The Issue BAMI and VENICE filed competing applications for a certificate of need to construct a 100-bed acute care hospital in Englewood, Florida. The sole issue is which application should be granted, and which should be denied.
Findings Of Fact DHRS is the state agency empowered to review, issue, deny, and revoke certificates of need for health care projects. 381.494(8), Fla. Stat. (1981). In January, 1982, VENICE and BAMI separately applied to DHRS for a certificate of need to construct a 100-bed acute care hospital in Englewood, Florida. When the applications were filed, Florida law required the appropriate health systems agency to initially review applications for certificates of need. On March 10, 1982, the Project Review Committee of the South Central Florida Health Systems Council, Inc.--the appropriate health systems agency--considered the competing applications, then voted to approve the proposal submitted by VENICE, and deny the proposals submitted by BAMI and a third applicant (not involved in this proceeding). On March 27, 1982, the Board of Directors of the South Central Florida Health Systems Council, Inc. disagreed with the Project Review Committee's recommendation and voted to recommend (to DHRS) approval of the BAMI proposal and disapproval of the VENICE proposal. DHRS then independently reviewed the two competing applications. On April 30, 1982, it issued a (free-form) certificate of need to BAMI to construct a 75,000 square foot, 100-bed acute care hospital in Englewood. Conversely, it denied VENICE's application, asserting: (1) that the interest and depreciation expense per projected patient day for the first two years of operation of the BAMI proposal was less than that projected for the VENICE proposal; (2) that the estimated labor and materials cost per square foot for the BAMI proposal was lower than the amount estimated for the VENICE proposal; (3) and that the provision for 30 semiprivate rooms in the BAMI proposal offered patients an alternative unavailable in the all-private room hospital proposed by VENICE. VENICE thereafter requested a formal hearing to contest DHRS's action, which request resulted in this proceeding. Bami BAMI seeks a certificate of need to construct a new 100-bed acute care hospital in Englewood, Florida, to be known as Englewood Community Hospital. BAMI proposes to relocate and merge its existing Englewood Emergency Clinic and Primary Care Center into the proposed Englewood Community Hospital. The service area for the BAMI proposal includes the following communities in Sarasota, Charlotte, and Lee counties: Englewood, North Port, Warm Mineral Springs, El Jobean, Grove City, Rotunda West, Placida, Cape Haze, and Boca Grande. The proposed hospital contains 92 medical/surgical beds and 8 intensive care unit (ICU) beds. The 92 medical/surgical beds contain a mix of 32 private be and 60 semiprivate beds. The hospital will provide ambulatory surgical services, diagnostic and special procedures, radiology services, nuclear medicine, ultrasonography, cardio-pulmonary, emergency room, and clinical laboratory services. The following services would be shared with its affiliate, Fawcett memorial Hospital in Port St. Charlotte, Florida: business office, medical records, data processing, materials management, personnel, education, public relations, administration, dietary, bio-medical engineering, laboratory, sterile processing, vascular laboratory, and occupational therapy. The proposed hospital will be a wholly-owned subsidiary of BAMI, and will have its own board of directors, board of trustees, and medical staff. BAMI is an experienced health care provider. Its principals have been in the health care business since 1964, and have built and operated 25 health care facilities in the mid-western United States. BAMI owns and operates several health care facilities in Florida: the 400-bed Fort Myers Community Hospital in Fort Myers, Florida; the 254-bed Fawcett Memorial Hospital in Port Charlotte, Florida; the 120-bed Kissimmee Memorial Hospital in Kissimmee, Florida; the Englewood Emergency Clinic and Primary Care Center in Englewood, Florida; the Ambulatory Surgical Center in Tampa, Florida; and the Emergency Clinic and Primary Care Center in Bonita Springs, Florida. BAMI also owns two smaller hospitals, one in Georgia and the other in Alabama. It is experienced in building and opening new hospitals, having built both the Fort Myers Community Hospital and the Kissimmee Memorial Hospital. It also expanded Fawcett Memorial Hospital from 96 beds to 254 beds. BAMI has financial assets of approximately $63,842,400 and a net worth exceeding $13.5 million. Venice VENICE seeks a certificate of need to construct a 100-bed satellite acute care hospital in Englewood, to be known as the Englewood-North Port Hospital. The service area for this proposed hospital consists of Englewood, North Port, Rotunda West, Placida, Warm Mineral Springs, Boca Grande, and Cape Haze. VENICE's proposed hospital contains 96 medical/surgical beds and four ICU beds. No semiprivate rooms will be available. All of the 96 medical/surgical beds will be placed in private rooms. The proposed satellite hospital will share the following services with VENICE's existing 300-bed "mother" hospital in Venice, Florida: specialized laboratory services, physical therapy, nuclear medicine, pulmonary functions, and specialized radiology services. For specialized and more sophisticated services, patients will be transported from the Englewood hospital to the larger hospital in Venice. The following support services will also be shared with the "mother" hospital: purchasing, bulk storage, laundry, dietary management, data processing, financial management, personnel recruitment, and educational services. In order to share these services, the existing Venice Hospital will be required to operate a transportation system. For many years, VENICE has owned and operated Venice Hospital, a fully licensed and accredited 300-bed general acute care hospital at 540 The Rialto, Venice, Florida. Venice neither owns nor operates any other hospital, although it has applied for a certificate of need to construct a 50-bed psychiatric hospital. The present management of Venice Hospital is inexperienced in the construction and opening of new hospitals. II. COSTS AND METHODS OF CONSTRUCTION Construction costs for the competing BAMI and VENICE proposals are broken down into categories and depicted in the following table: COMPARATIVE CONSTRUCTION COSTS CATEGORY BAMI VENICE Total Project Cost $13,355,000 $18,170,000 Total Project Per Bed Cost 135,500 181,700 Total Direct Construction Equipment Cost for and Fixed 11,670,190 13,874,516 Gross Square Feet 75,327 75,000 Construction Costs 155 173 Per Square Foot Number of Stories One Two Expansion Potential 100 additional 200 additional EQUIPMENT Movable 3,500,000 2,272,444 Bami Construction of the BAMI hospital can begin by September 1, 1983, and be completed by December 31, 1984. The new hospital can be opened by January 1, 1985. The BAMI hospital will be a one-story building, a design which is efficient for a hospital of this size. It will consist of a steel structure with curtain walls. The building is functional and economical, and can be expanded horizontally to 200 beds with minimum disruption to existing services and staff. The design of this hospital is similar to the 120-bed Kissimmee Memorial Hospital built by BAMI in 1979. BAMI's cost estimates are based on the actual costs of constructing the Kissimmee Memorial Hospital. BAMI proposes to construct the hospital by using an affiliate, F & E Community Developers of Florida, Inc. The use of an in-house contractor will allow BAMI to build the hospital in a short time period, at less cost and with higher quality. BAMI's proposal contains both active and passive energy conservation elements. The passive elements include overhangs, shaded glass, and movable windows. Active elements include the selection of quality equipment and a computerized control system for the electric reheat heating/ventilation/air conditioning ("HVAC") system. The architectural and construction plans for BAMI's proposed hospital are virtually complete. Schematic drawings were submitted and approved by DHRS in August, 1981. Preliminary plans have also been approved by DHRS. DHRS approval entailed a review of architectural, electrical, and mechanical preliminary drawings. Venice If the VENICE proposal is approved, construction could begin between April and July, 1984. The hospital could open for occupancy on January 1, 1986, a year later than BAMI's proposal. VENICE's architectural and construction plans are at an early stage, consisting only of a program summary and block design. Architectural, electrical, and mechanical preliminary drawings have not yet been submitted to DHRS and approved. The construction cost estimates submitted by VENICE are less reliable than those submitted by BAMI, since they were derived from less developed plans and were based on assumptions presented by persons who did not testify at hearing. VENICE's proposed hospital consists of a reinforced concrete structure with a modular precast concrete exterior. Although it will consist of two stories, the building will be stressed for the subsequent addition of two stories. When and if it is expanded to four stories, it would be a 300-bed hospital. The planned vertical expansion increases the initial cost of the building by approximately ten percent. Because of the extensive sharing of medical and support services between the proposed satellite hospital and the "mother" hospital in Venice, the ancillary medical and support facilities of the satellite have been down-sized. The VENICE proposal will also require horizontal expansion in the future. Areas such as radiology, laboratory, and emergency rooms will require immediate expansion as beds are added to the facility. It has not been shown at what point, in the planned expansion, VENICE's proposed hospital would become a free-standing hospital--when it would no longer be required to rely on its "mother" hospital in Venice. VENICE proposes an energy efficient facility. The multiple-story design minimizes site use and roof coverage. The relatively narrow wings provide for optimum use of daylight. VENICE contends that its HVAC system is more cost effective than the system proposed by BAMI. This contention is not substantiated by convincing evidence. The VENICE witness who testified on this question was an architect, not a mechanical engineer. He was unfamiliar with the computerized energy control system proposed by BAMI and used assumptions made by others who did not testify at the hearing. Bami III. HOSPITAL EQUIPMENT BAMI's proposed movable hospital equipment will cost approximately $3,500,000. Included are three radiology rooms: one general radiographic room, one standard R and F room, and one R and F room with angiographic capability. Also included are 8 ICU beds, four operating "rooms--two major and two minor-- nuclear medicine, and ultrasound capability. Venice The equipment cost for the VENICE proposal is $2,272,444. Included are 3 operating rooms, one with cystographic capability; four ICU beds and two radiology rooms--one R and F, and one general radiographic. More sophisticated diagnostic procedures, such as nuclear medicine and specialized radiology, will be provided at the "mother" hospital in Venice, not at the proposed Englewood satellite. To utilize these procedures, patients will be transported from Englewood to Venice. VENICE acknowledges that its proposed hospital will utilize less sophisticated diagnostic equipment than BAMI's. VENICE's equipment cost would have to be increased approximately $700,000 if it were to provide eight ICU beds and specialized radiology and nuclear-medicine to match BAMI's proposal. The equipment cost differential indicates the different levels of care proposed by the two hospitals. The VENICE proposal requires the development of a transportation "shuttle" system between the "mother" hospital in Venice and the satellite in Englewood. The system would consist of two trucks in addition to vans or ambulances. The plans for this essential transportation system are, however, not fully developed. The need for van or ambulance transportation between the two facilities has not been fully considered. Further, the transportation plan estimates a 25-minute one-way driving time between Englewood and Venice year- round. During the busy winter months, it is likely that the driving time will increase. Although VENICE proposes to lease the necessary trucks, neither the leasing costs nor associated costs have been fully taken into account. IV. FUNDS FOR OPERATING AND CAPITAL EXPENDITURES Bami BAMI will finance the $13,555,000 required to open its proposed hospital with bond proceeds, an equipment lease, and an equity contribution. It will obtain $7,905,000 from taxable bonds with a maturity of 25 years, and an interest rate of 12.5 percent. There will be a 2-year holiday on principal payments. BAMI will finance the $3,500,000 equipment cost pursuant to a lease agreement with Financial and Insurance Services, Inc., with an eight-year term and an interest rate of 15 percent. BAMI will make an equity contribution of $2,150,000. This will be in the nature of a contribution of capital from a parent corporation to a subsidiary corporation. As of September 30, 1982, BAMI had a net worth exceeding $13,500,000. BAMI will provide up to $1,000,000 in operating capital to cover initial start-up costs of the proposed hospital. In addition, BAMI has obtained a $5,000,000 line of credit which will be available to cover any potential cash shortages occurring during the start-up phase of the hospital. Venice VENICE will obtain the $18,170,000 required for its proposal from tax- free bond financing and an equity contribution. The bonds, which will have a maturity of 30 years and an interest rate of 10.52 percent, will be an obligation of the Venice Hospital. A debt service reserve fund of $1,900,750 will be required in order for the bonds to obtain an "A" rating. In unrelated applications, VENICE has proposed a major renovation of its existing hospital and the construction of a new free-standing 50-bed psychiatric hospital. These projects, if undertaken, will require additional equity contributions of $1,221,000 and additional bond financing in the amount of $10,370,000. To obtain the bond financing, VENICE will be required to maintain a one-to-one historical debt coverage ratio. VENICE has not convincingly established that it will be able to carry out all three projects and still maintain the required one-to-one debt coverage ratio. VENICE proposes to locate its proposed hospital on 15 acres of land costing $135,000. But the land sales contract provides only for the sale of 250 acres at a cost of $2,250,000. (The present owners wish to sell the entire 250- acre parcel and not lesser amounts.) The source of the $2,250,000 needed to acquire the property has not been identified. The bond proceeds could not be used. To purchase the 250 acres and fund the equity for its three proposed health care projects, VENICE will require $4,311,000. The source of these funds has not been identified. VENICE contends that one possible source would be Board Designated Funds. However, VENICE's audited financial statements for the period ending September 30, 1982, suggest otherwise. PROPOSED SITES Bami BAMI, through a subsidiary, has contracted to purchase approximately 12 acres as a site for its proposed Englewood hospital. The 12-acre site is part of a 60-acre parcel of land that is zoned OPI, a zoning classification which will permit the construction of a hospital. The 12-acre site is located on Morningside Drive, an access road to Pine Street. Although Morningside Drive is a dirt road, it will be paved. Under the contract, the current owner will pay all paving costs in excess of $65,000. The initial $65,000 in paving costs will be borne by BAMI and has been included in BAMI's estimated construction costs. Pine Street, a major north- south transportation artery in the Englewood area, is currently being resurfaced in both Sarasota and Charlotte counties. A second access to Pine Street has been acquired by the current owner. A watermain is available at the BAMI site. The current owner of the property will construct a sewage treatment plant and provide sewer service to the proposed hospital at prevailing rates. The sewage treatment plant will be located on a 7.5-acre portion of the 48 contiguous acres retained by the current owner. The BAMI site is located in an A-11 flood zone with an elevation of ten feet. Fill dirt will be used to raise it to an acceptable elevation of twelve feet. A current owner of the BAMI site envisions the entire 60 acres as an Englewood medical center. If necessary he will allow BAMI to purchase an additional 12 acres contiguous to the site. BAMI has not yet, however, obtained a legally enforceable right to purchase additional property adjoining its 12- acre site. Although the 12-ace site will permit the planned 100-bed future expansion, the site would be crowded with little space remaining for future improvements. Venice The VENICE site is an undesignated 15-acre portion of a 250-acre parcel of land located off State Road 777, also known as South River Road. It is uncertain whether the hospital will have one or two access roads to State Road 777. A watermain is available at the VENICE site. Sewage treatment will be provided by a nearby privately owned sewage treatment plant until the hospital, eventually, constructs its own. The zoning classification of the VENICE site will not permit construction of a hospital. Before the hospital could be built, Sarasota County would be required to rezone the property to OPI. Use of the property for a hospital is also inconsistent with Sarasota County's comprehensive land use plan, adopted October 31, 1981. Such a rezoning process would take a minimum of three or four months, and perhaps longer. Approximately 100 individual steps are involved. Hearings would be held by the Sarasota Planning Commission and the Sarasota County Commission. VENICE has not yet filed an application to rezone either the 15 acres or the entire 250-acre parcel. Neither has it shown that it is likely to succeed in having the property rezoned to a classification permitting hospital use. Bami VI. EFFICIENT AND ALTERNATIVE USES OF HEALTH CARE RESOURCES As part of its application, BAMI proposes to merge its existing Englewood Emergency Clinic and Primary Care Center into its proposed Englewood hospital. If the BAMI application is denied and VENICE's granted, BAMI will continue to operate the Emergency Clinic and Primary Care Center. As a result, the Emergency Clinic and VENICE's Englewood hospital would be providing duplicative emergency services. The costs resulting from this duplication would be approximately $894,800 in 1985; $975,300 in 1986; and $1,063,100 in 1987. For cost effectiveness, BAMI's proposed hospital will share some ancillary and support services with Fawcett Memorial Hospital in nearby Port Charlotte. Fawcett Memorial will also provide tertiary level services, such as renal dialysis and CAT scans to patients of the proposed Englewood hospital. BAMI operates a multi-hospital system, with subsidiaries which provide ancillary and specialized support services. These services include physical therapy, inhalation therapy, cardiopulmonary function, speech therapy, data processing, and collection services. Corporate level expertise in accounting, property management, pharmacy management, personnel, and marketing, is also available. The multi-hospital system allows BAMI to obtain favorable purchasing contracts and capital for future expansion. Venice Venice Hospital, the only hospital in south Sarasota County, has a high rate of occupancy. Although presently a 300-bed facility, it has an ultimate capacity of 400 beds. It recently applied for a certificate of need to add 24 ICU/PCU beds and additional beds, beyond that, are needed. It has a shelled-in fourth floor that will accommodate an additional 45-bed nursing unit. Completing the fourth floor at Venice Hospital would be a more cost-effective alternative way to add beds than constructing a new hospital in Englewood. As already mentioned, the "mother" hospital in Venice will share numerous ancillary and support services with the proposed satellite hospital in Englewood. VENICE proposes to share, among other things, its present laboratory with the proposed Englewood satellite. As a result, the laboratory in the satellite hospital has been reduced to a minimal size. It has not been convincingly established that the Venice Hospital laboratory, even if expanded as proposed, can process the additional laboratory work-load arising from an Englewood satellite. The laboratory at the existing Venice Hospital presently operates 24-hours per day, seven days a week. Even if its application to expand its laboratory is granted, the total area of the laboratory would be less than the accepted space guidelines required for a 324-bed hospital. VII. AVAILABILITY, APPROPRIATENESS, AND ACCESSIBILITY OF PROPOSED HEALTH CARE SERVICES Scope of Services Although both proposed hospitals would share services with affiliated hospitals, BAMI proposes more of an autonomous, full-service and free-standing hospital than that proposed by VENICE. BAMI will equip its hospital with a more complete and sophisticated range of diagnostic services and, unlike VENICE, has not down-sized its ancillary and support services. For the VENICE proposal to become a free-standing facility comparable to BAMI's, the space devoted to ancillary medical services and support services would have to be expanded by 30 percent and 50 percent, respectively. The costs of such an expansion have not been determined. Economic Access Both parties will enter Medicaid contracts covering their proposed hospitals. BAMI projects that .1 percent of its patients will be Medicaid; VENICE projects .2 percent. BAMI hospitals treat all emergency patients, regardless of ability to pay. Third party payment is accepted. On elective admissions, self-pay patients are requested to make reasonable deposits and sign promissory notes. In specific instances, patients can be admitted without making financial arrangements in advance. Patients are not referred to other hospitals because of inability to pay. If an indigent is defined as "one who cannot pay," Fawcett Memorial Hospital provided between $600,000 and $700,000 in indigent care during 1982. This figure represents approximately 3.9 percent of gross revenue. Similarly, Venice Hospital treats emergency patients regardless of their ability to pay. Promissory notes are obtained from self-pay patients if necessary. The credit policies of Venice Hospital are similar to BAMI's. Venice Hospital had a bad debt or charity to gross receipts ratio of between 2.5 percent and 3.0 percent in 1982. Venice Hospital also has a Hill-Burton requirement to provide indigent care in the amount of approximately $125,000 per year. This requirement stems from a federal grant awarded in 1970. Access to Osteopathic Physicians BAMI's proposed hospital will have an open medical staff, including licensed medical doctors and osteopathic physicians. BAMI has a practice of allowing osteopathic physicians on its medical staff. For several years, osteopathic physicians have been included on the staff of all BAMI hospitals. Fort Myers Community Hospital, a BAMI hospital, is one of two hospitals in the Fort Myers area with osteopathic physicians on its staff. Kissimmee Memorial Hospital, also owned by BAMI, has the only two osteopathic physicians in Kissimmee on its staff. Fawcett Memorial Hospital has the only osteopathic physician in Port Charlotte on its staff. In contrast, VENICE has not added osteopathic physicians to its staff with similar enthusiasm. It granted staff privileges to its first osteopathic physician six to nine months prior to hearing. Two months before the hearing, staff privileges were granted to a second. Venice Hospital has, however, changed its bylaws to comply with the law prohibiting discrimination against osteopathic physicians. Geographic Access The geographic locations of the sites for the two proposed hospitals, as described above, provide equal access to the service area. The BAMI site is closest to the existing population concentrations of the Englewood area, while the VENICE site is closer to Interstate 75. Both sites will require the paving of an access road to major traffic arteries. No significant advantage in access is afforded to either. VIII. COMPETITION The existing Venice Hospital currently serves the hospital needs of approximately 64 percent of the people in the greater Englewood area. These patients comprise approximately 26.8 percent of Venice Hospital's total patient days. BAMI's existing Fawcett Memorial Hospital in Port Charlotte currently serves between ten and twelve percent of the hospital needs of the people in the greater Englewood area. These patients account for approximately 11.3 percent of Fawcett Memorial's total patient load. In addition, BAMI's Englewood Emergency Clinic and Primary Care Center has treated over 20,000 patients since it opened in February, 1980. The existing Venice Hospital holds a dominant market share in the greater Englewood area. It is only twelve miles north of Englewood and is the only hospital in south Sarasota County. The closest competitor in Sarasota County is Sarasota Memorial Hospital, approximately 20 miles north of the Venice Hospital. Venice Hospital has been in operation for approximately 30 years. In contrast, Fawcett Memorial Hospital is approximately 21 miles east of Englewood. In the mid-1970s, it was converted from a nursing home to a 96-bed hospital, and in 1976, it was expanded to 254 beds. Approval of BAMI's proposal will enhance competition among hospitals serving the greater Englewood area. The competition will not, however, adversely affect Venice Hospital's long-term viability. The construction of either hospital in the Englewood area will change existing hospital utilization and physician referral patterns. New referral patterns will form and an increasingly autonomous group of physicians will develop. Local physicians will utilize the Englewood hospital, whether it is owned by BAMI or VENICE. Bami IX. PROJECTED COSTS OF PROVIDING HEALTH CARE SERVICES BAMI forecasts an occupancy rate of 60 percent at its proposed Englewood hospital in 1985; 75 percent in 1986; and 80 percent in 1987, with an average length of stay of 8.5 days. These figures are credible in view of the population growth in the Englewood area, the undisputed need for a new hospital, and the elderly population. To project total cost and gross revenue per patient day, various calculations are made. BAMI's employee salary expenses are based on its experience at nearby Fawcett Memorial Hospital, adjusted by an inflation factor. Non-salary expenses are derived from its experience at Kissimmee Memorial Hospital, a hospital of similar size with a utilization rate similar to that projected for the Englewood hospital. Depreciation of plant and equipment is calculated using the straight-line method. Revenue projections are derived using the American Hospital Association's Monitrend median inpatient revenue, inflated at 9 percent per year. An indigent/bad debt deduction of four percent of total patient revenue is used. These assumptions provide a credible basis from which total cost and gross revenue per patient day can be calculated. Using these assumptions, total costs per patient day is forecast to be $482.00 in 1975; $479.60 in 1986, and $510.32 in 1987. Gross revenue per patient day is forecast to be $552.00 in 1985; $601.68 in 1986; and $655.83 in 1987. These forecasts are credible and accepted as reasonably reliable. Venice VENICE's primary contention is that its proposed hospital, although costing more to build, will--in the long run--result in lower costs to patients and increased savings to the community. This contention was not substantiated by convincing evidence. In forecasting its costs and revenues, VENICE projected an occupancy rate of 65 percent in 1986; 80 percent in 1987; and 80 percent in 1988. The 1986 projection is unreasonably high; it envisions a 70.4 percent utilization rate during the opening month. VENICE's projected salary expenses are derived from its current experience at Venice Hospital, adjusted for inflation. Although this figure is reliable, the projected non-salary expense per patient day is not. The nonsalary expense is not based on Venice Hospital's most recent 1982 expenses, and is not adjusted by the requisite inflation factor. The depreciation schedule and assumptions used by VENICE in forecasting its revenues and costs are also questionable. Discrepancies went unexplained. The testimony of Deborah Kolb, Ph.D., an expert in health care financial and need analysis, is considered more credible. She concluded that VENICE understated 1986 depreciation expense for its proposed hospital by approximately $300,000, an error which would have increased its projected patient costs per day by $13.70. VENICE also projects room charges at its proposed hospital which are significantly lower than those projected for its "mother" hospital in Venice. This difference in room charges was not adequately explained or justified. Although VENICE's controller attributed the difference to cost savings resulting from the satellite hospital concept, these savings were not meaningfully itemized or identified in VENICE's revenue and cost projections. VENICE also failed to identify, and reflect in its projections, increased costs resulting from use of its satellite concept. For example, in 1986, 532 Englewood patient are projected as requiring sophisticated nuclear medicine tests at the "mother" hospital in Venice; 141 Englewood patient are projected as requiring special radiology tests at Venice Hospital. When asked who would absorb the costs of transporting patients between the satellite hospital in Englewood and the "mother" hospital in Venice, VENICE's controller responded that Venice Hospital would. However, those costs have not been quantified. Moreover Venice Hospital does not currently pay for ambulance transportation of its patients and does not have vans which transport patients on 24-mile round trips. This amounts to a significant and additional cost of operation, which has not been fully considered in the financial forecasts. Moreover, VENICE utilized cost per patient day based on Venice Hospital's 1981 costs rather than the higher 1982 costs. (Revenue per patient day increased 23.8 percent, in 1982.) In addition, projected revenues at VENICE's proposed Englewood satellite were not adjusted downward to take into account the less-sophisticated medical services which would be provided. As a result, VENICE's projected revenues per patient day are questionable and lack credibility. Venice Hospital received funds from three philanthropic organizations: Venice Hospital Blood Bank, Venice Hospital Auxiliary Volunteers, and Venice Health Facilities Foundation. Without the infusion of these funds, charges to Venice Hospital's patients would be higher. Venice Hospital's own fund raising literature states that patient charges, alone, do not cover the full costs of providing medical services. These community-raised funds, then, pay part of the costs of providing medical care. But in calculating cost savings to the community from its proposed Englewood hospital, VENICE has not identified or taken into account these additional funds raised from the community. VENICE's comparison of its projected patient charges with those of BAMI's is, accorded little weight. The two proposed hospitals are significantly different, one providing more extensive and sophisticated medical care than the other. This difference was not adequately taken into account in the financial comparison. Additional costs to Venice Hospital resulting from the Englewood satellite hospital were not fully considered. Comparisons based on historical charges by Venice Hospital and Fawcett Memorial Hospital are also misleading since these hospitals are different in size and occupancy rate--and the proposed Englewood hospital will duplicate neither. Moreover, Venice Hospital historical room rates used for the comparison were selectively chosen. VENICE also relies on projected HVAC life cycle savings, which, as already mentioned, were not convincingly established. Finally, the costs of acquiring VENICE's site-- necessitating a 250-acre purchase--were not fully reflected in the comparison. X QUALITY OF CARE The parties stipulated that both proposals will provide high quality medical care. The only question is whether bed-configuration will affect the quality of care provided. BAMI proposes a mix of 32 private and 60 semiprivate medical/surgical beds, with an additional 8 ICU beds. In contrast, VENICE proposes 96 private medical/surgical beds and 4 ICU beds. BAMI's mix of private and semiprivate rooms will allow consumers a choice and is preferable to VENICE's all private-room proposal. Private and semiprivate rooms confer various benefits. BAMI's proposed 32 private rooms will be adequate to serve those patients requiring private rooms while, at the same time, affording patients a choice between private and semiprivate. The VENICE proposal will not allow such a choice. It has not been shown, however, that bed configuration will affect the quality of medical care rendered patients. XI. COMPARISON: BAMI'S PROPOSED HOSPITAL IS PREFERABLE TO VENICE'S Both proposed hospitals would provide necessary and quality medical care to people in the Englewood area. On balance, however, BAMI's proposal is preferable. BAMI's free-standing hospital will provide more complete and sophisticated medical care, with less need to transport patients between "mother" and satellite hospitals. VENICE's satellite hospital will require extensive transporting of patients, food, linens, equipment, lab samples, and medications between the "mother" hospital in Venice and the satellite hospital in Englewood. BAMI, a multi-hospital system, is more experienced in constructing and operating new hospitals. The BAMI proposal will cost approximately $2,000,000 less to build, yet be of comparable quality and equipped with more sophisticated diagnostic equipment. While VENICE's construction plans are preliminary, BAMI's are detailed and virtually complete. VENICE's site requires rezoning, BAMI's does not. If BAMI's application is approved, its hospital could be opened by January 1, 1985,a year earlier than VENICE's. BAMI is financially able to begin construction immediately while VENICE--because of other projects simultaneously undertaken--may not be. Apart from zoning, both hospital sites are equally acceptable, although BAMI's 12-acre site is minimally sufficient for the anticipated future expansion to 200 beds. BAMI's financial ability to purchase is assured, while VENICE's is not. BAMI's proposal would avoid a duplication of emergency medical services in Englewood, while VENICE's would cause it. For patients preferring osteopathic physicians, BAMI's hospital would, most likely, be preferable. For patients preferring semiprivate rooms, BAMI's proposal would be preferable. Competition between hospitals serving the Englewood area would be enhanced with the BAMI proposal and decreased with VENICE's. Although VENICE argued that the costs to its patients would, over the long run, be less than BAMI's, this proposition was not convincingly proved.
