The Issue Whether Mount Sinai Medical Center of Florida, Inc., has standing to initiate the proceeding in Case No. 03-2954CON to challenge the preliminary decision of the Agency for Health Care Administration to approve the application of Kendall Healthcare Group, Ltd., for a Certificate of Need authorizing the construction of an 80-bed satellite hospital in Dade County.
Findings Of Fact The Parties Mount Sinai owns and operates two acute care hospitals under a single license. The two comprise over 900 licensed beds, 575 of which are operational. Mount Sinai's main campus is the site of a general acute care hospital located in the incorporated area of Miami Beach, on the eastern edge of Miami- Dade County. Its second campus, located about one mile north of Mount Sinai, is that of the Miami Heart Institute, acquired by Mount Sinai in 2000. One of six statutory teaching hospitals in the state and a regional tertiary care center, Mount Sinai offers a variety of general acute care and tertiary services. These include open heart surgery and related procedures. Mount Sinai is also a "safety net" provider of hospital services for the Miami-Dade County community. Kendall is a 412-bed acute care hospital located at the intersection of Bird Road and 117th Avenue that serves west Miami. In addition to general acute care services, it provides tertiary services such as open heart surgery and neurosurgery. Approximately 95% of the patients and physicians at Kendall are of Hispanic origin. So is most of the administrative team at the hospital. English and Spanish are most commonly spoken at the hospital. (Tagalog can also be heard in the hospital because of the presence of nurses from the Philippines.) West Kendall Baptist, Inc. ("West Kendall Baptist"), is an affiliate of Baptist Hospital of Miami, an existing provider of acute care services in western Miami-Dade County. The applicant for CON 9674 to establish a 80-bed acute care satellite hospital in western Miami-Dade County, West Kendall Baptist Hospital, is a party to these consolidated proceedings by virtue of Kendall's petition in Case No. 03-2822CON and its own petition in Case No. 03-3096CON. West Kendall Baptist is not a party in Case No. 03-2954CON and did not take an active role in the proceedings with regard to Mount Sinai's standing to initiate the proceeding. The site of its proposed hospital is approximately three miles from the proposed site for Kendall's proposed satellite hospital. The Agency for Health Care Administration is the state agency authorized to evaluate and render final determinations on Certificate of Need applications in Florida. The West Kendall Area Bounded on the west by the Everglades, the West Kendall Area of Dade County is generally recognized as the area south of Bird Road, west of the Florida Turnpike and north of Southwest 216th Street. The area is served primarily by four hospitals. The hospital with the most market share in West Kendall is Baptist. South Miami Hospital, Inc. ("South Miami"), is the second largest provider of acute care hospital services to West Kendall residents. Kendall is a close third, providing approximately the same volume of patient days to the service area population as South Miami. The fourth hospital that provides any significant level of patient days to residents of West Kendall is Jackson Memorial Hospital South ("Jackson South"). There are no other hospitals based on market share that are significant providers of services to residents of West Kendall. The Applications Kendall filed CON Application No. 9675 to construct a satellite hospital (the "Tamiami Hospital") to provide general acute care services in the West Kendall Area. To that end, Kendall has placed a deposit on land located at 137th Avenue and 120th Street approximately five miles from the site of Kendall. The application calls for the de-licensure of 80 beds at Kendall so that there will be no net increase in beds in the health planning district with the establishment of the satellite hospital. Kendall's purpose in seeking the establishment of the 80-bed satellite hospital is two-fold. It will accommodate the population growth in the proposed service area. It will also alleviate delays in gaining access to hospital services caused by traffic congestion in the Kendall area. The Tamiami Hospital will offer general acute care hospital services, but not tertiary services. Three miles from the proposed site of Tamiami Hospital is the proposed site of the Baptist satellite hospital, the subject of West Kendall Baptist's application, CON Application No. 9674. Like Kendall, West Kendall Baptist's application is for a new 80-bed hospital to serve the West Kendall area. Just as in the case of Kendall, West Kendall Baptist's new hospital would not add new beds to the service district. The beds would be transferred from Baptist South, an underutilized hospital to help decompress Baptist, a hospital presently experiencing high utilization. In projecting utilization, each applicant assumed that the other would not be approved. The utilization projections of West Kendall Baptist were based on the assumption that 85% of its patient volume would be generated from patients who reside in West Kendall but are currently being served at Baptist's other area hospitals. The projections of Kendall were based on the assumption that the majority of the patient volume would be generated from taking market share away from Baptist's existing facilities and the further assumption that Baptist would not also have a simultaneous approval of a new hospital. The Motivation for Mount Sinai's Challenge Mount Sinai challenges Kendall's application on the supposition that if both of the Kendall and West Kendall Baptist applications are approved, Kendall will have to generate volume at the expense of existing providers other than Baptist if it is to meet its projected utilizations. Mount Sinai theorizes that a portion of Kendall's volume at Tamiami Hospital will be achieved at Mount Sinai's expense, at a time that Mount Sinai can ill afford to lose business. Mount Sinai did not challenge the West Kendall Baptist application because 85% of its patient volume is projected by the application to come from re-direction of patients that would have been served otherwise by Baptist hospitals. The potential of its volume of service to be affected by the approval of West Kendall Baptist's application, in Mount Sinai's view, is much less than the potential in the case of the Tamiami Hospital. Competitors? Kendall has never considered Mount Sinai to be a competitor. Prior to this case, Mount Sinai had never challenged a CON application of Kendall nor had Kendall ever challenged one filed by Mount Sinai. Until recently, Mount Sinai has not regarded Kendall as much of a competitor either. In the Official Statement for two separate bond offerings, one in the amount of $25,000,000, and another in the amount of $70,340,000, both dated May 23, 2001, Mount Sinai devoted a section to a discussion of "Demographics and Competition." The following appears in the "Demographics and Competition" section under a subheading entitled "Competing Hospitals": The Medical Center considers its principal, although not exclusive, competition to be Aventura Hospital and Medical Center, Cedars Medical Center, Mercy Hospital, Jackson Memorial Medical Center (operated by Miami- Dade County) and Parkway Regional Medical Center. Other important competitors within certain segments of the Medical Center's market are Baptist Hospital of Miami, Palmetto General Hospital, and Memorial Hospital of Hollywood. Kendall Ex. 5, at A-23. Kendall is not mentioned as a competitor. Physical lay-out of hospitals in Miami-Dade County and driving distance between the proposed site for the Tamiami Hospital and Mount Sinai support Kendall's claim that it and Mount Sinai are not engaged in serious competition. There are 16 hospitals within a 20-mile radius of the proposed site at Southwest 120th Street and Southwest 127th Avenue. Neither Mount Sinai nor Miami Heart Institute is among the 16. The driving distance from the proposed site at 120th Street and 137th Avenue is 23.9 miles to Mount Sinai and 24.4 to Miami Heart. It takes approximately 45 minutes to drive from Kendall to Mount Sinai if the traffic is not congested; otherwise it takes much longer. There are six hospitals along the most straight-forward drive (or in very close proximity to it) from the proposed site of Kendall's satellite hospital, Tamiami Hospital, to Mount Sinai: South Miami Hospital, Larkin Community Hospital, Health South Doctor's Hospital, Coral Gables Hospital, Mercy Hospital, Jackson Memorial Hospital, and South Shore Hospital. Another three lie between the proposed site and Mount Sinai and are within a few miles of the most direct drive between the two: Westchester General Hospital, Pan American Hospital, and South Shore Hospital. Overlap between medical staffs also indicates that Kendall and Mount Sinai are not competitors. There is insignificant overlap between the medical staffs of Kendall and Mount Sinai. The parties agree that medical staff overlap between existing providers is a criterion used to determine adverse impact to non-approved or non-applicant providers caused by expansion of beds or programs at the approved provider or, as in this case, the establishment of a satellite hospital. See Tr. 426. There are 16 physicians on staff at Kendall who, during calendar year 2002, were the attending physicians for discharges that occurred at Mount Sinai or Miami Heart. Of the 16, 15 had discharges at Mount Sinai. (The physician with ID FLME0053375 had discharges at Miami Heart but none at Mount Sinai, see Kendall Ex. 4, p. 23.) At Miami Heart, 12 of the 16 had discharges. (The physicians with IDs FLME 005564, FLME 0055703, FLME 0054181 and FLME 0045129 had discharges at Mount Sinai but none at Miami Heart, id.) Of the 12 staff members with discharges at Miami Heart, they had 450 discharges or 5.9% of the total number of discharges (7,610) at the facility for the year. At Mount Sinai, the overlap in terms of percentage of discharges, was even less. Of the 15 staff members who had discharges at Mount Sinai, they accounted for 282 discharges or 1.7% of the 16,381 total discharges for the year at Mount Sinai. The degree of overlap between Kendall physicians and Mount Sinai or Miami Heart physicians can only be characterized as insignificant, an indicator that the Mount Sinai will not be substantially affected by the approval of Kendall's CON. The Primary Service Area Based on the experience of South Miami, it is reasonable for Kendall to estimate that approximately 90% of the admissions to the proposed Tamiami Hospital will come from a primary service area (the "PSA") encompassing seven zip codes: 33177, 33183, 33185, 33186, 33187, 33193, and 33196. These seven zip codes plus zip code 33175, a zip code not included in the PSA, comprise the West Kendall Area. Zip code 33175, the single zip code in West Kendall not included in the PSA, is the site of Kendall Regional Medical Center. None of the zip codes in the PSA Kendall has designated in its application are part of Mount Sinai's service area. The following appears in Mount Sinai's Official Statements referred to in the "Demographics and Competition" section above under the sub-heading "Service Area": For planning purposes, the Medical Center defines its primary service area as the communities of Miami Beach, Surfside, and Bal Harbour, and its secondary service area as the communities of North Miami, North Miami Beach, Sunny Isles and Aventura. Both the primary and secondary service areas lie within Miami-Dade County. Mount Sinai's tertiary service area includes mainland Miami-Dade County communities such as Miami Springs, Hialeah, Hialeah Gardens and West Miami, as well as the Broward County community of Hallandale. Kendall Ex. 5, page A-20. There is no reference to Kendall or the West Kendall Area as part of Mount Sinai's service areas. Population Growth West Kendall is one of the few areas in Miami Dade County where there is still room for growth. Its population growth has been and is reasonably expected to continue to be robust. The 2003 population for the area is 261,150. The projected rate of growth for the area from 2003-2008 is 12.1%, with the actual population anticipated to grow by an additional 31,482. Mount Sinai provides an insignificant level of service in the proposed Tamiami Hospital's PSA. If one holds the use rate constant, when population growth in the service area is considered, the impact of Tamiami Hospital on Mount Sinai is negligible. In the year 2010, factoring in population growth, Mount Sinai will realize an increase of 102 patient days with approval, construction and operation of Tamiami Hospital. The same is true for Miami Heart Institute. There will not be a substantial impact on Miami Heart. By 2010, as in the case of Mount Sinai, population growth will offset any losses incurred by Miami Heart due to the establishment of Tamiami Hospital. Patients from the PSA Patients who leave the Tamiami PSA to seek hospital services at Mount Sinai or Miami Heart are typically elective patients referred by physicians rather than emergency room admissions or HMO referrals. These patients by-pass more proximate hospitals because of Mount Sinai's array of advanced medical and tertiary services favored by physicians or unavailable at existing facilities serving the PSA. In calendar year 2002, Mount Sinai drew from the PSA 174 patients, slightly more than 1% of the total volume of patients at Mount Sinai for the year (16,366). The 174 patients include those who received open heart surgery and other specialized services that will not be offered at Tamiami Hospital. Of the 7,610 patients seen at Miami Heart in calendar year 2002, 91 were discharges from the PSA, less than 1.2% of the total. If Tamiami Hospital is approved, patients treated for open heart surgery and other specialty services at Mount Sinai and Miami Heart are not likely to be diverted to Kendall. Cultural and Demographic Differences Although the ethnic make-up of its patient population has become more Hispanic in recent years, Mount Sinai is not considered a Hispanic hospital. In contrast, more than 91% of the patients from the PSA discharged from Kendall are identified as white Hispanic. It is appropriate to consider Kendall as a Hispanic hospital, moreover, because it is in an area of Miami- Dade County that has a high concentration of Hispanic residents, a bilingual culture and administrative and clinical staffs that are largely Hispanic. For the 12 months ending June 30, 2002, Kendall's patients originating within the PSA that were Medicare patients were a number significantly higher than HMO/PPO patients. Just the opposite was true for Mount Sinai and Miami Heart patients over the same time period. This finding supports the finding that Mount Sinai/Miami Heart patients coming from the PSA constitute a younger, more mobile group than the patients from the PSA treated at Kendall. In all likelihood, this younger, mobile group will continue to seek services at Mount Sinai and Miami Heart for the reasons that they have sought them out in the first place. The establishment of Tamiami Hospital is not likely to affect this dynamic. Recruitment of Staff The extent to which nursing staff at Kendall reside in the same zip codes as nursing staff at Mount Sinai is minimal. The zip code area from which Mount Sinai derives 51% of its registered nurses contributed only 9.9% of Kendall's RN work force. The area from which Mount Sinai drew 75.2% of its registered nurses contributed only 12% to Kendall's RNs. It is not likely that Kendall would recruit administrative staff from Mount Sinai. A statewide shortage of nurses has been in effect for some time. Miami Dade County, however, is not experiencing the shortage to the same extent as other parts of the state. One reason is that Miami-Dade Community College and Broward County Community College rank one and two among community colleges nationally in the number of nursing graduates. To the extent the shortage is having an impact on Miami Dade County, there are methods for dealing with it. Systems adopted by All About Staffing, a subsidiary of Hospital Corporation of America and a provider of clinical staffing services to Kendall, present a promising future for the availability of nurses. Kendall and Mount Sinai, moreover, attract different nurses in terms of culture and expectations. Nurses who work at Kendall are not generally interested in working at Mount Sinai. Nurses who work at Mount Sinai are not generally interested in working at Kendall. Approval of Kendall's application is not likely to have an impact on Mount Sinai's ability to recruit and retain nurses. AHCA's Position The Agency referred Mount Sinai's petition, taking it "at its word when it alleged that it would be 'substantially affected' if the Agency were to grant the CON application . . . that Mount Sinai challenges." AHCA's Brief and Proposed Recommended Order on Mount Sinai's Lack of Standing, p. 2. At this stage of the proceeding, the Agency sees itself as sufficiently informed to support dismissal of the petition for lack of Mount Sinai's standing. At hearing, Jeffrey N. Gregg, Chief of AHCA's Bureau of Health Facility Regulation testified in support of dismissal for lack of Mount Sinai's standing. The facts supporting the Agency's position are summarized in 1 through 6 of the Agency's Proposed Recommended Order.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Agency for Health Care Administration dismiss the petition of Mount Sinai Medical Center of Florida, Inc., in DOAH Case No. 03-2954, for lack of standing. DONE AND ENTERED this 12th of March, 2004, in Tallahassee, Leon County, Florida. S DAVID M. MALONEY Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 12th day of March, 2004. COPIES FURNISHED: Stephen A. Ecenia, Esquire Rutledge, Ecenia, Purnell & Hoffman, P.A. 215 South Monroe Street, Suite 420 Post Office Box 551 Tallahassee, Florida 32302-0551 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 Geoffrey D. Smith, Esquire Susan C. Hauser, Esquire Blank, Meenan & Smith, P.A. 204 South Monroe Street Post Office Box 11068 Tallahassee, Florida 32302-3068 Tom R. Moore, Esquire Agency for Health Care Administration 2727 Mahan Drive, Mail Station 3 Tallahassee, Florida 32308 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 Bethesda Healthcare Systems, Inc., filed Certificate of Need Application No. 9838 with the Agency for Health Care Administration. The application seeks authority to establish an 80-bed acute care satellite hospital in the West Boynton area of south Palm Beach County. The issue in this case is whether the Agency should approve the application.
