The Issue Whether this case presents "not normal circumstances" that lead to award to St. Anthony's Hospital, Inc., of a certificate of need for an Open Heart Surgery program?
Findings Of Fact The parties and existing programs in District 5. St. Anthony's Hospital, Inc., the applicant for CON No. 7418 (the subject of this proceeding), is a not-for-profit corporation. Its facility, St. Anthony's Hospital, at which the adult open heart surgery program would be operated if CON No. 7418 were granted, is a 427-bed licensed general community hospital providing adult acute medical services in surgery, psychiatry and obstetrics. Located south of Ulmerton Road in Pinellas County, (generally considered "South Pinellas County,") St. Anthony's also provides home health care, family medicine clinics, outreach education, health screening and occupational health. Also located in South Pinellas County are Bayfront Medical Center, All Children's Hospital, and Northside Hospital. Northside is not a party to this proceeding although it recently received approval for a CON to provide open heart surgery services. Northside is located 6-1/2 to 7 miles from St. Anthony's and provides services in the same service area. Bayfront Medical Center, Inc., is one of two intervenors in this proceeding. Its facility, Bayfront Medical Center is a 518-bed, acute care, not-for-profit hospital located within the limits of the city of St. Petersburg and 1.7 miles from St. Anthony's. It offers cardiac, cancer and emergency services as well as a Level II trauma center. Bayfront also maintains a large women's and children's program, a rehabilitation center and a neurology program. Its cardiology program includes adult and pediatric cardiac catheterization, angioplasty and open heart surgery. But the open heart surgery program is shared with All Children's Hospital. Pre-operative and post-operative patient care is Bayfront's responsibility. The actual surgery takes place on the premises of All Children's. All Children's Hospital is a research hospital affiliated with the University of South Florida College of Medicine. Most importantly, and certainly most pertinent to this case, it is a dedicated Class II pediatric specialty hospital, one of two pediatric specialty hospitals in Florida, and one of only 47 in the nation. It provides, therefore, primary, secondary and tertiary care for children, in addition to the open heart surgery services it provides adults. Its cardiac surgery program was grandfathered under CON law to begin children's cardiac surgery in 1975. At the time of the grandfathering, All Children's was asked by state officials to consider adult cardiac surgery services as well. The hospital trustees and medical staff agreed and began a combined pediatric/adult open heart surgery program in 1976. As explained, above, the adult program is shared with Bayfront. All Children's Hospital is not a party to this proceeding. Largo Medical Center, Inc.'s facility, Largo Medical Center is a 256- bed, acute-care hospital specializing in cardiology and open heart surgery. Largo, the other intervenor in the proceeding, is located in AHCA's District 5 but outside South Pinellas County, as are two other open heart surgery programs: a program at Morton F. Plant Hospital in Clearwater and a program at HCA Bayonet Point/Hudson Medical Center located in Hudson in Pasco County. Morton F. Plant Hospital and HCA Bayonet Point/Hudson Medical Center are not participants in this proceeding. The Agency for Health Care Administration is the single state agency authorized by Section 408.034(1), Florida Statutes, to issue or deny certificates of need, "written statements ... evidencing community need for a new ... health service [such as an adult inpatient cardiac catheterization program.]" Section 408.032(2), Florida Statutes. Standing of the Intervenors. Over half of Largo's open heart surgery patients originate from St. Anthony's defined service area and 35 percent from South Pinellas County. If St. Anthony's achieves its projected volume, Largo likely will lose 35 percent of its open heart surgery patients in the third year of operation. A loss of that number of patients will contribute to a substantial loss of revenue to Largo. As concerns Bayfront's standing to intervene in this proceeding, St. Anthony's purpose in seeking a CON for an open heart surgery program is to obtain authorization for a program to take the place of the All Children's/Bayfront adult open heart surgery program. As counsel for St. Anthony's made clear in oral representation during hearing, whether made clear from the face of St. Anthony's application or not, the application is a "replacement application for Bayfront/All Children's [open heart surgery program]." (Tr. 208.) Filing of the CON application Under cover of a certification of its authorized agent dated September 17, 1993, St. Anthony's Hospital, Inc., filed an application for Certificate of Need 7418 with the Agency for Health Care Administration. The application seeks expansion of existing cardiology services at St. Anthony's health care facility in Pinellas County to include an on-site program for adult open heart surgery. d . Background This is not the first time St. Anthony's has initiated proceedings to obtain a CON for open heart surgery. It has filed applications before because of its concern that South Pinellas County is not being served appropriately by the adult open heart services program shared by Bayfront Medical Center and All Children's Hospital. In the application in this case, St. Anthony's describes its previous attempts in this way: ... St. Anthony's has on eight occasions, since 1987, applied for a Certificate of Need to provide open heart surgery services. Each application has either been denied, or was withdrawn by St. Anthony's based on represent- ations St. Anthony's received that All Children's/Bayfront shared program was adequate and appropriate to meet the needs of south Pinellas adult open heart patients. St. Anthony's has historically deferred to All Children's so as not to unnecessarily duplicate services. St. Anthony's Ex. 1, p 27. In CON application 7396, filed July 14, 1993, All Children's Hospital requested AHCA to allow the hospital "to discontinue services to the adult cardiac surgery population effective June 30, 1994 ...". St. Anthony's Ex. No. 20, attachment at p.7. The reason for the request was that All Children's had experienced and projected to continue to experience growth in its pediatric surgery caseload. Since "All Children's mission and legal responsibility lies with Florida's children ... the [hospital's] obvious difficulty ... [was] how to continue dealing with a growing pediatric patient load with decreasing availability of facilities." Id. At the same time, although not increasing as rapidly as children's surgery, the growth of the caseload for adult open heart surgery, as of the summer of 1993, was continuing in St. Petersburg. As a licensed pediatric hospital, All Children's opined in CON Application 7396, [W]e are unable to expand the adult program in even a moderate fashion and are unable to provide the true continuum of adult cardiac care that adult cardiologists and surgeons believe to be needed in the community. Only an adult licensed hospital can provide those services and allow for future growth. Id., at 8. With regard to the growing pediatric patient load threatened by decreasing availability of facilities, the application projected, "a true crisis within one year in the surgery, SICU area if adjustments are not made to alleviate the situation." Id. The crisis, however, did not materialize. As of June 20, 1994, nearly one year after the filing of the withdrawal application, the President and Chief Executive Officer of All Children's Hospital was of the opinion that there was not a crisis in the care of pediatric patients. Nor was there a crisis in the care of adult open heart surgery patients. In fact, adult open heart surgery patients were receiving very high quality care within one year of the projection of crisis made in the application. The application to terminate the open heart surgery program was withdrawn prior to June 20, 1994. All Children's withdrew the application in response to wishes expressed in the community that the program be continued. Nonetheless, St. Anthony's viewed the representations made by All Children's in CON application 7396 to "impeach any continued suggestion by All Children's or Bayfront that the existing shared services agreement is a normal or appropriate setting for adult open heart services." St. Anthony's Ex. No. 1, pg. 27. It filed, therefore, the application that initiated this proceeding. Transfer Stress and Limitations of the All Chidren's/Bayfront OHS program. After pre-operative care at Bayfront, adult open heart surgery patients are transferred through an enclosed corridor connecting Bayfront to All Children's. The same corridor is used to transfer the patients back to Bayfront for appropriate post- operative care following the surgery and intensive care at All Children's. Patients typically suffer stress when being transferred from one institution to another. They certainly suffer "transfer stress" when being transferred from St. Anthony's to Bayfront for open heart surgery in the All Children's/Bayfront program, just as they would suffer stress in transfers from Bayfront to St. Anthony's were St. Anthony's application to be granted and were the St. Anthony program to take the place of the All Children's/Bayfront program. Typical transfer time, however, between Bayfront and All Children's is only about five minutes. Most patients do not realize they are going from one institution to another. Although the arrangement is less than ideal, it is doubtful that open heart surgery patients suffer stress due to the transfers from Bayfront to All Children's and back again. There are, however, some drawbacks with regard to angioplasty patients in the All Children's adult program. Ambulation of angioplasty patients cannot be appropriately observed postoperatively at All Children's because there are not telemetry facilities available at All Children's for observation. There are such facilities at Bayfront and the patients may be observed there post- operatively once out of the intensive care unit at All Children's. Carlos M. Estevez, M.D., is a cardiologist with St. Petersburg Medical Clinic with active privileges at St. Anthony's, Bayfront, All Children's and Edward White Hospital. Beds have been unavailable postoperatively for adult therapeutic anigoplasty patients of his on occasion at All Children's. The patients have been required to be transferred to Bayfront or back to St. Anthony's, with French sheaths in their groin, a less- than-ideal situation. Dr. Estevez' therapeutic anigoplasty patients requiring open heart backup at All Children's are typically discharged from All Children's after spending the night in the intensive care unit. For the average angioplasty patient, intensive care services are an overutilization of services. Dr. Estevez believes "crisis" would be a fair term to describe the current situation for his angioplasty patients in the All Children's/Bayfront program. Not Normal Circumstances Part of CON review is to look for factors the application shows to be "beyond the norm," or "any unusual circumstances." AHCA's interrogatory answer responded with regard to defining "not normal circumstances," in this way: There is no definition for "not normal circum- stances." In the absense (sic) of a projected numeric need pursuant to a fixed pool publication, an applicant may demonstrate valid need, justi- fiable evidence of situations or occurrences in a service area which are not accounted for such as access problems, which may support approval. St. Anthony's Ex. 7, p. 9. Circumstances of the All Children's/Bayfront Program. As a dedicated Class II pediatric specialty hospital, All Children's, alone, cannot provide the continuum of care needed by adult open heart surgery patients. Its provision of services, as stated above, is limited to surgery and postoperative intensive care. Other services in the continuum of care required by adult open heart surgery patients include admission to an emergency room, and pre-operative coronary care as well as post-operative care (other than intensive care) all the way through cardiac rehabilitation. The components of the continuum other than the actual surgery and post-op intensive care are provided by Bayfront and other hospitals. Despite All Children's inability to provide "continuum of care," by itself, to adult open heart surgery patients, the care provided the open heart surgery patient in the All Children's/Bayfront program is of high quality. All Children's physical site is limited for future growth both as to the adult open heart program and its pediatric programs. The physical outer limits of the hospital building are right on the property line, "all the way around. It has no room to expand." St. Anthony's Ex. No. 20. But for physical limitations, All Children's pediatric services would expand because the need for expansion in the pediatric program exists. The inability of the pediatric programs to expand compromises All Children's mission: pediatric care in a hospital dedicated to pediatrics. The adult open heart surgery program, if withdrawn, would free All Children's somewhat for further pediatric program growth both as to resources and space. But All Children's is no longer trying to withdraw from the program. All Children's board of trustees believes that only an adult licensed hospital can provide the continuum of care needed for adult open heart surgery patients and allow for future growth. Moreover, it is not possible to put together a competitive adult open heart pricing structure for the continuum of care that one hospital could provide when adult open heart surgery patients are being transferred from All Children's to and from other hospitals in order to provide the full continuum of care. AHCA's Response to the Application. AHCA's response to the application was denial based on a determination of no need to support the application. After review, AHCA determined that the application did not demonstrate that St. Anthony's could support sufficient volume even were the All Children's/Bayfront program to become non-operational. There was, however, an even more fundamental objection to granting the application on the part of the agency. As Elizabeth Dudek, Chief of the Certificate of Need and Budget Review sections of the agency, explained with regard to St. Anthony's premise that the application seeks to have its program "replace" the All Children's/Bayfront adult open heart surgery program, I don't understand that premise. I don't understand it because, one, the All Children's/ Bayfront program is still operational. There is no indication that the All Children's/Bayfront program has somehow indicated that it would relinquish its program volume to St. Anthony's. dditionally, ... by law they wouldn't be able to [accomplish a transfer] through the CON program, you can't transfer [or replace] a program ... Tr. 1534, ll. 2-12. Need. For those in need of open heart surgery services in South Pinellas County, there is another facility in South Pinellas County at which the services can be obtained: Northside. As for all of AHCA District 5, there are other facilities at which open heart surgery services are available. There is no evidence, despite the inability of the All Children's/Bayfront adult program to expand, that the needs of those requiring high quality open heart surgery services in South Pinellas County or AHCA District 5 are going unmet.
The Issue Whether there is a need for a new Pediatric Heart Transplant (PHT) program in Organ Transplant Service Area (OTSA) 3, and, if so, whether Certificate of Need (CON) Application No. 10518, filed by Orlando Health, Inc., d/b/a Arnold Palmer Medical Center (APMC), to establish a PHT program, satisfies the applicable statutory and rule review criteria for award of a CON to establish a PHT program at the Arnold Palmer Hospital for Children (APH).
Findings Of Fact Based upon the credibility of the witnesses and evidence presented at the final hearing and on the entire record of this proceeding, the following Findings of Fact are made: The Parties Orlando Health, Inc., d/b/a Arnold Palmer Medical Center OH was originally formed by two community physicians 100 years ago as a 20-bed hospital in downtown Orlando. Today, OH is a large not-for-profit healthcare system with more than 3,300 beds serving Central Florida and beyond. Comprised of nine wholly-owned or affiliated hospitals and rehabilitation centers, OH serves as the region’s only Level One Trauma Center and Pediatric Trauma Center, and is a statutory teaching hospital system offering graduate medical education and clinical research in both specialty and community hospitals. OH has been actively involved in clinical research since the beginning of its graduate medical education and residency programs in the 1950s. OH’s primary service area includes approximately 2.2 million people, with a greater service area of Central Florida, which encompasses more than three million people today and is rapidly growing. OH experiences about 100,000 inpatient admissions and 1.5 million ambulatory visits each year. OH has 24,000 employees, including 2,000 physicians and 8,000 nurses. OH has long been recognized as the safety net provider for the Central Florida region. APMC is comprised of two hospitals, APH and Winnie Palmer Hospital for Women and Babies (WPH). APMC was founded on the premise that the close integration of specialty inpatient pediatrics and obstetrics services improves quality and outcomes. APMC is the single largest acute care facility in the nation dedicated to women and children. APH has achieved national ranking as a Top 50 Children’s Hospital by U.S. News and World Report, based on quality data metrics that focus on process, structure, and outcomes, for the past eight consecutive years for key programs, including pediatric cardiology. Since 2015, APH has been the only pediatric hospital in Florida to receive the Top Hospital award from Leapfrog, an achievement based on evaluation of numerous quality metrics, including outcomes data over time. APH has been a Magnet-designated facility since 2013. APH’s primary service area covers 25 counties. APH’s pediatric trauma center and dedicated pediatric emergency department receive approximately 55,000 visits per year. The Heart Center at APH (the Heart Center) is nationally ranked among the top pediatric cardiac programs in the country for its outcomes in complex congenital heart surgery. Dr. William DeCampli, APH’s chief of Pediatric Cardiac Surgery, and Dr. David Nykanen, APH’s chief of Cardiology, serve as the medical directors of the Heart Center. Dr. DeCampli and Dr. Nykanen will continue to serve as the medical directors of the Heart Center following implementation of APH’s proposed PHT program. The Heart Center is on the third floor of APH in the “corner pocket” of the hospital. It is intentionally designed so that the pediatric cardiovascular intensive care unit (CVICU), cardiovascular operating suite, and cardiac catheterization suite are in close proximity to each other, to promote the integration of care between the units and to ensure the safe transition of pediatric patients. APH’s 20-bed CVICU is more advanced than the intensive care units of most pediatric cardiac programs across the country. APH established a freestanding dedicated CVICU in January 2005, and was one of the first in the nation to do so. APH CVICU clinical staff are dedicated to the CVICU and specifically trained to care for the special needs of pediatric cardiac patients. Unlike many other pediatric cardiac programs in the country, APH’s CVICU has 24/7/365 attending physician in- house coverage which leads to better access for patients and better outcomes. APH’s commitment to this continuous on-site physician presence reflects a standard that all pediatric cardiac programs aspire to, but few have achieved. APH has three employed pediatric cardiac anesthesiologists providing 24/7/365 in-house coverage, rare among pediatric cardiac programs. The specialty of pediatric cardiac anesthesia is distinct from the specialty of general pediatric anesthesia. Pediatric cardiac anesthesiologists specialize in the complex defects and anatomy of the cardiovascular system in patients with congenital heart disease (CHD) for whom anesthesia and sedation poses heightened risk. Pediatric cardiac anesthesiologists provide anesthesia for cardiac procedures as well as for any non-cardiac procedures the CHD patient may require. APH is the highest ranked program in Florida in outcomes for the most complex category of congenital heart surgery. In 2007, the Heart Center’s surgical team published more than three times the number of investigational papers than the state’s leading academic pediatric cardiac surgery program. Nationally, APH has the highest neonate population with the lowest mortality rate. APH has a state-of-the-art echocardiography (echo) program with the entire infrastructure necessary for PHT. Echo is essential at every stage of diagnosing, treating, and evaluating the response to therapies and interventions in pediatric cardiac care, including PHT. Dr. Riddle, an echocardiologist at APH, has extensive experience in diagnosing and evaluating complex congenital heart anomalies, including patients requiring PHT. APH’s echo program is comprised of multiple components: the facility, the equipment, the physicians, the sonographers, the protocols, and the quality. APH’s echo lab is the “mission control center” for the program, with four large screens that enable clinicians to watch and discuss echos as they are being performed, and to review echos in meticulous detail, sometimes spending hours looking at complex echos. APH’s culture is the tremendous differentiator among pediatric cardiac programs. APH’s goal is to know every aspect of a patient’s care and anatomy, and APH clinicians, with the full support of administration, spend significant time doing that. All APH sonographers are certified and APH has weekly didactic sessions for sonographers, along with quality improvement and quality review sessions. All APH echo readers are dedicated echo physicians, with extensive training, who also are involved in constant didactic lectures and immersion in quality improvement measures. APH’s director of echo, Dr. Craig Fleishman, is nationally recognized and serves as the chair of the Scientific Sessions of the American Society of Echocardiography, the national governing and education body for echo. APH is the only pediatric heart program in Central Florida to achieve accreditation from the American Society of Echocardiography in transthoracic, transesophageal, and fetal echo. APH is highly skilled at diagnosing complex congenital heart anomalies, including those in fetuses when the patient’s heart may be no larger than a grape. APH’s echo surgical correlations, in which the echo gradients are compared to actual measurements during surgery, are “phenomenal.” Similar correlations occur in coordination with the APH cardiac catheterization lab. APH has used printed 3D heart modeling, but printed 3D modeling includes only data obtained from a computerized tomography (CT) scan or magnetic resonance imaging (MRI) , and does not show all of the finer complex structures of the heart and valves; thus, it has limited utility in evaluating treatment options for complex CHD. However, APH is implementing a virtual reality 3D modeling system that combines data from echo, CT, and MRI data, and even surgical images, to create a complete virtual 3D model of the heart that includes the fine details, including valve attachments. Unlike a printed 3D model, which once cut open, no longer represents the heart and cannot be put back together for further evaluation, virtual 3D modeling enables clinicians to evaluate multiple potential interventions and observe responses and to repeat as many times as may be necessary, using the same model. APMC has a large maternal fetal medicine program staffed by seven employed perinatologists specializing in high- risk pregnancies. The program is expected to have 10 employed perinatologists by the end of 2018. Agency for Health Care Administration AHCA is the state health-planning agency charged with administration of the CON program as set forth in sections 408.31-408.0455, Florida Statutes. Context of the Arnold Palmer Application Approximately one in 100 babies are born with CHD. The majority of these disorders can be treated, at least initially, with reconstructive surgery. The earlier a congenital heart defect can be repaired, the better the chances the patient has to not only survive but to grow normally in infancy and thrive. However, some children with CHD have a severity level such that current methods of reconstructive surgery are not adequate to produce what might be called a cure. Treatment of such cases is called “palliation.” As a result of medical and surgical advances in palliation, children are now surviving complex CHD in numbers that previously were not thought possible. However, in the most severe cases, the palliation is fairly short-term. Many children who receive palliative surgery ultimately will progress to end-stage heart failure despite having had multiple operations and extensive medical management, as their heart will eventually begin to have decreased function due to the underlying anomaly. Prior to the advances in palliative care, many children born with complex CHD simply did not survive long enough to receive a PHT. Today, the number of children who face heart failure later in life, rather than earlier, is increasing. Successful palliation has resulted in significantly more CHD patients requiring PHT at age 10, 15, or 20, rather than as infants or young children. Another category of children requiring PHT are those who do not have CHD, but who have an acquired problem known as cardiomyopathy. Children with cardiomyopathy may present in heart failure at any time and at any age, having gone from a state of completely normal function--exercising, growing, doing well in school--to within two or three days having end stage heart failure. About half of these children recover with medication and intensive care--which APH does extremely well on a regular basis. But those who do not recover will require a PHT. Patients with CHD tend to be more medically and surgically complex and higher risk than patients with cardiomyopathy with respect to PHT. On a percentage basis, and because of advancements in palliation, there are more CHD patients and fewer cardiomyopathies in the teenage cohort requiring PHT today than there were 10 years ago. Pursuant to Florida Administrative Code Rule 59C- 1.044, AHCA requires applicants to obtain separate CONs for the establishment of each adult or pediatric organ transplantation program, including: heart, kidney, liver, bone marrow, lung, lung and heart, pancreas and islet cells, and intestine transplantations. “Transplantation” is “the surgical grafting or implanting in its entirety or in part one or more tissues or organs taken from another person.” Fla. Admin. Code R. 59A- 3.065. Heart transplantation is defined by rule 59C-1.002(41) as a “tertiary health service,” meaning “a health service which, due to its high level of intensity, complexity, specialized or limited applicability, and cost, should be limited to, and concentrated in, a limited number of hospitals to ensure the quality, availability, and cost effectiveness of such service.” AHCA rules define a “pediatric patient” as “a patient under the age of 15 years.” Fla. Admin. Code R. 59C- 1.044(2)(c). AHCA rules divide Florida into four OTSAs, corresponding generally with the northern, western central, eastern central, and southern regions of the state. Fla. Admin. Code R. 59C-1.044(2)(f). If approved, the proposed program at issue in this proceeding would be located in OTSA 3, which is comprised of Brevard, Indian River, Lake, Martin, Okeechobee, Orange, Osceola, Seminole, and Volusia Counties. Currently, there are no providers of PHT in OSTA 3. However, that does not mean that OTSA 3 residents lack access to these transplant services. In fact, the unrefuted evidence demonstrated that pediatric residents of OTSA 3 have received transplants at Shands, by way of example. At hearing, APMC agreed that OTSA 3 residents are accessing these services at existing providers in Florida, with APH referring a few of these patients on average to Shands every year for these services. The incidence of PHT in Florida, as compared to other types of solid organ transplants, is relatively small. The chart below sets forth the number of pediatric (aged 0-14) heart transplant discharges by year for the four existing Florida PHT programs during the reporting period from June 30, 2013, to June 30, 2017: HOSPITAL HEART TRANSPLANT FY 12/13 FY 13/14 FY 14/15 FY 15/16 FY 16/17 UF Health Shands Hospital 13 4 17 12 9 John Hopkins All Children’s Hospital 6 13 10 9 7 Memorial Regional Hospital 5 3 4 11 4 Jackson Memorial Hospital 1 2 1 3 1 TOTAL 25 22 32 35 21 The above historic data demonstrates that the incidence of PHT statewide is relatively rare and does fluctuate from program to program and from year to year. As seen above, only 21 PHTs were performed statewide during the 12-month period July 1, 2016, to June 30, 2017, for an average program volume of only 5.25 cases for the four existing programs. There are four existing and one CON-approved PHT programs in Florida. This is more than every state in the country except California, which also has five programs but more than double the pediatric population of Florida. And three of the California programs have a volume of five per year or less. Texas, another geographically large state with over 1.4 million more children than Florida, has only two centers. The number of PHTs is also impacted by a national shortage in donor hearts. Unfortunately, there are not enough donor hearts to meet the demand for pediatric heart patients in the United States. While the total number of PHTs in the United States increased between 2012 and 2015, it has more recently declined from 2015 to 2017. Based on population, the number of PHTs in Florida is higher than the national average. Thus, while fortunately its incidence is rare, Florida residents in need of PHT are currently able to access this life-saving procedure. Arnold Palmer’s “Readiness” to Implement a PHT Program APH has over 14 years of experience performing complex congenital heart surgery and has met the majority of the demand for complex pediatric cardiac surgery in Central Florida for the past 25 years. In that time, APH has performed thousands of heart operations and achieved extraordinary outcomes, which are most dramatically apparent in the highest acuity levels. APH is the largest pediatric cardiac surgical program in Central Florida. Because WPH and APH are regional centers of excellence for neonatal and pediatric cardiac care, APH has a large proportion of complex, single-ventricle patients in its existing pediatric cardiac program. In turn, approximately 70 percent of the patients who ultimately require PHT have complex, single-ventricle physiologies. In addition, APH is a regional referral center for patients presenting with cardiomyopathies that may require PHT services. APH voluntarily participates in the Society for Thoracic Surgeons (STS) National Congenital Heart Surgery Database (the “STS database”). The STS is the official organ for the collegial development of the field of thoracic and cardiac surgery, both adult and pediatric. There are over 75,000 physician and institutional members of the STS. The STS maintains the largest worldwide data collection of multiple variables and data points pertaining to every cardiac surgery performed by its members. The data is rigorously analyzed to measure the actual and risk-adjusted expected performance and quality of each member facility, and to support quality improvement projects, as well as original research in the field. The STS is a national organization, and its publishing arm, the Annals of Thoracic Surgery, is one of the top-ranked journals in the world. Once a year, the STS updates a running, four-year cumulative tally of outcomes for each participating institution in the country and publishes a one-page report summarizing the facility’s performance.1/ The STS stratifies cardiac surgical cases by “STAT” level, which is a measure of acuity, complexity and risk.2/ STAT 1 is the simplest kind of congenital heart defect that generally requires a straightforward surgical repair, while STAT 5 reflects complex, high-acuity, and high- risk conditions and surgeries. The STS public report contains four columns. The first lists the STAT levels. The second column lists the facility’s number of deaths divided by the number of patients operated on at that facility within the given STAT category. The third column, “Expected” reflects the STS’ expectation of mortality within the reporting institution’s program based on the relative acuity of the cases performed at that institution and if the reporting hospital performs consistent with the national average for that STAT level. The data in the third column reflects the very high acuity level of APH’s CHD patient population, i.e., the risk factors for the patient not surviving their congenital heart defect and surgery. The fourth column, “Observed/Expected” (the “O/E ratio”), divides the program’s actual mortality by its expected mortality. The O/E ratio is widely accepted as the standard metric for evaluating performance in pediatric cardiac programs because in contrast to reporting raw mortality, the STS O/E ratio is risk-adjusted using multivariable regression models which enable the STS to risk adjust each institution’s mortality and compare it against the national norm; i.e., to produce a model containing every case that every program did within the four-year time period measured. An O/E ratio of less than one means the facility is doing better than the overall STS database. For STAT 2 cases, APH’s O/E ratio is 0.58, meaning that APH has achieved close to one-half the mortality that STS expects APH to have for APH’s STAT 2 cases. Even more impressive, however, is APH’s STAT 5 O/E ratio of 0.24. The analysis conducted by the STS shows that, statistically speaking, a patient in the highest risk STAT 5 category has a four-fold less risk of dying after an operation at APH than at an average pediatric cardiac surgery program in the country. APH has consistently achieved outstanding outcomes in its pediatric cardiac program, on a national basis, for more than a decade. AHCA has recognized APH as first in the state for overall pediatric heart surgery mortality. Mechanical cardiopulmonary support or cardiac extracorporeal membrane oxygenation (ECMO) (referred to as “CPS” within the APH pediatric cardiac program) is a very short-term method of sustaining life when a patient has rapid onset end- stage heart failure.3/ To place a patient on CPS, the cardiac surgeon makes an incision in the base of the neck to expose the main artery to the brain and the main vein draining from the brain. The vessels are controlled by the surgeon and opened, and cannulas are inserted into the vessels and advanced into the heart, or if the chest is open, may be placed directly into the heart, then sutured into place and connected to a heart-lung machine. Often the procedure is done while a baby is sustaining a cardiac arrest. CPS is not the preferred intervention for patients in heart failure who require PHT. Complications from CPS develop exponentially with each 24 hours on the circuit. Thus, CPS can be a contraindication for PHT. Complications from CPS include bleeding from fresh suture lines in the heart, arteries, pericardium, or chest wall; bleeding in the brain, or at IV line locations; and clotting caused by the CPS lines, which can be devastating if the clot travels to the brain, kidneys, bowel, or heart. There also is significant risk in moving a patient on CPS. Particularly in neonates, the movement of a cannula by even a few millimeters can obstruct circulation, or cause thrombus or ventilator issues. CPS thus is not a sustainable method for bridging a patient to PHT, when the majority of patients face long periods on a waitlist. The proper method for bridging to PHT is the use of ventricular assist device (VAD) therapy, relatively recently approved for use in pediatric patients. A VAD is a device that does not mechanically process or oxygenate the blood, and does not require transfusion, and, thus, provides far more stable and longer-term maintenance of life while a patient waits for PHT. In contrast to CPS, which cannot safely be used more than a few days to, at most, two weeks, a heart failure patient may safely remain on a VAD for months in the hospital while they await a donor heart. The ability to implement VAD therapy enhances quality of care for patients and increases a patient’s eligibility for PHT. Currently, the standard of care is that hospitals that do not provide PHT should not provide VAD therapy. Consequently, patients at APH with rapid onset heart failure do not have access to VAD therapy and must be placed on CPS. There is no question that OH has built a mature, high quality pediatric cardiac program at APH over the past 14 years. The organization has the demonstrated experience and success in complex reconstructive heart surgery and medical management of patients with heart disease. With the additional staffing described below, APH would be able to successfully implement a PHT program, assuming need for such a program is demonstrated. The Arnold Palmer Application APMC is proposing to establish a PHT program in Orlando, which is located in OTSA 3. The application was conditioned on APMC promoting and fostering outreach activities for pediatric cardiology services, which will include the provision of pediatric general cardiology outpatient services at satellite locations within OTSA 3. This condition is not intended to include any outreach activities beyond establishing outpatient clinics in OTSA 3. There is currently no PHT provider in OTSA 3. There are, however, three providers of pediatric open-heart surgery and pediatric cardiac catheterization within the OTSA. APMC proposes that Dr. William DeCampli and Dr. David Nykanen, who currently staff its pediatric cardiac program, would also staff the proposed transplant program. However, neither has worked in a transplant program in over 14 years. APMC acknowledges its need to recruit additional nurses to staff the program. It also concedes that it might recruit nurses without transplant experience, who may need to obtain necessary training at a different facility. Additionally, APMC has not yet recruited a physician specializing in pediatric heart failure, which the applicant agrees is necessary to implement the program. At hearing, much of APMC’s case focused on its readiness and desire to offer a full spectrum of services to cardiac patients at its hospital. This is reflected in the testimony of Sharon Mawa, a nurse operations manager in APMC’s CVICU: And I feel Arnold Palmer is ready. We—it’s all encompassed. When you have a heart program, you—you want to do it all . . . . And the only piece that we are unable to provide, that we’re—that we haven’t been ready for, and I feel like we’re ready for now, is heart transplant. And I think to do a heart program well, you should be able to do all of it for that patient. However, as detailed further below, such arguments do not demonstrate community need for the proposed service, but instead represent an institutional desire to expand the facility’s service lines. A public hearing was held in Orlando on January 8, 2018, pertaining to APMC’s PHT application. APMC participated in support of the application at this hearing. About one year earlier, on January 10, 2017, a public hearing was held in Orlando pertaining to a CON application to establish a PHT program submitted by Nemours Children’s Hospital (Nemours), which is also located in Orlando. OH/APMC participated at that hearing in opposition to the Nemours application. OH/APMC submitted written opposition to the Nemours PHT program at that time, urging the Agency to deny Nemours’ proposal. OH/APMC’s 2017 opposition to the Nemours PHT application included argument related to access and need for the service in OTSA 3. OH/APMC’s written opposition to the proposed Nemours program included letters of opposition authored by Dr. DeCampli and Dr. Nykanen. In urging the denial of the Nemours’ PHT application, Dr. Nykanen told AHCA: For the past 14 years at Arnold Palmer Hospital for Children we have referred our patients requiring advanced heart failure management, including cardiac transplantation, predominantly to Shands Children’s Hospital. We have been the largest referral source of these patients in the region over the past decade. Many of our patients have had the opportunity to be evaluated as outpatients, which is always preferable. The management of this patient population is medically intense but surgery is rarely an emergency. The geographic proximity of Gainesville to our region is not a significant barrier with respect to transport from one facility to the other. The availability of organs for transplantation mandates the time from assessment to surgery which is measured in weeks to months. The Shands team has been readily accessible to us day or night and I am aware of no financial or programmatic barriers to providing this specialized care to our patients. We have been pleased with the outcomes achieved. (emphasis added). In December 2017, several months after opposing Nemours’ PHT proposal, APMC submitted its own PHT application to AHCA. UF Health Shands UF Health-Shands Hospital (Shands), as an existing provider of PHT in OTSA 1, participated extensively in this proceeding notwithstanding its acknowledged lack of standing to formally intervene.4/ Shands is located in Gainesville, Florida and is the sole provider of PHT in OTSA 1. OTSA 1 extends from Pensacola to Jacksonville, south to Gainesville and west to Hernando County. AHCA called numerous witnesses affiliated with Shands in its case-in-chief. The scope of the testimony presented by Shands-affiliated witnesses was circumscribed by Order dated June 18, 2018 (ruling on APMC’s motion in limine), that: At hearing, the Agency may present evidence that the needs of patients within OTSA 3 are being adequately served by providers located outside of OTSA 3, but may not present evidence regarding adverse impact on providers located outside of OTSA 3. Baycare of Se. Pasco, Inc. v. Ag. for Health Care Admin., Case No. 07-3482CON (Fla. DOAH Oct. 28, 2008; Fla. AHCA Jan. 7, 2009). Shands is located in Gainesville, Florida. Shands Children’s Hospital (SCH) is an embedded hospital within a larger academic health center. SCH has 202 beds and is held out to the public as a children’s hospital. SCH occupies multiple floors of the building in which it is located, and the children’s services are separated from the adult services. SCH has its own separate entrance and emergency department. SCH is nationally recognized by the U.S. News and World Report as one of the nation’s best children’s hospitals. SCH has its own leadership, including Dr. Shelley Collins, an associate professor of Pediatrics and the associate chief medical officer of SCH who was called as a witness by the Agency. As a comprehensive teaching and research institution, SCH has between 140 to 150 pediatric specialists who are credentialed. It has every pediatric subspecialty that exists and is also a pediatric trauma center. In the area of academics and training, SCH has over 180 faculty members and approximately 50 residents, and 25 to 30 fellows in addition to medical students. SCH has 72 Level II and III Neonatal Intensive Care Unit (NICU) beds. It also has a dedicated 24-bed pediatric intensive care unit, as well as a dedicated 23-bed pediatric cardiac intensive care unit, both of which are staffed 24/7 by pediatric intensive care physicians, pediatric intensive care nurses, and respiratory therapists. As a tertiary teaching hospital located in Gainesville, Shands is accustomed to caring for the needs of patients and families that come from other parts of the state or beyond. Jean Osbrach, a social work manager at Shands, testified for the Agency. Ms. Osbrach oversees the transplant social workers that provide services to the families of patients at SCH. Ms. Osbrach described how the transplant social workers interact with the families facing transplant from the outset of their connection with Shands. They help the families adjust to the child’s illness and deal with the crisis; they provide concrete services; and help the families by serving as navigators through the system. These social workers are part of the multi-disciplinary team of care, and they stay involved with these families for years. Shands is adept at helping families with the issues associated with receiving care away from their home cities. Shands has relationships with organizations that can help families that need financial support for items such as lodging, transportation, and gas. Shands has 20 to 25 apartments in close proximity to the hospital that are specifically available for families of transplant patients. Shands also coordinates with the nearby Ronald McDonald House to secure lodging for the families of out-of-town patients. Ms. Osbrach’s ability to empathize with these families is further amplified because her own daughter was seriously ill when she was younger. As Ms. Osbrach testified, while she was living in Gainesville, she searched out the best option for her child and decided that that was actually in Orlando. She did not hesitate to make those trips in order to get the highest level of care and expertise her child needed at that time. SCH accepts all patients, including pediatric heart transplant patients, regardless of their financial status or ability to pay. At final hearing, both Ms. Osbrach and Dr. Pietra testified at length about the different funding sources and other resources and assistance that are available to families from lower social economic circumstances that have a child who may need a transplant. SCH is affiliated with the Children’s Hospital Association, the Children’s Miracle Network, the March of Dimes, and the Ronald McDonald House Charities. Both Shands and APMC witnesses agreed that the quality of care rendered by SCH is excellent. ShandsCair Shands operates ShandsCair, a comprehensive emergency transport system. ShandsCair operates nine ground ambulances of different sizes, five helicopters, and one fixed wing jet aircraft. It owns all of the helicopters and ambulances so it never has to wait on a third-party vendor. ShandsCair performs approximately 7,000 ground and air transports a year. ShandsCair selects the “best of the best” to serve on its flight teams. ShandsCair has been a leader in innovation, implementing a number of state-of-the-art therapies during transport, such as inhaled nitrous oxide and hypothermic for neonates that are at high risk for brain injury. ShandsCair is one of just three programs in the country that owns an EC-155 helicopter, which is the largest helicopter used as an air ambulance. This helicopter is quite large, fast, and has a range of approximately 530 miles one way. This makes it easier to transport patients that require a significant amount of equipment, including those on ECMO. The EC-155 has room for multiple patients and the ability to transport patients on ventricular assist devices, ventilators, and other larger medical equipment. The Orlando area is well within the operational range of both ShandsCair’s ground and air transport assets. Transporting Pediatric Patients on ECMO In its CON application, one of the reasons APMC contended that its application should be approved is that it is too dangerous to transport patients on ECMO. Timothy Bantle, a certified respiratory therapist and the manager of the ECMO program at Shands, was called as a witness by the Agency. The ECMO program at Shands was established in 1991, and Shands has supported over 500 patients on ECMO. When Mr. Bantle began working in the Shands ECMO program in 2008, all ECMO patients at Shands were supported by an ECMO machine that utilized a roller head pump. In addition to the machine’s bulky size and weight, there was an inherent risk of the occlusion pressure causing a rupture. In 2014, Shands began using a newer, much smaller CARDIOHELP ECMO machine. In addition to weighing at most 20 pounds, the CARDIOHELP ECMO machine utilizes a centrifugal pump, instead of a roller head pump, which eliminates the risk of circuit ruptures. The technology in the CARDIOHELP ECMO machines is outstanding, and it is much easier to manage patients on the newer machines than the older machines. Shands now has nine of the newer and far more compact CARDIOHELP ECMO machines. Shands uses the CARDIOHELP ECMO machine for both veno-arterial (VA) and veno-venous (VV) ECMO and for every patient population, including infants. In the current fiscal year, Shands has had 67 patients on the CARDIOHELP ECMO machine. Shands has safely transported both adult and pediatric patients on ECMO. When transporting a patient on ECMO, the transport team includes a physician, an ECMO primer, a nurse, and a respiratory therapist. In addition to being highly trained, the transport team discusses the specifics of each patient en route, including discussing the situation with the referring doctor so they arrive fully prepared. Mr. Bantle persuasively testified that a properly trained team, using the newer CARDIOHELP ECMO machine, can transport these patients safely. ShandsCair has safely transported numerous pediatric patients on VA- and VV-ECMO by both ground and air, including pediatric heart transplant candidates. The newer CARDIOHELP ECMO equipment makes transport of ECMO patients much easier. ShandsCair has flown simultaneous, same day ECMO transports to the Grand Cayman Islands and to Miami. Transporting ECMO patients on the CARDIOHELP ECMO machine has become so routine that Dr. Weiss does not go on those flights. ShandsCair has also safely transported small infants on VA-ECMO, including a three-kilogram infant who was recently transported from Nemours on VA-ECMO, and after arrival at Shands was transitioned to a VAD and is now awaiting a heart transplant. The testimony of Dr. Weiss and Mr. Bantle regarding Shands’ ability to safely transport pediatric patients on ECMO was substantiated by the testimony of Drs. Fricker, Pietra, and Collins. The overwhelming evidence established that ShandsCair can safely transfer pediatric patients, including infants, on ECMO by both ground and by air. Shands’ Pediatric Heart Program The congenital heart program at Shands includes two pediatric heart surgeons, and a number of pediatric cardiologists, including Dr. Jay Fricker and Dr. Bill Pietra, both of whom testified for the Agency. Dr. Fricker did much of his early work and training at the Children’s Hospital of Pittsburgh, and came to the University of Florida in 1995. He is a professor and chief of the Division of Cardiology in the Department of Pediatrics. He is also the Gerold L. Schiebler Eminent Scholar Chair in Pediatric Cardiology at UF. He has been involved in the care of pediatric heart transplant patients his entire career. Dr. Bill Pietra received his medical training in Cincinnati and then went to Denver, specifically to do transplant training under Dr. Mach Boucek, who was one of the pioneers in pediatric infant transplant. He came to the University of Florida and Shands in August 2014, and he is now the medical director for the UF Health Congenital Heart Center. Shands performed its first PHT in 1986. Shands provides transplants to pediatric patients with both complex congenital conditions and cardiomyopathy patients. Shands takes the most difficult PHT cases, including those that other transplant centers will not take. PHT patients are referred to Shands from throughout the state, with many patients coming from central and north Florida. Every patient that is referred for transplant evaluation is seen and evaluated by Shands. While transplantation is not an elective service, it also is very rarely done on an emergent basis. Some conditions are diagnosed well in advance of the need for a transplant. It is not uncommon for a patient to be seen by a Shands physician for a number of years before needing a transplant. Pediatric transplant patients now survive much longer, and frequently well into adulthood. Unlike APH, Shands has the ability to continue to care for those patients as they transition from childhood to becoming adults. The Congenital Heart Center at Shands has a good relationship with APH. Physicians at APH have not only referred patients to Shands for transplant evaluation, they have also