Conclusions THE PARTIES resolved all disputed issues and executed a settlement agreement, which is attached and incorporated by reference. The parties are directed to comply with the terms of the attached settlement agreement. Based on the foregoing, this file is hereby CLOSED. DONE AND ORDERED on this G05 day of Wark . 2014, in Tallahassee, Florida. : Aa Lhe 7 Agency for Health Care Administration Agency for Health Care Administration v. Gulfside Regional Hospice, Inc. C.1. No.: 13-0812-000; Case No.: 13-1571MPI Final Order Page 1 of 3 Filed March 27, 2014 4:51 PM Division of Administrative Hearings A PARTY WHO IS ADVERSELY AFFECTED BY THIS FINAL ORDER IS ENTITLED TO A JUDICIAL REVIEW WHICH SHALL BE INSTITUTED BY FILING ONE COPY OF A NOTICE OF APPEAL WITH THE AGENCY CLERK OF AHCA, AND A SECOND COPY ALONG WITH FILING FEE AS PRESCRIBED BY LAW, WITH THE DISTRICT COURT OF APPEAL IN THE APPELLATE DISTRICT WHERE THE AGENCY MAINTAINS ITS HEADQUARTERS OR WHERE A PARTY RESIDES. REVIEW PROCEEDINGS SHALL BE CONDUCTED IN ACCORDANCE WITH THE FLORIDA APPELLATE RULES. THE NOTICE OF APPEAL MUST BE FILED WITHIN 30 DAYS OF RENDITION OF THE ORDER TO BE REVIEWED. Copies furnished to: Karl D. Acuff, Esquire 1615 Village Square Boulevard, Suite 2 Tallahassee, Florida 32309-2770 Telephone: (850) 671-2644 Fax: (850) 671-2732 Email: kd_acuff@floridacourts.com (Via Electronic Mail) Tracie L. Hardin, Esquire Agency for Health Care Administration 2727 Mahan Drive Building 3, Mail Station 3 Tallahassee, Florida 32308 (Via Electronic Mail) Agency for Health Care Administration Bureau of Financial Services 2727 Mahan Drive Building 2, Mail Station 14 Tallahassee, Florida 32308 (Via Electronic Mail) Bureau of Health Quality Assurance 2727 Mahan Drive, Mail Stop 9 Tallahassee, Florida 32308 (Via Electronic Mail) Richard Zenuch, Chief Medicaid Program Integrity 2727 Mahan Drive Building 2, Mail Station 6 Tallahassee, Florida 32308 (Via Electronic Mail) Eric W. Miller, Inspector General Medicaid Program Integrity 2727 Mahan Drive Building 3, Mail Station 4 Tallahassee, Florida 32308 (Via Electronic Mail) Division of Administrative Hearings The Desoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (Via Electronic Mail) Agency for Health Care Administration v. Gulfside Regional Hospice, Inc. C.1. No.: 13-0812-000; Case No.: 13-1571MPI CERTIFICATE OF SERVICE I HEREBY CERTIFY that a true and correct copy of the foregoing has been furnished to ——— the above named addressees by Electronic Mail, or the method designated, on this th day of J tore , 2014. Richard Shoop, Esquire Agency Clerk State of Florida Agency for Health Care Administration 2727 Mahan Drive, Building 43 Tallahassee, Florida 32308-5403 (850) 412-3630 Agency for Health Care Administration v. Gulfside Regional Hospice, Inc. C.1, No.: 13-0812-000; Case No.: 13-1571MPI Final Order Page 3 of 3 STATE OF FLORIDA AGENCY FOR HEALTH CARE ADMINISTRATION STATE OF FLORIDA, AGENCY FOR HEALTH CARE ADMINISTRATION, Petitioner, Case No.: 13-1571MP1 vs. CL. No.: 13-0812-000 Provider No.: 087570800 License No.: 5005096 NPI No.: 1144328881 GULFSIDE REGIONAL HOSPICE, INC., Respondent. / SETTLEMENT AGREEMENT Petitioner, the STATE OF FLORIDA, AGENCY FOR HEALTH CARE ADMINISTRATION, (“AHCA” or “Agency” or “Petitioner), and Respondent, GULFSIDE REGIONAL HOSPICE, INC., (“PROVIDER”), by and through the undersigned, hereby stipulate and agree as follows: 1. The parties enter into this agreement for the purpose of memorializing the resolution to this matter. 2. PROVIDER is a Medicaid provider in the State of Florida, provider number 087570800, and was a provider during the audit period. 3. In its Final Audit Report, dated March 18, 2013, the Agency notified PROVIDER that a review of Medicaid claims performed by Medicaid Program Integrity (“MPI”), Office of the AHCA Inspector General, during the period of January 1, 2008, through December 31, 2011, indicated that certain claims, in whole or in part, were inappropriately paid by Medicaid. The Agency for Health Care Administration v, Gulfside Regional Hospice, Inc. (C.1. No.: 13-0812-000) Settlement Agreement Page 1 of 7 Agency sought repayment of this overpayment, in the amount of forty-four thousand, eight hundred seventy dollars and thirty-five cents ($44,870.35). Additionally, the Agency applied sanctions in accordance with Sections 409.913(15), (16), and (17) Florida Statutes, and Rule 59G-9.070(7)(e) Florida Administrative Code. Specifically, the Agency assessed the following sanctions against PROVIDER: a fine in the amount of eight thousand, nine hundred seventy- four dollars and seven cents ($8,974.07) and costs in the amount of fifty-four dollars and sixteen cents ($54.16). The total amount due was fifty-three thousand, eight hundred ninety-eight dollars and fifty-eight cents ($53,898.58). 4. In response to the audit report dated March 18, 2013, PROVIDER filed a Petition for Formal Administrative Hearing. 5. Subsequent to the original audit that took place in this matter, the Agency agreed to relinquish the fine. The overpayment remains in the amount of forty-four thousand, eight hundred seventy dollars and thirty-five cents ($44,870.35). Additionally, the Agency assessed the following against the PROVIDER: costs in the amount of fifty-four dollars and sixteen cents ($54.16) pursuant to Section 409.913(23)(a), Florida Statutes. The total amount due is forty-four thousand, nine hundred twenty-four dollars and fifty-one cents ($44,924.51). 6. In order to resolve this matter without further administrative proceedings, PROVIDER and AHCA agree as follows: (1) | AHCA agrees to accept the payment set forth herein in settlement of the overpayment, fine, and costs arising from the above-referenced audit. Agency for Health Care Administration v. Gulfside Regional Hospice, Inc. (C.1. No.: 13-0812-000) Settlement Agreement Page 2 of 7 (2) Within thirty (30) days from the date of the execution of a Final Order adopting this Settlement Agreement, PROVIDER agrees to pay the Agency the sum of forty-four thousand, nine hundred twenty-four dollars and fifty-one cents ($44,924.51). (3) The amount due will be offset by any amount already received by the Agency in this matter. (4) | PROVIDER and AHCA agree that such payment as set forth above will resolve and settle this case completely and release both parties from all liabilities arising from the findings relating to the claims determined to have been overpaid in the audit referenced as C.1. Number 13-0812-000. (5) PROVIDER agrees that it will not rebill the Medicaid Program in any manner for claims that were not covered by Medicaid, which are the subject of the audit in this case. Payment shall be made to: AGENCY FOR HEALTH CARE ADMINISTRATION Medicaid Accounts Receivable 2727 Mahan Drive M.S. #14 Tallahassee, Florida 32308-5403 7. Payment shall clearly indicate it is pursuant to a settlement agreement and shall reference the audit number. 8. Overpayments owed to the Agency bear interest at the rate of 10 percent per year from the date of determination of the overpayment by the Agency; and payment arrangements must be made at the conclusion of legal proceedings, pursuant to Section 409.913(25)(c), Florida Statutes. Agency for Health Care Administration v. Gulfside Regional Hospice, inc. (C1. No.: 13-0812-000) Settlement Agreement Page 3 of 7 9. PROVIDER agrees that failure to pay any monies due and owing under the terms of this Agreement shall constitute PROVIDER’S authorization for the Agency, without further notice, to withhold the total remaining amount due under the terms of this agreement from any monies due and owing to PROVIDER for any Medicaid claims. 10. | AHCA reserves the right to enforce this Agreement under the laws of the State of Florida, the Rules of the Medicaid Program, and all other applicable rules and regulations. 11. This settlement does not constitute an admission of wrongdoing or error by either party with respect to this case or any other matter. 12. The signatories to this Agreement, acting in a representative capacity, represent that they are duly authorized to enter into this Agreement on behalf of the respective parties. 13. This Settlement Agreement shall be construed in accordance with the provisions of the laws of Florida. 14. Venue for any action arising from this Settlement Agreement shall be in Leon County, Florida. 15. This Agreement constitutes the entire agreement between PROVIDER and AHCA, including anyone acting for, associated with or employed by them, concerning all matters and supersedes any prior discussions, agreements or understandings; there are no promises, representations or agreements between PROVIDER and AHCA other than as set forth herein. No modification or waiver of any provision shall be valid unless a written amendment to the Agreement is completed and properly executed by the parties. 16. This is an Agreement of Settlement and Compromise, made in recognition that the parties may have different or incorrect understandings, information and contentions, as to facts and law, and with each party compromising and settling any potential correctness or Agency for Health Care Administration v. Gulfside Regional Hospice, Inc. (C.I. No: 13-0812-000) Settlement Agreement Page 4 of 7 incorrectness of its understandings, information and contentions as to facts and law, so that no misunderstanding or misinformation shall be a ground for rescission hereof. 17, | PROVIDER expressly waives in this matter its right to any hearing pursuant to sections 120.569 or 120.57, Florida Statutes, the making of findings of fact and conclusions of law by the Agency, and all further and other proceedings to which it may be entitled by law or rules of the Agency regarding this proceeding and any and all issues raised herein. PROVIDER further agrees that it shall not challenge or contest any Final Order entered in this matter which is consistent with the terms of this settlement agreement in any forum now or in the future available to it, including the right to any administrative proceeding, circuit or federal court action or any appeal. 18. | PROVIDER does hereby discharge the State of Florida, Agency for Health Care Administration, and its agents, representatives, and attorneys of and from all claims, demands, actions, causes of action, suits, damages, losses and expenses, of any and every nature whatsoever, arising out of or in any way related to this matter, AHCA’s actions herein, including, but not limited 10, any claims that were or may be asserted in any federal or state court or administrative forum, including any claims arising out of this agreement. 19. | This Agreement is and shall be deemed jointly drafted and written by all parties to it and shall not be construed or interpreted against the party originating or preparing it. 20. To the extent that any provision of this Agreement is prohibited by law for any reason, such provision shall be effective to the extent not so prohibited, and such prohibition shall not affect any other provision of this Agreement. 21. This Agreement shall inure to the benefit of and be binding on cach party’s successors, assigns, heirs, administrators, representatives and trustees. Agency for Health Care Administration v. Gulfside Regional Hospice, Inc. (C.1. No.: 13-0812-000) Settlement Agreement Page 5 of 7 22. All times stated herein are of the essence of this Agreement. 23. This Agreement shall be in full force and effect upon execution by the respective parties in counterpart. 24. The parties agree to bear their own attorney’s fees and costs, if any. THE REMAINDER OF THIS PAGE IS INTENTIONALLY BLANK. Agency for Health Care Administration v. Gulfside Regional Hospice, Inc. (C.L No.: 13-0812-000) Settlement Agreement Page 6 of 7 GULFSIDE REGIONAL HOSPICE, INC. Yemf ¢ § Provider’s Representative KZ Couns. rovider STATE OF FLORIDA, AGENCY FOR HEALTH CARE ADMINISTRATION 2727 Mahan Drive, Mail Stop #3 Tallahassee, Florida 32308-5403 tuakt Williams General Counsel Kron Ow Kim Kellum Chief Medicaid Counsel ws ater bh: A aden Tracie L. Hardin Assistant General Counsel Dated: U/r ¥ , 2014 Dated: 2; 28 214 Dated: 2014 Dated: Ss 20 , 2014 F Dated: , 2014 Dated: ,2014 i Agency for Health Care Administration y. Gulfside Regional Hospice, Inc. (C.1. No.: 13-0812-000) Settlement Agreement Page 7 of 7 FLORIDA AGENCY FOR HEALTH CARE ADMINISTRATION RICK SCOTT a ELIZABETH DUDEK GOVERNOR Better Health Care for all Floridians SECRETARY FEDERAL EXPRESS MAIL No.: 8027 0367 2785 March 18, 2013 Provider No: 087570800 NPINo: 1144328881 License No.: 5005096 GULFSIDE REGIONAL HOSPICE, INC. 6117 TROUBLE CREEK RD NEW PORT RICHEY, FL 34653-5240 In Reply Refer to FINAL AUDIT REPORT C.I.No.: 13-0812-000 Dear Provider: The Agency for Health Care Administration (Agency), Office of Inspector General, Bureau of Medicaid Program Integrity, has completed a review of claims for Medicaid reimbursement for dates of service during the period January 1, 2008 through December 31, 2011. A preliminary audit report dated January 18, 2013 was sent to you indicating that we had determined you were overpaid $44,870.35. Since no documentation was produced to refute these billings, all the claims are considered overpayments. We have determined that you were overpaid $44,870.35 for services that in whole or in part are not covered by Medicaid. A fine of $8,974.07 has been applied. The cost assessed for this audit is $54.16. The total amount due is $53,898.58. Be advised of the following: (1) In accordance with Sections 409.913(15), (16), and (17), Florida Statutes (F.S.), and Rule 59G-9.070, Florida Administrative Code (F.A.C.), the Agency shall apply sanctions for violations of federal and state laws, including Medicaid policy. This letter shall serve as notice of the following sanction(s): e A fine of $8,974.07 for violation(s) of Rule Section 59G-9.070(7) (e), F.A.C. (2) Pursuant to Section 409.913(23) (a), F.S., the Agency is entitled to recover all investigative, legal, and expert witness costs. 2727 Mahan Drive, MS# 6 Tallahassee, Florida 32308 Visit AHCA online at http://ahca.myfiorida.com Nursing Home Diversion Waiver — Fee for Service Match Page 2 The Medicaid program is authorized by Title XIX of the Social Security Act and Title 42 of the Code of Federal Regulations. The Florida Medicaid Program is authorized by Chapter 409, F.S., and Chapter 59G, F.A.C. This review and the determination of overpayment were made in accordance with the provisions of Section 409.913, F.S. In determining the appropriateness of Medicaid payment pursuant to Medicaid policy, the Medicaid program utilizes procedure codes, descriptions, policies, limitations and requirements found in the Medicaid provider handbooks and Section 409.913, F.S. In applying for Medicaid reimbursement, providers are required to follow the guidelines set forth in the applicable rules and Medicaid fee schedules, as promulgated in the Medicaid policy handbooks (in accordance with Chapter 59G, F.A.C.), billing bulletins, and the Medicaid provider agreement. Medicaid cannot pay for services that do not meet these guidelines. Below is a discussion of the particular guidelines related to the review of your claims, and an explanation of why these claims do not meet Medicaid requirements. The audit work papers are attached, listing the claims that are affected by this determination. REVIEW DETERMINATION(S) A Medicaid Provider is required to comply with Medicaid policy requirements (e.g. laws, rules, regulations, handbooks, policy). These requirements include, but are not limited to, providing goods and services in accordance with provisions of Medicaid policy and retaining medical, financial, and business records pertaining to the goods and services furnished. This review included a review of your claims reimbursed to you by Medicaid for goods and services to determine compliance with Medicaid policy. Payments for goods or services that are not documented and/or not billed in accordance to Medicaid policy are deemed to be overpayments. Our review has determined that you have failed to comply with Medicaid policy as outlined below. e Medicaid fee-for-service payments have been identified for recipients while they were enrolled in the Medicaid Nursing Home Diversion Waiver Program. Medicaid providers are required to verify Medicaid recipient eligibility prior to rendering Medicaid services. The fee-for-service payments, shown on the attached work papers, were for services that were to be covered by the recipient’s Nursing Home Diversion Waiver Provider. The total amount reimbursed to you for these fee-for-service payments has been identified as an overpayment. If you are currently involved in a bankruptcy, you should notify your attorney immediately and provide a copy of this letter for them. Please advise your attorney that we need the following information immediately: (1) the date of filing of the bankruptcy petition; (2) the case number; (3) the court name and the division in which the petition was filed (e.g., Northern District of Florida, Tallahassee Division); and, (4) the name, address, and telephone number of your attorney. If you are not in bankruptcy and you concur with our findings, remit by certified check the total amount reflected on page one, paragraph one, of this letter which includes the overpayment amount as well as any fines imposed and assessed costs. The check must be payable to the Florida Agency for Health Care Administration. Questions regarding procedures for submitting payment should be directed to Medicaid Accounts Receivable, (850) 412-3901. To ensure proper credit, be certain you legibly record on your check your Medicaid provider number and the C.I. number listed on the first page of this audit report. Please mail payment to: Nursing Home Diversion Waiver — Fee for Service Match Page 3 Medicaid Accounts Receivable - MS # 14 Agency for Health Care Administration 2727 Mahan Drive Bldg. 2, Ste. 200 Tallahassee, FL 32308 Pursuant to section 409.913(25)(d), F.S., the Agency may collect money owed by all means allowable by law, including, but not limited to, exercising the option to collect money from Medicare that is payable to the provider. Pursuant to section 409.913(27), F.S., if within 30 days following this notice you have not either repaid the alleged overpayment amount or entered into a satisfactory repayment agreement with the Agency, your Medicaid reimbursements will be withheld; they will continue to be withheld, even during the pendency of an administrative hearing, until such time as the overpayment amount is satisfied. Pursuant to section 409.913(30), F.S., the Agency shall terminate your participation in the Medicaid program if you fail to repay an overpayment or enter into a satisfactory repayment agreement with the Agency, within 35 days after the date of a final order which is no longer subject to further appeal. Pursuant to sections 409.913(15)(q) and 409.913(25)(c), F.S., a provider that does not adhere to the terms of a repayment agreement is subject to termination from the Medicaid program. Finally, failure to comply with all sanctions applied or due dates may result in additional sanctions being imposed. You have the right to request a formal or informal hearing pursuant to Section 120.569, F.S. If a request for a formal hearing is made, the petition must be made in compliance with Section 28-106.201, F.A.C. and mediation may be available. If a request for an informal hearing is made, the petition must be made in compliance with rule Section 28-106.301, F.A.C. Additionally, you are hereby informed that if a request for a hearing is made, the petition must be received by the Agency within twenty-one (21) days of receipt of this letter. For more information regarding your hearing and mediation rights, please see the attached Notice of Administrative Hearing and Mediation Rights. Any questions you may have about this matter should be directed to: Sheri Creel, Auditor, Agency for Health Care Administration, Medicaid Program Integrity, 2727 Mahan Drive, Mail Stop #6, Tallahassee, Florida 32308-5403, telephone (850) 412-4600, facsimile (850) 410-1972. Sincerely, Pamela Fante Program Administrator Office of Inspector General Medicaid Program Integrity PF/SC/SG Enclosure(s) Copies furnished to: Finance & Accounting Health Quality Assurance (Interoffice mail) (E-mail) Nursing Home Diversion Waiver — Fee for Service Match Page 4 NOTICE OF ADMINISTRATIVE HEARING AND MEDIATION RIGHTS You have the right to request an administrative hearing pursuant to Sections 120.569 and 120.57, Florida Statutes. If you disagree with the facts stated in the foregoing Final Audit Report (hereinafter FAR), you may request a formal administrative hearing pursuant to Section 120.57(1), Florida Statutes. If you do not dispute the facts stated in the FAR, but believe there are additional reasons to grant the relief you seek, you may request an informal administrative hearing pursuant to Section 120.57(2), Florida Statutes. Additionally, pursuant to Section }20.573, Florida Statutes, mediation may be available if you have chosen a formal administrative hearing, as discussed more fully below. The written request for an administrative hearing must conform to the requirements of either Rule 28- 106.201(2) or Rule 28-106.301(2), Florida Administrative Code, and must be received by the Agency for Health Care Administration, by 5:00 P.M. no Sater than 21 days after you received the FAR. The address for filing the written request for an administrative hearing is: Richard J. Shoop, Esquire Agency Clerk Agency for Health Care Administration 2727 Mahan Drive, Mail Stop # 3 Tallahassee, Florida 32308 Fax: (850) 921-0158 Phone: (850) 412-3630 The request must be legible, on 8 % by 11-inch white paper, and contain: 1. Your name, address. telephone number, any Agency identifying number on the FAR, if known, and name, address, and telephone number of your representative, if any; 2. An explanation of how your substantial interests will be affected by the action described in the FAR: 3. A statement of when and how you received the FAR; 4. For a request for formal hearing, a statement of all disputed issues of material fact; 5. For a request for formal hearing, a concise statement of the ultimate facts alleged, as well as the rules and statutes which entitle you to relief; For a request for formal hearing, whether you request mediation, if it is available; For a request for informal hearing, what bases support an adjustment to the amount owed to the Agency; and 8. A demand for relief. A formal hearing will be held if there are disputed issues of material fact. Additionally, mediation may be available in conjunction with a formal hearing. Mediation is a way to use a neutral third party to assist the parties in a legal or administrative proceeding to reach a settlement of their case. If you and the Agency agree to mediation, it does not mean that you give up the right to a hearing. Rather, you and the Agency will try to settle your case first with mediation. If you request mediation, and the Agency agrees to it, you will be contacted by the Agency to set up a time for the mediation and to enter into a mediation agreement. If a mediation agreement is not reached within 10 days following the request for mediation, the matter will proceed without mediation. The mediation must be concluded within 60 days of having entered into the agreement, unless you and the Agency agree to a different time period. The mediation agreement between you and the Agency will include provisions for selecting the mediator, the allocation of costs and fees associated with the mediation, and the confidentiality of discussions and documents involved in the mediation. Mediators charge hourly fees that must be shared equally by you and the Agency. If a written request for an administrative hearing is not timely received you will have waived your right to have the intended action reviewed pursuant to Chapter 120, Florida Statutes, and the action set forth in the FAR shall be conclusive and final. Nursing Home Diversion Waiver — Fee for Service Match Page 5 If you are in agreement with this audit and wish to make payment, please return this form along with your check. Complete this form and send along with your check to: Agency for Health Care Administration Medicaid Accounts Receivable 2727 Mahan Drive, Mail Stop #14 Tallahassee. Florida 32308 CHECK MUST BE MADE PAYABLE TO: FLORIDA AGENCY FOR HEALTH CARE ADMINISTRATION Provider Name GULFSIDE REGIONAL HOSPICE, INC. Provider ID 087570800 MPI Case Number 13-0812-000 Overpayment Amount $ 44,870.35 Fine Amount $ 8,974.07 Costs Assessed L $ 54.16 Total Amount Due $ 53,898.58 Check Number Payment for Medicaid Program Integrity Audit
Conclusions THE PARTIES resolved all disputed issues and executed a settlement agreement, which is attached and incorporated by reference. The parties are directed to comply with the terms of the attached settlement agreement. Based on the foregoing, this file is hereby CLOSED . DONE AND ORDERED on this the , l <or·r- Tallahassee, Florida. day of =tf , 2010, in Thomas W. Arnold, Secrefary Agency for Health Care Administration Agency for Health Care Administration v. North Central Florida Hospice, Inc. d/b/a Haven Hospice Final Order - Page I of 3 Filed February 25, 2010 12:11 PM Division of Administrative Hearings. A PARTY WHO IS ADVERSELY AFFECTED BY THIS FINAL ORDER IS ENTITLED TO A JUDICIAL REVIEW WHICH SHALL BE INSTITUTED BY FILING ONE COPY OF A NOTICE OF APPEAL WITH THE AGENCY CLERK OF AHCA, AND A SECOND COPY ALONG WITH FILING FEE AS PRESCRIBED BYLAW, WITH THE DISTRICT COURT OF APPEAL IN THE APPELLATE DISTRICT WHERE THE AGENCY MAINTAINS ITS HEADQUARTERS OR WHERE A PARTY RESIDES. REVIEW PROCEEDINGS SHALL BE CONDUCTED IN ACCORDANCE WITH THE FLORIDA APPELLATE RULES. THE NOTICE OF APPEAL MUST BE FILED WITHIN 30 DAYS OF RENDITION OF THE ORDER TO BE REVIEWED. Copies furnished to: Alison Ingram North Central Florida Hospital, Inc. d/b/a Haven Hospice 4200 Northwest 90th Boulevard Gainesville, Florida 32606 (Via U.S. Mail) Justin M. Senior, General Counsel Agency for Health Care Administration 2727 Mahan Drive Building 3, Mail Station 3 Tallahassee, Florida 32308 (Interoffice Mail) Kim Kellum, Chief Medicaid Counsel Agency for Health Care Administration 2727 Mahan Drive Building 3, Mail Station 3 Tallahassee, Florida 32308 (Interoffice Mail) Tracie L. Hardin, Esquire Agency for Health Care Administration 2727 Mahan Drive Building 3, Mail Station 3 Tallahassee, Florida 32308 (Interoffice Mail) Bureau of Health Quality Assurance 2727 Mahan Drive, Mail Stop 9 Tallahassee, Florida 32308 (Interoffice Mail) Ken Yon, Bureau Chief Medicaid Program Integrity 2727 Mahan Drive Building 2, Mail Station 6 Tallahassee, Florida 32308 (Interoffice Mail) Peter Williams, Inspector General Medicaid Program Integrity 2727 Mahan Drive Building 2, Mail Station 6 Tallahassee, Florida 32308 (Interoffice Mail) Division of Administrative Hearings The Desoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (Via U.S. Mail) Agency for Health Care Administration Bureau of Finance and Accounting 2727 Mahan Drive Building 2, Mail Station 14 Tallahassee, Florida 32308 (Interoffice Mail) '. CERTIFICATE OF SERVICE I HEREBY CERTIFY that a true and correct copy of the foregoing has been furnished to the above named addressees by U.S. Mail, or the method designated, on this the Z,</ day of ---"- ---= y 7 ., 2010. Richard Shoop, Esquire Agency Clerk State of Florida Agency for Health Care Administration 2727 Mahan Drive, Building #3 Tallahassee, Florida 32308-5403 (850) 922-5873
The Issue Whether the Certificate of Need (“CON”) applications filed by Seasons Hospice and Palliative Care, Inc. (“Seasons”); Gulfside Hospice and Pasco Palliative Care, Inc. (“Gulfside”); and West Florida Health, Inc. (“West Florida”); for a new hospice program in Agency for Health Care Administration (“AHCA” or the “Agency”) Service Area 6A/Hillsborough County, satisfy the applicable statutory and rule review criteria sufficiently to warrant approval, and, if so, which of the three applications best meets the applicable criteria, on balance, for approval.