Findings Of Fact District, Subdistrict, Locations The site for WBCH (or the "Proposed Hospital") is on the northeast corner of the intersection of Boynton Beach Boulevard and S.R. 7 (a/k/a "U.S. Highway 441"), approximately two miles west of the Florida Turnpike in an unincorporated area of Palm Beach County referred to by Bethesda as the West Boynton area. District 9, composed of Indian River, Okeechobee, St. Lucie, Martin, and Palm Beach Counties, is one of 11 health service planning districts in Florida. See § 408.032(5), Fla. Stat. Subdistrict 9-5 (the "Subdistrict") consists of the southern portion of Palm Beach County as more particularly described by Florida Administrative Code Rule 59C-2.100(3)(i)5. The Subdistrict includes the West Boynton Beach area. The inhabitable geographic area of the Subdistrict is bordered by Highway 98 on the North, the Atlantic Ocean on the East, the Palm Beach/Broward County Line on the South, and the Loxahatchee National Wildlife Refuge (the "Wildlife Refuge") on the West. It has three major and more or less parallel north- south transportation arteries: 1-95, the easternmost of the three, close to the state's east coast; Florida's Turnpike, the most central artery; and U.S. Highway 441 (a/k/a State Road 7 or "SR 7"), the westernmost of the three arteries, not far from the Everglades. The Subdistrict is divided roughly in half by Boynton Beach Boulevard, which runs east-west from Route 1 on the east to SR 7 on the west. The Subdistrict contains six hospitals: West Boca Medical Center, Boca Raton Community Hospital, Delray Medical Center, BMH, JFK Medical Center, and WRMC. Four of the 6 hospitals, JFK, BMH, Delray Medical Center, and Boca Raton Community Hospital, are arrayed north to south in proximity to the I-95 corridor. Two sit east of the corridor, Boca Raton and BMH; the other two are west of the corridor, JFK and Delray. The remaining two hospitals in the Subdistrict, WRMC and West Boca Medical Center are each located along or close to SR 7. The most northerly-situated of the six hospitals, WRMC, is 8.47 miles north of Boynton Beach Boulevard; West Boca Medical Center, the most southerly and at about the same latitude as Boca Raton Community Hospital, is located 12 miles south of the Boulevard. Of the six Subdistrict hospitals two, Boca Raton Community Hospital and West Boca Medical Center, are not participants in the proceeding. The two are well south of Proposed Hospital's site, at a distance 25% or so farther from the proposed site than any of the four Subdistrict hospitals that are participating in this proceeding. If connected on a map by lines drawn from Delray to BMH, then from BMH to JFK, then from JFK to Wellington, the four participant hospitals (the applicant and the three intervenors), are arrayed in a crescent stretching from south to north. The crescent just about parallels the bend along the eastern boundary of the Wildlife Refuge. The southern tip of the crescent is at Delray Medical Center; heading north, BMH, east of the interstate is next. From BMH, the crescent curves westward as it extends north toward JFK. Its northern tip is at WRMC, well west of JFK. The site of the proposed project is not much east of the Wildlife Refuge, and at a point almost centered in relation to the four determinant locations of the crescent. Put another way, as the crow flies, the proposed site is generally equidistant from Delray, BMH, and JFK (11 to 12 miles) and slightly closer to WRMC (roughly 9 miles). Parties The Bethesda Healthcare System and its Facilities Bethesda Bethesda, a Florida nonprofit corporation, operates a local health care system in an area of south Palm Beach County it refers to as the "Boynton Area" because of its proximity to incorporated Boynton Beach. Its long-standing mission as a community-based organization is to provide quality health care services to all the patients it serves, regardless of ability to pay. Bethesda commits its earnings to operations and to reinvestment into new and expanded health care services and facilities for the Boynton area community. The Bethesda System includes BMH, Bethesda Health City, Inc., Bethesda Hospital Foundation, Inc., and other affiliated local entities that help advance Bethesda's mission. Bethesda is governed by local board members who are residents of its service area and are actively involved in the community. Bethesda Memorial Hospital BMH is a general acute care hospital located in Boynton Beach near the Atlantic coast, east of Interstate 95. Opened in 1959 as the first hospital in south Palm Beach County, BMH was originally established as a public hospital under the ownership and taxpayer support of the Southeastern Palm Beach County Hospital District, a public taxing district entity. In 1984, BMH was re-organized as a private nonprofit hospital under section 501(c)(3) of the Internal Revenue Code. In 1989, a county referendum replaced the hospital tax district with a county-wide healthcare district. BMH, therefore, no longer has any power to levy taxes; it doesn't receive any "tax revenues that aren't eligible to every other hospital in Palm Beach County from the existing healthcare district." Tr. 77. BMH currently has 390 licensed beds, including 347 acute care medical-surgical (“med-surg”) beds; a 15-bed Level II and Level III neonatal intensive care unit (“NICU”); and a 28- bed comprehensive medical rehabilitation ("CMR") unit, which opened in October 2005. BMH offers a wide variety of general inpatient med-surg services, an obstetrics ("OB") and perinatal program, and pediatric services. BMH offers numerous specialized adult services such as a comprehensive cancer program; a stroke center; a CMR unit; a comprehensive array of cardiology services, including diagnostic cardiac catheterization; a vascular institute; a full range of orthopedic services; and interventional radiology services, including neuroradiology. BMH also provides a host of hospital outpatient services, and it operates an active emergency department ("ED"). Bethesda has obtained CON approval to establish an interventional cardiology program (e.g., open heart surgery ["OHS"], angioplasty, and stents) at BMH, which is scheduled to open in late 2007. BHS also has CON exemptions to add eight cardiovascular ICU beds in connection with the interventional cardiology program and three NICU Level III beds, which will increase its total licensed capacity to 401 beds. Bethesda Health City In mid-1995, Bethesda opened Bethesda Health City, an ambulatory care facility in the West Boynton area, located south of the intersection of Hagen Ranch Road and Boynton Beach Boulevard, just east of the Florida Turnpike (the "Turnpike"). Population growth had begun to expand westward in Palm Beach County. The opening of Bethesda Health City followed Bethesda's perception of a need for health care services in the western unincorporated Boynton area. At the time Bethesda Health City opened, the surrounding West Boynton area was primarily agricultural. A nearby elementary school that served the children of migrant farmworkers was the only development in the area. Today, the area surrounding Bethesda Health City east of the Turnpike, like much of West Boynton, is undergoing significant commercial and residential development. At the time of hearing, a Super Target Store had just opened on the corner of Boynton Beach Boulevard and Hagen Ranch Road. A medical office building in the vicinity of Bethesda Health City was constructed in the last two or three years which is true of much of the nearby construction. The area is expected to continue to grow at a rapid pace as evidenced by new, large, project approvals that have taken place over the last two to three years, as well. Bethesda Health City offers certain outpatient services, such as outpatient imaging, radiation therapy, wound care, and physical therapy. Bethesda Health City also is the site of around 20 physicians' offices. All 135,000 square feet of existing space at Bethesda Health City currently is being utilized by Bethesda or is under lease to other health care providers, and Bethesda plans to open an additional 40,000 square feet of space on the remaining available land over the next year. Bethesda has about a 10% ownership interest in a limited liability company ("LLC") that operates an ambulatory surgery center at Bethesda Health City. The Proposed West Boynton Community Hospital With the orientation of the West Boynton Area of south Palm Beach County in mind, Bethesda purchased a site for the Proposed Hospital. The site is large enough to allow for the development of medical offices and ancillary facilities on the campus of WBCH. If approved and built, WBCH will include 68 med-surg beds and 12 critical care beds, all in private rooms, and an emergency department ("ED") with 12 treatment bays and an additional 6 observation beds. It will have an integrated operating room ("OR") suite for both inpatient and outpatient surgery services. WBCH will provide the same scope of general medical/surgical inpatient, outpatient, and emergency acute care services that are currently offered at BMH, including stroke, oncology, and related clinical research programs, with the exception of OB and NICU services, diagnostic cardiac catheterization, and radiation therapy. Bethesda plans to transfer 80 beds from BMH to WBCH. The transfer will enable BMH to convert its semi-private rooms to private rooms. It will not solve BMH's problem with overcrowding in its Emergency Department ("ED") but it will aid in relieving some of the pressure on the Emergency Room ("ER") and staff. The decompression will result from choice exercised by Bethesda emergency patients in the WBCH service area. It is reasonable to assume that those who reside closer to the WBCH ED than other Subdistrict EDs will typically choose WBCH over other facilities for the sake of convenience and in hope of receiving necessary treatment more quickly. AHCA The Agency is responsible for the administration of the CON program in Florida, including the evaluation of CON applications. See § 408.034, Fla. Stat. The Agency issued the SAAR in this case. Signed by AHCA's CON Bureau Chief, the SAAR contains the Agency's preliminary decision to approve the application, a decision AHCA has supported throughout the proceeding. WRMC Wellington Regional Medical Center is a full service 143-bed acute care hospital (133 acute care and 10 NICU level II beds) located at the intersection of State Road 7 and Forest Hill Boulevard. The Hospital was established in 1986. WRMC has over 470 physicians on its medical staff. WRMC provides all medical surgical services, including emergency medicine, required of and traditionally associated with a full service acute care hospital. WRMC offers additional specialized programs including obstetrics, NICU level II (with approval for NICU level III), specialized wound care, outpatient diagnostics and a Cancer Center. The full service Cancer Center at WRMC was established 15 years ago and has evolved to be the technological equivalent of some of the major cancer centers in Florida and nationally. The Center has advanced IRMT linear accelerators that pinpoint different types of cancers and equipment to provide high dose radiation (HDR). The Center provides 3D conformal configuration for tumors and is also installing Brian LAB, an advanced cancer therapy treatment. The Center is available and accessible to patients requiring cancer treatment in all its forms. The Outpatient Diagnostic Center at WRMC is user friendly. Opened in 2001 at a cost of $4.5 million, the Diagnostic Center is on the hospital campus but physically separate from the hospital. State of the art diagnostic equipment is tied to a PACS, which lets a patient's physician anywhere in the world view digital images of the patient via the internet. In the filmless environment of PACS, the patient receives a convenient CD ROM of their images. WRMC has a dedicated wound care program. The medical component consists of physicians and nurses who specialize in the debridement and treatment of difficult to heal wounds. The second component utilizes three hyperbaric chambers, which create atmospheres of 100% pressurized oxygen to expedite the wound healing. WRMC has a bariatric program for the management of morbid obesity. A specialized component of the program is gastric bypass surgery. The program targets complications that result from morbid obesity, high blood pressure and diabetes. JFK JFK Medical Center is an acute care hospital located on Congress Avenue in Palm Beach County. JFK operated as a not- for-profit hospital for almost 30 years before it was acquired by HCA in 1996 for approximately $251 million. The purchase price paid by HCA for JFK was used to pay off the hospital's debt and the remaining approximately $121 million was used to create the Quantum Foundation which funds a variety of health related projects in the area. In the wake of the acquisition, HCA has invested substantial amounts of money to upgrade JFK. The upgrades include a 40,000 square foot cancer facility, major plant and equipment improvements and significant expansions of the cardiac center. JFK has built three new cardiac catheterization labs, a new recovery area, an electro-physiology lab and two parking garages. JFK added 36 beds in early 2000 through a two story expansion and then completed a $76 million, five-story expansion in 2003 that tripled the size of the emergency room, added new ICUs and added 36 ICU beds. Since the acquisition by HCA, the exterior of the hospital has been upgraded and new equipment, including new chillers and boilers, has been added. The community image of the hospital and the morale of its employees have significantly improved since its acquisition by HCA. JFK currently has 424 adult acute care beds. JFK is the planning process to add 36 additional beds by building out shelled in space on the fifth floor of the recently constructed patient tower. This build-out will bring JFK's bed compliment up to 460. JFK has the ability to expand further by adding another 36 beds by constructing two floors to the northwest tower which was engineered and built to hold the additional two floors. In sum, JFK has the ability to add 72 beds to its existing campus. After that, JFK could also expand by purchasing property contiguous to its existing parking garage and moving certain administrative services from the existing hospital space and converting that space to hospital beds. JFK has received accreditation with commendation by JCAHO. In order to be a member of the JFK medical staff, a physician must achieve and maintain Board certification in his or her specialty area. JFK is in the top ten hospitals in the nation for working mothers. JFK accepts all patients without regard to their ability to pay. In 2005, JFK provided approximately $90 million in uncompensated care. JFK's focus is primarily on orthopedics, cancer, cardiac services, neurosciences and internal medicine. JFK, as a complex facility committed to offering high quality services, has kept up with rapid advances in medical technology, particularly in the areas of cardiac and bariatric services. JFK is also a center of medical excellence with high quality services in neurosurgery and multiple areas of general vascular surgery. In order to keep up with the rapid changes in cardiology JFK has made significant investments and commitments. Since 1987, it has installed three cardiovascular laboratories and replaced the equipment in them once. It has developed an electrophysiological program with two electrophysiological suites. An active participant in some of the recent, major innovations in cardiac care, JFK's cardiac program has been the busiest in Palm Beach County for many years. It is unique in that all the doctors associated with the cardiac program are hospital-based; none have a private practice. There are three open-heart surgical suites with seven or so cardiovascular surgeons on staff. There are five interventional cardiologists among 30-board certified clinical cardiologists and 5 electrophysiologists. Each has a volume of work that exceeds the average volume of physicians in Palm Beach County. The success of the cardiac program has enabled JFK to develop a number of other programs that have enhanced the level of sophistication of medical services in South Palm Beach County. JFK was recently certified as a chest pain center by a national accrediting organization that employs rigorous criteria for certification. In the certification process, emergency management services in Palm Beach County were praised by the organization for bypassing local hospitals to go to JFK as a primary angioplasty site, a practice that is gaining hold in Florida, in general. JFK has also established a vascular institute which utilizes a team approach with three different disciplines coming together: interventional radiology, cardiology, and vascular surgery. The ability to put together an effective team for this type of sophisticated approach is dependent upon the size of the