specifically recommended Shands to parents of children in need of a heart transplant. Shands operates a transplant clinic at Wolfson Children’s Hospital in Jacksonville. Approximately once a month a Shands transplant physician, a transplant coordinator, and nurses will go to Wolfson to evaluate patients with PHT issues. Wolfson personnel, such as ECHO techs and nurses, are also involved. Before APH filed its CON application, Dr. Pietra twice asked Dr. Nykanen about the possibility of Shands establishing a similar joint clinic at APH. Dr. Nykanen replied by stating he would need to confer with his colleagues, but never otherwise responded to these inquiries. Dr. Pietra testified that he would not be opposed to a joint venture clinic with APMC. Managed care companies are now a significant driver of where patients go for transplantation services. Managed care companies identify “centers of excellence” as their preferred providers for services such as pediatric heart transplantation. Shands is recognized by a majority of the major managed care companies that identify pediatric transplant programs as a center of excellence. In addition, the congenital heart surgery program at Shands has a three-star rating, which is the highest rating possible, and one that only 10 percent of such programs achieve. The quality of care provided by the PHT program at Shands is superb. The most recent Scientific Registry of Transplant Recipients data for Shands, for pediatric transplants performed between February 1, 2014, and December 31, 2016, is excellent. There is no credible evidence of record that any pediatric patient in OTSA 3 was denied access or unable to access an existing transplant program. To the contrary, the evidence established that UF Health Shands and ShandsCair are currently serving the needs of OTSA 3 residents who need a PHT. The APMC CON application was not predicated on any argument that a new program is needed because of poor quality care at any of the existing pediatric transplant programs in Florida. Rather, Dr. Nykanen, the co-director of The Heart Center at APH, testified that Shands provides outstanding medical care, and that he has been “happy with the care” received by the patients he has referred to Shands for PHT. At hearing, APMC witnesses suggested that the Shands program is unduly conservative in accepting donor hearts from beyond 500 miles, and may have some “capacity” issues in its pediatric cardiac intensive care unit (CICU). These statements, made by persons with no first-hand knowledge of the operations of the Shands program, are not persuasive. APMC called Cassandra Smith-Fields as an expert witness. Ms. Smith-Fields is the administrative director for the transplant program and dialysis services at Phoenix Children’s Hospital. Phoenix Children’s Hospital is the only PHT center in Arizona. Notably, two states bordering Arizona, Nevada and New Mexico, do not have PHT centers. Ms. Smith- Fields noted that the volume of transplants at Shands had recently declined from 18 to 11. However, in 2016, by volume, Phoenix Children’s Hospital was the second largest pediatric heart transplant center in the country with 24 transplants, but in 2017, its volume had dropped to 14. Ms. Smith-Fields agreed that “you have to always be careful drawing inferences from numbers that are low in any matter.” Ms. Smith-Fields testified that based upon her review of Scientific Registry of Transplant Recipients data for Shands, Shands did not appear to be aggressive in terms of accepting donor hearts beyond 500 miles. However, that criticism was based upon a one-year period when Shands’ PHT volume was lower than normal, and during which Shands was able to obtain donor hearts from within a 500-mile radius. Stephan Moore, director of the solid organ transplant and VAD programs at Shands, prepared an exhibit, which showed the location (by state and distance) of Shands donor hearts and lungs recovered from March 2, 2014, through March 18, 2018. This exhibit showed numerous trips by Shands beyond 500 miles to retrieve a donor organ, including trips to Texas, New Jersey, Illinois, and Ohio. During this four-year period, 27.6 percent of the organs recovered by Shands came from within Florida, and the remaining 72.3 percent were obtained from out of state. This data not only refutes Ms. Smith-Fields’ testimony on this issue, it also again illustrates why, due to the variability of PHT heart program volumes and availability of donor hearts, one should be extremely cautious in drawing conclusions based upon a single year of data. In addition, Dr. Pietra testified about the complexity of these cases and how an organ that might be acceptable for one patient would not be acceptable for another, for a host of reasons. Consequently, being conservative and cautious in choosing the right heart for each patient are good and important traits for a pediatric heart transplant program, particularly for one that wants the organ to work well for the patient long- term. Dr. Elise Riddle, a cardiologist practicing at APMC, testified that she was aware of instances when there had been a delay in obtaining a bed at Shands for a patient being referred for transplant services. However, Dr. Pietra testified that Shands has never refused a patient because a bed was not available, and that any delay would have been at most a matter of hours. In addition, Dr. Collins, who regularly reviews the throughput numbers of Shands CICU, testified that there was no need to expand the size of the unit. APMC did not question Dr. Collins about the unit’s occupancy rate, nor did it make any attempt to otherwise obtain that information. Dr. Riddle also testified that she had not been informed when a former patient had returned to the Orlando area following a successful PHT at Shands. However, Dr. Pietra testified at length about how Shands coordinates care with the patient’s primary care doctor and referring cardiologist post discharge, and works to develop a team to assist with follow care. Dr. Pietra testified: But we try to, again, develop a team and the team has to include like a local physician and usually a family practice or a pediatrician as the captain. If the patient’s got that, you feel a lot better about having a patient leave the local area and return to their hometown, as you say, so that they can be seen kind of in conjunction or collaboration with us in their hometown. If they have a referring cardiologist, that makes it that much easier sometimes to have a more sophisticated follow up done if needed. But again, the patient belongs to the transplant program in the long run, and so you are going to continue to offer them follow-up care basically for life. Since coming to Shands in August 2014, Dr. Pietra has updated many of the program’s protocols, including the protocols for immunosuppression, frequency of follow-up visits, and what is included in follow-up visits. Dr. Pietra has also initiated more written contracts between a prospective patient’s parents and the program, which make it very clear what the expectations are for the family. Two parents, one of whom lives in Clermont (one hour and 40 minute drive from Gainesville) and one of whom lives in Cocoa Beach (two hours and 35 minute drive from Gainesville) testified that their child had received a PHT at Shands in Gainesville, and that there were no issues with follow-up care for their children post-transplant. Volume/Outcome Relationship in Pediatric Heart Transplantation At the final hearing, experts for both sides agreed that there is a positive relationship between PHT volume and outcomes. In complex, highly specialized areas involving patients with rare diseases or conditions, volume provides experience not only for the surgeons but for the entire team. This is particularly true for pediatric heart transplantation, where higher volume keeps the entire team and ancillary staff functioning at a very high level. Both Dr. Pietra and Ms. Smith-Fields agreed that a minimum of 10 or more PHTs annually is a good standard for maintaining the proficiency of the entire transplant team. In Calendar Year 2017, there were only 32 PHTs in Florida. Both Dr. Pietra and Dr. Fricker testified about how the statewide volume made it very difficult to justify approving a sixth program in the State, and that the proliferation of programs would result in most of the programs not able to achieve the 10 or more transplants per year goal. Indeed, during the 12-month period of July 1, 2016, through June 30, 2017, none of Florida’s four existing PHT programs met the minimum volume standard of 10 PHTs. In addition, PHT programs are measured based on outcomes, and a single fatality in a small program can be devastating to that hospital’s quality metrics. As such, small programs are often less willing to take more complicated patients. Ironically, adding more programs that dilute volumes may decrease rather than increase access because of the fear a small program might have for taking more complex patients. Johns Hopkins All Children’s Hospital Johns Hopkins All Children’s Hospital (JHACH) is located in St. Petersburg, OTSA 2, AHCA District 5. According to reported AHCA data, JHACH performed seven PHTs during the 12 months ending June 2017. Several APMC witnesses made references to possible issues with the PHT program at JHACH based upon newspaper articles they had read. Such articles are hearsay, were not specifically identified or discussed by any witness, and accordingly, cannot form the basis of any finding of fact. Only one of APMC’s witnesses, Dr. Riddle, had any personal knowledge about JHACH, and she has not worked there or been involved in the care of any patients there since February 2016. The only APMC witness who actually looked at any data for JHACH, Ms. Smith-Fields, testified that JHACH had no deaths on its waiting list, that it was aggressive in retrieving donor hearts beyond 500 miles, and that had transplanted two patients during the first four months of this calendar year. When the Centers for Medicare and Medicaid Services (CMS) identifies a program as having deficient outcomes, it will send a peer review team to thoroughly assess the program. If necessary, CMS will enter a systems improvement agreement, which may include the appointment of a quality administrator to help the program improve its operations. There was no evidence presented that CMS had taken any such steps with JHACH. As discussed above, it was uncontroverted that there is a positive correlation between volumes and outcomes, and that a minimum of 10 transplants a year is an important volume threshold in order to maintain a high-quality program. With Florida already having five existing and approved programs, it is currently not possible for all five programs to achieve 10 transplants a year. Approving a new program in the State based upon rumors about the status of an existing program would in all likelihood only reduce the average volume even further below the 10 transplants per year standard, and lead to poorer outcomes. AHCA’s Preliminary Decision Following AHCA’s review of APMC’s application, as well as consideration of comments made at the public hearing held on January 8, 2018, and written statements in support of and in opposition to the proposals, AHCA determined to preliminarily deny CON application 10518. AHCA’s decision was memorialized in a SAAR dated February 16, 2018. Marisol Fitch, supervisor of AHCA’s CON and commercial-managed care unit, testified for AHCA. Ms. Fitch testified that AHCA does not publish a numeric need for transplant programs, as it does for other categories of services and facilities. Rather, the onus is on the applicant to demonstrate need for the program. In addition to need methodologies presented by an applicant, AHCA also looks at availability and accessibility of services in the area to determine whether there is an access problem. Additionally, an applicant may attempt to demonstrate that “not normal” circumstances exist in the proposed service area sufficient to justify approval. Statutory Review Criteria Section 408.035(1), Florida Statutes, establishes the statutory review criteria applicable to CON Application No. 10518. The parties have stipulated that APMC’s CON application satisfies the criteria found in section 408.035(1)(f) and (h). The Agency believes that there is no need for the PHT program that APMC seeks to develop, because the needs of the children in the APMC service area are being met by other providers in the State, principally Shands and JHACH. Section 408.035(1)(a) and (b): The need for the health care facilities and health services being proposed, and the availability, quality of care, accessibility, and extent of utilization of existing health care facilities and health services in the district of the applicant. Florida Administrative Code Rule 59C-1.044(6)(b)5/ The criteria for the evaluation of CON applications, including applications for organ transplantation programs, are set forth at section 408.035 and rule 59C-1.044. However, neither the applicable statutes nor rules have a numeric need methodology that predicts future need for PHT programs. Thus, it is up to the applicant to demonstrate need in accordance with section 408.035 and rule 59C-1.044. There are four OTSAs in Florida, numbered OTSA 1 through OTSA 4. APMC is located in OSTA 3, which includes the following counties: Seminole, Orange, Osceola, Brevard, Indian River, Okeechobee, St. Lucie, Martin, Lake, and Volusia Counties. (See § 408.032(5), Fla. Stat; Fla. Admin. Code R. 59C-1.044(2)(f)3.). OTSA 3 also generally corresponds with the pediatric cardiac catheterization and open heart surgery service areas defined by AHCA rule. (See Fla. Admin. Code R. 59C- 1.032(2)(g) and 59C-1.033(2)(h)). Currently, there is no provider of PHT in OTSA 3, but there are three providers of pediatric cardiac catheterization and pediatric open-heart surgery: APH, Florida Hospital for Children, and Nemours. There are four existing providers and one approved provider of PHT services in Florida: Shands in OTSA 1; JHACH in OTSA 2; Jackson Memorial Hospital in OTSA 4; and Memorial Regional Hospital, d/b/a Joe DiMaggio’s Hospital in OTSA 4; and an approved program in OTSA 4, Nicklaus Children’s Hospital, which received final approval from AHCA in August 2017. APMC’s Need Methodology 1: Ratio of Pediatric Cardiac Surgery Volume to PHT Case Volume To quantify need for a new PHT program in AHCA District 7, OTSA 3, APMC presented two “need methodologies.” According to the applicant, there is an observed correlation between a PHT center’s volume of congenital heart surgery and its PHT case volume. It should be noted that consistent with the rest of the application--which was focused on APH’s capabilities rather than community need for the service--both methodologies were designed to support the assertion that APMC could potentially attain a volume of 12 transplants by year two of operation. While APMC’s ability to generate 12 transplant cases is pertinent under rule 59C-1.044(6)(b), it is not indicative of unmet community need for this service. For example, if APMC retains or diverts patients who would otherwise have had access to these services through an existing provider, then they may be improving convenience whilst failing to satisfy any unmet community need. The first numeric methodology advanced by APMC in support of its proposal relied on an assumed correlation or a ratio between open-heart surgery cases and PHTs performed by the four existing PHT programs in Florida for calendar year 2016. The applicant then assumed that it would perform the mean rate experienced by the existing programs, in its second year of operation. When applied to APMC’s forecasted cardiac surgeries during the second year of operation (167), it arrived at a projected PHT volume of 11.7 by year two of operation. There are several issues with this methodology. The 11.7 projection is still below the threshold 12 transplants required under rule 59C-1.044(6)(b). The methodology also relied on figures for the 0-17 age cohort. APMC did not apply either methodology considering only 0-14 age data.6/ Additionally, APMC failed to demonstrate that there is any statistically predictive link between the two variables. The data presented in APMC’s application suggests that the correlation is weak, at best. For example, Bates page 0053 of the application reports Shands as having performed 140 pediatric cardiac surgeries and 15 pediatric heart transplants in 2016, while Memorial Regional Hospital performed more surgeries at 170, but less than half the transplants at seven for the same year. While APMC attempts to control for this variability by utilizing averages, such variability itself calls the causal relationship into question. Indeed, APMC’s own cardiac surgeon did not believe cardiac surgery volume and PHT volume to be directly related. An additional problem with APMC’s first methodology is that many of the numbers relied upon to reach its calculated forecast of 11.7 appear to be inflated. The 7 percent average, which APMC applies to its own facility, is not an accurate reflection of the true average rate among the four existing centers for 2016. While the 2016 transplant volume used represented the statewide total, APMC considered only the cardiac surgery volume reported by these four centers. Stated differently, APMC calculated a ratio considering the entire universe of one variable but not the other. The actual total number of cardiac surgeries performed statewide for 2016 for aged 0-14 was 1,216, not 491, as utilized as the denominator in calculating the ratio. As Ms. Fitch testified, when one uses the 1,216 surgeries in the formula, the ratio would be roughly 2.8 percent, not the 6.9 percent used by APMC. Then, applying APMC’s proffered number of 167 cardiac surgeries as representing its facility, the forecast would be about five PHTs, not 11.7. APMC only considered the open-heart surgeries performed at the four PHT hospitals, but certainly, the PHT patients, if they had open-heart surgery at all, may have had such surgeries at other facilities. As a pediatric OHS provider, APH is itself a good example of this, having provided 99 pediatric open-heart surgeries in 2016 that were not considered in the denominator of the formula. APMC’s Need Methodology 2: Ratio of PHT Volume to Common Indicators for PHT. APMC’s second need methodology is based on the identification of the International Classification of Disease (ICD) ICD-10 codes that are the most common indicators for PHT, taking into account acuity and based on APH’s actual experience. Starting with an analysis of ICD-9 codes and updating to ICD-10 codes as the most currently available model, APMC attempted to correlate the ICD-10 codes with the incidence of PHT in Florida hospitals using data from the AHCA inpatient database. This analysis produced an average ratio of the “most frequent indicators” to PHT cases, of 0.187. APMC then identified the volume of patients within OTSA 3 discharged under the top “most frequent” ICD-10 code indicators for PHT. Applying a conversion rate of 0.100 to this potential pool of PHT patients results in a forecast of 8.2 potential PHT cases in year 1 of APH’s PHT program. Holding constant the baseline potential patient volume in OTSA 3 and applying a conversion rate of 0.180 to years two and three resulted in a forecast of 14.8 PHT cases in OTSA 3 in years two and three. As with the previous methodology, this methodology is rejected, both as being an unreasonable basis for forecasting 12 PHTs by year 2, and as not being indicative of community need in OTSA 3 for this service. APMC presented no evidence that a link between the identified diagnosis codes and an eventual PHT exists or is predictive for any individual or group of individuals. Indeed, its health planner admitted that no statistical analysis was undertaken to test the validity of a causal relationship between these variables. Further, it is unconvincing that the average performance of the four existing long-established transplant programs over three recent calendar years is a reliable predictor of the prospective future performance of a new program by its second year of operation. This methodology, similar to the first, examined the age-range 0-17, even though rule 59C- 1.044 defines a pediatric patient as one aged 0-14. In considering the numbers of patients who presented at the four hospitals with one of the selected ICD-10 codes compared to the number of transplants, APMC acknowledged the variability in the ratios among the years and between the providers. This is evident from a review of the figures in the chart on Bates page 0055 of the APMC application. For example, according to the table, from 2014 to 2015, the number of inpatients with one of the ICD-10 codes decreased by one at Shands, but the number of PHTs performed over this same period doubled from 10 to 20. Such variability in the ratios suggests that there is no predictive link, and that it is instead other variables that affect PHT volume. Additionally, while this methodology considers diagnoses of patients actually treated in the four transplant hospitals to come up with a ratio, it then relies on average ICD volume of three Orlando hospitals instead of its own volume, without explanation. If APMC applied the ratio to its own ICD-10 volume of 138, as appears on Bates page 0056, without adding the other hospitals, its projected transplant volume would be 24.8 by year two, which is higher than any existing provider in the state. Or, if APMC applied only its own average ICD-10 volume over 2014-2016 of 46, it would result in a projected volume of 8.3 transplants at year two. While APMC’s approach is the one that gets it closest to a projected case volume of 12, it appears arbitrary and lacks credibility. Pediatric Population Growth in OTSA 3. In its application, and at hearing, APMC repeatedly referenced the growing pediatric population in central Florida as a factor supporting approval of its application. For example, APMC pointed out that OTSA 3 experienced the fastest growth rate for the 0-17 age cohort among all of the OTSAs for 2014, 2015, and 2016, and has a very robust projected annual growth rate of 2.7 percent through 2022. Moreover, each of the 10 counties in OTSA 3 is projected to experience rapid growth in the pediatric population, with the most dramatic growth rates in Orange, Osceola, and St. Lucie counties, at 10.3 percent, 12.4 percent, and 9.0 percent respectively. While the projected growth of the pediatric population in OTSA 3 is significant, such growth does not, in itself, demonstrate unmet demand or need for the project. Any increased demand for PHT due to population growth was not quantified by APMC in its application or at hearing, as APMC elected not to utilize a population and use rate analysis as a need methodology. No evidence of population demographics was presented to substantiate APMC’s transplant volume projections. On this issue, the following exchange from Dr. Nykanen’s deposition is informative: Q. When you referred to population information, is it your position that population demographics or population changes are in part a reason for the need for this project? A. As the population of Central Florida and as the population of this district increases the demand for cardiac services increases. So to the extent that you are serving more people, then I would agree, yes, that’s part of the – that’s part of the equation. Is it the tipping point? No. We don’t – we didn’t – nowhere in my discussions with Dr. DeCampli or administration was there the thought that, hey, the population is growing here so we need to provide this service. I think that the – it was more a question of, our program has grown to such a position that we need to provide this service in order to be able to be a quality program offering what we believe to be quality care for our patients. The fact that there are more people here is really not driving the need for it. That doesn’t drive the need, but it just – it does state that there may be more demand. That’s kind of the way that I feel about that. The above exchange, besides downplaying population growth as a significant argument for a PHT program, also reiterates the theme of APMC’s application and entire case, which is a focus on APMC and its institutional desire to expand the services it can provide to its patients. Another argument made by APMC in its application and at hearing is that approval of its program could reduce outmigration of PHT patients. By definition, because there is no existing PHT program in OTSA 3, all patients leave OTSA 3 for this service. However, that alone does not establish need for a new program. As discussed herein, APMC has not demonstrated a sufficient need or an access problem that justifies approval of its application. Outmigration of Donor Hearts There are four Organ Procurement Organizations (OPOs) in Florida, geographically distributed so that there is one OPO centrally located in each of the four OTSAs. The OPO in OTSA 3 has done well in procuring donor hearts notwithstanding the lack of a PHT program in its region. The establishment of a PHT program within an OPO region is known to positively correlate with an increase in the number of donor hearts that the OPO is able to procure. The number of hearts procured in Florida varies annually. In 2016, Florida OPOs procured 30 donor organs. Over 50 percent of the hearts procured in Florida leave the state. However, donor hearts also migrate into the state. With regard to the outmigration of organs from Florida, APMC has suggested that since Florida is a net exporter of organs, this is an additional reason for approval. However, organs harvested in one state are commonly used in another. There is nothing unusual or negative about that fact. There is a national allocation system through the United Network for Organ Sharing (UNOS) and this sharing, as explained by Dr. Pietra, facilitates the best match for organs and patients. UNOS divides the country into regions for the purpose of allocation of donor organs, with Florida being one of six states in Region 3. The evidence of record did not establish that approval of the APMC application would result in the reduction of organs leaving Florida, or even that such would be a desirable result. APMC also argues that approving its application would increase the number of donor organs that are both procured and transplanted within Florida. Specifically, the applicant suggested that its proposed program would increase public awareness of the need for donor hearts; and, by doing so, increase the supply of donor hearts. However, no record evidence was produced in an effort to demonstrate that the proposed program would increase the supply of organs in Florida. In fact, an APH pediatric cardiologist testified that it is unlikely that adding the proposed PHT program would impact the availability or supply of organs. Rule 59C-1.044(6)(b) Volume Standards Rule 59C-1.044(6)(b) includes additional criteria that must be demonstrated by an applicant. Subsection (6)(b)4. provides that an application for PHT include documentation that the annual duplicated cardiac catheterization patient caseload was at or exceeded 200, and that the duplicated cardiac open heart surgery caseload was at or exceeded 125 for the calendar year preceding the CON application deadline. Cardiac programs in Florida report their open-heart surgery volumes quarterly to a local health council, and the Agency publishes the calendar year totals. In the applicable baseline calendar year of 2016, APH’s duplicated OHS case volume for patients aged 0-14 was 139 OHS cases, satisfying the minimum OHS volume requirement.7/8/ APH also met the catheterization volume threshold by performing 227 cardiac catheterizations for patients aged 0-14 in the baseline 2016 calendar year. Geographic Access There is no evidence of record that families living in Central Florida are currently being forced to travel unreasonable distances to obtain PHT services. Indeed, there are five existing or approved programs within the state, with at least two located very reasonably proximate to OTSA 3. There was agreement that patients that need a PHT are approaching the end-stage of cardiac function, and in the absence of a PHT will very likely die. Accordingly, it is reasonable to infer that the parents of a child living in central Florida and needing a PHT will travel to St. Petersburg, Gainesville, or OTSA 4 for transplant services rather than let their child die because the travel distance is too far. To the contrary, the evidence in this record, as well as common sense, is that families will go as far as necessary to save their child. The notion that there is some pent-up demand for PHT services among central Florida residents (especially when there is no evidence of a single instance of an OTSA 3 patient being turned down or unable to access a PHT) is without support in this record. The parents of two pediatric patients that received PHT at Shands testified on behalf of the Agency at the final hearing.9/ Their testimony substantiated AHCA’s position that residents of the greater Orlando area have reasonable access to PHT services. One of the testifying parents lives in Brevard County, which is directly east of Orlando. Her daughter likely had a heart defect since birth, but it was not diagnosed until she was six years old. That patient was asymptomatic at the time of diagnosis but deteriorated over a period of years. When she was first seen at Shands, her condition was not emergent and the family had the time and researched other prominent institutions, including Texas Children’s Hospital, Boston Children’s Hospital, Children’s Hospital of Pittsburgh, and the Mayo Clinic in Rochester, Minnesota. Their goal was to find a program that did a good volume of transplants with above average survival rates. After doing this research, they chose Shands. Their daughter received her heart transplant at Shands, is doing well, and is now considering where to go to college. This family did not find the distance to be a problem. This parent also persuasively spoke of her concerns about further diluting the volumes of the existing programs that could result from approval of a sixth PHT program in Florida. This parent also observed that because of the shortage of donors, adding more transplant centers does not necessarily mean there will be more PHTs performed. The other lay witness is the parent of a very young boy who went from appearing to be perfectly healthy to almost dying, and being placed on life support within a 24-hour period. This family lives in Clermont, which is near Orlando. Shortly after her son’s two-month old check-up, the witness took her son to the local hospital thinking he had a urinary tract infection. The hospital sent him to APH for evaluation. As soon as he arrived there, he went into respiratory distress. An echocardiogram was done and showed he had a severely enlarged heart. APH recommended that he be transferred to Shands. Before being transferred, the mother spoke with her sister who coincidentally is a nurse in Chicago who works on the transplant floor. She also highly recommended Shands. Her son was safely transported to Shands by ShandsCair just over 24 hours after being first admitted to APH. When they arrived at Shands, both Dr. Bleiweiss and Dr. Fricker gave the parents their cell numbers and were always there to answer any questions. The infant was placed on a Berlin heart machine until an appropriate donor heart became available. This patient was able to undergo a transplant approximately three weeks after admission, and also had an excellent outcome. This mother testified that the distance to Shands was not a problem, that the social workers and nurses were always available to help, and that follow-up care at Shands has not been an issue. In fact, the patient is now able to have his labs done in Orlando. It is also notable that this patient’s transfer was uneventful and that the patient had no difficulties in being immediately admitted to Shands’ CICU. It is clear from the testimony of these parents that nothing about having a gravely ill child is “convenient.” But it was also clear that for both of these families, having an experienced provider care for their child was much more important to them than geographic proximity. The following exchange summarizes how the young boy’s mother felt about the inconvenience of having to travel from Clermont to Gainesville: Q If you want to hypothetically encounter a family who expressed to you a concern that their child needed a transplant, they resided in Orlando or the Orlando area, but they were concerned about having to travel to Gainesville to receive that service, what would you say to them? A That’s where they need to be and that everything will fall in place, but the most important thing is the care that your child needs. While transplantation is not an elective service, it is not done on an emergent basis. As noted, the number of families affected is, quite fortunately, very small. While having a child with these issues is never “convenient,” the travel issues that might exist do not outweigh the weight of the evidence that fails to demonstrate a need for approval of the APMC application. The Orlando area, being centrally located in Florida, is reasonably accessible to all of the existing providers. Most appear to go to Shands, which is simply not a substantial distance away. The credible evidence is that families facing these issues are able to deal with the travel issues. The testimony of the two parents supports the Agency’s position that obtaining the best possible outcome for the child is the parents’ primary motivation in choosing a PHT program. Financial Access APMC asserts that approval of its proposed program will enhance financial access to care. APMC currently serves patients without regard to ability to pay and will extend these same policies to PHT recipients. APMC’s application indicates that Medicaid/Medicaid HMO will account for 26.8 percent of total patient days in years one and two of the proposal. Self- pay is expected to account for 9.0 percent of patient days in years one and two. However, there was no competent evidence of record that access to PHT services was being denied by any of the existing transplant providers because of a patient’s inability to pay. Not Normal Circumstances APMC alleged the existence of “not normal circumstances” in support of its application. They are categorized as “‘not normal’ circumstances relating to access to PHT for residents of OTSA 3,” and can be summarized as follows: APMC has the one of the largest NICUs under one roof in the country, resulting in a disproportionate volume of newborns at [APH] with complex forms of congenital heart disease; There are patients at APMC who are placed on ECMO or other heart-assist devices after surgery who are too sick to be transferred from APMC to another facility to receive transplant; Forcing patients to accept the high and potentially fatal risks of transport on ECMO presents a major access issue; Post-transplant follow-up care for patients is life-long and can be time- critical, and the ability to provide 24/7 rapid access to specialized transplant urgent care is medically optimal. The first argument related to the size of APMC’s NICU, does not speak to community need. Regardless of how many newborns APH sees, if the needs of these newborns are currently being met by existing programs, then it is difficult to see how this circumstance bears upon need or accessibility to this service. Additionally, to the extent that APMC suggests that the size of its NICU will correlate with a similarly large number of PHT patients, the proposition is unsupported by the record evidence. In fact, APMC admits that its pediatric cardiac surgery program is at the border of the lowest tercile of STS programs by volume. If APH’s NICU yields only a modest to medium cardiac surgery volume, there is no reason to conclude that this NICU will, by virtue of its size alone, yield a high PHT volume. Next, APMC argued that it has had patients who could have potentially benefitted from transplant but who did not receive such services due to their being too sick or otherwise unable to transfer. It is noteworthy that APMC did not identify these patients or provide data in any fashion to bolster this claim. The application referenced 33 NICU patients on ECMO in four years, but APMC conceded that most of these are babies on respiratory or “VV ECMO,” who eventually wean off. The application also references 11 CVICU patients placed on bypass at APMC in the last four years, but no testimony was presented as to the actual number of patients alleged to be unable to transfer. APMC did not maintain at hearing that any of its pediatric patients have died as a result of being unable to transfer to a transplant facility. In fact, any incidence of children being too sick or acute to transfer outside the OH system to a transplant facility appears to be a product of APH clinical decision-making about appropriateness for transplant referral, rather than that such patients were refused at a transplant center or could not have been transferred at an earlier time. At his deposition, Dr. Nykanen discussed the issue: I think that I do agree that patients— pediatric patients in Central Florida can get a heart transplant. And I have sent patients—my patients to Gainesville for a transplant because I felt at least in the patient’s [sic] that they’ve transplanted I can support that I’m doing the right thing for my patient. In answering that question, there are patients that I do not refer for transplant because I just feel that they are not a candidate for traveling for a transplant, medically a candidate for traveling without— for a transplant. So the term reasonable is—is it reasonably accessible. It is accessible, indeed, for the majority of the patients that I feel need a heart transplant. They can travel and get a transplant. However, for some patients it’s not an option for them. Either due to their medical complexity, risks that I consider with transport, and rarely family situation. APMC emphasized the risks of moving pediatric cardiac patients while on ECMO. However, as noted earlier, the credible testimony of witnesses presented by the Agency was that while there are always risks inherent with the treatment of critically ill children, with modern advancements in technology, these transports are done routinely and safely. It is also significant that while APMC cited various risks associated with ECMO transports and underscored the danger to the patient, no APMC witness could point to a single example of a patient that died due to complications with ECMO during a transport. The Agency in its preliminary decision noted that the application lacked any data illustrating mortality or negative outcomes related to pediatric ECMO transports, and no such evidence was forthcoming at hearing. APMC presented no evidence demonstrating that children of OTSA 3 who are transplanted at an existing provider are denied or otherwise unable to access follow-up care. The two mothers that testified for the Agency both stated that they have not had issues accessing follow-up care at Shands. APMC relies instead in its application on theoretical claims about emergent complications that could arise and the challenges of accessing a center. However, these arguments are unconvincing. Both parties agreed that transplant centers can and do work with a patient’s local providers so that patients can receive urgent medical care closer to home and then return to their transplant center as necessary. Dr. Pietra testified that Shands works with primary physicians and providers post- transplant. Shands has developed a thorough protocol for all of its patients, which includes frequent follow-ups. Additionally, Ms. Smith-Fields agreed that at her facility in Arizona (the only PHT provider in that state) the program coordinates with providers local to patients to ensure rapid acute care is accessible, if needed. APMC’s cardiologist, Dr. Riddle, testified that APH does provide acute care and other necessary care to children post-PHT, and that it competently does so. APMC maintained at hearing that post-transplant care is life-long, and that in the event of an emergent situation, immediate access is critical. However, the evidence indicates that existing transplant centers plan for these events. There are more frequent follow-up visits to a transplant center during the period immediately following the transplant. Both Dr. DeCampli and Dr. Riddle testified that organ rejection is more likely to occur during the first year after transplant. Additionally, diagnostic testing can often detect signs of rejection in advance, to allow a transplant center to respond before an acute episode occurs. Indeed, one of the functions of echocardiograms is to scan the heart and detect abnormalities or episodes of rejection. The record reflects that transplant centers, such as Shands, are capable of properly and safely monitoring these patients and dealing with issues of rejection. The evidence in this record does not support the proposition that geographic distance to existing centers is a barrier to patients receiving necessary follow-up care. Orlando Health’s Prior Position APMC’s claim that there is an accessibility issue or a need for PHT services in OTSA 3 is further undermined by its own contrary position on these issues just a few months prior to the submission of its application. In January 2017, OH and APH presented written opposition to Nemours Children’s Hospital’s attempt to establish a PHT program in Orlando. APH also presented oral argument from Drs. Nykanen and DeCampli in opposition to the proposed Nemours PHT program being approved by the Agency. The written statement of opposition, identified on its face to be on behalf of OH and APH for Children, unequivocally advanced the position that PHT services are not needed in OTSA 3, and that they are reasonably available to residents of the service area: Nothing supports the theory in the [Nemours] applications that the proposed services are unique or not otherwise available, or that there is a need for them among the population. * * * Specifically, CON application no. 10471 [Nemours’ PHT application] does not provide any facts that would lead the Agency to conclude that existing pediatric heart transplant services are not reasonably available to residents of the service area. For example, the data shown in CON application no. 10471, Exhibit 15, p. 75, does not reflect time travel distances; existing providers are within the typical two hour drive time standard accepted by health planning experts and the Agency for tertiary services. The personal letter authored by Dr. Nykanen and included as part of the APH opposition was unequivocal and specific in its conclusion that access to these services for residents of OTSA 3 is not a problem. Dr. Nykanen stood by his statement in this proceeding, testifying in his deposition: So we would—we would do anything for our child. I’d travel around the world, you know, halfway around the world if I thought that something would benefit my child. So geographic proximity in that sense probably doesn’t matter. And it doesn’t matter. If I’m an outpatient and I can get in my car and I can go to Gainesville. * * * And I don’t think that it—I honestly don’t think that a two-hour drive is that much of a barrier. It’s a pain and it’s inconvenient. * * * So I think what I intended with that statement and believe it to be true today is that if my child needed a transplant and I could travel to Gainesville and I could get there, I’ll do it, as a family. Is that an inconvenience, yes. Is it a huge barrier, probably not. Because if it, in the balance of things, meant that my child would survive or not, then I would do it. I’d go to London, England if I had to. APMC attempted to justify its prior position as mere concern about the inexperience of the Nemours cardiac program. However, this is contradicted by the record evidence in this case. Dr. Nykanen testified that, at the time of the Nemours public hearing, his expressed position was that there was not a need for PHT services in central Florida. The unambiguous statements by APMC opposing a local competitor’s attempt to establish the same health service that it now claims the children of central Florida need, further undermines the credibility of APMC’s current position, and underscores APMC’s focus on its own interests. The prior position taken by APMC with respect to need and accessibility in OTSA 3 was made with the intent that it be received and considered by the Agency in its decision on the Nemours application. AHCA witness, Marisol Fitch, found this clinical and health planning testimony to be persuasive, and APMC’s prior position that need and accessibility do not support approval of a new PHT program are in line with the record evidence. The glaring inconsistency in APMC’s past and current assertions calls into serious question the credibility of the general, theoretical, and unsubstantiated access problems that are alleged in APMC’s application. Section 408.035(1)(c): The ability of the applicant to provide quality of care and the applicant’s record of providing quality of care; Section 408.035(1)(d): The availability of resources, including health personnel, management personnel, and funds for capital and operating expenditures, for project accomplishment and operation; and Rule 59C-1.044(3-4). Quality in the delivery of health care is APMC’s first and foremost strategic imperative. APMC defines “quality” as the simultaneous achievement of excellence in three areas: patient outcomes, patient experience, and patient access. APMC is very deliberate in its approach to metric- driven performance in quality and safety. APMC is the highest- rated system in all of Central Florida within the CMS rating system, which analyzes data for 66 quality improvement metrics. Similarly, APMC is the highest ranked Truven-rated health care system in Central Florida, and is ranked first among the over 30 hospitals analyzed and ranked by Vizient Southeast. The metrics analyzed by these rating organizations include, but are not limited to, mortality rates, readmission rates, cost containment, patient experience scores, emergency department wait times, and infection rates. Through deliberate focus and a compulsive commitment to quality, the APH Heart Center has performed at the highest levels with respect to quality of care and patient outcomes for well over a decade. For its part, the Agency does not dispute that the applicant is a quality provider. However, AHCA does maintain that approval of an unneeded sixth provider of PHT services in Florida could lead to or correlate with negative patient outcomes. Given the relatively low PHT volumes statewide, and agreement that volume is positively correlated with quality and outcome in transplantation, splitting state volume among six providers could negatively impact the quality of this service, as it concerns the residents of OTSA 3 and Florida more broadly. This service is defined by Florida law as a tertiary service of limited concentration. Indeed, APMC agrees that there should not be a PHT program in every hospital, particularly since organs are a limited resource. APMC failed to credibly demonstrate that it would achieve the PHT volumes it projected unless it diverts significant volumes from other Florida providers. Approval of a new program will not create transplant patients that do not exist or are not currently able to reasonably access services. The applicant has not demonstrated that it will achieve volume sufficient to reasonably assure quality care. Rule 59C-1.044(4) requires that applicants meet certain staffing requirements, including: “The program shall employ a transplant physician, and a transplant surgeon, if applicable, as defined by the United Network for Organ Sharing (UNOS) June 1994.” The applicant concedes that it still needs to hire a transplant surgeon and a cardiologist specializing in heart failure, to staff the proposed program. While APH has had difficulty recruiting and retaining a bone marrow transplant physician to implement the bone marrow program approved in 2014, given its outstanding reputation for quality it is likely that APMC would ultimately be successful in recruiting a PHT surgeon and an advanced heart failure cardiologist. Section 408.035(1)(e): The extent to which the proposed services will enhance access to health care for residents of the service district. Approval of APMC’s proposed program would likely improve physical access to PHT services for the very few residents of OTSA 3 that need them. Generally speaking, adding an access point for a service will make that service more convenient and geographically proximate for some. However, given the rarity of PHTs, approval of the APMC program would not result in enhanced access for a significant number of patients. Moreover, there was no credible evidence presented at hearing that any resident of OTSA 3 that needed PHT services was unable to access those services at one of the existing PHT programs in Florida. Based upon persuasive record evidence, there is also clearly a positive relationship between PHT volume and outcomes. As with any complex endeavor, practice makes perfect. In this instance, maintaining a minimum PHT case volume provides experience to the clinicians involved and helps maintain proficiency. According to the credible testimony of Dr. Pietra, maintaining a volume of no fewer than 10 PHTs per year is critical, “because your relative risk for the next patient that you do is at its lowest” if you stay above that volume. The clear intent of the minimum volume requirement of 12 heart transplants per year contained in rule 59C- 1.044(6)(b)2. is to ensure a sufficient case volume to maintain the proficiency of the transplant surgeons and other clinicians involved in the surgical and post-surgical care of PHT patients. In the 12 months ending in June 2016, there were only 35 PHT’s performed in Florida. By the end of June 2017, that number had dropped to 21, with none of the four operational PHT programs meeting the 10-case minimum volume. And when the approved PHT program at Nicklaus Children’s Hospital becomes operational, the per-program volume of PHTs is likely to drop even further. Given the lack of demonstrated need for a sixth program, and low volume of PHT’s statewide, the undersigned is unable to recommend approval of the APMC program knowing that it would further dilute the pool of PHT patients, potentially adversely affecting the quality of care available at the existing programs. Adequate case volume is also important for teaching facilities, such as Shands, to benefit residents of all the OTSAs by being able to train the next generation of transplant physicians. There was no persuasive evidence of record that approval of APMC’s application would meaningfully and significantly enhance geographic access to transplant services in OTSA 3. The modest improvement in geographic access for the few patients that are to be served by the program is not significant enough to justify approval in the absence of demonstrated need. There is no evidence that approval of the APMC application will enhance financial access, or that patients are not currently able to access PHT services because of payor status. Section 408.035(1)(g): The extent to which the proposal will foster competition that promotes quality and cost- effectiveness. It is clear that establishing and maintaining a transplant program is expensive and entails a significant investment of resources. Given the limited pool of patients, the added expense of yet a sixth Florida program is not a cost- effective use of resources. Section 408.035(1)(i): The applicant’s past and proposed provision of health care services to Medicaid patients and the medically indigent. OH is the designated safety net provider for the Central Florida region. In 2016, OH provided approximately $437 million in unreimbursed charity care. OH’s commitment to provide health care services to its entire community without regard to ability to pay continues today. Fifty-five percent of the patients served by APH are Medicaid beneficiaries, and 5-7 percent are self-pay or uninsured. If approved, OH’s mission and role as a safety net provider would extend to its proposed PHT program.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a final order be entered denying CON Application No. 10518 filed by Orlando Health, Inc., d/b/a Arnold Palmer Medical Center. DONE AND ENTERED this 26th day of December, 2018, in Tallahassee, Leon County, Florida. S W. DAVID WATKINS Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 26th day of December, 2018.
The Issue Whether certificate of need application number 7184 for the establishment of adult open heart surgery services at Baptist Hospital, Pensacola, Florida, filed in March 1993, meets statutory and rule criteria for approval.