Findings Of Fact Procedural History The Fixed Need Pool On October 3, 2014, the Agency published a need for one additional hospice program in Hospice Service Area 6A, Hillsborough County, for the January 2016 planning horizon. Under the Agency's need methodology, numeric need for an additional hospice program exists when the difference between projected hospice admissions and the current admissions in a service area is equal to or greater than 350. The need methodology promotes competition and access because numeric need exists under the methodology when the hospice use rate in a service area falls below the statewide average use rate. In a service area in which there is a sole hospice provider, as in the present case, the existing provider has an incentive to continually improve access to hospice services in the service area in order to avoid numeric need for an additional program under the formula. For the January 2016 planning horizon, the Agency determined that the difference between projected hospice admissions and current admissions in Hospice Service Area 6A was 759, and therefore a numeric need for an additional hospice program exists in Hillsborough County. AHCA is the state agency authorized to evaluate and render final determinations on CON applications pursuant to section 408.034(1), Florida Statutes. The Proposals and Preliminary Decision Nine applicants submitted CON applications seeking to establish a new hospice program in AHCA Service Area 6A, Hillsborough County, in response to the fixed need pool. LifePath, the only existing provider of hospice care in the service area, opposed the hospice application which was sponsored by a hospital system, i.e., West Florida’s. After reviewing the applications, the Agency preliminarily approved West Florida's CON Application No. 10302 and preliminarily denied the remainder of the applications, including Seasons’ CON Application No. 10298 and Gulfside's CON Application No. 10294. At the final hearing, Marisol Fitch, supervisor of AHCA's CON unit, testified that the Agency approved West Florida's CON application because it determined that West Florida's application best promotes increased access to hospice services for residents of Hillsborough County. The Agency concluded that Tampa General and Florida Hospital, West Florida's parent organizations, already have large infrastructures in place in Hillsborough County. Accordingly, the Agency determined that West Florida's proposed hospice program, if approved, would benefit from built-in access points that would enable West Florida to improve hospice accessibility. The Applicants, AHCA and Lifepath West Florida West Florida is a joint venture with 50-50 ownership and control by Tampa General and Florida Hospital, two acute care hospitals in Hillsborough County. The entity was created for the purpose of seeking the CON at issue in this proceeding for a new hospice in Service Area 6A. West Florida recently became the owner/operator of three home health agencies which had been operated for several years by the Florida Hospital System. Tampa General has not operated hospices in the past, while Florida Hospital has, and the CON application submitted by West Florida relied heavily upon the Florida Hospital-affiliated hospice’s programs and history. West Florida is the only applicant in this proceeding that is hospital affiliated. Seasons Seasons, the applicant, is a single purpose entity created for the purpose of seeking a CON to operate a new hospice in Service Area 6A. It is affiliated with Seasons Hospice and Palliative Care, a for-profit company (hereinafter referred to as “Seasons HPC”). Seasons HPC is the largest family-owned hospice organization in the country. The first Seasons HPC-affiliated hospice opened in Chicago, Illinois, in 1997. In 2003, Seasons HPC opened its second hospice in Milwaukee, Wisconsin, and in 2004, it acquired a third hospice in Baltimore, Maryland. Since 2004, Seasons HPC has continued to grow nationally by opening, or in some cases acquiring, hospices in new markets. Today, Seasons HPC is the fourth largest hospice company in the United States with 25 separate hospices operating in 18 different states. Each Seasons HPC-affiliated hospice is a separate entity, with its own license, executive director, and staff. However, each Seasons HPC hospice is connected via overlapping ownership and via contracts with Seasons Healthcare Management, its management company. Among the services that Seasons Healthcare Management provides to each Seasons HPC hospice are: education and training, quality management, financial planning support, management of payrolls, tax preparation, cost report preparation and coordination, IT services, corporate compliance policies and programs, marketing and development expertise, in- house legal services, and a wide variety of policies and consultations including, but not limited to, clinical support and physician oversight. Todd Stern is the CEO of Seasons Healthcare Management and is also the CEO of the 25 separate hospices that Seasons HPC operates throughout the country. Mr. Stern joined Seasons HPC in 2001, and was appointed CEO in 2008. Gulfside Gulfside is a 501(c)3 community-based, not-for-profit organization and is licensed by AHCA. Gulfside has been providing hospice services in Pasco County (which is contiguous to Hillsborough County) for more the 25 years. Gulfside provides service to all patients in need regardless of race, creed, color, gender, sexual orientation, national origin, age, qualified individual with a disability, military status, marital status, pregnancy, or other protected status. LifePath LifePath is the sole existing, licensed hospice provider in Hospice Service Area 6A, Hillsborough County. LifePath is a subsidiary of Chapters Health System. LifePath has provided hospice services in Hillsborough County since 1983. It was the first hospice program in the state to be accredited by The Joint Commission and has continuously maintained that accreditation. LifePath is also accredited by the National Institute for Jewish Hospices. In addition to providing routine, continuous, and respite care to residents of Hillsborough County, LifePath also provides inpatient hospice care in two, 24-bed hospice houses located in Temple Terrace and Sun City, Florida. Additionally, LifePath has scatter-bed contracts with all of the acute care hospitals in Hillsborough County to provide inpatient care. LifePath is an important part of the healthcare continuum in Hillsborough County and works collaboratively with other healthcare providers in the community, including hospitals, nursing homes, and assisted-living facilities. AHCA AHCA is the state agency responsible for administering the Florida CON program. Overview of Hospice Services In Florida, a hospice program is required to provide a continuum of palliative and supportive care for terminally ill patients and their families. A terminally ill patient has a medical prognosis that his or her life expectancy is one year or less if the illness runs its normal course. Under the Medicare program administered by the federal government, a terminally ill patient is one who has a life expectancy of six months or less. Hospice services must be available 24 hours a day, seven days a week, and must include certain core services, such as nursing services, social work services, pastoral or counseling services, dietary counseling, and bereavement counseling services. Physician services may be provided by the hospice directly or through contract. Hospice care and services provided in a private home shall be the primary form of care. Hospice care and services may also be provided by the hospice to a patient living in an assisted living facility, adult family-care home, nursing home, hospice residential unit or facility, or other non-domestic place of permanent or temporary residence. The inpatient component of care is a short-term adjunct to hospice home care and hospice residential care and shall be used only for pain control, symptom management, or respite care. The hospice bereavement program must be a comprehensive program, under professional supervision, that provides a continuum of formal and informal support services to the family for a minimum of one year after the patient's death. The goal of hospice is to provide physical, emotional, psychological, and spiritual comfort and support to a dying patient and their family. Hospice care provides palliative care as opposed to curative care, with the focus of treatment centering on palliative care and comfort measures. Hospice care is provided pursuant to a plan of care that is developed by an interdisciplinary team consisting of, e.g., physicians, nurses, social workers, counselors, chaplains, and other disciplines. There are four levels of service in hospice care: routine home care, continuous care, general inpatient care, and respite care. Generally, hospice routine home care comprises the vast majority of patient days and respite care is typically a very minor percentage of days. Continuous care is basically emergency room-like or crisis care that can be provided in a home care setting or in any setting where the patient resides. Continuous care is provided for short amounts of time usually when symptoms become severe and skilled and individual interventions are needed for pain and symptom management. The inpatient level of care provides the intensive level of care within a hospital setting, a skilled nursing unit, or in a free-standing hospice inpatient unit. Respite care is generally designed for caregiver relief. Medicare reimburses different levels of care at different rates. Approximately 85-to-90 percent of hospice care is paid for by Medicare. There are certain services required or desired by some patients that are not necessarily covered by Medicare and/or private or commercial insurance. These services include music therapy, pet therapy, art therapy, massage therapy, and aromatherapy, among others. There are other, more complicated and expensive non-covered services, such as palliative chemotherapy and radiation, that may be indicated for severe pain control and symptom control. Hospices which provide these additional services are said to have “open access” and foot the bill for such services. The Parties’ Proposals Each of the applicants- -as well as LifePath and the Agency– -agree that any one of the applicants could provide quality hospice services if approved. The following paragraphs set out some of each applicant’s attributes. Before each of the applicants’ proposals is discussed more fully below, it is clear that all of the applicants would likely be successful if approved. As stated by the parties themselves: “All three applicants . . . have the ability to operate a high quality hospice.” West Florida counsel, Tr., p. 12. “These are all excellent providers” and “There are no bad choices here.” AHCA counsel, Tr., pp. 1802 and 2009. “All [applicants] would be qualified; they all do good.” Lifepath counsel, Tr., p. 1980. “All applicants will undoubtedly provide the same level of quality care.” West Florida PRO, ¶ 59. The ultimate concern of AHCA regarding a new hospice provider in Hillsborough County is not the quality of care that the applicants can provide. All applicants will undoubtedly provide the same level of quality care. The real concern is costs, access, and availability. The Agency believes that West Florida will be best suited to promote cost effectiveness, as well as increase access and availability. A. West Florida West Florida is a collaborative effort by two existing, licensed hospitals in the service area. West Florida justifiably touts its connection to educational institutions. West Florida conditioned its approval on the funding of an additional palliative care fellowship at the University Of South Florida College of Medicine at an annual cost of roughly $80,000 and an additional CPE resident in Tampa General’s CPE program at an annual cost of $30,000. Having West Florida as part of the Tampa General “family” will expose not only the new palliative care fellow, but also medical students, medical interns and residents, other fellows, nurses, and a wide variety of allied health professionals, to hospice services and the benefits of hospice care. The new CPE resident could help to expand knowledge about end-of-life care and ultimately improve access to hospice services. West Florida will benefit the Tampa General pastoral care and CPE program by extending pastoral palliative care and end-of-life care training and experiences for all CPE students. Florida Hospital is a part of the Adventist Health System, which operates all types of healthcare facilities throughout the nation, including hospitals, rehab facilities, home health agencies, hospices, long term acute care hospitals, nursing homes, and more. In Florida, Adventist operates a range of facilities, including statutory teaching hospitals, quaternary-level service providers, critical-access hospitals, and safety net hospitals. In Hillsborough County, Florida Hospital operates Florida Hospital Tampa and Florida Hospital Carrollwood, both acute care facilities, in addition to a variety of outpatient facilities, physician practices, and the like. West Florida has proposed and is committed to opening a four-bed hospice inpatient unit at Florida Hospital Carrollwood, located in the northwestern portion of the county. Currently, there are two other inpatient hospice house units in Hillsborough County, one on the eastern side and one in the far south, both operated by LifePath. The unit would theoretically benefit hospice patients by increasing the number of inpatient beds and improving geographic distribution, thereby providing more access to hospice care. An inpatient unit may operate better than contracted “scatter beds” because hospice staff trained in end-of-life care and symptom management would be the medical personnel providing care to the patient rather than other hospital staff. Florida Hospital is an experienced provider of hospice services in the State of Florida, operating Florida Hospital Hospice Care in Volusia and Flagler Counties, as well as Hospice of the Comforter in Orange and Osceola Counties. Ms. Rema Cole is the administrator for Florida Hospital Hospice in Flagler and Volusia Counties. She has been responsible for opening two new hospice programs in the State of Florida. West Florida will provide a wide variety of unfunded “open access” services to its patients, such as: radiation and chemotherapy, caring for patients on ventilators, and training staff to provide these services. Combined, Florida Hospital and Tampa General touch tens of thousands of lives in Hillsborough County, totaling approximately 52,000 patients each year. Tampa General or Florida Hospital could tell its patients and their families about the goals and benefits of hospice care. It is likely West Florida would tend to promote its own hospice more prominently than it would promote its competitor’s (LifePath) services. West Florida suggests the possibility of a fully integrated electronic medical record. It would entail a long process, but steps have already been taken to begin the integration. The ability of the medical records of both Tampa General Hospital and Florida Hospital to “talk” to each other and all related ancillary providers, including its clinically integrated network, home health agency, and West Florida could improve the ability to reduce costs, as well as emergency room visits and unplanned admissions of hospice patients to hospitals. Having a streamlined system that communicates between the hospice, hospitals, and their ancillary providers could reduce workload, unnecessary paperwork, and increase the efficiency at which the hospice staff is able to operate. There is no such system in operation yet, but West Florida has plans to implement it once it is available. Florida Hospital Hospice Care provides a wide range of non-compensated programs, including a pet partner program called “HosPooch” that provides pet therapy to patients in inpatient units, nursing homes, ALFs, and even to non-hospice patients at their cancer centers. They also have a recording project called Project Storytellers that has a group of volunteers going into patients’ homes or wherever they may be to talk to the patient about their life, record things that were important to them, and give that recording to the families as a keepsake. Florida Hospital Hospice Care is involved with their local Veterans Administration nursing home and clinic, where volunteers perform pinnings of veterans. There is also music therapy, a group of quilters, and vigil volunteers, who sit at the bedside of patients to keep watch if the caregiver needs to take a break or run errands. West Florida can immediately tap into the existing connections that both Florida Hospital and Tampa General have in the community. These include relationships and connections with physicians, churches, civic groups, and other organizations, both healthcare and non-healthcare related. These existing relationships would serve not only as opportunities to market West Florida, but could also serve as educational opportunities to inform more individuals, groups, and organizations about the benefits of hospice care and the availability of the West Florida. West Florida agreed to condition approval of its CON application on the following eleven concepts: Annual funding for an additional palliative care fellowship at the University of South Florida; Annual funding for an additional CPE resident; Annual sponsorship of up to $5,000 for children’s bereavement camps; Up to $10,000 annually for a special wish fund; Operating a 4-bed inpatient unit at Florida Hospital Carrollwood; Programs which are not paid by Medicare; Offices on the campus of Tampa General and Florida Hospital; Using a licensed clinical social worker with at least a Master’s degree to lead the psychological department; 8) Establish an education program on hospice care accessible to medical staff; Programs for the Hispanic population; and Creation of a community resource information website. A. Seasons Seasons described its proposal for services through various key players within its parent organization. Dr. Balakrishana Natarjan is the chief medical officer for Seasons Healthcare Management. Dr. Natarjan plays an active role in recruiting the medical directors for each Seasons hospice, and the medical director of each hospice reports directly to him. Dr. Natarjan has developed a detailed list of the medical director’s qualifications and responsibilities, and a list of what he deems to be “non-negotiable company values” to which each medical director must agree. It is difficult to imagine how some of those values can be monitored (e.g., “The Medical Director must love holding the patient’s hand”; “The Medical Director must go to bed each night knowing they made a difference in the lives of specific dying patients,” etc.), but the idea of non-negotiables is recognized as positive. Seasons has also recently hired Daniel Maison, M.D., as the associate chief medical officer for the company. Dr. Russell Hilliard is Seasons’ vice-president for Patient Experience and Staff Development. He has a Ph.D. in music education, with an emphasis in music therapy and social work from Florida State University. His work is well-recognized in the hospice community. He was instrumental is starting the music therapy programs at Big Bend Hospice in Tallahassee, Florida, and at Hospice of Palm Beach County (Florida). His concept of music therapy is innovative, inclusive, and well- proven to achieve positive results. Dr. Hilliard will assist Seasons in doing a community-oriented needs assessment to ascertain what needs exist in Hillsborough County, examine how to meet those needs, and establish programs to be implemented upon approval as a hospice provider in the area. Seasons’ music therapies would then be implemented as necessary to meet the identified needs. Seasons has also assembled a team of national experts who are available to assist in various areas. One such expert is Mary Lynn McPherson, Pharm.D. Dr. McPherson has developed an online course entitled “Medication Management at the End of Life for Clinical, Supportive, Hospice and Palliative Care Practitioners,” that is offered through Seasons. Dr. McPherson is purportedly available 24 hours a day, seven days a week, to field numerous calls from Seasons physicians and other staff regarding complex medication management issues. Joyce Simard, a national expert in caring for people with dementia, developed for Seasons HPC hospices a specialized program for patients in the advanced stages of dementia. The program uses person-centered approaches to improve the quality of life for people suffering from dementia through meaningful sensory activities that stimulate the senses and promote comfort and serenity. Seasons Hospice Foundation (Foundation) is an independent 501(c)(3), non-profit foundation founded in 2011. The Foundation was established because Seasons was receiving unsolicited donations from grateful families and friends of patients, and it wanted these funds to go to a charitable purpose. Today the mission of the Foundation is to serve the needs of patients outside the hospice benefit. For example, the Foundation will assist patients who are unable to cover basic non-hospice needs, such as restoring electricity to a patient’s home or airfare so family members can travel to see a patient. Seasons does not rely on charitable contributions or other philanthropy to support its operations, nor does it rely on any other types of non-hospice revenue sources such as thrift shops. Unlike some new hospices which try to conserve resources and hire part-time staff when opening, Seasons invests 100 percent in new programs up front. All of the initial core staff is full-time, even when the hospice may be starting out with just a handful of patients. This allows the hospice team to develop trust among the group and to become familiar with Seasons’ policies, procedures and culture. Each Seasons HPC program and staff is reflective of the ethnic and cultural make-up of the area it serves. However, the mission statement, core values, service standards, operating practices, protocols, and policies are uniform in each Seasons HPC hospice. Seasons provides a large depth and breadth of programs in its hospices. Included among those services are music therapy, pet therapy (using certified pet therapy animals, as well as a specialized robotic seal for certain patients), Namaste (a specialized program for patients in the advanced states of dementia), Kangaroo Kids summer camp, Volunteer Vigil program, Leaving a Legacy, and Careflash. Seasons also participates in the We Honor Veterans program. Seasons would provide “open access” services in Hillsborough County. Seasons would provide these services for patients choosing to continue them so long as their prognosis remains six months or less, and the treatment is approved by the clinical leadership team for appropriateness. Such interventions may include IV antibiotics, blood transfusions, palliative cardiac drips, ventilator support, radiation therapy, heart therapy, dialysis and other palliative therapies. As discussed earlier, Seasons offers a very robust and highly professional music therapy program. But Seasons also provides music companions when simple entertainment is what is called for and Seasons makes sure the entire interdisciplinary staff is trained in this subject. Seasons actively works with hospitals in the markets it serves to educate physicians and allied health professionals in hospice and end-of-life care. Seasons hospices have affiliation agreements with several medical schools around the country to offer internships, fellowships, and other educational opportunities to pre-med students, medical students, and residents. Seasons hires experienced nurses who have previously worked in emergency rooms and intensive care units, and consequently is able to provide a much more clinically complex service than some other hospices. As a result, Seasons is able to serve patients that other organizations typically may not have served. Seasons utilizes a hospice-specific electronic medical record and is the largest hospice client of Cerner, a medical records provider. When a patient is admitted to a Seasons hospice, Seasons gathers the medical history of the patient, including hospital records if the patient has recently been in the hospital, and all relevant non-hospital medical records, including rehab notes, labs and other diagnostic testing results. This integrated electronic medical record is accessible to all Seasons hospice team members. Seasons has a centralized call center that takes calls from patients and their families 24 hours a day, seven days a week. At the call center, there are clinicians who are licensed in every state where Seasons operates who can respond to questions and provide consultation. The call center staff has full access to the patient’s electronic medical record in real time. Seasons also requires that all of its staff, including management at all levels, make calls to check on patients during the term of their treatment (i.e., not only when a patient calls or after the patient has died). In September 2010, Seasons acquired a controlling interest in a hospice in Miami-Dade County that was formerly known as Douglas Gardens Hospice. The hospice was acquired from the Miami Jewish Health System, which retains a 20-percent ownership in the hospice. At the time Seasons took over Douglas Gardens Hospice, the census was approximately 63 patients and the hospice was largely dependent upon referrals from the relatively small Miami Jewish Health System. Seasons retooled the makeup of the staff to better reflect the county’s Hispanic population and aggressively developed outreach efforts across the entire county. By the time of the final hearing, Douglas Gardens had grown to be the second largest hospice in Miami-Dade County with a census of 520 patients. When Seasons acquired its interest in the Miami-Dade County hospice, it diligently pursued referrals from assisted living facilities and nursing homes. In September 2010, Seasons had 13 admissions from ALFs; in September 2015, that number had risen to 154 admissions. Seasons’ hospice in Miami-Dade County has contracts with over 60 percent of the nursing homes in the county. In September 2015, the hospice admitted 110 patients from skilled nursing facilities. It has also pursued marketing to more than 30 acute care hospitals in the county. Today, approximately 40 to 45 percent of Seasons’ referrals in Miami-Dade County come from acute care hospitals. The majority of Seasons’ Miami-Dade County’s staff, including its executive director, is bilingual, and the hospice serves a large number of Hispanic patients. It also employs five to six chaplains, including non-denominational chaplains, a rabbi, and a Catholic priest who is able to deliver the sacrament of last rites. Seasons HPC requires all of its chaplains to be either board-certified or become board-certified within a year of being hired. Seasons HPC has developed a more formalized consulting arrangement with another national expert, Rabbi Elchonon Freedman from West Bloomfield, Michigan. Rabbi Freedman has been involved in the hospice field since the early 1990s and has four CPE units (equivalent to a master’s degree) and is board- certified. He heads the Jewish Hospice & Chaplaincy Network in Michigan which is heavily involved in hospice education across all denominations. Seasons participates in the “We Honor Veterans” program, and its Miami program has achieved Level 3 status. Seasons opened a new hospice in Broward County in late 2014, and it became Medicare certified in August 2015. The Broward hospice has achieved an average daily census of more than 50 patients as of the date of the final hearing. Seasons HPC has been successful in opening and growing new hospices in other large metropolitan markets throughout the country, most of which have no CON requirements and therefore present significantly higher hospice competition. Examples of large metropolitan markets where Seasons has successfully opened and grown the census of new hospices include: Phoenix, northern California, San Bernandino, and Houston. Seasons also agreed to condition its CON application approval on certain agreed services, including: Providing at least two continuing education units per year to registered nurses and licensed social workers at no charge; Offering internship experiences for various disciplines involved in hospice care; Donation of $25,000 per year to fund a wish fulfillment program for its patients and families; Provision of services outside the therapies paid for by Medicare; and Voluntary reporting of the Family Evaluation of Hospice Care survey to AHCA. Gulfside Gulfside is a 501(c)3 community-based, not-for-profit organization licensed by the AHCA as a hospice. Gulfside has been providing hospice services in Pasco County for more the 25 years. Gulfside provides care to all individuals eligible for