hospital. JFK is investing in advanced technology in order to enhance its vascular service line. It is building two vascular suites "to do the same kind of stenting and intervention to . . . patients, but not necessarily in their heart, in the rest of the blood vessels in their body." Tr. 3750. In addition, at the time of hearing, JFK was in the process of implementing procedures that employ a gamma knife, a highly sophisticated radio-surgical tool for the treatment of brain and spine lesions. The use of a gamma knife under the direction of a neurosurgeons with the assistance of a radiologist or radiation oncologist minimizes the amount of tissue to be removed in lesion surgery. The procedure has multiple benefits including minimization of strokes. Most hospitals do not have access to gamma knives which cost in excess of $4 million. JFK has made other commitments that will enhance the level of services that are being delivered to residents of Palm Beach County. For example, JFK has made commitments to buy state-of-the-art equipment for performing more complex neuro- interventional procedures to be conducted by James Jaffe, M.D., an interventional neuro-radiologist who practices at JFK and who is one of the few interventional neuro-radiologists practicing in all of Florida. JFK is a JCAHO-certified stroke center, having met the rigid qualifications that only a limited number of hospitals nationwide and few hospitals in the Palm Beach area have met. Accredited by JCAHO in January 2006 as a primary stroke center, JFK hopes to become a comprehensive stroke center so designated by the state. To do so will require meeting criteria that JFK does not yet meet. But its intention to meet them is serious. At the time of hearing, JFK had plans to meet with its stroke team to work through the steps required to achieve certification to ensure the critical components necessary for the certification are in place prior to seeking it. Most clearly indicative of the seriousness of its intentions is the presence of Dr. Jaffe in the radiology group on staff to JFK. The full- time presence at a facility of an interventional neuro- radiologist is among the requirements for designation as a comprehensive stroke center by the state. Delray The ultimate parent company of Delray is Tenet Healthcare, which owns other hospitals throughout the country. Tr. at 4743. Tenet owns four acute-care hospitals in Palm Beach County in addition to Delray: West Boca Medical Center, Good Samaritan, St. Mary’s, and Palm Beach Gardens hospitals. Each hospital is its own corporation and has its own local governing board that, among other things, is responsible for ensuring the quality of care in the hospital, credentialing of all health professionals, and approving appointments to the medical staff, as well as clinical policies, procedures, and protocols for patient care. Delray is a 403-bed, for-profit hospital in Delray Beach in southern Palm Beach County. Located in zip code 33484, near the eastern boundary of zip code 33446, one of the six zip codes designated as the service area of the proposed WBCH, Delray is around 2.5 miles south of Atlantic Boulevard. Delray opened in 1982. It is accredited by JCAHO and recently received accreditation as a stroke center. Delray provides tertiary-level care. It is also one of the two state and county designated trauma centers in Palm Beach County. St. Mary's (another Tenet hospital), located in West Palm Beach, serves the northern part of the county, and Delray the southern part, from the Broward County line south of Delray to Southern Boulevard north of the hospital. As a Level II Trauma Center, Delray must meet certain requirements that relate to the efficiency and speed with which advanced trauma care can be delivered to trauma victims. Among these are the ability to have neurosurgeons and orthopedic surgeons available to assist the trauma surgeon within 15 minutes of receiving a call for assistance. The trauma service offered by Delray significantly raises the intensity of the services offered at the hospital. Delray is located on a “campus” that includes the hospital building, a large outpatient diagnostic center, a wound care center, a trauma aftercare center, a 53-bed inpatient psychiatric facility known as Fair Oaks Pavilion, a CMR facility known as Pinecrest Rehabilitation Hospital, and a nursing home known as Lakeview Care Center. Delray’s 403 licensed beds include the 53 inpatient psychiatric beds at its in-patient psychiatric facility known as Fair Oaks Pavilion ("Fair Oaks"). The remaining 350 acute care beds consist of 298 medical-surgical beds and 52 critical care beds that are located throughout the hospital in various departments. Specifically, there is a 14-bed trauma ICU, 8-bed neurosurgical ICU, 8-bed coronary care unit (“CCU”), 15-bed surgical ICU, and a 7-bed medical ICU. All of the ICU beds are private, and Delray has 102 private beds in total. The rest of its beds are semi-private. Delray recognizes that "[p]atient preferences seem to be moving more toward private rooms," tr. 4760, but the hospital's semi- private rooms have not caused substantial operational difficulties for Delray. Delray is a highly-utilized facility, as it was at the time of Bethesda I. It recently converted a 42-bed unit to telemetry beds because of the heightened demand for such beds during the peak “season” in South Florida (winter months), and to lessen the instances where patients are held in the ER waiting for a bed. These beds reduce the time between when patients are admitted to the hospital and when they are actually placed in an inpatient bed. Delray also added 31 acute care med-surg beds (also referred to as "surge ortho," beds at hearing, see tr. 4808), in December 2005 in anticipation of that season’s activity. With the addition of the 31 beds, occupancy rates did not rise during the 2005-2006 winter season. Although it has the ability to add more beds, Delray has no current plans to do so. It is observing a number of market forces that could reduce the need for Delray beds in the near term, such as the opening of the interventional cardiology and open heart surgery programs at BMH and Boca Raton Community Hospital. Delray also anticipates, similar to JFK, that its census could be affected should Boca Raton Community Hospital follow through on its announcement that it will build a 500-bed teaching hospital on the campus of Florida Atlantic University. The hospital would add 100 beds to Boca Raton's inventory. Whatever the effect of these market forces, Delray has the ability to expand further and add more beds. It has a site plan approved by local government for 616 beds on its campus as it did at the time of Bethesda I. The campus includes the hospital building with 350 beds, Fair Oaks and its 53 psychiatric beds and a 90-bed comprehensive medical rehabilitation hospital known as Pinecrest Rehabilitation Hospital for a total of 502 beds. Some beds that did not exist at the time of Bethesda I (although recognized as likely at the time to be added soon) have since been added, such as the 31 med surg beds added in December 2005. Delray is also completing construction on a new central energy plant, and construction is beginning on a new emergency department that should be completed in a year and a half. The new emergency department will increase the number of ER treatment rooms at Delray from 24 to 36, and will have 3 distinct trauma rooms in it. In addition, Delray has recently added two major imaging instruments in its radiology department and a new 64- slice CT scanner, and is planning to add a new MRI unit in an expanded area constructed in conjunction with the new ER. The radiology department is in the process of implementing the “PACS” system. Instead of film, it uses digital images that can be emailed, remotely accessed and viewed, and electronically stored. This technology allows for more prompt diagnoses by doctors and efficient use of time and space. Delray has plans for renovations in its pharmacy, remodeling its regency unit, adding electrophysiology to its cardiac services, and some disaster preparedness upgrades such as hurricane windows. The services provided at Delray include general medical and surgical services, trauma, interventional cardiology, open-heart surgery, in-patient psychiatric services, orthopedics, gastroenterology, urology, neurology and neurosurgery. These services reflect the chronic illnesses and co-morbidities of its predominantly elderly patient population. Because of this patient demographic, Delray does not provide OB services. Delray has been the only provider of inpatient psychiatric services in south Palm Beach County since October 2001 when Bethesda Memorial discontinued its program. Since 1991, Delray has been one of two state- designated Level II trauma centers in Palm Beach County. This designation requires that Delray have a neurosurgeon, trauma surgeon, orthopedic surgeon, anesthesiologist, and other specialists and specialized equipment and facilities available at all times. Being a trauma center also means that Delray has a higher acuity and intensity of patient conditions that often include the most severe injuries that require long recovery times. Delray receives funding from the Palm Beach County Healthcare District to help offset a portion of the costs associated with providing trauma services. There is a cap to this funding. The cap is generally reached "at about month 9," tr. 4785, so that three months of the year are uncovered by public funding. Approximately $1-million in trauma care provided by Delray, therefore, is not covered by funding from the Healthcare District. Delray accepts all patients without regard for ability to pay. Bethesda I: The 2003 Bethesda/JFK CON Applications In the early part of 2003, Bethesda filed CON Application No. 9659. In the same batching cycle, JFK filed CON Application No. 9660. Each application sought approval to establish a satellite hospital in the West Boynton area. AHCA issued a SAAR in June of 2003. It preliminarily approved Bethesda's application and denied JFK's. An administrative hearing on the applications commenced on February 5, 2004. By Recommended Order dated September 29, 2004, the Administrative Law Judge ("ALJ") recommended denial of both the Bethesda and the JFK applications. A final order denying both applications was issued by AHCA on March 7, 2005 (the "Bethesda I Final Order"). Since the close of final hearing in this case, the final order has been affirmed by the Fourth District Court of Appeal. See Bethesda Healthcare System, Inc. v. Agency for Health Care Administration, 4th DCA Case No. 4D05-1430. Unlike Bethesda, JFK decided not to re-apply for a CON to authorize a satellite hospital in the West Boynton Area. JFK's Decision Not to Re-apply The decision not to re-apply was made by JFK's CEO despite the import of the West Boynton area "market" to JFK. This import is demonstrated, inter alia, by JFK's construction of an office building in the West Boynton area that includes a wound care center and diabetes center. The decision of JFK's CEO was supported by several factors. First, JFK accepted the decision in Bethesda I. Second, JFK's CEO concluded that a small community hospital was not the best way to meet the health care needs in the West Boynton area for a number of reasons, among them changes in the CON regulatory arena and advances in the delivery of health care services. Third, JFK established both a hospitalist program and an intensivist program to better ensure prompt and effective care for its patients, strategies that will enhance the quality of health care services in the Subdistrict. These programs are expensive. They represent a direction taken by JFK in the use of its resources for meeting the healthcare needs of its patients different from the direction it pursued in Bethesda I. With regard to changes in the CON regulatory arena, the ability of existing hospitals to add beds has been deregulated. Furthermore, opening soon in District 9 are three new open heart programs that will significantly affect other existing providers in the district, including JFK and Delray. As for advances in the delivery of health care services, programs such as the intensivist program provide great benefits to patient care and outcomes. Because there is a specially trained physician present in the ICU 24 hours a day, delay in evaluation and management of the patient is greatly reduced. Moreover, patients and their families' satisfaction levels improve. Since starting the intensivist program, the number of cardiac arrests at JFK has been cut in half and the survival rate is up to 70% from 50%. More generally, studies have shown that if a hospital has an intensivist working 24 hours a day, seven days a week, the mortality rate for intensive care unit patients goes down 40%. The cost to a hospital to implement an intensivist program is very high, but patients get better care and get out of the ICU more quickly. For an intensivist program to be effectively implemented, a hospital needs a significant volume of ICU admissions. Bethesda II Bethesda filed CON application 9838 in the first "hospital beds and facilities" batching cycle of 2005. The acute care bed need rule, Florida Administrative Code Rule 59C-1.038, was repealed effective April 21, 2005. The repeal of the rule took effect subsequent to the filing of Bethesda's application but prior to the issuance of the SAAR by AHCA and initiation of this formal administrative proceeding. The parties stipulated that the letter of intent, CON application, and omissions response were timely filed by Bethesda and processed by AHCA in compliance with the statutory technical submittal requirements. The Omissions Response was filed on April 20, 2005. Dated and received by the Agency that same day is a letter from counsel for Delray (the "Delray Letter"). Its opening paragraph states, in part, the following: Even though Bethesda Healthcare System (Bethesda) filed an incomplete "shell" application, it is clear there is no need for a new acute care hospital in Palm Beach County, including the west Boynton Beach area. It is also clear there are no historical or projected access problems in the west Boynton Beach area that have affected or are projected to affect outcomes or quality of life. Moreover, a significant number of additional acute care beds have been approved by your Agency in the past two to three years to serve current and future residents of the proposed service area. These statements are based on the Final Order by AHCA in Bethesda's March 2003 CON application (#9659) for a similar project (Case No. 03-2701). This Final Order was recently entered on March 7, 2005 and there have been no significant changes of any kind that should change AHCA's position on new hospital construction in the west Boynton area. We therefore urge AHCA to deny Bethesda's application. Delray Ex. 9, (emphasis supplied). On June 17, 2005, the Agency issued its State Agency Action Report (the "Bethesda II SAAR"). The Bethesda II SAAR recommended approval of Bethesda's application. The Bethesda II SAAR on its first page makes reference to the Delray Letter. In doing so, it summarizes the letter's content and specifically refers to the Delray Letter's synopsis of the highlights in the Bethesda I Final Order to support Delray's call for the denial of the application in Bethesda II: This letter [the Delray letter] references Bethesda's previous attempt to establish a satellite facility in West Boynton (CON #9659) and provides highlights of the Final Order [footnoted reference to DOAH Case No. 03-2701] signed by the Agency Secretary on March 7th, 2005, which details the Agency's ultimate reasoning for denying a Certificate of Need (CON) to construct a Bethesda West facility. Ex. B-1F, at 1. The Bethesda II SAAR goes on to detail the arguments advanced by Delray for denial of the application as presented in what the Bethesda II SAAR denominates "this opposition letter." See id., at 1-2. Thus the SAAR makes several thing clear about Bethesda I: 1) the drafter of the Bethesda II SAAR was aware of the Bethesda I Final Order, and; 2) Delray's view of the Bethesda I Final Order was considered by AHCA. The SAAR in Bethesda II does not make any reference to changes in material circumstances that would justify a different outcome from Bethesda I. Nor did staff have a recommendation with regard to the application. At a meeting to review the SAAR, attended by Mr. Gregg, with the Secretary of the Agency, Alan Levine, the decision was made to approve the application. Whatever findings with regard to the intra-agency workings of AHCA that could be drawn from the circumstance of the application's approval, Bethesda is provided the opportunity in this formal administrative proceedings to demonstrate that substantial changes in material circumstances have occurred since Bethesda I. Bethesda has taken advantage of the opportunity. It has shown or proven substantial changes in material circumstances to have occurred between Bethesda I and this case. Not the least of these is that Florida Administrative Code Rule 59C-1.008(2)(e), applies to this case. It did not apply in Bethesda I. In light of the changes between Bethesda I and this case, the ultimate question remains: what action should be taken on the basis of findings related to CON statutory and rule criteria applicable in the case. Need under the CON Law In General Every new hospital project in Florida must be evaluated under the statutory criteria that requires consideration of the need for the proposed project. These criteria are found in ten subsections in Section 408.035, Florida Statutes. There are rule criteria as well that must be met or factored into the balancing process that will lead to a decision in this case. In the wake of the filing of the Bethesda I application, however, there have been significant changes to the CON Law. They will be