Findings Of Fact On or about March 23, 1993, Baptist Hospital, Inc., ("Baptist"), Pensacola, Florida, filed a certificate of need ("CON") application to establish an adult open heart surgery program for a total project cost of $2.35 million. Baptist's application was subsequently numbered CON 7184, and was approved preliminarily by the Agency for Health Care Administration ("AHCA") on July 7, 1993. Conditions for the issuance of the CON were drafted by Elizabeth Dudek of AHCA. Violations of CON conditions may result in sanctions, including fines of up to $1,000 a day. The conditions, as drafted, are as follows: The provision of a minimum of 3 percent of total annual adult open heart surgeries to Medicaid patients. The provision of a minimum of 3 percent of total annual adult open heart surgeries to charity care patients. A fixed rate structure by DRG for open heart surgery discharge (DRGs 104-108) will be set at a level which is 85 percent of the average of the most recently available charges at Sacred Heart and West Florida Regional, inflated at 7.5 percent annually. Baptist shall ensure a minimum annual adult open heart surgery patient volume of 350 at each Sacred Heart and HCA West Florida. (This assurance shall not be achieved though the transfer of charity care patients). Baptist is a 546-bed hospital, with 388 medical/surgical beds, 62 acute care beds being used as skilled nursing beds, 76 psychiatric and 20 substance abuse beds. Baptist is a Medicaid disproportionate share provider and a designated Level II trauma center, located in Pensacola, Escambia County, in AHCA District I. District I includes Escambia, Santa Rosa, Okaloosa, and Walton Counties. Baptist's primary service area is Escambia and Santa Rosa Counties in Florida, and Baldwin and Escambia Counties in Alabama. Sacred Heart Hospital of Pensacola ("Sacred Heart") the oldest hospital in Pensacola, is licensed for 391 beds, including 42 Level II and III neonatal intensive care beds, and is a Level II trauma center. Sacred Heart has an approved CON to add 40 acute care beds for a women's and children's hospital. In late 1995, construction is expected to be completed. After the women's and children's hospital is finished, Sacred Heart will undertake the construction of 12 additional critical care beds which it projects will be operational in 1996. Sacred Heart is a Medicaid disproportionate share provider. Sacred Heart initiated an open heart surgery program in the early 1970's, and is located approximately 4 to 6 miles from Baptist. Escambia and Santa Rosa Counties are in Sacred Heart's primary service area. The secondary service area includes Okaloosa and Walton Counties, and sections of Alabama. Approximately 65 percent of the total open heart surgery patients in Escambia County, and 51 to 58 percent of the total from Santa Rosa County have open heart surgeries at Sacred Heart. West Florida Regional Medical Center ("West Florida") is a 547-bed existing provider of open heart surgery services, composed of 378 medical/surgical care, 21 skilled nursing, 89 psychiatric, and 58 comprehensive medical rehabilitative beds. West Florida is also a state Level II trauma center, in Pensacola. West Florida is approximately 7 to 9 miles from Sacred Heart, and approximately the same distance from Baptist. Open heart surgery services were initiated in 1975 at West Florida, which is the dominant provider to residents of Okaloosa and Walton Counties. West Florida Regional's service area includes all of District 1. Three open heart surgery programs exist in Mobile, Alabama, approximately one to one and a half hour drive from Pensacola, two more in Dothan, Alabama, and one in Panama City, in AHCA District 2. Over 90 percent of the population in District 1 is located within a two-hour average drive to an existing open heart surgery program. Numeric Need On February 5, 1993, AHCA published a fixed need pool of zero for additional adult open heart surgery programs in District I for the July 1995 planning horizon. Two subsequent publications of need for an additional open heart surgery program in the district have also resulted in zero numeric need. When zero numeric need is computed, using the formula in Rule 59C-1.033(7)(b), an applicant has to demonstrate not normal circumstances for the approval of the application. In addition, a new adult open heart surgery program will not normally be approved if the formula in subsection (c) of that rule yields a result less than 350, indicating that existing programs in the district will be reduced to volumes below 350 annual open heart surgery operations. The calculation to determine whether this condition applies was 346.67. A fixed need pool of zero was published and not challenged. Vol. 19, No. 5, Florida Administrative Weekly, February 5, 1993. Not Normal Circumstances for Need Baptist describes certain conditions as not normal circumstances for the approval of its open heart surgery program. The not normal circumstances described are (1) a lack of financial access for uninsured persons, (2) utilization and capacity problems at one of the two existing providers in the district, (3) the size of Baptist Hospital, and the size and complexity of its cardiology services, and the fixed price and minimum volume conditions proposed for the approval of the CON. Financial Access Baptist asserts that its program will serve uninsured patients, who are a financially underserved group in its service area. Baptist proposes in its pro forma to serve up to 15 uninsured open heart surgery patients in year one and up to 19 in year two. Assuming the percentage of uninsured persons in District 1 is comparable to that for the entire state and assuming the open heart surgery use rate for the uninsured would otherwise be the same, Baptist's expert claimed that 53 uninsured persons were denied open heart surgery services in District 1 in 1993. Baptist's opponents challenged the admissibility of evidence related to uninsured persons as an impermissible amendment not discussed in the application. Assuming arguendo, that the evidence is admissible, Baptist failed to document any unmet need for uninsured persons, which its proposal will alleviate. There was more credible evidence that uninsured persons have a lower use rate for reasons other than the absence of another program in the district, including age, lack of access to primary care physicians, lack of referrals to cardiovascular surgeons, and the failure to secure Medicaid coverage. No advantage is gained with referrals of patients to the same group of cardiologists and cardiovascular surgeons who currently serve both Sacred Heart and Baptist, in the absence of evidence that the doctors can and will accept more Medicaid and indigent patients. The use rate for Medicaid patients in District 1, adjusted for age, shows equal access to open heart surgery services, as compared to other payer groups. District 1 Demographics and Utilization AHCA District 1 includes Escambia, Santa Rosa, Okaloosa and Walton Counties. Approximately 250,000 people reside in Escambia County, with slightly over half of the district population located in the other three counties in the district. Escambia is the western-most county in the district and the state. From 1992 to 1997, adult population growth is projected to be lower in Escambia County (2.6 percent) than it is district-wide (6.5 percent) which, in turn, is lower than the statewide growth rates (9 percent). Open heart surgery services began in District 1 prior to 1988 at both Sacred Heart and West Florida. From 1988 to 1993, the volumes of procedures in District 1 and the state have been as follows: 1988 1989 1990 1991 1992 1993 District 1 805 803 733 901 1,006 848 Statewide 18,961 19,819 22,010 23,748 26,078 25,190 From July 1991 - June 1992, there were 498 and 493 open heart surgery procedures at Sacred Heart and West Florida Regional, respectively, for a total of 991 procedures in AHCA District I. At West Florida Regional, open heart surgeries declined from 533 in 1992 to 418 in 1993. Open heart surgery use rates in District 1 and statewide are declining or becoming comparatively more level. Most residents of the district receive open heart surgery services in the district, with fewer than 3 percent out-migration. Baptist's expert claimed that the 1993 decline was an anomaly rather than a trend, comparing District 1 to AHCA districts which experienced a 1993 decline, but are reporting larger volumes for the first quarter of 1994. The volumes were not annualized to take into account seasonal fluctuations. In fact, Baptist's cardiologists also noted the increase in alternative procedures such as angioplasty, electrophysiology, and drug therapies. In the first quarter of 1994, there were 250 open heart surgery procedures in the district, as compared to 265 in 1992, and 208 in 1993. Annualized for the entire year to adjust for seasonal variations, 980 open heart surgeries are expected in 1994. Expert projections of total open heart surgeries at District 1 facilities for 1995-1998 are in a range as follows: 1995 1996 1997 1998 880 - 1,051 894 - 1,069 908 - 1,085 921 - 1,100 Sacred Heart's occupancy for total acute care beds was 74.8 percent in 1991, 74.5 percent in 1992, and 74.4 percent in 1993. However, Sacred Heart's critical care unit ("CCU") is frequently at capacity during the peak season in the winter months. Delays of 1 to 3 days before patients are admitted for elective open heart surgery operations and elective angioplasties, are not uncommon. Elective procedures are those performed on patients who are stabilized with drug therapies pending the procedure. There is no evidence of delays in transfers for emergency angioplasties or emergency open heart surgeries, other than the time required to follow transfer protocols. Actual Sacred Heart CCU utilization was 83.4 percent in 1991, 84.4 percent in 1992, and 81.2 percent in 1993. Sacred Heart's expert in health planning, Mark Richardson's opinion that over 75 to 77 percent occupancy in a CCU means inadequate capacity to add a new open heart program, but not to serve an existing program is accepted. In addition, Sacred Heart plans to add 12 beds to the critical care unit in early 1996, and has improved case management procedures to alleviate capacity limits in the CCU, and scheduling heart surgeries. Two of the three cath labs at Sacred Heart are used for cardiac caths, electrophysiological studies and angioplasties. Sacred Heart has the capacity to perform 4,200 total cases a year. There are no problems associated with the capacity of the cardiac cath labs at Sacred Heart. The expert testimony is undisputed that West Florida Regional provides excellent quality of care, has excess cath lab, CCU and operating room capacity, and is in an excellent position to increase utilization without additional construction and with minimum additional staff. Cardiologists at Baptist resist transferring patients to West Florida, where they have not sought staff privileges. The statement in Baptists' CON application that the "closed medical staff arrangement at West Florida Regional limits referrals" from Baptist and Sacred Heart is not supported by the evidence. Staff privileges in various categories, including temporary privileges are available to physicians who apply. There was an inference that only doctors affiliated with the hospital's clinics gain privileges at West Florida. From September 1993 to April 1994, over one hundred doctors not affiliated with West Florida's Medical Clinic referred patients to the cath lab at West Florida. West Florida has the capacity to perform from 2500 to 3000 procedures in the two cardiac cath labs and one electrophsiology lab and from 800 to 1000 open heart surgery procedures in its 2 dedicated operating rooms. In 1993, there were 1453 cardiac cath, 387 angioplasties, and 418 open heart surgery procedures at West Florida Regional. A resident of the Baptist area and former patient, and a doctor with privileges at Baptist complained that the drive to West Florida takes up to 30 minutes. There is no credible claim of geographic access problems to West Florida, as defined by Rule 59C-1.033(4)(a), Florida Administrative Code, which provides that "[a]dult open heart surgery shall be available within a maximum automobile travel time of 2 hours under average conditions for at least 90 percent of the district's population." Medical risks of transfers do not outweigh the benefits of concentrated expertise in open heart surgery programs. That determination is one basis for AHCA's rule designating open heart surgery services as tertiary services. Cardiology Consultants is a group of cardiologists, cardiac surgeons, nurses and support staff which provides services to Baptist and Sacred Heart. The chairman of Cardiology Consultants does not travel to West Florida Regional because it is an inefficient use of his time. Because their patients would have to be transferred to cardiologists other than themselves or others in their group, the cardiologists are reluctant to make referrals from Baptist to West Florida Regional for open heart surgery. The cardiologists and one former patient who testified agreed that Sacred Heart's open heart surgery services provided excellent quality of care. By contrast, Baptist's expert, Dr. Luke, claimed that an analysis of severity adjusted mortality rates showed outcomes at Sacred Heart significantly below that statistically expected, and below that experienced at West Florida Regional. That testimony is not reliable due to his lack of an explanation of the methodology involved in the compilation of the report. The analysis was offered to demonstrate that Baptist could capture a larger market share than Sacred Heart. If Dr. Luke's assertions on quality of care are true, the conclusion would suggest that Baptist-based cardiologists refer patients almost exclusively to a lower quality facility to avoid referrals to cardiologists outside their group at West Florida. That conclusion is rejected based on the expert's admission of his lack of clinical expertise to render opinions on quality of care. One of the reasons advanced for the approval of the Baptist CON is that Baptist and Sacred Heart operate, in effect, a unified, high quality single cardiology program with a shared chief cardiologist, shared on-call cath lab staff, and virtually identical, overlapping medical staffs from the Cardiology Consultants group. Cardiology Consultants maintains offices at both Sacred Heart and Baptist. Because the group staffs both hospitals, Baptist argues that its cardiology program should be viewed in terms of serving a 1000 bed hospital, and the statutory criterion on joint or shared programs would apply. In fact, an agreement for a shared or joint CON application was rejected by Sacred Heart. Baptist, in this case, is seeking to establish a program which competes with that at Sacred Heart. Baptist's Size and Programs Baptist cited its size and the breadth of its existing cardiology services as a not normal basis for approval of its open heart surgery program. Baptist is one of only three hospitals in Florida exceeding 500 beds, performing over 1100 cardiac caths without open heart surgery backup. There are also 58 Florida hospitals with cardiac cath services without an open heart surgery program. The Baptist network in District 1 includes two other hospitals of 60 and 55 beds, and affiliations with four of the five hospitals located in Baldwin and Escambia Counties, Alabama. Baptist's actual medical/surgical bed size is 388, as compared to 391 operational and 40 more approved for a total of 431 at Sacred Heart, and 379 at West Florida Regional. All three of the Pensacola hospitals are described by AHCA's witnesses as "large." Since the late 1980's, Baptist has followed a long range plan to develop a first floor heart center. The most recent cath lab construction included shelled-in space to relocate the backup lab from the fourth floor to the first floor. The projected cost of moving the lab, as is, is $50,000 to $60,000. By comparison to the first floor lab, the fourth floor lab equipment is not state-of-the-art. Upgrading the fourth floor lab is expected to cost $400,000. Baptist has a large volume cardiology program, with a broad range of services, and claims to treat sicker cardiac patients. In fiscal year 1993, there were 1106 cardiac caths, 146 electrophysiology studies, 118 pacemaker implants, 69 coronary angioplasties, 20 vascular angioplasties, and 28 defibrillator implants. Baptist's claim that it provided services to more severe cardiac cases, based on a computer analysis of unknown variables with inadequately explained data input is not substantiated. If open heart surgery services are not approved at Baptist, the cardiology program will not be able to expand to include alternative less invasive techniques which require open heart surgery backup. Without open heart surgery, however, other cardiology services at Baptist have been able to develop and currently contribute approximately $12 million annually to net revenue, with a $6.4 million contribution margin. In the cardiac diagnostic categories, 80 percent of Baptist patients come from Escambia County with an additional 5 percent from Santa Rosa County. Baptist anticipates having the capacity in its two cardiac cath labs to handle the anticipated increase of 100 to 150 angioplasties, expected to result from the establishment of an open heart surgery program, in its two laboratories which are currently at 65 percent utilization. Utilization is approximately 80 percent in the first floor cath lab, which is used for almost all cardiac caths and angioplasties. The fourth floor cath lab is used exclusively for pacemaker implants and electrophysiology studies, not for cardiac caths or angioplasties. If approved, Baptist can meet the requirement of AHCA rules related to adequate staffing and the availability and quality of its service. Angioplasties were performed at Baptist, prior to the requirement for back-up open heart surgery services. However, an exception was given to Baptist in a letter from AHCA's predecessor agency in 1987. Baptist is allowed to have invasive cardiologists perform angioplasties in an emergency or if open heart surgery is not a viable option, as happens for some patients who have had prior open heart surgeries. Proposed CON Conditions As a condition for approval of this project, Baptist proposes to set charges, through September 1997, at the lesser of actual charges or 85 percent of the inflated average charges of the two existing providers, but not less than 50 percent of charges. Initially, Baptist proposed to adhere to the condition for the first three years, from July 1994 to September 1997. Having been delayed due to litigation, Baptist's expert financial witness testified that Baptist would adhere to the condition for three years after approval of the application. Baptist did not agree to adhere permanently to the fixed price structure, although no time limit is set in the AHCA draft of the proposed condition. AHCA did not consider the proposed condition a not normal circumstance in this or a prior Baptist application. District 1 already has the lowest average charges statewide for open heart surgery services. Statewide charges are 27 percent higher than the average for Pensacola and 42 percent higher than Sacred Heart's. There will not be an enhancement of financial access as a result of approval of the Baptist CON. In addition, relatively few patients would benefit from the proposed fixed charges. Medicare, Medicaid, and managed care contractual agreements will not be affected by the proposed fixed rate charge structure. Baptist also proposed to adhere to a CON condition to monitor and maintain annual minimum volumes of 350 open heart surgeries at Sacred Heart and West Florida. In its CON application, Baptist projects 85 to 100 of its projected 165 open heart surgeries in year one would otherwise have been performed at Sacred Heart. The loss of net income was projected at $1.37 million or 9.6 percent of total net income. Baptist projected 35 surgeries lost to West Florida Regional, and the financial loss of a half a million dollars, or 6 percent of net income. Baptist's expert, Dr. Luke, noted that at least 925 open heart procedures must be performed in 1997 to allow Sacred Heart and West Florida Regional to maintain the 350 minimum volume of procedures. If there are three open heart surgery providers in Escambia County in 1998, Dr. Luke conceded that one of those programs will not have a minimum volume of 350 open heart surgery procedures a year. Historically, the required volume of open heart surgeries was exceeded only in 1992, and the highest projected volume by Baptist's expert is 1,100 for 1998. See, Findings of Fact 12 and 14. Baptist's expert asserted that the surgeons volume is more directly related to quality than the hospital's volume, but the hospital volume requirement is specifically recognized as a factor in Rule 59C-1.033(7)(c). To the extent that open heart surgery volumes at an existing provider decline, it is unlikely that Baptist can control decisions which are made based on the convenience of cardiologists and cardiovascular surgeons, increasingly by health maintenance organizations and other insurers, and the preferences of patients or their families. While the proposed 350 minimum condition is intended to avoid adverse effects of the approval, there is no reason to create and then have to alleviate that potential problem absent a showing of need or not normal circumstances. The proposed condition is not, in and of itself, a not normal circumstance. Other Criteria Related To Need Local Health Plan The 1992 District 1 Allocation Factors Report is the applicable local health plan to the review of Baptist's CON application. However, the 1990 District 1 Allocation Factors were analyzed by Baptist, and therefore, the Baptist application addressed only those preferences common to the two plans. Preference one favors an applicant demonstrating cost efficiency, lower project costs, and the least increase in patient charges. Beyond the first three years of the program for very few patients, the fixed rate charge structure will not be effective in keeping patient costs lower. Therefore, Baptist does not meet the preference. The lowest cost expansion of open heart surgery services in the district is the use of the excess capacity at West Florida Regional, with capacity for 800 to 1000 open heart surgeries as compared to the highest district-wide projection of 1,100 open heart surgeries in 1998. See, Finding of Facts 14 and 16. The second preference for bed conversions to increase utilization is not applicable to the proposed project. Preference three favors converting existing capacity to expand services over new construction. Baptist proposed to dedicate 2 exising rooms for open heart surgery, and to renovate 9,660 square feet, including a 2-bed expansion of the existing 8-bed cardiac care unit (CCU), to relocate a 6-bed eye unit, to expand by 9-beds an existing 18-bed step-down unit, to establish of a 12-bed progressive care unit, and to relocate a cystoscopy room. Total project costs are projected to equal $2,350,000. The Baptist proposal for renovations is preferable to new construction, but cannot be favored due to the alternative of using exising capacity at West Florida Regional. Preference four for joint ventures or shared services that mutually increase efficiency as opposed to unilateral CON applications is not given to Baptist. Although the same group of cardiologists presently operates the cardiovascular surgeries as a unified program at both Baptist and Sacred Heart, this application is a unilateral application, not a joint program. It is a duplicative program. The fifth preference, for applicants proposing to serve patients regardless of ability to pay, favors the Baptist application. In response to the sixth preference, for applicants agreeing to provide the greatest percentage of Medicaid and indigent services, Baptist proposes 3.03 percent of cases to be Medicaid patients and 3.03 percent indigent patients for the first year of operation, and 2.44 percent Medicaid and 2.93 percent indigent for the second year, or up to 15 indigents in year one, and 19 in year two of initiating a open heart surgery program. In total operations at Baptist in 1991, Medicaid was approximately 20 percent and charity 3 percent. Sacred Heart which, like Baptist, is a disproportionate share provider, averaged approximately 23 percent Medicaid and 5 percent charity. West Florida provided approximately 4 percent Medicaid and 9 percent charity. Baptist is entitled to partial preference to the extent that its provision of Medicaid exceeds that of West Florida. Preference seven, for applicants demonstrating a history of serving the greatest percentage of indigent and Medicaid patients, is met by Baptist. Baptist is a disproportionate share provider of services to Medicaid and charity care. In 1991, Baptist also provided 7.3 percent charity and uncompensated care. The eighth preference, for expansion of existing facilities as opposed to the establishment and construction of a freestanding facility, is not applicable to this case. Preference nine for applications which increase a facility's weighted occupancy rate, preference ten for a facility with an actual occupancy rate equal to or above the weighted occupancy rate and preference eleven to avoid a decrease in a facility's weighted occupancy rate were not addressed by Baptist, having not been included in the earlier local plan. Preference twelve is given to CON applicants who describe the impact on patient case load and the estimated increase in subdistrict case load, but not to applicants who do not supply this information. Baptist met the preference by providing an analysis of the impact on patient case loads at Sacred Heart and West Florida Regional. Preference thirteen is given for CON applications that include a five year projected occupancy rate for the applicant facility that is equal to or greater than the rule standard rate for facilities, as specified in the state rule paragraph 59C-1.038(7)(e), currently 75 percent. Baptist did not provide five year projected occupancy rates. Preference fourteen, related to pediatric units, is not applicable to Baptist's proposal. Preference fifteen, related to eliminating ICU/CCU units of less than 10 beds, is not applicable to this project. Preference sixteen is met by Baptist's plans to establish periodic internal evaluations of staff and equipment performance. Baptist committed to meet preference seventeen by providing initial and ongoing training and educational programs for staff members treating or caring for open heart patients, including training staff at an existing high- volume hospital in Orlando. Preference eighteen is given for the creation and use of data collection systems to monitor and report patient volume, patient origin, charges, safety problems and complications. Baptist agrees to meet preference eighteen by collecting and reporting data for open heart surgery services, as it currently does for all other services. Preference nineteen for written referral agreements between facilities in District 1 is not met by Baptist. Preference twenty for a plan to record instances of service repetition due to poor results, data, or images, is met. An index of performance currently exists for cardiac cases at Baptist. The preference for applicants that demonstrate a history of or willingness to commit to provide health care services to AIDS patients, preference twenty-one, was not addressed by Baptist. Preference twenty-two, given to CON applicants that demonstrate they have provided the greatest percentage of the facility's available annual patient days to AIDS patients has not been addressed. On balance, Baptist failed to demonstrate compliance with the applicable local health plan, in part by failing to address some of the preferences. Baptist does meet preferences for serving patients regardless of their ability to pay, for its proposal to serve Medicaid and indigent patients, for having done so in the past, for quality assurance, data collection and training programs, and for including an impact analysis. State Health Plan The 1989 Florida State Health Plan provides six allocation preferences related to the review of CONs to establish open heart surgery programs. The first state plan preference favors applicants establishing new open heart surgery programs in larger counties in which the percentage of elderly is higher than the statewide average and the total population exceeds 100,000. Although the population of Escambia County exceeds 250,000, the preference is not met because the percentage of the population age 65 or over is 12.24 percent, in contrast to the statewide average of 18.59 percent. State plan preference two, for new open heart surgery programs which will reach a volume of 350 adult procedures annually within three years of initiating the program, is not met. Baptist projects that it will perform 165 open heart surgery procedures in the first year of operation and 205 operations in its second year of operation. Baptist did not include a third year projection. With a CON condition that Sacred Heart and West Florida will retain a minimum of 350 procedures, Baptist's expert, Dr. Luke, conceded that Baptist cannot achieve the 350 volume by its third year of operation. State preference three, for improved geographic accessibility and reduced travel time for residents leaving the district for open heart surgeries is not met by the Baptist application. Out-migration from District 1 is extremely low, approximately 3 percent, and the geographic access standard is met. State plan preference four, for hospitals which meet Medicaid disproportionate share criteria, is met by Baptist. State preference five which, in general, favors larger more efficient facilities is met by Baptist. Baptist has 388 medical/surgical beds, with $12 million in net revenue annually from its cardiology program. A large hospital is described by AHCA witnesses as one exceeding 350 to 400 beds. State health plan preference six, for applicants with protocols for the use of alternative non-surgical therapeutic cardiac procedures, is met by Baptist. On balance, Baptist's CON application does not comply with the state health plan. Although it meets the preferences for treating patients regardless of ability to pay, for a disproportionate share provider, and for a large, efficient hospital, and for the types of services proposed, Baptist is not located in an area with demographic characteristics indicative of need, and does not have the ability to attract enough patients from that population to reach sufficient open heart surgery volumes to assure a quality program. AHCA Review of the Baptist CON Application Dr. James T. Howell, the AHCA Division Director for Health Policy and Cost Containment, made the decision to approve the Baptist open heart surgery CON, because of Baptist's substantial, active, sophisticated cardiology program, its status as a high disproportionate share provider, its size, and because the results of the numeric need calculation and the formula for determining the reduced volume at existing providers were close to that required by rule. See, Finding of Fact 7. In February, 1993, after the numeric need publication and prior to the filing of the application at issue in this case, Dr. Howell, Albert Granger, and Robert Sharpe of AHCA met with the Mayor of Pensacola who is also Senior Vice President of Baptist Health Care and President of Baptist Health Care Foundation, and Baptist's Vice President for Planning who expressed frustration over the denials of its prior open heart surgery CON applications. Baptist submitted CON applications for open heart surgery in 1987, 1989, 1991, 1992, and 1993. Among the issues of concern was the status of Sacred Heart and West Florida Regional as grandfathered providers resulting in their having "a permanent franchise." Baptist representatives expressed concern about their ability ever to secure an open heart surgery program under the current rules. After that meeting, the rule amendment process was initiated to allow consideration of data reported up to 3 months, rather than 6 months prior to the publication of the fixed need pool. At the time the Baptist application for CON 7184 was reviewed, the amendment had not been adopted. No other change in the open heart surgery rule has been made subsequent to the review of the prior Baptist CON application. When the Baptist application for CON 7184 was filed initially, Laura MacLafferty was assigned as AHCA's primary reviewer. The state agency action report ("SAAR") represents her factual analysis of the application, although she did not and, routinely, does not make recommendations to issue or deny CONs. Ms. MacLafferty and her supervisor, Alberta Granger, are not aware of any AHCA non-rule policy to determine if a calculation of minimum volume is "close" enough to the 350 standard of the rule, nor any agency guidelines to determine when a hospital is "large" or "operates a large cardiology program" which should include open heart surgery. Subsequent to reviewing the Baptist application, in December 1993, Ms. MacLafferty reviewed another open heart surgery application from District 1, filed on behalf of Fort Walton Beach Medical Center. In her review of both the Baptist and Fort Walton applications, Ms. MacLafferty found no documentation that patients in District 1 experienced problems with access to open heart surgery services. Ms. MacLafferty submitted the draft SAAR to a supervisor, Alberta Granger. The draft SAAR was retrieved from her desk, prior to Ms. Granger's reviewing it. It was removed by Elizabeth Dudek, who heads AHCA's CON and health care board sections. Ms. Granger did not review the SAAR, which was prepared by Ms. MacLafferty. The final draft was returned to Ms. Granger for her to sign on July 7, 1993. This was the only time since Ms. Granger became supervisor in the CON office, that she has not reviewed and discussed with Ms. Dudek SAARs prepared by her staff. Ms. Granger had been the primary reviewer of Baptist's 1989 CON application. Ms. Granger and her supervisor, Ms. Dudek, are aware that in this case and in one or more of its prior CON open heart surgery applications, Baptist argued that its size, scope of cardiology services, and proposed fixed rate structure were reasons to approve its proposal. Ms. Granger stated, and Ms. Dudek confirmed, that the usual procedure was not followed in the review of this and one other application in this batching cycle. In this batching cycle, Dr. Howell requested that Mr. Sharpe, head of AHCA's planning section, also review those two open heart surgery applications. Ms. Dudek recalls, that prior to 1987, there were two batches of approximately 12 total applications in which agency personnel other than the CON staff was involved in the review of CON applications. In making his decision on the Baptist application, Dr. Howell consulted Ms. Dudek and Mr. Sharpe. Ms. Dudek, who heads the CON and health care board section, was not initially in favor of the approval of the Baptist application. Mr. Sharpe, head of the planning section, prepared a 9 page analysis of the pros and cons of the Baptist proposal. The Sharpe analysis demonstrates that an increase of 9 additional open heart surgeries during the 12 month reporting period, and the use of the more current data under the pending rule revision would have resulted in the need for one additional open heart surgery program in District 1. The memorandum also demonstrated that a lower future volume of open heart surgeries is projected by using the actual use rate, as required by Rule 59C-1.033(7)(6)2, rather than a trended use rate. If these adjustments to the data are made to achieve numeric need, then Baptist's application could be approved without a showing of not normal circumstances. The memorandum also reported the October 1991-September 1992 volumes of cardiac cath admissions at Baptist as 2,677, at Sacred Heart as 2053, and at HCA West Florida as 1,915, with the conclusion that Baptist "had the largest number of cardiac catheterization admissions of the three hospitals." The evidence in this proceeding is that the memorandum was in error. Actual volumes for October 1991-September 1992 were 912 at Baptist, not 2677. Dr. Howell found Baptist's proposal consistent with health care reform trends towards eliminating the need for CON regulation by enhancing market competitive forces, as a part of Florida's managed competition model, as explained in the Sharpe analysis. Similarly, Dr. Luke described the 1980's use of the CON process to control costs by limiting duplication and the rejection of institution specific planning as outdated. Dr. Luke also favors a model of competition for cost controls. At this time, however, these positions have not been adopted in Florida Statutes and rules. The 1994 Florida Health Security Plan, however, recommends the continuation of CON review of all tertiary services, including open heart surgery. That plan was submitted as a part of AHCA's 1994 legislative proposals. Ms. Dudek described traditional "not normal" circumstances as issues related to financial, geographic, or programmatic access to the proposed service by potential patients, and not facility specific concerns. Facility specific concerns, in this case, include Baptist's attempt to retain cardiologists who wish to perform procedures not approved at Baptist and to improve its position to compete for managed care contracts. Baptist has failed to show not normal circumstances for the departure from the open heart surgery rule, statutes and prior complications of the criteria to the review of CON applications. Baptist has also failed to demonstrate that the facts of this case justify a departure from the guidelines set by rule for the need methodology, use rate and population projections, and the minimum volumes at existing providers.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a final order be entered denying the application of Baptist Hospital of Pensacola for certificate of need number 7184 to establish an adult open heart surgery program in Agency for Health Care Administration District 1. DONE AND ENTERED this 18th day of November, 1994, 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 18th day of November, 1994. APPENDIX To comply with the requirements of Section 120.59(2), Fla. Stat. (1991), the following rulings are made on the parties' proposed findings of fact: Sacred Heart Hospital of Pensacola's Proposed Findings of Fact. 1-11. Accepted in or subordinate to Finding of Fact 3. 12-14. Accepted in or subordinate to Finding of Fact 15. Accepted in or subordinate to Finding of Fact 4. Accepted in Finding of Fact 16. Accepted in Finding of Fact 2. Accepted in Findings of Fact 2, 3 and 4. Accepted in Finding of Fact 5. Accepted in Finding of Fact 3. Accepted in Findings of Fact 3 and 4. Accepted in Finding of Fact 5. Accepted in Findings of Fact 3 and 4. Accepted in Finding of Fact 24. Accepted in Finding of Fact 18. Issue not reached. 27-28. Accepted in Findings of Fact 11 and 12. Accepted first two sentences in Findings of Fact 15 and 16. Remainder issue not reached. Accepted. Accepted. 32-35. Accepted in Findings of Fact 11 - 16. 36. Accepted in Findings of Fact 6 and 7. 37-38. Subordinate to Finding of Fact 6 and 7. 39. Accepted in Finding of Fact 60. 40-46. Accepted in or subordinate to Finding of Fact 15. 47-49. Accepted in or subordinate to Finding of Fact 16. 50-53. Accepted in or subordinate to Finding of Fact 26. 54-64. Accepted in or subordinate to Findings of Fact 3 and 15. 65-70. Accepted in or subordinate to Findings of Fact 12 and 15. 71. Issue not reached. 72-78. Accepted in or subordinate to Findings of Fact 4, 12, and 16. 79-88. Accepted in or subordinate to Findings of Fact 18-20. 89-95. Accepted in Finding of Fact 15. 96. Accepted in Finding of Fact 20. 97-101. Accepted in or subordinate to Finding of Fact 15. Subordinate to Findings of Fact 4 and 16. Accepted in or subordinate to Findings of Fact 4 and 16. Accepted in Finding of Fact 3. 105-110. Accepted in or subordinate to Findings of Fact 21-30 and 75. Accepted in Finding of Fact 12. Accepted in Findings of Fact 3-5 and 17. 113-121. Accepted in or subordinate to Finding of Fact 29 and 30. 122-126. Accepted in or subordinate to Finding of Fact 27. 127-135. Issue not reached. 136-138. Accepted in or subordinate to Findings of Fact 9 and 10. 139-141. Accepted in general in Findings of Fact 74 - 77. 142-149. Accepted in or subordinate to Findings of Fact 29 and 30. West Florida's Proposed Findings of Fact. Accepted in Findings of Fact 3 and 4. Accepted in Findings of Fact 1 and 6. 3-13. Accepted in or subordinate to Findings of Fact 61-76. 14-15. Accepted in or subordinate to Findings of Fact 1 and 68. 16. Accepted in or subordinate to Findings of Fact 64-68 and 75. 17-21. Accepted in Findings of Fact 6-7. 22-24. Accepted in or subordinate to Finding of Fact 17. 25. Accepted in Findings of Fact 2 and 11. 26-27. Accepted in Findings of Fact 3 and 4. 28. Subordinate to Finding of Fact 3 and 4. 29-30. Accepted in Finding of Fact 17. 31-32. Accepted in Finding of Fact 11. 33. Accepted in Findings of Fact 15 and 16. 34-36. Subordinate to Findings of Fact 11 and 12. 37-45. Accepted in or subordinate to Findings of Fact 4 and 16. 46-55. Accepted in or subordinate to Findings of Fact 11-14. 56-79. Accepted in or subordinate to Finding of Fact 14, 29, 30 and 55. 80-83. Accepted in Findings of Fact 68, 75 and 77. 84. Accepted in Findings of Fact 29 and 30. 85-87. Accepted in Findings of Fact 27 and 28. 88. Accepted in Findings of Fact 17-19. 89-90. Accepted in Findings of Fact 21-24. 91-92. Accepted in Finding of Fact 15. 93-97. Accepted in Finding of Fact 16. 98-100. Accepted in or subordinate to Findings of Fact 61, 63, 71-74 and 77. 101. Accepted in Findings of Fact 27-28. 102-105. Accepted in Findings of Fact 9 and 10. Accepted in or subordinate to Finding of Fact 11. Accepted in Finding of Fact 75. Accepted in Findings of Fact 23-24. Baptist Hospital, Inc.'s and AHCA's Proposed Findings of Fact. Accepted. Accepted in Finding of Fact 1. Accepted in Finding of Fact 6. Accepted in Finding of Fact 12. Accepted in Finding of Fact 7. Accepted in Finding of Fact 72. Accepted in Finding of Fact 8. Accepted in Finding of Fact 2. 9-11. Accepted in Finding of Fact 21. Accepted in Findings of Fact 2, 51 and 60. Accepted in Finding of Fact 24. 14-16. Accepted in Finding of Fact 34. Accepted in Finding of Fact 3. Accepted in Finding of Fact 4. 19-24. Accepted in Findings of Fact 21-23. 25-30. Accepted in or subordinate to Finding of Fact 26. 31-37. Accepted in or subordinate to Findings of Fact 21-26. 38. Rejected in Finding of Fact 23. 39-53(a-g) Accepted in or subordinate to Findings of Fact 18-24. 54. Rejected in Finding of Fact 20. 55-58. Accepted in Finding of Fact 15. Rejected in Finding of Fact 15. Accepted in Finding of Fact 15. Accepted in Finding of Fact 26. Accepted in Finding of Fact 15. 63-66. Rejected conclusions in Finding of Fact 15. Accepted in or subordinate to Finding of Fact 15. Rejected conclusions in Finding of Fact 15. 69-78. Accepted in or subordinate to Finding of Fact 15. 79-81. Rejected in or subordinate to Finding of Fact 17. 82-84. Rejected in or subordinate to conclusion in Finding of Fact 17. 85. Subordinate to Finding of Fact 15. 86-87. Accepted in or subordinate to Findings of Fact 13 and 21. 88-90. Accepted in or subordinate to Finding of Fact 18. 91-94. Rejected in Finding of Fact 15. 95-97. Accepted in or subordinate to Finding of Fact 15. 98-121. Issues not reached or rejected in Findings of Fact 74-77 except that the reference to a shared cardiology program should be understood to mean unified operation of programs under one group of cardiologists serving two hospitals, not "joint, cooperative or shared," as AHCA has previously defined those terms in construing subsection 408.035(1)(e), Florida Statutes. Accepted in or subordinate to Finding of Fact 4. Accepted in Finding of Fact 4. 124-132. Issue not reached or rejected in Findings of Fact 74-77 except that the reference to a shared cardiology program should be understood to mean unified operation of programs under one group of cardiologists serving two hospitals, not "joint, cooperative or shared," as AHCA has previously defined those terms in construing subsection 408.035(1)(e), Florida Statutes. 133-134. Accepted in Findings of Fact 15-18. 135. Accepted in Finding of Fact 75. 136-138. Conclusion not support by testimony cited. 139-145. Accepted in Findings of Fact 2, 36, 37, 38 and 57. 146-152. Accepted in or subordinate to Findings of Fact 1, 29 and 30. 153-165(a-c) Rejected conclusions that highest projections of growth in open heart surgery is reasonable in District 1 in Findings of Fact 11-16. 165(d) Rejected as insignificant number in Finding of Fact 12. 165(e-g) Rejected in Finding of Fact 19. 165(h) Accepted in Findings of Fact 9-10. Rejected in Finding of Fact 29. Accepted as shared is defined in Finding of Fact 20. 168-172. Rejected in Findings of Fact 29-30. 173-177. Rejected conclusions in Findings of Fact 29-30. 178-181. Rejected in Findings of Fact 4, 16, 17 and 18. 182-186. Accepted in 1 as explained in Findings of Fact 27 and 28. Rejected in part in Finding of Fact 52 and accepted in part in Findings of Fact 60. Rejected as most relevant in Findings of Fact 60. 189-199. Accepted in Finding of Fact 25. 200-201. Issue not reached. COPIES FURNISHED: William Wiley, Esquire Darrell White, Esquire Charles A. Stampelos, Esquire McFarlain, Wiley, Cassedy & Jones 600 First Florida Bank Building 215 South Monroe Street Tallahassee, Florida 32301 John Radey, Esquire Jeffrey Frehn, Esquire Aurell, Radey, Hinkle, Thomas & Baranek 101 North Monroe Street, Suite 1000 Post Office Drawer 11307 Tallahassee, Florida 32302 Michael J. Cherniga, Esquire Greenberg, Traurig, Hoffman Post Office Drawer 1838 Tallahassee, Florida 32302 W. Dexter Douglass, Esquire John A. Rudolph, Jr., Esquire Douglass & Powell Post Office Box 1674 Tallahassee, Florida 32302 Richard Patterson, Esquire Agency for Health Care Administration 325 John Knox Road Tallahassee, Florida 32303 R. S. Power, Agency Clerk Agency for Health Care Administration Atrium Building, Suite 301 325 John Knox Road Tallahassee, Florida 32303 Harold D. Lewis, Esquire The Atrium, Suite 301 325 John Knox Road Tallahassee, Florida 32303
Findings Of Fact Galencare, Inc., d/b/a Northside Hospital ("Northside") and NME Hospitals, Inc., d/b/a Palms of Pasadena Hospital ("Palms") were litigants in administrative proceedings concerning the Agency For Health Care Administration's ("AHCA's") preliminary action on certificate of need applications. Northside moved to dismiss Palms' application based on defects in the corporate resolution. The resolution is as follows: RESOLVED, that the Corporation be and hereby is authorized to file a Letter of Intent and Certificate of Need Application for an adult open heart surgery program and the designation of three medical/surgical beds as a Coronary Intensive Care Unit as more specifically described by the proposed Letter of Intent attached hereto. RESOLVED, that the Corporation is hereby authorized to incur the expenditures necessary to accomplish the aforesaid proposed project. RESOLVED, that if the aforedescribed Certificate of Need is issued to the Corporation by the Agency for Health Care Administration, the Corporation shall accomplish the proposed project within the time allowed by law, and at or below the costs contained in the aforesaid Certificate of Need Application. RESOLVED, that the Corporation certifies that it shall appropriately license and immediately there- after operate the open heart surgery program. In its Motion, Northside claimed that the third and fourth clauses in the Resolution are defective, the third clause because it does not "certify" that the time and cost conditions will be met and the fourth for omitting "adult" to describe the proposed open heart surgery program. Northside relies on the language of the statute requiring that a resolution shall contain statements . . .authorizing the filing of the application described in the letter of intent; authorizing the applicant to incur the expenditures necessary to accomplish the proposed project; certifying that if issued a certificate, the applicant shall accomplish the proposed project within the time allowed by law and at or below the costs contained in the application; and certifying that the applicant shall license and operate the facility. Subsection 408.039(2)(c), Florida Statutes. Northside also relies on Rule 59C-1.008(1)(d), which is as follows: The resolution shall contain, verbatim, the requirements specified in paragraph 408.039 (2)(c), F.S., . . . Palms' filed the Motion For Sanctions against Northside on November 15, 1993, pursuant to Subsection 120.57(1)(b)5 for filing a frivolous motion for an improper purpose, needlessly increasing the cost of the litigation, with no legal basis. Northside's claims that the Resolution was defective were rejected in the Recommended Order of Dismissal of January 11, 1994, amended and corrected on January 26, 1994, and not discussed in AHCA's Final Order of March 15, 1994.