care who meet the criteria of terminal illness and reside within the service area. Gulfside is accredited by the Joint Commission with Gold Seal status. Gulfside has grown in scope of services and in terms of census and coverage. In July 2004, it had 50 patients and roughly 30 staff members. It had a limited reach within Pasco County, primarily serving the community of New Port Richey. Hernando-Pasco Hospice, now known as HPH, was the dominant hospice provider in Pasco County. Gulfside grew, in part, through extensive community education to physicians and other healthcare and service providers, to its current average census of 360, which makes it the dominant hospice provider in Pasco County. The leadership at Gulfside has extensive experience in hospice, senior living, and Alzheimer’s care and management, including the management of senior living and SNF facilities, and developing new facilities and programs. Gulfside has a depth of experience in oncology care, social work, nursing, hospice and palliative medicine, health care administration, technical development, as well as program and project development. For example, Gulfside’s CEO and COO were both part of the team at LifePath’s Service Area 6B program (Polk, Highland and Hardee Counties) as the program was developing, growing from a census of 200 to 350 in one year. Each hospice patient at Gulfside meets with its interdisciplinary team (“IDT”) at least bi-weekly to discuss patients and to review their plan of care and any adjustments to the care plan. These meetings also include an educational component for IDT members. IDT meetings also take place when a patient requests a change in their care plan or should a change in the patient’s status trigger a new IDT review. Additionally, the physician member of the IDT will confer on a regular basis with the hospice medical director to obtain guidance and advice. The spiritual and pastoral care staff are also part of the IDT. Gulfside has extensive orientation and training for newly hired staff, requires that new staff must demonstrate core competencies before rendering services, and requires all staff to regularly demonstrate their competencies at Gulfside’s recurring “skills days.” Gulfside encourages all disciplines of its staff to maintain competencies, receive additional training, and earn continuing education units in their respective fields. Field staff use web-connected laptops and smartphones to assist with documentation and make live updates to the Electronic Medical Record (Allscripts) which Gulfside phased in over two years ago. Gulfside also has software programs which help to identify potential hospice referrals, allowing them to focus their outreach and education efforts to reach new patients. Gulfside has inpatient and other hospice service agreements with every hospital and nursing home in Pasco County. Gulfside has a very involved structure for internal improvement and regulatory compliance. There are a series of audits conducted by supervisors and others throughout its organization to ensure proper care, documentation and compliance. This type of review for performance improvement has been in place at Gulfside since 2005. Gulfside uses the services of DEYTA, a national organization, to assist it with the processing and data aggregation of its CHAPs results as part of its benchmarking for excellence. Gulfside’s commitment to quality and compliance was recognized in their last CMS and State Survey results, both of which were deficiency-free. Gulfside’s volunteer services are well-developed, allowing trained and supervised volunteers to work in administration, patient care, patient support, and even as part of the spiritual care team. Gulfside was awarded the Florida Hospices and Palliative Care Association’s Excellence Award in 2015 for its specialized Spiritual Care Volunteer Program. That program uses volunteers with spiritual or counseling training, including Stephen Ministers (lay-ministers) and retired clergy, to primarily serve patients with memory impairments, allowing the hospice chaplains to focus their efforts on patients with a more involved spiritual plan of care that might involve complicated unresolved relationships and life review. Community outreach and education and marketing efforts by hospices are important for a hospice to be part of the community. Gulfside has an extensive history of outreach programs that include educational programs for physicians and facility staff, programs to honor local veterans, and to provide education and support to caregivers, patients, and to others caring for family and loved ones with life limiting illnesses. Local fundraisers and events help keep Gulfside in touch with the community at large, in addition to raising funds which help support its mission. Gulfside’s Thrift Shop operations are part and parcel of this community presence. The thrift shop operations are a significant source of Gulfside’s operating revenues. If approved, Gulfside would focus its attention to end-stage heart disease patients, as its research showed that fewer patients with this diagnosis were currently being served in Hillsborough County. Gulfside has developed special program to serve these patients and their unique needs. The end-stage heart disease incidence rate in Hillsborough County for the Hispanic population was 25 percent, much higher than the incidence rate for the population at large of seven percent. Gulfside sees this fact as evidence of need for more focused services. Another unique trend Gulfside identified in Hillsborough County is a comparatively higher infant mortality rate when compared to the state average. In response to that identified trend, Gulfside proposed a program to meet the need for anticipatory grief and bereavement counseling for the parents and siblings of these infants and children. Gulfside currently has well-established relationships with providers in Hillsborough County, physicians, hospitals, SNFs, and conducts outreach and education as part of its mission to educate about hospice, as well as to serve the increasing number of patients its serves who are Hillsborough County residents. Gulfside agreed to a number of conditions for approval of its CON application: Condition 1 is for enhanced services to Veterans. Gulfside is a Level 4 We Honor Veterans provider. Condition 2 is for special bereavement programs and is consistent with Gulfside’s programs and includes the traumatic loss program. Condition 3 is for special programs not covered by Medicare, and these programs all compliment the patient and family hospice experience and are incorporated into how Gulfside provides care. These programs include: (a) Pet Peace of Mind program for ensuring patients and families are not burdened with additional stress worrying about the care of their pets. (b) Treasured Memories, an interactive craft-based activity to express feelings and to create a tangible reminder of the patient. (c) Heartstrings, a program using Reverie Harps to provide a soothing focus for patients and families, and include the patient playing the Harp. The Reverie Harp is a unique instrument which is auto-tuned and harmonizing; anyone can play it and make beautiful soothing music. Condition 4 provides for an Ethics Committee to assist with dilemmas and concerns for professionals and others when there is a question regarding cultural, religious, or clinical questions about the appropriateness or compatibility of a course of care or other decisions related to a patient. Condition 5 is for Gulfside’s Crisis Stabilization program which has become a significant program as troubled family dynamics and other at-risk situations seem to arise with more frequency. Condition 6 is for the Patient and Family Resource Navigator, a program already being used in Pasco County which assists patients and families to identify community and governmental benefits and resources which may be available to them and assisting them with applying or accessing the benefits or resources. Condition 7 is to provide programs for patients whose primary language is not English. This will include providing for translations and to recruit bilingual staff and volunteers. Condition 8 reflects that Gulfside is an “open access” hospice, providing complex therapies such as infusion therapies, dobutamine, special wound care, palliative chemotherapy and palliative radiation to its patients. Condition 9 was for Gulfside to offer non- cancer patient outreach and education. This includes the previously discussed end-stage heart disease and Alzheimer’s patients. Condition 10, Gift of Presence for the actively dying, will require the provision of specially trained volunteers to be present with patients and families during the last stages to assist and comfort them. Condition 11 is related to physician and clinician education, and networking programs to educate community practitioners and aligned professionals about hospice and palliative care and to provide peer-to-peer networks. Condition 12, provides for professional and physician internships and residencies, as well as the use of professional volunteers to educate about hospice and palliative care services. Condition 13 is for the development and implementation of the Patient and Family secure web-portal. Condition 14 provides that Gulfside will establish a separate foundation for Hillsborough County to help cover patient needs and expensive treatments. Gulfside will provide seed-money of $25,000 and donations will remain in Hillsborough County as part of this Condition. Condition 15 is for the rapid licensure of the new Gulfside program in Hillsborough County. Gulfside will file its licensure application to add Hillsborough County to its existing license within 5 days of receipt of the CON. Gulfside’s corporate office in Land O’Lakes and its freestanding hospice inpatient facility in Zephyrhills would be used to support the Hillsborough County program. Both are located just north of the county line. Gulfside will not need to add administrative capabilities or staff at its corporate office to initially support staff and the incremental additional patients served in Hillsborough County. The existing supports for the new program would allow it to enjoy improved economies of scale and efficiencies. Gulfside projects it will take approximately 45 days to receive a license from AHCA. During that time, existing staff will be canvassed to see which of them would like to work in the new Hillsborough County program. Gulfside would only need to assemble one additional IDT initially to begin serving the new service area. Gulfside would provide services in Hillsborough County through existing experienced staff now working in Pasco County. Travel requirements for the Hillsborough County staff would not differ much from what is commonly seen in Pasco County, because Pasco has many remote areas that Gulfside serves. Gulfside already has 25 current staff who reside in Hillsborough County. Because Gulfside is not creating a new Medicare provider or newly licensed entity in Florida, it could begin offering services as a fully-licensed and Medicare Certified provider as soon as it has a license from AHCA. All of Gulfside’s current ancillary services and supply contractors already serve Hillsborough (as well as Pasco) County and all of these contracts necessary for delivering hospice care can readily be expanded to include Hillsborough County. Gulfside will serve all of Hillsborough County through its extensive network of relationships throughout the county. Pasco and Hillsborough Counties are part of the same recognized healthcare market with patients flowing between the two counties. Gulfside expects its initial referrals will originate in the northern part of the county due to its strong referral relationships with providers in that area, and Gulfside’s assessments showed greater unmet need in that same area. It will later expand to cover the entire county. Gulfside’s operations in Hillsborough County would be more profitable on average than its current operations in Pasco County despite the allocation of administration and corporate overhead costs to the Hillsborough County program, and despite the assessment of a seven percent fee for corporate services and management from the Pasco home office. The cause of this difference is that the new program in Hillsborough County will benefit from economies of scale. Adding service volume does not require the duplication of costs and services for administrative and other support in place in Pasco County. Gulfside had a loss in fiscal year 2015 due to several significant non-recurring expenses. Gulfside’s projected budget for the 2016 fiscal year included a profit of $337,000, and Gulfside for the first four months of the new fiscal year was ahead of budget. The 2016 fiscal year budget did not include those items which Gulfside had identified as non-recurring, and yet they out-performed that conservative budget, corroborating that these were non-recurring expenses, and that Gulfside will be more profitable than projected in the 2016 fiscal year budget. Gulfside had a one-year loss for the 2015 fiscal year, but in that year, it also acquired a significant asset with the purchase of its corporate center office. Gulfside also maintained a good cash position and had significant additional credit available should it have needed to draw on those resources. LifePath’s Position vis-à-vis Competition Due to LifePath’s growth and its penetration rate within Service Area 6A, there has not been a need established by AHCA for another hospice in Hillsborough County until recently. The events leading to the newly established need are partially of LifePath’s own making, to wit: In May 2013, the Centers for Medicare and Medicaid Services (“CMS”) announced a decision to eliminate two categories of diagnosis often used for hospice care–“debility, undefined” and “failure to thrive.” The initial pronouncement from CMS indicated the change would take effect in approximately October 2013. LifePath decided to immediately stop accepting patients with those diagnoses so as to be in compliance with the new federal regulations when they took effect. LifePath also informed all its referring partners, physicians, hospitals, discharge planners, etc., that it would not be taking those types of patients any longer. Then CMS decided to delay implementation of the new policies for a year. By then, LifePath had already taken actions resulting in the loss of some 700 potential admissions. When AHCA did its hospice need calculations shortly thereafter, lo and behold, there was a “shortage” of some 700 cases in the use rate portion of the need calculation formula. As a result, AHCA determined there was a need for one additional hospice provider in Service Area 6A. LifePath had been hoisted on its own petard. LifePath does not challenge the Agency’s fixed need calculation or that another hospice should be approved for Hillsborough County Service Area 6A. Rather, LifePath is desirous that only the hospice with least potential for negative impact on LifePath should be approved. Based on the preponderance of evidence, West Florida would have the most negative impact on LifePath. Gulfside, due to its lower census development, would have the least impact. However, as Seasons would be more likely to completely meet the need projected by AHCA and would impact LifePath less than would West Florida, its proposal is the most acceptable. IV. Statutory and Rule Review Criteria The parties stipulate that: (1) All three applicants’ letters of intent and CON applications were timely and properly filed with required fees; (2) AHCA duly noticed its preliminary intent to approve West Florida’s CON application and to deny Seasons and Gulfside; (3) Seasons, Gulfside and LifePath timely filed Petitions for Formal Administrative Hearings challenging AHCA’s preliminary decision; and (4) Each application contains the minimum application content prescribed by sections 408.037 and 408.039, Florida Statutes. Also, Schedules A, D-1, and 10 in each CON application are acceptable and reasonable. Section 408.035(1) Criteria Stipulations (1)(a) “The need for the health care facilities and health services being proposed.”– -There is a need for one additional hospice program in Service Area 6A. (1)(b) “The availability, quality of care, accessibility, and extent of utilization of existing health care facilities and health services in the service district of the applicant.”- –A consideration of this criterion supports the need for one new hospice program in the service area. (1)(d) “The availability of resources, including health personnel, management personnel, and funds for capital and operating expenditures, for project accomplishment and operation.”– -Each applicant has adequately projected the availability of personnel. Each party’s Schedule 6 and staffing projections are reasonable. Each party’s audited financial statements present an adequate financial condition. (1)(f) “The immediate and long-term financial feasibility of the proposal.”– -Schedules 1, 2, and 3 in each application are reasonable and indicate that each applicant’s proposal is financially feasible in the short term and long term. (1)(h) –“The costs and methods of the proposed construction, including the costs and methods of energy provision and availability of alternative, less costly, or more efficient methods of construction.” - This criterion is not applicable. Florida Administrative Code Rule 59C-1.030 Stipulations: (2)(d) – “In determining the extent to which a proposed service will be accessible, the following will be considered: . . . The performance of the applicant in meeting any applicable Federal regulations.”- –This criterion would support approval of any of the three applicants. Florida Administrative Code Rule 59C-1.0355 Stipulations (6)“An applicant for a new hospice program shall provide a detailed program description in its certificate of need application . . . .”– -Each application contained adequate evidence regarding the applicants’ proposals. Factors Mitigating Against Approval of West Florida West Florida's proposal to establish a hospital-based hospice program in Service Area 6A materially differs from Seasons’ and Gulfside's proposals seeking to establish community- based hospice programs in the service area. There are key differences between a freestanding or community-based hospice, on the one hand, and a hospital-based hospice, on the other. Most significantly, in contrast to a community-based hospice, a hospital-based hospice has ready access to a patient population (i.e., acute care patients at its sponsoring hospital) from which it may receive referrals. Further, a hospital-based hospice primarily serves patients discharged from its sponsoring hospital and not the community at large, thereby creating a silo of care in which patients are funneled from the sponsoring hospital to the affiliated hospice. Nationally, for the period 2010 through 2014, hospital-based hospice programs obtained approximately 71 percent of their admissions from hospitals within their own health system and only six percent of admissions from out-of- system hospitals. Further, it is possible for a hospital-based hospice program to quickly obtain a large volume of admissions by virtue of its relationship with its sponsoring hospital. The census development for a community-based hospice program is more gradual. Hospital-based hospices do not tend to serve the broader community; once they have captured all of the admissions coming out of their own hospital or health system, they cease to continue to achieve significant market share growth. Moreover, hospital-based hospices tend to have shorter average lengths of stay and provide higher levels of inpatient care than community-based hospices because they tend to treat patients with a higher acuity and have easy access to inpatient beds where they can provide inpatient hospice care. Medicare reimbursement for general inpatient care is significantly higher than for some other types of hospice care. To the extent that a hospice provider provides more inpatient care, they will experience higher revenues. This would result in a concomitant reduction in revenues for a competing hospice in the same service area. Approximately 36 percent of patients discharged from an acute care hospital in Hillsborough County and admitted to a hospice program are discharged from one of West Florida's sponsoring hospitals. In 2014, approximately 46 percent of LifePath's admissions were referred from acute care hospitals. Accordingly, even if West Florida made no effort to obtain referrals to its program from sources other than its affiliate organizations, approximately 16.6 percent of LifePath's admissions could be at risk if West Florida's proposed project is approved. Mr. Michael Schultz, the CEO of Florida Hospital's West Florida Region, testified that the goal of Tampa General and Florida Hospital is to manage a patient's entire episode of care and that if West Florida's application were approved, both hospital organizations would "absolutely" prefer to have West Florida provide hospice care to patients discharged from its hospitals. LifePath's projection that it would lose 20 percent of its admissions if West Florida's application was approved is reasonable. Mr. Burkhart discussed West Florida’s desire to develop a “covered lives” strategy or network, where the hospital system can control how the dollars are spent and how the care is delivered. West Florida applied for a hospice CON for two reasons: 1) AHCA had published need; and 2) because “we wish to have more control over a piece of the hospice continuum so that when we’re doing things like narrow networks, we have that in our portfolio under our control.” Tr., p. 99. In a covered lives network, a hospice patient would pay less if they went to a West Florida affiliated hospice, and more if they went to Lifepath or another out-of-network hospice. West Florida plans to open satellite hospice offices in Tampa General and in the two Florida Hospitals located in Hillsborough County. There was no mention of the desire or possibility of opening satellite hospice offices in any of the non-West Florida affiliated hospitals located in Hillsborough County. From a practical perspective, it seems unlikely that competing hospital systems would welcome such involvement by a competitor. Seasons Seasons is the only applicant without a current connection to the healthcare community in Hillsborough County. It has, however, some experience in other Florida markets. Fewer of Seasons’ programmatic proposals are directly tied to a Condition of CON approval, but the programs are nonetheless generally universal in Seasons HPC operations. Gulfside Service Area 6A has a sizeable Hispanic population, but Gulfside has very limited experience in treating Hispanics. In fact, only 3.3 percent of its recent admissions are Hispanic. Gulfside’s COO did not know how many, if any, of Gulfside’s existing staff was bilingual. Today, Gulfside relies on interpreters who are accessed through a language line to communicate with Hispanic patients and family members. Since Gulfside plans to utilize existing staff to serve Hillsborough County, it will need to continue to rely upon interpreters to communicate with Hispanics in that county. To the extent the Hispanic population in Hillsborough County is underserved, or there is a need to ensure that these patients have a choice of hospice providers that are committed to meeting their needs, Seasons demonstrated far more experience and ability than Gulfside. Seasons projected 516 admissions in year two while Gulfside projected 276 admissions. Seasons has reasonably projected to achieve 240 more admissions in year 2 than Gulfside and thus will do a better job in meeting the unmet need. West Florida also projects more admissions than Gulfside. Ultimate Findings of Fact Each of the applicants, as advertised, could provide quality hospice services to the residents of AHCA Service Area 6A/Hillsborough County. The proposal by West Florida would be more likely to serve its own hospital patients than the community at large. This would have the effect of less penetration by West Florida in the service area as a whole. It would also likely result in West Florida retaining more of the most critically ill hospice patients (i.e., those with shorter lengths of stay), thereby benefitting from the new reimbursement rules to the exclusion of the competing hospice. Gulfside would be able to commence operations in Hillsborough County more quickly than Seasons or West Florida. It has connections with other healthcare providers in Hillsborough County and could easily transition to that geographic area. However, it proposes less growth and coverage than either Seasons or West Florida, thus will less likely meet the need which currently exists. Seasons has the financial and operational wherewithal to be successful in Hillsborough County. It has more experience (and success) in starting a new hospice than the other applicants. Its programs are well-established and conducted by experts in their fields. Seasons would meet the need for a new hospice provider in Service Area 6A better than the other applicants. Upon consideration of all the facts in this case, Seasons’ application, on balance, is the most appropriate for approval.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a final order be entered approving Seasons Hospice and Palliative Care of Tampa, LLC’s, CON No. 10298 and denying West Florida Health, Inc.’s, CON No. 10302 and Gulfside Hospice & Palliative Care of Tampa, LLC’s, CON No. 10294. DONE AND ENTERED this 21st day of March, 2016, in Tallahassee, Leon County, Florida. S R. BRUCE MCKIBBEN Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 21st day of March, 2016. COPIES FURNISHED: Stephen K. Boone, Esquire Boone, Boone, Boone and Koda, P.A. 1001 Avenida Del Circo Post Office Box 1596 Venice, Florida 34284 (eServed) Lorraine Marie Novak, Esquire Agency for Health Care Administration 2727 Mahan Drive, Mail Stop 3 Tallahassee, Florida 32308 (eServed) Seann M. Frazier, Esquire Parker, Hudson, Rainer and Dobbs, LLP Suite 750 215 South Monroe Street Tallahassee, Florida 32301 (eServed) Jonathan L. Rue, Esquire Parker, Hudson, Rainer and Dobbs, LLC 303 Peachtree Street Northeast, Suite 3600 Atlanta, Georgia 30308 (eServed) Karl David Acuff, Esquire Law Office of Karl David Acuff, P.A. Suite 2 1615 Village Square Boulevard Tallahassee, Florida 32309-2770 (eServed) Stephen C. Emmanuel, Esquire Michael J. Glazer, Esquire Ausley & McMullen 123 South Calhoun Street Post Office Box 391 Tallahassee, Florida 32301 (eServed) Richard J. Shoop, Agency Clerk Agency for Health Care Administration 2727 Mahan Drive, Mail Stop 3 Tallahassee, Florida 32308 (eServed) Stuart Williams, General Counsel Agency for Health Care Administration 2727 Mahan Drive, Mail Stop 3 Tallahassee, Florida 32308 (eServed) Elizabeth Dudek, Secretary Agency for Health Care Administration 2727 Mahan Drive, Mail Stop 1 Tallahassee, Florida 32308 (eServed)
Conclusions THE PARTIES resolved all disputed issues and executed a Settlement Agreement. The parties are directed to comply with the terms of the attached settlement agreement. Based on the foregoing, this file is CLOSED. DONE and ORDERED on this the£ day of 1=4f=-----·' 2009, m Tallahassee, Florida. r Agency for Health Care Administration 1 Filed July 7, 2009 1:19 PM Division of Administrative Hearings. A PARTY WHO IS ADVERSELY AFFECTED BY THIS FINAL ORDER IS ENTITLED TO A JUDICIAL REVIEW WHICH SHALL BE INSTITUTED BY FILING ONE COPY OF A NOTICE OF APPEAL WITH THE AGENCY CLERK OF AHCA, AND A SECOND COPY ALONG WITH FILING FEE AS PRESCRIBED BY LAW, WITH THE DISTRICT COURT OF APPEAL IN THE APPELLATE DISTRICT WHERE THE AGENCY MAINTAINS ITS HEADQUARTERS OR WHERE A PARTY RESIDES. REVIEW PROCEEDINGS SHALL BE CONDUCTED IN ACCORDANCE WITH THE FLORIDA APPELLATE RULES. THE NOTICE OF APPEAL MUST BE FILED WITHIN 30 DAYS OF RENDITION OF THE ORDER TO BE REVIEWED. Copies furnished to: L. William Porter II, Esquire Agency for Health Care Administration (Laserfiche) Lewis W. Fishman, Esquire 2 Datran Center 9130 S. Dadeland Boulevard, Suite 1121 Miami, Florida 33156-7848 (U.S. Mail) June C. McKinney Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 Ken Yon, Bureau Chief, Medicaid Program Integrity Diana Coumbe, Medicaid Program Integrity Finance and Accounting 2 CERTIFICATE OF SERVICE I HEREBY CERTIFY that a true and correct copy of the foregoing has been furnished to Richard Shoop, Esquire Agency Clerk State of Florida Agency for Health Care Administration 2727 Mahan Drive, Building #3 Tallahassee, Florida 32308-5403 (850) 922-5873 3
The Issue Whether the certificate of need (CON) applications filed by New Port Richey Hospital, Inc., d/b/a Community Hospital of New Port Richey (Community Hospital) (CON No. 9539), and Morton Plant Hospital Association, Inc., d/b/a North Bay Hospital (North Bay) (CON No. 9538), each seeking to replace and relocate their respective general acute care hospital, satisfy, on balance, the applicable statutory and rule criteria.
