is employed by the hospital, or T-cell depletion, separation of lymphocyte and hematological cell subpopulations and their removal for prevention of graft versus host disease. This requirement may be met through contractual arrangements. The Application addresses the requirement of 59C- 1.044(9)(b)7. by explaining that, "Cellular processing services will be provided by OneBlood or other external specialty providers with applicable accreditation and certification." The Application also cites a letter from OneBlood to support a claim that it can perform T-Cell depletion. Review of the letter, which was introduced as an exhibit during the final hearing and is otherwise hearsay, indicates that OneBlood can perform T-Cell subsets, not T-Cell depletion. There was no evidence demonstrating OneBlood's ability to perform T-Cell depletion. T-Cell depletion is a preventative measure against Graft versus Host disease, a serious and anticipated complication of an allogeneic BMT. And yet, it is not anticipated that T-Cell depletion will initially be available for Baptist's proposed program. At the final hearing, when Baptist's nursing witness, Ms. Rios, was asked how Baptist will comply with 59C- 1.044(9)(b)7., she replied, "I don't know at this point." When Baptist's counsel followed up and asked how Memorial West complied with this criterion, Ms. Rios replied, "We did not do T-Cell depletion at Memorial." Further, the evidence did not demonstrate that OneBlood is FACT-accredited to do the blood processing services, like T-Cell depletion, which are required for allogeneic BMT programs. Baptist's reliance on OneBlood to perform services is contrary to objective evidence as to what OneBlood can actually perform. Baptist failed to demonstrate that it has a feasible proposal to provide for T-Cell depletion. Rule 59C-1.044(9)(b)8. requires allogeneic BMT program applicants to have: An on-site laboratory equipped for the evaluation and cryopreservation of bone marrow. The Application does not provide for and Baptist does not plan to have an on-site laboratory equipped for the evaluation and cryopreservation of bone marrow. Rather, the Application states that "[b]one marrow evaluation and cryopreservation will be provided by the OneBlood organization." Baptist’s intent in this regard was confirmed by testimony. The requirement is that the laboratory be on-site. Instead, Baptist proposes to ship blood product to a OneBlood facility more than 40 miles from Baptist. When blood product is cryopreserved, its temperature is extremely low and very susceptible to fractures. Serious complications could occur if there are any issues with the transport of a donor's blood. Baptist’s proposed contractual arrangement with OneBlood is not in compliance with the rule requirement for an on-site laboratory for allogeneic BMT transplants. The SAAR does not address Baptist’s failure to meet this requirement for an on-site lab. When confronted with the issue at the final hearing, AHCA’s expert, Ms. Fitch, took the position that language under the recitation on page 26 of the SAAR, that an “on-site tissue- typing laboratory or a contractual arraignment with an outside laboratory within the State of Florida, which meets the requirements of the American Society of Histocompatibility,” was an acknowledgment that Baptist met the requirement in rule 59C- 1.044(9)(b)8. Ms. Fitch testified that the above quote from the SAAR was borrowed from language used for evaluations of past applications, and that contractual arrangements should be sufficient. A comparison of that language from the SAAR, however, with the general requirement under rule 59C-1.044(3)(h) applicable to all types of transplantation programs, makes it clear that Ms. Fitch confused the two laboratory requirements. The general requirement for all transplant programs under 59C- 1.044(3)(h) is for an “on-site tissue-typing laboratory or a contractual arrangement with an outside laboratory within the State of Florida, which meets the requirements of the American Society of Histocompatibility.” The requirement for an on-site laboratory for allogeneic BMT programs under 59C-1.044(9)(b)8., however, does not allow for contracting with an outside laboratory, but simply provides that an applicant shall have “[a]n on site laboratory equipped for the evaluation and cryopreservation of bone marrow.” While Ms. Fitch testified that none of the rule requirements were “100 percent mandatory,” allowing Baptist to meet the requirement for an on-site laboratory through contractual arrangement with an outside laboratory would violate the express terms of rule 59C-1.044(9)(b)8. Rule 59C-1.044(9)(b)11. requires allogeneic BMT program applicants to have: A patient convalescent facility to provide a temporary residence setting for transplant patients during the prolonged convalescence. Baptist meets this requirement with a new facility adjacent to Baptist Hospital and MCI, charging standard rates for the facility as would be paid in comparable area hotels. Rule 59C-1.044(9)(b)12. requires allogeneic program applicants to have: An outpatient unit for close supervision of discharged patients. Baptist proposes to provide those outpatient services at MCI, and is closing its outpatient cancer facilities at its other hospitals, except for its chemotherapy unit at Mariner Hospital in Monroe County, so that they will all be housed under MCI. Specific information as to how the outpatient unit at MCI will be staffed is lacking. In particular, there are no specifics as to the staffing and qualifications for those at MCI who will be providing the "collection and reinfusion of stem cells." Collection and reinfusion of stem cell is accomplished with the use of an apheresis machine. While the evidence indicates this activity will be undertaken on the third floor of MCI’s “research building,” Schedule 6 of the Application does not identify nursing or other staff or personnel. 4. Allogeneic BMT Program Applicant Criteria Rule 59C-1.044(9)(c) contains requirements specific to autologous BMT program applicants. Subsections (c)2., (c)3., and (c)6. of that rule are the same requirements for allogeneic programs provided in rule 59C-1.044(9)(b)2., (b)3., and (b)6., addressed above. The requirements under 59C-1.044(9)(c)4., are the same as for allogeneic programs under 59C-1.044(9)(b)4., except (c)4. does not require “the maintenance of immunosuppressive therapy and treatment complications” as required for allogeneic programs. While additional staff training will be required, Baptist has demonstrated the capability to commence autologous BMT transplants in the not-so-distant future. This capability was largely acquired by hiring away the primary BMT medical professionals who conducted that program at Memorial West. Many of Baptist’s other clinical requirements for an autologous program will have to be acquired. While Baptist will depend on contractual agreements with OneBlood, corroborating evidence from OneBlood regarding its capabilities in that regard was not provided, nor was there evidence of an existing contractual agreement with OneBlood. As for the clinical proposal to deliver autologous BMT transplants, while attainable, Baptist’s proposed program does not add any new clinical capabilities or experience that are not already being provided in the service area. As far as an allogeneic program, rather than demonstrating current capability, the evidence indicates that Baptist would start with autologous transplants, and begin allogeneic transplants only after sufficient institutional skills and staff training are obtained. A specific timetable as to when such skills would be acquired was not supplied. ADVERSE IMPACT UM demonstrated that it will lose $111,019 of revenue per transplant episode for each procedure not served by UM. There was credible, expert opinion that projected a range of total financial adverse impact to UM in the form of income loss between $6.2 million and $14 million over a three-year period. As demonstrated by the fact that Baptist has hired away Memorial West's program director, head nurse, one of its most skilled ARNPs, and its main pharmacist, approval of Baptist’s program could also adversely impact UM by drawing staff and personnel away from UM. Baptist has already undermined the services available in TSA 4 by depleting the staffing at the BMT program of Memorial West at the expense of Memorial West’s BMT program. A new program in TSA 4 will also adversely affect the capability for effective research efforts in existing programs. The relatively small population of BMT patients makes program volume critical for clinical research. The small patient population is also characterized by having significant subgroups with individual uniqueness by patient. By disbursing this small population among yet another provider, advancements in research are hampered by reducing the critical and varied mass of patients who present to a given set of physicians and staff, thereby diluting those researchers’ ability to learn by experience, experimentation, and observation. This same phenomenon occurs with the dilution of BMT candidates for clinical trials. The de-concentration of research, experimentation, and clinical effort for this specialized transplant service is contrary to the statutory and public policy contained in section 408.032(17), which recognizes that tertiary health services, (which include BMT programs), “due to [their] high level of intensity, complexity, specialized or limited applicability, and cost, should be limited to, and concentrated in, a limited number of hospitals to ensure the quality, availability, and cost- effectiveness of such service.”
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Agency for Health Care Administration enter a final order denying CON Application No. 10420. DONE AND ENTERED this 30th day of March, 2017, in Tallahassee, Leon County, Florida. S JAMES H. PETERSON, III Administrative Law Judge Division of Administrative Hearings The Desoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 30th day of March, 2017.
The Issue Whether Certificate of Need (CON) applications 10386 and 10388 filed by South Broward Hospital District, d/b/a Memorial Regional Hospital (Memorial), to establish a pediatric kidney transplantation program at Joe DiMaggio Children’s Hospital and an adult kidney transplantation program at Memorial Regional Hospital in Broward County, both of which are proposed for organ transplantation service area (OTSA) 4, should be approved. Alternatively, do competing CON applications 10387 and 10389 filed by North Broward Hospital District, d/b/a Broward Health Medical Center (Broward Health), to establish a pediatric kidney transplantation program at Chris Evert Children’s Hospital and Broward Health Medical Center, on balance, better satisfy the applicable statutory and rule review criteria for award of a CON to establish a pediatric or adult kidney transplantation program in OTSA 4?