Findings Of Fact General On October 15, 1986 Plantation General Hospital (Plantation) filed an application to establish adult and pediatric open heart surgery programs and a pediatric cardiac catheterization program. On October 16, 1986 North Broward Medical Center filed an application to establish an open heart surgery program. Both applications were denied by the Department of Health and Rehabilitative Services for reasons stated in its state agency action report issued on February 27, 1986. Both North Broward Medical Center and Plantation sought formal proceedings on their applications. North Ridge General Hospital, Memorial Hospital, Holy Cross Hospital and Florida Medical Center intervened in the proceedings. North Broward Medical Center updated its application on September 1, 1986. Plantation General Hospital updated its application on September 29, 1986, and deleted the pediatric open heart and pediatric cardiac catherization portions of the application. The Parties North Broward Medical Center (North Broward) is a 419-bed acute care hospital in Pompano Beach owned by the North Broward Hospital District (District), a special taxing district created by the Legislature to provide hospital services to residents of the northern two-thirds of Broward County. The District operates a multi-hospital system. The other hospitals, are Broward General Medical Center (Broward General), a 715-bed acute care hospital in east central Broward County, Imperial Point Medical Center, a 200-bed acute care hospital, and Coral Springs Medical Center, a 200-bed acute care hospital which opened in early 1987. The District has a single medical staff for all four hospitals. North Broward offers many cardiac services, including cardiac catheterization and some cardiac surgery procedures. Its catheterization lab opened in January, 1986. The lab will perform between 350 and 400 catheterizations during its first year. Broward General, the largest of the District hospitals, has a full cardiology program including a catheterization lab in which not only diagnostic catheterizations are performed, but also therapeutic catheterizations, (including balloon angioplasties) and has an open heart surgery program. It is not a party to this case. Plantation is a 264-bed full service general medical surgical hospital in Plantation, Florida. It offers many cardiac services, including diagnostic cardiac catheterization. It began its catheterization services in April, 1985 and in the first eight months performed 300 catheterizations. Approximately 500 catheterizations were performed its first year. South Broward Hospital District is the special taxing district created to provide hospital services to residents of the southern one-third of Broward County. It owns a single hospital, Memorial Hospital. Memorial is a 737-bed tertiary care hospital. It began operating an open heart surgery program in 1983 and provides a complete range of cardiac services, excluding heart transplants. Holy Cross Hospital is a 597-bed not-for-profit acute care hospital sponsored by the Sisters of Mercy, an order of nuns based in Pittsburg, Pennsylvania. It provides cardiac services including open heart surgery, but not including heart transplants. Its open heart surgery program began in 1976. North Ridge General Hospital is a 395-bed acute care hospital located in Fort Lauderdale. It offers full cardiac services excluding heart transplants; 34 percent of its hospital admissions are cardiac related. It has had an open heart surgery program for 11 years. Florida Medical Center is a 459-bed acute care hospital located in Fort Lauderdale approximately three and one half miles from Plantation. It provides a broad range of cardiac surgery excluding transplants and was the first open heart surgery program in Broward, opening in December, 1974. II. Statutory Criteria For Evaluating The Application Under Section 381.494(6)(c), Florida Statutes. Consistency with the State Health Plan and Local Health Plan. Section 381.494(6)(c)1. Florida Statutes. The State Health Plan specifically addresses both cardiac catheterization services and open heart surgery. The plan recognizes a large body of research demonstrating a relationship between the number of procedures performed and surgical death rates; programs with low volume have higher mortality. One of the plan objectives is to maintain an average of 350 open heart surgery procedures per program in each district through 1990. The State Plan recognizes it is not advisable to open cardiac catheterization units in a facility which does not provide open heart surgery, and that "consideration" should be given to applications for open heart surgery facilities which provide cardiac catheterization. The State Plan does not state or imply, however, that every facility with a catheterization program should also have open heart surgery. The State Plan specifically recognizes there is support within medicine for cardiac catheterization labs not associated with open heart surgery programs. Florida currently has a significant number of hospitals with catheterization programs which do not perform open heart surgery. Neither the State nor Local Health Plans link approval of open heart surgery programs at a facility to the number of catheterizations being done at an institution. The District X (Broward County) Health Plan for 1985 states that each existing open heart surgery program must be performing at least 350 cases annually before additional programs will be considered. The parties have stipulated that each existing and approved open heart surgery program in Broward County is not currently operating at 350 open heart surgery cases per year. The District X Health Plan concludes that accessibility to either catheterization or open heart surgery is not a problem for residents of District X. The District plan recommends that "[N]ew cardiac catheterization or cardiac surgery programs should not be approved unless they meet or exceed the standards and criteria set forth by HRS." The plan does not specify circumstances which the Local Health Council identifies as justifying a departure from those standards. Nowhere in the District X Health Plan's examination of available cardiac services is evaluation based on anything other than a district-wide basis. The Local Health Council has neither adopted subdistricts for cardiac services nor manifested through its plan any indication that new cardiac services should be examined on anything less than a district-wide basis. Division of the county north and south or east and west should not be done in determining the need for open heart surgery in Broward; the county should be looked at as a unit. Plantation has argued that there are different medical communities in the east and west portions of Broward County and that physician referral patterns are such that State Road 441 is a dividing line between east and west medical communities. It maintains that Florida Medical Center is the only open heart provider located in the west, and thus operates almost without competition in western Broward, and without competitive stimulus to affect cost or quality of service. In the absence of sub-districting by the Local Health Council, ad hoc balkanization of the county is inappropriate. Neither of the applications satisfy the criteria of the Local Health Plan. Insofar as Rule 10-5.0ll(1)(f)7., Florida Administrative Code, requires applications to be consistent with the Local Health Plan and the State Health Plan, both applications failed to meet that portion of the rule. Availability, Utilization, Geographic Accessibility and Economic Accessibility Of Facilities In The District. Section 381.494(6)(c)2., Florida Statutes. As to service accessibility, open heart services are available within two hours under average travel conditions for at least 90 percent of the District X population. The Local Health Council has found that accessibility does not present a problem to the residents of District X. Open heart surgery is available to patients in Broward County, including indigents who are able to receive treatment at Broward General without regard to ability to pay. As to utilization, none of the five existing providers of open heart surgery in Broward operates at capacity. North Ridge can easily handle 150 more open heart surgery cases per year with its current staffing. Broward General is working 4 hours per day 4 days a week to do 230 open heart surgeries. Holy Cross performs only 235 procedures per year in its two operating rooms dedicated to open heart surgery. Florida Medical Center performs about 400 open heart surgeries in its two dedicated operating rooms. Memorial Hospital can handle twice its 1986 rate of 355 open heart procedures without difficulty. The record as a whole indicates there is currently substantial excess capacity in the existing open heart surgery programs in District X. This will continue through the planning horizon. While there may be occasional scheduling problems at any of the 5 current providers of open heart surgery at times of peak demand, these anecdotal problems do not support a finding that open heart surgery is inaccessible or that current providers are overutilized. North Broward failed to demonstrate that there is any concentration of hispanic migrant workers in northwest Broward in need of open heart surgery services that are not receiving them and which it, as a tax supported institution, would serve. There is no issue as to the applicants' ability to meet the standard enacted in Rule 10-5.011(1)(f)(3), Florida Administrative Code, which implements Section 381.494(6)(c) 2., Florida Statutes. Quality of Care Section 381.494(6)(c)3., Florida Statutes Additional open heart programs would reduce the number of procedures done in the existing programs and thereby affect quality of care, for an open heart surgical team needs to perform a considerable number of procedures to remain proficient. Efficiency and communication among the entire surgical team is important to lower operating time and time under anesthesia. The team consists of the surgeon, an assistant surgeon, surgical nurses, the pump profusionist, the anesthesiologist, the hospital intensive care unit, the monitoring units, and physical and respiratory therapy units. In 1986 North Ridge performed about 600 open heart procedures. Florida Medical Center performed about 404; Memorial performed approximately 355, Broward General Medical Center performed 235, and Holy Cross performed 235. All provide high quality care. Holy Cross Hospital and Broward General Medical Center have not reached the 350 procedure volume required by Rule 10-5.011(1)(f)11. (I), Florida Administrative Code. Memorial and Florida Medical Center are just over the 350 procedure volume set in the rule and will drop below that number if Plantation is approved, which would degrade the quality of care at those institutions. Economies And Improvement In Services Derived From Shared Health Care Resources Section 381.494(6)(c)51 Florida Statutes. Plantation did not contend that its proposal would result in economies and improvements from joint, cooperative, or shared health care resources. North Broward proposes to share the same open heart surgical team that is now being using by Broward General, a larger hospital owned by the North Broward Hospital District. North Broward has no contract with the surgeons at Broward General to insure that they will staff its open heart surgery program if it is approved. If the volume of open heart surgery at North Broward grows to occupy its current open heart surgeons full time, additional surgeons can be added to the group of surgeons who serve Broward General. A witness for North Broward testified that this would still constitute a shared service program. Such an elastic definition of a "shared service", based on whether all surgeons are in a group practice together rather than on whether actual procedures are done together, is useless. National Health Planning Guidelines published in the Federal Register on March 28, 1978 state than an open heart surgery program should reach 200 cases within three years in order to be cost effective and to have a high level of care, and that additional programs should not be approved unless all existing programs have reached the level of 350 cases per program. 43 Fed.Reg. 13048. These standards are generally incorporated in Rule 10-5.011(1)(f) governing open heart surgery programs. The federal regulation also states that in special circumstances, a shared surgical team may perform fewer than 200 cases if they are performing open heart surgery in more than one institution; in such cases procedures at each institution may be aggregated to reach the 200 case level. The Federal Register states "In some areas open heart surgical teams, including surgeons and specialized technologists, are utilizing more than one institution. For these institutions the guidelines may be applied to the combined number of open heart procedures performed by the surgical team where an adjustment is justifiable in line with Section 121.6(B) and promotes more cost effective use of available facilities and support personnel. In such cases, in order to maintain quality care a minimum of 75 open heart procedures at any institution is advisable. . . ." 43 Fed. Reg. 13048 Section 121.6(B) states that adjustments may be made by local health systems agencies (now local health councils) to the standards set in the Federal guidelines for important reasons, e.g. increased cost of care for a substantial number of patients in the area if the guidelines are followed, or if residents of the service area do not have access to necessary health services. Special circumstances which have justified the use of a shared surgical team under the federal guidelines have been to provide indigent care, geographic accessibility, trauma service, or to meet the needs of a teaching hospital. While special circumstances may justify the use of a shared team, a shared team is not a special circumstance in and of itself. A reading of the entire portion of the federal guidelines dealing with shared surgical teams leads to the conclusion that the circumstances in which those guidelines authorize the use of shared surgical teams to operate open heart surgery programs that would not otherwise meet the National guidelines are not present. North Broward's proposal to use a shared open heart surgical team with Broward General does not enhance its application. The Extent To Which The Proposed Services Will Be Accessible To All Residents Of The Service District. Section 381.494(6)(c)8., Florida Statutes The parties stipulated that the Petitioners' meet the considerations of criteria 8 regarding health manpower, management personnel and funds for capital and operating expenditures, and that the other portions of subsection 8 are inapplicable, except for the clause concerning the extent to which the proposed services are accessible to all residents of the service district. The proposed services at North Broward would be economically accessible to the residents of the service district. North Broward serves patients without regard to their financial resources. It currently cares for indigents in its cardiac catheterization laboratory. Its filings with the Hospital Cost Containment Board for 1987 budget 19.5 percent of its charges as unpaid because rendered to indigents. The budget also projects Medicaid deductions as 5.2 percent of total revenue. By comparison, North Ridge and Holy Cross project 0 percent Medicaid deductions in their 1987 budgets. North Ridge projects only 3.7 percent and Holy Cross 4.5 percent for uncompensated indigent care. Florida Medical Center's performance shows only 0.1 percent Medicaid and 6.1 percent uncompensated care, which includes bad debt. None of the current open heart surgery providers which are privately owned has a particularly good record in providing access to indigents. On the other hand, indigents generally do not significantly utilize open heart surgical services. Plantation's current Medicaid utilization approximates 2 percent. There is no indication that Plantation's proposal will significantly enhance economic accessibility of open heart surgery services to indigents in District X. It has given no undertaking that it will provide any particular level of service to indigents. While Plantation will accept patients when a physician with staff privileges chooses to admit the patient, there is no showing that physicians at Plantation have any significant indigent patient load. Probable Impact Of The Proposed Projects On The Cost Of Providing Open Heart Surgery Services. Section 381.494(6)(c) 12., Florida Statutes There is no need in the district for a new program and the approval of additional programs will have an adverse economic impact on existing providers by diluting the number of procedures now being performed by existing programs. For example, Plantation is physically near Florida Medical Center. Much of the cardiac surgery and therapeutic catheterization (angioplasty) performed on patients who receive diagnostic catheterization at Plantation is now being done at Florida Medical Center. Patients who have diagnostic catheterization usually have their open heart surgery or angioplasty at the hospital where their catheterization was performed. Thus if Plantation receives approval for its open heart surgery program, most of those patients who receive cardiac catheterizations at Plantation would have their angioplasty or open heart surgery done there rather than at Florida Medical Center. Florida Medical Center has not attached a particular dollar loss figure to the impact of the approval of Plantation's open heart surgery program. Approval of the Plantation program will result in a pre-tax income decrement to North Ridge of approximately $416,000 in the 12 months ending December 31, 1989. Memorial Hospital would probably lose $690,000 in net revenue if Plantation is approved. Holy Cross would lose about 15 percent of its heart patients. II. Factual Findings Concerning The Rule Criteria Against Which The Application Must Be Evaluated Rule Hethodology. Rule 10-5.011(f)8. The parties have stipulated that applied on a District-wide basis, the formula set in Rule 10-5.011(f)8., using the 1984 or 1985 District X open heart surgery use rate applied to the 1987 population forecast for Broward County by the Governor's Office results in an average of less than 350 procedures annually for the existing providers in Broward County. Moreover, each existing and approved open heart surgery program in Broward is not currently operating at 350 open heart surgery cases per year. According to the evidence from the Department of Health and Rehabilitative Services, the methodology shows need for 4.4 open heart programs in Broward County. HRS Exhibit 1. Minimum Service Volume For Existing Applicants, Rule 10-5.011(1)(f)ll. Florida Administrative Code. The rule also requires that the service volume of each existing and approved open heart program be at least 350 adult open heart surgery cases per year. Holy Cross and Broward Medical Center have not reached the 350 minimum service volume in 1986. Memorial and Florida Medical Center just reached that level in 1986. The Abnormal Circumstance Exception Rule 10-5.011(1)(f)2., Florida Statutes The rules of the Department of Health and Rehabilitative Services provides that the "Department will not normally approve applications for new open heart surgery programs in any service area unless the conditions of sub- paragraphs 8. and 11. . . . are met". As shown in the discussion above, those sub-paragraphs are not met by the applications and unless an abnormal situation prevails in Broward County, the applications should be denied. Service Accessibility Rule 10-5.011(1)(f)4., Florida Administrative Code The parties stipulated that each of the Petitioners meets the requirements of service accessibility involving travel time, hours of operation and waiting. The only issue remaining is the criterion dealing with underserved population groups. There is no persuasive evidence that there are any underserved population groups in Broward County, i.e. Medicare, Medicaid or indigent patients. Broward General has additional capacity to serve such patients. Service Quality Rule 10-5.011(1)(f) 5., Florida Administrative Code The parties stipulated that Petitioners' applications meet the criteria of this rule, except as logistically affected by North Broward's shared surgical concept, and the applicant's ability to achieve a minimum service volume. The application of North Broward meets the rule criteria insofar as having an adequate number of appropriately trained personnel for the program. The problem is that with the shared surgical team it is physically impossible for the team to be in two hospitals at the same time. Both applicants would achieve the necessary volume of 200 procedures within 3 years. Cost Effectiveness Rule 10-5.011(1)(f)6., Florida Administrative Code The parties stipulated that both applicants' proposed equipment lists and costs are not in dispute. The charges to be made for open heart surgery at Plantation and North Broward would be comparable with charges established by similar institutions in the service area. Mere competition, given five existing providers, would insure this. There is, however, a less costly alternative to the institution at Plantation and North Broward of open heart surgery programs: Further use of the existing programs which do not meet the minimum 350 procedure service level required by Rule 10-5.011(1)(f)11., Florida Administrative Code. The cost effectiveness component of Rule 10-5.011(1)(f)6. has not been met by either applicant.
Recommendation The applications of North Broward Medical Center and Plantation General Hospital for approval of open heart surgery programs should be denied. DONE and ORDERED this 6th day of August, 1987, in Tallahassee, Florida. WILLIAM R. DORSEY, JR. Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 6th day of August, 1987. APPENDIX TO RECOMMENDED ORDER, CASE NO. 86-1535, 86-1536 Rulings on the Joint Proposals of the Applicants: 1-6. Covered in Findings of Fact 1-3. 7-10. To the extent appropriate, covered in Finding of Fact 4. Rejected as unnecessary. Rejected as a conclusion, not a finding. Rejected for the reasons stated in Finding of Fact 10. Rejected because to the extent that the State Plan speaks of maintaining an average of 300 open heart surgery procedures, it is inconsistent with the portion of Rule 10-5.11(1)(f)1l. a. (I) which requires each program to have a volume of 350. Rejected for the reasons stated in Findings of Fact 10- 12. Rejected because to the extent that the State Plan speaks of maintaining an average of 300 open heart surgery procedures, it is inconsistent with the portion of Rule 10-5.11(1)(f)11. a. (I) which requires each program to have a volume of 350. Covered in Finding of Fact 41. Covered in Finding of Fact 32. Covered in Finding of Fact 40. Rejected because whether the "350" standard relates to economic efficiency or other issues it still applies, and is not met. The allegation that Holy Cross has not met the standard due to its own constraints is rejected. Rejected because the concept of a shared surgical team is rejected. See Findings of Fact 30-33 and 40. Rejected as unnecessary. Rejected as unnecessary because existing providers do not perform 350 procedures per year as the rule requires. Rejected because Holy Cross performed 235 procedures. See Finding of Fact 21. Rejected as unnecessary and irrelevant. 25-30. Rejected because the attempt to use a use rate other than that prescribed in Rule 10-5.011(1)(f)8. is improper. 31-34. The evidence that other providers have operational constraints which impede expansion of the number of procedures at their facilities are unpersuasive. 35-37. Covered in Finding of Fact 35. Covered in Finding of Fact 35. This attempt to create a subdistrict for open heart services is rejected as inconsistent with the Local Health Plan. Covered in Finding of Fact 18. Rejected as legal interpretation not a fact. Rejected as legal interpretation not a fact. Rejected as unnecessary. Subparagraph 11. of the rule does not speak in terms of averages. This finding is rejected. To the extent HRS may have, in the past, used averages rather than absolute numbers, that was a misapplication of the rule. Rejected because the contention concerning operational constraints of Holy Cross is rejected as unpersuasive. Rejected as unnecessary. 47-53. Rejected because although the applicants can meet the 200 procedure minimum service volume they cannot meet the other requirements of subparagraph 11, rendering further findings on minimum service volume unnecessary and subordinate. 54-61. Rejected because although cardiologists would prefer to have open heart surgery available so that they can also provide therapeutic catheterizations, they are not necessary for operation of a diagnostic catheterization laboratory. See Finding of Fact 11. 62-71. Covered in Finding of Fact 35 and 36. 72. The necessary findings concerning shared services are made in Findings of Fact 30-33. The additional information in these proposals is unnecessary. 79-83. Covered in Finding of Fact 41, to the extent necessary. 84-164. The findings concerning lack of adverse impact on intervenors are generally rejected. The approval of additional programs will necessarily have the effect of diluting the number of procedures performed by existing providers, which has an adverse financial impact on them. The losses the opponents will experience are not especially significant, in the sense that they would cause existing providers to cease providing open heart surgery services. The factor is not so significant in the balancing to justify the extensive proposed findings made by the applicants, which are therefore rejected as subordinate and unnecessary. Ruling on Proposals of the Department of Health and Rehabilitative Services: The Proposed Recommended Order submitted by the Department of Health and Rehabilitative Services is quite brief. All of the proposals have essentially been adopted in the Recommended Order. Rulings on the Proposed Findings of Florida Medical Center: Covered in introductory paragraph. Covered in statement of issue. 3-5. Covered in Finding of Fact 1. 6. Rejected as unnecessary because capital costs are not an issue. 7-8. Covered in Finding of Fact 1. 9. Covered in Finding of Fact 8. 10. Covered in Finding of Fact 1. 11-13. Rejected as unnecessary. 14. Covered in Finding of Fact 4. 15. Rejected as unnecessary. 16-17. Covered in Finding of Fact 4. 18. Rejected as unnecessary. 19. Discussed in Conclusion of Law 12. 20-24. Rejected as unnecessary. 25-27. Covered in Finding of Fact 8. 28. Rejected as subordinate. 29. Covered in Finding of Fact 8. 30-31. Rejected as unnecessary. 32. Covered in Finding of Fact 37. 33-41. Rejected as unnecessary. 42-43. Covered in Finding of Fact 9. 44. Rejected as unnecessary. 45. Covered in Finding of Fact 9. 46. Covered in Finding of Fact 10. 47-48. Covered in Finding of Fact 11. 49. Covered in Finding of Fact 12. Covered in Finding of Fact 13. Covered in Finding of Fact 14. Covered in Finding of Fact 15. Covered in Finding of Fact 16. Covered in Finding of Fact 17. Covered in Finding of Fact 18. 56-58. Rejected as cumulative. Rejected as unnecessary. Rejected because testimony of East-West communities is legally irrelevant. 61-62. Rejected as unnecessary. Rejected as irrelevant. Rejected as unnecessary. 65-66. Rejected as subordinate and cumulative. Covered in Finding of Fact 22. Rejected as unnecessary. 69-70. Subordinate to Finding of Fact 27. 71-75. Covered in Finding of Fact 22. 76-77. Rejected as unnecessary. Covered in Finding of Fact 27. Implicitly dealt with in Finding of Fact 21. Rejected as unnecessary. Covered in Finding of Fact 40. 82-84. Rejected as unnecessary. 85. Covered in Finding of Fact 29. 86-87. Covered in Finding of Fact 36. 88-109. Covered in Finding of Fact 37 to the extent necessary. 110-119. Rejected because Section 381.494(6)(d) does not apply because the project does not reach the capital expenditure threshhold of $600,000. 120. Covered in Finding of Fact 38. 121-124. Covered in Conclusions of Law. Covered in Finding of Fact 20. To the extent necessary, covered in Finding of Fact 36. Covered in Finding of Fact 36. 128-129. Covered in Finding of Fact 41. Covered in Finding of Fact 19. Rejected as unnecessary. Covered in Conclusion of Law 10. 133-141. Rejected as unnecessary. Covered in Finding of Fact 37. Rejected as not constituting a Finding of Fact. Rejected as irrelevant whether HRS practice reflects what is found in the rule or not, HRS is required to follow its rules. Rejected as subordinate. Covered in Finding of Fact 36. Rejected as subordinate. 148-150. Rejected as unnecessary. 151. Covered in Finding of Fact 36. Rulings on Findings by North Ridge: Covered in Finding of Fact 1. Covered in Findings of Fact 9, 13 and 16. Covered in Findings of Fact 13 and 33. Covered in Finding of Fact 7 to the extent necessary. Covered in Finding of Fact 27 to the extent necessary. Covered in Finding of Fact 21 to the extent necessary. 7-8. Rejected as unnecessary. 9. Covered in Findings of Fact 25 and 26. 10-11. Rejected as unnecessary. Covered in Finding of Fact 5 to the extent necessary. Covered in Findings of Fact 6 and 21, to the extent necessary. Covered in Findings of Fact 8 and 21. Covered in Finding of Fact 30 to the extent necessary. 16-17. Rejected as unnecessary. Covered in Finding of Fact 30. Covered in Finding of Fact 31. 20-26. Rejected as unnecessary. 27. Implicitly adopted in Finding of Fact 31. 28-30. Rejected as unnecessary. Covered in Findings of Fact 2 and 23. Rejected as unnecessary. Rejected as unnecessary. This is governed by Rule 10- 5.011(1)(f). Rejected as unnecessary. To the extent appropriate, covered in Finding of Fact 37. 36-43. Covered in Finding of Fact 37. The specific impact of the opening of the North Broward Program in North Ridge has not been determined by the Hearing Officer because it is unnecessary to do so. An additional program will dilute the number of procedures already being provided, which clearly will have a negative financial impact on North Ridge. 44-47. To the extent necessary, covered in Findings of Fact 32 and 33. 48-50. Rejected as unnecessary. Rejected because the shared surgical team concept has been rejected as the basis for the Certificate of Need, economic access is already adequate, demographic factors do not require a new program and rate of increase in utilization in Broward is not relevant because the rule requires a specific use rate. Rejected as a recounting of contentions and is not a Finding of Fact. Rulings on Holy Cross Hospital and South Broward Hospital District: Covered in Finding of Fact 36. Rejected as subordinate. Covered in Finding of Fact 37. Covered in "Stipulation concerning applicable statutes." Rejected as a Conclusion of Law, not a Finding of Fact. Rejected as a statement of position, not a Finding of Fact. Covered in Finding of Fact 2. Covered in Finding of Fact 4. Covered in Finding of Fact 5. Covered in Finding of Fact 6. Covered in Finding of Fact 8. Covered in Finding of Fact 7. Rejected as a statement of law, not a Finding of Fact. Covered in Finding of Fact 20. Covered in Findings of Fact 23 and 35. Rejected as unnecessary. Covered in Finding of Fact 36. Rejected as unnecessary. 19-20. Rejected as cumulative. 21. Rejected as unnecessary. 22-25. Covered in Finding of Fact 21. 26-27. Rejected as unnecessary. Rejected as a statement of law, not a Finding of Fact. Covered in Finding of Fact 21. Covered in Findings of Fact 37 and 28. Rejected as unnecessary. Covered in Finding of Fact 9. Covered in Finding of Fact 25. 34-35. Covered in Finding of Fact 26. 36-37. Rejected as unnecessary. Rejected as a statement of a position, not a Finding of Fact. Rejected for the reasons proposal 38 was rejected. Covered in Conclusion of Law 10. Rejected as unnecessary. Covered in Conclusion of Law 10. 43-46. Rejected as unnecessary. 47. To the extent appropriate, covered in Findings of Fact 10 and 11. 48-50. Rejected as unnecessary. 51-52. Covered in Finding of Fact 9. Covered in Finding of Fact 10. Covered in Finding of Fact 11. Covered in Finding of Fact 15. Covered in Finding of Fact 14. 57-58. Covered in Finding of Fact 18. 59-69. Rejected as unnecessary. 70-107. Covered in Finding of Fact 37. COPIES FURNISHED: Ronald K. Kolins, Esquire Post Office Box 3888 West Palm Beach, Florida 33402 John Parker, Esquire J. Marbury Rainer, Esquire John Rue, Esquire 1200 Carnegie Building 133 Carnegie Way Atlanta, Georgia 30303 R. Bruce McKibben, Jr., Esquire Department of Health and Rehabilitative Services 1323 Winewood Boulevard Building One, Room 407 Tallahassee, Florida 32399-0700 Kenneth F. Hoffman, Esquire Eleanor Joseph, Esquire Oertel & Hoffman, P.A. Post Office Box 6507 Tallahassee, Florida 32314-6507 Steve Ecenia, Esquire Post Office Drawer 1838 Tallahassee, Florida 32301 Eric B. Tilton, Esquire Kenneth D. Kranz, Esquire Post Office Drawer 550 Tallahassee, Florida 32302 Gregory L. Coler, Secretary Department of Health and Rehabilitative Services 1323 Winewood Boulevard Building One, Room 407 Tallahassee, Florida 32399-0700 Sam Power, Clerk Department of Health and Rehabilitative Services 1323 Winewood Boulevard Building One, Room 407 Tallahassee, Florida 32399-0700 John Miller, Acting General Counsel Department of Health and Rehabilitative Services 1323 Winewood Boulevard Building One, Room 407 Tallahassee, Florida 32399-0700
The Issue Whether the Certificate of Need application (CON 9239) of Galencare, Inc., d/b/a Brandon Regional Hospital ("Brandon") to establish an open heart surgery program at its hospital facility in Hillsborough County should be granted?
Findings Of Fact District 6 District 6 is one of eleven health service planning districts in Florida set up by the "Health Facility and Services Development Act," Sections 408.031-408.045, Florida Statutes. See Section 408.031, Florida Statutes. The district is comprised of five counties: Hillsborough, Manatee, Polk, Hardee, and Highlands. Section 408.032(5), Florida Statutes. Of the five counties, three have providers of adult open heart surgery services: Hillsborough with three providers, Manatee with two, and Polk with one. There are in District 6 at present, therefore, a total of six existing providers. Existing Providers Hillsborough County The three providers of open heart surgery services ("OHS") in Hillsborough County are Florida Health Sciences Center, Inc., d/b/a Tampa General Hospital ("Tampa General"), St. Joseph's Hospital, Inc. ("St. Joseph's"), and University Community Hospital, Inc., d/b/a University Community Hospital ("UCH"). For the most part, Interstate 75 runs in a northerly and southerly direction dividing Hillsborough County roughly in half. If the interstate is considered to be a line dividing the eastern half of the county from the western, all three existing providers are in the western half of the county within the incorporated area of the county's major population center, the City of Tampa. Tampa General Opened approximately a century ago, Tampa General has been at its present location in the City of Tampa on Davis Island at the north end of Tampa Bay since 1927. The mission of Tampa General is three-fold. First, it provides a range of care (from simple to complex) for the west central region of the state. Second, it supports both the teaching and research activities of the University of South Florida College of Medicine. Finally and perhaps most importantly, it serves as the "health care safety net" for the people of Hillsborough County. Evidence of its status as the safety net for those its serves is its Case Mix Index for Medicare patients: 2.01. At such a level, "the case mix at Tampa General is one of the highest in the nation in Medicare population." (Tr. 2452). In keeping with its mission of being the county's health care safety net, Tampa General is a full-service acute care hospital. It also provides services unique to the county and the Tampa Bay area: a Level I trauma center, a regional burn center and adult solid organ transplant programs. Tampa General is licensed for 877 beds. Of these, 723 are for acute care, 31 are designated skilled nursing beds, 59 are comprehensive rehabilitation beds, 22 are psychiatry beds, and 42 are neonatal intensive care beds (18 Level II and 24 Level III). Of the 723 acute care beds, 160 are set aside for cardiac care, although they may be occupied from time-to-time by non-cardiac care patients. Tampa General is a statutory teaching hospital. It has an affiliation with the University of South Florida College of Medicine. It offers 13 residency programs, serving approximately 200 medical residents. Tampa General offers diagnostic and interventional cardiac catheterization services in four laboratories dedicated to such services. It has four operating rooms dedicated to open heart surgery. The range of open heart surgery services provided by Tampa General includes heart transplants. Care of the open heart patient immediately after surgery is in a dedicated cardiovascular intensive care unit of 18 beds. Following stay in the intensive care unit, the patient is cared for in either a 10-bed intermediate care unit or a 30- bed telemetry unit. Tampa General's full-service open heart surgery program provides high quality of care. St. Joseph's Founded by the Franciscan Sisters of Allegheny, New York, St. Joseph's is an acute care hospital located on Martin Luther King Boulevard in an "inner city kind of area" (Tr. 1586) of the City of Tampa near the geographic center of Hillsborough County. On the hospital campus sit three separate buildings: the main hospital, consisting of 559 beds; across the street, St. Joseph's Women's Hospital, a 197-bed facility dedicated to the care of women; and, opened in 1998, Tampa Children's Hospital, a 120-bed free-standing facility that offers pediatric services and Level II and Level III neonatal intensive care services. In addition to the women's and pediatric facilities, and consistent with the full-service nature of the hospital, St. Joseph's provides behavioral health and oncology services, and most pertinent to this proceeding, open heart surgery and related cardiovascular services. Designated as a Level 2 trauma center, St. Joseph's has a large and active emergency department. There were 90,211 visits to the Emergency Room in 1999, alone. Of the patients admitted annually, fifty-five percent are admitted through the Emergency Room. The formal mission of St. Joseph's organization is to take care of and improve the health of the community it serves. Another aspect of the mission passed down from its religious founders is to take care of the "marginalized, . . . the people that in many senses cannot take care of themselves, [those to whom] society has . . . closed [its] eyes . . .". (Tr. 1584). In keeping with its mission, it is St. Joseph's policy to provide care to anyone who seeks its hospital services without regard to ability to pay. In 1999, the hospital provided $33 million in charity care, as that term is defined by AHCA. In total, St. Joseph's provided $121 million in unfunded care during the same year. Not surprisingly, St. Joseph's is also a disproportionate Medicaid provider. The only hospital in the district that provides both adult and pediatric open heart surgery services, St. Joseph's has three dedicated OHS surgical suites, a 14-bed unit dedicated to cardiovascular intensive care for its adult OHS patients, a 12-bed coronary care unit and 86 progressive care beds, all with telemetry capability. St. Joseph's provides high quality of care in its OHS. UCH University Community Hospital, Inc., is a private, not-for-profit corporation. It operates two hospital facilities: the main hospital ("UCH") a 431-bed hospital on Fletcher Avenue in north Tampa, and a second 120-bed hospital in Carrollwood. UCH is accredited by the JCAHO "with commendation," the highest rating available. It provides patient care regardless of ability to pay. UCH's cardiac surgery program is called the "Pepin Heart & Vascular Institute," after Art Pepin, "a 14-year heart transplant recipient [and] . . . the oldest heart transplant recipient in the nation alive today." (Tr. 2841). A Temple Terrace resident, Mr. Pepin also helped to fund the start of the institute. Its service area for tertiary services, including OHS, includes all of Hillsborough County, and extends into south Pasco County and Polk County. The Pepin Institute has excellent facilities and equipment. It has three dedicated OHS operating suites, three fully-equipped "state-of-the-art" cardiac catheterization laboratories equipped with special PTCA or angioplasty devices, and several cardiology care units specifically for OHS/PTCA services. Immediately following surgery, OHS patients go to a dedicated 8-bed cardiovascular intensive care unit. From there patients proceed to a dedicated 20-bed progressive care unit ("PCU"), comprised of all private rooms. There is also a 24-bed PCU dedicated to PTCA patients. There is another 22-bed interventional unit that serves as an overflow unit for patients receiving PTCA or cardiac catheterization. UCH has a 22-bed medical cardiology unit for chest pain observation, congestive heart failure, and other cardiac disorders. Staffing these units requires about 110 experienced, full-time employees. UCH has a special "chest pain" Emergency Room with specially-trained cardiac nurses and defined protocols for the treatment of chest pain and heart attacks. UCH offers a free van service for its UCH patients and their families that operates around the clock. As in the case of the other two existing providers of OHS services in Hillsborough Counties, UCH provides a full range of cardiovascular services at high quality. Manatee County The two existing providers of adult open heart surgery services in Manatee County are Manatee Memorial Hospital, Inc., and Blake Medical Center, Inc. Neither are parties in this proceeding. Although Manatee Memorial filed a petition for formal administrative hearing seeking to overturn the preliminary decision of the Agency, the petition was withdrawn before the case reached hearing. Polk County The existing provider of adult open heart surgery services in Polk County is Lakeland Regional Medical Center, Inc. ("Lakeland"). Licensed for 851 beds, Lakeland is a large, not-for- profit, tertiary regional hospital. In 1999, Lakeland admitted approximately 30,000 patients. In fiscal 1999, there were about 105,000 visits to Lakeland's Emergency Room. Lakeland provides a wide range of acute care services, including OHS and diagnostic and therapeutic cardiac catheterization. It draws its OHS patients from the Lakeland urban area, the rest of Polk County, eastern Hillsborough County (particularly from Plant City), and some of the surrounding counties. Lakeland has a high quality OHS program that provides high quality of care to its patients. It has two dedicated OHS surgical suites and a third surgical suite equipped and ready for OHS procedures on an as-needed basis. Its volume for the last few years has been relatively flat. Lakeland offers interventional radiology services, a trauma center, a high-risk obstetrics service, oncology, neonatal intensive care, pediatric intensive care, radiation therapy, alcohol and chemical dependency, and behavioral sciences services. Lakeland treats all patients without regard to their ability to pay, and provides a substantial amount of charity care, amounting in fiscal year 1999 to $20 million. The Applicant Brandon Regional Hospital ("Brandon") is a 255-bed hospital located in Brandon, Florida, an unincorporated area of Hillsborough County east of Interstate 75. Included among Brandon's 255 beds are 218 acute care beds, 15 hospital-based skilled nursing unit beds, 14 tertiary Level II neonatal intensive care unit ("NICU") beds, and 8 tertiary Level III NICU beds. Brandon offers a wide array of medical specialties and services to its patients including cardiology; internal medicine; critical care medicine; family practice; nephrology; pulmonary medicine; oncology/hematology; infectious disease; neurology; psychiatry; endocrinology; gastroenterology; physical medicine; rehabilitation; radiation oncology; pathology; respiratory therapy; and anesthesiology. Brandon operates a mature cardiology program which includes inpatient diagnostic cardiac catheterization, outpatient diagnostic cardiac catheterization, electrocardiography, stress testing, and echocardiography. The Brandon medical staff includes 22 Board-certified cardiologists who practice both interventional and invasive cardiology. Board certification is a prerequisite to maintaining cardiology staff privileges at Brandon. Brandon's inpatient diagnostic cardiac catheterization program was initiated in 1989 and has performed in excess of 800 inpatient diagnostic cardiac catheterization procedures per year since 1996. Brandon's daily census has increased from 159 to 187 for the period 1997 to 1999 commensurate with the burgeoning population growth in Brandon's primary service area. Brandon's Emergency Room is the third busiest in Hillsborough County and has more visits than Tampa General's Emergency Room. From 1997- 1999, Brandon's Emergency Room visits increased from 43,000 to 53,000 per year and at the time of hearing were expected to increase an additional 5-6 percent during the year 2000. Brandon has also recently expanded many services to accommodate the growing health care needs of the Brandon community. For example, Brandon doubled the square footage of its Emergency Room and added 17 treatment rooms. It has also implemented an outpatient diagnostic and rehabilitation center, increased the number of labor, delivery and recovery suites, and created a high-risk ante-partum observation unit. Brandon was recently approved for 5 additional tertiary Level II NICU beds and 3 additional tertiary Level III NICU beds which increased Brandon's Level II/III NICU bed complement to 22 beds. Brandon is a Level 5 hospital within HCA's internal ranking system, which is the company's highest facility level in terms of service, revenue, and patient service area population. Brandon has been ranked as one of the Nation's top 100 hospitals by HCIA/Mercer, Inc., based on Brandon's clinical and financial performance. The Proposal On September 15, 1999, Brandon submitted to AHCA CON Application 9239, its third application for an open heart surgery program in the past few years. (CON 9085 and 9169, the two earlier applications, were both denied.) The second of the three, CON 9169, sought approval on the basis of the same two "not normal" circumstances alleged by Brandon to justify approval in this proceeding. CON 9239 addresses the Agency's January 2002 planning horizon. Brandon proposes to construct two dedicated cardiovascular operating rooms ("CV-OR"), a six-bed dedicated cardiovascular intensive care unit ("CVICU"), a pump room and sterile prep room all located in close proximity on Brandon's first floor. The costs, methods of construction, and design of Brandon's proposed CV-OR, CVICU, pump room, and sterile prep room are reasonable. As a condition of CON approval, Brandon will contribute $100,000 per year for five years to the Hillsborough County Health Care Program for use in providing health care to the homeless, indigent, and other needy residents of Hillsborough County. The administration at Brandon is committed to establishing an adult open heart surgery program. The proposal is supported by the medical and nursing staff. It is also supported by the Brandon community. The Brandon Community in East Hillsborough County Brandon, Florida, is a large unincorporated community in Hillsborough County, east of Interstate 75. The Brandon area is one of the fastest growing in the state. In the last ten years alone, the area's population has increased from approximately 90,000 to 160,000. An incorporated Brandon municipality (depending on the boundaries of the incorporation) has the potential to be the eighth largest city in Florida. The Brandon community's population is projected to further increase by at least 50,000 over the next five to ten years. Brandon Regional Hospital's primary service area not only encompasses the Brandon community, but further extends throughout Hillsborough County to a populous of nearly 285,000 persons. The population of Brandon's primary service area is projected to increase to 309,000 by the year 2004, of which approximately 32,000 are anticipated to be over the age of 65, making Brandon's population "young" relative to much of the rest of the State. The community of Brandon has attracted several new large housing developments which are likely to accelerate its projected growth. According to the Hillsborough County City- County Planning Commission, six of the eleven largest subdivisions of single-family homes permitted in 1998 are located nearby. For example, the infrastructure is in place for an 8,000-acre housing development east of Brandon which consists of 7,500 homes and is projected to bring in 30,000 people over the next 5-10 years. Two other large housing developments will bring an additional 5,000-10,000 persons to the Brandon area. The community of Brandon is also an attractive area for relocating businesses. Recent additions to the Brandon area include, among others, CitiGroup Corporation, Atlantic Lucent Technologies, Household Finance, Ford Motor Credit, and Progressive Insurance. CitiGroup Corporation alone supplemented the area's population with approximately 5,000 persons. The community of Brandon has experienced growth in the development of health care facilities with 5 new assisted living facilities and one additional assisted living facility under construction. The average age of the residents of these facilities is much higher than of the Brandon area as a whole. Existing Providers' Distance from Brandon's PSA Brandon's primary service area ("PSA") is comprised of 12 zip code areas "in and around Brandon, essentially eastern Hillsborough County." (Tr. 1071). Using the center of each zip code in Brandon's primary service area as the location for each resident of the zip code area, the residents of Brandon's PSA are an average of 15 miles from Tampa General, 16.4 miles from St. Joseph's, 17.3 miles from UCH and 24.6 miles from Lakeland Regional Medical Center. In contrast, they are only 7.7 miles from Brandon Regional Hospital. Using the same methodology, the residents of Brandon's PSA are an average of more than 40 miles from Blake Medical Center (44.9 miles) and Manatee Memorial (41 miles). Numeric Need Publication Rule 59C-1.033, Florida Administrative Code (the "Open Heart Surgery Program Rule" or the "Rule") specifies a methodology for determining numeric need for new open heart surgery programs in health planning districts. The methodology is set forth in section (7) of the Rule. Part of the methodology is a formula. See subsection (b) of Section (7) of the Rule. Using the formula, the Agency calculated numeric need in the District for the January 2002 Planning Horizon. The calculation yielded a result of 3.27 additional programs needed to serve the District by January 1, 2002. But calculation of numeric need under the formula is not all that is entailed in the complete methodology for determining numeric need. Numeric need is also determined by taking other factors into consideration. The Agency is to determine net need based on the formula "[p]rovided that the provisions of paragraphs (7)(a) and (7) (c) do not apply." Rule 59C-1.033(b), Florida Administrative Code. Paragraph (7)(a) states, "[a] new adult open heart surgery program shall not normally be approved in the district" if the following condition (among others) exists: 2. One or more of the operational adult open heart surgery programs in the district that were operational for at least 12 months as of 3 months prior to the beginning date of the quarter of the publication of the fixed need pool performed less than 350 adult open heart surgery operations during the 12 months ending 3 months prior to the beginning date of the quarter of the publication of the fixed need pool; . . . Rule 59C-1.033(7)(a), Florida Administrative Code. Both Blake Medical Center and Manatee Memorial Hospital in Manatee County were operational and performed less that 350 adult open heart surgery operations in the qualifying time periods described by subparagraph (7)(a)2., of the Rule. (Blake reported 221 open heart admissions for the 12-month period ending March 31, 1999; Manatee Memorial for the same period reported 319). Because of the sub-350 volume of the two providers, the Rule's methodology yielded a numeric need of "0" new open heart surgery programs in District 6 for the January 2002 Planning Horizon. In other words, the numeric need of 3.27 determined by calculation pursuant to the formula prior to consideration of the programs described in (7)(a)2.1, was "zeroed out" by operation of the Rule. Accordingly, a numeric need of zero for the district in the applicable planning horizon was published on behalf of the Agency in the January 29, 1999, issue of the Florida Administrative Weekly. No Impact on Manatee County Providers In 1998, only one resident of Brandon's PSA received an open heart surgery procedure in Manatee County. For the same period only two residents from Brandon's PSA received an angioplasty procedure in Manatee County. These three residents received the services at Manatee Memorial. Of the two Manatee County programs, Manatee Memorial consistently has a higher volume of open heart surgery cases and according to the latest data available at the time of hearing has "hit the mark" (Tr. 1546) of 350 procedures annually. Very few residents from other District 6 counties receive cardiac services in Manatee County. Similarly, very few Manatee county residents migrate from Manatee County to another District 6 hospital to receive cardiac services. In 1998, only 19 of a total 1,209 combined open heart and angioplasty procedures performed at either Blake or Manatee Memorial originated in the other District 6 counties and only two were from the Brandon area. Among the 6,739 Manatee County residents discharged from a Florida hospital in calendar year 1998 following any cardiovascular procedure (MDC-5), only 58(0.9 percent) utilized one of the other providers in District 