Findings Of Fact The Parties AHCA AHCA is the single state agency responsible for the administration of the CON program in Florida pursuant to Chapter 408, Florida Statutes (2000). The agency separately reviewed and preliminarily approved both applications. Community Hospital Community Hospital is a 300,000 square feet, accredited hospital with 345 licensed acute care beds and 56 licensed adult psychiatric beds, located in southern New Port Richey, Florida, within Sub-District 5-1. Community Hospital is seeking to construct a replacement facility approximately five miles to the southeast within a rapidly developing suburb known as "Trinity." Community Hospital currently provides a wide array of comprehensive inpatient and outpatient services and is the only provider of obstetrical and adult psychiatric services in Sub-District 5-1. It is the largest provider of emergency services in Pasco County with approximately 35,000 visits annually. It is also the largest provider of Medicaid and indigent patient days in Sub-District 5-1. Community Hospital was originally built in 1969 and is an aging facility. Although it has been renovated over time, the hospital is in poor condition. Community Hospital's average daily census is below 50 percent. North Bay North Bay is a 122-bed facility containing 102 licensed acute care beds and 20 licensed comprehensive medical rehabilitation beds, located approximately one mile north of Community Hospital in Sub-District 5-1. It serves a large elderly population and does not provide pediatric or obstetrical care. North Bay is also an aging facility and proposes to construct a replacement facility in the Trinity area. Notably, however, North Bay has spent approximately 12 million dollars over the past three years for physical improvements and is in reasonable physical condition. Helen Ellis Helen Ellis is an accredited hospital with 150 licensed acute care beds and 18 licensed skilled nursing unit beds. It is located in northern Pinellas County, approximately eight miles south of Community Hospital and nine miles south of North Bay. Helen Ellis provides a full array of acute care services including obstetrics and cardiac catheterization. Its daily census average has fluctuated over the years but is approximately 45 percent. Mease Mease operates two acute care hospitals in Pinellas County including Mease Dunedin Hospital, located approximately 18 to 20 miles south of the applicants and Mease Countryside Hospital, located approximately 16 to 18 miles south of Community and North Bay. Each hospital operates 189 licensed beds. The Mease hospitals are located in the adjacent acute care sub-district but compete with the applicants. The Health Planning District AHCA's Health Planning District 5 consists of Pinellas and Pasco Counties. U.S. Highway 41 runs north and south through the District and splits Pasco County into Sub- District 5-1 and Sub-District 5-2. Sub-District 5-1, where Community Hospital and North Bay are located, extends from U.S. 41 west to the Gulf Coast. Sub-District 5-2 extends from U.S. 41 to the eastern edge of Pasco County. Pinellas County is the most densely populated county in Florida and steadily grows at 5.52 percent per year. On the other hand, its neighbor to the north, Pasco County, has been experiencing over 15 percent annual growth in population. The evidence demonstrates that the area known as Trinity, located four to five miles southeast of New Port Richey, is largely responsible for the growth. With its large, single- owner land tracts, Trinity has become the area's fuel for growth, while New Port Richey, the older coastal anchor which houses the applicants' facilities, remains static. In addition to the available land in Trinity, roadway development in the southwest section of Pasco County is further fueling growth. For example, the Suncoast Highway, a major highway, was recently extended north from Hillsborough County through Sub-District 5-1, west of U.S. 41. It intersects with several large east-west thoroughfares including State Road 54, providing easy highway access to the Tampa area. The General Proposals Community Hospital's Proposal Community Hospital's CON application proposes to replace its existing, 401-bed hospital with a 376-bed state- of-the-art facility and relocate it approximately five miles to the southeast in the Trinity area. Community Hospital intends to construct a large medical office adjacent to its new facility and provide all of its current services including obstetrical care. It does not intend to change its primary service area. North Bay's Proposal North Bay's CON application proposes to replace its existing hospital with a 122-bed state-of-the-art facility and also plans to relocate it approximately eight miles to the southeast in the Trinity area of southwestern Pasco County. North Bay intends to provide the same array of services it currently offers its patients and will not provide pediatric and obstetrical care in the proposed facility. The proposed relocation site is adjacent to the Trinity Outpatient Center which is owned by North Bay's parent company, Morton Plant. The Outpatient Center offers a full range of diagnostic imaging services including nuclear medicine, cardiac nuclear stress testing, bone density scanning, CAT scanning, mammography, ultrasound, as well as many others. It also offers general and specialty ambulatory surgical services including urology; ear, nose and throat; ophthalmology; gastroenterology; endoscopy; and pain management. Approximately 14 physician offices are currently located at the Trinity Outpatient Center. The Condition of Community Hospital Facility Community Hospital's core facilities were constructed between 1969 and 1971. Additions to the hospital were made in 1973, 1975, 1976, 1977, 1979, 1981, 1992, and 1999. With an area of approximately 294,000 square feet and 401 licensed beds, or 733 square feet per bed, Community Hospital's gross area-to-bed ratio is approximately half of current hospital planning standards of 1,600 square feet per bed. With the exception of the "E" wing which was completed in 1999, all of the clinical and support departments are undersized. Medical-Surgical Beds And Intensive Care Units Community Hospital's "D" wing, constructed in 1975, is made up of two general medical-surgical unit floors which are grossly undersized. Each floor operates 47 general medical-surgical beds, 24 of which are in three-bed wards and 23 in semi-private rooms. None of the patient rooms in the "D" wing have showers or tubs so the patients bathe in a single facility located at the center of the wing on each floor. Community Hospital's "A" wing, added in 1973, is situated at the west end of the second floor and is also undersized. It too has a combination of semi-private rooms and three-bed wards without showers or tubs. Community Hospital's "F" wing, added in 1979, includes a medical-surgical unit on the second and third floor, each with semi-private and private rooms. The second floor unit is centrally located between a 56-bed adult psychiatric unit and the Surgical Intensive Care Unit (SICU) which creates security and privacy issues. The third floor unit is adjacent to the Medical Intensive Care Unit (MICU) which must be accessed through the medical-surgical unit. Neither intensive care unit (ICU) possesses an isolation area. Although the three-bed wards are generally restricted to in-season use, and not always full, they pose significant privacy, security, safety, and health concerns. They fail to meet minimum space requirements and are a serious health risk. The evidence demonstrates that reconfiguring the wards would be extremely costly and impractical due to code compliance issues. The wards hinder the hospital's acute care utilization, and impair its ability to effectively compete with other hospitals. Surgical Department and Recovery Community Hospital's surgical department is separated into two locations including the main surgical suite on the second floor and the Endoscopy/Pain Management unit located on the first floor of "C" wing. Consequently, the department cannot share support staff and space such as preparation and recovery. The main surgical suite, adjacent recovery room, and central sterile processing are 25 years old. This unit's operating rooms, cystoscopy rooms, storage areas, work- stations, central sterile, and recovery rooms are undersized and antiquated. The 12-bay Recovery Room has no patient toilet and is lacking storage. The soiled utility room is deficient. In addition, the patient bays are extremely narrow and separated by curtains. There is no direct connection to the sterile corridor, and staff must break the sterile field to transport patients from surgery to recovery. Moreover, surgery outpatients must pass through a major public lobby going to and returning from surgery. The Emergency Department Community Hospital's existing emergency department was constructed in 1992 and is the largest provider of hospital emergency services in Pasco County, handling approximately 35,000 visits per year. The hospital is also designated a "Baker Act" receiving facility under Chapter 394, Florida Statutes, and utilizes two secure examination rooms for emergent psychiatric patients. At less than 8,000 total square feet, the emergency department is severely undersized to meet the needs of its patients. The emergency department is currently undergoing renovation which will connect the triage area to the main emergency department. The renovation will not enlarge the entrance, waiting area, storage, nursing station, nor add privacy to the patient care areas in the emergency department. The renovation will not increase the total size of the emergency department, but in fact, the department's total bed availability will decrease by five beds. Similar to other departments, a more meaningful renovation cannot occur within the emergency department without triggering costly building code compliance measures. In addition to its space limitations, the emergency department is awkwardly located. In 1992, the emergency department was relocated to the front of the hospital and is completely separated from the diagnostic imaging department which remained in the original 1971 building. Consequently, emergency patients are routinely transported across the hospital for imaging and CT scans. Issues Relating to Replacement of Community Hospital Although physically possible, renovating and expanding Community Hospital's existing facility is unreasonable. First, it is cost prohibitive. Any significant renovation to the 1971, 1975, 1977, and 1979 structures would require asbestos abatement prior to construction, at an estimated cost of $1,000,000. In addition, as previously noted, the hospital will be saddled with the major expense of complying with all current building code requirements in the 40-year-old facility. Merely installing showers in patient rooms would immediately trigger a host of expensive, albeit necessary, code requirements involving access, wiring, square footage, fireproofing columns and beams, as well as floor/ceiling and roof/ceiling assemblies. Concurrent with the significant demolition and construction costs, the hospital will experience the incalculable expense and loss of revenue related to closing major portions, if not all, of the hospital. Second, renovation and expansion to the existing facility is an unreasonable option due to its physical restrictions. The 12'4" height of the hospital's first floor limits its ability to accommodate HVAC ductwork large enough to meet current ventilation requirements. In addition, there is inadequate space to expand any department within the confines of the existing hospital without cannibalizing adjacent areas, and vertical expansion is not an option. Community Hospital's application includes a lengthy Facility Condition Assessment which factually details the architectural, mechanical, and electrical deficiencies of the hospital's existing physical plant. The assessment is accurate and reasonable. Community Hospital's Proposed Replacement Community Hospital proposes to construct a six- story, 320 licensed beds, acute care replacement facility. The hospital will consist of 548,995 gross square feet and include a 56-bed adult psychiatric unit connected by a hallway to the first floor of the main hospital building. The proposal also includes the construction of an adjacent medical office building to centralize the outpatient offices and staff physicians. The evidence establishes that the deficiencies inherent in Community Hospital's existing hospital will be cured by its replacement hospital. All patients will be provided large private rooms. The emergency department will double in size, and contain private examination rooms. All building code requirements will be met or exceeded. Patients and staff will have separate elevators from the public. In addition, the surgical department will have large operating rooms, and adequate storage. The MICU and SICU will be adjacent to each other on the second floor to avoid unnecessary traffic within the hospital. Surgical patients will be transported to the ICU via a private elevator dedicated to that purpose. Medical-surgical patient rooms will be efficiently located on the third through sixth floors, in "double-T" configuration. Community Hospital's Existing and Proposed Sites Community Hospital is currently located on a 23-acre site inside the southern boundary of New Port Richey. Single- family homes and offices occupy the two-lane residential streets that surround the site on all sides. The hospital buildings are situated on the northern half of the site, with the main parking lot located to the south, in front of the main entrance to the hospital. Marine Parkway cuts through the southern half of the site from the west, and enters the main parking lot. A private medical mall sits immediately to the west of the main parking lot and a one-acre storm-water retention pond sits to the west of the mall. A private medical office building occupies the south end of the main parking lot and a four-acre drainage easement is located in the southwest corner of the site. Community Hospital's administration has actively analyzed its existing site, aging facility, and adjacent areas. It has commissioned studies by civil engineers, health care consultants, and architects. The collective evidence demonstrates that, although on-site relocation is potentially an option, on balance, it is not a reasonable option. Replacing Community Hospital on its existing site is not practical for several reasons. First, the hospital will experience significant disruption and may be required to completely close down for a period of time. Second, the site's southwestern large four-acre parcel is necessary for storm-water retention and is unavailable for expansion. Third, a reliable cost differential is unknown given Community Hospital's inability to successfully negotiate with the city and owners of the adjacent medical office complexes to acquire additional parcels. Fourth, acquiring other adjacent properties is not a viable option since they consist of individually owned residential lots. In addition to the site's physical restrictions, the site is hindered by its location. The hospital is situated in a neighborhood between small streets and a local school. From the north and south, motorists utilize either U.S. 19, a congested corridor that accommodates approximately 50,000 vehicles per day, or Grand and Madison Streets, two-lane streets within a school zone. From the east and west, motorists utilize similar two-lane neighborhood streets including Marine Parkway, which often floods in heavy rains. Community Hospital's proposed site, on the other hand, is a 53-acre tract positioned five miles from its current facility, at the intersection of two major thoroughfares in southwestern Pasco County. The proposed site offers ample space for all facilities, parking, outpatient care, and future expansion. In addition, Community Hospital's proposed site provides reasonable access to all patients within its existing primary service area made up of zip codes 34652, 34653, 34668, 34655, 34690, and 34691. For example, the average drive times from the population centers of each zip code to the existing site of the hospital and the proposed site are as follows: Zip code Difference Existing site Proposed site 34652 3 minutes 14 minutes 11 minutes 34653 8 minutes 11 minutes 3 minutes 34668 15 minutes 21 minutes 6 minutes 34655 11 minutes 4 minutes -7 minutes 34690 11 minutes 13 minutes 2 minutes 34691 11 minutes 17 minutes 6 minutes While the average drive time from the population centroids of zip codes 34653, 34668, 34690, and 34691 to the proposed site slightly increases, it decreases from the Trinity area, where population growth has been most significant in southwestern Pasco County. In addition, a motorist's average drive time from Community Hospital's existing location to its proposed site is only 10 to 11 minutes, and patients utilizing public transportation will be able to access the new hospital via a bus stop located adjacent to the proposed site. The Condition of North Bay Facility North Bay Hospital is also an aging facility. Its original structure and portions of its physical plant are approximately 30 years old. Portions of its major mechanical systems will soon require replacement including its boilers, air handlers, and chillers. In addition, the hospital is undersized and awkwardly configured. Despite its shortcomings, however, North Bay is generally in good condition. The hospital has been consistently renovated and updated over time and is aesthetically pleasing. Moreover, its second and third floors were added in 1986, are in good shape, and structurally capable of vertical expansion. Medical Surgical Beds and ICU Units By-in-large, North Bay is comprised of undersized, semi-private rooms containing toilet and shower facilities. The hospital does not have any three-bed wards. North Bay's first floor houses all ancillary and support services including lab, radiology, pharmacy, surgery, pre-op, post-anesthesia recovery, central sterile processing and supply, kitchen and cafeteria, housekeeping and administration, as well as the mechanical, electrical, and facilities maintenance and engineering. The first floor also contains a 20-bed CMR unit and a 15-bed acute care unit. North Bay's second and third floors are mostly comprised of semi-private rooms and supporting nursing stations. Although the rooms and stations are not ideally sized, they are in relatively good shape. North Bay utilizes a single ICU with ten critical care beds. The ICU rooms and nursing stations are also undersized. A four-bed ICU ward and former nursery are routinely used to serve overflow patients. Surgery Department and Recovery North Bay utilizes a single pre-operative surgical room for all of its surgery patients. The room accommodates up to five patient beds, but has limited space for storage and pre-operative procedures. Its operating rooms are sufficiently sized. While carts and large equipment are routinely stored in hallways throughout the surgical suite, North Bay has converted the former obstetrics recovery room to surgical storage and has made efficient use of other available space. North Bay operates a small six-bed Post Anesthesia Care Unit. Nurses routinely prepare patient medications in the unit which is often crowded with staff and patients. The Emergency Department North Bay has recently expanded its emergency department. The evidence demonstrates that this department is sufficient and meets current and future expected patient volumes. Replacement Issues Relating to North Bay While it is clear that areas of North Bay's physical plant are aging, the facility is in relatively good condition. It is apparent that North Bay must soon replace significant equipment, including cast-iron sewer pipes, plumbing, boilers, and chillers which will cause some interruption to hospital operations. However, North Bay's four-page written assessment of the facility and its argument citing the need for total replacement is, on balance, not persuasive. North Bay's Proposed Replacement North Bay proposes to construct a new, state-of-the- art, hospital approximately eight miles southeast of its existing facility and intends to offer the identical array of services the hospital currently provides. North Bay's Existing and Proposed Sites North Bay's existing hospital is located on an eight-acre site with limited storm-water drainage capacity. Consequently, much of its parking area is covered by deep, porous, gravel instead of asphalt. North Bay's existing site is generally surrounded by residential properties. While the city has committed, in writing, it willingness to assist both applicants with on-site expansion, it is unknown whether North Bay can acquire additional adjacent property. North Bay's proposed site is located at the intersection of Trinity Oaks Boulevard and Mitchell Boulevard, south of Community Hospital's proposed site, and is quite spacious. It contains sufficient land for the facilities, parking, and future growth, and has all necessary infrastructure in place, including utility systems, storm- water structures, and roadways. Currently however, there is no public transportation service available to North Bay's proposed site. Projected Utilization by Applicants The evidence presented at hearing indicates that, statewide, replacement hospitals often increase a provider's acute care bed utilization. For example, Bartow Memorial Hospital, Heart of Florida Regional Medical Center, Lake City Medical Center, Florida Hospital Heartland Medical Center, South Lake Hospital, and Florida Hospital-Fish Memorial each experienced significant increases in utilization following the opening of their new hospital. The applicants in this case each project an increase in utilization following the construction of their new facility. Specifically, Community Hospital's application projects 82,685 total hospital patient days (64,427 acute care patient days) in year one (2006) of the operation of its proposed replacement facility, and 86,201 total hospital patient days (67,648 acute care patient days) in year two (2007). Using projected 2006 and 2007 population estimates, applying 2002 acute care hospital use rates which are below 50 percent, and keeping Community Hospital's acute care market share constant at its 2002 level, it is reasonably estimated that Community Hospital's existing hospital will experience 52,623 acute care patient days in 2006, and 53,451 acute care patient days in 2007. Consequently, Community Hospital's proposed facility must attain 11,804 additional acute care patient days in 2006, and 14,197 more acute care patient days in 2007, in order to achieve its projected acute care utilization. Although Community Hospital lost eight percent of the acute care market in its service area between 1995 and 2002, two-thirds of that loss was due to residents of Sub- District 5-1 acquiring services in another area. While Community Hospital experienced 78,444 acute care patient days in 1995, it projects only 64,427 acute care patient days in year one. Given the new facility and population factors, it is reasonable that the hospital will recapture half of its lost acute care market share and achieve its projections. With respect to its psychiatric unit, Community Hospital projects 16,615 adult psychiatric inpatient days in year one (2006) and 17,069 adult inpatient days in year two (2007) of the proposed replacement hospital. The evidence indicates that these projections are reasonable. Similarly, North Bay's acute care utilization rate has been consistently below 50 percent. Since 1999, the hospital has experienced declining utilization. In its application, North Bay states that it achieved total actual acute care patient days of 21,925 in 2000 and 19,824 in 2001 and the evidence at hearing indicates that North Bay experienced 17,693 total acute care patient days in 2002. North Bay projects 25,909 acute care patient days in the first year of operation of its proposed replacement hospital, and 27,334 acute care patient days in the second year of operation. Despite each applicant's current facility utilization rate, Community Hospital must increase its current acute care patient days by 20 percent to reach its projected utilization, and North Bay must increase its patient days by at least 50 percent. Given the population trends, service mix and existing competition, the evidence demonstrates that it is not possible for both applicants to simultaneously achieve their projections. In fact, it is strongly noted that the applicants' own projections are predicated upon only one applicant being approved and cannot be supported with the approval of two facilities. Local Health Plan Preferences In its local health plan for District 5, the Suncoast Health Council, Inc., adopted acute care preferences in October, 2000. The replacement of an existing hospital is not specifically addressed by any of the preferences. However, certain acute care preferences and specialty care preferences are applicable. The first applicable preference provides that preference "shall be given to an applicant who proposes to locate a new facility in an area that will improve access for Medicaid and indigent patients." It is clear that the majority of Medicaid and indigent patients live closer to the existing hospitals. However, Community Hospital proposes to move 5.5 miles from its current location, whereas North Bay proposes to move eight miles from its current location. While the short distances alone are less than significant, North Bay's proposed location is further removed from New Port Richey, is not located on a major highway or bus-route, and would therefore be less accessible to the medically indigent residents. Community Hospital's proposed site will be accessible using public transportation. Furthermore, Community Hospital has consistently provided excellent service to the medically indigent and its proposal would better serve that population. In 2000, Community Hospital provided 7.4 percent of its total patient days to Medicaid patients and 0.8 percent of its total patient days to charity patients. Community Hospital provided the highest percentage and greatest number of Medicaid patient days in Sub-District 5-1. By comparison, North Bay provided 5.8 percent of its total patient days to Medicaid patients and 0.9 percent of its total patient days to charity patients. In 2002, North Bay's Medicaid patients days declined to 3.56 percent. Finally, given the closeness and available bed space of the existing providers and the increasing population in the Trinity area, access will be improved by Community Hospital's relocation. The second local health plan preference provides that "[i]n cases where an applicant is a corporation with previously awarded certificates of need, preference shall be given to those which follow through in a timely manner to construct and operate the additional facilities or beds and do not use them for later negotiations with other organizations seeking to enter or expand the number of beds they own or control." Both applicants meet this preference. The third local health plan preference recognizes "Certificate of Need applications that provide AHCA with documentation that they provide, or propose to provide, the largest percentage of Medicaid and charity care patient days in relation to other hospitals in the sub-district." Community Hospital provides the largest percentage of Medicaid and charity care patient days in relation to other hospitals in Sub-District 5-1, and therefore meets this preference. The fourth local health plan preference applies to "Certificate of Need applications that demonstrate intent to serve HIV/AIDS infected persons." Both applicants accept and treat HIV/AIDS infected persons, and would continue to do so in their proposed replacement hospitals. The fifth local health plan preference recognizes "Certificate of Need applications that commit to provide a full array of acute care services including medical-surgical, intensive care, pediatric, and obstetrical services within the sub-district for which they are applying." Community Hospital qualifies since it will continue to provide its current services, including obstetrical care and psychiatric care, in its proposed replacement hospital. North Bay discontinued its pediatric and obstetrical programs in 2001, does not intend to provide them in its proposed replacement hospital, and will not provide psychiatric care. Agency Rule Preferences Florida Administrative Code Rule 59C-1.038(6) provides an applicable preference to a facility proposing "new acute care services and capital expenditures" that has "a documented history of providing services to medically indigent patients or a commitment to do so." As the largest Medicaid provider in Sub-District 5-1, Community Hospital meets this preference better than does North Bay. North Bay's history demonstrates a declining rate of service to the medically indigent. Statutory Review Criteria Section 408.035(1), Florida Statutes: The need for the health care facilities and health services being proposed in relation to the applicable district health plan District 5 includes Pasco and Pinellas County. Pasco County is rapidly developing, whereas Pinellas County is the most densely populated county in Florida. Given the population trends, service mix, and utilization rates of the existing providers, on balance, there is a need for a replacement hospital in the Trinity area. Section 408.035(2), Florida Statutes: The availability, quality of care, accessibility, and extent of utilization of existing health care facilities and health services in the service district of the applicant Community Hospital and North Bay are both located in Sub-District 5-1. Each proposes to relocate to an area of southwestern Pasco County which is experiencing explosive population growth. The other general acute care hospital located in Sub-District 5-1 is Regional Medical Center Bayonet Point, which is located further north, in the Hudson area of western Pasco County. The only other acute care hospitals in Pasco County are East Pasco Medical Center, in Zephyrhills, and Pasco Community Hospital, in Dade City. Those hospitals are located in Sub-District 5-2, east Pasco County, far from the area proposed to be served by either Community Hospital or North Bay. District 5 includes Pinellas County as well as Pasco County. Helen Ellis and Mease are existing hospital providers located in Pinellas County. Helen Ellis has 168 licensed beds, consisting of 150 acute care beds and an 18-bed skilled nursing unit, and is located 7.9 miles from Community Hospital's existing location and 10.8 miles from Community Hospital's proposed location. Access to Helen Ellis for patients originating from southwestern Pasco County requires those patients to travel congested U.S. 19 south to Tarpon Springs. As a result, the average drive time from Community Hospital's existing and proposed site to Helen Ellis is approximately 22 minutes. Helen Ellis is not a reasonable alternative to Community Hospital's proposal. The applicants' proposals are specifically designed for the current and future health care needs of southwestern Pasco County. Given its financial history, it is unknown whether Helen Ellis will be financially capable of providing the necessary care to the residents of southwestern Pasco. Mease Countryside Hospital has 189 licensed acute care beds. It is located 16.0 miles from Community Hospital's existing location and 13.8 miles from Community Hospital's proposed location. The average drive time to Mease Countryside is 32 minutes from Community Hospital's existing site and 24 minutes from its proposed site. In addition, Mease Countryside Hospital has experienced extremely high utilization over the past several years, in excess of 90 percent for calendar years 2000 and 2001. Utilization at Mease Countryside Hospital has remained over 80 percent despite the addition of 45 acute care beds in April 2002. Given the growth and demand, it is unknown whether Mease can accommodate the residents in southwest Pasco County. Mease Dunedin Hospital has 189 licensed beds, consisting of 149 acute care beds, a 30-bed skilled nursing unit, five Level 2 neonatal intensive care beds, and five Level 3 neonatal intensive care beds. Its former 15-bed adult psychiatric unit has been converted into acute care beds. It is transferring its entire obstetrics program at Mease Dunedin Hospital to Mease Countryside Hospital. Mease Dunedin Hospital is located approximately 18 to 20 miles from the applicants' existing and proposed locations with an average drive time of 35-38 minutes. With their remote location, and the exceedingly high utilization at Mease Countryside Hospital, neither of the two Mease hospitals is a viable alternative to the applicants' proposals. In addition, the construction of a replacement hospital would positively impact economic development and further attract medical professionals to Sub-District 5-1. On