Findings Of Fact Background AHCA is the state health planning agency charged with administering the CON program pursuant to the Health Facility and Services Development Act, sections 408.031-408.0455, Florida Statutes. 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 intestines transplantations. For purposes of determining the need for organ transplantation services, the State of Florida is divided, by rule, into four service planning areas, corresponding generally with the northern, western central, eastern central, and southern regions of the state. “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. “Kidney transplantation” is defined by rule 59C- 1.002(41) as a “tertiary health service, “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.” For purposes of kidney transplantation, a “pediatric patient” is “a patient under the age of 15 years.” Fla. Admin. Code R. 59C-1.044(2)(c). The Applicants The North Broward Hospital District and South Broward Hospital District are special, independent taxing districts established by the Legislature to ensure access to needed medical services to the residents of Broward County. Both districts are governed by respective boards appointed by the Governor. BHMC has a strong and diverse medical staff, including a broad mix of pediatric and adult specialists and subspecialists who provide high quality care to all segments of the community. More than 350 physicians are on BHMC's active medical staff, with the comprehensive medical staff totaling more than 900 professionals. BHMC is a statutory teaching hospital and the flagship hospital of the North Broward Hospital District. CECH is located within BHMC and offers pediatric specialists and subspecialists, including physicians in the areas of pediatric cardiology, pediatric critical care medicine, pediatric emergency medicine, pediatric endocrinology, pediatric gastroenterology, pediatric genetics, pediatric hematology- oncology, pediatric infectious disease, pediatric intensivist, pediatric nephrology, pediatric ophthalmology, pediatric pulmonary, pediatric rheumatology, pediatric surgery, and pediatric urology. The South Broward Hospital District operates MRH, Memorial Regional Hospital South, JDCH, Memorial Hospital West, Memorial Hospital Miramar, and Memorial Hospital Pembroke. MRH is a 777-bed acute care tertiary hospital. It is the flagship facility of the South Broward Hospital District and is one of the largest hospitals in Florida. MRH offers extensive and diverse health care services, including the Memorial Cardiac and Vascular Institute, which features renowned surgeons and an adult heart transplantation program. MRH also includes the Memorial Cancer Institute, which treats more inpatients than any other in AHCA District 10, and Memorial Neuroscience Center, which provides innovative technology and world-class physicians. JDCH is a dedicated pediatric hospital physically connected to MRH. The leadership of both the North Broward and South Broward Hospital Districts were in the midst of transition at the time of the final hearing. Although there was an attempt to suggest that such transitions should be a factor in this CON proceeding, both Districts are stable, well-established providers. Personnel changes, including the replacement of chief executive officers at both Districts, were not an influential factor in this proceeding. The Applicants’ Experience with Transplant Services Broward Health has provided liver transplantation since 2004. Broward Health's liver transplantation program has had higher annual volumes in the past, but is currently offering approximately 12 liver transplantations per year. In total, Broward Health has performed more than 200 liver transplantations since beginning its program. On or about June 23, 2010, Broward Health entered into a five-year contract with the University of Miami (UM) under which UM agreed to provide Broward Health with surgical coverage for Broward Health’s liver transplantation program. Throughout its history, Broward Health's liver transplantation program has offered high quality. During the two most recent surveys, in 2009 and 2012, inspectors with the Centers for Medicare and Medicaid Services (CMS) found that Broward Health's liver transplant program had no deficiencies. Broward Health’s liver program complies with all CMS and United Network for Organ Sharing (UNOS) standards. Broward Health’s liver transplant program exceeds national standards. As of June 2014, 63.3 percent of Broward Health’s transplant patients received a liver transplant within six months of being placed on the waitlist. This is less than half of the national average of 15.3 months. Additionally, Broward Health's mortality rate for liver transplantation is far better than national standards. Memorial established a pediatric heart transplant program in 2011 and an adult heart transplant program in 2014. Memorial's adult and pediatric heart transplant volumes have been relatively low. Memorial has performed a total of 14 pediatric heart transplants over the past five years. In 2012, Cleveland Clinic Hospital (CCH) filed a letter of intent (LOI) and application to establish an adult kidney transplant program. Broward Health submitted a grace period LOI and competing application, No. 10152. Both applications were initially approved and neither was challenged. Accordingly, both programs received final approval by AHCA. After receiving the adult kidney transplant program approval, Broward Health attempted to amend or supplement its liver transplantation agreement with UM to include UM surgical and medical support for Broward Health’s adult kidney transplantation program. Broward Health also applied to UNOS for approval of the adult kidney transplantation program, and identified the UM physicians as those who would provide the necessary surgical support for the program. However, Broward Health never reached an agreement with UM to use its kidney transplant surgeons and did not otherwise recruit the necessary physicians. Broward Health's CEO at that time, Mr. Frank Nask, found UM's proposal to support the kidney transplantation program to be cost prohibitive and decided not to execute the contract amendment with UM. He then instructed staff to dismantle the UNOS-approved kidney transplant program they had already created. Despite the inability to negotiate kidney coverage with UM in 2012, Broward Health continued to offer its adult liver transplantation program using UM surgeons. Had UNOS known that the UM doctors were not available to perform kidney transplants, it would not have approved Broward Health’s adult kidney transplantation program. In March 2014, Broward Health notified CMS, UNOS, and its patients that it was “inactivating” its adult kidney transplantation program. Inexplicably, Broward Health never notified AHCA of this decision. On January 14, 2015, AHCA advised Broward Health that CON No. 10152 had expired and requested that Broward Health return the CON. There is no dispute that CON 10152 has been terminated. Two batching cycles passed from the time Broward Health closed its adult kidney transplantation program until the cycle at issue in these proceedings. In its application for CON No. 10152, Broward Health recognized that an applicant’s prior failure to implement a CON is a proper consideration in the award of future CONs. The application touted Broward Health’s “history of providing transplantation services compared to that of CCH. CCH had an adult kidney transplant program . . . but elected to abandon [it] . . . .” (Memorial Ex. 23, pp. MHS15031-32). Memorial was awarded a CON to establish an adult heart transplantation program at the same time Broward Health was awarded CON No. 10152. Memorial successfully recruited the necessary physicians and staff and implemented that program. The nature of the tertiary services and the two-year planning horizon in this proceeding underscore the importance of applicants being positioned to successfully implement the programs with as little delay as possible. The Applicants’ Proposals Broward Health Broward Health’s proposal relies on the experience it gained through its substantial implementation of its kidney transplantation program in 2012, as well as existing experience and resources related to their adult liver transplantation program. Broward Health acquired significant experience in establishing an adult kidney transplantation program by applying for, and receiving, UNOS approval in 2012. Broward Health's application proposed to hire two abdominal transplant surgeons, Dr. El Gazzaz and Dr. Misawa. The offer to Dr. Misawa, however, has since been withdrawn. Broward Health expects to hire Dr. El Gazzaz. Since the filing of its CON application, Broward Health decided to supplement its surgical coverage by expanding its existing contract with the Cleveland Clinic for liver transplant surgical coverage to include kidney transplantation services should the kidney program receive approval. Broward Health conditioned acceptance of a pediatric kidney transplantation CON on also receiving approval of the adult kidney transplantation CON. Broward Health prepared its financial schedules under the assumption that the adult and pediatric programs were linked, and that both would receive approval. Since livers and kidneys are both abdominal organs, there is substantial overlap in the type of care that is required for transplant patients for each organ. Sometimes both kidneys and livers are transplanted at the same time. Historically, Broward Health has referred out 10 to 15 percent of its liver transplant patients to other providers because it could not offer combined kidney/liver transplantation. Broward Health has accumulated experienced personnel for abdominal transplants. Broward Health's existing nurses care for liver transplant patients and are therefore already prepared to care for kidney transplant patients. Broward Health's team also includes a transplant social worker, transplant psychologist, financial counselors, and quality coordinators. Broward Health plans to hire an additional financial specialist and two Registered nurses (RNs), as well as additional full-time equivalents (FTEs) for a data analyst, pharmacist, and dietician. Broward Health proposes to use the same clinical and ancillary staff for both adult and pediatric kidney transplantation. Unlike Memorial, Broward Health does not intend to perform kidney transplants using live donor organs. Rather, cadaveric organs will be used exclusively. Neither of Broward Health’s applications includes the expense of hiring or contracting for the surgeons needed for its proposed programs. Indeed, there was no evidence that Broward Health’s existing liver transplant surgeons would be willing to perform kidney transplants such that their presence at BHMC or CECH would give Broward Health an advantage in terms of the degree to which its existing services would support its proposed programs. Broward Health has previously developed kidney transplantation policies and procedures related to its 2012 kidney program. These policies and procedures will only require minor updates relative to its later application. Memorial The Memorial adult program would be located at its flagship hospital, MRH. Memorial asserts that it has the requisite staff and resources currently in place to provide expert care to adult patients with chronic end-stage renal disease (ESRD). Memorial points out that staff on the general nursing units and critical care units have extensive experience in the care of patients with chronic kidney disease. Memorial asserts a full range of appropriate inpatient and outpatient services for this patient population on a 24-hour basis including, but not limited to, continuous renal replacement therapy, hemodialysis, and cyclic peritoneal dialysis. Memorial points out that it developed a program to educate staff regarding specific issues related to transplant care (as part of the development of its cardiac transplant program) and that much of this education is relevant to the kidney transplant population. Memorial plans to recruit an experienced transplant surgical director, transplant surgeons, transplant nephrologists and surgical team, and all necessary staff as required. As to Memorial’s proposed pediatric program, the program would be located at JDCH, which is on the campus of, and physically connected to, MRH. JDCH has operated a pediatric nephrology and hypertension program, offering advanced care for children with acute or chronic kidney disorders since 2003. The program is headed by Dr. Alexandru Constantinescu, a board certified pediatric nephrologist. JDCH operates the only pediatric outpatient dialysis unit in Broward County. Dialysis is necessary to sustain the life of a patient with ESRD. With the exception of the actual surgical procedure, JDCH currently provides all the medical care and ancillary services required by pediatric kidney transplant patients, including pre-transplant care, transplant follow-up, and long- term post-transplant care. The only additional personnel JDCH needs in order to implement a pediatric kidney transplantation program is a transplant surgeon and a transplant coordinator, and both are identified in JDCH’s application. JDCH currently refers children who need kidney transplants to other facilities to receive the actual transplant surgery. After transplantation, the patients return to JDCH for their ongoing follow-up care. JDCH’s program also includes a cutting-edge component to transition pediatric transplant patients into the adult clinical setting. Because a transplant patient never ceases to be followed by his or her medical providers, JDCH’s program allows patients to stay within the same institution and to interact with the adult providers during the transition and adjustment period from child to adult. This existing program gives Memorial an advantage over Broward Health with respect to its pediatric and adult applications. In 2006, JDCH became one of five centers that compose the Florida’s Comprehensive Children’s Kidney Failure Center (“CCKFC”) program. JDCH is the only non-academic center approved to provide nephrology care for children with chronic kidney disease who are enrolled in the Department of Health Children’s Medical Services network. In addition, JDCH and Memorial have provided pediatric and adult heart transplantation services since 2010 and 2014, respectively. JDCH’s pediatric heart transplantation program was certified by the CMS in 2011 and was recertified in 2015. CMS certified Memorial’s adult heart transplantation program in November 2015. Memorial has committed to the development and implementation of its pediatric kidney transplant program, regardless of whether its adult program is also approved. The Review Criteria The statutory criterion for the evaluation of CON applications, including applications for organ transplantation programs, is set forth at section 408.035. In addition, AHCA has promulgated a transplantation rule, rule 59C-1.044, which