6, and none were discharged from Brandon. Among the 643 open heart surgeries performed on Manatee County residents in 1998, only 17 cases were seen at one of the District 6 open heart programs outside of Manatee County. There is, therefore, practically no patient exchange between Manatee County and the remainder of the District. In sum, there is virtually no cardiac patient overlap between Manatee County and Brandon's primary service area. The development of an open heart surgery program at Brandon will have no appreciable or meaningful impact on the Manatee County providers. CON 9169 In CON 9169, Brandon applied for an open heart surgery program on the basis of special circumstances due to no impact on low volume providers in Manatee County. The application was denied by AHCA. The State Agency Action Report ("SAAR") on CON 9169, dated June 17, 1999, in a section of the SAAR denominated "Special Circumstances," found the application to demonstrate "that a program at Brandon would not impact the two Manatee hospitals . . .". (UCH Ex. No. 6, p. 5). The "Special Circumstances" section of the SAAR on CON 9169, however, does not conclude that the lack of impact constitutes special circumstances. In follow-up to the finding of the application's demonstration of no impact to the Manatee County, the SAAR turned to impact on the non-Manatee County providers in District The SAAR on CON 9169 states, "it is apparent that a new program in Brandon would impact existing providers [those in Hillsborough and Polk Counties] in the absence of significant open heart surgery growth." Id. In reference to Brandon's argument in support of special circumstances based on the lack of impact to the Manatee County providers, the CON 9169 SAAR states: [T]he applicant notes the open heart need formula should be applied to District 6 excluding Manatee County, which would result in the need for several programs. This argument ignores the provision of the rule that specifies that the need cannot exceed one. (UCH No. 6, p. 7). The Special Circumstances Section of the SAAR on CON 9169 does not deal directly with whether lack of impact to the Manatee County providers is a special circumstance justifying one additional program. Instead, the Agency disposes of Brandon's argument in the "Summary" section of the SAAR. There AHCA found Brandon's special circumstances argument to fail because "no impact on low volume providers" is not among those special circumstances traditionally or previously recognized in case law and by the Agency: To demonstrate need under special circumstances, the applicant should demonstrate one or more of the following reasons: access problems to open heart surgery; capacity limits of existing providers; denial of access based on payment source or lack thereof; patients are seeking care outside the district for service; improvement of care to underserved population groups; and/or cost savings to the consumer. The applicant did not provide any documentation in support of these reasons. (UCH No. 6, p. 29). Following reference to the Agency's publication of zero need in District 6, moreover, the SAAR reiterated that [t]he implementation of another program in Hillsborough County is expected to significantly [a]ffect existing programs, in particular Tampa General Hospital, an important indigent care provider. (Id.) Typical "not normal circumstances" that support approval of a new program were described at hearing by one health planner as consisting of a significant "gap" in the current health care delivery system of that service. Typical Not Normal Circumstances Just as in CON 9169, none of the typical "not normal" circumstances" recognized in case law and with which the Agency has previous experience are present in this case. The six existing OHS programs in District 6 have unused capacity, are available, and are adequate to meet the projected OHS demand in District 6, in Hillsborough County ("County"), and in Brandon's proposed primary service area ("PSA"). All three County OHS providers are less than 17 miles from Brandon. There are, therefore, no major service geographic gaps in the availability of OHS services. Existing providers in District 6 have unused capacity to meet OHS projected demand in January 2002. OHS volume for District 6 will increase by only 179 surgeries. This is modest growth, and can easily be absorbed by the existing providers. In fact, existing OHS providers have previously handled more volume than what is projected for 2002. In 1995, 3,313 OHS procedures were generated at the six OHS programs. Yet, only 3,245 procedures are projected for 2002. The demand in 1995 was greater than what is projected for 2002. Neither population growth nor demographic characteristics of Brandon's PSA demonstrate that existing programs cannot meet demand. The greatest users of OHS services are the elderly. In 1999, the percentage in District 6 was similar to the Florida average; 18.25 percent for District 6, 18.38 percent for the state. The elderly percentage in Hillsborough County was less: 13.21 percent. The elderly component in Brandon's PSA was less still: 10.44 percent. In 2004, about 18.5 percent of Florida and District 6 residents are projected to be elderly. In contrast, only 10.5 percent of PSA residents are expected to be elderly. Brandon's PSA is "one of the younger defined population segments that you could find in the State of Florida" (Tr. 2892) and likely to remain so. Brandon's PSA will experience limited growth in OHS volume. Between 1999 - 2002, OHS volume will grow by only 36. The annual growth thereafter is only 13 surgeries. This is "very modest" growth and is among the "lowest numbers" of incremental growth in the State. Existing OHS providers can easily absorb this minimal growth. Brandon's PSA, is not an underserved area . . . there is excellent access to existing providers and . . . the market in this service area is already quite competitive. There is not a single competitor that dominates. In fact, the four existing providers [in Hillsborough and Polk Counties] compete quite vigorously. (Tr. 2897). Existing OHS programs in District 6 provide very good quality of care. The surgeons at the programs are excellent. Dr. Gandhi, testifying in support of Brandon's application, testified that he was very comfortable in referring his patients for OHS services to St. Joseph and Tampa General, having, in fact, been comfortable with his father having had OHS at Tampa General. Likewise, Dr. Vijay and his group, also supporters of the Brandon application, split time between Bayonet Point and Tampa General. Dr. Vijay is very proud to be associated with the OHS program at Tampa General. Lakeland also operates a high quality OHS program. In its application, Brandon did not challenge the quality of care at the existing OHS programs in District 6. Nor did Brandon at hearing advance as reasons for supporting its application, capacity constraints, inability of existing providers to absorb incremental growth in OHS volume or failure of existing providers to meet the needs of the residents of Brandon's primary service area. The Agency, in its preliminary decision on the application, agreed that typical "not normal" circumstances in this case are not present. Included among these circumstances are those related to lack of "geographic access." The Agency's OHS Rule includes a geographic access standard of two hours. It is undisputed that all District 6 residents have access to OHS services at multiple OHS providers in the District and outside the District within two hours. The travel time from Brandon to UCH or Tampa General, moreover, is usually less than 30 minutes anytime during the day, including peak travel time. Travel time from Brandon to St. Joseph's is about 30 minutes. There are times, however, when travel time exceeds 30 minutes. There have been incidents when traffic congestion has prevented emergency transport of Brandon patients suffering myocardial infarcts from reaching nearby open heart surgery providers within the 30 minutes by ground ambulance. Delays in travel are not a problem in most OHS cases. In the great majority, procedures are elective and scheduled in advance. OHS procedures are routinely scheduled days, if not weeks, after determining that the procedure is necessary. This high percentage of elective procedures is attributed to better management of patients, better technology, and improved stabilizing medications. The advent of drugs such as thrombolytic therapy, calcium channel blockers, beta blockers, and anti-platelet medications have vastly improved stabilization of patients who present at Emergency Rooms with myocardial infarctions. In its application, Brandon did not raise outmigration as a not-normal circumstance to support its proposal and with good reason. Hillsborough County residents generally do not leave District 6 for OHS. In fact, over 96 percent of County residents receive OHS services at a District 6 provider. Lack of out-migration shows two significant facts: (a) existing OHS programs are perceived to be reasonably accessible; and (2) County residents are satisfied with the quality of OHS services they receive in the County. This 96 percent retention rate is even more impressive considering there are many OHS programs and options available to County residents within a two-hour travel time. In contrast, there are two low-volume OHS providers in Manatee County, one of them being Blake. Unlike Hillsborough County residents, only 78 percent of Manatee County residents remain in District 6 for OHS services. Such outmigration shows that these residents prefer to bypass closer programs, and travel further distances, to receive OHS services at high-volume facility in District 8, which they regard as offering a higher quality of service. In its Application, Brandon does not raise economic access as a "not normal" circumstance. In fact, Brandon concedes that the demand for OHS services by Medicaid and indigent patients is very limited because Brandon's PSA is an affluent area. Brandon does not "condition" its application on serving a specific number or percentage of Medicaid or indigent patients. There are no financial barriers to accessing OHS services in District 6. All OHS providers in Hillsborough County and LRMC provide services to Medicaid and indigent patients, as needed. Approving Brandon is not needed to improve service or care to Medicaid or indigent patient populations. Tampa General is the "safety net" provider for health care services to all County residents. Tampa General is an OHS provider geographically accessible to Brandon's PSA. Tampa General actively services the PSA now for OHS. Brandon did not demonstrate cost savings to the patient population of its PSA if it were approved. Approving Brandon is not needed to improve cost savings to the patient population. Brandon based its OHS and PTCA charges on the average charge for PSA residents who are serviced at the existing OHS providers. While that approach is acceptable, Brandon does not propose a charge structure which is uniquely advantageous for patients. Restated, patients would not financially benefit if Brandon were approved. Tertiary Service Open Heart Surgery is defined as a tertiary service by rule. A "tertiary health service" is defined in Section 408.032(17), Florida Statutes, as follows: health service, which, due to its high level of intensity, complexity, specialized or limited applicability, and cost, should be limited to, and concentrated in, a limited number of hospitals to ensure the quality, availability, and cost- effectiveness of such service. As a tertiary service, OHS is necessarily a referral service. Most hospitals, lacking OHS capability, transfer their patients to providers of the service. One might expect providers of open heart surgery in Florida in light of OHS' status as a tertiary service to be limited to regional centers of excellence. The reality of the six hospitals that provide open heart surgery services in District 6 defies this health-planning expectation. While each of the six provides OHS services of high quality, they are not "regional" centers since all are in the same health planning district. Rather than each being a regional center, the six together comprise more localized providers that are dispersed throughout a region, quite the opposite of a center for an entire region. Brandon's Allegations of Special Circumstances. Brandon presents two special circumstances for approval of its application. The first is that consideration of the low-volume Manatee County providers should not operate to "zero out" the numeric need calculated by the formula. The second relates to transfers and occasional problems with transfers for Brandon patients in need of emergency open heart services. "Time is Muscle" Lack of blood flow to the heart during a myocardial infarction ("MI") results in loss of myocardium (heart muscle). The longer the blood flow is disrupted or diminished, the more myocardium is lost. The more myocardium lost, the more likely the patient will die or, should the patient survive, suffer severe reduction in quality of life. The key to good patient outcome when a patient is experiencing an acute MI is prompt evaluation and rapid treatment upon presentation at the hospital. Restoration of blood flow to the heart (revascularization) is the goal of the treating physician once it is recognized that a patient is suffering an MI. If revascularization is not commenced within 2 hours of the onset of an acute MI, an MI patient's potential for recovery is greatly diminished. The need for prompt revascularization for a patient suffering an MI is summed up in the phrase "time is muscle," a phrase accepted as a maxim by cardiologists and cardiothoracic surgeons. Recent advances in modern medicine and technology have improved the ability to stabilize and treat patients with acute MIs and other cardiac traumas. The three primary treatment modalities available to a patient suffering from an MI are: 1) thrombolytics; 2) angioplasty and stent placement; and, 3) open heart surgery. Because of the advancement of the effectiveness of thrombolytics, thrombolytic therapy has become the standard of care for treating MIs. Thrombolytic therapy is the administration of medication to dissolve blood clots. Administered intravenously, thrombolytic medication begins working within minutes to dissolve the clot causing the acute MI and therefore halt the damage done by an MI to myocardium. The protocols to administer thrombolysis are similar among hospitals. If a patient presents with chest pain and the E.R. physician identifies evidence of an active heart attack, thrombolysis is normally administered. If the E.R. physician is uncertain, a cardiologist is quickly contacted to evaluate the patient. Achieving good outcomes in cases of myocardial infarctions requires prompt consultation with the patient, competent clinical assessment, and quick administration of appropriate treatment. The ability to timely evaluate patient conditions for MI, and timely administer thrombolytic therapy, is measured and evaluated nationally by the National Registry of Myocardial Infarction. The National Registry makes the measurement according to a standard known as "door-to-needle" time. This standard measures the time between the patient's presentation at the E.R. and the time the patient is initially administered thrombolytic medication by injection intravenously. Patients often begin to respond to thrombolysis within 10-15 minutes. Consistent with the maxim, "time is muscle," the shorter the door-to-needle time, the better the chance of the patient's successful recovery. The effectiveness of thrombolysis continues to increase. For example, the advent of a drug called Reapro blocks platelet activity, and has increased the efficacy rate of thrombolysis to at least 85 percent. As one would expect, then, thrombolytic therapy is the primary method of revascularization available to patients at Brandon. Due to the lack of open heart surgery backup, moreover, Brandon is precluded by Agency rule from offering angioplasty in all but the most extreme cases: those in which it is determined that a patient will not survive a transfer. While Brandon has protocols, authority, and equipment to perform angioplasty when a patient is not expected to survive a transfer, physicians are reluctant to perform angioplasty without open heart backup because of complications that can develop that require open heart surgery. Angioplasty, therefore, is not usually a treatment modality available to the MI patient at Brandon. Although the care of choice for MI treatment, thrombolytics are not always effective. To the knowledge of the cardiologists who testified in this proceeding, there is not published data on the percentage of patients for whom thrombolytics are not effective. But from the cardiologists who offered their opinions on the percentage in the proceeding, it can be safely found that the percentage is at least 10 percent. Thrombolytics are not ordered for these patients because they are inappropriate in the patients' individual cases. Among the contraindications for thrombolytics are bleeding disorders, recent surgery, high blood pressure, and gastrointestinal bleeding. Of the patients ineligible for thrombolytics, a subset, approximately half, are also ineligible for angioplasty. The other half are eligible for angioplasty. Under the most conservative projections, then at least 1 in 20 patients suffering an MI would benefit from timely angioplasty intervention for which open heart surgery back-up is required in all but the rarest of cases. In 1997, 351 people presented to Brandon's Emergency Room suffering from an acute MI. In 1998, the number of MIs increased to 427. In 1999, 428 patients presented to Brandon's Emergency Room suffering from an acute MI. At least 120 (10 percent) of the total 1206 MI patients presenting to Brandon's Emergency Room from 1997 to 1999 would have been ineligible for thrombolytics as a means of revascularization. Of these, half would have been ineligible for angioplasty while the other half would have been eligible. Sixty, therefore, is the minimum number of patients from 1997 to 1999 who would have benefited from angioplasty at Brandon using the most conservative estimate. Transfers of Emergency Patients Those patients who presented at Brandon's Emergency Room with acute MI and who could not be stabilized with thrombolytic therapy had to be transferred to one of the nearby providers of open heart surgery. In 1998, Brandon transferred an additional 190 patients who did not receive a diagnostic catheterization procedure at Brandon for either angioplasty or open heart surgery. For the first 9 months of 1999, 114 such transfers were made. Thus, in 1998 alone, Brandon transferred a total of 516 cardiac patients to existing providers for the provision of angioplasty or open heart surgery, more than any other provider in the District. In 1999, Brandon made 497 such transfers. Not all of these were emergency transfers, of course. But in the three years between 1997 and 1999 at least 60 patients were in need of emergency transfers who would benefit from angioplasty with open heart backup. Of those Brandon patients determined to be in need of urgent angioplasty or open heart surgery, all must be transferred to existing providers either by ambulance or by helicopter. Ambulance transfer is accomplished through ambulances maintained by the Hillsborough County Fire Department. Due to the cardiac patient's acuity level, ambulance transfer of such patients necessitates the use of ambulances equipped with Advanced Life Support Systems (ALS) in order to monitor the patient's heart functions and to treat the patient should the patient's condition deteriorate. Hillsborough County operates 18 ambulances. All have ALS capability. Patients with less serious medical problems are sometimes transported by private ambulances equipped with Basic Life Support Systems (BLS) that lack the equipment to appropriately care for the cardiac patient. But, private ambulances are not an option to transport critically ill cardiac patients because they are only equipped with BLS capability. Private ambulances, moreover, do not make interfacility transports of cardiac patients between Hillsborough County hospitals. There are many demands on the ambulance transfer system in Hillsborough County. Hillsborough County's 18 ALS ambulances cover in excess of 960 square miles. Of these 18 ambulances, only three routinely operate within the Brandon area. Hillsborough County ambulances respond to 911 calls before requests for interfacility transfers of cardiac patients and are extremely busy responding to automobile accidents, especially when it rains. As a result, Hillsborough County ambulances are not always available on a timely basis when needed to perform an interfacility transfer of a cardiac patient. At times, due to inordinate delay caused by traffic congestion, inter-facility ambulance transport, even if the ambulance is appropriately equipped, is not an option for cardiac patients urgently in need of angioplasty or open heart surgery. It has happened, for example, that an ambulance has appeared at the hospital 8 hours after a request for transport. Some cardiac surgeons will not utilize ground transport as a means of transporting urgent open heart and angioplasty cases. Expeditious helicopter transport in Hillsborough County is available as an alternative to ground transport. But, it too, from time-to-time, is problematic for patients in urgent need of angioplasty or open heart surgery. Tampa General operates two helicopters through AeroMed, only one of which is located in Hillsborough County. AeroMed's two helicopters are not exclusively devoted to cardiac patients. They are also utilized for the transfer of emergency medical and trauma patients, further taxing the availability of AeroMed helicopters to transfer patients in need of immediate open heart surgery or angioplasty. BayCare operates the only other helicopter transport service serving Hillsborough County. BayCare maintains several helicopters, only one of which is located in Hillsborough County at St. Joseph's. BayCare helicopters are not equipped with intra-aortic balloon pump capability, thereby limiting their use in transporting the more complicated cardiac patients. Helicopter transport is not only a traumatic experience for the patient, but time consuming. Once a request has been made by Brandon to transport a patient in need of urgent intervention, it routinely takes two and a half hours, with instances of up to four hours, to effectuate a helicopter transfer. At the patient's beside, AeroMed personnel must remove the patient's existing monitors, IVS, and drips, and refit the patient with AeroMed's equipment in preparation for flight. In more complicated cases requiring the use of an intra-aortic balloon pump, the patient's balloon pump placed at Brandon must be removed and substituted with the balloon pump utilized by AeroMed. Further delays may be experienced at the receiving facility. The national average of the time from presentation to commencement of the procedure is reported to be two hours. In most instances at UCH, it is probably 90 minutes although "[t]here are of course instances where it would be much faster . . .". (Tr. 3212). On the other hand, there are additional delays from time-to-time. "[P]erhaps the longest circumstance would be when all the labs are full . . . or . . . even worse . . . if all the staff has just left for the day and they are almost home, to then turn them around and bring them all back." (Id.) Specific Cases Involving Transfers Delays in the transfer process were detailed at hearing by Brandon cardiologists with regard to specific Brandon patients. In cases in which "time is muscle," delay is critical except for one subset of such cases: that in which, no matter what procedure is available and no matter how timely that procedure can be provided, the patient cannot be saved. Craig Randall Martin, M.D., Board-certified in Internal Medicine and Cardiovascular Disease, and an expert in cardiology, wrote to AHCA in support of the application by detailing two "examples of patients who were in an extreme situation that required emergent, immediate intervention . . . [intervention that could not be provided] at Brandon Hospital." (Tr. 408). One of these concerned a man in his early sixties who was a patient at Brandon the night and morning of October 13 and 14, 1998. It represents one of the rare cases in which an emergency angioplasty was performed at Brandon even though the hospital does not have open heart backup. The patient had presented to the Emergency Room at approximately 11:00 p.m., on October 13 with complaints of chest pain. Although the patient had a history of prior infarctions, PTCA procedures, and onset diabetes, was obese, a smoker and had suffered a stroke, initial evaluation, including EKG and blood tests, did not reveal an MI. The patient was observed and treated for what was probably angina. With the subsiding of the chest pain, he was appropriately admitted at 2:30 a.m. to a non- intensive cardiac telemetry bed in the hospital. At 3:00 a.m., he was observed to be stable. A few hours or so later, the patient developed severe chest pain. The telemetry unit indicated a very slow heart rate. Transferred to the intensive care unit, his blood pressure was observed to be very low. Aware of the seriousness of the patient's condition, hospital personnel called Dr. Martin. Dr. Martin arrived on the scene and determined the patient to be in cardiogenic shock, an extreme situation. In such a state, a patient has a survival rate of 15 to 20 percent, unless revascularization occurs promptly. If revascularization is timely, the survival rate doubles to 40 percent. Coincident with the cardiogenic shock, the patient was suffering a complete heart block with a number of blood clots in the right coronary artery. The patient's condition, to say the least, was grave. Dr. Martin described the action taken at Brandon: . . . I immediately called in the cardiac catheterization team and moved the patient to the catheterization laboratory. * * * Somewhere around 7:30 in the morning, I put a temporary pacemaker in, performed a diagnostic catheterization that showed that one of his arteries was completely clotted. He, even with the pacemaker giving him an adequate heart rate, and even with the use of intravenous medication for his blood pressure, . . . was still in cardiogenic shock. * * * And I placed an intra-aortic balloon pump . . ., a special pump that fits in the aorta and pumps in synchrony with the heart and supports the blood pressure and circulation of the muscle. That still did not alleviate the situation . . . an excellent indication to do a salvage angioplasty on this patient. I performed the angioplasty. It was not completely successful. The patient had a respiratory arrest. He required intubation, required to be put on a ventilator for support. And it became apparent to me that I did not have the means to save this patient at [Brandon]. I put a call to the . . . cardiac surgeon of choice . . . . [Because the surgeon was on vacation], [h]is associate [who happened to be in the operating room at UCH] called me back immediately . . . and said ["]Yes, I'll take your patient. Send him to me immediately, I will postpone my current case in order to take care of your patient.["] At that point, we called for helicopter transport, and there were great delays in obtaining [the] transport. The patient was finally transferred to University Community Hospital, had surgery, was unsuccessful and died later that afternoon. (Tr. 409-412). By great delays in the transport, Dr. Martin referred to inability to obtain prompt helicopter transport. University Community Hospital, the receiving hospital, was not able to find a helicopter. Dr. Martin, therefore, requested Tampa General (a third hospital uninvolved from the point of being either the transferring or the receiving hospital) to send one of its two helicopters to transfer the patient from Brandon to UCH. Dr. Martin described Tampa General's response: They balked. And I did not know they balked until an hour later. And I promptly called them back, got that person on the telephone, we had a heated discussion. And after that person checked with their supervisor, the helicopter was finally sent. There was at least an hour-and-a-half delay in obtaining a helicopter transport on this patient that particular morning that was unnecessary. And that is critical when you have a patient in this condition. (Tr. 413, emphasis supplied.) In the case of this patient, however, the delay in the transport from Brandon to the UCH cardiovascular surgery table, in all likelihood, was not critical to outcome. During the emergency angioplasty procedure at Brandon, some of the clot causing the infarction was dislodged. It moved so as to create a "no-flow state down the right coronary artery. In other words, . . ., it cut off[] the microcirculation . . . [so that] there is no place for the blood . . . to get out of the artery. And that's a devastating, deadly problem." (Tr. 2721). This "embolization, an unfortunate happenstance [at times] with angioplasty", id., probably sealed the patient's fate, that is, death. It is very likely that the patient with or without surgery, timely or not, would not have survived cardiogenic shock, complete heart block, and the circumstance of no circulation in the right coronary artery that occurred during the angioplasty procedure. Adithy Kumar Gandhi, M.D., is Board-certified in Internal Medicine and Cardiology. Employed by the Brandon Cardiology Group, a three-member group in Brandon, Dr. Gandhi was accepted as an expert in the field of cardiology in this proceeding. Dr. Gandhi testified about two patients in whose cases delays occurred in transferring them to St. Joseph’s. He also testified about a third case in which it took two hours to transfer the patient by helicopter to Tampa General. The first case involves an elderly woman. She had multiple-risk factors for coronary disease including a family history of cardiac disease and a personal history of “chest pain.” (Tr. 2299). The patient presented at Brandon’s Emergency Room on March 17, 1999 at around 2:30 p.m. Seen by the E.R. physician about 30 minutes later, she was placed in a monitored telemetry bed. She was determined to be stable. During the next two days, despite family and personal history pointing to a potentially serious situation, the patient refused to submit to cardiac catheterization at Brandon as recommended by Dr. Gandhi. She maintained her refusal despite results from a stress test that showed abnormal left ventricular systolic function. Finally, on March 20, after a meeting with family members and Dr. Gandhi, the patient consented to the cath procedure. The procedure was scheduled for March 22. During the procedure, it was discovered that a major artery of the heart was 80 percent blocked. This condition is known as the “widow-maker,” because the prognosis for the patient is so poor. Dr. Gandhi determined that “the patient needed open heart surgery and . . . to be transferred immediately to a tertiary hospital.” (Tr. 2305-6). He described that action he took to obtain an immediate transfer as follows: I talked to the surgeon up at St. Joseph’s and I informed him I have had difficulties transferring patients to St. Joseph’s the same day. [I asked him to] do me a favor and transfer the patient out of Brandon Hospital as soon as possible by helicopter. The surgeon promised me that he would take care of that. (Tr. 2261). The assurance, however, failed. The patient was not transferred that day. That night, while still at Brandon, complications developed for the patient. The complications demanded that an intra-aortic balloon pump be inserted in order to increase the blood flow to the heart. After Dr. Gandhi’s partner inserted the pump, he, too, contacted the surgeon at St. Joseph’s to arrange an immediate transfer for open heart surgery. But the patient was not transferred until early the next morning. Dr. Gandhi’s frustration at the delay for this critically ill patient in need of immediate open heart surgery is evident from the following testimony: So the patient had approximately 18 hours of delay of getting to the hospital with bypass capabilities even though the surgeon knew that she had a widow-maker, he had promised me that he would make those transfer arrangements, even though St. Joseph’s Hospital knew that the patient needed to be transferred, even though I was promised that the patient would be at a tertiary hospital for bypass capabilities. (Tr. 2262). Rod Randall, M.D., is a cardiologist whose practice is primarily at St. Joseph’s. He had active privileges at Brandon until 1998 when he “switched to courtesy privileges,” (Tr. 1735) at Brandon. He reviewed the medical records of the first patient about whom Dr. Gandhi testified. A review of the patient’s medical records disclosed no adverse outcome due to the patient’s transfer. To the contrary, the patient was reasonably stable at the time of transfer. Nonetheless, it would have been in the patient’s best interest to have been transferred prior to the catheterization procedure at Brandon. As Dr. Randall explained, [W]e typically cath people that we feel are going to have a probability of coronary artery disease. That is, you don’t tend to cath someone that [for whom] you don’t expect to find disease . . . . If you are going to cath this patient, [who] is in a higher risk category being an elderly female with . . . diminished injection fraction . . . why put the patient through two procedures. I would have to do a diagnostic catheterization at one center and do some type of intervention at another center. So, I would opt to transfer that patient to a tertiary care center and do the diagnostic catheterization there. (Tr. 1764, 1765). Furthermore, regardless of what procedure had been performed, the significant left main blockage that existed prior to the patient’s presentation at Brandon E.R. meant that the likely outcome would be death. The second of the patients Dr. Gandhi transferred to St. Joseph’s was a 74-year-old woman. Dr. Gandhi performed “a heart catheterization at 5:00 on Friday.” (Tr. 2267). The cath revealed a 90 percent blockage of the major artery of the heart, another widow-maker. Again, Dr. Gandhi recommended bypass surgery and contacted a surgeon at St. Joseph’s. The transfer, however, was not immediate. “Finally, at approximately 11:00 the patient went to St. Joseph’s Hospital. That night she was operated on . . . ”. (Tr. 2267). If Brandon had had open heart surgery capability, “[t]hat would have increased her chances of survival.” No competent evidence was admitted that showed the outcome, however, and as Dr. Randall pointed out, the medical records of the patient do not reveal the outcome. The patient who was transferred to Tampa General (the third of Dr. Ghandhi's patients) had presented at Brandon’s ER on February 15, 2000. Fifty-six years old and a heavy smoker with a family history of heart disease, she complained of severe chest pain. She received thrombolysis and was stabilized. She had presented with a myocardial infarction but it was complicated by congestive heart failure. After waiting three days for the myocardial infarction to subside, Dr. Gandhi performed cardiac catheterization. The patient “was surviving on only one blood vessel in the heart, the other two vessels were 100 percent blocked. She arrested on the table.” (Tr. 2271). After Dr. Gandhi revived her, he made arrangements for her transfer by helicopter. The transfer was done by helicopter for two reasons: traffic problems and because she had an intra-aortic balloon pump and there are a limited number of ambulances with intra- aortic balloon pump maintenance capability. If Brandon had had the ability to conduct open heart surgery, the patient would have had a better likelihood of successful outcome: “the surgeon would have taken the patient straight to the operating room. That patient would not have had a second arrest as she did at Tampa General.” (Tr. 2273). Marc Bloom, M.D., is a cardiothoracic surgeon. He performs open-heart surgery at UCH, where he is the chief of cardiac surgery. He reviewed the records of this 54-year-old woman. The records reflect that, in fact, upon presentation at Brandon’s E.R., the patient’s heart failure was very serious: She had an echocardiogram done that . . . showed a 20 percent ejection fraction . . . I mean when you talk severe, this would be classified as a severe cardiac compromise with this 20 percent ejection fraction. (Tr. 2712). Once stabilized, the patient should have been transferred for cardiac catheterization to a hospital with open- heart surgery instead of having cardiac cath at Brandon. It is true that delay in the transfer once arrangements were made was a problem. The greater problem for the patient, however, was in her management at Brandon. It was very likely that open heart surgery would be required in her case. She should have been transferred prior to the catheterization as soon as became known the degree to which her heart was compromised, that is, once the results of the echocardiogram were known. Adam J. Cohen, M.D., is a cardiologist with Diagnostic Consultative Cardiology, a group located in Brandon that provides cardiology services in Hillsborough County. Dr. Cohen provided evidence of five patients who presented at Brandon and whose treatments were delayed because of the need for a transfer. The first of these patients was a 76-year old male who presented to Brandon’s ER on April 6, 1999. Dr. Cohen considered him to be suffering “a complicated myocardial infarction.” (Brandon Ex. 45, p. 43) Cardiac catheterization conducted by Dr. Cohen showed “severe multi-vessel coronary disease, cardiogenic shock, severely impaired [left ventricular] function for which an intra-aortic balloon pump was placed . . .”. (Id.) During the placement of the pump, the patient stopped breathing and lost pulse. He was intubated and stabilized. A helicopter transfer was requested. There was only one helicopter equipped to conduct the transfer. Unfortunately, “the same day . . . there was a mass casualty event within the City of Tampa when the Gannet Power Plant blew up . . .”. (Brandon Ex. 45, p. 44). An appropriate helicopter could not be secured. Dr. Cohen did not learn of the unavailability of helicopter transport for an hour after the request was made. Eventually, the patient was transferred by ambulance to UCH. There, he received angioplasty and “stenting of the right coronary artery times two.” (Id., at p. 47.) After a slow recovery, he was discharged on April 19. In light of the patient’s complex cardiac condition, he received a good outcome. This patient is an example of another patient who should have been transferred sooner from Brandon since Brandon does not have open heart surgery capability. The second of Dr. Cohen’s patients presented at Brandon’s E.R. at 10:30 p.m. on June 14, 1999. He was 64 years old with no risk factors for coronary disease other than high blood pressure. He was evaluated and diagnosed with “a large and acute myocardial infarction” Two hours later, the therapy was considered a failure because there was no evidence that the area of the heart that was blocked had been reperfused. Dr. Cohen recommended transfer to UCH for a salvage angioplasty. The call for a helicopter was made at 12:58 a.m. (early the morning of June 15) and the helicopter arrived 40 minutes later. At UCH, the patient received angioplasty procedure and stenting of two coronary arteries. He suffered “[m]oderately impaired heart function, which is reflective of myocardial damage.” (Brandon Ex. 45, p. 58). If salvage angioplasty with open heart backup had been available at Brandon, the patient would have received it much more quickly and timely. Whether the damage done to the patient’s heart during the episode could have been avoided by prompt angioplasty at Brandon is something Dr. Cohen did not know. As he put it, “I will never know, nor will anyone else know.” (Brandon Ex. 45, p. 60). The patient later developed cardiogenic shock and repeated ventricular tachycardia, requiring numerous medical interventions. Because of the interventions and mechanical trauma, he required surgery for repair of his right femoral artery. The patient recently showed an injection fraction of 45 percent below the minimum for normal of 50 percent. The third patient was a 51-year-old male who had undergone bypass surgery 19 years earlier. After persistent recurrent anginal symptoms with shortness of breath and diaphoresis, he presented at Brandon’s E.R. at 1:00 p.m. complaining of heavy chest pain. Thrombolytic therapy was commenced. Dr. Cohen described what followed: [H]he had an episode of heart block, ventricular fibrillation, losing consciousness, for which he received ACLS efforts, being defibrillated, shocked, times three, numerous medications, to convert him to sinus rhythm. He was placed on IV anti- arrhythmics consisting of amiodarone. The repeat EKG showed a worsening of progression of his EKG changes one hour after the initiation of the TPA. Based on that information, his clinical scenario and his previous history, I advised him to be transferred to University Hospital for a salvage angioplasty. (Brandon Ex. 45, p. 62). Transfer was requested at 1:55 p.m. The patient departed Brandon by helicopter at 2:20 p.m. The patient received the angioplasty at UCH. Asked how the patient would have benefited from angioplasty at Brandon without having to have been transferred, Dr. Cohen answered: In a more timely fashion, he would have received an angioplasty to the culprit lesion involved. There would have been much less occlusive time of that artery and thereby, by inference, there would have been greater salvage of myocardium that had been at risk. (Brandon Ex. 45, p. 65). The patient, having had bypass surgery in his early thirties, had a reduced life expectancy and impaired heart function before his presentation at Brandon in June of 1999. The time taken for the transfer of the patient to UCH was not inordinate. The transfer was accomplished with relative and expected dispatch. Nonetheless, the delay between realization at Brandon of the need for a salvage angioplasty and actual receipt of the procedure after a transfer to UCH increased the potential for lost myocardium. The lack of open heart services at Brandon resulted in reduced life expectancy for a patient whose life expectancy already had been diminished by the early onset of heart disease. The fourth patient of Dr. Cohen’s presented to Brandon’s E.R. at 8:30, the morning of August 29, 1999. A fifty-four-year-old male, he had been having chest pain for a month and had ignored it. An EKG showed a complete heart block with atrial fibrillation and change consistent with acute myocardial infarction. Thrombolytic therapy was administered. He continued to have symptoms including increased episodes of ventricular arrhythmias. He required dopamine for blood pressure support due to his clinical instability and the lack of effectiveness of the thrombolytics. The patient refused a transfer and catheterization at first. Ultimately, he was convinced to undergo an angioplasty. The patient was transferred by helicopter to UCH. The patient was having a “giant ventricular infarct . . . a very difficult situation to take care of . . . and the majority of [such] patients succumb to [the] disease . . .”. (Tr. 2703). The cardiologist was unable to open the blockage via angioplasty. Dr. Bloom was called in but the patient refused surgical intervention. After interaction with his family the patient consented. Dr. Bloom conducted open heart surgery. The patient had a difficult post-operative course with arrythmias because “[h]e had so much dead heart in his right ventricle . . .”. (Id.) The patient received an excellent outcome in that he was seen in Dr. Bloom’s office with 40 percent injection fraction. Dr. Bloom “was just amazed to see him back in the office . . . and amazed that this man is alive.” (Tr. 2704). Most of the delay in receiving treatment was due to the patient’s reluctance to undergo angioplasty and then open heart surgery. The fifth patient of Dr. Cohen’s presented at Brandon’s E.R. on March 22, 2000. He was 44 years old with no prior cardiac history but with numerous risk factors. He had a sudden onset of chest discomfort. Lab values showed an elevation consistent with myocardial injury. He also had an abnormal EKG. Dr. Cohen performed a cardiac cath on March 23, 2000. The procedure showed a totally occluded left anterior descending artery, one of the three major arteries serving the heart. Had open heart capability been available at Brandon, he would have undergone angioplasty and stenting immediately. As it was, the patient had to be transferred to UCH. A transfer was requested at 10:25 that morning and the patient left Brandon’s cath lab at 11:53. Daniel D. Lorch, M.D., is a specialist in pulmonary medicine who was accepted as an expert in internal medicine, pulmonary medicine and critical care medicine, consistent with his practice in a “five-man pulmonary internal medicine critical care group.” (Brandon Ex. 42, p. 4). Dr. Lorch produced medical records for one patient that he testified about during his deposition. The patient had presented to Brandon’s E.R. with an MI. He was transferred to UCH by helicopter for care. Dr. Lorch supports Brandon’s application. As he put it during his deposition: [Brandon] is an extremely busy community hospital and we are in a very rapidly growing area. The hospital is quite busy and we have a large number of cardiac patients here and it is not infrequently that a situation comes up where there are acute cardiac events that need to be transferred out. (Brandon Ex. 42, p. 20). Transfers Following Diagnostic Cardiac Catheterization Brandon transfers a high number cardiac patients for the provision of angioplasty or open heart surgery in addition to those transferred under emergency conditions. In 1996, Brandon performed 828 diagnostic cardiac catheterization procedures. Of this number, 170 patients were transferred to existing providers for open heart surgery and 170 patients for angioplasty. In 1997, Brandon performed 863 diagnostic catheterizations of which 180 were transferred for open heart surgery and 159 for angioplasty. During 1998, 165 patients were transferred for open heart surgery and 161 for angioplasty out of 816 diagnostic catheterization procedures. For the first nine months of 1999, Brandon performed 639 diagnostic catheterizations of which 102 were transferred to existing providers for open heart surgery and 112 for angioplasty. A significant number of patients are transferred from Brandon for open heart surgery services. These transfers are consistent with the norm in Florida. After all, open heart surgery is a tertiary service. Patients are routinely transferred from most Florida hospitals to tertiary hospitals for OHS and PCTA. The large majority of Florida hospitals do not have OHS programs; yet, these hospitals receive patients who need OHS or PTCA. Transfers, although the norm, are not without consequence for some patients who are candidates for OHS or PCTA. If Brandon had open heart and angioplasty capability, many of the 1220 patients determined to be in need of angioplasty or open heart surgery following a diagnostic catheterization procedure at Brandon could have received these procedures at Brandon, thereby avoiding the inevitable delay and stress occasioned by transfer. Moreover, diagnostic catheterizations and angioplasties are often performed sequentially. Therefore, Brandon patients determined to be in need of angioplasty following a diagnostic catheterization would have had access to immediate angioplasty during the same procedure thus reducing the likelihood of a less than optimal outcome as the result of an additional delay for transfer. Adverse Impact on Existing Providers Competition There is active competition and available patient choices now in Brandon's PSA. As described, there are many OHS programs currently accessible to and substantially serving Brandon's PSA. There is substantial competition now among OHS providers so as to provide choices to PSA residents. There are no financial benefits or cost savings accruing to the patient population if Brandon is approved. Brandon does not propose lower charges than the existing OHS providers. Balanced Budget Act The Balanced Budget Act of 1997 has had a profound negative financial impact on hospitals throughout the country. The Act resulted in a significant reduction in the amount of Medicare payments made to hospitals for services rendered to Medicare recipients. During the first five years of the Act's implementation, Florida hospitals will experience a $3.6 billion reduction in Medicare revenues. Lakeland will receive $17 million less, St.Joseph's will receive $44 million less, and Tampa General will receive $53 million less. The impact of the Act has placed most hospitals in vulnerable financial positions. It has seriously affected the bottom line of all hospitals. Large urban teaching hospitals, such as TGH, have felt the greatest negative impact, due to the Act's impact on disproportionate share reimbursement and graduate medical education payment. The Act's impact upon Petitioners render them materially more vulnerable to the loss of OHS/PTCA revenues to Brandon than they would have been in the absence of the Act. Adverse Impact on Tampa General Tampa General is the "safety net provider" for Hillsborough County. Tampa General is a Medicaid disproportionate share provider. In fiscal year 1999, the hospital provided $58 million in charity care, as that term is defined by AHCA. Tampa General plays a unique, essential role in Hillsborough County and throughout West Central Florida in terms of provision of health care. Its regional role is of particular importance with respect to Level I trauma services, provision of burn care, specialized Level III neonatal and perinatal intensive care services, and adult organ transplant services. These services are not available elsewhere in western or central Florida. In fiscal year 1999, Tampa General experienced a net loss of $12.6 million in providing the services referenced above. It is obligated under contract with the State of Florida to continue to provide those services. Tampa General is a statutory teaching hospital. In fiscal year 1999, it provided unfunded graduate medical education in the amount of $19 million. Since 1998, Tampa General has consistently experienced losses resulting from its operations, as follows: FY 1998-$29 million, FY 1999-$27 million; FY 2000 (5 months)-$10 million. The hospital’s financial condition is not the result of material mismanagement. Rather, its financial condition is a function of its substantial provision of charity and Medicaid services, the impact of the Act, reduced managed care revenues, and significant increases in expense. Tampa General’s essential role in the community and its distressed financial condition have not gone unnoticed. The Greater Tampa Chamber of Commerce established in February of 2000 an Emergency Task Force to assess the hospital's role in the community, and the need for supplemental funding to enable it to maintain its financial viability. Tampa General requires supplemental funding on a continuing basis in order to begin to restore it to a position of financial stability, while continuing to provide essential community services, indigent care, and graduate medical education. It will require ongoing supplemental funding of $20- 25 million annually to avoid triggering the default provision under its bond covenants. As of the close of hearing, the 2000 session of the Florida Legislature had adjourned. The Legislature appropriated approximately $22.9 million for Tampa General. It is, of course, uncertain as to what funding, if any, the Legislature will appropriate to the hospital in future years, as the terms which constitute the appropriations must be revisited by the Legislature on an annual basis. Tampa General has prepared internal financial projections for its fiscal years 2000-2002. It projects annual operating losses, as follows: FY 2000-$20.1 million; FY 2001- $20.6 million; FY 2002-$31.9 million. While its projections anticipate certain "strategic initiatives" that will enhance its financial condition, including continued supplemental legislative funding, the success and/or availability of those initiatives are not "guaranteed" to be successful. If the Brandon program is approved, Tampa General will lose 93 OHS cases and 107 angioplasty cases during Brandon's second year of operation. That loss of cases will result in a $1.4 million annual reduction in TGH's net income, a material adverse impact given Tampa General’s financial condition. OHS services provide a positive contribution to Tampa General's financial operations. Those services constitute a core piece of Tampa General's business. The anticipated loss of income resulting from Brandon's program pose a threat to the hospital’s ability to provide essential community services. Adverse Impact on UCH UCH operated at a financial break-even in its fiscal year 1999. In the first five months of its fiscal year 2000, the hospital has experienced a small loss. This financial distress is primarily attributed to less Medicare reimbursement due to the Act and less reimbursement from managed care. UCH's reimbursement for OHS services provides a good example of the financial challenges facing hospitals. In 1999, UCH's net income per OHS case was reduced 33 percent from 1998. Also in 1999, UCH received OHS reimbursement of only 32 percent of its charges. UCH would be substantially and adversely impacted by approval of Brandon's proposal. As described, UCH currently is a substantial provider of OHS and angioplasty services to residents of Brandon's PSA. There are many cardiologists on staff at Brandon who also actively practice at UCH. UCH is very accessible from Brandon's PSA. UCH reasonably projects to lose the following volumes in the first three years of operation of the proposed program: a loss of 78-93 OHS procedures, a loss of 24-39 balloon angioplasties, and a loss of 97-115 stent angioplasties. Converting this volume loss to financial terms, UCH will suffer the following financial losses as a direct and