referred to in this order as they were in Bethesda I: "the 2004 CON Amendments." It was concluded in Bethesda I that the 2004 CON Amendments had no impact on either the Bethesda or JFK applications in that case. Following issuance of the Bethesda I Final Order, however, changes were made to AHCA rules as a result of the 2004 CON Amendments. As concluded in the "Conclusions of Law" section of this order, these changes have an impact on the legal framework in which CON 9838, Bethesda's current application, is to be considered. The 2004 CON Amendments: the Impact in Bethesda I, Analysis in Bethesda I and the Impact on Bethesda's Current Application On June 28, 2004, Governor Jeb Bush signed into law House Bill 329 (the "2004 CON Amendments). The bill made significant changes to the CON law by way of amendments and revisions. The 2004 CON Amendments and their effects on the Bethesda I application were specifically addressed in Bethesda I. See Wellington Regional Medical Center, Inc., d/b/a Wellington Regional Medical Center v. AHCA, Case No. 03-2701 (DOAH September 29, 2004) at 91-94; (AHCA March 11, 2005). Beginning with paragraph 340 of the Recommended Order, the ALJ conducted a legal analysis that reached the following conclusions: 1.) the 2004 CON Amendments applied to the applications of Bethesda and JFK in Bethesda I; 2.) the 2004 CON Amendment's deregulation of acute care bed additions at existing hospitals had no direct impact on either application in Bethesda I; 3.) until the Agency amends its need methodology rules to account for the statutory changes made by the 2004 CON Amendments (rule changes not undertaken or effective at the time of the issuance of the Bethesda I recommended order), the rules in existence, whether consistent with the 2004 CON Amendments or not, remained effective and, therefore, applied in Bethesda I; 4.) likewise, the legal impacts of transfers of beds from facilities within the same subdistrict or from a facility in one subdistrict to a facility in another subdistrict continued to have significance; 5.) JFK, therefore, was required to establish "not normal" circumstances to win approval of its application because it proposed the transfer of beds from one subdistrict to another (Subdistrict 9-4 to Subdistrict 9-5); 6.) In contrast, Bethesda was not required to establish "not normal" circumstances to win approval of its application because its proposed transfer of beds was intra-subdistrict, that is, within Subdistrict 9-5. The Recommended Order in Bethesda I concluded that JFK had failed to show "not normal" circumstances and therefore its application should be denied. (It was also concluded that JFK otherwise failed to satisfy the statutory and rule criteria for a CON.) With regard to Bethesda, it was concluded that it failed on balance to satisfy the statutory and rule criteria. Should AHCA or an appellate court disagree and conclude that need for a satellite hospital in the West Boynton area had been proven, the ALJ recommended that Bethesda be approved. The most significant factors in favor of the Bethesda application's superiority over JFK's were "its more reasonable utilization projections, its financial feasibility, its lower costs of construction, its greater integration of administrative services between the satellite and main hospitals, and its more realistic and attainable Medicaid and charity care commitment." The Recommended Order listed the factors in the balancing process that led to the recommendation that Bethesda's application be denied for failure to satisfy the applicable statutory and rule criteria. Weighing against marginal improvement in access for residents of the West Boynton area so that the balance was struck in favor of denial of Bethesda's application were "exacerbation of the shortage of specialty physicians for ER call coverage (§408.035(6), Fla. Stat.), the negative impact . . . of Bethesda West on the competitive balance in the West Boynton market (§408.035(9), Fla. Stat.), and the costs associated with the construction of the facility (§408.035(10), Fla. Stat.)." In its final order, AHCA accepted the recommendation that the applications of both Bethesda and JFK be denied. In doing so, AHCA rejected all of the exceptions filed by the parties, save one. The granted exception was filed by the Agency, itself. The Agency had taken exception to giving weight to the finding that "Bethesda [had] failed to demonstrate that access to acute care services will be materially approved based upon the approval of the [proposed hospital,]" Id., AHCA Final Order at 11. The Agency ruled that "[w]hile a CON applicant is required to demonstrate the extent to which the proposed services will enhance access to health care for the residents of the service district [citation omitted], the CON applicant is not required to show that the granting of its application will materially improve access to health care services." Id., at 12. In follow-up to the lone granted exception, the Agency substituted a new Conclusion of Law in Bethesda I. It includes the following language: "Bethesda failed to demonstrate . . . the extent to which the proposed services will enhance access to health care for the residents of the subdistrict." Id. The Agency's Final Order in Bethesda I, therefore, clarifies that a material improvement in access is not necessary for an applicant to receive credit under "access" criteria. An applicant need only show enhancement of access provided it demonstrates the extent to which the proposed services will enhance access to health care for the residents of the subdistrict as called for by Section 408.035(5), Florida Statutes. As concluded in the section of this order devoted to Conclusions of Law, the legal framework in which this case is decided is different from the Bethesda I legal framework. (This conclusion is enough, on its own, to defeat the applicability of the doctrine of administrative finality urged by Delray.) Florida Administrative Code Rule 59C-1.038(4)(b), in effect at the time of the Bethesda I decision, has been repealed. It provided the formula for calculating acute care bed need based on existing bed inventory and other factors in the Subdistrict as well as subsection (a) of the same rule which provided for approval under "not normal" circumstances. Since there is no methodology by rule for calculating bed need applicable to this case, this case is subject to Florida Administrative Code Rule 59C-1.008(2)(e) (the "No AHCA Need Methodology Rule"). The No AHCA Need Methodology Rule was not at issue in Bethesda I. AHCA's Position as to Need/Access Criteria The Agency recognizes that the repeal of AHCA's acute care bed need rule in the wake of the 2004 CON Amendments altered the legal framework for acute care hospital projects. Under the 2004 CON Amendments, it is no longer possible to try to predict acute care bed need based on market conditions, utilization, or looking at known and proposed bed additions. The deregulation accomplished by the 2004 CON Amendments makes the situation of hospital acute care bed need in health planning districts in Florida or their subdistricts too fluid. Acute care bed need is outside the scope of reasonable predictability. With respect to acute care services, the only reviewable projects remaining are new hospital projects. A CON advisory group was established by the Legislature in 2004 to consider whether AHCA should adopt a "decision algorithim," or a new rule for acute care projects. After a year of study, the advisory group recommended that AHCA continue with its case-by-case adjudication in the absence of a rule. In evaluating a proposed site for a new hospital, therefore, AHCA looks at the criteria in the No AHCA Bed Need Methodology Rule starting with local population data, preferably at the zip code level. AHCA also considers access to emergency services and to basic hospital services. The trend in new hospital projects has been satellite hospitals and small basic hospitals located either in suburban parts of major urban centers, or what Mr. Gregg refers to as "small towns," which are areas of very rapid growth that are more remote from urban centers. AHCA continues to look at occupancy levels of existing hospitals when evaluating a proposed site for a new hospital. However, AHCA allows applicants to define "need" as provided in rule. There is no Agency need methodology nor is there any Agency policy upon which to determine need for the hospital services proposed by Bethesda's application. Beginning with its third sentence, Florida Administrative Code Rule 59C-1.008(2)(e), therefore, governs AHCA in evaluating the arguments for "need" presented by CON applicants for satellite hospital projects since there is no agency need methodology for determining need. The pertinent part of the rule reads: If an agency need methodology does not exist for the proposed project: The agency will provide to the applicant, if one exists, any policy upon which to determine need for the proposed beds or service. The applicant is not precluded from using other methodologies to compare and contrast with the agency policy. If no agency policy exists, the applicant will be responsible for demonstrating need through a needs assessment methodology which must include, at a minimum, consideration of the following topics, except where they are inconsistent with the applicable statutory or rule criteria: Population demographics and dynamics; Availability, utilization and quality of like services in the district, subdistrict or both; Medical treatment trends; and, Market conditions. The existence of unmet need will not be based solely on the absence of a health service, health care facility, or beds in the district, subdistrict, region or proposed service area. Fla. Admin. Code R. 59C-1.008. In considering applications for satellite hospitals, AHCA weighs and balances the criteria in Florida Administrative Code Rule 59C-1.008(2), along with other applicable criteria. With respect to "Medical Treatment Trends," AHCA has identified improved access to emergency services and to basic hospital services as a "medical treatment trend." AHCA does not require a CON applicant for a satellite hospital to demonstrate that the existing acute care delivery system in the proposed service area is failing in order to obtain approval of the satellite proposal; nor does AHCA currently have a travel time standard with respect to access to acute care services. On numbers of occasions, AHCA has approved satellite hospital CON applications even when residents of the proposed satellite hospital's proposed service area live within 20 minutes of existing hospitals. In view of the recent legislative and regulatory changes, AHCA characterizes all arguments for need for new acute care hospitals as "special circumstances." There are no defined "special circumstances" that an applicant must demonstrate for approval. By "special circumstances," AHCA means whatever the information is supplied by the applicant. Typically, an applicant for a new hospital project will emphasize population growth, access to emergency services, and access improvement due to population growth as "special circumstances." See Tr. 3428- With regard to emergency services in particular, "convenience" is considered a part of access. AHCA recognizes the significant population growth in West Boynton as a fundamental change that supports Bethesda's newly proposed WBCH. As Mr. Gregg explained, with each passing batch, every passing six months, there is going to be a significant number of people entering south Palm Beach County, and more of these people will reside in the West Boynton area as opposed to the established eastern/coastal areas. The need for hospital services for this growing population becomes more significant with the passing of time. A large and rapidly growing number of people will derive various benefits from the placement of WBHC in the West Boynton area. For example, for more and more people over time it will be more convenient to access emergency room and certain basic hospital services. In its SAAR, AHCA recognized that the WBCH service area has a growing population, and, in future years, "access to existing facilities will get slower for more people." In approving this application, AHCA's focus is on planning for the future. By looking ahead of current need to need in the future AHCA's preliminary approval of WBCH is intended to respond to reasonably projected growth in the West Boynton area and in the Subdistrict. The proposed location for WBCH is a favorable one in AHCA's view because it is remote enough from existing facilities yet surrounded by a high-growth area. The ultimate judgment made by AHCA is that WBCH will do greater benefit for the people that will receive enhanced access than it will do harm to the existing providers. This judgment is founded on the WBCH's proposed location. Location, location, location Under Bethesda's application, bed inventory in the Subdistrict remains unaffected by WBCH. Bethesda's opponents make the point that Bethesda can de-license beds at BMH, transfer them to WBCH and then, at will, increase the inventory at BMH to make up for the transferred beds. With the exception of physical constraints or local regulation constraints to an increase in beds at WBCH, the point of Bethesda's opponents is correct. There is no impediment in CON law at present to an increase at will in BMH's bed inventory. Bed inventory in Bethesda I with regard to Bethesda's application was not a relevant concern because the proposed project would not increase the inventory of the Subdistrict. The same is true in Bethesda II. In addition, bed inventory in the Subdistrict is not relevant under Bethesda II for another reason. As JFK argued in Bethesda I, "the practical effect of the 'deregulation' of acute care bed additions by the 2004 CON Amendments is that the Agency's subdistrict bed inventories ... become irrelevant." Columbia/JFK Medical Center Limited Partnership, d/b/a JFK Medical Center v. Agency for Health Care Administration, (DOAH September 29, 2004) at 93. The issue in this CON proceeding then, whether by virtue of the current CON Law or Bethesda's application for intra-subdistrict action, is not how many beds should there be in the Subdistrict. Rather, the issue with regard to beds is where, in the context of need analysis, should the beds be located. This is an issue that is fundamental to all manner of planning, not just healthcare planning. As one expert health care planner put it at hearing: [G]eographic access is a foundation of planning, health planning, regional, urban planning, all the same . . . [T]he accent for example in real estate is location, location, location. It's no different here. Tr. 5132. That bed location rather than bed inventory is a concern in this proceeding does not relieve Bethesda of demonstrating need and otherwise meeting the statutory and rule criteria for its Proposed Hospital. Notwithstanding the de-regulation of the addition of new beds at existing acute care hospitals, therefore, the opening of a new acute care hospital, whether a satellite hospital or a hospital that adds beds to the health services planning area's inventory, remains subject to CON review under statutory and rule criteria. The approval of a satellite hospital (the re-location of beds in a new hospital facility) must be evaluated under designated CON statutory and rule criteria. In Bethesda I, the criteria in Florida Administrative Code Rule 59C-1.030(2) were found to be "subsumed in the statutory criteria discussed [in the order] related to the accessibility (or not) of existing acute care services in Subdistrict 9-5 and the need (or not) for new acute care beds in the West Boynton area." Bethesda I Recommended Order, at 88. The criteria of Florida Code Rule 59C-1.030(2), therefore, will be discussed together with the statutory criteria found in Sections (1), (2) and (5) of Section 408.035, Florida Statutes (the "CON Review Criteria Statute" or the "Statutory Review Criteria.") Florida Administrative Code Rule 59C-1.030(2)(a) and The Statutory Review Criteria: Subsections (1), (2) and (5). Florida Administrative Code Rule 59C-1.030 reads in part: * * * (2) Health Care Access Criteria The need that the population served or to be served has for the health . . . services proposed to be offered or changed, and the extent to which all residents of the district, and in particular low income persons, . . . ethnic minorities, . . . other underserved groups and elderly are likely to have access to those services. The extent to which that need will be met adequately under a proposed . . . relocation of a service . . . and the effect of the proposed change on the ability of members of medically underserved groups which have traditionally experienced difficulties in obtaining equal access to health services to obtain needed health care. The contribution of the proposed service in meeting the health needs of members of such medically underserved groups, particularly those needs identified in the applicable local health plan and State health plan as deserving of priority. In determining the extent to which a proposed service will be accessible, the following will be considered: The extent to which medically underserved individuals currently use the applicant's services, as a proportion of the medically underserved population in the applicant's proposed service area(s), and the extent to which medically underserved individuals are expected to use the proposed services, if approved; The performance of the applicant in meeting any applicable Federal regulations requiring uncompensated care, community service, or access by minorities and handicapped persons to programs receiving Federal financial assistance, including the existence of any civil rights access complaints against the applicant; The extent to which Medicare, Medicaid and medically indigent patients are served by the applicant; and The extent to which the applicant offers a range of means by which a person will have access to its services. In any case where it is determined that an approved project does not satisfy the criteria specified in paragraphs (a) through (d) the agency may, if it approves the application, impose the condition that the applicant must take affirmative steps to meet those criteria. (f) In evaluating the accessibility of a proposed project, the accessibility of the current facility as a whole must be taken into consideration. If the proposed project is disapproved because it fails to meet the need and access criteria specified herein, the Department will so state in its written findings. The CON Review Criteria Statute provides, in pertinent part: Review Criteria.