balance, given the proximity, utilization, service array, and accessibility of the existing providers, including the applicants, the relocation of Community Hospital will enhance access to health care to the residents. Section 408.035(3), Florida Statutes: The ability of the applicant to provide quality of care and the applicant's record of providing quality of care As stipulated, both applicants provide excellent quality of care. However, Community Hospital's proposal will better enhance its ability to provide quality care. Community is currently undersized, non-compliant with today's standards, and located on a site that does not allow for reasonable expansion. Its emergency department is inadequate for patient volume, and the configuration of the first floor leads to inefficiencies in the diagnosis and treatment of emergency patients. Again, most inpatients are placed in semi-private rooms and three-bed wards, with no showers or tubs, little privacy, and an increased risk of infection. The hospital's waiting areas for families of patients are antiquated and undersized, its nursing stations are small and cramped and the operating rooms and storage facilities are undersized. Community Hospital's deficiencies will be effectively eliminated by its proposed replacement hospital. As a result, patients will experience qualitatively better care by the staff who serve them. Conversely, North Bay is in better physical condition and not in need of replacement. It has more reasonable options to expand or relocate its facility on site. Quality of care at North Bay will not be markedly enhanced by the construction of a new hospital. Sections 408.035(4)and(5), Florida Statutes, have been stipulated as not applicable in this case. Section 408.035(6), Florida Statutes: The availability of resources, including health personnel, management personnel, and funds available for capital and operating expenditures, for project accomplishment and operation The parties stipulated that both Community Hospital and North Bay have available health personnel and management personnel for project accomplishment and operation. In addition, the evidence proves that both applicants have sufficient funds for capital and operating expenditures. Community Hospital proposes to rely on its parent company to finance the project. Keith Giger, Vice-President of Finance for HCA, Inc., Community Hospital's parent organization, provided credible deposition testimony that HCA, Inc., will finance 100 percent of the total project cost by an inter-company loan at eight percent interest. Moreover, it is noted that the amount to be financed is actually $20 million less than the $196,849,328 stated in the CON Application, since Community Hospital previously purchased the proposed site in June 2003 with existing funds and does not need to finance the land acquisition. Community Hospital has sufficient working capital for operating expenditures of the proposed replacement hospital. North Bay, on the other hand, proposes to acquire financing from BayCare Obligated Group which includes Morton Plant Hospital Association, Inc.; Mease; and several other hospital entities. Its proposal, while feasible, is less certain since member hospitals must approve the indebtedness, thereby providing Mease with the ability to derail North Bay's proposed bond financing. Section 408.035(7), Florida Statutes: The extent to which the proposed services will enhance access to health care for residents of the service district The evidence proves that either proposal will enhance geographical access to the growing population in the service district. However, with its provision of obstetrical services, Community Hospital is better suited to address the needs of the younger community. With respect to financial access, both proposed relocation sites are slightly farther away from the higher elderly and indigent population centers. Since the evidence demonstrates that it is unreasonable to relocate both facilities away from the down-town area, Community Hospital's proposal, on balance, provides better access to poor patients. First, public transportation will be available to Community Hospital's site. Second, Community Hospital has an excellent record of providing care to the poor and indigent and has accepted the agency's condition to provide ten percent of its total annual patient days to Medicaid recipients To the contrary, North Bay's site will not be accessible by public transportation. In addition, North Bay has a less impressive record of providing care to the poor and indigent. Although AHCA conditioned North Bay's approval upon it providing 9.7 percent of total annual patient days to Medicaid and charity patients, instead of the 9.7 percent of gross annual revenue proposed in its application, North Bay has consistently provided Medicaid and charity patients less than seven percent of its total annual patient days. Section 408.035(8), Florida Statutes: The immediate and long-term financial feasibility of the proposal Immediate financial feasibility refers to the availability of funds to capitalize and operate the proposal. See Memorial Healthcare Group, Ltd. d/b/a Memorial Hospital Jacksonville vs. AHCA et al., Case No. 02-0447 et seq. Community Hospital has acquired reliable financing for the project and has sufficiently demonstrated that its project is immediately financially feasible. North Bay's short-term financial proposal is less secure. As noted, North Bay intends to acquire financing from BayCare Obligated Group. As a member of the group, Mease, the parent company of two hospitals that oppose North Bay's application, must approve the plan. Long-term financial feasibility is the ability of the project to reach a break-even point within a reasonable period of time and at a reasonable achievable point in the future. Big Bend Hospice, Inc. vs. AHCA and Covenant Hospice, Inc., Case No. 02-0455. Although CON pro forma financial schedules typically show profitability within two to three years of operation, it is not a requirement. In fact, in some circumstances, such as the case of a replacement hospital, it may be unrealistic for the proposal to project profitability before the third or fourth year of operation. In this case, Community Hospital's utilization projections, gross and net revenues, and expense figures are reasonable. The evidence reliably demonstrates that its replacement hospital will be profitable by the fourth year of operation. The hospital's financial projections are further supported by credible evidence, including the fact that the hospital experienced financial improvement in 2002 despite its poor physical condition, declining utilization, and lost market share to providers outside of its district. In addition, the development and population trends in the Trinity area support the need for a replacement hospital in the area. Also, Community Hospital has benefited from increases in its Medicaid per diem and renegotiated managed care contracts. North Bay's long-term financial feasibility of its proposal is less certain. In calendar year 2001, North Bay incurred an operating loss of $306,000. In calendar year 2002, it incurred a loss of $1,160,000. In its CON application, however, North Bay projects operating income of $1,538,827 in 2007, yet omitted the ongoing expenses of interest ($1,600,000) and depreciation ($3,000,000) from its existing facility that North Bay intends to continue operating. Since North Bay's proposal does not project beyond year two, it is less certain whether it is financially feasible in the third or fourth year. In addition to the interest and depreciation issues, North Bay's utilization projections are less reasonable than Community Hospital's proposal. While possible, North Bay will have a difficult task achieving its projected 55 percent increase in acute care patient days in its second year of operation given its declining utilization, loss of obstetric/pediatric services and termination of two exclusive managed care contracts. Section 408.035(9), Florida Statutes: The extent to which the proposal will foster competition that promotes quality and cost-effectiveness Both applicants have substantial unused capacity. However, Community Hospital's existing facility is at a distinct competitive disadvantage in the market place. In fact, from 1994 to 1998, Community Hospital's overall market share in its service area declined from 40.3 percent to 35.3 percent. During that same period, Helen Ellis' overall market share in Community Hospital's service area increased from 7.2 percent to 9.2 percent. From 1995 to the 12-month period ending June 30, 2002, Community Hospital's acute care market share in its service area declined from 34.0 percent to 25.9 percent. During that same period, Helen Ellis' acute care market share in Community Hospital's service area increased from 11.7 percent to 12.0 percent. In addition, acute care average occupancy rates at Mease Dunedin Hospital increased each year from 1999 through 2002. Acute care average occupancy at Mease Countryside Hospital exceeded 90 percent in 2000 and 2001, and was approximately 85 percent for the period ending June 30, 2002. Some of the loss in Community Hospital's market share is due to an out-migration of patients from its service area to hospitals in northern Pinellas and Hillsborough Counties. Market share in Community's service area by out-of- market providers increased from 33 percent in 1995 to 40 percent in 2002. Community Hospital's outdated hospital has hampered its ability to compete for patients in its service area. Mease is increasing its efforts to attract patients and currently completing a $92 million expansion of Mease Countryside Hospital. The project includes the development of 1,134 parking spaces on 30 acres of raw land north of the Mease Countryside Hospital campus and the addition of two floors to the hospital. It also involves the relocation of 51 acute care beds, the obstetrics program and the Neonatal Intensive Care Units from Mease Dunedin Hosptial to Mease Countryside Hospital. Mease is also seeking to more than double the size of the Countryside emergency department to handle its 62,000 emergency visits. With the transfer of licensed beds from Mease Dunedin Hospital to Mease Countryside Hospital, Mease will also convert formerly semi-private patient rooms to private rooms at Mease Dunedin Hospital. The approval of Community Hospital's relocated facility will enable it to better compete with the hospitals in the area and promote quality and cost- effectiveness. North Bay, on the other hand, is not operating at a distinct disadvantage, yet is still experiencing declining utilization. North Bay is the only community-owned, not-for- profit provider in western Pasco County and is a valuable asset to the city. Section 408.035(10), Florida Statutes: The costs and methods of the proposed construction, including the costs and methods or energy provision and the availability of alternative, less costly, or more effective methods of construction The parties stipulated that the project costs in both applications are reasonable to construct the replacement hospitals. Community Hospital's proposed construction cost per square foot is $175, and slightly less than North Bay's $178 proposal. The costs and methods of proposed construction for each proposal is reasonable. Given Community Hospital's severe site and facility problems, the evidence demonstrates that there is no reasonable, less costly, or more effective methods of construction available for its proposed replacement hospital. Additional "band-aide" approaches are not financially reasonable and will not enable Community Hospital to effectively compete. The facility is currently licensed for 401 beds, operates approximately 311 beds and is still undersized. The proposed replacement hospital will meet the standards in Florida Administrative Code Rule 59A-3.081, and will meet current building codes, including the Americans with Disabilities Act and the Guidelines for Design and Construction of Hospitals and Health Care Facilities, developed by the American Institute of Architects. The opponents' argue that Community Hospital will not utilize the 320 acute care beds proposed in its CON application, and therefore, a smaller facility is a less- costly alternative. In addition, Helen Ellis' architectural expert witness provided schematic design alternatives for Community Hospital to be expanded and replaced on-site, without providing a detailed and credible cost accounting of the alternatives. Given the evidence and the law, their arguments are not persuasive. While North Bay's replacement cost figures are reasonable, given the aforementioned reasons, including the fact that the facility is in reasonably good condition and can expand vertically, on balance, it is unreasonable for North Bay to construct a replacement facility in the Trinity area. Section 408.035(11), Florida Statutes: The applicant's past and proposed provision of health care services to Medicaid patients and the medically indigent Community Hospital has consistently provided the most health care services to Medicaid patients and the medically indigent in Sub-District 5-1. Community Hospital agreed to provide at least ten percent of its patient days to Medicaid recipients. Similarly, North Bay agreed to provide 9.7 percent of its total annual patient days to Medicaid and charity patients combined. North Bay, by contrast, provided only 3.56 percent of its total patient days to Medicaid patients in 2002, and would have to significantly reverse a declining trend in its Medicaid provision to comply with the imposed condition. Community Hospital better satisfies the criterion. Section 408.035(12) has been stipulated as not applicable in this case. Adverse Impact on Existing Providers Historical figures demonstrate that hospital market shares are not static, but fluctuate with competition. No hospital is entitled to a specific or historic market share free from competition. While the applicants are located in health planning Sub-District 5-1 and Helen Ellis and the two Mease hospitals are located in health planning Sub-District 5- 2, they compete for business. None of the opponents is a disproportionate share, safety net, Medicaid provider. As a result, AHCA gives less consideration to any potential adverse financial impact upon them resulting from the approval of either application as a low priority. The opponents, however, argue that the approval of either replacement hospital would severely affect each of them. While the precise distance from the existing facilities to the relocation sites is relevant, it is clear that neither applicants' proposed site is unreasonably close to any of the existing providers. In fact, Community Hospital intends to locate its replacement facility three miles farther away from Helen Ellis and 1.5 miles farther away from Mease Dunedin Hospital. While Helen Ellis' primary service area is seemingly fluid, as noted by its chief operating officer's hearing and deposition testimony, and the Mease hospitals are located 15 to 20 miles south, they overlap parts of the applicants' primary service areas. Accordingly, each applicant concedes that the proposed increase in their patient volume would be derived from the growing population as well as existing providers. Although it is clear that the existing providers may be more affected by the approval of Community Hosptial's proposal, the exact degree to which they will be adversely impacted by either applicant is unknown. All parties agree, however, that the existing providers will experience less adverse affects by the approval of only one applicant, as opposed to two. Furthermore, Mease concedes that its hospitals will continue to aggressively compete and will remain profitable. In fact, Mease's adverse impact analysis does not show any credible reduction in loss of acute care admissions at Mease Countryside Hospital or Mease Dunedin Hospital until 2010. Even then, the reliable evidence demonstrates that the impact is negligible. Helen Ellis, on the other hand, will likely experience a greater loss of patient volume. To achieve its utilization projections, Community Hospital will aggressively compete for and increase market share in Pinellas County zip code 34689, which borders Pasco County. While that increase does not facially prove that Helen Ellis will be materially affected by Community Hospital's replacement hospital, Helen Ellis will confront targeted competition. To minimize the potential adverse affect, Helen Ellis will aggressively compete to expand its market share in the Pinellas County zip codes south of 34689, which is experiencing population growth. In addition, Helen Ellis is targeting broader service markets, and has filed an application to establish an open- heart surgery program. While Helen Ellis will experience greater competition and financial loss, there is insufficient evidence to conclude that it will experience material financial adverse impact as a result of Community Hospital's proposed relocation. In fact, Helen Ellis' impact analysis is less than reliable. In its contribution-margin analysis, Helen Ellis utilized its actual hospital financial data as filed with AHCA for the fiscal year October 1, 2001, to September 30, 2002. The analysis included total inpatient and total outpatient service revenues found in the filed financial data, including ambulatory services and ancillary services, yet it did not include the expenses incurred in generating ambulatory or ancillary services revenue. As a result, the overstated net revenue per patient day was applied to its speculative lost number of patient days which resulted in an inflated loss of net patient service revenue. Moreover, the evidence indicates that Helen Ellis' analysis incorrectly included operational revenue and excluded expenses related to its 18-bed skilled nursing unit since neither applicant intends to operate a skilled nursing unit. While including the skilled nursing unit revenues, the analysis failed to include the sub-acute inpatient days that produced those revenues, and thereby over inflated the projected total lost net patient service revenue by over one million dollars.
Recommendation Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED that: Community Hospital's CON Application No. 9539, to establish a 376-bed replacement hospital in Pasco County, Sub- District 5-1, be granted; and North Bay's CON Application No. 9538, to establish a 122-bed replacement hospital in Pasco County, Sub-District 5- 1, be denied. DONE AND ENTERED this 19th day of March, 2004, in Tallahassee, Leon County, Florida. S WILLIAM R. PFEIFFER Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 19th day of March, 2004. COPIES FURNISHED: James C. Hauser, Esquire R. Terry Rigsby, Esquire Metz, Hauser & Husband, P.A. 215 South Monroe Street, Suite 505 Post Office Box 10909 Tallahassee, Florida 32302 Stephen A. Ecenia, Esquire R. David Prescott, Esquire Richard M. Ellis, Esquire Rutledge, Ecenia, Purnell & Hoffman, P.A. 215 South Monroe Street, Suite 420 Post Office Box 551 Tallahassee, Florida 32302-0551 Richard J. Saliba, Esquire Agency for Health Care Administration Fort Knox Building III, Mail Station 3 2727 Mahan Drive Tallahassee, Florida 32308 Robert A. Weiss, Esquire Karen A. Putnal, Esquire Parker, Hudson, Rainer & Dobbs, LLP The Perkins House, Suite 200 118 North Gadsden Street Tallahassee, Florida 32301 Darrell White, Esquire William B. Wiley, Esquire McFarlain & Cassedy, P.A. 305 South Gadsden Street, Suite 600 Tallahassee, Florida 32301 Lealand McCharen, Agency Clerk Agency for Health Care Administration 2727 Mahan Drive, Mail Station 3 Tallahassee, Florida 32308 Valda Clark Christian, General Counsel Agency for Health Care Administration 2727 Mahan Drive, Mail Station 3 Tallahassee, Florida 32308 Rhonda M. Medows, M.D., Secretary Agency for Health Care Administration 2727 Mahan Drive, Mail Station 3 Tallahassee, Florida 32308
The Issue Whether the Agency for Health Care Administration (AHCA) should approve the application of Compassionate Care Hospice of the Gulf Coast, Inc. (Petitioner, the Applicant, or CCH), for Certificate of Need (CON) No. 10337 to provide hospice services in Sarasota County, Florida.
Findings Of Fact THE PARTIES AHCA is the state agency authorized to evaluate and render final determinations on CON applications pursuant to section 408.034, Florida Statutes. CCH is a development stage, Florida for-profit, privately-owned corporation, formed for the purpose of initiating hospice services in the Gulf Coast region of Florida, including Sarasota, Manatee, and Pasco Counties. Compassionate Care Group, LTD (CCH-LTD), the Applicant’s parent, is a national, for-profit hospice provider, headquartered in Parsippany, New Jersey, operating 39 hospice programs in 22 states, with 57 offices. CCH-LTD (or its affiliate(s)) currently provides hospice services in Service Area 6B consisting of Polk, Highlands, and Hardee Counties; Service Area 3E, consisting of Lake and Sumter Counties; and Service Area 11, consisting of Miami-Dade and Monroe Counties. The hospice services offered in Service Area 6B is CCH-LTD's only mature program in Florida. The other two are still in the start-up phase. Tidewell is a Florida, not-for-profit corporation, currently licensed to provide hospice services and is currently the sole hospice provider in three geographically contiguous Hospice Service Areas, including Service Areas 8D, Sarasota County; 8A, Charlotte and DeSoto Counties; and 6C, Manatee County. Tidewell currently serves on an annual basis approximately 8,000 patients and their families, employs 500 to 600 fulltime, and 100 to 150 part-time, employees and has approximately 1,000 active volunteers. Tidewell has a total average daily census of approximately 1,130 patients. Tidewell’s average daily census in Service Area 8D, Sarasota County, is approximately 500 patients. STIPULATED FACTS AND LAW CCH submitted its Application for CON 10337 to establish a new hospice program in Service Area 8D, Sarasota County, in the October 2014 AHCA Hospice Program Batching Cycle. CCH's Application was deemed complete, reviewed, and preliminarily denied by AHCA. CCH timely petitioned for a hearing, pursuant to section 120.57. Tidewell timely petitioned to intervene. Intervention was granted subject to proof of legal standing at hearing. All of the review criteria in section 408.035 and Florida Administrative Code Rules 59C-1.008, 59C-1.030 and 59C-1.0355 were at issue in this proceeding, except the following subsections of section 408.035(1): (h) is not applicable to this proceeding; (j) is not applicable to this proceeding; and (d) for which the parties stipulated that CCH has access to sufficient resources, including health personnel, management personnel, and funds for capital and operating expenditures for project start-up as described in its Application, except for manpower specifically associated with CCH's proposed Cardiac Connections, Pulmonary Connections, and Promises programs. Florida law requires a hospice program to provide a continuum of palliative and supportive care for terminally-ill patients and their families. "Palliative care" means services or interventions which are not curative, but are provided for the reduction or abatement of pain and suffering. A terminally-ill patient is defined under sections 400.601(3), (7), and (10), Florida Statutes, as having a medical prognosis of 12 months or less life expectancy. The goal of hospice is to provide physical, emotional, psychological, and spiritual comfort and support to dying patients and their families. Hospice care is provided pursuant to an individualized plan of care developed by an interdisciplinary team consisting of physicians, nurses, home health aides, social workers, bereavement counselors, spiritual care counselors, chaplains, and others. There are four levels of service in hospice care: routine home care; continuous care; general inpatient care; and respite care. Routine home care (provided where patients reside) accounts for the vast majority of admissions and patient days. Continuous care, sometimes called "crisis care," is provided in a home care setting or in any setting where patients reside. Continuous care is provided for short durations when symptoms become so severe that around-the-clock care is necessary for pain and symptom management. General inpatient level of care is provided in either a hospital setting, a skilled nursing unit, or in a freestanding hospice inpatient unit. Respite care is generally designed for caregiver relief. It allows patients to stay in facilities for brief periods to provide breaks for caregivers. The Medicare hospice benefit requires terminally-ill patients to have a life expectancy prognosis of six months or less to be eligible to elect the Medicare benefit. Like Florida law (chapter 400, Florida Statutes), the Federal Medicare benefit excludes patients seeking curative treatments from hospice eligibility. Medicare is the largest payor source for hospice services. Other sources include Medicaid, private insurance, managed care plans including Medicaid Managed Care, other government payors and charity. Hospices are required to accept all patients regardless of ability to pay. STATUTORY REVIEW CRITERIA The need for the healthcare facilities and health services being proposed. § 408.035(1)(a), Fla. Stat. On October 3, 2014, AHCA published a numerical fixed need of zero for new hospice programs in Hospice Service Area 8D, comprised of Sarasota County, for the October 2014 “Other Beds and Programs” batching cycle with a planning horizon of January 2016. The published need of zero was not timely challenged by any party and is, therefore, the numerical need applicable to this case. A published need of zero creates a rebuttable presumption that a new hospice is not needed. Florida Administrative Code Rule 59C-1.0355(3)(b) provides: (b) Conformance with Statutory Review Criteria. A Certificate of Need for the establishment of a new Hospice program or construction of a freestanding inpatient Hospice facility shall not be approved unless the applicant meets the applicable review criteria in Sections 408.035 and 408.043(2), F.S., and the standards and need determination criteria set forth in this rule. Applications to establish a new Hospice program shall not be approved in the absence of a numeric need indicated by the formula in paragraph (4)(a) of this rule, unless other criteria in this rule and in Sections 408.035 and 408.043(2), F.S., outweigh the lack of a numeric need. Conceding the absence of a published numerical need in the batch cycle, CCH filed the Application seeking to establish a new hospice program in Service Area 8D, Sarasota County, based on the existence of “not normal and special circumstances.” CCH asserts that there are a number of not normal and special circumstances in Sarasota County that outweigh the lack of a numerical fixed need in the overall weighing and balancing of the statutory and rule review criteria. The not normal and special circumstances alleged by CCH include: Tidewell is a regional monopoly provider, operating the sole hospice in three contiguous hospice service areas. Per section 408.043(2), Florida Statutes, and Rule 59C-1.0355(3)(c), F.A.C., the lack of published numeric need is outweighed by the need to promote competition and discourage regional monopolies. There are over 46,979 Medicaid recipients living in Sarasota. Pursuant to section 409.967(2)(c), Florida Statutes, under the new Medicaid managed care model, AHCA established Medicaid Managed Care Requirements to ensure there is an “adequate network” of health care providers in place to provide Medicaid patients with choices when seeking health care services. An “adequate network” of hospices requires a minimum of two hospice providers per county. The Applicant asserts Medicaid recipients in Service Area 8D are being underserved because they do not have an adequate network of providers to choose from in Sarasota. Patients, families, physicians, long term care facilities, home health agencies, and other typical hospice referral sources for hospice lack any choice of provider in Service Area 8D. This is especially important for those who have had negative experiences with Tidewell. There are numerous large scale referral sources in Sarasota that are unhappy about, reluctant to, or in some instances even refusing to refer patients to Tidewell because of their negative experiences. The patients not being referred to hospice because Tidewell is the only option are underserved. Almost 10 percent of Sarasota County residents who received hospice services in 2012, 528 out of 5,707 patients, left Sarasota County to do so. While there is no statistical way to determine why these residents opted to leave Service Area 8D for their hospice care, the number is significant given the large scale referral sources, including home health agencies and long term care providers, dissatisfied with Tidewell or who prefer choice. Hospice patients with end-stage heart, pulmonary, and renal diseases, are underserved in Service Area 8D. Tidewell’s decreasing trends on admitting these patients is inconsistent with national, Florida, and Sarasota County data demonstrating increasing needs for hospice care for these patients. The cost and difficulty of caring for these patients often causes hospices to avoid admitting them. The Applicant has developed disease specific programs targeting these patients. In addition to the alleged not normal and special circumstances summarized above, CCH asserts that the AHCA's numeric need calculation of zero should be given little weight in determining whether to approve the Application because there are anomalies in Tidewell’s reported admissions that distort the apparent penetration rate used in the calculation. At the final hearing, CCH pointed out that, while AHCA allows double counting for purposes of the fixed need calculation, from a health planning perspective, the apparent penetration rate can be distorted by routinely double counting admissions. CCH provided an example where Tidewell reported admitting more than 100 percent of the potential cancer deaths over 65. Based on this analysis, CCH argues that because of a distorted penetration rate, the presumption of no need for a new hospice should be given little weight. CCH's attempt to demonstrate an error in the fixed need pool calculation, however, is untimely. Subsections 2 and 3 of rule 59C-1.008(2)(a) state: Any person who identifies an error in the Fixed Need Pool numbers must advise the Agency of the error within 10 days of the date the Fixed Need Pool was published in the Florida Administrative Register. If the Agency concurs in the error, the Fixed Need Pool number will be adjusted and re- published in the first available edition of the Florida Administrative Register. Failure to notify the Agency of the error during this time period will result in no adjustment to the Fixed Need Pool number for that batching cycle. Except as provided in subparagraph 2. above, the batching cycle specific Fixed Need Pools shall not be changed or adjusted in the future regardless of any future changes in need methodologies, population estimates, bed inventories, or other factors which would lead to different projections of need, if retroactively applied. Therefore, CCH's purported evidence of an error in the calculation of the fixed need pool has not been considered, and the rebuttable presumption that a new hospice is not needed has not been diminished by CCH's criticism of the fixed need calculation. CCH's alleged not normal and special circumstances are addressed below in the same order as summarized in paragraphs through e., above. Regional Monopoly Section 408.043(2), Florida Statutes, provides in pertinent part: HOSPICES.