immediate result of Brandon being approved: about $1.1 million in the first year, and about $1.2 million in the second year, and about $1.3 million in the third year. As stated, UCH is currently operating at about a financial break-even point. The impact of the Balanced Budget Act, reduced managed care reimbursement, and UCH's commitment to serve all patients regardless of ability to pay has a profound negative financial impact on UCH. A recurring loss of more than $1 million dollars per year due to Brandon's new program will cause substantial and adverse impact on UCH. Adverse Impact on St. Joseph’s If Brandon's application is approved, St. Joseph’s will lose 47 OHS cases and 105 PTCA cases during Brandon's second year. That loss of cases will result in a $732,000 annual reduction in SJH's net income. That loss represents a material impact to SJH. Between 1997 and 2000, St. Joseph’s has experienced a pattern of significant deterioration in its financial performance. Its net revenue per adjusted admission had been reduced by 12 percent, while its costs have increased significantly. St. Joseph's net income from operations has deteriorated as follows: FYE 6/30/97-$31 million; FYE 12/31/98- $24 million; FYE 12/31/99-$13.8 million. A net operating income of $13.8 million is not much money relative to St Joseph's size, the age of its physical plant, and its need for capital to maintain and improve its facilities in order to remain competitive. St. Joseph’s offers a number of health care services to the community for which it does not receive reimbursement. Unreimbursed services include providing hospital admissions and services to patients of a free clinic staffed by volunteer members of SJH's medical staff, free immunization programs to low-income children, and a parish nurse program, among others. St. Joseph’s evaluates such programs annually to determine whether it has the financial resources to continue to offer them. During the past two years, the hospital has been forced to eliminate two of its free community programs, due to its deteriorating financial condition. St. Joseph’s anticipates that it will have to eliminate additional unreimbursed community services if it experiences an annual reduction in net income of $730,000. Adverse Impact to LRMC The approval of Brandon will have an impact on Lakeland. Lakeland will suffer a financial loss of about $253,000 annually. This projection is based on calculated contribution margins of OHS and PTCA/stent procedures performed at the hospital. A loss of $253,000 per year is a material loss at Lakeland, particularly in light of its slim operating margin and the very substantial losses it has experienced and will continue to experience as a result of the Balanced Budget Act of 1997. In addition to the projected loss of OHS and other procedures based upon Brandon's application, Lakeland may experience additional lost cases from areas such as Bartow and Mulberry from which it draws patients to its open heart/cardiology program. Lakeland will also suffer material adverse impacts to its OHS program due to the negative effect of Brandon's program on its ability to recruit and retain nurses and other highly skilled employees needed to staff its program. The approval of Brandon will also result in higher costs at existing providers such as Lakeland as they seek to compete for a limited pool of experienced people by responding to sign-on bonuses and by reliance on extensive temporary nursing agencies and pools. Nursing Staff/Recruitment The staffing patterns and salaries for Brandon's projected 40.1 full-time equivalent employees to staff its open heart surgery program are reasonable and appropriate. Filling the positions will not be without some difficulty. There is a shortage for skilled nursing and other personnel needed for OHS programs nationally, in Florida and in District 6. The shortage has been felt in Hillsborough County. For example, it has become increasingly difficult to fill vacancies that occur in critical nursing positions in the coronary intensive care unit and in telemetry units at Tampa General. Tampa General's expenses for nursing positions have "increased tremendously." (Tr. 2622). To keep its program going, the hospital has hired "travelers . . . short-term employment, registered nurses that come from different agencies, . . . with [the hospital] a minimum of 12 weeks." (Tr. 2622). In fact, all hospitals in the Tampa Bay area utilize pool staff and contract staff to fill vacancies that appear from time-to- time. Use of contract staff has not diminished quality of care at the hospitals, although "they would not be assigned to the sickest patients." (Tr. 2176). Another technique for dealing with the shortage is to have existing full-time staff work overtime at overtime pay rates. St. Joseph's and Lakeland have done so. As a result, they have substantially exceeded their budgeted salary expenses in recent months. It will be difficult for Brandon to hire surgical RNs, other open heart surgery personnel and critical care nurses necessary to staff its OHS program. The difficulty, however, is not insurmountable. To meet the difficulty, Brandon will move members of its present staff with cardiac and open heart experience into its open heart program. It will also train some existing personnel in conjunction with the staff and personnel at Bayonet Point. In addition to drawing on the existing pool of nurses, Brandon can utilize HCA's internal nationwide staffing data base to transfer staff from other HCA facilities to staff Brandon's open heart program. Approximately 18 percent of the nurses hired at Brandon already come from other HCA facilities. The nursing shortage has been in existence for about a decade. During this time, other open heart programs have come on line and have been able to staff the programs adequately. Lakeland, in District 6, has demonstrated its ability to recruit and train open heart surgery personnel. Brandon, itself, has been successful, despite the on- going shortage, in appropriately staffing its recent additions of tertiary level NICU beds, an expanded Emergency Room, labor and delivery and recovery suites, and new high-risk, ante-partum observation unit. Brandon has begun to offer sign-on bonuses to compete for experienced nurses. Several employees who staff the Lakeland, UCH and Tampa General programs live in Brandon. These bonuses are temptations for them to leave the programs for Brandon. Other highly skilled, experienced individuals who already work at existing programs may be lost to Brandon's program as well simply as the natural result of the addition of a new program. In the end, Brandon will be able to staff its program, but it will make it more difficult for all of the programs in Hillsborough County and for Lakeland to meet their staffing needs as well as producing a financial impact on existing providers. Financial Feasibility Short-Term Brandon needs $4.2 million to fund implementation of the program. Its parent corporation, HCA will provide financing of up to $4.5 million for implementation. The $4.2 million in start-up costs projected by Brandon does not include the cost of a second cath lab or the costs to upgrade the equipment in the existing cath lab. Itemization of the funds necessary for improvement of the existing cath lab and the addition of the second cath lab were not included in Brandon's pro formas. It is the Agency's position that addition of a cath lab (and by inference, upgrade to an existing lab) requires only a letter of exemption as projects separate from an open heart surgery program even when proposed in support of the program. (See UCH No. 7, p. 83). The position is not inconsistent with cardiac catheterization programs as subject to requirements in law separate from those to which an open heart surgery program is subject. Brandon, through HCA, has the ability to fund the start-up costs of the project. It is financially feasible in the short-term. Long-Term Open heart surgery programs (inclusive of angioplasty and stent procedures, as well as other open heart surgery procedures) generally are very profitable. They are among the most profitable of programs conducted by hospitals. Brandon's projected charges for open heart, angioplasty, and stent procedures are based on the average charges to patients residing in Brandon's PSA inflated at 2 percent per year. The inflation rate is consistent with HCFA's August 1, 2000, Rule implementing a 2.3 percent Medicare reimbursement increase. Brandon's projected payor mix is reasonably based on the existing open heart, angioplasty, and stent patients within its PSA. Brandon also estimated conservatively that it would collect only 45 to 50 percent of its charges from third-party payors. To determine expenses, Brandon utilized Bayonet Point's accounting system. It provided a level of detail that could not be obtained otherwise. "For patients within Brandon's primary service area, . . . that information is not provided by existing providers in the area that's available for any public consumption." (Tr. 1002). While perhaps the most detailed data available, Bayonet Point data was far from an ideal model for Brandon. Bayonet Point performs about 1,500 OHS cases per year. It achieves economies of scale that will not be achievable at Brandon in the foreseeable future. There is a relationship between volume and cost efficiency. The higher the volume, the greater the cost efficiency. Brandon's volume is projected to be much lower than Bayonet Point's. To make up for the imperfection of use of Bayonet Point as an "expenses" proxy, Brandon's financial expert in opining that the project was feasible in the long-term, considered two factors with regard to expenses. First, it included its projected $1.8 million in salary expenses as a separate line item over and above the salary expenses contained in the Bayonet Point data. (This amounted to a "double" counting of salary expenses.) Second, it recognized HCA's ability to obtain competitive pricing with respect to equipment and services for its affiliated hospitals, Brandon being one of them. Brandon projected utilization of 249 and 279 cases in its second and third year of operations. These projections are reasonable. (See the testimony of Mr. Balsano on rebuttal and Brandon Ex. 74). Comparison of Agency Action in CONs 9169 and 9239 Brandon's application in this case, CON 9239, was filed within a six-month period of the filing of an earlier application, CON 9169. The Agency found the two applications to be similar. Indeed, the facts and circumstances at issue in the two applications other than the updating of the financial and volume numbers are similar. So is the argument made in favor of the applications. Yet, the first application was denied by the Agency while the second received preliminary approval. The difference in the Agency's action taken on the later application (the one with which this case is concerned), i.e., approval, versus the action taken on the earlier, denial, was explained by Scott Hopes, the Chief of the Bureau of Certificate of Need at the time the later application was considered: The [later] Brandon application . . ., which is what we're addressing here today, included more substantial information from providers, both cardiologists, internists, family practitioners and surgeons with specific case examples by patient age [and] other demographics, the diagnoses, outcomes, how delays impacted outcomes, what permanent impact those adverse outcomes left the patient in, where earlier . . . there weren't as many specifics. (Tr. 1536, 1537). A comparison of the application in CON 9169 and the record in this case bears out Mr. Hopes' assessment that there is a significant difference between the two applications. Comparison of the Agency Action with the District 9 Application During the same batching cycle in which CON 9239 was considered, five open heart surgery applications were considered from health care providers in District 9. Unlike Brandon's application, these were all denied. In the District 9 SAAR, the Agency found that transfers are an inherent part of OHS as a tertiary service. The Agency concluded that, "[O]pen heart surgery is a tertiary service and patients are routinely transferred between hospitals for this procedure." (UCH Ex. 7, pp. 51-54). In particular, the Agency recognized Boca Raton's claim that it had provided "extensive discussion of the quality implications of attempting to deal with cardiac emergencies through transfer to other facilities." (UCH Ex. 7, p. 52). Unlike the specific information referred to by Mr. Hopes in his testimony quoted, above, however, the foundation for Boca Raton's argument is a 1999 study published in the periodical Circulation, entitled "Relationship Between Delay in Performing Direct Coronary Angioplasty and Early Clinical Outcomes." (UCH Ex. 7, p. 21). This publication was cited by the Agency in its SAAR on the application in this case. Nonetheless, a fundamental difference remains between this case and the District 9 applications, including Boca Raton's. The application in this case is distinguished by the specific information to which Mr. Hopes alluded in his testimony, quoted above.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a final order be entered granting the application of Galencare, Inc., d/b/a Brandon Regional Hospital for open heart surgery, CON 9239. DONE AND ENTERED this 30th day of March, 2001, in Tallahassee, Leon County, Florida. DAVID M. MALONEY Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 30th day of March, 2001. COPIES FURNISHED: Sam Power, Agency Clerk Agency for Health Care Administration 2727 Mahan Drive Building 3, Suite 3431 Tallahassee, Florida 32308-5403 Julie Gallagher, General Counsel Agency for Health Care Administration 2727 Mahan Drive Building 3, Suite 3431 Tallahassee, Florida 32308-5403 Richard A. Patterson, Esquire Agency for Health Care Administration 2727 Mahan Drive Building 3, Suite 3431 Tallahassee, Florida 32308-5403 Stephen A. Ecenia, Esquire R. David Prescott, Esquire Thomas W. Konrad, Esquire Rutledge, Ecenia, Purnell & Hoffman, P.A. 215 North Monroe Street, Suite 420 Post Office Box 551 Tallahassee, Florida 32302-0551 James C. Hauser, Esquire Metz, Hauser & Husband, P.A. 215 South Monroe Street, Suite 505 Post Office Box 10909 Tallahassee, Florida 32302 John H. Parker, Jr., Esquire Jonathan L. Rue, Esquire Sarah E. Evans, Esquire Parker, Hudson, Rainer & Dobbs 1500 Marquis Two Tower 285 Peachtree Center Avenue, Northeast Atlanta, Georgia 30303 Robert A. Weiss, Esquire Karen A. Putnal, Esquire Parker, Hudson, Rainer & Dobbs, LLP The Perkins House, Suite 200 118 North Monroe Street Tallahassee, Florida 32301
Findings Of Fact St. Anthony's is a 434 bed nonprofit acute care hospital located in St. Petersburg, Florida. On September 15, 1987, St. Anthony's filed an application for a CON to establish and implement an open heart surgery program in its facility. The Department filed a notice of intent to deny the application in January, 1988, and thereafter, St. Anthony's filed a Petition for Formal Administrative Hearing to contest the denial. Intervenors, All Children's and Bayfront sought and were granted leave to intervene in the proceeding. By Pre-hearing Stipulation, the parties have agreed to the following Findings of Fact: Each of the parties has a record of providing good quality of care. The licensure and accreditation of each party is not at issue and need not be proven. The equipment proposed by St. Anthony's in its application is adequate and the costs projected for that equipment are reasonable. The staffing levels and related salaries as proposed by St. Anthony's in its application are appropriate and reasonable. The architectural plans and related costs for St. Anthony's proposed project are appropriate and reasonable. The total project costs proposed by St. Anthony's in its application are appropriate and reasonable. St. Anthony's has the ability to finance the project costs. Projected revenues and expenses set out in the pro forma financial projections by St. Anthony's are reasonable. St. Anthony's presently provides a full range of acute, general, medical, and surgical services, and surgical subspecialties including neuro- surgery, maxillofacia surgery, thoracic surgery, and peripheral vascular surgery. It also offers broad psychiatric, substance abuse, and obstetrical services and a full time emergency room capability. It also provides cardiology services including cardiac catheterization. It has a historic commitment to cardiology services, establishing a cardiac catheterization lab in 1961, a coronary care unit in 1968, and a holter monitor service in 1973. In 1975, it established the community's first echocardiography laboratory, and as early as 1965, seriously considered establishing an open heart surgery program at the facility. This program was not, however, developed at the time. St. Anthony's continued its involvement in the area of cardiography and its program covers a full array of diagnostic services including echocardiography, nuclear cardiography, and basic electrocardiography, and possesses a magnetic resonance imaging unit which can be used in the diagnosis of heart problems. Additionally, it has a well equipped vascular laboratory and peripheral vascular disease program as well as a cardiac rehabilitation program and a wellness center that is aimed at early identification and prevention. St. Anthony's is also the site of the Rogers Heart Foundation, a nonprofit, privately funded foundation established in the late 1950's to perform research, education, and clinical diagnostic studies in the field of cardiovascular diseases. As a result of the activities of the foundation, St. Anthony's is well known by physicians in the area as a center for cardiac training and expertise, and until recently, was a participant with Emory University in that institution's cardiac fellowship training program. St. Anthony's has a long tradition in the service area for providing indigent services and is one of the major providers of charity and indigent care in Pinellas County. This care is provided through direct free care to patients as well as discounted charges and the write-off of bad debts. It also provides services through Medicaid and through write-off of Medicare deductible and coinsurance portions of patients' charges. All Children's Hospital is a 113 bed children's hospital located in St. Petersburg approximately two miles from St. Anthony's. It is a full service tertiary facility which serves as a referral center for children from throughout the State of Florida and currently has an approved CON for an additional 55 beds. Following construction, which is due to begin in February, 1989, All Children's will have 6 operating rooms, 2 cardiac catheterization labs, and 5 additional surgical intensive care unit beds for a total of 13 ICU beds. At the present time it has 2 operating rooms used for open heart surgery and 2 cardiac catheterization labs. The hospital has a strong affiliation with the University of South Florida College of Medicine in Tampa. All Children's open heart program began several years after the hospital opened its first cardiac catheterization lab for children in the early 1970's. This came about when several cardiologists whose patients were primarily adult, and who were unable to utilize the facilities at the Rogers Heart Foundation because of its closed status, asked to make use of All Children's cardiac catheterization unite. Since this was consistent with All Children's efforts to increase the quality of its program through higher volume, All Children's began making its services available to adults admitted to Bayfront Hospital, a neighboring facility, with cardiac catheterization done by the patient's cardiologist in the All Children's facility. All Children's currently has 3 pediatric cardiologists and approximately 12 to 15 adult cardiologists on staff. The primary cardiac surgical team consists of Drs. Daicoff and Botero. At the present time, approximately 34% of the adult and pediatric patients treated at All Children's are Medicaid patients. Uncompensated indigent care provided at All Children's ranged from 16.52% in 1986 to 18.03% in 1987 and Medicaid patient days ranged from 30.4% in 1986 to 34.2% in 1987. Bayfront's uncompensated care was 22.15% in 1986 and 23.93% in 1987 while Medicaid patient days for that facility were 7.6% in 1986 and 8.9% in 1987. St. Anthony's devoted 1.2% of its total patient days in 1986 to Medicaid patients and 2.3% of it's total patient days in 1987. Bayfront is a 518 bed not-for-profit, full service acute care hospital located in St. Petersburg adjacent to All Children's. It was founded prior to 1968 as Mound Park Hospital, owned by the City of St. Petersburg, but in 1968, separated from city ownership and became known as Bay front Medical Center. Its mission is to provide care to all citizens in St. Petersburg and the surrounding area regardless of their ability to pay, and it offers a full range of services with the pediatric component provided by its neighbor, All Children's. It has 450 physicians on medical staff. Bayfront serves as a teaching hospital working in conjunction with the University of South Florida Medical School and providing a residency program in Pinellas County covering the entire spectrum of health care training at the facility. Bayfront runs a comprehensive cancer service approved by the American College of Surgeons and its obstetrical and gynecological women's service accounts for approximately 4,500 births per year. With All Children's, it participates in a prenatology program for high risk mothers and infants as part of a regional care program. Bayfront provides helicopter emergency coverage for its trauma center which averages 50,000 emergency room visits per year. The trauma service, staffed on a 24 hour a day basis by a full complement of surgeons, includes open heart surgery capability available for trauma related heart surgery needs. All Children's and Bayfront are connected to each other by an enclosed passageway. Taken together, the primary service area of the three hospital parties to this action is the southern half of Pinellas County up to approximately Ulmerton Road. Because of their geographical proximity to each other and their diverse but complementary populations, All Children's and Bayfront have developed working programs on a shared service basis in an effort to hold down the cost of health care in the community and to avoid unnecessary duplication of service. The Department has recognized and continues to recognize the shared nature of the All Children's/Bayfront open heart surgery program and the Boards of Directors of both institutions, as early as 1975, agreed to share open heart surgery services. The shared program for cardiac catheterization and open heart surgery are now known as the "Cardiac Center of Excellence". Under the "Center" concept, diagnostic services are shared. All Children's Hospital's previously described cardiac catheterization laboratory and its non-invasive diagnostic study equipment is complemented by Bayfront's cardiac catheterization laboratory and its non-invasive diagnostic services including EKG, 2-D echo color flow doppler, magnetic resonance imaging, holter monitoring, and stress testing. Not only are diagnostic services shared by the two facilities but therapeutic services are shared as well. All Children's provides 2 open heart surgery operating suites, percutaneous transluminal coronary angioplasty, laser angioplasty, and intensive care units for children and adult post operative patients. Bayfront provides laser angioplasty and its cardiac catheterization laboratory has the capability to do emergency angioplasty procedures. Once these have been accomplished, Bayfront has a coronary care unit, a surgical unit for post operative patients, and a progressive care unit for its adult patients progressing toward discharge. Transportation services are also shared as are rehabilitation services. All Children's mobile intensive care unit is available to provide ground transportation for adults and children and it has entered into appropriate cardiac transportation protocols with outlying hospitals. Bayfront provides helicopter transportation for children and adults to its trauma center and, too, has appropriate cardiac transportation protocols similar to those entered into by All Children's. This joint program, which has grown to provide up to date, sophisticated, high quality cardiac care to both adults and children, minimizes operating costs and capital investment. An entire range of cardiac services is available with highly trained physicians and professional staff and state of the art equipment and facilities to both adult and pediatric patients. When an adult patient requires open heart surgery at the "Center", he is admitted to Bayfront the day prior to surgery where preliminary preparation is accomplished. On the day of surgery, the patient is prepared and Bayfront personnel transport the patient through the underground connection to All Children's where the actual surgery takes place. Subsequent to the surgery, the patient will normally be kept over night at All Children's in a surgical ICU whereupon, barring complications, he is then transferred by Bay front personnel back to Bay front to continue recovery in a cardiac surgical ICU. The remainder of the recovery period, usually lasting about one week for an uncomplicated case, is accomplished at Bayfront, and upon completion of recovery, the patient is discharged from that hospital, returning there for out patient treatment in Bayfront's cardiac rehabilitation program. In an emergency situation, when an adult patient is presented directly to All Children's for angioplasty, All Children arranges with Bayfront to admit the patient there within 24 hours. For non-Medicare patients, each facility bills the appropriate insurance carrier or patient for the charges for services rendered by each hospital. The Medicare and Medicaid reimbursement mechanisms by which All Children's and Bayfront are paid for providing open heart surgery differ substantially from the norm. The Health Care Finance Administration, which administers thee Medicare program recognizes the Bayfront/All Children's shared open heart surgery program for adults and has structured its reimbursement mechanism in an appropriate manner to accommodate that shared status. The normal method of fixed DRG payments is not followed. Because of accreditation requirements, the process becomes somewhat complicated in that the patient must be discharged from one facility and admitted to the other for surgery and vice-versa for recovery. However, representatives of both facilities claim, and there is no evidence to the contrary, that this procedure does not impose any burden on the patient or his family nor does it affect the quality of care. In fact, under the program, both facilities have been able to maintain an excellent quality of care. The physicians who practice there and who testified for St. Anthony's, indicated some scheduling problems relating to the availability of operating rooms at a time desired by the surgeon, but these problems have not affected quality of care and are being resolved through more acute scheduling and the addition of the 2 new surgical suites at All Children's. Between the two facilities, there are 15 cardiologists on both staffs who refer open heart patients for surgery. There are also 3 cardiovascular surgeons on staff at the two facilities, all of whom are members of the same physician group which exclusively performs open heart surgery under the shared program and which provides backup for all angioplasties in the "Center" program. One of these, Dr. Daicoff, indicated that although he would prefer the development of a single state of the art heart institute to serve the future needs of southern Pinellas County, he and his group would provide angioplasty backup as well as do surgery at St. Anthony's if the capability were approved and if he could be convinced that the St. Anthony's program would achieve the same level of high quality currently enjoyed by Bayfront and All Children's. Recognizing that the likelihood of a centralized heart institute is remote, Dr. Daicoff favors the approval of St. Anthony's program. Open heart surgery is currently being performed at two other hospitals in HRS District V, (Pinellas and Pasco Counties). These are the Largo Medical Center and Morton F. Plant Hospital, both of which are located close to the Ulmerton Road dividing line in the center of Pinellas County. These two facilities provide the majority of open heart surgery in the northern portion of Pinellas County and in Pasco County. Nonetheless, an open heart program at Bayonet Point Hospital in Pasco County was approved in December, 1987, not because of numerical need for the project, but because the applicant also sought approval for cardiac catheterization services. In that case, a need was shown for cardiac catheterization services in Pasco County, and a lab at Bayonet Point was approved. Because of the Department rule requiring open heart surgery backup within 30 minutes of a cardiac catheterization lab, no such backup otherwise being available for the Bayonet Point facility, its program was approved as well. The service area for open heart surgery for the three hospital parties to this proceeding is the St. Petersburg, Florida area. At the present time there are no major referrals to All Children's for open heart surgery from outside this area to the adult program operated in conjunction with Bayfront. The adult program at All Children's/Bayfront is centered around southern Pinellas County, an area in which the rate of growth is somewhat constant and not significant. The majority of growth in the county is located in the north end. For the fiscal year ending September 30, 1988, 268 adult open heart surgery procedures were performed at All Children's. During the same period, 160 children's cases were performed. During 1984, 257 adult and 48 pediatric open heart surgeries were performed at All Children's; during 1985, 215 adult and 75 pediatric; during 1986, 258 adult and 46 pediatric; and during 1987, 268 adult and 72 pediatric. If all theatres at All Children's were operated on a capacity basis, as many as 520 open heart procedures could be accomplished. This would require performing 2 surgeries per day, 5 days a week, 52 weeks per year. At the present time, nowhere near this load is being carried. St. Anthony's contends this would not be realistic. However, additional capacity exists at All Children's to accommodate increased open heart surgery if required. The proper time frame for determining the "actual use rate" referenced in the Department's rule for determining need assessment for new open heart surgery services is July, 1986 through June, 1987. During that period, 299 procedures, including pediatric, were performed at All Children's with 432 total procedures being performed at Largo and 392 at Morton F. Plant. This constitutes a total of 1,123 open heart procedures within the District. St. Anthony's contends that open heart surgery procedures by themselves, however, are net the only factor for consideration. Cardiac catheterization is no longer merely a diagnostic procedure but constitutes a place for acute intervention. Cardiac catheterization practice has increased radically and has carried with it an increase in open heart surgeries. St. Anthony's cannot fully implement a cardiac catheterization program by adding angioplasty without the concomitant open heart surgery capability required for the full operation of angioplasty and its related programs. Without an open heart capability at St. Anthony's, it's ability to provide a full array of non- open heart cardiac catheterization services is constrained. It urges that from a medical standpoint, it would be beneficial to the patient to have acute intervention and angioplasty available at that hospital rather than , as is presently the case, disrupting cardiac care and courting the danger of additional coronary problems, the risk of which is increased when a patient must be transported to another hospital for the angioplasty and acute intervention procedures. St. Anthony's asserts that it will lose its reputation, built up over a period of 40 years, for a continuum of quality care if it is not permitted to provide the required surgical background for acute intervention and angioplasty. This is, however, only speculation not supported by any evidence of record. Rule 10-5.011(f), F.A.C. contains a methodology for determining numerical need for new programs and utilization guidelines for existing and approved programs which the Department uses when assessing the need for new open heart surgery services. Under the terms of the rule, the Department is to consider applications in context with applicable statutory and rule criteria and will not normally approve applications for new open heart surgery programs in a service area unless the conditions of subparagraphs 8 and 11 are met. Subparagraph 8 provides a formula for computing the projected number of open heart surgical procedures in the service area for the year in which the proposed open heart surgery program would initiate service. This is to be not more than two years into the future. This number, projected for the target year, is determined by multiplying the actual use rate, (the number of procedures per 100,000 population) in the service area for the twelve month period beginning fourteen months prior to the letter of intent deadline for the batching cycle, by the projected population in the service area in the year service is to be initiated. As was stated above, the proper time frame for determining actual use was July, 1986 through June, 1987, and during that period, a total of 1,123 procedures, including pediatric procedures, were performed at the three existing facilities in District V. Midway through the fiscal year cited above, the total population in District V was 1,082,797, resulting in an actual use rate of 103.7 procedures per 100,000 population. The population projection for the planning horizon is 1,135,819 persons as July 1, 1989, and when the actual use rate of 103.7 per 100,000 is applied, it is anticipated that 1,178 will be performed by July, 1989, the first projected year for the St. Anthony's program, if approved. Once one has arrived at the projected number of procedures in the target year by applying the methodology contained in paragraph 8 of the rule, one turns to the provisions of subparagraph 11 of the rule which provides for no additional open heart surgery programs unless: ... the service volume of each existing and approved open heart surgery program within the service area is operating at and is expected to continue to operate at a minimum of 350 adult open heart surgery cases per year or 130 pediatric heart cases per year; Subparagraph 11b provides: No additional open heart surgery programs shall be approved which will reduce the volume of existing open heart surgery facilities below 350 open heart procedures annually for adults and 130 pediatric heart procedures annually, 75 of which are open heart. In the state agency action report, the Department, in computing need for additional open heart programs, utilized a figure of 1,065 procedures in determining actual use rate which excluded surgeries performed upon children within the district at All Children's. At the hearing, the Department's representative, Mr. Jaffe, agreed that it would be more appropriate to utilize the entire number of procedures, including pediatric, (1,123), in order to develop a more accurate use rate. That is the figure which was used in the analysis in this Recommended Order. From a review of the provisions of subparagraph 11 of the rule, the 350 procedure standard is to be applied once estimated procedures during the target year are established. Since subparagraph 11a(I) provides for service volume of existing and approved programs, utilization of that figure results in a need for 3.4 programs based on the 1989 estimated procedures. Since 3 programs currently exist, (All Children's/Bayfront, Largo, and Morton F. Plant), and Bayonet Point's program has been approved, this results in a .6 open heart surgery program surplus. Even if Bayonet Point's program is not considered, then a need exists for only .4 programs which, when rounded down, is not sufficient to approve an additional program. Turning to the utilization provisions of subparagraph 11, it has been the Department's policy to determine utilization of existing programs for the time period over which the use rate is computed, here, July, 1986 through June, 1987. During that period, only 241 adult open heart procedures were performed at Bayfront/All Children's, and in the fiscal year ending September 30, 1988, the combined program accounted for 268 adult procedures. These numbers are not inconsistent with those used by St. Anthony's when adjustments are made to account for that portion of the total surgery figure which pertains to pediatric patients. They are also below the cutoff figure of 350 adult procedures for all existing or approved facilities in the District. St. Anthony's expert witness, Dr. Kolb, advanced an alternative theory that the "actual use rate" in the methodology established by rule should be adjusted to account for the out-migration of residents of District V to facilities outside the District for open heart surgery. She contended that the actual use rate had to account for all open heart surgeries performed on District residents regardless of where that surgery took place. If that theory were to be applied, then the total number of surgeries for the relevant time frame would have to increased from 1,123 to 1,883, and if that figure is incorporated in the rule computation, utilizing the 350 procedure unit of division, the calculation would show a 2.6 new program need if Bayfront Point were not taken into consideration. If it were, then the need, according to the expert, would be 1.6. Utilizing the Department's policy of rounding up or down as appropriate, even taking into account Bayonet Point, there would be a need for 2 new programs. However, St. Anthony's position is not well taken here. There is nothing in the Department's rule which by any reasonable interpretation can include an adjustment for out-migration. The Department has consistently applied its own rule to include only procedures performed at facilities in the district to determine actual use rate and this interpretation is both reasonable and justified. By statute, the Department is required to apply a uniform methodology. The data base available from all of the various districts within the state is not conducive to an application of an adjustment since double counting and the lack of uniformity appear inherent in any non-specified adjustment attempt. Another flaw in the expert's theory is that out-migrating patients would be recaptured by the development of additional programs within the district. This is not a justified assumption in that the out-migration occurs even though there is currently an underutilized capability within the district and it becomes obvious that many out-migrators go elsewhere for reasons totally unrelated to the availability of quality care within the district. Further, there is a substantial question as to the reliability of the data relied upon by St. Anthony's expert in her calculation of an assumed out-migration percentage. The expert relied upon Med Par data which reports on Medicare patients constituting 55 to 60 percent of the District V population. The expert's assumption that the same percentage of non-Medicare patients would out-migrate as Medicare patients do, is erroneous because experience has established that Medicare referral patterns do not necessarily match those appropriate to the rest of the population. Another factor to consider is that a substantial number of the people who make up the District V population are seasonal residents and many of these individuals return for major surgery, especially of an elective or non-emergency nature, to those areas from which they have come and with which they are most familiar and comfortable. St. Anthony's expert, in addition to suggesting an alternative to actual use rate, also suggests that instead of using a 350 procedure figure in calculating numerical need, a 200 procedure figure be used because of the independent pediatric program at All Children's Hospital. The Department urges that this be rejected on the basis that it ignores certain salient factors. One of these is that for the purpose of applying rule standards, All Children's/Bayfront's shared service qualifies as a single existing open heart surgery program. Also, open heart procedures, by their nature highly specialized and complex, require costly, highly specialized manpower and facility resources and the application of the rule procedure standard is, even in the eyes of Petitioner's planner, designed to limit unnecessary duplication of resources while maintaining a high quality of care. Petitioner shows no legitimate health care planning purpose for using any figure other than that called for by the rule and applied by the Department, which is found to be reasonable and appropriate. Moreover, there is a limited pool of nurses available to staff the specialized functions of an open heart surgery program or a CCU incident thereto. The nursing staff which works in these units is made up of specially trained individuals critical to the success of the program and it is generally difficult to recruit this caliber of nurse. In the event an additional facility, Petitioner, is authorized to establish its own separate program, it will have a substantial adverse impact on the staff situation at the existing facilities, and if basic economic principles apply, could result in an increase in nursing costs and a related increase in health care charges. Another factor to be considered is the potential for loss of patients at Bayfront/All Children's if the St. Anthony's operation is begun. One witness estimates a 42 percent (110 adult procedure) loss to Bayfront/All Children's based on the reasonable assumption that several of the cardiologists on staff at St. Anthony's, who currently refer patients to the group performing open heart surgery at All Children's, would begin to refer their patients to the "in house" capability at St. Anthony's where the surgery, now being performed at All Children's, would henceforth be accomplished. It is reasonable to expect that a substantial, if not 42 percent, loss will occur, and taken together, the loss of referrals and the loss of staff to St. Anthony's by the opening of that program would have a substantial adverse impact on the open heart surgery program at All Children's/Bayfront. This potential diminishment in the efficiency and quality of care in the existing open heart surgery program at All Children's/Bayfront, which may come about as the result in the reduction in number of adult patients treated there is not justified in that there is no showing that any group in District V, including the medically indigent, are receiving less than adequate treatment. Even assuming there 1:3 no need established utilizing the Department's numerical methodology, an applicant can successfully apply for a certificate of need if it shows there are "not normal" circumstances justifying award of the certificate. It has long been the Department's position that these "not normal" circumstances be raised by the applicant in the application prior to the completeness deadline in order for them to be legitimately heard, considered, and resolved at hearing. Review of the application submitted by St. Anthony's in this case fails to reveal that the applicant alleged or demonstrated any "not normal" circumstances and even that which might be so considered, the out- migration theory previously discussed herein, was not raised in the application, but only in the testimony of St. Anthony's expert at the hearing. Petitioner has shown no problems regarding financial accessibility nor has it shown that any identifiable subgroup within the district is having difficulty obtaining open heart services. Indigent patients are being served effectively and it was demonstrated that, as currently constituted, All Children's and Bayfront both provide a higher percentage of indigent care than does applicant, St. Anthony's. Assuming approval of St. Anthony's application, there is no indication it will increase its percentage of indigent care in the open heart surgery area above that which it already provides in the other services offered. Rule 10-5.011(f)4(a), FACE requires access to open heart surgery services within two hours for at least 90 percent of the service area population. There is no evidence offered by Petitioner to indicate that this standard is not being met by the existing facilities. St. Anthony's has not established by competent evidence its ability to recruit and maintain adequate, experienced staff to implement its open heart program if approved though, in reality, this may well be one of the lesser problems involved and, as was stated previously, there was no showing that approval of its program would, by enhancing competition, lower costs for health care services. Quite the contrary, it appears that St. Anthony's program would constitute an unnecessary duplication of a specialized service and would have an adverse impact upon the All Children's/Bayfront program and, possibly, the others within the district. Petitioner's evidence of prospective charges for open heart surgery, showing it to anticipate lower charges than Largo and Plant, is somewhat irrelevant in that those two facilities are located in an area of the district which does not fall within the primary service area considered here. Petitioner contends that the Department's approval of a CON for open heart surgery by Humana-Brandon, in District VI, and its approval of a certificate for open heart surgery for Tallahassee Community Hospital, in District III, are inconsistent with its denial of its application in District V. For a variety of reasons, other than the fact that the districts are different and the conditions dissimilar, there is little inconsistency involved. Granting approval of a CON for open heart surgery to St. Anthony's creates a legitimate concern that approval would cause the currently existing All Children's/Bayfront program to drop well below the 200 annual procedures considered necessary for quality of care. Further, in the Tallahassee area, a "not normal" situation existed which does not exist here. The geographical separation of alternative facilities in the Tallahassee area is substantially different and creates an entirely different picture that which exists in the District V/District VI area. Taken together, then, it is found that application of the numerical need and ancillary provisions of rule 10-5.011, F.A.C. demonstrates no numerical need for a new program and approval and implementation of St. Anthony's application would likely result in a diminishment, as opposed to enhancement, of the quality of open heart surgery care in the District as well as an increase rather than a decrease in health care costs. Further, it is found that there are no "not normal" circumstances, aliunde the numerical need, to justify approval of Petitioner's application.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is, therefore: RECOMMENDED that the application of St. Anthony's Hospital for approval of a certificate of need to establish and operate an open heart surgery program at its facility in St. Petersburg, Florida be denied. RECOMMENDED this 22nd day of February, 1989 at Tallahassee, Florida. ARNOLD H. POLLOCK, Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, FL 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 22nd day of February, 1989. APPENDIX TO RECOMMENDED ORDER, CASE NO. 88-0637 The following constitutes my specific rulings pursuant to Section 120.57(2), Florida Statutes, on all of the Proposed Findings of Fact submitted by the parties to this case. By St. Anthony's Hospital: Accepted and incorporated herein Rejected as contra to the weight of the evidence. Accepted in so far as open heart surgery is not done at Bayfront. Accepted and incorporated herein Accepted and incorporated herein Accepted - 13. Accepted and incorporated herein 14. - 22. Accepted and incorporated herein 23. - 26. Accepted and incorporated herein Rejected as not proven Rejected Rejected & 31. Accepted and incorporated herein Rejected & 34. Accepted and incorporated herein Last sentence rejected. Balance accepted. & 37. Accepted Accepted and incorporated herein Rejected. There was no showing any patient from St. Anthony's has been harmed by transfer to All Children's nor that patients or their families are dissatisfied. - 42. Rejected as not supported by evidence of record. 43. - 47. Accepted and incorporated herein 48. & 49. Accepted 50. & 51. Accepted as to total procedures in District V but rejected as to the conclusion that-all existing providers are performing at a level of more than 350 adult open heart surgeries per year. While Largo and Plant may, All Children's/Bayfront is not. 52. & 53. Accepted Rejected as not supported by the evidence Accepted as a cite to the pertinent rule - 59. Rejected. Out-migration is not a proper factor for consideration under statute or rule Accepted as to the rule not addressing mixed programs. - 63. Rejected as not consistent with the rule and proper implementation of the need methodology thereunder. The conclusion that all existing programs in District 10 are currently operating at more than 350 procedures annually is rejected. All Children's is not. Accepted Accepted and incorporated herein & 68. Rejected. Use of figures attributable to out- migration is not provided for or permitted by the rule. Accepted and incorporated herein Accepted Irrelevant. Even if true, there is no showing of the reason or that petitioner would capture these patients. Accepted Accepted Accepted & 76. Rejected. Cited provision of application stated "may" indicate, not "did' indicate. In addition, MEDPAR data relates only to Medicare patients and an extrapolation of that figure is not necessarily reliable. Accepted Accepted but not considered controlling in that the rule provides time reference for use in the methodology. Not established & 81. Accepted 82. Rejected as not supported by any independent evidence of record. Accepted - 87. Accepted 88. & 89. Rejected. Bayfront's application was withdrawn. 90. Accepted By the Department of Health and Rehabilitative Services 1.-18. Accepted and incorporated herein 19. & 20. Accepted and incorporated herein Accepted and incorporated herein & 23. Accepted and incorporated herein 24. - 26. Accepted and incorporated herein 27. - 29. Accepted and incorporated herein 30. - 32. Accepted and incorporated herein 33. & 34. Accepted and incorporated herein 35. Accepted and incorporated herein 36. & 37. Accepted 38. - 40. Accepted and incorporated herein 41. No ruling. Not understood. 42. Accepted and incorporated herein 43. Accepted and incorporated herein 44. Accepted and incorporated herein 45. - 47. Accepted and incorporated herein 48. Accepted 49. - 55. Accepted and incorporated herein 56. Accepted 57. Accepted and incorporated herein 58. & 59. Accepted and incorporated herein 60. & 61. Accepted and incorporated herein 62. Accepted and incorporated herein 63. & 64. Accepted 65. Accepted and incorporated herein 66. Accepted 67. Accepted and incorporated herein 68. Accepted 69. Accepted By All Children's Hospital 1. - 3. Accepted and incorporated herein 4. & 5. Accepted 6. & 7. Rejected as a summary of testimony and not a Finding of Fact 8. & 9. Accepted 10. - 19. Accepted and incorporated herein 20. - 22. Accepted and incorporated herein 23. & 24. Accepted and incorporated herein Accepted & 27. Accepted and incorporated herein 28. - 30. Accepted and incorporated herein 31. & 32. Accepted Accepted Accepted and incorporated herein & 36. Accepted and incorporated herein By Bayfront Medical Center 1. - 3. Not Findings of Fact 4. - 8. Accepted and incorporated herein 9. & 10. Accepted and incorporated herein 11. & 12. Not Findings of Fact 13. - 49. Accepted and incorporated herein 50. & 51. Accepted and incorporated herein 52. & 53. Accepted and incorporated herein 64. - 56. Accepted and incorporated herein 57. - 68. Accepted and incorporated herein Accepted and incorporated herein - 72(c). Accepted and incorporated herein 72(d). Argument, not Finding of Fact 72(e).- 72(1). Accepted and incorporated herein Not a Finding of Fact Accepted and incorporated herein Accepted & 77. Accepted Not a Finding of Fact - 81. Accepted and incorporated herein Accepted and incorporated herein - 86. Accepted and incorporated herein 87. & 88. Accepted and incorporated herein Merely a comment on the evidence Accepted and incorporated herein Accepted and incorporated herein Accepted and incorporated herein Accepted & 95. Accepted Accepted Accepted and incorporated herein & 99. Accepted 100. Accepted. COPIES FURNISHED: Ivan Wood, Esquire Wood, Lusksinger & Epstein Four Houston Center 1221 Lamar, Suite 1400 Houston, Texas 77010 John H. Parker, Jr., Esquire Hudson, Rainer & Dobbs 1200 Carnegie Building 133 Carnegie Way Atlanta, Georgia 30303 Steven M. Presnell, Esquire Lee Elzie, Esquire MacFarlane, Ferguson, Allison and Kelly 804 First Florida Bank Building Tallahassee, Florida 32301 Gerald B. Sternstein, Esquire H. Darrell White, Jr., Esquire McFarlain, Sternstein, Wiley and Cassedy, P.A. 600 First Florida Bank Building Tallahassee, Florida 32301 Michael J. Cherniga, Esquire Roberts, Baggett, LaFace & Richard 101 East College Avenue Tallahassee, Florida 32301 Gregory L. Coler, Secretary Department of Health and Rehabilitative Services 1323 Winewood Blvd. Tallahassee, Florida 32399-0700 R. S. Power, Agency Clerk Department of Health and Rehabilitative Services 1323 Winewood Blvd. Tallahassee, Florida 32399-0700
The Issue The issue for determination is whether an agency statement, and criteria used in support of the statement, constitute a rule under Subsection 120.52(16), Florida Statutes (1993), whether the statement and criteria have been adopted as a rule pursuant to Section 120.54, Florida Statutes (1993), and whether the statement and criteria violate Subsection 120.535(1), Florida Statutes (1993).