--The agency shall determine the reviewability of applications and shall review applications for certificate-of-need determinations for health care facilities and health services in context with the following criteria: The need for the health care facilities and health services being proposed. 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. * * * (5) The extent to which the proposed services will enhance access to health care for residents of the service district. Application of the statutory and rule criteria in this case requires findings of fact to be made with regard to certain health care planning concepts. Among these are "Proposed Service Areas," typically composed of a "Primary Service Area" and a "Secondary Service Area." The Proposed Service Area Primary Service Area, in General There are a number of different ways that health care planners can define a hospital's primary service area. One common way is by zip code. Frequently, health care planners include in a hospital's primary service area zip codes that account for 75% or 80% or so of the origins of patients discharged from the hospital after receiving in-patient acute care. The primary service areas selected by each of the participants in this proceeding are reasonable. WBCH'S Primary Service Area Bethesda proposes to establish WBCH in a rapidly developing unincorporated area of south Palm Beach County known as West Boynton, an area due west of the City of Boynton Beach. The site for the proposed WBCH is on the corner of SR 7 and Boynton Beach Boulevard. Boynton Beach Boulevard runs from US Highway 1 on the east at a stone's throw from the intracoastal waterway westward to the levee on the eastern boundary of the Wildlife Refuge. It is the main east/west thoroughfare serving the West Boynton area. The West Boynton area is now generally recognized in the South Palm Beach County community as roughly bounded by Lantana Road on the north; the L-30 canal on the south; the City of Boynton Beach on the east, whose western boundary is between Congress Avenue and Military Trail; and the Wildlife Refuge on the west. Lantana Road is about 4 miles north of Boynton Beach Boulevard; the L-30 canal is 2 1/2 miles south of Boynton Beach Boulevard. Military Trail is about 5 miles east of the WBCH site. The primary service area (the "PSA") for the proposed project comprises four zip codes: zip codes 33437 (the home- site zip code), 33436, 33463, and 33467. These four generally equate with the West Boynton Area. Secondary Service Area The entire proposed service area consists of six zip codes. WBCH's secondary service area ("SSA") includes zip code 33414 to the north, in the Wellington area, and zip code 33446 to the south, in unincorporated West Delray. Overlapping PSAs The four zip codes in the PSA chosen by Bethesda for WBCH are each a part of one or more primary service areas of the four hospitals that are participants in this proceeding. For example, all four zip codes that make-up the WBCH PSA could be considered as zip codes within BMH's primary service area. Two of the proposed zip codes (33426 and 33427), in fact, are among the top three zip codes (as measured by BMH discharges per zip code in 2004) from which BMH's patient's originate. The overlapping of the PSA with a BMH primary service area is not of much concern since the beds that will be housed in WBCH originate in BMH. In contrast to any overlapping between the PSAs of BMH and WBCH, the overlapping of the WBCH PSA with the primary service areas of Bethesda's competitors deserve more detailed discussion. All four zip codes in the WBCH's PSA and one of the zip codes in the proposed Secondary Service Area are part of WRMC's primary service area. Three of WRMC's top five zip codes (measured by WRMC discharges per zip code in 2004) overlap with two of the primary and one secondary service area zip codes proposed by Bethesda for the new hospital. These three overlapping zip codes alone accounted for over 33% of WRMC's acute care discharges in 2004. JFK's primary service area overlaps with WBCH's PSA to a significant extent. All four zip codes that make-up WBCH's PSA and one zip code in its secondary service area are in JFK's primary service area. These five zip codes accounted for over 33% of JFK's acute care admissions in 2004. Zip code 33467 is the zip code from which the largest number of JFK's patients originate. Delray's primary service area significantly overlaps with WBCH's PSA, as well. Three zip codes in the proposed new hospital's PSA (33463, 33436, and 33437) are in Delray's primary service area. These three were the zip codes of origin for over 32% of all acute discharges at Delray in 2004. Two of the zip codes (33436 and 33437) are among the top three zip codes from which Delray's acute care patients originate. That residents in the proposed PSA and the secondary service area of WBCH are in the primary service areas of one or more of four existing hospitals is a factor which demonstrates that West Boynton area residents, just as was found in Bethesda I, are not denied access to basic hospital services including emergency services. But there have been material changes since the Bethesda I proceeding. One set of data points that has changed is population. Current and Projected Population As found in Bethesda I, WBCH's Primary Service Area (PSA) has a significant and rapidly growing population. Development and population growth in the western portions of south Palm Beach County have been so rapid in recent years that population forecasts have failed to keep pace with the growth. Not surprisingly, therefore, recent population growth has exceeded the population projections in Bethesda I. For example, based on Claritas population estimates presented at the February 2004 hearing, the Bethesda I Recommended Order found that the 4 zip codes that make-up the WBCH PSA would have a population of 181,000 in 2007. Those projections underestimated the population growth in these four zip codes that roughly comprise the West Boynton area. The most recent Claritas release projects that the 2005 population in the PSA was 183,395. The PSA's population is projected to be 188,877 in 2006. If approved and constructed, WBCH will probably not open until 2010 or 2011, when the PSA's population is expected to grow to 216,407 residents according to Claritas projections. Further, projections of Claritas and the University of Florida's Bureau of Economic and Business Research (BEBR) show continued growth to 242,652 residents in 2015, a timing horizon that is reasonable to examine for planning purposes, given the date by when WBCH would be expected to open. Zip code 33437 in which the WBCH proposed site is located is the largest and fastest-growing area in West Boynton, with 52,455 residents in 2006, and projected populations of 61,146 in 2011, and 69,588 in 2015. The 2005 Claritas release shows a population of 50,717 in home-site zip code 33437 in 2005, whereas the 2002 Claritas projections presented at the February 2004 Hearing projected a population of less than 50,000 in 2007. The population projections for the PSA and home-site zip code 33437 for the current planning horizon (2011) far exceed the projections for the planning horizon (2007) set forth in Bethesda's 2003 Application. In that prior application, the 2007 PSA population was projected to be 180,619, and the 2007 population of 33437 was projected to be 41,147. The population of the PSA is now projected to be 216,407 in 2011, and the 2011 population of zip code 33437 is projected to be 61,146. Wellington is within the proposed service area (the PSA and the Secondary Service Area combined) selected by Bethesda for WBCH. But it is in zip code 33414, part of WBCH's Secondary Service Area. There are no hospitals in the four-zip code PSA selected by Bethesda. Few areas in Florida without a hospital have a population in excess of 60,000 residents, as projected for home-site zip Code 33437 in 2011, much less a population in excess of 200,000, as projected for the WBCH's four zip code PSA. It is not unusual for areas with populations much smaller than those projected for the WBCH PSA to support a substantially larger number of acute care hospital beds in one or more hospitals. The resident population for WBCH's entire proposed six zip code service area is projected to grow from 258,659 in 2006, to 299,712 in 2011, to 338,569 in 2015, representing a 30.9% growth in population from 2006-2015. The projected rates of population growth to 2010, and also to 2015, in both the PSA and the entire service area surpass the projected population growth rates of Palm Beach County, District 9, and the State of Florida. For the period 2006 to 2015, the expected growth rate is 30.9% for WBCH's proposed service area, while the growth rate for the same time period for Palm Beach County is expected to be 18.4% and for the State of Florida, 16.0%. Wellington Regional's home zip code, 33414, a zip code in WBCH's secondary service area, has experienced considerable growth in recent years. The trend is reasonably projected to continue. The population of zip code 33414 is projected to grow from 50,186 in 2005 to 61,828 in 2010, representing a 23.2% growth in population for that five-year period. Indeed, Wellington has been described for the period 2000 to 2010 as "the engine of growth in the western communities." Tr. 5130. While Wellington's growth is dramatic, the two zip codes in the total service area with the highest number of non- tertiary med-surg discharges are the two western-most zip codes in WBCH's PSA, i.e., 33437 and 33467. The population in each of those PSA zip codes is about the same as the population in zip code 33414, and they are also growing rapidly - - well in excess of the County average. Furthermore, the projected population of the PSA in 2011 (216,407) far exceeds the projected population of zip code 33414 in 2011 (64,156). Unlike zip code 33414, however, the PSA zip codes have no existing hospital. The health care planners for all parties in this case primarily relied upon population projections from Claritas, Inc., a national demographic data service, for projections at the zip code level. Claritas is generally viewed as the best source for zip code level analyses, and zip codes are the smallest area from which patient origin and destination data is collected by hospitals and AHCA, therefore making such data useful to health planners. Nonetheless, Claritas projections are based on the most recent decennial U.S. Census, i.e., 2000, and do not take into account data of impending population growth, such as new housing starts. Therefore, Claritas tends to understate population projections in areas such as West Boynton with recent, rapid growth. Moreover, Claritas resident population projections do not account for the many part-time residents, or "snow birds," who relocate to Palm Beach County during the winter "peak season" months. Nor do they account for undocumented immigrants who work in Palm Beach County. Residential, Commercial and School Construction and Planned Projects New Construction and Planned Projects There has been a great deal of construction activity in the last two or three years in terms of new homes, commercial projects, and schools throughout both the West Boynton PSA to be served by Bethesda's proposed WBCH facility and the Wellington area to the north surrounding Wellington Regional. Moreover, there have also been many additional large new residential projects approved and planned in the last two years for development in both West Boynton and in the West Delray area to the south. Evidence of the recent construction activity and project plans was presented through the testimony, aerial photos, and charts of Bethesda's land planning expert, Mr. Kilday; the testimony and exhibits of Bethesda's traffic engineer, Mr. Rennebaum, and of COBWRA's President, Ms. Greenberg; and the testimony of numerous community residents and physicians who live and work throughout those areas. For planning purposes, Palm Beach County uses a persons-per-household average of 2.34 persons per unit. During the February 2004 Hearing in the Bethesda I, Mr. Kilday presented general testimony that there had been many residential project approvals obtained by developers for the West Boynton area west of the Turnpike specifically in an area known as the Agricultural ("Ag") Reserve. Mr. Kilday presented only one exhibit at that prior hearing, which was a high aerial map dated January 5, 2004, prepared by the Palm Beach County Planning, Zoning & Building Division, showing an area west of Jog Road and south of Lantana Road, including the Ag Reserve (the "Ag Reserve Map"). The Ag Reserve Map was prepared on an aerial photo taken in January 2002. The Ag Reserve is an area west of the Turnpike, bounded by Clint Moore Road on the south and the Loxahatchee Conservation Area on the west, and with a northern boundary about one mile north of Boynton Beach Boulevard. Jog Road is about 1 1/2 miles east of the Turnpike, and 3 1/2 miles east of the WBCH site. Some residential projects south of Boynton Beach Boulevard had been recently approved by the County for development in the Ag Reserve as of the February 2004 hearing. For example, three of the G.L. Homes Canyon projects had "approval" dates of August 27, 2003. At the time Mr. Kilday testified in the February 2004 hearing, however, no homes had been constructed, and the Ag Reserve portion of West Boynton still "looked like an orange grove." Mr. Kilday did not present testimony in the February 2004 hearing regarding any specific development in the Wellington or West Delray areas. His focus then was on the Ag Reserve portion of West Boynton. The Ag Reserve Map used in Bethesda I did not go as far north as Wellington. In this proceeding, (Bethesda II), Mr. Kilday presented three Project Lists for West Boynton, West Delray, and Wellington, which include a count of the number of houses constructed between January 2002, and February 2005, and the number of approved or planned units remaining to be constructed for numerous large residential communities. Mr. Kilday chose January 2002 as the start of the study period because the Ag Reserve Map was the focal point for the February 2004 hearing, and it could be used to count housetops west of Jog Road, at least in West Boynton and West Delray, as of January 2002. Mr. Kilday's office already had high-altitude February 2005 aerials of the West Boynton, West Delray, and Wellington areas west of Jog Road available. Thus, he used February 2005 aerials of that entire area for a more recent count of housetops as of that date in order to demonstrate the fast pace of residential construction that had been occurring since the Bethesda I Ag Reserve Map photo was taken. The Project Lists are just a "sample" of projects with which Mr. Kilday had had personal involvement. Many more projects have been approved by the County. The Project Lists also include numerous large residential projects that were approved by, or planned and presented to, the County subsequent to the February 2004 hearing. As part of the County zoning process, developers must apply for "concurrency," meaning that, "at the time the project is built," there are adequate facilities and infrastructure to support it, as the biggest issue is traffic and roads. Applicants must state the date when their project will be built out. The County will hold an applicant to that date and will include a condition of approval that no building permits will be issued thereafter for the project. The current "assumption" is that "these roads are all going over capacity," so developers "try to get the longest build out date" they can, which is the "outside date" that "the road is scheduled to fail," meaning it has exceeded the acceptable level of service. For Mr. Kilday's most recent project (Ravello), in process at the time of final hearing, the build out date was February 2009. Mr. Kilday also presented two composite exhibits (12 photos each) of low altitude "oblique" aerial photos of several of the large residential and commercial projects that are being constructed in the West Boynton area and in Wellington which were taken on October 8, 2005. The number for each project on Mr. Kilday's Project Lists for West Boynton, West Delray, and Wellington (i.e., Exhibits B-32, B-33, B-34) corresponds to project numbers on the February 2005 high altitude aerials for those three areas (i.e., Exs. B-30E.3, B-30F.3, and B-30G.2), and to the project numbers on the low altitude aerials for West Boynton and Wellington (i.e., Exs. B-30H and B-30I). The Project Lists demonstrate that there was a substantial amount of construction activity in the West Boynton and Wellington areas between January 2002 and February 2005, and also that many large new residential projects have been approved and planned in the last two years in the West Boynton and West Delray areas. Furthermore, as Mr. Kilday pointed out, the February 2005 count of recent new home construction in the West Boynton and Wellington areas was already out of date. That was supported not only by his testimony regarding the more recent