— When an application is made for a certificate of need to establish or to expand a hospice, the need for such hospice shall be determined on the basis of the need for and availability of hospice services in the community. The formula on which the certificate of need is based shall discourage regional monopolies and promote competition . . . . Tidewell is the sole hospice provider in three adjoining hospice service areas (Service Areas 8D, 8B, and 6C), encompassing Manatee, Sarasota, Charlotte, and Desoto Counties. This situation is unique in the state. There is no other part of the state consisting of multiple contiguous hospice service areas with only a single hospice provider. In fact, there is no other part of the state where there are even two adjoining service areas with a single hospice provider. The four counties that comprise the three hospice service areas where Tidewell operates as the sole provider are recognized as a “region” by the U.S. Bureau of the Census and the Office of Management and Budget. These four counties constitute a recognized combined statistical area used for federal planning and budgeting decisions. Multiple witnesses confirmed Tidewell operates as a single integrated regional provider. All of Tidewell’s licensed hospices have the same officers and directors; adhere to the same policies, procedures, and protocols; and share multiple support services, such as information technology and human resources. Practically speaking, Tidewell functions as a single hospice in the four counties which comprise Service Areas 8D, 8B, and 6C. While neither the applicable statute nor rule defines “monopoly,” its commonly understood meaning is that there is an exclusive or sole provider of services or goods in an area. Tidewell is the only hospice provider in the four counties that make up Service Areas 8D, 8B, and 6C. It is found, under the circumstances, that Tidewell has a regional monopoly in those contiguous service areas. The fact that Tidewell is a regional monopoly, standing alone, however, is not a sufficient basis to justify approval of a new hospice program in Service Area 8D. 2. Enhancing Access for Medicaid Managed Care Eligible Patients AHCA recently transitioned its Medicaid program to a managed care delivery model. In so doing, the state was required to develop “adequate network” standards for healthcare services offered to Medicaid patients, including hospice services. Section 409.967(2)(c), Florida Statutes, requires AHCA to develop standards governing the number, type, and regional dispersal of healthcare providers to ensure access. There are two separate components of the Statewide Medicaid Managed Care Program: (1) Managed Medical Assistance (MMA), and (2) Medicaid Long Term Care (LTC). AHCA developed model contracts for managed care plans seeking to become approved Medicaid plan providers under the MMA or LTC programs. The model contracts included “adequate network” standards for the various healthcare providers, including hospices. Under the MMA and LTC model contracts, there must be a minimum of two hospice providers per county. The “adequate network” standards contained in the model contracts were developed through a deliberative process between AHCA and the federal government’s Center for Medicare and Medicaid Services (CMS) as part of the Medicaid Waiver Program issued by CMS. AHCA and CMS used the existing CMS standards from other programs as a starting point, and then made informed decisions on particular adjustments to the standards as necessary. Ultimately, some of the standards adopted for Florida were more stringent than the CMS standards and some were less stringent, depending on Florida use rates. The hospice standard adopted for Florida is two hospices per county. One of the reasons that the standard of two hospices per county was adopted is to provide for patient choice in hospice care. Fifty-six of Florida’s 67 counties have two or more licensed hospices. Nevertheless, Abbie Riddle, AHCA’s Medicaid Plan Management Operations Bureau Chief, testified that there is nothing unusual or not normal about a county not meeting the hospice “adequate network” standards because she had issued waivers in numerous counties throughout the state where there were fewer than two licensed hospices, including Sarasota County. Tidewell argues that because Service Area 8D MMA and LTC contracts are operating under a waiver, there is no reason to be concerned about the lack of an “adequate network.” There is no evidence, however, that the decision to issue waivers for fewer than two hospices within a county was based upon an adequacy analysis or determination. Rather, Ms. Riddle, on behalf of AHCA, granted waivers to all counties that did not have at least two hospices with a physical address within the county. Further, AHCA’s waiver authority under the model contract does not suggest that the issuance of a waiver is a determination of network adequacy. Rather, Section VI, B., 3. of the model contract provides: If the Managed Care Plan is able to demonstrate to the Agency’s satisfaction that a region as a whole is unable to meet network requirements, the Agency may waive the requirement at its discretion in writing. As soon as additional service providers become available, however, the Managed Care Plan shall augment its network to include such providers in order to meet the network adequacy requirements. Such a written waiver shall require attestation by the Managed Care Plan that it agrees to modify its network to include such providers as they become available. The addition of another hospice program in Service Area 8D, Sarasota County, would be consistent with the applicable “adequate network” standards for hospice services. This finding, however, is not the equivalent of finding that there is an underserved population in Sarasota County. 3. Lack of Choice and Out-Migration CCH relies on 13 letters of support from the community and 13 deposed witnesses who all urge that choice and competition are sufficient reasons to support approval of CCH’s Application. The letters and witnesses, however, express personal opinions that are not based upon any demonstrated expertise in health planning. Those opinions, therefore, have not been given significant weight. CCH also presented evidence that some residents of Sarasota County receive hospice services from hospices located in surrounding counties. That evidence, however, was insufficient to demonstrate a cause for the outmigration. The observations of outmigration, alone, do not support a conclusion that the outmigration would be prevented by the addition of another hospice provider. 4. Specific Terminally-Ill Populations Not Being Served The Special Circumstances provision in the hospice rule recognizes that a CON may be granted in the absence of need when there are specific terminally-ill populations that are not being served. This can include a specific disease category. The health planners testifying at the final hearing agreed that a given population does not have to be completely unserved to rise to a level of special circumstance. Rather, it is adequate to demonstrate that a given population is underserved compared to the statewide use rate of hospice services for that population. CCH asserts that hospice patients with end-stage heart, pulmonary, and renal diseases are underserved in Service Area 8D. CCH described its programs especially designed to meet the needs of patients with those diseases. CCH failed, however, to demonstrate that patients in Service Area 8D in those disease categories are underserved. In describing its Cardiac Connections Program, Pulmonary Connections Program, and Advanced Care Connection Programs, CCH relied on evidence from those who created and operate the programs. Documenting an ability to provide care under specialty programs with alternative or additional clinical protocols, however, is not the equivalent of documenting substandard care by an existing provider, an underserved group, or “special circumstances” sufficient to find a need for the Applicant who is offering those alternative protocols. Only 40 percent of CCH-LTD affiliate program offices have implemented the Cardiac Connections Program. Even where implemented, not all of CCH-LTD’s end-stage heart failure patients are enrolled in Cardiac Connections. CCH acknowledged that CCH-LTD hospices are still able to deliver acceptable and appropriate care to end-stage heart disease hospice patients without the Cardiac Connections Program. CCH described the Cardiac Connections Program as an enhanced service and agreed that the failure of CCH-LTD affiliate facilities to provide its end-stage heart failure patients with Cardiac Connection Program services does not constitute “substandard service” to those patients. In fact, CCH agrees that adequate palliative hospice care can be provided to end-stage heart patients without the Cardiac Connections Program. As an example of the significance of the Cardiac Connections Program, CCH cites the fact that its Cardiac Connections Program admits inotrope and left ventricle assist device (LVAD) patients. CCH suggests that, because inotropes must be started in an intensive care setting and are expensive, many hospices will not provide inotropes in a home setting for their patients. Tidewell, however, also admits LVAD patients and patients being infused with inotropes. Those patients are included in Tidewell’s complex case management protocol when the patient is going to be infused at home and Tidewell pays for all infused medications related to the patient’s primary diagnosis. The evidence further demonstrated that Tidewell understands the needs of end-stage heart failure patients and provides high quality care hospice services for those patients consistent with best practices and generally accepted guidelines. As argued with regard to end-stage heart failure patients and its Cardiac Connections Program, CCH contends that end-stage pulmonary disease patients in Sarasota County are an underserved group because those patients do not have access to CCH’s Pulmonary Connections Program. CCH-LTD's national Pulmonary Connections Program coordinator, however, acknowledged that hospice patients with a primary diagnosis of end-stage pulmonary disease, who are not enrolled in its Pulmonary Connections Program, should not be presumed to be receiving substandard care. Tidewell demonstrated that Tidewell provides high quality palliative care to its end-stage pulmonary disease patients, consistent with best practices, including the necessary patient and family training for the symptoms associated with shortness of breath. Although CCH also argued that its Renal Advanced Care Connections program would enhance access for renal failure patients in Sarasota County, the evidence in that regard was not sufficiently developed at hearing to support any findings of fact with regard to an unmet need that would be served by that program. In addition to describing its specialty programs, CCH relies on admissions data and general demographic or disease prevalence information to support its contention that there is an unmet hospice need in Service Area 8D for end-stage cardiac, pulmonary, and renal patients. For instance, CCH provided evidence showing that heart disease is the number one leading cause of hospitalization nationally and in Florida, and that it has a high mortality rate. It was also shown that, nationally, there were over 5.7 million heart disease hospitalizations in 2008, and that figure is projected to grow to over 10 million by 2037. Using admissions data, CCH made various data comparisons to demonstrate the need for CCH’s Cardiac Connections Program in Sarasota County. CCH compared the rate of re-hospitalization (within 30 days) for patients in the Cardiac Connections Program, with general readmission rates (i.e. not specifically from hospice programs) for end-stage heart failure patients nationally, and all end-stage heart failure readmissions to Sarasota County and surrounding hospitals. CCH also compared the rates of re-hospitalization of cancer patients with heart failure patients. CCH did not, however, offer evidence to allow a comparison of Tidewell’s re-hospitalization rates for Service Area 8D end-stage heart failure hospice patients with rates for Cardiac Connections Program patients. Nor did CCH provide data to allow a comparison of the hospital readmission rates for Cardiac Connections Program patients with the re-hospitalization rates for CCH-LTD affiliate end-stage heart failure patients where end-stage heart failure patients are not enrolled in the Cardiac Connections Program. CCH also submitted admissions data showing that Florida has the second highest number of pulmonary disease cases in the U.S. behind California, which has double the population. The evidence showed that Florida ranks number one for pulmonary disease with a prevalence rate of six percent, followed by California at four percent. Sarasota County is even higher with a 7.37 percent prevalence rate, closely followed by Manatee County at 6.5 percent. Relying primarily on comparative admissions data, CCH argues that the population requiring hospice care for heart, pulmonary and renal failure has been going up, while the percentage of patients served by Tidewell for those populations has declined. The admissions data for Tidewell submitted by CCH in support of its argument of allegedly underserved populations, however, does not properly utilize death rates necessary to determine “penetration rates.” Rather than relying on general demographic and disease prevalence information or merely comparing differences in the number of admissions in trying to determine whether underservice exists, it is more accurate to compare penetration rates. Penetration rates for an area within a given time period are calculated by dividing the number of hospice admissions by the resident deaths for the area during the time period. Using penetration rates calculated and published by AHCA, Tidewell’s overall annual penetration rates for Service Area 8D range from four to nine percent higher than the Florida average penetration rates during the period from 2004 to 2014. While CCH has criticized the calculations for Tidewell’s penetration rates as inflated due to AHCA's double counting of readmissions, the numbers hold up in other contexts, indicating that Tidewell is available and accessible for those persons eligible for hospice to a greater degree than the average Florida hospice. When annual Service Area 8D hospice admissions for end-stage heart failure patients as a percentage of annual Service Area 8D end-stage heart failure deaths from 2011 to 2014 (from Department of Elder Affairs’ admissions data that does not include readmissions and death statistics from the Florida Bureau of Vital Statistics, respectively) are compared to the average penetration rate for all Florida hospices, it shows that, although the state average fluctuates annually, Tidewell’s rate increased incrementally year over year, and approximated, or exceeded, the state average rate three out of four years. Comparing Service Area 8D to all of Florida, using hospice end-stage pulmonary disease and end-stage renal disease admissions as a percentage of end-stage pulmonary and renal disease deaths, respectively, for the years 2011 to 2014, shows that annual variations in the average rates exist in both Service Area 8D and Florida, but there is no pattern of historical or remarkable underservice to hospice eligible patients of Service Area 8D for either disease. To the extent the state average penetration exceeds Tidewell’s in any one year, it does not support the notion that the difference represents a “gap” in service. Gaps, for purposes of the special circumstance applications, must be a material or sustained trend, not a blip. Availability, quality of care, accessibility, and extent of utilization of existing healthcare facilities, and health services in the service district of the applicants. § 408.035(1)(b), Fla. Stat. Sarasota County, with a population of over 400,000 residents, has a healthcare delivery system with 6 acute care hospitals, 31 skilled nursing facilities, 61 assisted living facilities, 53 home health agencies, 9 adult family care homes, 54 homemaker and companion services, 20 surgical centers, 1,100 doctors, and over 5,000 registered nurses. As the sole provider of hospice services in Sarasota County, Tidewell is governed by a 15-member volunteer Board of Trustees who all live in and are representative of Tidewell’s Service Areas. The Board provides independent accountability to the communities served by Tidewell, including Sarasota County, Service Area 8D. In addition to its principle administrative office in Sarasota, Tidewell has located two of its eight satellite offices within the geographic boundaries of Service Area 8D, Sarasota County. In addition, Tidewell owns and operates seven hospice houses with a total of 65 licensed general inpatient beds, which can also be used for residential patients and respite care. Two of Tidewell’s hospice houses are located in Service Area 8D, with six beds in the hospice house located in Venice and 12 beds in Sarasota. A hospice house residential patient is a patient receiving the hospice routine home level of care when the patient does not have anywhere else available or safe to receive the care (e.g. homeless patients and patients without a caregiver). Although Tidewell maintains contracts with all the hospitals and nursing homes in its Service Areas to utilize facility beds for general inpatient, respite care and residential care, Tidewell’s hospice houses provide a more homelike environment, and are more accessible and preferred by families. Tidewell makes all of its hospice program services, hospice houses, and community services available to patients regardless of their ability to pay, religious preference, race, nationality, ethnicity, or sexual orientation. Tidewell is Medicaid and Medicare certified to serve patients and families eligible for those program benefits, and is accredited, with “deemed” status, by the Community Health Accreditation Program (CHAP) (i.e. AHCA defers to and accepts CHAP accreditation surveys in lieu of routine AHCA operational surveys). CHAP’s standards and practices mirror those contained in the Federal Medicare Hospice Conditions of Participation (CoPs). Tidewell is accredited by the National Institute for Jewish Hospice, and Tidewell has a full time Rabbi available and accessible in Service Area 8D. Tidewell effectively competes with other types of post-acute care providers, like private duty home health companies in its Service Areas. Tidewell allocates its excess revenue philanthropic contributions to operating reserves and to provide additional and enhanced services for patients, families, and the community at large. In Sarasota County, Service Area 8D, Tidewell deploys one assisted living facility (ALF) team, two home teams, one nursing home team, and three hospice house teams, and has coverage from its crisis/continuous care, admissions, and triage (after hours and weekends) teams. Each of these service teams in Sarasota County includes seven to eight registered nurse (RN) case managers (one RN for every 12 patients), one licensed practical nurse (LPN), four to five certified nursing assistants (CNA), three social workers (SW), and one chaplain. Tidewell also employs, for use in Service Area 8D, additional clinical staffing personnel for upticks in census, after hours and triage, admissions and crisis care, including 20 as-needed CNAs, 25 crisis care LPNs, 20 RNs and one LPN for triage and after hours, a wound care coordinator, and a certified child life specialist. Tidewell has access to contracted RNs and LPNs if the census ever exceeds employed staffing ratios. Beyond the interdisciplinary group (IDG) positions required by the CoPs, Tidewell supplies each IDG team with an experienced hospice RN clinical director and a team coordinator. Tidewell also employs an RN wound care program coordinator to assist RN case managers in managing patients with wounds and a specialist trained in therapeutic play for children and how to support parents of chronically ill children. Tidewell maintains a state-of-the-art call center to immediately dispatch and track triage RNs and to respond to requests for information from patients, families, and physicians during evenings and weekends. Tidewell gives all patients eligible for general inpatient, residential, and respite care a choice of all contracted venues and hospice houses that have a bed available. Families often choose the geographically closest hospice house available, without regard to the Service Area where they reside. In hospice, the location where the patient receives care is considered the patient’s residence. When the geographically nearest hospice house selected by a patient and family for their convenience is in a Tidewell Service Area, other the one in which the patient is currently receiving care, AHCA requires that the transfer to the new Service Area be reported as a new admission on the hospice’s semi-annual utilization report to AHCA. AHCA considers this approach to be consistent with the requirements of rule 59C-1.0355(8)(a)2., which links reported admissions to Service Areas. Tidewell’s size and economies of scale allow it to provide an array of enhanced counseling services to patients, families, and the community. Tidewell operates a grief education and support center (the Center), managed by an expert in bereavement, with 10 full-time grief specialists who hold either a license as a clinical social worker or a Master’s degree in counseling, or both. Three Tidewell grief counselors are assigned to hospice patients and families in Sarasota County. In addition to counseling individuals, the Center organizes grief groups in the community. In fiscal year 2015, in Sarasota County, 865 hospice family members accessed Tidewell community group bereavement services beyond the 13-month Medicare hospice benefit period, and Tidewell also served 1,623 community group attendees with no prior hospice connection. The Center also provides, at no charge, emergency counseling interventions. Tidewell grief counselors are on call and respond to calls from law enforcement, fire-rescue, and medical personnel in the community to deal with grief associated with serious accidents and disasters. Tidewell has an extensive and well-organized professional relations and outreach program to ensure that existing and new physicians, nursing homes, ALFs, and other potential referral sources are aware of Tidewell’s services. Tidewell provides literature to physicians, nurse practitioners, and physician assistants for use in promoting end-of-life conversations with patients early, and to let physicians know that Tidewell is available 24/7, every day, to evaluate their patients for hospice eligibility. Tidewell provides a significant number of well- organized, well-staffed, professional programs to patients, families, and the community free of charge, which are not otherwise required or reimbursed under the Medicare hospice benefit. The programs include complementary services, the Tidewell Honors Veterans program, and the Transitions program. Complementary services are methods of intervention that work in conjunction with traditional medicine and nursing interventions to provide the patient with moments of joy, stress relief, and lasting legacies for the family. Complementary service therapies include pet therapy, massage, horticultural intervention, expressive arts, music therapy, humor, Reiki, aromatherapy, care and touch, life legacy and reminiscence. The complementary therapy department is staffed by two massage therapists and one expressive arts facilitator, contracts with two horticulture contractors and one expressive arts contractor, and relies heavily on volunteers. Sarasota Service Area 8D had a total of 1,201 complementary visits from Tidewell staff, contractors, and volunteers in fiscal year 2015. In fiscal year 2015, Tidewell served 478 veterans in its Tidewell Honors Veterans hospice program and 42 patients in its Transitions program in Sarasota County. The Tidewell Honors Veterans is a program that recognizes veterans and expresses the community’s gratitude for military service. The Transitions program is a pre-hospice, volunteer- operated program that offers practical assistance to those in the community with a diagnosis of one year or less life expectancy, but who have not elected hospice care. Tidewell employs a child life specialist and participates in Florida’s Partners in Care (PIC) program, which allows pediatric patients with chronic terminal illnesses to receive curative care while also electing hospice palliative care. Tidewell currently has 21 children enrolled in its PIC program and four pediatric hospice patients. The PIC program operates at a deficit because the reimbursement rate from the waiver program is insufficient to fully compensate the staff. Other than the waiver program funding, there are no grants or other funding services for the PIC program. Tidewell has a contract with music therapists for a combined 30 hours a week to see PIC patients and consult with pediatric hospice patients. Currently, Tidewell has a total of 1,002 volunteers that are active and available for assignment. Tidewell employs an expert in non-profit management to organize and maintain its volunteer services. Tidewell has four volunteer coordinators physically located in Sarasota County. Each of the Sarasota volunteer coordinators works with 120 to 150 volunteers. CCH submitted anecdotal evidence that one cardiologist (Dr. Rosenfeld) and two nursing facilities (according to Dr. Robinson) have had difficulty with referrals to Tidewell. That evidence, however, from a health planning perspective, especially in view of the credible evidence submitted by Tidewell demonstrating the quality, accessibility, and extent of utilization of Tidewell services in Sarasota County, is entitled to little weight. Persuasive evidence submitted by Tidewell showed significant volume of admissions at Tidewell, effective overall outreach to physicians, and Tidewell’s success in penetrating Service Area 8D. The ability of Applicant to provide quality of care and Applicant’s record of providing quality of care. § 408.035(1)(c), Fla. Stat. In the State Agency Action Report (SAAR), AHCA addressed CCH-LTD’s history of providing quality of care in its existing Florida operations and found that CCH-LTD attained a “five-of-five star rating” in each of five survey questions, meaning “respondents were 90 to 100 percent satisfied with the hospice’s performance.” CCH-LTD has an established Quality Assessment Performance Improvement (QAPI) program in place throughout all of its operations, with continual assessment of quality measures, ongoing and periodic audits of patient medical charts, quarterly meetings between 12 Regional QAPI coordinators and local programs, and monitoring to assure follow-up on improvement items. In addition, CCH-LTD conducts internal periodic surveys to assure ongoing compliance. All of CCH-LTD’s 39 programs have been accredited by CHAP, which is considered as the “gold standard” for hospice quality. According to CCH-LTD’s current Florida regional director, the CCH-LTD affiliate in Florida Service Area 6B had a “miscommunication” with AHCA in 2015 regarding its hospice license renewal application. In February 2015, AHCA required CCH-LTD to close its affiliate’s hospice in Service Area 6B for failure to submit a renewal application and to discharge or transfer its approximately 230 patients to other hospices, until the affiliate obtained a new license in June of 2015. This incident, in all probability, interfered with the continuity of care for those patients because of CCH-LTD’s miscommunication with AHCA. CCH, however, cooperated in the transfer of patients and the transfers were made in an orderly process until the issue with the temporary lapse in license was fully resolved. After that, AHCA reissued CCH its license, and AHCA has subsequently surveyed the program and found it to be without deficiencies. The availability of resources, including health personnel, management personnel, and funds for capital and operating expenditures, for project accomplishment and operation. § 408.035(1)(d), Fla. Stat. CCH demonstrated that it has the resources available, or can secure the necessary resources, for accomplishment of the proposed project. The extent to which the proposed services will enhance access to healthcare for residents of the service district. § 408.035(1)(e), Fla. Stat. While the addition of another hospice would provide a choice for hospice care in Sarasota County, considering the present zero fixed need determination for Service Area 8D, as well as evidence of the quality services and accessibility currently provided by Tidewell, it is found that approval of the Application would not materially improve access to hospice care for residents of Service District 8D. To the contrary, evidence presented by Tidewell demonstrated that approval of CCH’s proposed program will, immediately and over the long term, have a material adverse impact on Tidewell and the hospice services provided by Tidewell to the Sarasota community. Tidewell, using reasonable assumptions regarding length of stay, number of patients that would be lost to CCH, and variability of Tidewell’s expenses, demonstrated that a reasonable expectation from approval of the Application will cause Tidewell to incur a lost contribution margin per patient day of $72.92, totaling at least $1.2 million for each year that CCH captures 300 or more of Tidewell’s Service Area 8D admissions. If CCH captures 300 admissions annually, Tidewell reasonably and conservatively expects, based on a calculation of average historical donations per admission, to lose at least $145,000 in philanthropy annually. Considering available options to absorb the contribution margin and philanthropic losses in the event CCH is approved, and because Medicare hospice benefit core services are required by law, Tidewell determined that operational and administrative costs for core patient and family services costs would not be cut (except for reducing the variable costs associated with the 300 lost admissions accounted for in Tidewell’s contribution margin analysis). Given the impact, approval of the Application would require Tidwell to look for reductions to costs in its enhanced patient services (not otherwise required by the Medicare hospice benefit) and community education and support services, which Tidewell currently provides and for which Tidewell incurred costs in fiscal year 2015 of approximately $1.5 million exclusive of grants. Specifically, and within two years of CCH’s second year of operation, Tidewell reasonably estimated that it will need to eliminate: 100 percent of Tidewell’s community grief education and support groups; the Transitions Program; 100 percent of complementary services to patients; 100 percent of its volunteer program; and Tidewell’s Childrens Program. Tidewell has cut community services in the past when operating revenue dropped significantly. Between fiscal year 2012 and fiscal year 2014, when operating revenue dropped $10 million, Tidewell had to cut $346,000 from bereavement services and over $300,000 from complementary services. This history indicates a willingness and likelihood Tidewell would make similar cuts if a competitor reduces Tidewell’s contribution margin by $1.5 million. CCH contends that Tidewell can easily absorb any lost margin because Tidewell had an increase in unrestricted net assets in 2015 of approximately $10 million. However, approximately $6 million of Tidewell’s 2015 asset increase came from philanthropy, of which $2.5 million came from a single donor. Another $1 million of the increase came from investments. Neither philanthropy nor investment income are considered assured for purposes of projecting future net assets and funding losses. In reality, and disregarding philanthropy and interest, a net operating revenue of only approximately $2.7 million would have been available to Tidewell to absorb a contribution margin loss of $1.2 million in 2015. It is fair to characterize the impact of terminating these Tidewell programs as significant and adverse in the short- and long-term for Tidewell and the services it provides to the Sarasota community. The immediate and long-term financial feasibility of the proposal. § 408.035(1)(f), Fla. Stat. Assuming CCH secures 300 admissions in year two of its proposed project, its project appears financially feasible in the near and long-term. The extent to which the proposal will foster competition that promotes quality and cost effectiveness. § 408.035(1)(g), Fla. Stat. While approval of the Application would increase competition, in view of other findings regarding the negative impact on Tidewell and likely interference with its thriving hospice program with complementary, voluntary and overall quality, it is concluded that competition of the type proposed by CCH is not needed in Service Area 8D, nor would it promote quality and cost effectiveness. The applicant’s past and proposed provision of healthcare services to Medicaid patients and the medically indigent. § 408.035(1)(i), Fla. Stat. CCH demonstrated a history of providing services to both Medicaid and charity patients. The Applicant projects 4.3 percent of patient days to be provided to Medicaid and charity patients and conditioned the Application on contracting with the Medicaid managed care plan provider.
Recommendation Accordingly, based upon the foregoing findings of fact and conclusions of law, it is RECOMMENDED that the Agency for Health Care Administration enter a final order denying CON Application No. 10337. DONE AND ENTERED this 19th day of September, 2016, in Tallahassee, Leon County, Florida. S JAMES H. PETERSON, III Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 Fax filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 19th day of September, 2016.
The Issue Whether there is “an error in the Fixed Need Pool numbers” for hospice as calculated by the Agency for Health Care Administration (“AHCA”) pursuant to Florida Administrative Code Rule 59C-1.0355(4)(a), and as published by AHCA on February 5, 2021, pursuant to rule 59C-1.008(2)(a).