governs the approval of new programs. However, the rule does not contain a methodology that predicts the future need for transplant programs. Instead, the rule sets forth a minimum volume of annual transplants for existing programs that must be met before a new program will normally be approved. The parties agree that the availability, quality of care, accessibility, and extent of utilization of existing health care facilities and health services in OTSA 4 under section 408.035(1)(a), immediate financial feasibility under section 408.035(1)(f), and costs and methods of construction under section 408.035(1)(i) are not at issue. Section 408.035(1)(a) and Rule 59C-1.044(8)(d): The need for the health care facilities and health services being proposed All parties are in agreement that there is a need for at least one new adult kidney transplant program and one new pediatric kidney transplant program in OTSA 4. However, Broward Health argues that two additional adult kidney transplantation programs could be supported in OTSA 4. Memorial disagrees with this contention. Neither applicant’s need or utilization projections, nor the Agency’s SAARs, considered simultaneous approval of two new adult kidney transplant programs. Broward Health’s applications make no mention of a need for two adult kidney transplantation programs, and do not include any analysis of the impact of approving two programs. Broward Health’s health planning expert, Mark Richardson, acknowledged that “the application basically was put forth to show there was a need for the Broward program. It was silent on whether there is a need for a second or not.” Nothing in Broward Health’s applications address the impact Memorial and Broward Health’s proposed adult kidney transplantation programs would have upon each other or upon existing providers if both were approved. The notion of approving both adult applications would have impacted AHCA’s analysis with respect to a number of review criteria, including utilization of existing programs, availability of resources such as health personnel, extent to which the proposed services will enhance access and competition, and the impact on existing providers. Stated differently, Broward Health’s position at hearing that two adult kidney transplantation programs should be approved would have altered the nature and scope of Broward Health’s adult application, as well as the Agency’s review of both the Memorial and Broward Health adult applications. Memorial’s health care planning and financial expert, Michael Carroll, assessed the applicants’ need projections as well as population growth, the incidence of ESRD in OTSA 4, volumes of existing kidney transplant providers in Florida, and availability of organs. Memorial projects that its programs will perform 30 adult kidney transplants and five pediatric kidney transplants. Mr. Carroll found the projections reasonable based on the number of kidney transplants being performed in OTSA 4, and the recent growth in procedures. No contrary evidence was presented. Mr. Carroll’s analysis confirms the need for one additional adult kidney transplantation program in OTSA 4. In part because kidney transplantation is constrained by the availability of organs, Mr. Carroll opined that only one adult program should be established at this time. Broward Health’s planning expert, Mark Richardson, also reviewed existing volumes, population and discharge data, and information gathered from meetings with Broward Health representatives. He opined at final hearing that OTSA 4 could sustain two additional adult kidney transplantation programs. Mr. Richardson’s opinion is based on the fact that each applicant forecasted 30 adult kidney transplants by the end of year two for what he interpreted as a total of 60 cases. Mr. Richardson argued that, even if two new programs were approved, these figures would satisfy the requirement in rule 59C-1.044(8)(d), that each applicant project a minimum of 15 adult kidney transplants per year by the end of year two. Mr. Richardson’s opinions assume that Broward Health will capture approximately 29 percent of Broward County kidney transplant patients, its current market share of patients discharged with certain renal failure diagnostic codes. In 2013, 97 Broward County residents received kidney transplants somewhere in Florida. Mr. Richardson assumed that if Broward Health captured 29 percent of those patients, they would account for 80 percent of Broward Health’s projected kidney transplant volume, with the other 20 percent resulting from in-migration, for a total of 35 kidney transplants. Mr. Richardson assumed that 30 of those patients would be adults, and five pediatric. The 97 patients in Mr. Richardson’s analysis received both cadaveric and living donor transplants. Broward Health will not use living donor organs at least for the first four years of its programs. Living donor transplants account for 20 to as much as 40 percent of kidney transplants. Mr. Richardson’s methodology therefore cannot be applied to a program like Broward Health’s, which would be restricted to cadaveric donors. The credible evidence of record established that there is a need for one additional pediatric kidney transplantation program and one, not two, additional adult kidney transplantation program in OTSA 4. 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 Rules 59C-1.044(3-4) and 59C- 1.044(8)(a-c) The parties’ disagreement concerning which applications best satisfy the above criteria centered on: (1) which applicant’s existing programs provide a greater degree of support for the proposed programs; (2) the applicants’ ability to recruit the necessary physicians to implement the programs, taking into consideration Broward Health’s failure to implement the adult kidney transplantation program awarded by CON No. 10152; (3) the use of employed versus contracted physicians; (4) the use of living donor organs; (5) the “co- location” of the proposed adult and pediatric programs; and the results of a May 2015 CMS survey of Memorial’s pediatric heart transplantation program. Which applicant’s existing programs provide a greater potential degree of support Broward Health relies heavily on its existing adult liver transplantation program, and the prior approval by UNOS of its now-terminated adult kidney transplantation program, to argue that it is best-suited to operate the adult and pediatric kidney transplantations programs at issue in this proceeding. However, there was no evidence that Broward Health’s existing liver transplant surgeons will perform kidney transplants such that their presence at BHMC or CECH could give Broward Health an advantage in terms of the degree to which its existing services would support its proposed programs. Moreover, liver transplant volume at Broward Health has steadily declined since 2007. The program has never been profitable, and Broward Health has considered discontinuing it. Broward Health also asserts that its experience transplanting livers, which, like kidneys, is an abdominal organ, should be weighed more heavily than Memorial’s experience with heart transplants. According to Broward Health, many staff members from Broward's liver transplant program can simultaneously work with the kidney transplant program, because the two abdominal transplant programs require a similar skill set that is transferrable from one to the other. However, again, given the uncertainty as to the identity of the surgeons who will be performing the kidney transplants for Broward Health, this argument is unpersuasive. Given the history, size, and resources of both hospital systems, the undersigned concludes that the proposed adult kidney transplantation programs are on equal footing as to the support offered by their existing programs. However, given Memorial’s experience with pediatric heart transplant patients, Memorial has an advantage over Broward Health with respect to the pediatric kidney program. As noted by several witnesses at hearing, children are not “little adults,” and therefore a track record of working with children is crucial. The applicants’ ability to recruit the necessary physicians to implement the programs; and The use of employed versus contracted physicians 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.” Absent evidence that either applicant had secured the necessary physicians to support its programs, AHCA properly reviewed each applicant’s history of recruitment and establishing transplant programs. Memorial has already successfully recruited physicians and other health care professionals needed to care for ESRD and kidney transplant patients. Its existing transplant programs are operated under the direction of physicians who are employed by MRH. In contrast, for whatever reason, Broward Health was not able to reach an agreement with UM to provide the required surgical and medical support for its previously approved kidney transplantation program, resulting in the abandonment of the program. Memorial’s record of recruiting for, and implementing organ transplantation programs, compared to Broward Health’s record, gives Memorial an advantage in terms of the applicants’ history of providing, and ability to provide, quality of care in organ transplantation. Employed, as opposed to contracted physicians, are more invested in their transplant programs, and provide the hospital with more control in ensuring that the service is implemented and operational. Employing physicians also improves patient safety and outcomes. Unlike Memorial, Broward Health’s existing transplantation program is directed by contracted physicians. Broward Health’s applications state that “two kidney transplant surgeons [are] currently committed to support the proposed new adult and pediatric programs and a third surgeon [is] currently being recruited.” The “two kidney transplant surgeons” are identified in letters of intent, accepted into evidence over a hearsay objection. Neither of the physicians who purportedly signed the letters testified at the hearing. The letters of intent are not binding. Indeed, one of the letters was revoked at the instruction of Dr. Tzakis, the Cleveland Clinic surgeon who serves as medical director for Broward Health’s liver program. The second physician was being recruited for Broward Health’s liver transplantation program; his letter of intent did not address kidney transplantation. It became apparent at hearing that Broward Health’s “plan A” has now become to contract with the Cleveland Clinic to provide professional services, including surgical coverage for the proposed kidney transplantation programs. Memorial’s plan to employ physicians, rather than contract for their services, gives Memorial and JDCH an additional advantage over BHMC and CECH. The use of living donor organs Unlike Broward Health, Memorial will use living donor organs, as well as deceased or “cadaveric” donor organs, in its proposed programs, and its applications include the related costs associated with establishing a live donor program. There are significant benefits to use of living donor organs, including reduction or elimination of a patient’s time on the waiting list, improved recovery times, better patient outcomes, increased organ life, and the possibility of avoiding dialysis, which carries an increased risk of mortality for children. As acknowledged by Broward Health in its application for CON No. 10152, living donor kidney transplantation also has the following “distinct advantages:” instead of occurring on an emergency schedule based upon the availability of a suitable organ, the procedure can be scheduled so as to best accommodate the needs of both recipient and donor, and to minimize organ preservation time. In many instances, the total time from removal of the organ to restoration of blood flow in the recipient can be less than one hour. For these and other reasons, live donor transplants typically result in better quality of life and longer survival rates for recipients. (Memorial Ex. 23, p. MHS15056). Memorial’s plan to use living donor organs gives it an advantage over Broward Health in terms of its ability to provide quality of care in pediatric and adult kidney transplantation. The “co-location” of the proposed adult and pediatric programs Especially for pediatric patients nearing the transition to adult care, there are significant benefits in “co- locating” adult and pediatric transplant programs, i.e., one provider operating both programs. For example, co-location allows pediatric patients to transition into the adult setting with providers they trust, reduces the patient and family’s stress, and improves quality of care. In addition, some resources from adult and pediatric kidney transplantation programs can be shared if they are co- located, which improves the programs’ financial feasibility. These factors weigh in favor of granting both pediatric and adult programs to one provider, if appropriate. The May 2015 CMS survey of Memorial’s pediatric heart transplantation program Broward Health’s primary attack against Memorial with respect to sections 408.035(1)(c) and (d), centered on the results of a May 2015 CMS survey of Memorial’s pediatric heart transplantation program. The survey found numerous deficiencies, including deficiencies related to patient safety. CMS notified Memorial that the deficiencies were substantial enough to warrant terminating the program if not immediately corrected. CMS notified Memorial that the program would be terminated unless the deficiencies were cured within 45 days. In response to the survey, Memorial hired an outside consultant, Transplant Solutions. Transplant Solutions conducted its own survey and identified the same deficiencies noted in the CMS survey. Even after Memorial implemented its corrective action plan, CMS found additional deficiencies, though the new deficiencies were not sufficient to warrant termination of the program. Barbara Sverdlik, Director of Nursing and Transplant Administrator at BHMC, compared the lack of deficiencies in the 2012 survey of Broward Health’s adult liver transplantation program with the results of the May 2015 survey of JDCH’s pediatric heart transplantation program. As Ms. Sverdlik acknowledged, JDCH ultimately passed its 2015 survey and, in spite of the results of the initial survey, “[JDCH] could offer a good quality [pediatric kidney transplantation] program.” Although concerning, it is not entirely surprising that numerous deficiencies were found in Memorial’s relatively new pediatric heart transplant program. However, it is more significant to the undersigned that Memorial took immediate action to correct those deficiencies in order to ensure that the program continued without interruption. JDCH’s May 2015 Survey therefore does not give Broward Health any advantage or Memorial any disadvantage under the review criteria. Section 408.035(1)(e): The extent to which the proposed services will enhance access to health care for residents of the service district Three primary considerations were identified at