October 2005 aerials, but also by his testimony and the testimony of numerous other witnesses as to additional construction that had occurred as of the April-May 2006 final hearing. That testimony, and evidence regarding some of the newly planned residential and commercial projects and schools in the West Boynton, West Delray, and Wellington areas, are discussed further below. West Boynton Area Those familiar with the recent construction activity in the West Boynton area over the last two years describe it as "explosive" and "phenomenal," with large residential and commercial projects being constructed along every major roadway. All of the many West Boynton projects taken by Mr. Kilday's firm through the approval process in the last few years have begun construction as soon as they can pull permits. The only issue has been the time it takes to obtain all necessary development permits. At the time of hearing, there had been a significant level of construction of new homes that had not broken ground one year earlier. Planning for more projects is continuing at an intense pace. Over the past 12 months, Mr. Kilday's firm has had at least one or two West Boynton projects before the Board of County Commissioners each month for the approval process. Any vacant land in the West Boynton area, including land on Congress Avenue to the east, as well as land west of the Turnpike, is getting serious consideration for development. The residential projects in West Boynton have tended to be age-restricted communities, although some of the more recent developments such as Canyon Lakes have not been age- restricted. Construction of major residential communities in the West Boynton area west of the Turnpike began to the north, in the area north of the Ag Reserve up to Lantana Road. Project nos. 1-14 and 30 on Mr. Kilday's West Boynton area Project List are located there, and they have a total of 6,450 approved units. The largest projects in that area, Bellaggio (a/k/a Town Park), Villages of Windsor, Valencia Shores, and Venetian Isles, were approved between 1996 and 2001, but they had had little, if any, construction activity (i.e., 713 units combined) as of the January 2002 photo in the Ag Reserve Map. By February 2005, however, 4,053 units had been constructed in those four projects alone. Furthermore, there is evidence that all of the building permits for Villages of Windsor (679) were issued between 2004 and April 1, 2006, and that 379 of the building permits for Valencia Shores were not issued until 2004 and 2005. Several community residents who moved into new homes in that northwest portion of West Boynton in 2003 and 2004, testified in depositions that there has been active construction and new development of additional new homes, commercial properties, and public facilities after they arrived. Among these were Mr. Greiner, the 78-year-old president of the Bellaggio (Town Park) Residents' Association, who described in some detail the recent construction activity and new developments in the surrounding area as of the December 19, 2005, date of his deposition. See Ex. B-54 (Greiner Depo.), at 7-10, 18, 49. In addition to the new town homes and the new residential community identified by Mr. Greiner, which are not on Mr. Kilday's Project List, there is yet another new project in the area on Lantana Road to the east, i.e., Lantana Farms PUD (Project no. 4), which was approved after the February 2004 hearing. Residential development in that area is just now being extended to the western side of State Road 7, past Lantana Road. Construction of the new Super Target center at the intersection of Lantana Road and Hwy. 441, had not commenced in October of 2005. Under construction at the time of Mr. Greiner's deposition, it opened in the two months prior to the final hearing in this case. The West Boynton residential projects north of the Ag Reserve and south of Hypoluxo Road, including Valencia Shores, Verona Lakes, Melrose Park, Venetian Isles, Savannah Estates, Equus, and Palm Meadows Estates, are within three miles of the WBCH site. There are 3,346 approved units in those projects. As of February 2005, 2,961 units had already been built in those communities. In the northern-most Ag Reserve area within one mile north of Boynton Beach Boulevard and within about a mile of the WBCH site, are three large new residential developments. Countryside Meadows, approved in December 2003 for 248 units, had no construction on February 2004, and had only two models as of February 2005. By April 21, 2006, 170 building permits had been issued for that project. Amestoy AGR-PUD (640 homes) was not approved until 2006. It recently received zoning approval and plans to break ground in October. Ravello (192 homes) is going through the approval process now. The total number of approved and planned units in this northern-most Ag Reserve area is 1,082 units. In the Ag Reserve area south of Boynton Beach Boulevard and west of the Turnpike are numerous large residential communities in several stages of development. That includes G.L. Homes' Canyon Lakes (500 homes), Canyon Isles (500 homes), and Canyon Springs (500 homes) projects, which were approved for development in August 2003. Also in that same area are several projects including Lyons West AGR-PUD (943 homes), Delray Holdings (282 homes), Canyons Town Center TMD (39 town homes), and TMD Workforce Housing (54 homes), which were just approved in 2005. Another 554 homes are planned for Fogg 5, which is in the process of seeking concurrency. Thus, there are 3,372 approved and planned residential units in the West Boynton area west of the Turnpike that lies in the Ag Reserve area south of Boynton Beach Boulevard and north of the L-30 canal. All of those projects are within three miles of the WBCH site. No homes had been constructed in these projects in the Ag Reserve at the time of the February 2004 hearing. The first project to start construction, Canyon Lakes, had no residents when Mr. Rennebaum ran his travel time study from there in April 2005. Canyon Lakes (Fogg North) has built out rapidly. There were 297 units built as of February 2005, and by April 21, 2006, a total of 454 building permits had been issued. Canyon Isles (Fogg Central) had no homes as of February 2005; a few as of October 2005; and 432 building permits issued by April 21, 2006. Thirty units remain to be sold. Farther to the south, Canyon Springs (Fogg South) was an undeveloped green field in October 2005. Today, it has its infrastructure and looks like Canyon Springs looked in October 2005; deposits have been taken on the first homes. A commercial marketplace with shopping center, grocery store, restaurants, town homes, and workforce housing; a library; and an elementary school are being built near Lyons Road between the Canyon projects and Boynton Beach Boulevard. Not all the new development is west of the Turnpike. There has been recent residential and commercial construction activity and development east of the Turnpike and south of Boynton Beach Boulevard, between the Turnpike and Jog Road. Hagen Assemblage PUD (Valencia Pointe) was approved for 690 homes in 2003. It had no earthwork or units as of February 2005, but had 60-70 units and a main recreation area when Mr. Kilday testified. It has had 190 building permits issued already. Other recent nearby projects include Briella Townhomes (230 homes), approved in October 2004, and Mini- Assemblage PUD (552 homes), approved in 2005, which will be developed next to Bethesda Health City upon relocation of the old Hagen Ranch Elementary school. Tivoli Lakes (324 homes) had no construction as of January 2002. By February 2005, 88 homes had been constructed. In addition to the burgeoning residential growth surrounding Bethesda Health City, a large Super Target center opened in late 2005, at the intersection of Boynton Beach Boulevard and Hagen Ranch Road, and a medical office building has recently been built next door. At the time of the February 2004 hearing, that Super Target and the one on Lantana Road were just seeking approval, and were completely undeveloped as of April 2005. While Mr. Kilday's testimony primarily focused on new developments in the West Boynton area west of Jog Road, there are also major new developments at the eastern edge of West Boynton, such as the huge new mixed use projects along Congress Avenue, south of JFK. Renaissance Commons (1,561 units) is being constructed on the old Motorola site. Winchester Property (1,040 units) is being developed in a former cow pasture. Finally, new schools constructed recently in West Boynton already exceed planned capacity; more are under construction; and others are now planned. For example, Park Vista High School, which opened in West Boynton in 2004, was the third largest high school in Florida when it was built. Now, it is at 122% of capacity and relies on portable classrooms. In fact, many of the schools in both West Boynton and Wellington, such as Hagen Ranch Elementary, Palm Beach Central High School, Wellington High School, and Coral Reef, are above capacity due to the rapid population growth. West Delray Area In the past two years, the West Delray area has also begun to see ground breaking on huge new residential communities in the Ag Reserve area west of the Turnpike, and active construction of previously approved projects between the Turnpike and Jog Road. Those projects had been held back because of Atlantic Avenue roadway constraints which were just resolved two weeks prior to final hearing with a builder compilation of funding that allows that road to be expanded. West Delray originally began its expansion, east of the Turnpike, as a retirement-oriented community. The newer projects are a half-and-half mix of retirement and family oriented communities. Mr. Kilday's Project list for West Delray includes projects west of Jog Road with a total of 6,568 approved units, only 704 of which had been built as of January 2002. Some of the larger projects east of the Turnpike, which had no units as of January 2002, such as Valencia Falls and Valencia VII (Fischera/Valencia Palms), have had heavy construction in the last few years. Valencia Falls (706 homes) was totally built out by February 2005. Valencia VII (Fischera/Valencia Palms), which was one of the projects singled out (along with Fogg North (Canyon Lakes)) by Delray's traffic engineer as purportedly having had no construction according to the County Traffic Performance Standards, actually had 588 building permits issued in 2004 and 2005. Its 625 approved units are about built out. East and west of the Turnpike, seven large new residential communities are planned, and six of those obtained approvals in 2004 and 2005, subsequent to the February 24 hearing. The new projects west of the Turnpike include Ascot (380 homes), Ascot East (315 homes); Hyder AGR-PUD (554 homes); Dubois AGR-PUD (554 homes); and Appolonia Farms (609 homes). The other two new projects, MI Homes (477 homes) and Ansca PUB (329 homes) are just east of the Turnpike on Atlantic Boulevard. Mr. Kilday's Project List of West Delray projects between the L-30 canal and Clint Moore Road, includes projects west of the Turnpike with a total of 4,074 approved and planned units. Areas on the west of Palm Beach County are referred to as the "western communities." Among the western communities is the Wellington Area. Wellington Area Wellington Regional is located on Hwy. 441 about 4 1/3 miles north of Lantana Road. There is abundant evidence of a "boom" in construction of commercial and residential properties in the last two years in the eastern portions of the Wellington area along the Hwy. 441 corridor between West Boynton and Southern Boulevard, starting around the Lake Worth Road area to the south, and heading north up past the Wellington Green Mall, the Forest Hill Boulevard intersection, Wellington Regional, and beyond. The newer part of Wellington is filling in easterly, from the older part in the west, to State Road 7, to the Turnpike. A JFK physician who also practices at Wellington Regional and Palms West described Wellington's growth as follows: There has been a large population expansion there and development expansion . . . . [T]hat whole 441 corridor a mile on either side I'll say, from the north/south boundary that I gave you has undergone extensive development. Ex. JFK-134 (Dr. Levin Depo), at 12. A Bellagio resident, who lives in the West Boynton area just south of Lantana Road, described the development activity northward, as follows: Going north from us on 441 going up towards Wellington there are any number of developments under construction primarily residential, but there is also some commercial areas there that have started putting up signs for what's coming. Yes. Yes. That's - - it's amazing to me how much commercial construction is going on going north. At the Lake Worth Road there's already - - on the south side there's a bank, a fast food restaurant and some stores. On the other side of Lake Worth Road there's a larger commercial area that's got a Publix, a tire store and all kinds of retail shops. On the other side of 441 and Forest Hill there's a very large commercial development with a Winn Dixie store and many, many restaurants and stores. And as you go north there seems to be no end of stores and commercial going in on both sides of the road. * * * That area, that particular intersection [at Wellington Regional] is a major intersection. There are two enormous housing developments directly across the street from it, and the commercial development around the mall is just incredible. . . . They are building, in fact, virtual mini malls right next to them, and it just keeps growing and growing and growing. Ex. B-54 (Greiner Depo), at 9-10, 25. Wellington is noted for its organized youth sports leagues and schools, and its polo programs. The real estate projects are marketed to emphasize family-oriented activities. There are many new schools along the Hwy. 441 corridor in the Wellington area. When WRMC opened in 1986, there was no development in the vicinity around it. Even in 1994, Wellington Regional was still largely surrounded by agricultural fields, commonly referred-to as a cow pasture. By February 2005, significant development had taken place around Wellington Regional. Wellington Green Mall had been constructed on the south side of Forest Hill Boulevard, west of Hwy. 441. Lake Worth Road was extended farther to the west, providing access to a whole series of new residential projects located south of Wellington Green Mall. Huge residential communities such as Olympia, Village Walk of Wellington, and Buena Vista (a/k/a Buena Vida) had begun construction on the east side of Hwy. 441, across from Wellington Regional. Olympia, Buena Vista, and Village Walk of Wellington alone are approved for 4,267 units. Only one model home was constructed in Olympia as of January 2002. By February 2005, a total of 1,329 homes had been constructed in those three projects. However, as of that date, the aerials still show considerable "white sand" and "pods" without rooftops under development in those communities. By October 2005, large portions of those three projects were built out, although there is still significant "white sand" for more homes in Olympia. Mr. Kilday's Project List includes projects with 8,888 approved units in the Wellington area near Hwy. 441. In January 2002, 1,957 of the approved units had been constructed. By February 2005, 5,747 units had been constructed. No homes had been built in Palm Beach Plantation (Diamond C Ranch), Victoria Groves, or Black Diamond as of January 2002, and only six had been built in Wellington Edge. Now, however, Palm Beach Plantation has had 536 building permits issued from 2004 through April 21, 2006, and is largely built out. Victoria Groves (610 homes), Black Diamond (444 homes), and Wellington Edge (494 homes) are now totally built out. Wellington View, which had 51 homes as of February 2005, has now had 105 building permits issued. New residential projects are now being approved south from the Wellington Green Mall toward Lake Worth Road. Lanier Property (288 units) and Oakmont Estates (202 units) were approved in 2004, subsequent to the February 2004 hearing. Three new projects with 800 units have just recently, in 2006, been planned on Lake Worth Road, east of Lyons Road, which runs between Hwy. 441 and the Turnpike. Northwest of Wellington, the Callery-Judge Groves project is being planned for development on a large piece of agricultural land to include 10,000 new homes. Westward Growth of the Palm Beach County Population The populations in the areas in the western part of Palm Beach County are growing faster than those elsewhere in the county. For instance, the two western-most zip codes in the PSA, 33437 and 33467, are projected to experience 17.1% and 16.6% population growth, respectively, from 2005 to 2010, as compared to 10.7% and 14.9% growth in the two PSA zip codes to their east, i.e., 33436 and 33463, respectively. Delray's witness, Mr. Greene, presented data from the Palm Beach County Population Allocation Model, which distributes county-wide population estimates to smaller traffic analysis zones ("TAZs"). While the TAZ projections for the western-most areas of the County are substantially understated, they still demonstrate an increasing shift in the West Boynton area population base from the more eastern areas to newly developing areas west of the Turnpike. For example, the percentage of the population of zip code 33467 residing west of the Turnpike is projected to grow from 35.4% in 2004, to 38.6% in 2005, to 44.2% in 2010, and to 44.9% in 2011. Likewise, the percentage of the population of zip code 33437 that resides west of the Turnpike is projected to grow from 10.1% in 2004, to 12.4% in 2005, to 21.5% in 2010, and to 23.2% in 2011. The population growth rate west of the Turnpike is a change from evidence presented in