Findings Of Fact Sacred Heart initiated this proceeding by filing a Petition alleging that, in reviewing the Baptist application, AHCA developed a statement which violates the provisions of Section 120.535(1), Florida Statutes, because the statement should have been promulgated as a rule. The statement, as described by Sacred Heart, is as follows: The Agency may, in its discretion, approve a CON application to establish an adult open heart surgery program notwithstanding findings by it that: 1) Need is not indicated pursuant to Florida Administrative Code Rule 59C-1.033(7)(c), i.e., approval of a new program will reduce the 12 month total to an existing adult open heart surgery program in the district below 350 open heart surgery operations; (2) the applicable fixed need pool for adult open heart surgery programs in the District is zero; and, (3) the application failed to demonstrate "not normal" circumstances justifying the approval of its application. By contrast, Rule 59C-1.033(7)(c) establishes the formula for determining numeric need and also provides: (c) Regardless of whether need for a new adult open heart surgery program is shown in paragraph (b) above, a new adult open heart surgery program will not normally be approved for a district if the approval would reduce the 12 month total at an existing adult open heart surgery program in the district below 350 open heart surgery opera- tions. . . . In reaching the preliminary decision to approve the Baptist application, various AHCA staff considered and discussed the facts presented, and the merits of the Baptist application. Dr. James T. Howell, the AHCA Division Director for Health Policy and Cost Containment, made the decision to approve the Baptist open heart surgery CON, because of Baptist's substantial, active, sophisticated cardiology program, its status as a high disproportionate share provider, its size, and because the results of the numeric need calculation and the formula for determining the reduced volume at existing providers were close to that required by rule. In February, 1993, after the numeric need publication and prior to the filing of the application at issue in this case, Dr. Howell, Albert Granger, and Robert Sharpe of AHCA met with the Mayor of Pensacola who is also Senior Vice President of Baptist Health Care and President of Baptist Health Care Foundation, and Baptist's Vice President for Planning who expressed frustration over the denials of its prior open heart surgery CON applications. Baptist submitted CON applications for open heart surgery in 1987, 1989, 1991, 1992, and 1993. Among the issues of concern was the status of Sacred Heart and West Florida Regional as grandfathered providers resulting in their having "a permanent franchise." Baptist representatives expressed concern about their ability ever to secure an open heart surgery program under the current rules. After that meeting, the rule amendment process was initiated to allow consideration of data reported up to 3 months, rather than 6 months prior to the publication of the fixed need pool. At the time the Baptist application for CON 7184 was reviewed, the amendment had not been adopted. No other change in the open heart surgery rule has been made subsequent to the review of the prior Baptist CON application. When the Baptist application for CON 7184 was filed initially, Laura MacLafferty was assigned as AHCA's primary reviewer. The state agency action report ("SAAR") represents her factual analysis of the application, although she did not and, routinely, does not make recommendations to issue or deny CONs. Ms. MacLafferty and her supervisor, Alberta Granger, are not aware of any AHCA non-rule policy to determine if a calculation of minimum volume is "close" enough to the 350 standard of the rule, nor any agency guidelines to determine when a hospital is "large" or "operates a large cardiology program" which should include open heart surgery. Subsequent to reviewing the Baptist application, in December 1993, Ms. MacLafferty reviewed another open heart surgery application from District 1, filed on behalf of Fort Walton Beach Medical Center. In her review of both the Baptist and Fort Walton applications, Ms. MacLafferty found no documentation that patients in District 1 experienced problems with access to open heart surgery services. Ms. MacLafferty submitted the draft SAAR to a supervisor, Alberta Granger. The draft SAAR was retrieved from her desk, prior to Ms. Granger's reviewing it. It was removed by Elizabeth Dudek, who heads AHCA's CON and health care board sections. Ms. Granger did not review the SAAR, which was prepared by Ms. MacLafferty. The final draft was returned to Ms. Granger for her to sign on July 7, 1993. This was the only time since Ms. Granger became supervisor in the CON office, that she has not reviewed and discussed with Ms. Dudek SAARs prepared by her staff. Ms. Granger had been the primary reviewer of Baptist's 1989 CON application. Ms. Granger and her supervisor, Ms. Dudek, are aware that in this case and in one or more of its prior CON open heart surgery applications, Baptist argued that its size, scope of cardiology services, and proposed fixed rate structure were reasons to approve its proposal. Ms. Granger stated, and Ms. Dudek confirmed, that the usual procedure was not followed in the review of this and one other application in this batching cycle. In this batching cycle, Dr. Howell requested that Mr. Sharpe, head of AHCA's planning section, also review those two open heart surgery applications. Ms. Dudek recalls, that prior to 1987, there were two batches of approximately 12 total applications in which agency personnel other than the CON staff was involved in the review of CON applications. In making his decision on the Baptist application, Dr. Howell consulted Ms. Dudek and Mr. Sharpe. Ms. Dudek, who heads the CON and health care board section, was not initially in favor of the approval of the Baptist application. Mr. Sharpe, head of the planning section, prepared a 9 page analysis of the pros and cons of the Baptist proposal. The Sharpe analysis demonstrates that an increase of 9 additional open heart surgeries during the 12 month reporting period, and the use of the more current data under the pending rule revision would have resulted in the need for one additional open heart surgery program in District 1. The memorandum also demonstrated that a lower future volume of open heart surgeries is projected by using the actual use rate, as required by Rule 59C-1.033(7)(6)2, rather than a trended use rate. If these adjustments to the data are made to achieve numeric need, then Baptist's application could be approved without a showing of not normal circumstances. The memorandum also reported the October 1991-September 1992 volumes of cardiac cath admissions at Baptist as 2677, at Sacred Heart as 2053, and at HCA West Florida as 1915, with the conclusion that Baptist "had the largest number of cardiac catheterization admissions of the three hospitals." The evidence in this proceeding is that the memorandum was in error. Actual volumes for October 1991-September 1992 were 912 at Baptist, not 2677. Dr. Howell found Baptist's proposal consistent with health care reform trends towards eliminating the need for CON regulation by enhancing market competitive forces, as a part of Florida's managed competition model, as explained in the Sharpe analysis. Similarly, Dr. Luke described the 1980's use of the CON process to control costs by limiting duplication and the rejection of institution specific planning as outdated. Dr. Luke also favors a model of competition for cost controls. At this time, however, these positions have not been adopted in Florida Statutes and rules. The 1994 Florida Health Security Plan recommends the continuation of CON review of all tertiary services, including open heart surgery. That plan was submitted as a part of AHCA's 1994 legislative proposals. Ms. Dudek described traditional "not normal" circumstances as issues related to financial, geographic, or programmatic access to the proposed service by potential patients, and not facility specific concerns. Facility specific concerns, in this case, include Baptist's attempt to retain cardiologists who wish to perform procedures not approved at Baptist and to improve its position to compete for managed care contracts. Baptist and AHCA contend that the intent to approve the application is predicated upon the exercise of AHCA's discretion to determine whether the circumstances justify a departure from the "normal" operation of the rule methodologies. As stated by Baptist and AHCA, this position is not inconsistent with the wording of the rule, but reflects a disagreement with Sacred Heart over what constitutes not normal circumstances. AHCA interprets Rule 59C-1.033 as giving the agency flexibility, in the exercise of its professional judgment, to approve open heart surgery applications when the rule methodology does not result in a numeric need for a new program, and/or the calculation intended to assure the 350 minimum procedures for established providers yields a lower number. Both sections of the open heart surgery rule have been upheld with the not normal circumstances provisions included. St. Mary's Hospital v. HRS, 13 FALR 2096 (F.O. 5/1/91). In the review of certificate of need applications, the weight to be accorded a particular statutory or rule criterion varies based upon the facts and circumstances of each case. If an earlier application is denied, and a new one submitted, the weight to be afforded certain criterion in the review of the more recent application may be different if the facts and circumstances are different. It is not consistent, however, for AHCA to treat the same facts differently, or to reach different conclusions of law on the same facts. In 1987, the agency responsible for CON regulation, denied a Baptist application, in the absence of numeric need, for the express purpose of protecting the 350 volumes at existing providers. In the preceding 12 months, there were 45 emergency angioplasties performed at Baptist, Sacred Heart's open heart surgery volume was 291, and West Florida Regional's was 344. The Baptist application was denied in a SAAR, which is replete with the references to the relationship of volume to quality, and which concludes: There is insufficient need for a third open heart surgery program in District One. It would lower the average number of procedures below the 350 recommended in the Rule and it would have a negative impact on existing providers. SAAR, CON Action No. 5120 at p.17. In early 1990, another Baptist application for an open heart surgery CON was denied. Using the preferences from the 1989 state health plan, the agency found that Baptist was (1) in a large county with a higher than average elderly population, (2) a disproportionate share provider, which would serve patients regardless of their ability to pay, (3) large enough to propose a fixed price structure for 3 years, and (4) capable of providing all the supplementary procedures for a complete cardiac program. Baptist was also found to have met the quality of care standard and to have the resources to implement the program. In addition, the fixed rate proposal was viewed as enhancing competition. The agency recommended denial, after finding no need for the project, no enhanced access or quality of care benefits and that existing providers volumes would fall below 350. The 1989 state health plan is also applicable to the review of CON 7184. Using the same 1989 preferences, the findings on the preferences in this case are essentially the same, except that the elderly population in Escambia is now below the state-wide average. See, DOAH Cases Nos. 93-4886 and 93-4887, Findings of Fact 53-60 (R.O. 11/18/94). By 1992, the use rate indicated a need for 2.48 open heart surgery programs in District One. Baptist asserted as "not normal" circumstances: (1) scheduling difficulties at Sacred Heart, (2) its status as a Level II trauma center, and (3) a fixed price structure at 85 percent of the average rate per DRG for the two existing providers. In its analysis of Baptist's asserted "nor normal" circumstances, the agency noted that "[a]pparently, Baptist has made no attempt to refer cases to West Florida Regional." The agency rejected the assumption that a trauma center has a need for open heart surgery services. The agency treated the proposed pricing structure as one reason for concluding that Baptist's proposed open heart program would reduce patient volumes at Sacred Heart and West Florida Regional. See, SAAR CON Action No. 6774, pp. 3-5. In this case, AHCA made a mistake of fact and failed to follow its precedents in determining not normal circumstances. See, Finding of Facts 16 and 17, supra. Due to the regulatory scheme which establishes the certificate of need review process and the criteria in statutes and rules which have be weighed and balanced, it is impossible to have a rule which would describe every set of circumstances which would justify departure from the "normal" operation of a rule methodology. The agency has, however, described the conditions which should be alleviated by the approval of a CON under not normal circumstances. In the 1987 CON 5120 SAAR, the agency found: There is no accessibility problem, geographic, programmatic or financial, noted by the applicant or the Local Health Council, for patients in District One for open heart surgery. SAAR, CON Action No. 5120 at p.6. The "not normal" circumstance claimed by Baptist do not involve access problems for District 1 residents and have been rejected as such by the agency in the past.
Findings Of Fact Application Process Humhosco is a wholly owned subsidiary of Humana, Inc. Humhosco owns Humana Hospital Brandon and other hospitals in Florida. The record does not disclose thee number of such hospitals or whether Humhosco owns other assets. On February 26, 1988, Humhosco submitted to HRS a letter of intent to apply for a certificate of need for open heart services at Humana Hospital Brandon. The letter of intent included a certificate dated February 26, 1988, authorizing Humhosco to file the application for the project estimated to cost nearly $2 million, making available "sufficient funds" for the project, certifying that Humhosco shall accomplish the project within the time allowable by law at or below the costs stated in the application, and certifying that Humhosco shall license and operate the facility. The certificate was signed by Alice F. Newton, as Secretary of Humana, Inc. She certified that the representations contained in the preceding paragraph were resolutions of the Board of Directors of Humana, Inc. approved on February 26, 1989. On or about March 14, 1988, Humhosco submitted to HRS an application for a certificate of need to install and operate an open heart center at Humana Hospital Brandon. The projected cost was about $1.9 million. The application included a certificate dated March 16, 1988, containing resolutions similar to those contained in the certificate of February 26, 1988. The certificate was again signed by Alice F. Newton, but this time in her capacity as Secretary of Humhosco. The resolutions, which were dated as of March 16, 1988, were adopted by the Board of Directors of Humhosco. The application contained no financial statement of Humhosco. Instead, the application contained an audited financial statement for "Humana Hospital- Brandon (a division of Humhosco, Inc., a wholly-owned subsidiary of Humana Inc.)." The financial statement, which was for fiscal year ending August 31, 1987, reflected an examination of the financial records of Humana Hospital Brandon, not Humhosco. The financial statement disclosed a shareholder's equity of about $24 million and net income of about $6.2 million based on net revenues of about $47 million and income before income taxes of about $12.2 million. The record does not explain the basis for a shareholder's equity in a division of the corporation in which it owns shares. However, nothing in the record suggests that the financial statement is mislabelled. The financial statement appears to reflect the operations and net worth of a division of Humhosco, not Humhosco itself. The financial statement is of little value in assessing the financial condition of Humhosco. Nothing in the record supports an inference that Humhosco's other hospitals, as well as any other operating assets that Humhosco might own, are profitable or, if unprofitable, whether their losses are exceeded by the profits of Humana Hospital Brandon. By letter dated April 14, 1988, HRS requested additional information from Humhosco. The letter requested, among other things, a financial statement for the prior year and an original certificate rather than a copy. HRS never commented on the fact that the certificate accompanying the letter of intent evidenced resolutions from the corporate parent of the applicant or that the financial statements were of a division of the applicant. By letter dated May 12, 1988, Humhosco responded to the above- described omissions letter. In its response, Humhosco provided the earlier financial statement, which was for Humana Hospital Brandon and not Humhosco. The letter did not include any material information regarding either certificate. By letter dated July 11, 1988, HRS informed Humhosco of its intent to issue Certificate of Need 5537 for the establishment of the open heart program described in the application. The accompanying State Agency Action Report, which was dated July 8, 1988, recommended that the certificate of need be issued in its entirety. The report stated that the need methodology described by Rule 10-5.011(1)(f) justified seven open heart programs in District VI, which has only six such programs, and the Humhosco proposal was in substantial compliance with all criteria. The Hospital Humana Hospital Brandon is a 220-bed general hospital in Brandon, which is in eastern Hillsborough County. Humana Hospital Brand on is fully accredited by the Joint Commission of the Accreditation of Health Care Organizations. The hospital, which is a Level II trauma center with eastern Hillsborough County as its catchment area, contains 16 intensive-care and cardiac-care beds and 35 progressive-care beds, in addition to its regular medical-surgery beds. The hospital offers a wide range of services, including medicine, pathology, anesthesiology, radiology, neurology, intensive care, and emergency care available at all times for cardiac emergencies. The hospital provides cardiac catheterization services through its cardiac catheterization lab and noninvasive cardiographics lab. Open heart surgery is cardiac surgery during which a cardiopulmonary bypass procedure is used. Cardiac catheterization is a diagnostic/therapeutic procedure used in connection with heart and circulatory conditions. Coronary angioplasty is the expansion of narrowed segments of the coronary vessels. The proposed open heart suite would be adjacent to the existing cardiac catheterization lab, and the two facilities would share the same recovery/support area. The proposed program would provide a wide range of procedures, including the repair or replacement of heart valves, repair of congenital heart defects, cardiac revascularization, repair or reconstruction of intrathoracic vessels, and the treatment of cardiac truama. The program would have the ability to implement and apply circulatory assist devices such as the intra- aortic balloon assist and prolonged cardiopulmonary partial bypass. Need District and State Health Plans The 1985 District VI Health Plan reports that most cardiac surgeries are open heart with the most common of these being coronary bypass surgery. The plan acknowledges that an important use of cardiac catheterization is evaluation for open heart surgery. According to the plan, open heart surgery, particularly coronary bypass surgery, has been controversial with respect to its risk- and cost- effectiveness and the fairness of its distribution among the entire population. Noting a decline in procedures in District VI from 1983 to 1984, the plan concluded that the application of the present rule methodology could exaggerate need if the decline continued. Otherwise, however, the proposed program satisfied the policies of the district plan broadly relating to need. The State Health Plan stated that an inverse relationship exists between the volume of open heart procedures and surgical death rates. The state plan added, however, that no clear agreement exists as to the minimum number of procedures necessary to maintain staff skills. The plan endorsed the rule requiring that a new program project a minimum of 200 procedures annually within three years of opening. The State Health Plan reported the controversy concerning the efficacy of open heart procedures, at least at their current rate. The plan concluded that further study would be required before the issue could be resolved. The plan stated that new types of cardiac catheterization procedures may replace some open heart surgery, "while necessitating the availability of open heart programs on standby basis within the same facility." The plan also anticipated a reduction in the rate of open heart surgery with the introduction of new procedures, such as balloon angioplasty, clot-dissolving substances, and calcium blockers. The plan noted the recommendations of two groups that cardiac catheterization laboratories be located only in facilities providing open heart surgery. The plan suggested that catheterization laboratories without connected open heart programs would suffer lower utilization rates than catheterization laboratories with open heart programs. The State Health Plan concluded by establishing an objective "to maintain an average of 350 open heart surgery procedures per program in each district through 1990." HRS Rules Rule 10-5.011(1)(f), Florida Administrative Code, sets forth the HRS numeric need methodology. Rule 10-5.011(1)(f)8 provides a formula to estimate the number of open heart procedures for the horizon year, which, in this case, is 1990. Rule 10-5.011(1)(f)11 prohibits the approval of new open heart programs unless certain conditions are met, including satisfying the requirement of Rule 10-5.011(1)(f)5.d that 200 procedures annually be performed within three years after commencement of the service. The proposed open heart program would generate a minimum of 200 adult open heart procedures annually within three years after commencement. Ultimately, the program could handle as many as 500 procedures annually. Under the formula contained in Rule 10-5.011(1)(f)8, the estimated number of open heart procedures in District VI is 2555 in 1990, which is when the proposed program would become operational. The projected population of District VI on January 1, 1990, is 1,563,354 persons. For the 12-month period ending two months prior to the deadline for letters of intent for the subject batching cycle, the use rate per 100,000 persons in District VI was 163.45. This figure is based on a population of 1,469,572 persons residing in District VI as of July 1, 1987, and 2402 open heart procedures performed during calendar year 1987. (The number of procedures includes 1050 procedures performed at Tampa General for the one-year period ending September 30, 1987, rather than calendar year 1987.) Rule 10-5.001(1)(f)11.b requires that the projected number of procedures in 1990 be divided by 350 in order to generate the number of programs needed to exist in 1990. The result of this calculation is that seven open heart programs are needed in District VI. That means that there is a net need for one program because there are presently six existing and approved open heart programs in District VI. However, Rule 10-5.011(1)(f)11.a.I prohibits the approval of any new open heart programs unless "each existing and approved" program is "operating at" and "expected to continue to operate at" a minimum of 350 adult open heart cases annually. The meaning of this rule is unclear, and HRS apparently interprets it merely to require that all existing programs average 350 procedures annually at the time of determination of the actual use rate. Another interpretation of the rule is that each existing and each approved program must be operating at the requisite rate before new programs could be approved. This interpretation is impractical because approved programs that are not yet in operation are not operating at any rate. If the intent of the rule were to prohibit the establishment of more than one open heart program at a time, HRS could have simply stated as much. The most likely interpretation is one that addresses the universally recognized relationship between volume of open heart procedures (up to a certain level) and patient mortality. The rule requires that each existing and approved facility in the district be operating at 350 procedures annually before new open heart programs are licensed. The rule does not authorize averaging the total number of procedures among the licensed facilities in a district. The inverse relationship between the number of procedures and surgical deaths is not dependent upon an average number of procedures performed in a geographical area. The safety of an open heart patient is dependent upon the actual number of open heart procedures being performed at the hospital that he or she has selected for open heart surgery. The presence in District VI of a hospital performing 1400 open heart procedures annually is of no relevance to the patient who has unwittingly selected a hospital in the same district that performs only, say, 50 such procedures annually. The six existing and approved open heart programs in District VI are identified below by facility, location, and numbers of procedures in 1987 and the first six months of 1988. Facility County 1987/1988 Procedures Tampa General Hillsborough 1050/714 St. Joseph's Hillsborough 887/514 University Community Hillsborough 0/0 Manatee Memorial Manatee 0/70 L. W. Blake Manatee 0/0 Lakeland Regional Polk 465/292 TOTAL DISTRICT VI PROCEDURES--1987 2402/1590 The 1988 procedures for Manatee Memorial cover the period of February, when the program became operational, through June. The State Agency Action Report indicates that Manatee Memorial is an approved but not yet existing program, although the program had already accounted for 70 procedures by the time of the report. The reason for this apparent discrepancy is that HRS uses the 1987 data used for calculating the use rate when determining the status of other programs. HRS offered little explanation of why it used 1987 data for determining in 1988 whether other programs were existing. Rule 10-5.011(1)(f), Florida Administrative Code, which covers open heart programs, does not define "approved and existing programs" or establish the time at which the status of a program should be determined. However, given the critical role of patient safety in the licensing process, the rule does not justify the reference to obsolete data. The Manatee Memorial open heart program was existing and approved at the time of the letter of intent and application of Humhosco and the State Agency Action Report. It was not then operating at 350 open heart procedures annually. Its approximate annualized rate of 168 procedures is materially below even the annual rate of 200 procedures often cited as the minimum number at which the mortality rate levels out. Additionally, there was no evidence that Manatee Memorial would attain such a volume of open heart procedures. Conclusions Regarding Need According to the numeric need methodology, exclusive of Rule 10- 5.011(1)(f)11.a.I, District VI could support an additional open heart program. Although in the long run the rate of open heart procedures may decrease for the reasons set forth above, the rate of such procedures will probably increase at least through 1990 and probably several years thereafter. For reasons set forth elsewhere in this recommended order, the Humana Hospital Brandon program would successfully satisfy this need. However, the requirement of Rule 10-5.011(1)(f)11.a.I has not been met, and thus need under the rule does not exist. Of the six current open heart programs in District VI, three performed no procedures in 1987. During the first six months of 1988, one of these three programs became operational, but the other two had yet to perform their first procedure. Although the first-year rate of procedures at Manatee Memorial was not insubstantial, the program is not operating at and expected to continue to operate at the minimum annual rate of 350 procedures set forth in the rule. The likelihood of the Manatee Memorial program attaining such a rate is especially difficult to predict in view of the unknown consequences of the initiation of another open heart program in Manatee County and another elsewhere in District VI. On balance, the proposed program at Humana Hospital Brandon is not needed or authorized due to the existing volume of procedures at Manatee Memorial as of the time of the application and approval and the adverse effect of reduced volumes upon patient safety. Rule 10-5.011(1)(f)11.a.I makes it clear that District VI needs time to absorb the recently approved open heart programs before a new one should be established. Quality of Care Humhosco has the ability to provide high quality of care and has done so in the past. An open heart program at Humana Hospital Brandon would improve the quality of care at the hospital. The new program would have limited effect upon the hospital's trauma services due to the limited number of trauma-related open heart procedures. However, the new program would complement the cardiac catheterization lab at the hospital. The addition of an open heart program would permit Humhosco to add cardiac angioplasty services in the cardiac catheterization lab at the hospital. Continuity of care and patient safety and convenience would be enhanced by the establishment of an open heart program at Humana Hospital Brandon. Strong physician support exists for an open heart program at Humana Hospital Brandon. Many existing staff persons already have the necessary skills and experience to participate in the open heart program. The staff includes 10 cardiovascular surgeons certified by the Medical Board of Thoracic Surgery or board-eligible for certification and three board-certified or board-eligible anesthesiologists trained in open heart surgery. Humhosco would add the additional staff needed to operate the proposed program. Humana Hospital Brandon has the capacity to accommodate the projected patient volume from the open heart program. Service Accessiblity Rule 10-5.011(1)(f)4.a provides that open heart programs shall be available within a maximum automobile travel time of two hours under average conditions for at least 90% of the district's population. The two-hour standard reflects the fact that open heart surgery is a tertiary service that is ordinarily performed on a scheduled rather than emergency basis. Hillsborough County is the largest county within District VI. The growth rate of eastern Hillsborough is higher than the growth rate of the remainder of the county. No open heart program is presently located in eastern Hillsborough County. A program at Humana Hospital Brandon would reduce the travel time for the persons living in eastern Hillsborough County. However, the two-hour standard is presently met in District VI, and the improvement in geographical access resulting from the establishment of a program at Humana Hospital Brandon is not substantial. The proposed program would satisfy the requirements of Rule 10- 5.011(1)(f)4.b and c regarding hours of operation and waiting periods. Humhosco has projected for the open heart program a payor mix of 55% Medicare, 2% Medicaid, and 5% indigent. If these projections were realized, Humhosco would achieve the objective of making open heart surgery available to these classifications of patients. Humhosco's record of serving these patient classifications at Humana Hospital Brandon suggests that these projected goals would be achieved. Financial Feasibility The immediate financial feasibility of the proposed project is good. The source of construction funds is a reasonable mix of 25% equity and 75% debt. The borrowed funds will come from Humana, Inc., which has ample resources to make a loan of this magnitude. The terms are 10 years at 12% with 120 equal monthly payments of $20,575.89 principal and interest. The availability of the equity portion of construction costs, which amounts to a little over $475,000, is uncertain due to the lack of information concerning the financial condition of the applicant. It is unlikely, however, that the unavailability of any or all of these funds would interfere with the project. Humana, Inc. has in any event committed by resolution to make available to the applicant sufficient funds to accomplish the project. The long-term financial feasibility of the proposed project is good. Even after total interest payments of about $168,000 and $158,000 in the first two years of operation, Humhosco projects, based on reasonable assumptions, that the open heart program would produce after-tax income of about $250,000 on first-year gross revenues of about $6.2 million and $345,000 on second-year gross revenues of about $7 million. Cost Effectiveness The implementation of an open heart program at Humana Hospital Brandon would encourage competition among health care providers of open heart services. Humhosco projects the average charge per open heart admission when the program would open in 1990 to be $29,000. This figure is about $3600 less than the average charge per open heart admission at Tampa General in 1987 and compares favorably with the charges of other providers in the area. In the long term, the effect of an open heart program at Humana Hospital Brandon could have an adverse effect on cost effectiveness if the program at Tampa General lost substantial volume due to the presence of this competition. Tampa General is a major provider of medical services to the medically indigent. Although publicly supported, Tampa General expends more on indigent-related costs than it receives in public funds for the medically indigent. Tampa General therefore must subsidize its unreimbursed indigent services with revenues from paying patients. In 1980, after a period of serious financial strains, Tampa General commenced a modernization program to attract paying patients. The program, together with a $160 million bond issue and new marketing efforts, has significantly improved the financial condition of the hospital. The approval in the past of new open heart programs in the area has coincided with the reduction of open heart procedures at Tampa General. In fiscal year ending 1983, Tampa General performed 1671 procedures. The following year, during which St. Joseph's began performing open heart surgery, Tampa General performed 878 procedures. In fiscal year ending 1985, Tampa General performed 802 procedures. The following two years, during which no new programs became operational, Tampa General performed 1050 and 1428 (projected) procedures, respectively. Undoubtedly, a new open heart program at Humana Hospital Brandon would have some effect on existing programs, including that at Tampa General. However, the record does not support a finding that the establishment of an open heart program at Humana Hospital Brandon would have a more lasting effect upon the program at Tampa General than did the other programs established in recent years. Other Factors The record does not demonstrate that there are less costly, more efficient, or more appropriate alternatives to the in-patient services proposed in the subject application. With one exception, existing in-patient facilities providing open heart services are being used in an appropriate and efficient manner. The exception is that there is nothing in the record to suggest that the open heart programs at Manatee Memorial, University Community, and L. W. Blake are being utilized efficiently. To the contrary, the only program in existence at the time of the application was not operating at the optimal minimum level. The costs and methods of proposed construction are reasonable and appropriate. There is nothing in the record to suggest that practical alternatives exist to the construction program contemplated by Humhosco. Open heart patients will not experience serious problems in obtaining in-patient care if the proposed application is not approved. There is nothing in the record to suggest that joint, cooperative, or shared resources could be used to provide the open heart services for which Humhosco has applied. The proposed program would not have any significant effect on research and educational facilities or health professional training programs.
Recommendation Based on the foregoing, it is RECOMMENDED that a Final Order be entered dismissing the petition of University Community Hospital in Case No. 88-4366 on the grounds that it dismissed its petition, and denying the application of Humhosco for Certificate of Need 5537. DONE and ENTERED this 18th day of April, 1989, in Tallahassee, Florida. ROBERT E. MEALE Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, FL 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 18th day of April, 1989. APPENDIX Treatment Accorded proposed Findings of Humhosco and HRS 1-29. Adopted or adopted in substance. 30. Rejected as against greater weight of the evidence to the extent that the requirement of 350 procedures at each facility is part of the numeric need methodology. 31 and 33. Adopted in substance. However, the resulting determination of need or no need is tentative. Rule 10-5.011(1)(f)11 provides a general prohibition against the establishment of programs under normal circumstances even though, under the other portions of the rules, there would otherwise be a numeric need. 32. Adopted. Rejected as legal argument. To the extent factual, rejected as against the greater weight of the evidence. Adopted in substance. Rejected as unnecessary. 37-38. Rejected as subordinate. Adopted in substance at least as to the maintenance or slight increase of the present use rate for the immediate future. This fact does not justify a deviation from the rule requirement of the historic use rate, which in any event would justify another program. Nor does this fact justify a not normal condition for the reasons set forth in the recommended order. It should be noted that Humhosco did not offer evidence to this effect at the hearing for either of these improper purposes. This fact is only relevant in assessing the impact of the establishment of the proposed project upon existing providers, especially Tampa General and, to a lesser extent due to the greater amount of speculation involved, the new providers such as Manatee Memorial. Rejected as unsupported by the greater weight of the evidence. An increase in the number of programs has historically been accompanied by an increase in the number of procedures. It is conjecture whether or to what degree the addition of programs caused such an increase. 41-45. Adopted in substance. 46-48. Rejected as subordinate. 49-52. Adopted or adopted in substance. 53-55 and 60. Rejected as legal argument. 56-58 and 61. Adopted or adopted in substance. 59. Rejected as recitation of evidence. 62-64. Rejected as subordinate. 65. Rejected as legal argument. 66-69. Adopted. 70 and 72. Rejected as unsupported by the greater weight of the evidence. 71. Rejected as irrelevant. 73-76. Rejected as subordinate. Concerning the "overcrowded" conditions at Tampa General, the evidence showed only that the Tampa General program was, at times, quite busy, but not overutilized. The periodic high level activity at Tampa General is subordinate to the findings in the recommended order concerning the limited impact upon Tampa General of the approval of the proposed project. 77. Adopted in substance. 78-82. Rejected as subordinate. 83. Adopted in substance. 84-86. Rejected -as subordinate. Rejected as unsupported by the greater weight of the evidence. The proposed payor mix is reasonable insofar as providing access to the medically indigent and Medicaid patients. The record is unclear, however, that the approval of the application would improve the existing access of such patients to open heart services. Adopted in substance. 89 and 91. Rejected as subordinate. 90. Adopted, except that the last sentence is rejected to the extent that it suggests that Humhosco's commitment to financial access is greater than the commitment of existing providers. 92-94. Adopted. 95-96. Rejected as irrelevant. A hospital has no financial strength. A lender or investor assesses the legal entity that owns or operates the hospital. The net worth and profitability of the hospital may have a material impact on the net worth and profitability of the owner or operator of the hospital. However, it is impossible to make that determination without assessing the assets, liabilities, profits, and losses of the legal entity and not simply one of its assets. The immediate financial feasibility may be inferred by the activity of Humana, Inc. with respect to the proposed project. Rejected as legal argument. Adopted in substance. 99-100 and 108. Adopted. 101-107. Rejected as subordinate and cumulative. 109 and 123. Rejected as legal argument. 111-122. Adopted in substance. 123. Rejected as legal argument. and 126. Adopted. and 127-128. Rejected as subordinate. Adopted in substance. Rejected as cumulative. 131-133. Rejected as cumulative and, for the purpose offered, irrelevant. 134-137. Adopted in substance. 138-150. Rejected as subordinate. Treatment of Proposed Findings of Tampa General 1-3. Adopted. Rejected as legal argument and, as to the policy of HRS, irrelevant insofar as such policy might deviate from the clear requirements of the statute. First two sentence rejected as legal argument. Remainder adopted. 6-7. Rejected as legal argument except that last sentence of Paragraph 7 is adopted. First two sentences adopted. Remainder rejected as irrelevant. Adopted in substance. 10-11. Adopted. 12. Rejected as legal argument and, to the extent factual, against the greater weight of the evidence. 13-14. Adopted in substance. 15-16. Rejected as unnecessary. 17. Rejected as against the greater weight of the evidence. 18-20. Adopted in substance. Adopted insofar as Humhosco provides quality cardiac care services at Humana Hospital Brandon without an open heart program. Remainder rejected as against the greater weight of the evidence. Rejected insofar as the proposed finding suggests that a slight improvement in geographic accessibility should, as a matter of law, be ignored in this case. Adopted in substance if, like the proposed finding in Paragraph 19 concerning trauma-center status, this proposed finding means only that the slight improvement in geographic accessibility is alone insufficient to justify granting the certificate of need. Rejected as subordinate. 24-25. Rejected as recitation of evidence and subordinate. Rejected as unsupported by the greater weight of the evidence. Adopted. 28-29. Adopted in substance. Rejected as irrelevant given the interpretation adopted in the recommended order concerning the meaning of Rule 10-5.011(1)(f)11.a.I. Adopted in substance. 32-33. Rejected as unsupported by the greater weight of the evidence. 34. Rejected as subordinate. 35-40. Rejected as unsupported by the greater weight of the evidence. 41-42. Rejected as unsupported by the greater weight of the evidence and subordinate. Treatment Accorded proposed Findings of St. Joseph's 1-4. Adopted or adopted in substance. First sentence adopted except that the tax status of Humhosco as a "holding company" is rejected as a legal conclusion, irrelevant, and unsupported by the greater weight of the evidence. Second sentence adopted. Third sentence rejected as irrelevant. Third sentence rejected as a legal conclusion, irrelevant, and unsupported by the greater weight of the evidence, although it appears to be true that the identities of the persons occupying the named positions are the same between the two companies. Last sentence rejected as irrelevant. Adopted. Rejected as irrelevant. Adopted. Rejected as irrelevant. 10-13. Rejected as legal argument and unnecessary, given the finding in the recommended order that, even ignoring the additional beds that have been approved at Humana Hospital Brandon, the hospital is not overutilized. 14-15 and 17 and 19. Rejected as legal argument. 16. Rejected as subordinate. 18. Adopted in part and rejected in part. The existence of a cardiac catheterization lab does not mandate the authorization of an open heart program. However, the record in this case supports the finding that the addition of an open heart program would complement existing services in the cardiac catheterization lab, and nothing in the law prohibits the consideration of such a factor. 20-21. Rejected as irrelevant. See Paragraph 18 above. Rejected as irrelevant. Rejected as legal argument. Rejected as unsupported by the evidence. 25-26. Rejected as subordinate to the finding contained in the recommended order that the status as a trauma center is not a significant factor in considering the subject application. 27-28. Rejected as legal argument. 29-30. Adopted in substance. 31-33. Rejected as recitation of evidence. 34. Rejected as against the greater weight of the evidence. 35-39. Rejected as subordinate. 40. Adopted in substance. 41-49. Rejected as subordinate. 50. Rejected as irrelevant. 51-52. Rejected as against the greater weight of the evidence. 53-55. Rejected as subordinate. 56. Rejected as legal argument. 57-58. Rejected as recitation of testimony. Rejected as legal argument. Adopted. 61-69. Rejected as unnecessary. Rejected as legal argument. Adopted except that the last sentence is rejected as legal argument. Rejected as legal argument. Rejected as recitation of testimony. Rejected as legal argument. Adopted in substance. 76-78. Rejected as recitation of evidence. COPIES FURNISHED: Ivan Wood, Esquire Sam Power Wood, Lucksinger & Epstein Clerk Four Houston Center Department of Health and 1221 Lamar, Suite 1440 Rehabilitative Services Houston, TX 77010 1323 Winewood Boulevard Tallahassee, FL 32399-0700 John Radey, Esquire Elizabeth McArthur, Esquire Gregory L. Coler Aurell, Fons, Radey & Hinkle Secretary Post Office Drawer 11307 Department of Health and Tallahassee, FL 32302 Rehabilitative Services Tallahassee, FL 32399-0700 Cynthia S. Tunnicliff, Esquire Carlton, Fields, Ward, Emmanuel, Smith & Cutler, P.A. John Miller Drawer 190 General Counsel Tallahassee, FL 32302 Department of Health and Rehabilitative Services 1323 Winewood Boulevard John Rodriguez, Esquire Tallahassee, FL 32399-0700 Assistant General Counsel 2727 Mahan Drive Fort Knox Executive Center Tallahassee, FL 32308 James C. Hauser, Esquire Joy Thomas, Esquire Messer, Vickers, Caparello, French and Madsen, P.A. Post Office Box 1876 Tallahassee, FL 32302 =================================================================
The Issue Whether there is need for a new Pediatric Heart Transplant and/or Pediatric Heart and Lung Transplant program in Organ Transplant Service Area (OTSA) 3; and, if so, whether Certificate of Need (CON) Application No. 10471 (heart) and/or 10472 (heart and lung), filed by The Nemours Foundation, d/b/a Nemours Children’s Hospital (Nemours or NCH), to establish a Pediatric Heart Transplant and/or Pediatric Heart and Lung Transplant program, satisfy the applicable statutory and rule review criteria for award of a CON.