final hearing relevant to which applicant’s proposed programs are more likely to enhance access: the commitment of each applicant to the proposed programs; the availability of donor organs at each facility; and the availability of services at each facility. Access is significantly enhanced by the use of living donor organs, not only for the living donor recipient, but also for other potential transplant recipients on the wait list. The 20 to 40 percent of kidney transplant patients who could receive a living donor transplant would not have access to kidney transplantation at Broward Health for at least the first four years of its programs, whereas those same patients would have immediate access to the needed services at Memorial. In this regard, and as acknowledged by witnesses for the Agency and Broward Health, Memorial’s programs would enhance access to needed kidney transplantation services to a significantly greater extent than Broward Health’s. In its applications and at final hearing, Broward Health touted its existing adult liver program as providing a foundation for its proposed kidney transplantation programs. However, just five percent of liver transplant recipients require a simultaneous liver and kidney transplant. Any access advantage Broward Health might claim to patients requiring dual transplantations is outweighed by Memorial’s use of living donor organs which impacts a much larger percentage of transplant patients. It is uncontroverted that Broward Health abandoned its prior adult kidney transplantation program, thereby exacerbating the access challenges that exist in OTSA 4 with regard to kidney transplant services. Also, despite a recognized need for a pediatric program, Broward Health’s pediatric application was conditioned on the award of the adult program; it “will not be developed as a stand-alone pediatric kidney transplant program.” (JE 12, p. BH83). The adult program is really Broward Health’s focus, and this is evident even in Broward Health’s financial and staffing projections. As established through the final hearing testimony of their CEOs, MRH and JDCH are steadfastly committed to establishing pediatric and adult kidney transplantation programs. It is also noteworthy that JDCH operates the only pediatric outpatient dialysis program in Broward County, again highlighting its commitment to the pediatric population suffering from kidney disease. In contrast, the proposed Broward Health program would rely on a third party, DaVita, to provide pediatric outpatient dialysis. As the applicant which is more committed to provide the needed services to both the pediatric and adult populations, and which has an unblemished track record of implementing programs, Memorial would enhance access to pediatric and adult kidney transplantation services in OTSA 4 to a greater extent than Broward Health. At hearing, Marisol Fitch, the Agency representative, explained why AHCA concluded that as between the two applicants, Memorial would be most likely to enhance access to this needed service: Q So as between these two applicants, one telling you that if you don’t give them a CON for an adult program, they are not going to implement a CON for the children’s program, versus the other one, which of these two applicants would best ensure and enhance access for residents of this area of the state? A If you are talking about all residents, including the pediatric population, then it would be the applicant that was going to do both. Q That’s Memorial; isn’t that right? A They did not condition their application on – they would do the pediatric without the adult. Q Now I will ask you the same question regarding the issue of the live donor program. One applicant is indicating they will not establish and operate a live donor program, the other one will. Of the two applicants, which would enhance access to the residents of the district that we are dealing with here? A The applicant that used live donor since a large chunk of donors for kidneys are live donors. Q That would mean Memorial; isn’t that right? A That is correct. Section 408.035(1)(f): The immediate and long-term financial feasibility of the proposal The parties have stipulated that short-term financial feasibility, the ability to fund and open the projects, is not at issue. However, the parties contested the long-term financial feasibility of each proposal. The Agency’s application review concluded that the proposed programs were financially feasible in the long-term. That conclusion presumed that the assumptions underlying the applicants’ financial figures were appropriate. In Schedule 8A of its pediatric application, Memorial projected a net loss of $1,129,885 in its second year, while Broward Health projected a net excess of revenue over expenses of $200,717 at the end of year two. In Schedule 8A of its adult application, Memorial projected a net loss of $589,691 in its second year, and Broward Health projected a net excess of revenue over expenses of $560,709 at the end of year two. According to Broward Health’s financial consultant, Tom Davidson, the primary reason Broward Health’s financial projections appear more favorable than Memorial’s is because Memorial’s applications include the costs of required transplant physicians, while Broward Health’s do not. As Mr. Davidson testified at hearing: Q How can you explain that difference? Have you analyzed the two pro formas to figure out why Broward Health projects it can make money at a lower volume than what you think Memorial Health would do to break even? A Yes, I mean it’s entirely – not only in the pro formas, but actually in the real world, it is a function of the physician expense. This is kind of an interesting case from a financial feasibility point of view because there is really only one issue that needs to be analyzed. You have two applicants in the same county, both tax- supported programs that provide a lot of charity care. They both want the same service, they are both projecting the same volume. Every line item in the real world, forget about what’s in the pro formas, but when the real world comes around, whatever goes on in terms of payer mix, gross charges, and in particular net revenues with Medicare and Medicaid and commercial insurers, all those numbers are just going to be what they are. They are going to have to spend the same money to take care of the transplant patient. There is nothing really that a sensible human being could bring up that would distinguish the two in terms of financial feasibility except for this one issue. Does one hospital have to hire a bunch of new doctors to get into business or do both? Broward Health represented to me and I represented in the financial projections that I prepared that they would not. Memorial represented in their forecasts that they would. And that’s the entire difference. And it’s really the only difference that there can be between these two applications. Because otherwise, if you just think about it logically – you don’t have to be a finance person – there’s no – you can’t slip a piece of paper between these two programs in terms of revenues, expenses, and other expenses, because you’ve got to take care of patients. You have to give them lab tests and things cost what they cost. So without getting into some really kind of bazaar attempts to distinguish these two, that’s the question. And I think as a health planner it is my firm opinion that that is the only thing on the financial side that Your Honor has to consider, whether or not Broward Health has to hire doctors. Originally, Mr. Davidson included approximately $900,000 in his expense projections for the cost of adding two physicians. He later eliminated those expenses by assuming that the surgeons currently performing adult liver transplants would also perform Broward Health’s adult and pediatric kidney transplants at no additional cost. Broward Health’s applications do not include any costs associated with employing or contracting for physicians needed to operate its programs and Broward Health does not know what the financial terms of either arrangement might be. As acknowledged by Robyn Farrington, Chief Nursing Officer at BHMC, Broward Health will need additional physicians beyond those who are already either employed or contracted by Broward Health in order to operate adult and pediatric kidney transplant programs. As Michael Carroll credibly testified, even assuming the surgeons performing liver transplants at BHMC also performed kidney transplants at no additional cost, it is improper to exclude the costs for those physicians from a financial assessment of the kidney program: “whatever time that liver transplant surgeon spends [performing kidney transplants] should be allocated to the kidney transplant program.” Broward Health’s pediatric application also failed to include any additional staff for the proposed project. This is because, unlike Memorial, the financial and staffing projections in Broward Health’s applications are interdependent: the staffing and expenses in Broward Health’s pediatric application assume that Broward Health is awarded the CON for an adult program and that, in large part, the adult program would support the pediatric program without the need for additional resources. Accordingly, no expenses associated with adding staff is reflected on Schedule 8A of Broward Health’s pediatric application. However, since children are not simply small adults, additional staff would, in fact, be required for Broward Health’s pediatric program. If its pediatric application is approved, Broward Health will then evaluate what additional staffing it might need for its program. However, as of now there is no way to determine from its applications what staff Broward Health will need for its pediatric program or what the additional cost of that staff will be. In short, there is no way to forecast the cost of either of Broward Health’s proposed programs. The uncertainty regarding the ultimate cost of the Broward Health programs contrasts with Memorial’s applications, which were presented as “stand-alone” projects with regard to projected costs. All resources necessary to operate the adult and pediatric kidney transplantation programs are included in each application. Notwithstanding the stand alone financial presentations, it is reasonable to assume that some resources will be shared if Memorial receives final approvals for both programs. As pointed out by Broward Health, Memorial’s applications contained four mathematical errors that impacted its financial projections. Specifically, Memorial included an incorrect number of adult transplants to be performed prior to CMS certification, improperly calculated Medicare reimbursements, overstated organ procurement costs, and included too many post-transplant follow up appointments. Memorial prepared corrected financial schedules to account for these errors. Revised Schedule 8A for Memorial’s adult application showed a net excess of revenue over expenses of $745,434 at the end of year two. Revised Schedule 8A for Memorial’s proposed pediatric program showed a net loss of $1,026,422 at the end of year two. The combined net loss at the end of year two for both programs totals $280,988. The errors did not affect Memorial’s volume projections, the programs’ scope, orientation, philosophy, accessibility, or need assessment. Memorial has the financial ability to absorb the losses for its proposed pediatric program, even if operated as a stand-alone program. If Memorial’s adult and pediatric programs are co- located, some resources will be shared, and the combined programs will approach break even by the end of year two. In this case, long-term financial feasibility is not accorded as much weight as it might be in other CON determinations, because there is an established need for these tertiary services, and both applicant organizations have the ability, if they so choose, to subsidize operational losses in order to maintain the programs. Stated differently, the projected long-term financial feasibility of both applicants’ proposals is not a basis for distinguishing between them. Rather, the commitment of the applicants to their proposals, as addressed above, is the more critical consideration. Section 408.035(1)(g): The extent to which the proposal will foster competition that promotes quality and cost- effectiveness The Cleveland Clinic is an existing provider of adult kidney transplantation services in OTSA 4. If Broward Health’s “plan A” is implemented, a contract with the Cleveland Clinic for surgeons to operate an adult kidney transplantation program in the same county and OTSA is less likely to foster competition that promotes quality and cost-effectiveness than approval of Memorial’s independent programs. Broward Health’s proposals will not foster competition for pediatric or adult living donor transplants. These considerations weigh in favor of Memorial with respect to the ability of both its proposed adult and pediatric kidney transplantation programs to foster competition pursuant to section 408.035(1)(g). Section 408.035(1)(i): The applicants’ past and proposed provision of health care services to Medicaid patients and the medically indigent Consistent with their missions, both applicants provide substantial services to Medicaid patients and the medically indigent. Mr. Richardson was critical of Memorial’s applications because they do not include Medicaid in their projected payor mix. However, Mr. Richardson’s data showed a miniscule percentage of Broward County residents who received a kidney transplant and are Medicaid-eligible. And although Medicare makes up a far larger portion of the payor mix, Broward Health’s pediatric application included no Medicare in its payor mix assumptions. As Mr. Davidson testified, it is improper to draw any conclusions from an applicant excluding Medicaid as a payor source or from the fact that Broward Health did not include any bad debt or charity care in its applications. As Mr. Richardson agreed, Memorial provides a large volume of Medicaid care and the pediatric applications are on equal footing on this criterion. Mr. Richardson also correctly agreed that the applicants are the same in terms of their history of serving Medicaid and medically-indigent adult patients. There is no evidence that either applicant has a greater commitment to providing kidney transplantation services to Medicaid patients and the medically indigent than the other. Accordingly, neither applicant is entitled to preference under this criterion.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a final order be entered approving CON Application Nos. 10386 and 10388 filed by the South Broward Hospital District, d/b/a Memorial Regional Hospital, subject to the conditions contained in the applications, and denying CON Application Nos. 10387 and 10389 filed by the North Broward Hospital District, d/b/a Broward Health Medical Center. DONE AND ENTERED this 4th day of May, 2016, 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 4th day of May, 2016.