the February 2004 hearing, which supported the finding that 89% of the West Boynton population resided east of the Turnpike. See Columbia/JFK Medical Center vs. AHCA, (DOAH Case No. 03-2829CON), September 29, 2004, Paragraph No. 105. That finding was based upon the then 2003 TAZ projections. The more recent 2005 TAZ projections now show a much higher percentage than 11% of the population is projected to live west of the Turnpike by 2010 and beyond. The population growth in the West Boynton and West Delray areas and the shift of the population to areas west of the Turnpike have been so rapid that they substantially outpace the County's TAZ projections. For example, the County's 2003 TAZ projections, which Delray presented at the prior February 2004 hearing, projected a total 2011 population for zip code 33467 of only 43,261, with 17,384 of those residents projected to be west of the Turnpike. The more current 2005 TAZ projections project a total 2011 population for zip code 33467 of 60,160, with 26,983 of those residents living west of the Turnpike. The 2003 TAZ projections used in the prior case similarly underestimated the 2011 total population of zip code 33437, and the population residing in that zip code west of the Turnpike. The County's most recent 2005 TAZ population projections, which are stated to be based on development approvals through December 2004 only, still substantially understate the actual population and the approved residential units in the western area of West Boynton and West Delray. For example, the 2005 projections for TAZs 749 and 750, which are west of the Turnpike and cover the area from Boynton Beach Boulevard south to the L-30 canal and west to Lyons Road, show zero population in 2005, and only 2,436 residents by 2010. However, the Canyon Lakes project in TAZ 749 actually had many homes built in 2005, and JFK's Dr. Dorman was already living there. Furthermore, the three Canyon projects, the two TMD projects, and Fogg 5, which are in TAZs 749 and 750, are planned for 2,147 units, and at a County average of 2.34 persons per household, are likely to have 5,024 residents by 2010. That number more than doubles the TAZ projections. Based on Mr. Kilday's testimony, there are also more new projects being processed each month. When you add the most recent TAZ projections for all four TAZs on both sides of Lyons Road between Boynton Beach Boulevard, the Turnpike, the L-30 canal, and Hwy. 441 (i.e., TAZs 748-51), the County is projecting a total population of 3,498 in 2010. Adding the Lyons West AGR-PUD and Delray Holdings projects approved in 2005, west of Lyons Road, to the projects on the east side of Lyons Road, however, there are now 3,372 units planned for TAZs 748-51. Thus, at the County average of 2.34 persons per household, it is likely that there will be 7,890 residents in those projects alone in 2010. The TAZ projections for 2010 are likely to be substantially understated for that area west of the Turnpike. In addition to the substantial likelihood that the County's TAZ projections substantially underestimate the population in the western portions of the PSA, they do not account for any of the new projects approved since 2004. Even so, a count of the most recent population projections for the TAZs that are within the area from Lantana Road (4 miles north of the site) south to Atlantic Boulevard (5 miles south of the site), and from those TAZs bordering Jog Road (3 1/2 miles from the site) westward to the Loxahatchee Reservation Area, yields a total population projection of 97,697 residents in 2011, in an area which is well within a five-mile radius of the proposed WBCH site. If the new projects approved in 2005 and 2006, which are not considered in the 2005 County Population Allocation Model, were accounted for, the projection would likely be substantially higher. Claritas projects a population of only 82,000 in 2010 within 5 miles of the WBCH site. The TAZ population projections, project a population of 97,697 in 2011 in an area with a radius that is less than 5 miles. Claritas projects a 2010 population of only 10,721 within three miles of the site. There are already a combined total of 7,800 approved and planned residential units within a three-mile radius north and south of the WBCH site, on the west side of the Turnpike alone. At the County average of 2.34 persons per household, those projects yield a likely population of at least 18,252 residents by 2010. Moreover, as the Turnpike is only two miles from the site, a three-mile radius should also count the many thousands of additional residents who live another mile to the east of the Turnpike in the Hagen Ranch Road area. For example TAZs 450, 950, and 955, which are located along Boynton Beach Boulevard within one mile east of the Turnpike, are projected by the County to have a total population of 4,410 in 2011. Claritas projects a 2010 population of only 255 residents within one mile of the site. However, there are already 1,082 homes approved and planned within about one mile north and east of the site. At the County average (2.34), it is likely that there will be 2,532 residents in those units in 2010, and that does not account for any units that may be built in the approved projects within one mile on the south side of Boynton Beach Boulevard. Claritas census tract data projects only 2,100 people by 2010 in Census Tract 77.13, which covers the large West Boynton and West Delray area, west of the Turnpike, extending from Hypoluxo Road, three miles north of Boynton Beach Boulevard, all the way south to Clint Moore Road. There are already a total of 11,784 residential units approved for the West Boynton and West Delray portions of that large west Turnpike area, and there were already thousands more people living there in 2005 than are projected by the Claritas census tract data for 2010. At the County average (2.34), it is likely that there will be around 27,575 residents in the projects that are already planned and approved in Census Tract 77.13 by 2010. More project approvals are likely. In recognition of the population growth in the West Boynton and Wellington areas, as well as demographics of the area and excessive response times, Palm Beach County Fire Rescue ("PBC Fire Rescue") will locate three of its four planned new stations in those western areas. PBC Fire Rescue also plans to add a new station, Station #30, at the intersection of Pierson Road and Hwy. 441 due to "all the new growth in the Forest Hill Blvd./441 (Olympia development, Mall at Wellington Green, Wellington Hospital area, ect (sic) . . ." Ex. B-83, Gregory Deposition, Ex. 2 to the Deposition, 4th page from the back. PBC Fire Rescue also plans to add a new Station 48 at the intersection of Hypoluxo Road and Lyons Road due to the "new growth in the Lantana/Hypoluxo/Lyons area and because of response time problems in the Lantana Road area." Id. A new Station 44 at the intersection of Flavor Pict and Jog Roads will be added "because of current response time deficiencies which could not be corrected by [existing stations]." Id. Access Issues As found in the Bethesda I Recommended Order, "[i]n the CON context, "access" is typically evaluated from the vantage points of programmatic, financial, cultural, and geographic access." Columbia/JFK Medical Center Limited Partnership, d/b/a JFK Medical Center vs. AHCA, Case No. 03- 2829CON (DOAH September 29, 2004) at 59. Bethesda's case is one of enhancement of access which in turn will promote improved quality of care. Both Bethesda and AHCA emphasize planning to curtail future diminution in access to certain hospital-related healthcare services. As in Bethesda I, the low-income population in the Subdistrict, including the West Boynton area, which has a relatively small portion of residents who are indigent, has access to the hospital services at the hospitals in the Subdistrict. Bethesda's case that access will be enhanced concerns programmatic access for the elderly, who have special needs apart from the general population, and a blend of cultural access and geographic access. The proposed satellite hospital will enhance programmatic access in the Subdistrict, according to Bethesda, because it will offer better access to emergency care that is less than adequate for seniors and others because of emergency department over-crowding. Access by the elderly will also be enhanced, according to Bethesda, because of the growing elderly population in the Subdistrict, particularly in the West Boynton area, and their special needs that entail, among others, avoidance of driving longer distances, such as the distance they would have to drive to the existing providers versus a closer WBCH. Cultural access will be enhanced, according to Bethesda, because Spanish-speaking laborers and migrant workers, many of whom are undocumented, and who have special needs different from the rest of the population, will have better access to some hospital services if WBCH is approved. There is a geographic component to the access issues of Spanish-speaking laborers and migrants too because of their willingness and ability to receive non-hospital health care services in the West Boynton area at a clinic that specializes in providing them with health care. The SAAR recognized enhancement of access for the Spanish-speaking population and the elderly because of each population's special needs, positions maintained by the Agency at hearing. The SAAR did not recognize that there were any programmatic access problems. At hearing, however, Mr. Gregg alluded to enhanced access to emergency services as a medical treatment trend that should be considered under the criteria applicable to this proceeding through Florida Administrative Code Rule 59C-1.008(2). Availability of emergency services is an issue of programmatic access. Programmatic Access: ED Overcrowding "Programmatic access" refers to the adequacy of the programs and services provided at existing facilities in relation to the specific health care needs of the persons served by those facilities. See Bethesda I, paragraph 219, at 59. An ED includes all of the organizational and physical infrastructure of a hospital having to do with care in the emergency room. Lack of adequate ED service constitutes an issue of programmatic access. Adequate ED service is especially important to the elderly (those aged 65 and over). The elderly (those over the age of 65) seek ED services 1/3 more often than those under the age of 65. The elderly also have need for acute patient services in EDs and after admission to the hospital following ED evaluation and treatment at a much higher rate than the under age 65 population. The elderly present at EDs in need of emergent care (within 15 minutes) much more often than the younger population. Approximately 15% of all ages present at an ED in need of emergent care whereas 24.5% of those between the ages of 65 and 75 years present in need of emergent care and 25.5% of those 75 and older present in need of emergent care. In Bethesda I, the Recommended Order contains the following finding with regard to programmatic access: The evidence was not persuasive that there are any programmatic access problems in Subdistrict 9-5 and, in any event, neither of the proposed satellite hospitals would enhance programmatic access in the subdistrict because they will not offer any programs or services that are not already offered at one or more of the tertiary hospitals in the subdistrict that currently serve the West Boynton area. Bethesda I Recommended Order, paragraph 220 at 59. Overcrowding in the EDs of existing providers, however, was not an issue in Bethesda I. In contrast, Bethesda claims in this proceeding that the special needs of the elderly are not being served adequately because of ED overcrowding. The evidence supports the claim. ED or emergency room overcrowding is a serious issue in the Subdistrict and in the county. In addition to the new submission of overcrowding, a significant difference from Bethesda I, there is also new information in the literature that relates to emergency room overcrowding. Emergency health care services are of nation-wide concern. There are particular problems in the State of Florida. A January 2006 report entitled: The National Report Card on the State of Emergency Medicine: Evaluating the Environment of Emergency Care Systems State by State, begins with the observation that "[e]mergency medicine needs to be there 'where you need it, when you need it.'" The National Report Card is based upon a study by The American College of Emergency Physicians, with data and input from the U.S. Department of Health and Human Services and all 50 states' offices of emergency medicine. The Report includes a section specific to Florida. The principal "Problem" identified in Florida is that "Florida does not have enough emergency facilities for its residents." Florida's "Problem" is attributable to a large elderly population, the high percentage of hospital admissions in Florida that come through hospital EDs, increasing hospital ED visits, and the lack of an increase in accompanying acute care hospital EDs. The first "Recommendation" as to Florida is that "Florida policymakers need to increase the number of emergency departments and trauma centers." There have been no new hospital EDs added in 20 years in Palm Beach County, and, in fact, two were closed (i.e., Palm Beach Regional, near JFK, and Everglades Memorial). National statistics show that only 20.5% of all ED patients wait 4 hours or more in the ED. Moreover, national benchmarks show that 70.4% of ED patients should be seen within 2 hours. As demonstrated by ED utilization data from BMH, JFK, Delray, and Wellington Regional, there have been substantial increases in utilization of area hospitals' ED's in the last two years, and excessively long average lengths of ED patient stays. At BMH, total ED visits increased from 49,985 visits in 2002, to 52,448 visits in 2004, and to an annualized 55,700 visits in 2005, representing 11.6% growth from 2002 to 2005. At the same time, the average length of stay for patients seen in the ED is steadily increasing. For patients who were treated in the BMH ED and then admitted to the hospital, the average ED length of stay ("LOS"), from triage until transfer to an inpatient bed, was 6.27 hours in FY 2004, and increased to 6.86 hours in FY 2005. The percentage of patients meeting Bethesda's target 180 minutes ED LOS criteria was only 6.6% in FY 2004, and decreased to 5.3% in FY 2005. Moreover, ED patients experience even longer stays during peak season. The average ED LOS of BMH ED patients who were admitted to the hospital was 11.70 hours in January 2005, and 10.63 hours in February 2005. The ED average LOS during those peak months was higher than the ED average LOS during the same months in 2004. The ED overcrowding problems at BMH are not solely the result of the growing ED volumes. A growing and major cause of the problem is the bottleneck caused by the lack of available inpatient rooms on the "floors," which leads to "holds" and back-ups in the ED. "Holds" are patients who have been seen in the ED and admitted to the hospital, but who must be held in the ED for some period of time thereafter waiting for an inpatient bed to become available. One major cause of these "holds" at BMH is the frequent lack of availability of the many semi- private inpatient beds, which occurs when a two-bed, semi- private room must be used for only one patient due to infection control/patient isolation issues or gender concerns. The availability of nursing staff is not a factor that contributes to the back-ups in the BMH ED. BMH's ED has adequate staff and is one of the best staffed areas of the hospital. In FY 2005, 9,320 patients had to be "held" in the BMH ED while waiting for an inpatient bed to become available, and the average LOS in ED holds was 3.91 hours. During the peak season, both the number of ED holds and the LOS in ED hold increases. In January, February, and March 2005, over 900 patients were placed in ED hold each month, and the average LOS in ED hold was in excess of 4.25 hours. When BMH's ED Director testified in the February 2004 hearing, he testified that the number of ED holds was 1,600 in FY 2002, and fewer than 1,000 in FY 2003. There were 9,320 ED holds at BMH in FY 2005. The high number of ED holds, and resulting back-up and crowding in the BMH ED, has an adverse effect on the quality of care provided to ED patients. The overcrowding causes delays in the diagnosis of, and provision of needed care to, patients who come to the ED. Often patients are forced to wait hours in the triage area before being seen by a physician because other ED areas are filled with patients being held for inpatient beds. Another adverse consequence of the overcrowded ED is the growing number of patients who either leave the ED without being seen by a clinician or leave the ED against medical advice. In March 2004, 86 patients left the ED without being seen by a clinician, and 88 patients left the ED against medical advice. By March 2005, those numbers had risen to 218 patients who left the ED without being seen by a clinician, and 140 patients who left the ED against medical advice. In early 2006, BMH had days where as many as 30 people left the ED against medical advice because of the tremendous backlog in the ED. BMH's expansion of its ED in 2003, did not resolve its ED overcrowding problems. At the time of the February 2004 hearing, it was thought that expansion of the ED would help eliminate ED holds. It is now apparent that the ED backlogs are not due to the amount of ED bed space. Simply increasing the number of bays or beds in the ED has not prevented ED overcrowding. JFK similarly has experienced increases in ED visits, patient LOS in the ED, and ED holds. ED visits at JFK increased from 50,453 in 2002, to 61,033 in 2005, representing a 21% increase in ED volume. JFK's inpatient