Findings Of Fact Based upon the demeanor and credibility of the witnesses and other evidence presented at the final hearing and on the entire record of this proceeding, the following Findings of Fact are made: The Parties The Applicant, Nemours Nemours Children’s Hospital is a licensed Class II specialty children’s hospital located in Orange County, Health Planning District 7, Subdistrict 7-2, OTSA 3, which is owned and operated by The Nemours Foundation. Nemours is licensed for 100 beds, including 73 acute care, nine comprehensive medical rehabilitation, two Level II neonatal intensive care unit (NICU), and 16 Level III NICU beds, and is a licensed provider of pediatric inpatient cardiac catheterization and pediatric open-heart surgery. As the primary beneficiary of the Alfred I. duPont Testamentary Trust established in the will of Alfred duPont, the Foundation was incorporated in Florida in 1936. The Foundation set out to provide children and families medical care and services, its mission being “[t]o provide leadership, institutions, and services to restore and improve the health of children through care and programs not readily available, with one high standard of quality and distinction regardless of the recipient’s financial status.” Foundation assets reached $5.5 billion, by the end of 2015. The Foundation has funded $1.5 billion of care to Florida’s pediatric population through subspecialty pediatric services, research, education, and advocacy. Nemours has established a pediatric care presence throughout the State of Florida. Nemours operates over 40 outpatient clinics throughout Florida that offer primary care, specialty care, urgent care, and cardiac care services to pediatric patients in central Florida, Jacksonville, and the panhandle region. Nemours also provides hospital care to pediatric inpatients at Nemours Children’s Hospital in Orlando, as well as through affiliations with Wolfson’s Children’s Hospital in Jacksonville, West Florida Hospital in Pensacola, and numerous hospital partners in central Florida. The resources Nemours offers in the greater Orlando area are especially significant with 17 Primary Care Clinics, five Urgent Care Clinics, 10 Specialty Care Clinics, nine Nemours Hospital partners, and, of course, NCH itself. These clinics are located throughout OTSA 3 where Nemours determined access to pediatric care was lacking, including Orlando, Melbourne, Daytona Beach, Titusville, Kissimmee, Lake Mary, and Sanford, as well as neighboring Lakeland. The clinics are fully staffed with hundreds of Nemours-employed physicians who live in the clinic communities. Through these satellite locations, as well as the Nemours CareConnect telemedicine platform, Nemours is able to bring access to its world-class subspecialists located at NCH to children throughout the State of Florida who otherwise would not have access to such care. Nemours was established to provide state of the art medical care to children through its integrated model. Nemours’ development has been and continues to be driven by its mission and objective to be a top-tier, world-class pediatric healthcare system. NCH is the first completely new “green field” children’s hospital in the United States in over 40 years, allowing Nemours to integrate cutting-edge technology and a patient-centered approach throughout. Nemours has created a unique integrated model of care that addresses the needs of the child across the whole continuum, connecting policy and prevention, to the highest levels of specialized care for the most complex pediatric patients. From its inception, Nemours envisioned the development of a comprehensive cardiothoracic transplant program as proposed by the CON applications at issue in this proceeding. NCH is located in the Lake Nona area, just east of downtown Orlando in a development known as Medical City. Medical City is comprised of a new VA Hospital, the University of Central Florida (UCF) College of Medicine and School of Biomedical Sciences, the University of Florida (UF) Research and Academic Center, the Sanford Burnham Medical Research Institute, and a CON-approved hospital, which is a joint venture between UCF and AHCA, which will serve as UCF’s teaching hospital. Medical City is intended to bring together life scientists and research that uses extraordinarily advanced technology. Co- location in an integrated environment allows providers and innovators of healthcare, “the brightest minds,” so to speak, to interact and to share ideas to advance healthcare and wellness efforts. Agency for Health Care Administration AHCA is the state health-planning agency that is charged with administration of the CON program as set forth in sections 408.031-408.0455, Florida Statutes. Context of the Nemours Applications Pursuant to Florida Administrative Code Rule 59C-1.044, AHCA requires applicants to obtain separate CONs for the establishment of each adult or pediatric organ transplantation program, including: heart, kidney, liver, bone marrow, lung, lung and heart, pancreas and islet cells, and intestine transplantations. “Transplantation” is “the surgical grafting or implanting in its entirety or in part one or more tissues or organs taken from another person.” Fla. Admin. Code R. 59A-3.065. Heart transplantation, lung transplantation, and heart/lung transplantation are all defined by rule 59C-1.002(41) as “tertiary health services,” meaning “a health service which, due to its high level of intensity, complexity, specialized or limited applicability, and cost, should be limited to, and concentrated in, a limited number of hospitals to ensure the quality, availability, and cost effectiveness of such service.” AHCA rules define a “pediatric patient” as “a patient under the age of 15 years.” Fla. Admin. Code R. 59C-1.044(2)(c). AHCA rules divide Florida into four OTSAs, corresponding generally with the northern, western central, eastern central, and southern regions of the state. Fla. Admin. Code R. 59C-1.044(2)(f). The programs at issue in this proceeding will be located in OTSA 3, which is comprised of Brevard, Indian River, Lake, Martin, Okeechobee, Orange, Osceola, Seminole, and Volusia Counties. Currently, there are no providers of PHT in OTSA 3, and there are no approved PHLT programs statewide. The incidence of PHT in Florida, as compared to other types of solid organ transplants, is relatively small. The chart below sets forth the number of pediatric (ages 0-14) heart transplant discharges by year for the four existing Florida PHT programs during Calendar Years (CY) 2013 through 2016, and the 12-month period ending June 2017: HOSPITAL HEART TRANSPLANT CY 2013 CY 2014 CY 2015 CY 2016 12 MONTHS ENDING JUNE 2017 All Children’s Hospital 7 14 9 8 7 UF Health Shands Hospital 6 8 15 15 9 Memorial Regional Hospital 5 5 5 7 4 Jackson Health System 2 2 1 4 1 Total 20 29 30 34 21 The above historic data demonstrates that the incidence of PHT statewide is relatively rare, and does fluctuate from program to program and from year to year. As can be seen, the most recent available 12-month data reflects that only 21 PHTs were performed during that time, for an average program volume of only 5.25 cases. Florida has more existing and approved PHT programs than every other state in the country except California, which has more than double the pediatric population of Florida. And like Florida, two of the California programs are extremely low- volume programs. Additionally, evidence regarding the number of PHLT patients demonstrated just how rare this procedure is. From 2013 to 2016, there was an annual average of only four PHLTs nationally, with only one actual transplant on a Floridian. Nemours’ health planner stated that although Nemours projected in its application that it would perform one heart/lung procedure each year, it is a “very low-volume service,” and Nemours in actuality expects that there will be years with zero volume of PHLT. The CON Applications Nemours filed its applications for heart transplantation, heart/lung transplantation, and lung transplantation in the second Other Beds and Programs Batching Cycle of 2016. Nemours is proposing the development of a comprehensive cardiothoracic transplant program, which will be the only such program in Florida. This will be achieved by combining three types of transplant services (heart, lung, and heart/lung) in one comprehensive cardiothoracic transplant program. Each application was conditioned on the development of all three transplantation programs. Nemours is located in OTSA 3, where there is currently no PHT provider, PLT provider, or PHLT provider. There are, however, three providers of pediatric open-heart surgery and pediatric cardiac catheterization, and a large, growing pediatric population. Unlike any other facility in Florida, the Nemours Cardiac Center (Cardiac Center) is uniquely organized to treat all forms of congenital heart disease. The Cardiac Center employs a “programmatic approach” to offer the most beneficial environment and the finest care available for pediatric patients. The Cardiac Center, physically located at NCH, throughout Florida, is organized as a single Department of Cardiovascular Services to house Cardiac Surgery, Cardiac Anesthesia, Cardiac Intensive Care Unit (ICU), and Cardiology. Cardiac Center physicians throughout Florida are organized as a single entity with the goal of providing the highest quality, patient-centered care to all patients without the usual barriers created by the departmental “silos.” The entire Cardiac Center clinical team, including nurses and physicians, is dedicated solely to the special challenges of congenital heart abnormalities and makes the care of children with heart disease the life’s work of team members. The fully integrated organizational structure permits the team to take shared responsibility for all aspects of the delivery of quality care to these pediatric patients from admission to discharge. The Cardiac Center holds weekly patient consensus conferences, where all providers, including physicians, nurses, and the patients’ caregivers, participate in case reviews of all inpatients and those patients scheduled for surgery or catheterization. The Cardiac Center is “state of the art” with a designated cardiovascular operating room, a designated cardiovascular lab that includes an electrophysiology lab, and a dedicated comprehensive care unit. In addition, The Foundation has furthered the commitment to the Cardiac Center by funding an additional $35 million expansion to the sixth floor of NCH, adding an additional 31 inpatient beds, an additional operating room, and a comprehensive cardiovascular intensive care unit. Dr. Peter D. Wearden joined Nemours in 2015 as the chief of cardiac surgery, chair of the Department of Cardiovascular Services, and director of the Cardiac Center at Nemours. Dr. Wearden will serve as director of the Comprehensive Cardiothoracic Transplant Program at Nemours and will be instrumental in the development and implementation of the program. Dr. Wearden was recruited from the Children's Hospital of Pittsburgh (CHP), where he served as the surgical director of Heart, Lung, and Heart/Lung Transplantation. He was also the director of the Mechanical Cardiopulmonary Support and Artificial Heart Program. CHP rose to a US News and World Report top 10 program during Dr. Wearden’s tenure. CHP is at the forefront of organ transplantation and is where the first pediatric heart/lung transplantation was performed. Dr. Wearden is a trained cardiothoracic surgeon who completed fellowships in both cardiothoracic surgery (University of Pittsburgh) and Pediatric and Congenital Heart Surgery (Hospital for Sick Children, Toronto, Canada). He is certified by the American Board of Thoracic Surgery and holds additional qualifications in Congenital Heart Surgery from that organization. In his tenure as a board-certified pediatric transplant specialist, he has participated in over 200 pediatric cardiothoracic transplantations, of which he was the lead surgeon in over 70. In addition, he has procured over $20 million in National Institutes of Health research funding since 2004 specific to the development of artificial hearts and lungs for children and their implementation as a live-saving bridge to transplantation. Dr. Wearden was a member of the clinical team that presented to the Food and Drug Administration (FDA) panel for approval of the Berlin Heart, the only FDA-approved pediatric heart ventricular assist device (VAD)1/ currently available, and he proctored the first pediatric artificial heart implantation in Japan in 2012. A VAD is referred to as “bridge to transplant” in pediatric patients because the device enables a patient on a waiting list for a donated heart to survive but is a device on which a child could not live out his or her life. Both utilization of VADs and heart transplantation procedures are in the “portfolio of surgical interventions” that can save the life of a child with heart failure. Dr. Wearden is an international leader in the research and development of VADs. Victor Morell, an eminent cardiac surgeon and chief of Pediatric Cardiac Surgery at CHP, testified that Dr. Wearden’s presence in Orlando alone and the work that he will be able to do with VADs and a PHT program will likely save lives. Many of the physicians that comprise the Nemours Cardiac Center transplant team not only have significant transplant experience, but also have experience performing transplants together. These physicians came with Dr. Wearden from CHP, were trained by Dr. Wearden, or otherwise worked with Dr. Wearden at some point in their careers. The physicians recruited to the Nemours transplantation team were trained at or hail from among the most prestigious programs in the country. For example, Dr. Kimberly Baker, a cardiac intensivist, was trained by Dr. Wearden in the CHP ICU. Dr. Constantinos Chrysostomou, Nemours’ director of cardiac intensive care, worked with Dr. Wearden at CHP, and has experience starting the pediatric ICU in Los Angeles at Cedar Sinai Hospital. Dr. Steven Lichtenstein, chief of cardiac anesthesia, held the same position at CHP for 12 years before he was recruited to Nemours. Dr. Karen Bender, a cardiac anesthesiologist, was recruited by Dr. Wearden from the Children’s Hospital of Philadelphia – one of the leading programs in the country. Dr. Michael Bingler, a cardiac interventionalist, was at Mercy Children’s Hospital in Kansas City for eight years. Dr. Adam Lowry of the Nemours cardiac intensive care center previously trained at both Texas Children’s Hospital (the number one program in the country) and Stanford. The 11 physicians that comprise the Cardiac Center’s Cardiothoracic Physician Team have collectively participated in 1,146 cardiothoracic transplantations. These physicians came to Nemours to care for the most acute, critically ill patients, including those requiring PHT. In addition to the physician team, the expertise and skill of the non-physician staff in the catheterization lab, the operating room, and the cardiac ICU are crucial to a successful program. Dr. Dawn Tucker is the administrative director of NCH’s Cardiac Center and heads the nursing staff for NCH’s Cardiac Center, which includes 23 registered nurses with transplant experience. Dr. Tucker holds a doctorate of Nursing Practice and was formerly the director of the Heart Center at Mercy Children’s Hospital in Kansas City, where she oversaw the initiation of a PHT program. The average years of experience for total nursing care in cardiac units across the nation is two years. The average years of experience in the Nemours Cardiac Center is eight years. Medical literature shows the greater the years of nursing staff experience, the lower the mortality and morbidity rates. The nursing staff at Nemours, moreover, has extensive experience in dealing not only with pediatric cardiac patients, but with pediatric heart transplants as well. The Cardiac Center’s cardiothoracic nursing staff has over 220 years of collective cardiothoracic transplant experience. Nemours operates a “simulation center” that allows the Cardiac Center to simulate any type of cardiac procedure on a model patient before performing that procedure on an actual patient. The model patient’s “heart” is produced using a three- dimensional printer that creates a replica of the heart based on MRI’s or other medical digital imaging equipment. These replica hearts are printed on-site, using the only FDA-approved software for such use, and are ready for use in the simulation center within a day after medical imaging. Nemours Cardiac Center currently performs what the Society of Thoracic Surgeons has coined “STAT 5” cardiac procedures. STAT 5 cardiac procedures are the most complex; STAT 1 procedures are the least complex. A PHT is a STAT 4 procedure. Since Dr. Wearden’s arrival at the Nemours Cardiac Center, there have been no patient mortalities. The uncontroverted evidence established that Nemours has assembled a high-quality, experienced, and unquestionably capable team of physicians and advanced practitioners for its cardiothoracic transplantation programs and is capable of performing the services proposed in its applications at a high level. UF Health Shands While not a party to this proceeding,2/ UF Health Shands’ (Shands) presence at the final hearing was pervasive. AHCA called numerous witnesses affiliated with Shands in its case-in-chief. The scope of the testimony presented by Shands- affiliated witnesses was circumscribed by Order dated December 13, 2017 (ruling on NCH’s motion in limine) that: At hearing, the Agency may present evidence that the needs of patients within OTSA 3 are being adequately served by providers located outside of OTSA 3, but may not present evidence regarding adverse impact on providers located outside of OTSA 3. Baycare of Se. Pasco, Inc. v. Ag. for Health Care Admin., Case No. 07-3482CON (Fla. DOAH Oct. 28, 2008; Fla. AHCA Jan. 7, 2009). UF Health Shands Hospital is located in Gainesville, Florida. UF Health Shands Children’s Hospital is an embedded hospital within a larger hospital complex. Shands Children’s Hospital has 200 beds and is held out to the public as a children’s hospital. The children’s hospital has 72 Level II and III NICU beds. Unlike Nemours, Shands offers obstetrical services such that babies are delivered at Shands. It also has a dedicated pediatric intensive care unit (PICU) as well as a dedicated pediatric cardiac intensive care unit. The Shands Children’s Hospital has its own separate emergency room and occupies four floors of the building in which it is located. It is separated from the adult services. Shands Children’s Hospital is nationally recognized by U.S. News & World Report as one of the nation’s best children’s hospitals. The children’s hospital has its own leadership, including Dr. Shelley Collins, an associate professor of pediatrics and the associate chief medical officer. As a comprehensive teaching and research institution, Shands Children’s Hospital has virtually every pediatric subspecialty that exists and is also a pediatric trauma center. The children’s hospital typically has 45 to 50 physician residents and 25 to 30 fellows along with medical students. Over $139 million has been awarded to Shands for research activities. As a teaching hospital, Shands is accustomed to caring for the needs of patients and families that come from other parts of the state or beyond. Jean Osbrach, a social work manager at Shands, testified for AHCA. Ms. Osbrach oversees the transplant social workers that provide services to the families with patients at Shands Children’s Hospital. Ms. Osbrach described how the transplant social workers interact with the families facing transplant from the outset of their connection with Shands. They help the families adjust to the child’s illness and deal with the crisis; they provide concrete services; and these social workers help the families by serving as navigators through the system. These social workers are part of the multidisciplinary team of care, and they stay involved with these families for years. Shands is adept at helping families with the issues associated with getting care away from their home cities. Shands has apartments specifically available in close proximity to the children’s hospital and relationships with organizations that can help families that need some financial support for items such as lodging, transportation, and gas. Ms. Osbrach’s ability to empathize with these families is further enhanced because her own daughter was seriously ill when she was younger. Ms. Osbrach testified that, while she was living in Gainesville, she searched out the best options for her child and decided that it was actually in Orlando. Despite the travel distance, she did not hesitate to make those trips in order to get the care her child needed at that time. The Shands Children’s Hospital is affiliated with the Children’s Hospital Association, the Children’s Miracle Network, the March of Dimes, and the Ronald McDonald House Charities. Shands operates ShandsCair, a comprehensive emergency transport system. ShandsCair operates nine ground ambulances of different sizes, five helicopters, and one fixed-wing jet aircraft. ShandsCair does over 7,000 transports a year, including a range of NICU and other pediatric transports. ShandsCair is one of the few services in the country that owns an EC-155 helicopter, which is the largest helicopter used as an air ambulance. This makes it easier to transport patients that require a lot of equipment, including those on extracorporeal membrane oxygenation (ECMO). Patients on ECMO can be safely transported by ground and by air by ShandsCair. Shandscair serves as a first responder and also provides facility-to- facility transport. It has been a leader in innovation. The congenital heart program at Shands includes two pediatric heart surgeons, as well as pediatric cardiologists Dr. Jay Fricker and Dr. Bill Pietra, both of whom testified for AHCA. Dr. Fricker did much of his early work and training at the Children’s Hospital of Pittsburgh, and came to the University of Florida in 1995. He is a professor and chief of the Division of Cardiology in the Department of Pediatrics at Shands. He is also the Gerold L. Schiebler Eminent Scholar Chair in Pediatric Cardiology at UF. He has been involved in the care of pediatric heart transplant patients his entire career. Dr. Bill Pietra received his medical training in Cincinnati and did his early work at several children’s hospitals in Colorado. He came to the University of Florida and Shands in July 2014 and is now the medical director, UF Health Congenital Heart Center. Shands performed its first pediatric heart transplant in 1986. Shands treats the full range of patients with heart disease and performs heart transplants on patients, from infants through adults, with complex congenital heart disease. Shands provides transplants to pediatric patients with both congenital heart defects and acquired heart disease (cardiomyopathy). Shands will accept the most difficult cases, including those that other institutions will not take. Data presented by AHCA dating back to the beginning of 2014 demonstrate that Shands has successfully transplanted numerous patients that were less than six months old at the time of transplantation. This data also demonstrates that Shands serves all of central and north Florida, as well as patients that choose to come to Shands from other states. PHT patients now survive much longer than in the past, and in many cases, well into adulthood. Because Shands cares for both adult and pediatric patients, it has the ability to continue to care for PHT patients as they transition from childhood to adulthood. Managed care companies are now a significant driver of where patients go for transplantation services. Many managed- care companies identify “centers of excellence” as their preferred providers for services such as PHT. Shands is recognized by the three major managed-care companies that identify transplant programs as a center of excellence for PHT services. AHCA’s Preliminary Decision Following AHCA’s review of Nemours’s applications, as well as consideration of comments made at the public hearing held on January 10, 2017, and written statements in support of and in opposition to the proposals, AHCA determined to preliminarily deny the PHT and PHLT applications, and to approve the PLT application. AHCA’s decision was memorialized in three separate SAARs, all dated February 17, 2017. Marisol Fitch, supervisor of AHCA’s CON and commercial-managed care unit, testified for AHCA. Ms. Fitch testified that AHCA does not publish a numeric need for transplant programs, as it does for other categories of services and facilities. Rather, the onus is on the applicant to demonstrate need for the program based on whatever methodology they choose to present to AHCA. In addition to the applicant’s need methodology, AHCA also looks at availability and accessibility of service in the area to determine whether there is an access problem. Finally, an applicant may attempt to demonstrate that “not normal” circumstances exist in its proposed service area sufficient to justify approval. Statutory Review Criteria Section 408.035(1) establishes the statutory review criteria applicable to CON Applications 10471 and 10472. The parties have stipulated that each CON application satisfies the criteria found in section 408.035(1), (d), (f), and (h), Florida Statutes. The only criteria at issue essentially relate to need and access. However, the Agency maintains that section 408.035(1)(c) is in dispute to the extent that center transplant volume as a result of Nemours’ approval would lead to or correlate with negative patient outcomes. AHCA believes that there is no need for the PHT or PHLT programs that Nemours seeks to develop because the needs of the children in the Nemours service area are being met by other providers in the state, principally Shands and Johns Hopkins All Children’s Hospital. Section 408.035(1)(a) and (b): The need for the health care facilities and health services being proposed; and the availability, quality of care, accessibility, and extent of utilization of existing health care facilities and health services in the district of the applicant. Florida Administrative Code Rule 59C-1.044(6)(b).3/ The criteria for the evaluation of CON applications, including applications for organ transplantation programs, are set forth at section 408.035 and rule 59C-1.044. However, neither the applicable statutes nor rules have a numeric need methodology that predicts future need for PHT or PHLT programs. Thus, it is up to the applicant to demonstrate need in accordance with rule 59C-1.044. There are four OTSAs in Florida, numbered OTSA 1 through OTSA 4. NCH is located in OSTA 3, which includes the following counties: Seminole, Orange, Osceola, Brevard, Indian River, Okeechobee, St. Lucie, Martin, Lake, and Volusia. (See § 408.032(5), Fla. Stat; Fla. Admin. Code R. 59C- 01.044(2)(f)3.) OTSA 3 also generally corresponds with the pediatric cardiac catheterization and open-heart surgery service areas defined by AHCA rule. (See Fla. Admin. Code R. 59C- 1.032(2)(g) and 59C-1.033(2)(h)). Currently, there is no provider of PHT in OTSA 3, but there are three providers of pediatric cardiac catheterization and pediatric open-heart surgery: Orlando Health Arnold Palmer Hospital for Children; Florida Hospital for Children; and Nemours. There are no licensed providers of PHLT anywhere in the State of Florida. There are four existing providers and one approved provider of PHT services in Florida: UF Shands in OTSA 1; Johns Hopkins All Children’s Hospital in OTSA 2; Jackson Memorial Hospital in OSTA 4; and Memorial Regional Hospital, d/b/a Joe DiMaggio’s Hospital in OTSA 4; and a third approved program in OTSA 4, Nicklaus Children’s Hospital, which received final approval from AHCA in August 2017. As noted above, there is no fixed-need pool published for PHT, PHLT, or PLT programs. Alternatively, AHCA follows rule 59C-1.008(2)(e)2., which requires consideration of population demographics and dynamics; availability, utilization and quality of like services in the district, subdistrict, or both; medical treatment trends; and market conditions. To quantify the need for a new PHT program in District 7, OTSA 3, Nemours created and presented a methodology that started with the statewide use rate in its projected first year. Then for the second year, Nemours aggressively increased the use rate to the highest rate in any of the other transplant service areas in the state. Then, in an even more aggressive (and unreasonable) assumption, Nemours projected that it would essentially capture all of the cases in OTSA 3 by the second year of the program. In its application, the assumptions resulted in a projection that Nemours would do four transplants in the first year of operation and eight in the second. These projections fall short of the rule requirement that the applicant project a minimum of 12 transplants per year by the second year of operation. Fla. Admin. Code R. 59C-1.044(6)(b)2. At hearing, Nemours updated (increased) those first and second year projections to 7 and 13 cases, respectively. However, these updated projections included one child, aged 15 to 17, in year one, and two in year two. There are several reasons these projections lack credibility. First, as noted, Nemours assumed a near- 100 percent market share based on the highest use rate in the state by just year two. Second, when Nemours prepared its update, it used the most recent calendar year data. However, this was not the most current data. Calendar Year 2016 reflected 34 cases statewide, but that number had dropped to 21 for the most recent 12-month period available at the time of the hearing. Use of this most recent 12-month data would have significantly decreased the Nemours PHT volume projections. In addition, the projection of 13 cases by year two would place Nemours at a higher PHT case volume than three of the four established programs in the state, and would be at a level that is nearly equivalent to the much more established Shands program. This is not credible, especially considering that Nemours also admitted at hearing that only two OTSA 3 residents received pediatric heart transplants in 2016. The existence of unmet need cannot be based solely on the absence of an existing service in the proposed service area. Fla. Admin. Code R. 59C-1.008(2)(e)3. While Nemours’ own health planner agreed that the absence of a PHT program in OTSA 3 is not itself a basis for finding need, Nemours nevertheless argues that this rule is inapplicable in this proceeding because the title to this subsection of the rule is “Comparative Review” and a portion of this subsection addresses competing applications in the same cycle. As detailed further in the Conclusions of Law section herein, this interpretation is unconvincing and rejected. AHCA interprets this rule provision to apply to those batched applications submitted without the submission of a competing application in the same batching cycle, as with Nemours in this proceeding. Nemours initiated its cardiac catheterization and cardiac surgery program in June/July 2016. In its PHT application, Nemours projected that it would meet or exceed the rule minimum required volumes of 200 cardiac catheterizations and 125 open-heart surgery cases by the end of 2017. Actual volumes achieved by Nemours in CY 2017 were 97 open-heart cases and 196 cardiac catheterizations. The incidence of PHLT is extremely low. During the four calendar years, 2013 through 2016, there were only 16 PHLT transplants performed nationwide. Only one Florida resident received a PHLT during that four-year period, and that was performed in Massachusetts. Also during that four-year period, only three Florida residents were registered for PHLT. There is no evidence in this record as to why two of the three registered Florida residents did not obtain a PHLT. Based on the national use rate for PHLTs from CY 2013 through CY 2016, Nemours projects that it will perform an average of one PHLT per year. Nemours acknowledges that due to the extremely low incidence of PHLTs, there may be some years that no PHLTs are performed at Nemours. Geographic Access There is no evidence of record that families living in central Florida are currently being forced to travel unreasonable distances to obtain PHT services. Indeed, there are five existing or approved programs within the state, with at least two located very reasonably proximate to OTSA 3. According to the analysis of travel distances for PHT patients living in OTSA 3 contained in the Nemours application (Exhibit 15), only some residents located in Brevard and Indian River Counties are not within 120 miles of an existing PHT program. There was agreement that patients that need a PHT are approaching the end-stage of cardiac function, and in the absence of a PHT will very likely die. Accordingly, it is reasonable to infer that the parents of a child living in central Florida and needing a PHT will travel to St. Petersburg or Gainesville for transplant services rather than let their child die because the travel distance is too far. To the contrary, the evidence in this record from witnesses on both sides, as well as common sense, is that families will go as far as necessary to save their child. The notion that there is some pent-up demand for PHT services among central Florida residents (especially when there is no evidence of a single OTSA 3 patient being turned down or unable to access a PHT) is without support in this record. The parents of four pediatric patients testified at the final hearing. Two testified for Nemours. The other two testified for AHCA and were parents of children that received PHTs at Shands. One of the Nemours witnesses was the parent of a child that has not received a transplant. The other received transplant services at Johns Hopkins All Children’s Hospital in St. Petersburg. The parents of the two Shands patients were representative of the two broad categories of PHT patients. One was a patient with a congenital heart defect that lives in Cocoa Beach (Brevard County). The patient likely had the heart defect since birth, but it was not diagnosed until she was six years old. That patient was asymptomatic at the time of diagnosis but deteriorated over a period of years. While she was first seen at Shands, the family had the time and researched other prominent institutions, including Texas Children’s Hospital, Boston Children’s Hospital, Children’s Hospital of Pittsburgh, and the Mayo Clinic in Rochester, Minnesota. They did this because, like all of the parents that testified, they “would have gone to the ends of the earth” to save their child. This family researched the volumes and experience of the programs they considered and looked for what they felt was the best program for their child, and ultimately chose Shands. It was clear that they felt Shands was the right choice. Their daughter received her heart transplant at Shands, is doing well, and is now considering what college to attend. Additionally, this family did not find the two hours and 35 minute travel time from their home in Brevard County to Shands to be an impediment, and actually consider Shands as being relatively close to their home. This testimony supports the obvious truism that obtaining the best possible outcome for a sick child is the paramount goal of any parent. The other parent witness called by AHCA has a daughter that, on Christmas Eve in 2008, went from perfectly healthy to near death and being placed on life support within a 24-hour period. As opposed to a congenital heart defect, this patient had cardiomyopathy. This family lives in Windermere, a suburb of Orlando. She acquired a virus that attacked her heart. She was initially treated at Arnold Palmer Children’s Hospital where she had to be placed on ECMO. From there, she was safely airlifted to Shands while still on ECMO where, upon arrival, the receiving team of physicians informed the family that she was one of the most critically ill children they had ever seen. After an 11-hour open-heart surgery, a Berlin Heart was successfully implanted and kept her alive for four months until an appropriate donor heart became available. This patient also had an excellent outcome and is now a student at the University of Florida. The following exchange summarizes how the child’s mother felt about the inconvenience of having to travel from the Orlando area to Gainesville: Q If a family in Orlando told you, or in your city of residence told you that their child was critically ill and they were worried about having to travel and potentially spend time in Gainesville to get care, what would you tell them? A Well, I would tell them to just take it a day at a time and – when your child is critically ill, convenience never really comes into your mind. What comes into your mind is how do I help my child live. And so you will go anywhere. And it’s just an hour and a half, it just doesn’t matter. When you are talking about saving your child, it means nothing. It literally means nothing. It is clear from the testimony of these two parents that nothing about having a gravely ill child is “convenient.” It creates great stress, but it was also clear that having an experienced provider was more important than just geographic proximity. The mothers of the two Shands patients persuasively spoke of their concerns about further diluting the volumes of the existing programs that could result from approval of a sixth pediatric heart transplant program in Florida, particularly when there are two other programs that are not that far from the Orlando area.4/ While transplantation is not an elective service, it is not done on an emergent basis. As noted, the number of families affected is, quite fortunately, very small. While having a child with these issues is never “convenient,” the travel issues that might exist do not outweigh the weight of the evidence that fails to demonstrate a need for approval of either application. The Orlando area, being centrally located in Florida, is reasonably accessible to all of the existing providers. Most appear to go to Shands, which is simply not a substantial distance away. The credible evidence is that families facing these issues are able to deal with the travel inconvenience. In addition, Nemours presented evidence regarding the various locations at which they provide services, ranging from Pensacola to Port St. Lucie. Clearly, Nemours sees itself as providing some cardiac services to patients in these locations, but it would also suggest that patients seen at these locations may be referred to NCH for transplant services, which would mean that some patients would be bypassing closer facilities. As observed by AHCA, for Nemours to posit that it is appropriate for patients to travel from Pensacola or Jacksonville to Orlando while asserting that it is not acceptable for patients in Orlando to go to Gainesville or St. Petersburg is an illogical inconsistency. Financial Access Nemours asserts that approval of its proposed programs will enhance financial access to care. Nemours currently serves patients without regard to ability to pay and will extend these same policies to transplant recipients. Approximately half of Nemours’ projected PHTs are to be provided to Medicaid recipients, the other half to commercially insured patients.5/ However, there was no competent evidence of record that access to PHT or PHLT services was being denied by any of the existing transplant providers because of a patient’s inability to pay. Transplant Rates at Shands In its need methodology, Nemours utilized the use rate from OTSA 1 where Shands is located because it is the highest use rate in the state. Despite this, Nemours then asserted that Shands is not performing as many PHTs as it could or should. The Nemours CON applications are not predicated on any argument that their proposed programs are needed because of poor quality care at any of the existing pediatric transplant programs in Florida. Indeed, Dr. Wearden stated his belief that Shands provides good quality care in its transplant programs, and he respects the Shands lead surgeon, Dr. Mark Bleiweis. As evidence of his respect for the Shands PHT program, Dr. Wearden has referred several transplant patients to Dr. Bleiweis at Shands. Despite that position, Nemours argued that the Shands program is unduly conservative and cautious in its organ selection and may have some “capacity” issues due to a few cited instances of apparent surgeon unavailability. These assertions, made by Nemours witnesses with no first-hand knowledge of the operations of the Shands program, are not persuasive. With regard to whether the Shands program is unduly “cautious,” “conservative,” or “picky,” Nemours relied on a document produced by Shands in discovery. Nemours also relied on data reported by Shands to the Scientific Registry of Transplant Recipients (SRTR). The data included a list of all of the organs offered to Shands since the beginning of 2015, the sequencing of the offer of that organ to Shands, whether the organ was transplanted at Shands or elsewhere, the primary and secondary reasons the organ was refused (if refused) and other information. The SRTR exhibit demonstrates that a high number of the organs that are offered are not acceptable for transplant on patients waitlisted at Shands. It also shows that organs that are accepted may have to be examined by many different centers before being deemed potentially acceptable. This demonstrates the extensive level of complexity, nuance, and clinical judgment involved in the decision to accept an organ for transplant in a pediatric patient. Indeed, Dr. Wearden agreed that the decision by a program to accept or turn down an organ involves both clinical expertise and judgment, and that there are many reasons an organ might be turned down, which helps explain why the transplanted percentage of total organs offered nationally is on average, so small. Dr. Wearden chose a few examples of organs that were not taken by Shands to express an opinion that Shands may be unduly conservative in its organ selection. However, this assertion was credibly refuted by Dr. Pietra, a transplant cardiologist and the medical director of the UF Health Congenital Heart Center. Dr. Pietra discussed the complexity of these cases and how simply looking at the SRTR data does not provide enough information to reach Dr. Wearden’s conclusion. An organ that might be acceptable for one patient would not be acceptable for another for a host of reasons. Many more organs are rejected by transplant centers than are accepted. Dr. Pietra credibly opined that being conservative and cautious are important traits for a transplant surgeon, particularly for one that wants the accepted organ to work well for the patient long-term. That does not mean that Shands is rejecting organs when it should have taken them, nor does the SRTR data support the proposition that the Nemours program should be approved because its program may have accepted an organ for a particular patient that Shands might have rejected. Nemours also argues that Shands performs PHTs at a rate lower than the region and the country, and that this should mitigate for the approval of another program. This assertion is predicated on waitlist information reported in the SRTR data. Patients that are placed on the waitlist have different status designations, depending on the severity of their condition. That status may change, up or down, over time. Due to the shortage of organs, until a patient reaches status 1A, he or she is unlikely to be offered an organ. The evidence reflected that Shands puts patients on the PHT organ waitlist at a time earlier than the moment they require the transplant surgery under what is called the “pediatric prerogative.” This helps those patients maintain their status on the list but does not result in organs being provided to less severely ill patients to the detriment of those in greater need. Further, the record evidence supports the finding that Shands waitlists patients because the clinical determination has been made that the child will ultimately require a transplant. This was corroborated by the parent of a Shands PHT patient who testified that when her daughter was placed on the waitlist, Dr. Fricker concluded at that time that her daughter would ultimately need a PHT, even though she was placed on a lower status initially, and it was a few years before the transplant occurred. Transplant surgeon Dr. Victor Morell, of the Children’s Hospital of Pittsburgh, testified that he waitlists his PHT patients not only when they need the procedure performed immediately, but rather when, in his clinical judgment, he determines the patient will ultimately need a PHT. This testimony supports the finding that there is nothing clinically unusual or inappropriate about how the Shands program waitlists patients. Shands realizes that its philosophy, which is contemplated within and permitted under the United Network for Organ Sharing (UNOS) rules, makes its statistics, both in terms of percent of patients transplanted and waitlist mortality, look worse. While Shands’ waitlist mortality may be higher than expected as reflected in the SRTR data, it is still significantly lower than in the UNOS region or the United States. Shands advocates for its patients by their waitlist practices because it believes it helps secure the best outcomes for its patients. It does not indicate need for a new PHT program. Nemours also suggests that there may be a “capacity” problem at Shands because the organ rejection information provided by Shands shows that, during the 3-year period of CY 2015 through CY 2017, there were seven entries showing as either a primary or secondary reason for organ rejection that the surgeon was unavailable. However, this included both adult and pediatric hearts, and further investigation revealed that in only four instances were there potential PHT recipients at Shands. Of those four hearts that were rejected, two were not accepted by any PHT provider, and the two that were accepted were placed with adult transplant patients, not PHT patients. Shands has two PHT transplant surgeons. In very few instances at Shands, an organ was offered but not accepted because the surgeon was not available for one of several reasons. In one instance, there was another transplant scheduled. A surgeon could be ill, could be gone, or may have just completed another long surgery and be too fatigued to safely perform another. Like Shands, Nemours also has two experienced PHT surgeons. Although Dr. Wearden believes that Nemours would endeavor to not reject an organ for this reason, this ambition ignores reality. He cannot guarantee that the same could not or would not happen at Nemours for the same reasons it occasionally occurs at Shands. As explained by Dr. Pietra, when there are only small to medium volume programs, there is not likely to be a sufficient number of surgeons such that this scenario can be avoided entirely. Not Normal Circumstances In both its heart and heart/lung applications, Nemours articulated the following “not normal circumstances” in seeking approval: Florida does not have any approved pediatric heart/lung transplant programs. Florida's only two approved pediatric lung transplant programs have not performed any lung transplant programs in the last two reporting years according to AHCA reporting data. Significantly, there are no pediatric heart transplant or lung transplant programs in AHCA's Organ Transplant Service Area OTSA 3 in which NCH is located-an area of the State with one the fastest growing and youngest populations. Florida has no other pediatric comprehensive, multi-organ thoracic transplant program. Florida has no other pediatric comprehensive, multi-organ thoracic transplant program that is part of a pediatric specific integrated delivery system such as Nemours offers. NCH offers a unique, dedicated model of cardiothoracic care developed at its Alfred I. duPont Hospital for Children (AIDHC) in Wilmington, Delaware and implemented upon the opening of the program at NCH. The key and differentiating element of this Model of Care is a unified team of cardiac clinical and administrative professionals who serve children with cardiac problems in dedicated facilities (the "Cardiac Team"). The Cardiac Team only cares for children with cardiac diagnoses. As such, the Cardiac Team of anesthesiologists, surgeons, cardiologists, nurses, and other support personnel do not "float" to other hospital floors or departments as in a typical hospital setting. This dedicated model of cardiac care allows the Cardiac Team to develop highly specialized knowledge and relationships to provide the best treatment protocols for patients with cardiac conditions. NCH has developed state-of-the art facilities and innovative clinical pathways for the care of the most complex pediatric thoracic patients. NCH has and will bring new opportunities for research in pediatric cardiology, cardiac surgery, and pulmonary medicine, particularly clinical translational and basic research into the linkages between childhood obesity and cardiac conditions. Nemours operates a regional network of clinics in Florida, with primary locations in Pensacola, Jacksonville, and Orlando, that will operate in partnership with NCH for the appropriate regional referral of patients in Florida for pediatric thoracic care. NCH can reduce the out-migration of pediatric, thoracic transplant patients from OTSA 3 to other parts of the State as well as the out-migration of these patients to other out-of-state transplant programs. Similarly, NCH will reduce the outmigration of organs donated in Florida to other states ensuring that Florida recipient patients are first priority for organs donated in Florida. NCH has in place the infrastructure, facilities, and resources to seamlessly add thoracic transplant services to its existing comprehensive cardiac surgery program. Additional needed staff are already being recruited to this program. As a result, the project has minimal incremental cost that will need to be incurred. Total project costs are, therefore, estimated to be $715,425.00. In addition, according to Nemours, an additional “not normal” circumstance has emerged since the filing of the applications: the approval of Nemours’ PLT application in the absence of a PHT program at the facility, which it contends is “a very unusual situation.” Noteworthy about these purported reasons for approval are that: (1) none of them are specifically directed at a unique circumstance relating to a need for another PHT program; and (2) most of them are either a recitation of the fact that there is no existing program in the service area or are about Nemours’ capability to provide these services. They are not directed at whether there is a need for its proposed programs. In fact, the main thrust of Nemours’ case was directed at proof regarding its capabilities. But the flaw in this theme is best demonstrated in the testimony of Dawn Tucker, the last witness called by Nemours. Ms. Tucker is the cardiac program administrative director for Nemours. When asked why she supported the proposed program, she talked about the experience of the team, a desire to care for sick patients, an organization (Nemours) that financially supports the program, and the network of centers that Nemours has in Florida. These factors address why Nemours “wants” these CONs. None of them addresses the threshold issue of whether there is a “need” for these programs in OTSA 3. More specifically, the first, third, and fourth bullet points are all based on the absence of a program in OTSA 3. By rule, that is not a basis for establishing need. Fla. Admin. Code R. 59C-1.009(2)(e)3. AHCA appropriately rejected the absence of a program in OTSA 3 as the sole basis upon which need for the proposed projects could be established. The second bullet point relates to the pediatric lung transplant application that is not at issue in this matter. The fifth and sixth bullet points relate to the Nemours integrated model of care. But again, this does not address whether there is a need for the proposed programs. The fact that Nemours has an employed-physician model is not unique or “not normal.” AHCA considered the information regarding the model of care and correctly noted that the model of care does not itself enhance access or improve outcomes. It should be noted that Shands’ doctors are employed by the University of Florida. In addition, the reliance on this model does not guarantee a robust program. This bullet point references the much older and more established Alfred I. duPont Hospital for Children in Wilmington, Delaware, that is touted as the model for Nemours. Nemours presented evidence relating to its more established hospital in Delaware that also provides PHT services. However, the PHT program at duPont is a low-volume program, performing only one PHT in 2016. None of the managed- care companies that recognize Shands as a center of excellence also recognizes the duPont Hospital as such. One of the companies--Lifetrac--acknowledges duPont as a “supplemental” program, whereas Shands is one of its “select” programs. This demonstrates that simply having the financial resources of the duPont Foundation or the model of care used by that organization does not guarantee high volumes or success. The “not normal circumstance” bullet points regarding Nemours’ facilities, research, and other infrastructure similarly do not demonstrate need. Otherwise, a hospital could obtain a CON for a new program by spending the money in advance and then demanding approval based upon those expenditures. AHCA recognized that Nemours had recruited some very qualified clinicians, but correctly noted that that does not create or evidence need for the proposed programs. The remaining bullet point asserts that approval of the PHT and PHLT programs could reduce outmigration of both patients and organs. By definition, because neither of these transplant programs exists in OTSA 3, all patients leave OTSA 3 for these services. Again, that alone does not establish need, nor is it automatically a “not normal” circumstance. As discussed herein, Nemours has not demonstrated a sufficient need or an access problem that justifies approval of either application. With regard to the outmigration of organs from Florida, Nemours has argued that Florida is a net exporter of organs and that this is a “not normal” circumstance justifying approval of its application. However, organs harvested in one state are commonly used in another. There is nothing unusual or negative about that fact. Indeed, Dr. Wearden agreed that in his experience, this is a common occurrence. There is a national allocation system through UNOS and this sharing, as explained by Dr. Pietra, facilitates the best match for organs and patients. UNOS divides the country into regions for the purpose of allocation of donor organs, with Florida being one of six states in Region 3. The evidence of record did not establish that approval of the Nemours applications would result in the reduction of organs leaving Florida, or even that such would be a desirable result. Nemours also argued at hearing that approving their applications would increase the number of donor organs that are procured and transplanted in Florida. Nemours suggested that its programs would increase public awareness and implied that it would accept organs for future patients that surgeons at other programs turn down. However, these arguments are purely conjectural and are rejected. No record evidence exists which demonstrates that a Nemours program would increase the supply of organs in Florida. Indeed, Nemours presented no such relevant data or statistical evidence in its applications to demonstrate that this will occur. Finally, Nemours argues that its PHT and PHLT applications should be approved because it does not make sense for AHCA to have approved the PLT program but denied the other two applications. Nemours goes on to note that while there are hospitals in the country that do PHTs but not PLTs, there are no hospitals that do lungs but not hearts. Regardless of whether that is true, Florida law separates these three services into separate CON applications, which are reviewed independently. The wisdom of the rule is not at issue in this proceeding. Regardless of any overlap in the skill sets required to perform these procedures, approval of the pediatric lung transplant application does not determine need for pediatric heart or pediatric heart/lung programs. Nemours failed to establish that “not normal” circumstances currently exist that would warrant approval of either the PHT or PHLT programs. Nor did Nemours credibly demonstrate any other indicators of need for its proposed programs. 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. The parties stipulated that Nemours is a quality provider. However, AHCA maintains that this criterion is in dispute to the extent that center transplant volume as a result of Nemours’ approval would lead to or correlate with negative patient outcomes. Nemours failed to demonstrate that it would achieve the volumes it projected unless it takes significant volumes from other Florida providers.6/ Approval of Nemours will not create transplant patients that do not exist or are not currently able to reasonably access services. While Nemours has assembled a team of professionals with varying levels of transplant experience, it has not been demonstrated that it will achieve volume sufficient to reasonably assure quality care.7/ Section 408.035(1)(e): The extent to which the proposed services will enhance access to health care for residents of the service district. Approval of the Nemours PHT and PHLT programs would unquestionably improve geographic access to those services for the very few residents of OTSA 3 that need them. However, given the extreme rarity of pediatric heart and heart/lung transplants, approval of the Nemours programs would not result in enhanced access for a significant number of patients. Moreover, there was no credible non-hearsay evidence presented at hearing that any resident of OTSA 3 that needed PHT or PHLT services was unable to access those services at one of the existing PHT programs in Florida or, for PHLT, at a facility elsewhere. Based upon persuasive evidence at hearing, there is also clearly a positive relationship between volume and outcomes. As with any complex endeavor, practice makes perfect. In this instance, maintaining a minimum PHT case volume provides experience to the clinicians involved and helps maintain proficiency. According to the credible testimony of Dr. Pietra, programs should perform no fewer than 10 PHTs per year. “If you can stay above 10, then your program is going to be exercised at a minimum amount to keep everybody sort of at a peak performance.” The clear intent of the minimum volume requirement of 12 heart transplants per year contained in rule 59C- 1.044(6)(b)2. is to ensure a sufficient case volume to maintain the proficiency of the transplant surgeons and other clinicians involved in the surgical and post-surgical care of PHT patients. In addition, pediatric transplant programs are measured statistically based on outcomes, such as mortality and morbidity. Because of this, the loss of even one patient in a small program can be devastating to that hospital’s mortality statistics. As such, small programs may become less willing to take more complicated patients. In a perverse sort of way, adding more programs that dilute volumes may decrease, rather than increase, access because of the fear a small program might have for taking more complex patients. Adequate case volume is also important for teaching facilities, such as Shands, to benefit residents of all the OTSAs by being able to train the next generation of transplant physicians. The mothers of the two Shands patients that testified made note of the complexity of their daughters’ conditions and how their cases were used for training purposes. There was no persuasive evidence of record that approval of the Nemours applications would meaningfully and significantly enhance geographic access to transplant services in OTSA 3. The modest improvement in geographic access for the few patients that are to be served by the two programs is not significant enough to justify approval in the absence of demonstrated need. There is no evidence that approval of the Nemours applications will enhance financial access nor that patients are not currently able to access PHT or PHLT services because of payor status. Section 408.035(1)(g): The extent to which the proposal will foster competition that promotes quality and cost- effectiveness. It is clear that establishing and maintaining a transplant program is expensive. Given the limited pool of patients, the added expense of yet a sixth Florida program is not a cost-effective use of resources. This criterion also relates to the Nemours position that AHCA should approve the PHT and PHLT applications simply because the PLT application was approved, and it would not be cost-effective for Nemours unless the PHT and PHLT applications were also approved. However, each of these applications must rise or fall on its own merit. As of the hearing, Nemours had not yet implemented its PLT program. Given the absence of need for either the PHT or PHLT programs, the cost-effective solution might be for Nemours to reconsider implementation of the PLT program. 408.035(1)(i): The applicant’s past and proposed provision of health care services to Medicaid patients and the medically indigent. AHCA agreed at hearing that Nemours satisfies section 408.035(1)(i). Nonetheless, Nemours provides a very high level of Medicaid services, and projects a high-level volume related to Medicaid patients and charity care patients. As noted, approximately half of the PHTs projected by Nemours will be performed on Medicaid patients. Conformance with this criterion would mitigate toward approval had there been persuasive evidence that Medicaid and medically indigent patients are currently being denied access to PHT and PHLT services. However, no such evidence was presented.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a final order be entered denying CON Application Nos. 10471 and 10472 filed by The Nemours Foundation, d/b/a Nemours Children’s Hospital. DONE AND ENTERED this 31st day of July, 2018, in Tallahassee, Leon County, Florida. S W. DAVID WATKINS Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 31st day of July, 2018.