The Issue Whether respondent should grant petitioner's application for a certificate of need for a ten-station chronic hemodialysis center in Broward County?
Findings Of Fact At the time petitioner's application was originally submitted, an unmet need for hemodialysis facilities appeared to exist in Broward County. The project review committee and the board of directors of the Health planning and Development Council for Broward County, Inc., recommended denial of petitioner's application and of all applications for new facilities, however. Competing applicants seeking to expand and establish a satellite were awarded certificates of need because their personnel had proven track records. Petitioner's application was tentatively denied, not because it was deficient, but because competing applications were deemed stronger. With the approval and addition of hemodialysis units since that time, Broward County has become saturated with dialysis centers, and now has significant excess capacity. As of January 1, 1981, there were eight dialysis centers in Broward County, which is coterminous with the jurisdiction of the Health Systems Agency for respondent's District VIII, the Health Planning and Development Council for Broward County, Inc. These eight dialysis facilities had, in the aggregate, 125 approved stations, as of January 1, 1981. Five free-standing stations have since been approved for Plantation Artificial Kidney Center. Respondent's Exhibit No. 3. Countywide, the 125 hemodialysis stations then existing had a utilization rate of 67 percent in January and February of 1981, winter months in which Broward County experiences an influx of seasonal residents. On January 31, 1981, there were 29 seasonal hemodialysis patients in Broward County and, on February 28, 1981, there were 38. Respondent's Exhibit No. 1. Broward County has a population of approximately one million persons. Using the formula prescribed in respondent's rules, Florida End Stage Renal Disease Network 19 projected that 353 patients would require in-center dialysis in 1980, while in fact only 339 patients required dialysis outside their homes. This need could have been met with 106 stations, on the basis of 3.2 patients per station, instead of the 125 stations that existed in Broward County in fact in 1980. For December of 1981, the projection is that 349 patients will require 109 stations; for December of 1982, it is projected that 359 patients will require 112 stations; and for December of 1983, it is projected that 371 patients will require 116 stations, on the basis of 3.2 patients per station. Respondent's Exhibit No. 3. Customarily, dialysis centers are open for business six days a week, with each machine available for two shifts daily. Dialysis usually entails three sessions weekly for the patient so that, if fully utilized, one machine could service four patients. Approximately ten hemodialysis stations in Broward County are set aside for patients with hepatitis positive antigens. These isolation stations are not ordinarily fully utilized. On this account and because of seasonal changes in the numbers of hemodialysis patients in Broward County, the health systems plan looks to an 80 percent utilization rate (on the basis of two shifts a day, even though the machines could he used for three shifts daily in an emergency). This utilization rate translates into 3.2 patients per machine. Another objective of the health system plan is that 95 percent of patients be within 30 minutes of a hemodialysis center. The annual implementation plan calls for 132 stations by December of 1982, without adding any new centers. Dialysis patients in south Florida are older than dialysis patients in north Florida, on the average. Most dialysis patients in Broward County are more than 50 years old. In 1978, Broward County's increase in patients with end stage renal disease was the highest among [Florida's] HSA areas. Petitioner's Exhibit No. 4. Historically, Broward County has had the highest acquisition rate in Florida, although the rate has fallen recently. In 1978, the acquisition rate in Broward County was approximately 138 per million population. By 1980, it had dropped to 119 per million persons. The state average for 1980 was between 105 and 110 per million. In September of 1979, 122 of the 305 persons receiving chronic hemodialysis treatments in Broward County came from Dade County and ten postal zones in the south end of Broward County. Petitioner's Exhibit No. 5. Residential growth in Broward County is occurring principally in the western part of the county. Petitioner proposes to build a ten-station hemodialysis facility at 4175 Southwest 84th Street, in Davie, Broward County, Florida. Dr. Herold, a nephrologist, would refer patients to petitioner's facility, if it is built, and if the South Broward Artificial Kidney Center fills up. Although not an expert in making such projections, Dr. Herold "would say ten [of his] patients, as a guesstimate, Deposition, p. 6, would be referred to petitioner's proposed facility annually. Dr. Zeig, another nephrologist, said three of his patients were in imminent need of dialysis, as were six patients of a former associate of his, a Dr. Levinson. Dr. Zeig testified that he would refer his patients, "upwards of eight to ten . . . in the coming year," Deposition, p. 10, to petitioner's facility, if built. In his deposition, Dr. Rose testified on April 20, 1981, that he could refer "in the range of five to maybe seven" patients to the proposed facility within "the next year." These projected patients are among the 122 persons forecast to develop end stage renal disease in Broward County in 1981 or the 125 expected to be afflicted in 1982. Respondent's Exhibit No. 3. Petitioner projects that the proposed facility could break even with eight patients. Medicare pays for about 95 percent of renal dialysis treatments, nationally. Three or four dialysis centers are within 20 minutes driving time of the site petitioner proposes. The proposed facility would be approximately six miles from Plantation Artificial Kidney Center (15 approved stations 80 percent utilized as of February 28, 1981), and only three or four miles from the Nephrology Associates' satellite facility in Pembroke Pines (four approved stations 44 percent utilized as of February 28, 1981). Located in Broward County south and east of petitioner's proposed facility are South Broward Artificial Kidney Center in Hollywood (30 approved stations 80 percent utilized as of February 28, 1981) and Nephrology Associates' main facility, which is also in Hollywood (10 approved stations 65 percent utilized as of February 28, 1981). Petitioner's Exhibit No. 5; Respondent's Exhibit No. 1. Petitioner's facility would be next north of the southernmost of what would be five hemodialysis centers in the western part of Broward County. Petitioner proposes to offer patients "free" transportation to and from the proposed facility. At present, only one hemodialysis facility in Broward County, Plantation Artificial Kidney Center, provides transportation for patients. There was testimony, however, that Broward County would provide transportation "through coordination with each of the dialysis facilities, if needed." Block Deposition, p. 19. Some patients requiring dialysis perform dialysis themselves at home. This practice is likely to increase significantly as a result of recent advances in continuous ambulatory peritoneal dialysis techniques. Projections that 35 persons in Broward County would elect this method of dialysis in 1981, 30 in 1982, and 40 in 1983 were not shown to be unrealistic, even though Broward County's home dialysis rates have historically been extremely low. On February 28, 1981, 13 of the 350 hemodialysis patients in Broward County underwent dialysis at home. In 1978, there was only one such patient in Broward County. Eighty-seven hemodialysis patients or approximately 19 percent of the total in Broward County died in 1980. Half of the four attempts to transplant kidneys in Broward County failed in 1980. As a practical matter: patients are likely to follow their physicians' advice about which dialysis center to go to. Dr. Herold testified that he choose[s] not to use, Deposition, p. 9, Nephrology Associates' satellite facility for some unspecified medical reason. Dr. Zeig expressed similar sentiments, but also testified that "all our patients were dialysized there, Deposition, p. 8, during the time that he himself had been associated with Nephrology Associates. Dr. Zeig also testified that he had a letter from Nephrology Associates' board of directors advising him he was unwelcome there. Dr. Rose testified that he would not refer patients to Nephrology Associates' satellite facility because of "strong feelings based on medical conditions that exist that I, too, choose not to discuss." Deposition, p. 5. There was hearsay testimony to the effect that Nephrology Associates reused chemical dialyzers, but absolutely no evidence tending to show that this was not good medical practice or that any formal complaint about Nephrology Associates had been filed anywhere on any ground. Nephrology Associates is fully certified for Medicare purposes. In preparing the foregoing findings of fact, the hearing officer had the benefit of respondent's memorandum, petitioner's memorandum of law, and petitioner's proposed recommended order. To the extent petitioner's proposed findings of fact have not been adopted in substance, they have been rejected as unsupported by or contrary to the evidence; or have been deemed irrelevant.
Recommendation It is, accordingly, RECOMMENDED: That respondent deny petitioner's application for certificate of need. DONE AND ENTERED this 7th day of July, 1981, in Tallahassee, Florida. ROBERT T. BENTON, II Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32301 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 7th day of July, 1981. COPIES FURNISHED: Guyte P. McCord, III, Esquire and Cynthia S. Tunnicliff, Esquire Post Office Box 82 Tallahassee, Florida 32302 Eric J. Haugdahl, Esquire 1317 Winewood Boulevard Tallahassee, Florida 32301 Richard Baron, Esquire Suite 500 444 Brickell Avenue Miami, Florida 33131 =================================================================
The Issue The issue is whether Respondent Agency for Health Care Administration properly denied Petitioner Bert Fish Medical Center, Inc.'s application for a certificate of need to establish an adult kidney transplant program at its existing hospital located in Volusia County.