Findings Of Fact Based upon the credibility of the witnesses and evidence presented at the final hearing and on the entire record of this proceeding, the following Findings of Fact are made: The Parties AHCA is designated as the single state agency for the issuance, denial and revocation of certificates of need (“CONs”), including exemptions and exceptions in accordance with present and future federal and state statutes. Suncoast is a licensed hospice program serving HSA 5B, which is comprised entirely of Pinellas County. As an existing hospice provider in HSA 5B, Suncoast is substantially affected by the publication of the FNP at issue in this proceeding and has standing to challenge “an error in the Fixed Need Pool numbers” as set forth in rule 59C-1.008(2)(a)2. Seasons is also a licensed hospice program serving HSA 5B. As an existing hospice provider in HSA 5B, Seasons is substantially affected by the publication of the FNP at issue in this proceeding and has standing to challenge “an error in the Fixed Need Pool numbers” as set forth in rule 59C- 1.008(2)(a)2. Cornerstone is an applicant for a CON for a new hospice program in HSA 5B predicated, at least in part, on the publication of the FNP under challenge in this proceeding. Cornerstone is substantially and adversely affected by the potential change of the FNP from a determination of need for a new hospice program to no need for a new hospice program in HSA 5B, and therefore has standing to intervene in this proceeding. HPH is an applicant for a CON for a new hospice program in HSA 5B predicated, at least in part, on the publication of the FNP under challenge in this proceeding. HPH is substantially and adversely affected by the potential change of the FNP from a determination of need for a new hospice program to no need for a new hospice program in HSA 5B, and therefore has standing to intervene in this proceeding. VITAS is an applicant for a CON for a new hospice program in HSA 5B predicated, at least in part, on the publication of the FNP under challenge in this proceeding. VITAS is substantially and adversely affected by the potential change of the FNP from a determination of need for a new hospice program to no need for a new hospice program in HSA 5B, and therefore has standing to intervene in this proceeding. AHCA’s Calculation and Publication of the Fixed Need Pool As part of its responsibilities under the CON laws, AHCA is required to establish, by rule, uniform need methodologies for CON-regulated health facilities and services. Those need methodologies must take into account “the demographic characteristics of the population, the health status of the population, service use patterns, standards and trends, geographic accessibility, and market economics.” § 408.034(3), Fla. Stat. Rule 59C-1.0355 codifies the uniform need methodology that applies to hospice programs. The rule defines twenty-seven (27) service areas, and AHCA uses the need methodology in rule 59C-1.0355(4)(a) to calculate numeric need for hospice programs for each of the 27 HSAs. The results of those calculations determine whether there is an FNP of one, or zero, in each of the 27 HSAs. Typically, AHCA publishes need projections for hospice programs twice per year in “batching cycles.” See Fla. Admin. Code R. 59C-1.008(1)(g), (2)(a).1,2 Rule 59C-1.008(2)(a) allows parties to identify purported “errors” in the FNP numbers published by AHCA: Any person who identifies an error in the Fixed Need Pool numbers must advise the Agency of the error within 10 days of the date the Fixed Need 1 As explained below, AHCA cancelled the CON Hospital Facilities and Hospice 2nd Batching Cycle for 2020. 2 Although AHCA typically publishes need projections for hospice programs twice per year, Florida law requires only one FNP publication per year. See § 408.039(1), Fla. Stat. (“The agency by rule shall provide for applications to be submitted on a timetable or cycle basis; provide for review on a timely basis; and provide for all completed applications pertaining to similar types of services or facilities affecting the same service district to be considered in relation to each other no less often than annually.”). (emphasis added). Pool was published in the Florida Administrative Register. If the Agency concurs in the error, the Fixed Need Pool number will be adjusted and re- published in the first available edition of the Florida Administrative Register. Failure to notify the Agency of the error during this time period will result in no adjustment to the Fixed Need Pool number for that batching cycle. Except as provided in subparagraph 2. above, the batching cycle specific Fixed Need Pools shall not be changed or adjusted in the future regardless of any future changes in need methodologies, population estimates, bed inventories, or other factors which would lead to different projections of need, if retroactively applied. Fla. Admin. Code R. 59C-1.008(2)(a)2. and 3. It is undisputed that AHCA’s rules do not define “error” as that term is used in rule 59C-1.008(2)(a)2. Although there is no definition of the word “error,” AHCA limits its interpretation of the word to only “mathematical” errors or late-filed hospice admissions by Florida licensed hospice programs pursuant to rule 59C-1.0355(8). Petitioners’ Fixed Need Pool Challenge On February 5, 2021, AHCA published an FNP for one new hospice program in HSA 5B. Suncoast timely advised AHCA in writing of two purported errors it had identified in the FNP. Specifically, Suncoast asserted that: (1) AHCA’s calculations incorrectly predict future need based upon a spike in admissions caused by the COVID-19 pandemic that will not exist when the planning horizon arrives3; and (2) AHCA has not accounted for actual hospice admissions by VA hospitals that provide hospice care in Pinellas County. 3 Even before AHCA’s publication on February 5, 2021, Suncoast requested that AHCA suspend the Hospital Facilities and Hospice 1st Batching Cycle for 2021, citing the COVID-19 pandemic. Seasons Pinellas also timely advised AHCA in writing of the same two purported errors in the FNP. On February 17, 2021, AHCA issued separate but identical responses to Suncoast and Seasons Pinellas, stating that “the published need is correct and a revision to the fixed need pool is not warranted.” The Hospice Need Methodology Under AHCA’s hospice need methodology, numeric need for an additional hospice program is demonstrated if the projected number of unserved patients who would elect a hospice program is 350 or greater. The net need for a new hospice program in an HSA is calculated as follows: Numeric Need for a New Hospice Program. Numeric need for an additional Hospice program is demonstrated if the projected number of unserved patients who would elect a Hospice program is 350 or greater. The net need for a new Hospice program in a service area is calculated as follows: (HPH) -- (HP) = 350 where: (HPH) is the projected number of patients electing a Hospice program in the service area during the 12-month period beginning at the planning horizon. (HPH) is the sum of (U65C x P1) + (65C x P2) + (U65NC x P3) + (65NC x P4) where: U65C is the projected number of service area resident cancer deaths under age 65, and P1 is the projected proportion of U65C electing a Hospice program. 65C is the projected number of service area resident cancer deaths age 65 and over, and P2 is the projected proportion of 65C electing a Hospice program. U65NC is the projected number of service area resident deaths under age 65 from all causes except cancer, and P3 is the projected proportion of U65NC electing a Hospice program. 65NC is the projected number of service area resident deaths age 65 and over from all causes except cancer, and P4 is the projected proportion of 65NC electing a Hospice program. The projections of U65C, 65C, U65NC, and 65NC for a service area are calculated as follows: U65C = (u65c/CT) x PT 65C = (65c/CT) x PT U65NC = (u65nc/CT) x PT 65NC = (65nc/CT) x PT where: u65c, 65c, u65nc, and 65nc are the service area's current number of resident cancer deaths under age 65, cancer deaths age 65 and over, deaths under age 65 from all causes except cancer, and deaths age 65 and over from all causes except cancer. CT is the service area's current total of resident deaths, excluding deaths with age unknown, and is the sum of u65c, 65c, u65nc, and 65nc. PT is the service area's projected total of resident deaths for the 12-month period beginning at the planning horizon. “Current” deaths means the number of deaths during the most recent calendar year for which data are available from the Department of Health, Office of Vital Statistics at least 3 months prior to publication of the Fixed Need Pool. “Projected” deaths means the number derived by first calculating a 3-year average resident death rate, which is the sum of the service area resident deaths for the three most recent calendar years available from the Department of Health, Office of Vital Statistics at least 3 months prior to publication of the Fixed Need Pool, divided by the sum of the July 1 estimates of the service area population for the same 3 years. The resulting average death rate is then multiplied by the projected total population for the service area at the mid-point of the 12-month period which begins with the applicable planning horizon. Population estimates for each year will be the most recent population estimates from the Office of the Governor at least 3 months prior to publication of the Fixed Need Pool. The projected values of P1, P2, P3, and P4 are equal to current statewide proportions calculated as follows: P1 = (Hu65c/Tu65c) P2 = (H65c/T65c) P3 = (Hu65nc/Tu65nc) P4 = (H65nc/T65nc) where: Hu65c, H65c, Hu65nc, and H65nc are the current 12-month statewide total admissions of Hospice cancer patients under age 65, Hospice cancer patients age 65 and over, Hospice patients under age 65 admitted with all other diagnoses, and Hospice patients age 65 and over admitted with all other diagnoses. The current totals are derived from reports submitted under subsection (8) of this rule. Tu65c, T65c, Tu65nc, and T65nc are the current 12-month statewide total resident deaths for the four categories used above. (HP) is the number of patients admitted to Hospice programs serving an area during the most recent 12-month period ending on June 30 or December 31. The number is derived from reports submitted under subsection (8) of this rule. 350 is the targeted minimum 12-month total of patients admitted to a Hospice program. (Fla. Admin. Code R. 59C-1.0355(4)(a)). While daunting in its length and complexity, the methodology can succinctly be summarized as follows: AHCA makes a projection of future hospice need in an HSA which is abbreviated as “(HPH)”; AHCA then subtracts from that projection the actual number of hospice admissions in the HSA, which is abbreviated “(HP).” If the result of that subtraction is 350 or greater, AHCA publishes an FNP for an additional program for that HSA. (HPH) is calculated by determining the projected number of deaths in four categories—(1) cancer, 65 and older; (2) cancer, under 65; (3) non-cancer, 65 and older; and (4) non-cancer, under 65. The methodology then projects the percentage of people within those four categories that would elect hospice care, which is calculated by employing the statewide penetration rate for those four categories to a service area’s community. These penetration rates or, P-values, are calculated by using the entire state’s admissions in each of the four categories divided by the entire state’s deaths in each of those four categories. In calculating the number of deaths for (HPH), the rule calls for AHCA to use data from the most recent calendar year for which data are available from the Department of Health, Office of Vital Statistics, at least three months prior to publication of the FNP. (HP) is calculated by using semi-annual utilization reports that are required to be completed by each licensed hospice program in the state on or before July 20 of each year and January 20 of the following year. “The July report shall indicate the number of new patients admitted during the 6-month period composed of the first and second quarters of the current year” and the “January report shall indicate the number of new patients admitted during the 6-month period composed of the third and fourth quarters of the prior year.” Using this need methodology, the net need for HSA 5B for the July 2022 hospice planning horizon was 414, resulting in a need of one (1) new hospice program in the service area. Because the rule requires death data from the most recent calendar year that was available at least three months prior to the publication of the FNP, AHCA used the final death reports from 2019 in calculating need for the July 2022 hospice planning horizon. However, because the rule requires admissions data from the most recent 12-month period ending on June 30 or December 31, AHCA used admissions from 2020 in calculating need for the July 2022 hospice planning horizon. As pointed out by Petitioners, just 65 more hospice admissions in HSA 5B in 2020 would have resulted in a net need of zero (0) new hospice programs in that HSA for the July 2022 planning horizon. Legal Presumption Created by FNP Determination A positive FNP determination will establish a rebuttable presumption of need. Balsam v. Dep’t of HRS, 486 So. 2d 1341, 1349 (Fla. 1st DCA 1986); VITAS Healthcare Corp. of Cent. Fla., Inc. v. Ag. for Health Care Admin., Case No. 04-3858CON (Fla. DOAH June 14, 2005; Fla. AHCA July 7, 2005). The converse is also true that “[a] lack of numeric need under the rule formula establishes a rebuttable presumption of no need.” Beverly Enter.- Fla., Inc. v. Ag. for Health Care Admin., Case Nos. 92-6656, 92-6659-6662, 92-6669 (Fla. DOAH July 24, 1994; Fla. AHCA Oct. 17, 1994). In a hospice CON case, the absence of numeric need prohibits the approval of a new hospice program unless special circumstances found in the hospice need rule are present, or applicable criteria outweigh the lack of need. See Fla. Admin. Code R. 59C-1.0355(3)(b), (4)(d); Compassionate Care Hospice of the Gulf Coast, Inc. v. State, Ag. for Health Care Admin., 247 So. 3d 99, 101-02 (Fla. 1st DCA 2018). In most cases, the establishment of a positive FNP nearly always results in the approval of a new hospice program, and the determination of zero need results in a denial of all applications. Thus, AHCA’s calculation of hospice need as reflected in its FNP determination will substantially affect each of the parties in this case. Suncoast and Seasons Pinellas have identified two purported errors in AHCA’s need determination: (1) the challenged FNP is based on data that was skewed by the COVID-19 pandemic; and (2) the FNP numbers fail to account for hospice admissions to Bay Pines. Petitioners contend that, in light of these factors, AHCA’s calculation of a net need for one new hospice program in HSA 5B for the July 2022 planning horizon is not accurate. While both of these arguments are cognizable within an FNP challenge, neither is persuasive in this instance, as explained below. Does the Impact of the Pandemic Warrant Use of Updated Deaths Data? In March 2020, a worldwide pandemic erupted due to the outbreak of the novel coronavirus (“COVID-19”). (Office of the Governor, Executive Order No. 20-52 (“E.O. 20-52”)). COVID-19 is “a severe acute respiratory illness that can spread among humans through respiratory transmission and presents with symptoms similar to those of influenza.” E.O. 20-52. On March 9, 2020, Florida Governor Ron DeSantis declared a state of emergency due to the outbreak of COVID-19. E.O. 20-52. The Governor noted that, as of March 9, 2020, “eight counties in Florida have positive cases for COVID-19, and COVID-19 poses a risk to the entire state of Florida.” Id. Upon the Governor’s direction, on March 1, 2020, the State Surgeon General “declared a Public Health Emergency exists in the State of Florida as a result of COVID-19.” E.O. 20-52. The World Health Organization also “declared COVID-19 a Public Health Emergency of International Concern.” Id. On March 15, 2020, the Florida Division of Emergency Management issued an Emergency Order “prohibiting all individuals from visiting facilities within the State of Florida,” including nursing homes, long-term care hospitals, and assisted living facilities. (Div. of Emerg. Mgmt., In Re: Suspension of Statutes, Rules, and Orders, Pursuant to Executive Order Number 20-52, Made Necessary By the COVID-19 Public Health Emergency, DEM Order. No. 20-006 (Mar. 15, 2020)). The CON Hospital Facilities and Hospice 2nd Batching Cycle was scheduled to begin on the third Friday in July 2020. (Fla. Admin. Code R. 59C-1.008(1)(g) (2019).4 However, due to the outbreak of the COVID-19 pandemic, and under the authority of the Governor’s Executive Order, AHCA issued an Emergency Order cancelling the Hospital Facilities and Hospice 2nd Batching Cycle. (AHCA, In Re: Temporary Suspension of Certificate of Need Batching Cycle, AHCA 20-004 (July 17, 2020)). In that Emergency Order, AHCA noted that “all counties in Florida have confirmed cases of COVID-19 that are growing in number daily and straining virtually every health care resource available within the State.” Id. AHCA also considered cancelling the Hospital Facilities and Hospice 1st Batching Cycle – 2021 (the batching cycle at issue here). Although the 4 In December 2020, the Agency issued a new Final Rule changing the dates of the hospice batching cycles. (See Fla. Admin. Code R. 59C-1.008(1)(g) (2020). Under the new Rule, the Hospital Facilities and Hospice 2nd Batching Cycle will begin on the first Friday in August. State of Florida was still under a state of emergency when AHCA announced need for an additional hospice program in HSA 5B, AHCA decided to move forward with the batch because, according to AHCA’s representative, James McLemore, it was “trying to get to a normal.” In deciding not to change or adjust the FNP at issue, AHCA did not compare hospice penetration rates from this batch with any other batch. In other words, AHCA did not compare previous hospice penetration rates to see if the need predictions made in this batching cycle were unusual in any way. Suncoast’s health planning expert, Armand Balsano, testified that if AHCA had examined the hospice penetration rates for this batching cycle with previous batching cycles, it would have noticed a significant anomaly in the FNP numbers used to calculate hospice need for the July 2022 planning horizon for HSA 5B. According to Mr. Balsano, typically, overall hospice penetration rates are very consistent year over year, hovering around .67 or .68 (meaning that 67% - 68% of recorded deaths received hospice care before passing). However, for the February 2021 batching cycle, AHCA calculated that the overall penetration rate had dramatically increased to .727, which Mr. Balsano considered to have a “profound” effect on the FNP calculation. According to Petitioners, because AHCA’s need projections relied on 2020 hospice admissions, which included COVID-19-related hospice admissions, and 2019 deaths, which necessarily excluded COVID-19-related deaths, the data showed a larger spike in hospice admissions than deaths, which caused the overall penetration rate to increase dramatically from prior years. To illustrate the effect caused by using hospice admissions during a year in which Florida (and the rest of the world) was battling a highly contagious virus (2020) and deaths from a year in which the world was not (2019), Mr. Balsano recast the overall penetration rates using 2020 hospice admissions and 2020 deaths. According to Mr. Balsano, when using 2020 hospice admissions and 2020 hospice deaths, the penetration rate actually decreases from AHCA’s overall penetration rate of .727 to .629. When 2020 deaths were substituted for 2019 deaths, and AHCA’s calculated penetration rate of .727 was substituted with the recast penetration rate of .629, the rule need methodology would result in a negative numeric need, and thus, no need for an additional hospice program, according to Mr. Balsano. Mr. Balsano acknowledged that AHCA’s use of deaths from one year and hospice admissions from another year to predict need is not inherently unreliable in projecting future need. Petitioners also conceded that AHCA complied with its rules when it used 2019 death data to calculate the FNP numbers at issue. The parties stipulated that when performing its FNP calculation at issue, AHCA used the number of “current deaths” as defined in, and required by, rule 59C-1.0355(4)(a). The parties further stipulated that when performing the FNP calculation, AHCA used the number of patients admitted to hospice programs serving HSA 5B during the most recent 12-month period ending December 31, 2020, as derived from the reports submitted under rule 59C-1.0355(8), as required by rule 59C-1.0355(4)(a). Petitioners’ alternative FNP calculation is not permitted by rule 59C- 1.0355(4). Rather, it is uncontroverted that when performing its FNP calculations, AHCA used the number of “current deaths” as defined in and required by rule 59C-1.0355(4)(a). Likewise, AHCA used the number of patients admitted to Hospice Programs serving HSA 5B during the most recent 12-month period ending December 31, 2020, as derived from the reports submitted under rule 59C-1.0355(8), as required by rule 59C- 1.0355(4)(a). Moreover, Petitioners’ alternative need calculation is based on provisional death data for calendar year 2020 from the Office of Vital Statistics as of April 3, 2021. This data could not have been available three months prior to the February 5, 2021, publication of the FNP numbers, since calendar year 2020 did not conclude three months prior to February 5, 2021. Despite advocating for the use of 2020 death data, Suncoast’s expert witness did not know whether any 2020 death data, even provisional data, were available from the Office of Vital Statistics by February 5, 2021. Additionally, Mr. Balsano conceded that he did not know if the provisional data he used for his alternative FNP calculation were different from any death data available from the Office of Vital Statistics as of the date of the final hearing. Had AHCA used the provisional death data used by Suncoast’s expert witness in creating Suncoast Exhibits 11 through 20, then AHCA would have violated rule 59C-1.0355(4), and its calculation of the FNP numbers would have been erroneous. While the impacts of the COVID-19 pandemic have been profound and devastating, particularly in the number of individuals who have succumbed to the disease, the effects of the pandemic will, fortunately, be transitory. As of the time of the final hearing, a number of vaccines had become available to protect individuals from COVID-19. AHCA’s witness acknowledged that vaccines developed by Pfizer and Moderna (as well as Johnson and Johnson) have been reported to be very effective in reducing the number of deaths among individuals who have been vaccinated. AHCA further acknowledged that, in part, due to the availability of these vaccines, Florida has seen a significant decline in COVID-19 deaths. Inclusion of VA Hospital Hospice Admissions in the FNP Calculation? Petitioners further argue that AHCA’s failure to consider hospice admissions to VA hospitals has led to an incorrect projection of need under the rule formula. In making FNP calculations for hospice, AHCA only considers admissions to hospice programs licensed by AHCA. Thus, VA admissions are not considered because AHCA does not license VA facilities or programs. However, all deaths are factored into the FNP calculation, including deaths in a VA facility. Petitioners argue that this is an additional error, and created a flawed and unreliable calculation of need in HSA 5B, where there is a significant population of veterans. There are multiple VA hospitals in Florida that operate inpatient hospice units, including Bay Pines. The main facility of the Bay Pines VA system is the C.W. Bill Young Department of Veterans Affairs Medical Center (“CWBY VA Medical Center”) located in Bay Pines, Pinellas County, Florida. The CWBY VA Medical Center is part of the Department of Veterans Affairs, a federal agency. The CWBY VA Medical Center holds no type of health care facility or health services license issued by the State of Florida. The CWBY VA Medical Center is not a “Hospice Program” as that term is defined in rule 59C-1.0355(2)(f). The CWBY VA Medical Center does not report utilization information to AHCA pursuant to rule 59C-1.0355(8). Nor is it required to do so. At hearing, AHCA’s representative confirmed that AHCA lacks jurisdiction over the CWBY VA Medical Center to require it to submit any report to AHCA. It was not clear from the testimony at final hearing what hospice services the CWBY VA Medical Center provides. At most, the facility only provides inpatient end of life services. For example, Suncoast’s Exhibit 6 purported to depict Suncoast discharges to CWBY VA Medical Center during 2020. But Suncoast’s Care Navigator was asked whether she knew “what services specifically any of these patients received while they were at the VA” and she admitted, “I do not.” For “outpatient” or “community” hospice services, the CWBY VA Medical Center refers veterans to a local hospice for admission for hospice services. Although Suncoast tracks patient referrals from the CWBY VA Medical Center, Suncoast did not present any evidence demonstrating that those patients received hospice care at the VA. Suncoast’s expert witness conceded that AHCA followed the requirements of rule 59C-1.0355, by not including VA patient data, and that including such data would be contrary to the rule. Suncoast’s expert witness stated that Suncoast’s argument that AHCA should include any patients receiving hospice services at the VA in the FNP calculation was simply a “conceptual issue,” and that he could not obtain useable data from other VA centers in Florida to create an exhibit that could be introduced into evidence. This “conceptual issue,” which forms a significant part of Suncoast’s allegation that there is an error in the FNP numbers, is essentially the claim that hospice admissions at VA facilities were not counted, while deaths of patients in VA facilities under the VA’s inpatient hospice care were being counted as Florida resident deaths. Suncoast’s expert conceded that he did not know whether these patients had been reported to AHCA as hospice admissions as a result of care they may have received at a state-licensed hospice program, or whether the patients admitted to VA facilities actually died, much less whether they were counted as Florida resident deaths. Indeed, Suncoast’s evidence made clear that it admits patients referred from the CWBY VA Medical Center, and that those patients are included in utilization reports submitted to AHCA under rule 59C-1.0355(8). Suncoast also presented evidence that its hospice patients are frequently discharged for acute care services at the CWBY VA Medical Center, and that Suncoast reports such patients as separate admissions if the patient returns to Suncoast. Suncoast’s witness acknowledged that this results in a single patient being counted as multiple admissions in its utilization reports. Suncoast’s witnesses acknowledged that this discharge and re- admission pattern only occurred with VA patients and would not be the case for patients who were placed on inpatient hospice care in a Suncoast hospice house, or in a hospital or skilled nursing facility. Suncoast’s expert acknowledged that accounting for any VA admissions would change the penetration rate statewide, and as a result, any VA admissions identified in HSA 5B could not simply be subtracted from the total number of projected hospice admissions to recalculate the FNP for HSA 5B. Ultimately, Mr. Balsano could not opine on what the correct need number would have been, and had no idea what the calculated result would have been if the purported VA admissions were counted. Absent reliable data in this regard, there is no basis to deviate from the data source utilized by AHCA in its FNP calculation, even if such deviation was permissible by rule. The existence of potential alternatives to the FNP calculation in rule 59C-1.0355, and in particular the use of different death and admissions data than that used by AHCA, as advocated by Petitioners, is not warranted for the reasons discussed above. Petitioners have failed to carry their burden to establish that the FNP calculations that AHCA made using the rule- required data was in error.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a final order be entered determining that there is no error in the Fixed Need Pool numbers for Hospice Service Area 5B and that there is a calculated net need for one additional hospice program in Hospice Service Area 5B as published by AHCA on February 5, 2021. DONE AND ENTERED this 16th day of June, 2021, in Tallahassee, Leon County, Florida. S W. DAVID WATKINS Administrative Law Judge 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 16th day of June, 2021. COPIES FURNISHED: Stephen C. Emmanuel, Esquire Ausley & McMullen 123 South Calhoun Street Tallahassee, Florida 32301 D. Ty Jackson, Esquire GrayRobinson, P.A. 301 South Bronough Street, Suite 600 Post Office Box 11189 Tallahassee, Florida 32302 Julia Elizabeth Smith, Esquire Agency for Health Care Administration Mail Stop 3 2727 Mahan Drive Tallahassee, Florida 32308 Eugene Dylan Rivers, Esquire Ausley & McMullen, P.A. 123 South Calhoun Street Tallahassee, Florida 32301 Gabriel F.V. Warren, Esquire Rutledge Ecenia, P.A. 119 South Monroe Street, Suite 202 Post Office Box 551 Tallahassee, Florida 32301 David C. Ashburn, Esquire Greenberg Traurig, P.A. 101 East College Avenue Post Office Drawer 1838 Tallahassee, Florida 32301 Kristen Bond Dobson, Esquire Parker, Hudson, Rainer & Dobbs, LLP Suite 750 215 South Monroe Street Tallahassee, Florida 32301 Karl David Acuff, Esquire Law Offices of Karl David Acuff, P.A. Suite 2 1615 Village Square Boulevard Tallahassee, Florida 32309-2770 Amanda Marci Hessein, Esquire Rutledge Ecenia, P.A. Suite 202 119 South Monroe Street Tallahassee, Florida 32301 Simone Marstiller, Secretary Agency for Health Care Administration 2727 Mahan Drive, Building 3 Tallahassee, Florida 32308-5407 Shena L. Grantham, Esquire Agency for Health Care Administration Building 3, Room 3407B 2727 Mahan Drive Tallahassee, Florida 32308 Michael J. Cherniga, Esquire Greenberg Traurig, P.A. 101 East College Avenue Post Office Drawer 1838 Tallahassee, Florida 32301 Marc Ito, Esquire Law Office of Marc Ito, PLLC 411 Wilson Ave. Tallahassee, Florida 32303 Seann M. Frazier, Esquire Parker, Hudson, Rainer & Dobbs, LLP Suite 750 215 South Monroe Street Tallahassee, Florida 32301 Christoper E. Gottfried, Esquire Greenberg Traurig 101 East College Avenue Tallahassee, Florida 32301 Richard J. Shoop, Agency Clerk Agency for Health Care Administration 2727 Mahan Drive, Mail Stop 3 Tallahassee, Florida 32308 Stephen A. Ecenia, Esquire Rutledge Ecenia, P.A. 119 South Monroe Street, Suite 202 Post Office Box 551 Tallahassee, Florida 32301 James D. Varnado, General Counsel Agency for Health Care Administration 2727 Mahan Drive, Mail Stop 3 Tallahassee, Florida 32308 Thomas M. Hoeler, Esquire Agency for Health Care Administration 2727 Mahan Drive, Mail Stop 3 Tallahassee, Florida 32308