Findings Of Fact THE APPLICANT BFMC is a not-for-profit hospital located in New Smyrna Beach, Volusia County, Florida. The hospital is a 116-bed, Class 1, general acute-care hospital. BFMC proposes to establish an adult kidney transplant program on its third floor next to the inpatient unit. The applicant will designate seven acute-care beds for use in the program. The hospital currently offers no other special programs or tertiary services. BFMC is located in health planning District 4 which is comprised of seven counties. BFMC is located in organ Transplant Service Area 3 which is comprised of ten counties located within the following four health planning districts: District 4, Volusia County; District 3, Lake County; District 7, Orange, Seminole, Osceola, and Brevard Counties; District 9, Indian River, St. Lucie, Martin, and Okeechobee Counties. BFMC is a part of the Southeast Volusia Hospital District (SVHD) which encompasses southeastern Volusia County, including New Smyrna Beach, Edgewater, Oak Hill, and the unincorporated areas of south Volusia County. The legislature created the SVHD as a special taxing district to provide health care to all citizens without regard to their ability to pay. The SVHD commissioners are appointed by the Governor. They also serve as the directors of BFMC. East Volusia County is well developed, from Edgewater in the south, to the northern end of the county. Areas along the beaches, the Indian River, and the Halifax River are densely populated. Other areas of the county are less populated. BFMC is located two blocks east of highway U.S. 1. State Road 44, a four-lane highway, connects New Smyrna Beach to Interstate 95. The applicant is located approximately 50 miles from Florida Hospital in Orlando, Florida. Florida Hospital- Orlando currently is the only adult kidney transplant center in Transplant Service Area 3. BFMC offers the following inpatient and outpatient services: surgery (including a 14-bed intensive care unit for surgical and medical patients); medical and radiation oncology; cardiac catheterization; diabetic center; invasive radiology; MRI; CT scanning; and outpatient surgery. The hospital has an emergency room which is staffed on a 24-hour basis. BFMC operates a home health agency, a rehabilitation center, a diagnostic center, a primary care center and a clinic for the medically needy. The medical staff at BFMC consists of 128 physicians. Eighty-two percent of the doctors are board-certified in their respective medical fields. The remaining 18 percent of doctors are board-eligible in a medical specialty. The physicians at BFMC have medical specialties in the following areas: urology, nephrology, internal medicine, general surgery, vascular surgery, anesthesiology, cardiovascular surgery, transplant surgery, pain management, pathology, pulmonology, neurology, orthopedics, and orthopedic surgery. The 260 member nursing staff at BFMC includes 172 licensed nurses. Eighty-seven percent of the nurses are registered nurses. BFMC is a member of Halifax-Fish Community Health (Halifax-Fish), a partnership of the Halifax Hospital Medical Center (HHMC) and the SVHD. The goal of Halifax-Fish is to eliminate unnecessary duplication of services and to reduce health care costs. The HHMC owns and operates Halifax Medical Center, a general acute-care hospital located in Daytona Beach. Halifax Medical Center operates the third busiest emergency center in the state. Halifax Medical Center provides the following services which are not available at BFMC: (a) an adult bone-marrow transplant program; (b) adult and adolescent inpatient psychiatric services; and (c) a neonatal intensive care unit. The Halifax-Fish partnership provides the residents of eastern Volusia County with the following services: (a) two acute-care hospitals; (b) bone-marrow transplantation; (c) an HMO; (d) a PPO; (e) home health; (f) hospice; (g) long-term care; and (h) skilled nursing care. Halifax Medical Center filed a letter of intent to establish an adult kidney transplant program in the same batching cycle as BFMC. Subsequently, Halifax Medical Center withdrew its letter and offered its support to BFMC's application. The Organ Procurement and Transplant Network (OPTN) coordinates the listing of potential transplant recipients and the distribution of donated organs on a local, regional, and national level. The United Network for Organ Sharing (UNOS) is the entity that operates OPTN. UNOS has established standards for transplant surgeons, transplant physicians, and for certification of transplant centers. Most of the standards in AHCA's transplant rule, Rule 59C-1.044, Florida Administrative Code, are based on UNOS guidelines. UNOS has approved BFMC's membership application. Membership in UNOS signifies that BFMC has met applicable federal guidelines for the establishment of a kidney transplant program. It also means that UNOS will permit BFMC to participate in the national organ sharing program pending state authorization. There are six existing adult kidney transplant programs in Florida. These programs are located in the following districts and services areas: (a) Shands Hospital, District 3, Service Area 1; (b) Methodist Medical Center, District 4, Service Area 1; (c) Tampa General Hospital, District 6, Service Area 2; (d) Southwest Florida Regional Medical Center, District 8, Service Area 2; (e) Florida Hospital-Orlando, District 7, Service Area 3; and (f) Jackson Memorial Hospital, District 11, Service Area 4. PREHEARING STIPULATION The parties agree that BFMC timely filed its CON application, including the letter of intent, initial application, and response to omissions, with AHCA and the local health council. The initial CON application was filed on March 26, 1997. The response to omissions was filed on May 12, 1997. The parties agree that BFMC's CON application meets the publication requirements of Section 408.039(2)(d), Florida Statutes (1995), and Rule 59C-1.008(1)(i), Florida Administrative Code. The parties agree that BFMC's CON application meets the following requirements of Section 408.037, Florida Statutes: the application contains a certified copy of the resolution of its board of directors authorizing the filing of the CON application pursuant to Section 408.037(4), Florida Statutes; the application contains all of the minimum content items required by Section 408.037; and the application contains Schedules 1, 2, 3, 4, 6, 7, and 8 which are complete and reasonable and which properly document the required information. Other statutory and rule review criteria are addressed below. CERTIFICATE OF NEED REVIEW CRITERIA Need in Relation to State and District Health Plans: Section 408.035(1)(a), Florida Statutes. There is no published fixed need pool applicable here. Nevertheless, BFMC must show that its service area needs an additional adult kidney transplant program. The demonstration of need requires consideration of the following state and local health plan preferences. State Health Plan The state health plan has eight preferences which apply to all proposed transplant programs. The parties agree that BFMC's application complies with Preference 1. That preference requires the applicant to make a commitment to accept patients for organ transplants regardless of their ability to pay. Preference 2 favors applicants with a history of providing a disproportionate share of charity care and Medicaid patient days. BFMC is entitled to partial credit for this preference because it provides a high percentage of charity care. However, BFMC does not meet the Medicaid disproportionate share criteria. Preference 3 favors applicants with other existing organ transplantation programs. As the sole applicant, BFMC does not meet this criteria. However, BFMC's partner in the Halifax- Fish partnership, Halifax Medical Center, has a bone-marrow transplant program. Preference 4 favors teaching hospitals for the establishment of any organ transplantation program. BFMC does not meet this criteria because it is not a teaching hospital. However, Rule 59C-1.044, Florida Administrative Code, specifically excludes kidney transplant programs from the type of transplant programs which are restricted to teaching hospitals. Preference 5 favors applicants that are members of UNOS. The parties agree that BFMC meets this preference. The parties agree that BFMC meets the requirements of Preference 6. That preference favors an applicant that can demonstrate successful implementation of the Uniform Anatomical Gift Act. BFMC is not a teaching hospital. Therefore, it cannot receive credit for Preference 7. That preference favors teaching hospitals that document the establishment of a residence program related to the proposed organ transplantation program. Preference 8 favors facilities approved by the National Institute of Health (NIH) and Medicare for the establishment of additional transplant programs. BFMC does not meet the requirements of this preference because it is not an NIH approved facility or a Medicare designated center. Additionally, BFMC is seeking to establish an initial program, not an additional transplant program. As to state health plan preferences that apply to transplant programs, BFMC meets the requirements of at least three preferences and partially meets the requirements of at least two other preferences. Local Health Plan District 4 has eight local health plan preferences. Only six of these preferences are applicable here. The parties agree that Preference 5 and Preference 6 do not apply to BFMC's proposed project. Preference 1 favors applications for transplant centers to be located in a major metropolitan area. This preference defines "major metropolitan area" as a county with a population of 250,000 or more. BFMC meets this requirement because Volusia County's population exceeds 250,000. Preference 2 favors applicants who document that they have written relationships with a broad spectrum of other health care providers for patient transfer, tissue procurement, and/or joint venture with regard to the proposed service. BFMC meets the requirement of this preference. BFMC has agreements for transfer with nursing homes for the transfer of patients and emergency services. It has an agreement with a UNOS-designated organ procurement organization. The hospital has an agreement for laboratory services. BFMC and Halifax Medical Center provide an integrated health care system through the Halifax-Fish partnership. The partnership helps ensure continuity of care and non-duplication of costly services. BFMC does not meet the requirements of Preference 3. It is not recognized as a stand alone regional or national referral center. It does not have its own regional or national clientele. Preference 4 favors applicants that play a significant role in regional or national efforts such as comprehensive cancer centers designated by the National Cancer Institute. Pursuant to Preference 4, an applicant plays a "significant role" if it serves as the contracting agency for government medical research grants or if it has a formal affiliation with the lead agency and engages in active medical research with the lead agency. BFMC deserves partial credit for this preference based on its affiliation with Halifax Medical Center which participates actively in cancer research and operates a bone-marrow transplantation program. In cooperation with Halifax Medical Center, BFMC operates an Oncology Center which is dedicated to the outpatient treatment and management of a variety of cancers. The parties agree that BFMC meets the requirements of Preference 7. BFMC has submitted a plan to increase local organ donations. Preference 8 favors applicants who formally commit to a program of charity care, with the commitment spelled out in their CON application. BFMC's application meets this preference. SVHD's mission is to provide medical services to residents without regard to their ability to pay. BFMC's application is conditioned on the provision of 4 percent charity care, which equates to one person in each of the first two years of operation. Of the six applicable local health plan preferences from District 4, BFMC meets the requirements of four preferences in full and one preference in part. BFMC's application did not address the local health plan preferences for transplant programs in Districts 3, 7 and 9. AHCA sent an application packet to BFMC which indicated that District 4 was the applicable health planning district for BFMC's application. The application packet included a copy of the District 4 preferences. AHCA's omissions letter did not inform BFMC that it should address all local health plans for each district in Transplant Service Area 3. District 3 has one CON preference for transplantation programs. This preference favors programs at teaching hospitals. Shands Hospital, a teaching hospital in Gainesville, Florida, is located in District 3. BFMC does not meet this criteria. District 7 has two local preferences which address organ transplantation in general. The first favors applicants with residency programs. BFMC is not entitled to this preference. The second preference from District 7 favors applicants that agree to provide charity care. This preference requires the applicant to provide data detailing, by county and payor source, the admissions to the facility for the last year, and copies of any letters of support from referral facilities indicating their past good experiences in placing patients in need in the applicant's facility. BFMC is entitled to partial credit for this preference based on its commitment to provide charity care. District 9 does not have any local health plan preferences which apply to BFMC's application. Need in Relation to Rule Criteria: Rule 59C-1.044, Florida Administrative Code. The parties stipulated that BFMC's application met the threshold need determination set forth in Rule 59C-1.044(8), Florida Administrative Code. This rule requires each existing kidney transplant program in the transplant service area to have performed a minimum of 30 transplants in the most recent calendar year. Additionally, the applicant must document that it will perform a minimum of 15 transplants within two years of operation. The only hospital currently providing adult kidney transplant services in Transplant Service Area 3, Florida Hospital-Orlando, performed in excess of 100 transplants in the most recent calendar year. BFMC projects that it will perform 19 kidney transplants in its first year of operation, and 25 transplants in its second year of operation. BFMC based these projections on the number of persons on dialysis in Transplant Service Area 3. Nationally, about 50 percent of the persons on dialysis might be candidates for a kidney transplant. For persons below the age of 65, approximately 75 percent of the persons on dialysis could be candidates for a kidney transplant. In Transplant Service Area 3, there are about 2,161 persons on dialysis. Approximately 40 percent of those persons are not suitable for transplantation. Therefore, only 1,297 persons may be candidates for transplantation. Of the 1,297 persons that might be suitable for transplantation, only nine or ten percent will actually be willing to undergo a transplant. The number of persons willing to be listed as a candidate for a transplant is expected to increase by 12 percent annually. BFMC's projections have been adjusted for the relatively small number of pediatric cases in the transplant service area. The projections also consider the number of procedures performed by Florida Hospital-Orlando. The projections are reasonable based on the number of persons on dialysis in the transplant service area. On a statewide basis, there is a positive correlation between the number of available transplant centers, the number of people on the kidney transplant waiting list, and the number of transplants performed. Statistics from the Health Care Financing Administration (HCFA) indicate that, on a statewide basis, a greater number of transplant centers will result in a larger number of dialysis patients on the kidney transplant waiting list, and a larger number of transplants performed. Currently, Florida's percentage of transplant centers, compared to the total dialysis population, is significantly less than this same percentage for other states with similar numbers of persons on dialysis. Florida also lags behind other states with similar dialysis populations in the percentage of people on the transplant list and the number of transplants per the dialysis population. Volusia County is the appropriate location for an additional adult kidney transplant program within the ten-county area that comprises Transplant Service Area 3. Volusia County is second only to Orange County in the number of persons afflicted with one or more of the diseases which cause renal failure. Brevard County, which is located immediately adjacent to south Volusia County, is third. Together, Volusia County and Brevard County have more people on dialysis than Orange County. The Availability, Quality of Care, Efficiency, Appropriateness, Extent of Utilization, and Adequacy of Like and Existing Health Care Services in the Service District: Section 408.035(1)(b), Florida Statutes. There is no evidence that any patient on the UNOS waiting list has ever been turned away from a kidney transplant center in Florida. The kidney transplant program at Florida Hospital- Orlando has been in existence for 25 years. It performs four times the minimum number of transplants necessary before a new program may be considered in the service area. Despite its significant growth in the past few years, there is no evidence that Florida Hospital-Orlando is operating inefficiently. It has not reached its capacity for performing kidney transplants. Nevertheless, a new kidney transplant program at BFMC would improve access for patients who otherwise would not seek placement on the transplant waiting list. Patients that are appropriate candidates for placement on the kidney transplant waiting list often refuse that opportunity due to the distance from their home to the transplant center. They are not willing to travel very far from home for evaluation, for surgery, and for maintenance and follow-up after surgery. Kidney transplant patients require lifetime monitoring of immunosuppressants as well as continued treatment for the underlying disease. These patients are more willing to be placed on the waiting list and to consider a transplant, as an alternative to continued costly dialysis, if the transplant facility is close to their family and home. There is no evidence that BFMC's proposed program will adversely impact any other existing provider of kidney transplants. No provider of transplant services intervened in this proceeding to challenge BFMC's program. On the other hand, BFMC received support for its proposed program from numerous hospitals through out the transplant service area and in the adjacent transplant service area. An additional kidney transplant program will lead to a potential increase in the number of available donors. It will improve accessibility and availability of kidney transplant services, as well as the efficiency, appropriateness, and adequacy of the service in Transplant Service Area 3. The Ability of the Applicant to Provide Quality of Care and the Applicant's Record of Providing Quality of Care: Section 408.035(1)(c), Florida Statutes. The parties agree that BFMC's has a record of providing quality of care. BFMC's application demonstrates that it has the ability to provide quality of care for the proposed kidney transplant program. BFMC is accredited by the Joint Commission on Accreditation of Healthcare Organizations (JCAHO). The mechanisms for identifying and correcting potential problems are already in place at BFMC. BFMC's nursing staff has the necessary training and experience to deliver quality care to kidney transplant patients. BFMC is not a teaching or research hospital. Apart from its association with Halifax Medical Center, BFMC does not offer any tertiary services. However, the statutory and rule criteria do not require BFMC to be a teaching or research hospital in order to receive a CON for an adult kidney transplant program. BFMC is a "small" hospital. Nevertheless, it offers the essential services for a kidney transplant program. For example, BFMC performs cardiac catheterization which is required in a small percentage of kidney transplant cases. BFMC is already performing procedures which are more complex than kidney transplants. In addition to major cardiovascular procedures with cardiac cath, BFMC performs the following procedures: (a) stomach, esophageal and duodenal procedures greater than age 17 with cardiac cath; and (b) tracheostomy, except for mouth, larynx or pharynx disorder. Of all the transplant procedures, kidney carries the lowest DRG (diagnosis related group) weight. The DRG weight is an indication of the complexity and resource utilization of a procedure. The Availability and Adequacy of Other Health Care Facilities and Services in the District Which May Serve as Alternatives for the Services to be Provided by the Applicant: Section 408.035(1)(d), Florida Statutes. The parties agree that a patient in need of kidney transplant services has no acceptable alternative for long-term treatment. Dialysis is an interim outpatient alternative for patients who are candidates for a kidney transplant. Dialysis has higher long-term costs than transplantation. It is not the preferred treatment. A kidney transplant eliminates a patient's dependence on dialysis. It encourages personal and health care independence. A successful transplant greatly improves a patient's quality of life. BFMC's proposed program will lead to an increased awareness of the need for organ donors. The proposed project will result in the addition of persons on the transplant waiting list, the increased availability of organs for transplantation, and a growth in the number of transplants performed. An additional adult kidney transplant program in Transplant Service Area 3 will have a minor short-term impact, if any, on the kidney transplant program at Florida Hospital-Orlando. Probable Economies and Improvements in Service That May be Derived from Operation of Joint, Cooperative, or Shared Health Care Resources: Section 408.035 (1)(e), Florida Statutes. The parties stipulated that this provision does not apply to BFMC's proposed project. Need in the Service District for Special Equipment and Services Which are Not Reasonably and Economically Accessible in Adjoining Areas: Section 408.035 (1)(f), Florida Statutes. As discussed above, BFMC is located appropriately for the establishment of an additional adult kidney transplant program in Transplant Service Area 3. The proposed project is needed to improve access to the service. Need for Research and Educational Facilities, Health Care Practitioners, and Doctors of Osteopathy and Medicine at the Student, Internship, and Residency Training Levels: Section 408.035(1)(g), Florida Statutes. BFMC's proposed project will provide educational opportunities for the general public as well as medical professionals, residents, and students. If the project is approved, family practice residents from Halifax Medical Center will rotate through the program. Nursing students and allied technical support students, such as physical therapists, will receive training in the program. Availability of Resources Including Manpower, Management Personnel, and Funds for Project Accomplishment and Operation; Effects the Project Will Have on Needs of Health Professional Training Programs in the District: Section 408.035(1)(h), Florida Statutes. AHCA stipulated that BFMC has the necessary resources to establish and operate the proposed project. These resources include health manpower, management personnel, and funds for project accomplishment and operation. BFMC is willing to condition approval of its CON application on the performance of a study that would be defined by AHCA for the benefit of health care in the state. Immediate and Long-term Financial Feasibility of the Proposal: Section 408.035(1)(i), Florida Statutes. The parties have stipulated that BFMC's proposed project is financially feasible, immediately and in the long- term. Special Needs of Health Maintenance Organizations: Section 408.035(1)(j), Florida Statutes. The parties agree that this criteria does not apply to BFMC's CON application. Needs and Circumstances of Those Entities Which Provide a Substantial Portion of Their Services or Resources, or Both, to Individuals Not Residing in the District: Section 408.035(1)(k), Florida Statutes. BFMC has not provided evidence that it currently provides a substantial portion of its services or resources to individuals residing outside of its health planning district, District 4. However, BFMC proposes to serve the ten-county area comprising Transplant Service Area 3. This service area includes portions of health planning Districts 3, 4, 7, and 9. Probable Impact of the Proposed Project on the Cost of Providing Health Services Proposed by the Applicant: Section 408.035(1)(l), Florida Statutes. The parties stipulated that BFMC's application demonstrates compliance with this criteria. Costs and Methods of the Proposed Construction and the Availability of Alternative, Less Costly, or More Effective Methods of Construction: Section 408.035(1)(m), Florida Statutes. The parties stipulated that BFMS's application demonstrates compliance with this criteria. The Applicant's Past and Proposed Provision of Health Care Services to Medicaid Patients and the Medically Indigent: Section 408.035(1)(n), Florida Statutes. The parties stipulated that BFMS's application demonstrates compliance with this criteria. The Applicant's Past and Proposed Provision of Services Which Promote a Continuum of Care in a Multilevel Health Care System: Section 408.035(1)(o), Florida Statutes. Halifax-Fish is a multilevel health care system. As discussed above, it provides a continuum of care through the services of a HMO, PPO, home health agencies, tertiary care (NICU and bone-marrow transplant), adult and adolescent psychiatric beds, skilled nursing beds, hospice, and long-term care. Whether Less Costly, More Efficient, or More Appropriate Alternatives to the Proposed Inpatient Services are Available: Section 408.035(2)(a), Florida Statutes. Less costly, more efficient, or more appropriate alternatives to BFMC's proposed project are not available. Expanding the existing program at Florida Hospital-Orlando would not improve access for patients who are unwilling to travel to Orlando for evaluation, surgery, and follow-up services. BFMC has the necessary staff and facilities to establish a successful kidney transplant program. The applicant's utilization projection is reasonable. Whether the Existing Facilities Providing Similar Inpatient Services Are Being Used in an Appropriate and Efficient Manner: Section 408.035(2)(b), Florida Statutes. Florida Hospital-Orlando is being used in an appropriate and efficient manner. Florida Hospital-Orlando draws patients primarily from Orange County, certain other counties in the transplant service area, and out-of-state. It does not attract a large percentage of transplant patients from Volusia County. Florida Hospital-Orlando's patient origin for kidney transplants indicates that there is an existing geographic barrier to service for residents in the service area. That Patients Will Experience Serious Problems in Obtaining Inpatient Care of the Type Proposed, in the Absence of the Proposed New Service: Section 408.035(2)(d), Florida Statutes. As discussed above, many persons now on dialysis, who are potential candidates for transplant, do not seek a transplant because they do not have access to a program close to their home. BFMC's proposed project will make it possible for these people in Service Area 3 to obtain a transplant in or nearer to their community. The project will definitely improve access to the proposed service for handicapped and minority persons who find it especially difficult to travel. BFMC has a history of providing services to the chronically underserved. RULE CRITERIA Rule 59C-1.044(3)(c), Florida Administrative Code, requires an age-appropriate (adult or pediatric) intensive care unit which includes facilities for prolonged reverse isolation. The applicant's proposal meets this requirement. Additionally, AHCA stipulated that BFMC's application meets all architectural and construction requirements. BFMC has demonstrated compliance with Rule 59C- 1.044(4)(f), Florida Administrative Code. The proposed program includes nutritionists with expertise in the nutritional needs of transplant patients. Ms. Jayne Meade is a dietitian with experience in working with renal patients. Through the partnership with Halifax Medical Center, Ms. Kim Koeving will act as a consultant renal dietitian. Based on Ms. Meade's experience, supplemented by the expertise of Ms. Koeving, BFMC complies with this criteria. Furthermore, AHCA stipulated that BFMC's CON application met the specific criteria of Rule 59C-1.044(8)(a)3, Florida Administrative Code, which requires the applicant to demonstrate the availability of ancillary services, including post transplantation nutritional services. BFMC also demonstrated compliance with Rule 59C- 1.044(4)(g), Florida Administrative Code. That rule requires the proposed program to include respiratory therapists with expertise in the needs of transplant patients. BFMC has at least four respiratory therapists with expertise in the needs of transplant patients. Two of the therapists are on duty at all times. As to Rule 59C-1.044(8)(a)2., Florida Administrative Code, BFMC has demonstrated that outpatient services for the proposed program are available. These services include renal dialysis and ambulatory renal clinic services. BFMC meets this requirement through an agreement with Southeast Acute Care Services. As to Rule 59C-1.044(8)(b)3., Florida Administrative Code, BFMC's transplant team includes physicians who are board- certified or board-eligible in the areas of anesthesiology, nephrology, and psychiatry. There is no board certification for vascular surgery. Dr. Morris, the transplant surgeon, is board- certified in general surgery with a certificate in transplant surgery. Dr. Morris practices general, vascular, and thoracic surgery. Dr. Toub, the back-up transplant surgeon, is board- certified in surgery. Dr. Toub practices general, vascular and non-cardiac thoracic surgery. He also has experience in kidney transplantation. BFMC's program will have two transplant physicians. Dr. Chattopadhyay is board certified in internal medicine and nephrology. Dr. Latif is certified in internal medicine and board eligible in nephrology, awaiting the results of his boards. The proposed project will have a board certified urologist, Dr. Green, on the team. As to Rule 59C-1.044(8)(b)4., Florida Administrative Code, BFMC's application demonstrates that it includes a renal dietitian on its own staff as well as on the staff at Halifax Medical Center. Additionally, the team will include an experienced nephrology nurse, Valerie Holley, R.N. Ms. Holley has extensive experience with patients who have chronic renal failure. As to Rule 59C-1.044(8)(b)6., Florida Administrative Code, BFMC demonstrated that Dr. Gramer is an anesthesiologist with experience in both kidney and heart transplants. As to Rule 59C-1.044(8)(d)3., Florida Administrative Code, BFMC submitted data and information indicating a projected utilization of 19 transplants in the first year of operation, and 25 transplants in the second year of operation. These projections appear to be reasonable and achievable. They are based on a reasonable calculation of the percentage of persons currently on dialysis in the transplant service area who are potential candidates for transplantation. Despite the requirement of AHCA's rule, there is no evidence of a state or national standard which can serve as "commonly accepted criteria" for determining the number of dialysis patients who are potential kidney transplant recipients. BFMC's CON application demonstrates compliance with all other applicable rule criteria.
Recommendation Based on the forgoing Findings of Fact and Conclusions of Law, it is recommended that AHCA enter a Final Order granting BFMC's CON application No. 8724 for an adult kidney transplantation program. DONE AND ORDERED this 12th day of March, 1998, in Tallahassee, Leon County, Florida. SUZANNE F. HOOD Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 Filed with the Clerk of the Division of Administrative Hearings this 12th day of March, 1998. COPIES FURNISHED: Richard A. Patterson, Esquire Agency for Health Care Administration 2727 Mahan Drive Tallahassee, Florida 32308-5403 R. Terry Rigsby, Esquire Blank, Rigsby and Meenan, P.A. 204 South Monroe Street Tallahassee, Florida 32301 R. Sam Power, Agency Clerk Agency for Health Care Administration Building 3, Suite 3431 2727 Mahan Drive Tallahassee, Florida 32308 Paul J. Martin, Esquire Agency for Health Care Administration 2727 Mahan Drive Tallahassee, Florida 32308 Douglas M. Cook, Director Agency for Health Care Administration 2727 Mahan Drive Tallahassee, Florida 32308
Conclusions Sovereign immunity extends to “corporations primarily acting as instrumentalities . . . of the state, county, or municipalities.” See § 68.28(2), F.S.; Pagan v. Sarasota County Public Hospital Board, 884 So.2d 257 (Fla. 2d DCA 2004). MRHS was deemed to be an instrumentality of the hospital district by the Attorney General in an opinion dated December 8, 2006 and the circuit court in Marion County has reached the same conclusion in several cases. As a result, MRHS is entitled to sovereign immunity under § 768.28, F.S. The public policy basis for extending sovereign immunity to private entities such as MRHS has recently been questioned by two appellate courts. See University of Florida Board of Trustees v. Morris, 32 Fla. L. Weekly D1803 (Fla 2d DCA July 27, 2007) (Altenbernd, J., concurring), rev. denied, 2008 Fla LEXIS (Fla. Jan. 7, 2008); Andrews v. Shands at Lakeshore, Inc., 33 Fla. L. Weekly D30 (Fla 1st DCA Dec. 20, 2007). The nurses are employees of MRHS and they were acting within the scope of their employment when providing services to Tyler. As a result, the nurses’ negligence is attributable to MRHS. The nurses had a duty to provide competent medical care to Tyler. They breached this duty and violated the standards of care for nursing personnel by failing to report the cyanotic episodes to Dr. Pierre and by failing to properly perform the four-extremity blood pressure test. The nurses’ actions and inactions contributed to the delayed diagnosis of Tyler’s heart condition. However, Dr. Pierre’s failure to order an immediate cardiology consultation when she detected a heart murmur shortly after Tyler’s birth also contributed to the delayed diagnosis of Tyler’s heart condition. The delayed diagnosis of Tyler’s heart condition led to his “crash” on December 16 because it is more likely than not that Tyler would have been transferred to Shands or another tertiary facility had his condition been diagnosed sooner. Tyler was not a candidate for the second and third stages of the Norwood procedure because of the damage caused by the “crash,” and he also suffered brain damage during the “crash” that caused his developmental delay. The amount of damages agreed to by MRHS is reasonable, even though Dr. Pierre likely shares some of the responsibility for Tyler’s condition. Indeed, the life care plan prepared for Tyler reflects that the cost of a transplant is between $650,000 and $700,000 and Tyler is expected to require multiple transplants over the course of his life. Moreover, the non-economic damages (e.g., pain and suffering) of Tyler and his parents could very well have exceeded the settlement amount had the case gone to jury trial. LEGISLATIVE HISTORY: This is the first year that this claim has been presented to the Legislature. ATTORNEYS’ FEES AND LOBBYIST’S FEES: The claimants’ attorney provided an affidavit stating that that attorney’s fees will be capped at 25 percent of the amount awarded by the claim bill in accordance with §768.28(8), F.S. Lobbyist’s fees are not included in the 25 percent attorney’s fees. Lobbyist’s fees will be an additional 4 percent of the amount awarded by the claim bill, which would be $28,000 based upon the $700,000 claim. The Legislature is free to limit the fees and costs paid in connection with a claim bill as it sees fit. See Gamble v. Wells, 450 So. 2d 850 (Fla. 1984). The bill does so by stating that “[t]he total amount paid for attorney’s fees, lobbying fees, costs and other similar expenses relating to this claim may not exceed 25 percent of the amount awarded [by the bill].” If this language remains in the bill (and the bill is amended as recommended below to reflect the allocation approved by the circuit court), the claimants will receive a total of $525,000, with $393,750 going into Tyler’s special needs trust and $131,250 going to his parents. The remaining $175,000 will go to attorney’s fees, costs, and lobbyist’s fees. If this language was not in the bill (and the bill is amended as recommended below to reflect the allocation approved by the circuit court), the claimants would receive approximately $362,000, with approximately $271,500 going into Tyler’s special needs trust and approximately $90,500 going to his parents. The claimants’ attorney would receive a total of approximately $310,000 ($175,000 for attorney’s fees and approximately $135,000 for costs), and the lobbyist would receive $28,000. OTHER ISSUES: The bill identifies the Marion County Hospital District as the entity responsible for payment of the claim. The parties agree, and I recommend that the bill be amended to reflect MRHS as the entity responsible for payment because it is responsible for operating the hospital pursuant to a lease from the hospital district. The bill requires the entire claim to be paid into Tyler’s special needs trust. The parties agree, and I recommend that the bill be amended to require payment of the claim in accordance with the allocation approved by the circuit court, i.e., 75 percent into Tyler’s special needs trust and 25 percent to his parents. The bill requires any funds remaining in Tyler’s special needs trust upon his death to revert to the General Revenue Fund. The parties agree, and I recommend that the bill be amended to remove this language because the bill is being paid from the hospital’s funds, not State funds. The bill should be also amended to include the standard language requiring payment of Medicaid liens prior to disbursing any funds to the claimants. See § 409.910, F.S. RECOMMENDATIONS: For the reasons set forth above, I recommend that Senate Bill 68 (2008) be reported FAVORABLY, as amended. Respectfully submitted, cc: Senator Charlie Dean Representative Marcelo Llorente Faye Blanton, Secretary of the Senate T. Kent Wetherell Senate Special Master House Committee on Constitution and Civil Law Tony DePalma, House Special Master Counsel of Record