admissions through the ED also increased from 19,426 in 2004, to 21,011 in 2005. The average LOS for all patients seen in the JFK ED, including patients who were discharged as well as patients who were admitted, increased from 297 minutes in 2004, to 317 minutes, or approximately 5 1/4 hours, in 2005. For the peak season months of January, February, and March 2005, the average LOS for all ED patients was 335 minutes, 377 minutes, and 371 minutes, respectively. In comparison, in March 2004, the average LOS was 325 minutes. The total hours that patients were held in the JFK ED awaiting an inpatient bed has increased dramatically in the last two years. The total holding hours increased from 19,832 in 2004, to approximately 68,000 in 2005. Further, in 2005, JFK had an average of 197 patients per month leave the ED prior to medical screening. Like the experience at BMH, JFK's ED expansion in 2003, did not resolve its ED overcrowding problems. Delray also has experienced increasing ED volumes and overcrowded conditions in the last two years. Delray's ED visits increased from 30,894 in 2002, to 39,745 in 2005, representing a 28.6% increase. Delray's inpatient admissions through the ED increased from 11,412 in 2002, to 13,044 in 2004, to 13,227 in 2005. Over one-third of Delray's ED patients are admitted as inpatients to the hospital. Delray's growth in ED utilization has outpaced its consultants' projections. In October 2003, National Healthcare Consultants, Inc. ("NHC"), prepared a report assessing Delray's ED needs, which Delray used to justify its recommendation to Tenet that it needed capital funding to renovate and expand its ED. In assessing Delray's ED needs, NHC found it particularly important that Delray's service area has a large elderly population, defined as aged 65 and over, and that the ED is the "front door" to Delray, as nearly two-thirds of Delray's inpatient admissions come through the ED. Based on Delray's historic ED volumes, NHC projected that Delray's inpatient admissions through its ED would total 12,454 in 2004, and 12,823 in 2005. Those October 2003 projections underestimated the increase in demand for Delray's ED services, as reflected by Delray's actual 2004 and 2005 ED admissions in 2005, set forth previously. Patients admitted to Delray through the ED often experience lengthy stays in the ED. In 2005, the average LOS for admitted patients was 343 minutes, which surpassed Delray's and Tenet's target LOS of 300 minutes. During the peak season months of January, February, and March 2005, the average LOS was 404 minutes, 460 minutes, and 455 minutes, respectively. One component of the long LOS in the Delray ED is the time patients are held in the ED awaiting an inpatient bed. In its 2003 report, NHC estimated that Delray should anticipate a holding time of 240 minutes in the ED, or approximately 4 hours, for patients admitted to the hospital after the ED is expanded. The number of Delray ED patients who elected to leave without being seen by a clinician increased from 906 in 2004, to 1,152 in 2005. Wellington Regional also has experienced a sharp increase in ED volumes in the last two years. ED visits increased from 31,300 in 2002, to 34,960 in 2004 - - an 11.7% increase. Wellington Regional's own projections of future ED utilization predict an even more dramatic increase in the future. As part of its master facility plan, Wellington Regional projects 41,032 ED visits in 2007, and 48,164 ED visits in 2011. Wellington Regional's inpatient admissions through its ED also are steadily increasing, up from 4,483 in 2004, to 5,013 in 2005. Further, in the last two years, Wellington Regional experienced a substantial increase in the number of lengthy ED patient stays of more than 6 hours. The number of ED patient stays of 6+ hours increased from 279 in January 2003, to 389 in January 2004, to 509 in January 2005. Peak season ED patient stays of 6+ hours increased from 326 in February 2003, to 411 in February 2004, to 617 in February 2005. A similar trend was seen in March of each of those years. Thus, in addition to the new claim of ED overcrowding creating an access issue, changes have occurred with regard to emergency room overcrowding since Bethesda I: it has gotten worse. In Bethesda I, the following was found: 235. The existing hospitals in Subdistrict 9-5 have been able to meet the needs of the subdistrict by incrementally expanding their facilities when the need arises. Bethesda I Recommended Order at 63. The experiences in the past two years demonstrate that construction of expanded EDs will not prevent ED overcrowding problems at existing hospitals. The finding in paragraph 235 of Bethesda I was valid because ED overcrowding was not at issue there. But the finding cannot be made in this case because existing expanded EDs have not been able to meet the needs of the Subdistrict, particularly the elderly's need to adequate access to emergency services in the hospitals' EDs. There is other evidence of ED overcrowding in the Subdistrict. Several of the letters submitted to AHCA by residents, physicians, and community organizations in support of Bethesda's proposed WBCH complained of problems associated with long wait times in the existing hospitals' EDs. As part of its grass roots effort to demonstrate that the community needs a new hospital with hospital-based emergency services in West Boynton, COBWRA asked its resident associations' members for evidence of experiences of lengthy wait times at existing hospital emergency departments. The responses recount experiences in the past two years of excessive wait times in the EDs of all of the hospitals participating in this case. Some of the community respondents volunteered for depositions regarding their experiences with overcrowded EDs. Bethesda introduced the depositions into evidence. Of these nine depositions, one is from the head of a residents' association, which refers to the reports from members of his association with regard to long wait times in the EDs. The other eight all recount delays in treatments after they presented at the ED with various medical conditions requiring medical treatment. Prompt access to health care is key to effective treatment of any patient but particularly a patient who is elderly. The elderly have health conditions that are more often life threatening than the rest of the population. Specialty needs of the elderly, moreover, are more often emergent or urgent. And the elderly are more at risk to adverse outcomes caused by delays in receiving health care. Overcrowded EDs cause delays in diagnosis and in testing that support diagnosis and treatment. Dr. Lopez-Viego testified as to his opinion on the improvement in quality of care that would result if WBCH with its ED becomes a reality: [I]f you built a 12-room emergency room in the ground floor of an adequate hospital, that would make a big difference. That patient would be seen sooner, would be evaluated sooner, would be operated on sooner, and would probably be discharged sooner and in better condition. And for those of us who spend our lives running around taking care of the sick patient and answering that kind of a call, which after years can get somewhat tiring, that's where we see the benefit in the hospital out west. I am sure you all have statistics and numbers and all that. But there is no statistic I think that's more important than the number of pages that I get and when I get them and the number of phone calls that I get and the look of patients and families when they see me and tell me we have been here for 15 hours and nothing has been done, what's going on here. Clearly the systems are under pressure. The systems are under pressure, the nurses are under pressure, the emergency rooms are under pressure, and the community demands and probably needs better than that. Tr. 212 (emphasis supplied). Of the eight elderly emergency room patients mentioned above, however, no clinical evidence was offered of an adverse impact to outcome in any of their specific cases. But their anecdotal experiences supplement the evidence of ED overcrowding in the Subdistrict and additional lengths of stay in the EDs since the data considered in Bethesda I. Dr. Lopez- Viego's opinion based on extensive experience in the Subdistrict as well as the opinions of other clinicians (Dr. Brito and Dr. Raborn, for example) supports the finding that a significant number of elderly patients in the West Boynton area will enjoy not only enhanced access to Emergency services but better quality of care in WBCH's ED and in other basic acute care services if WBCH becomes a reality. There is more to the issue, however, as the evidence presented by Wellington, JFK and Delray points out. First, the distinction must be drawn between WBCH's providing improved quality of care for elderly patients who would be close to emergency care in the West Boynton area and the relief that WBCH would offer to overcrowded EDs in the Subdistrict or Palm Beach County. Just as expanding existing EDs will not solve the problem, WBCH and its emergency services will not solve ED overcrowding in the Subdistrict or the county. Emergency room crowding has multiple causes. A major cause, if not the primary cause, is the number of uninsured who use the emergency room for primary care. Few of the elderly population in the West Boynton area, a relatively affluent area and expected to remain so, are uninsured. The vast majority are covered by Medicare. A WBCH ED, therefore, is less likely to have the overcrowding caused by the uninsured who use ED for primary care. On the other hand, since elderly patients from the West Boynton area are not the cause of ED overcrowding, a WBCH ED is unlikely to solve ED overcrowding in the Subdistrict and the County. A WBCH ED may contribute to a marginal reduction in overcrowding in the short term but it will not stop overcrowding in existing EDs. A WBCH will, however, solve the overcrowding problem encountered by the elderly who reside in the West Boynton area when they seek health care service in an emergency room. For them, WBCH should provide an ED that is not crowded, an enhancement in access that will improve their quality of care. Another aspect of the emergency room issue is a shortage of certain on-call specialists to serve in Palm Beach County EDs: one of the factors that weighed against approval of Bethesda's application in Bethesda I. Findings of fact related to the On-Call Specialist Shortage are made below under the section devoted to Subsection (4) of the Statutory Criteria. Freestanding Clinics The argument has been made in this case that the way to solve emergency room overcrowding is to provide alternatives to emergency rooms: freestanding clinics where patients with low acuity problems can be seen. The alternative of freestanding clinics to date do not seem to have solved the problem of ED overcrowding. There are numerous freestanding urgent care centers and community clinics currently in operation in south and central Palm Beach County. Two county health clinics are located near JFK and Delray. Despite the existence of urgent care centers and county health clinics, the ED volumes at BMH, Delray, JFK, and Wellington Regional are heavy and continue to increase. Hospital-based emergency services are accessible to low income and uninsured patients because federal regulations such as EMTALA require hospitals to triage and stabilize all patients. Urgent care centers are not likely to be able to alleviate the crowding in hospital EDs because urgent care centers demand payment up front, which would be prohibitive to the high number of uninsured patients who access hospital EDs for treatment. 266 Unlike hospital EDs, moreover urgent care centers and primary care clinics are not open 24 hours a day, 7 days a week. Starting in 1995, Bethesda operated an urgent care center at Bethesda Health City for three to four years. The urgent care center did not off-load any of the patient volume from the BMH ED. The urgent care center never achieved any significant patient volume, despite Bethesda's marketing efforts and offering of extended weekday and Saturday hours. Cultural Access: Special Needs of Spanish-speaking Migrants. The "Summary" section of the SAAR, Section F., pgs. 33-36 summarizes Bethesda's application. Under the heading, "Need," in this section of the SAAR, AHCA lists six bullet points introduced by an italicized statement: "After weighing and balancing all relevant criteria, the following issues are presented." One of the six relates to needs of the Hispanic population. It states: The Hispanic population is projected by the applicant to grow 47 percent in the proposed service area from 2004 - 2009, compared to a projected 18 percent growth of the total population of this area, not including the number of undocumented immigrants, who are likely to be uninsured. The applicant expects the adjacency of the proposed location to the Caridad Health Clinic will increase access to inpatient and emergency services for these and other indigent groups in the service area. It is clear the applicant expects significant growth within this community that is disproportionately less likely to be insured than the general population. Ex. B-1F, at 34. The effect Bethesda expects WBCH to have on the Hispanic population in the District and the Subdistrict, particularly the un-insured segment of this population and its access to emergency room and basic hospital services, was a factor in AHCA's preliminary decision to approve the application. Asked to generally describe the Agency's decision, Mr. Gregg stated in part: The primary reason for approval of this application was local population growth in the immediate area compared to the surrounding area and the county in general. Included in that population growth were special considerations for the Hispanic population . . . . The Hispanic population is significant because it's the most likely population to be uninsured. And therefore, any hospital that would have an emergency department would be significantly affected by people who are more likely to be uninsured due to federal EMTALA laws and regulations. * * * Because this proposal is located for a suburban area, interior Palm Beach County, which one was undeveloped and now is very rapidly developing, it presents an opportunity for access improvement. This is specifically oriented toward emergency services and basic hospital services. And since the current market is one that was traditionally not populated and one that is for the most part gaining in population but currently divided by more than one provider basic acute care services, the impact on any one of them will not be so significant and in our view is outweighed by the chance for access improvement for the people who will live in this immediate area in the future. Tr. 3444-46, (emphasis supplied.) Mr. Gregg continued: We also think that this proposed satellite hospital which would be located in a relatively well insured suburban population would support the traditional safety net function of the Bethesda Hospital that currently exists. Tr. 3447. "Cultural access" issues refer to the extent to which certain persons cannot or do not gain access to existing healthcare facilities due to cultural factors such as race, ethnicity and national origin. There is no evidence in this case that there is a denial in the Subdistrict of access to healthcare services on the basis of Hispanic culture. Indeed, all of the hospitals in this proceeding provide access at their facilities to the Hispanic population in the Subdistrict. Bethesda's access case with regard to Hispanics, however, is not one of access denial access. Rather, it is based on enhancement of access to hospital services, particularly emergency room services, by patients that receives basic services at a health care facility close to WBCH's proposed site: the Caridad Clinic. Caridad Clinic Caridad Center is located at 8645 West Boynton Beach Boulevard, west of the Turnpike. A charitable health, education, and outreach center sponsored by the Migrant Association of South Florida, its mission is to upgrade the health, education and living standards for the children and families of agricultural workers, laborers, and the underserved. Consistent with its mission, the center's vision is to end the cycle of poverty for the migrant families and others it serves in South Florida. Its clients are mainly the children and families of Hispanic laborers and agricultural workers, most of whom are migrant workers and some of whom are undocumented immigrants. In support of its mission and vision, the center includes a clinic. The Caridad Clinic offers wide-ranging adult and pediatric medical, dental, and social services to Spanish- speaking medically indigent and migrant populations who are generally underserved in Palm Beach County, because of their status as migrants or their undocumented status. In a typical year, Caridad Clinic provides free, quality medical and dental care for about 7,000 individuals who live and work in Palm Beach County. The services include 1500 to 1800 patient visits each month to a physician or a physician's assistant for an annual total that exceeds 18,000 patient visits. Richard B. Raborn, M.D., is an expert in internal medicine and the President of the BMH Medical Staff, a position also referred to as "chief of staff." He has a long-term relationship with the Caridad Clinic. His professional relationship with the clinic began shortly after Hurricane Andrew in 1992 but his personal relationship with the clinic preceded that date. After an interruption in his professional relationship between 1999 and 2002, Dr. Raborn resumed his close professional relationship with the clinic. At the time of hearing, Dr. Raborn was the clinic's volunteer medical director. Dr. Raborn described the types of patients and services at Caridad Clinic at final hearing: We have both medical and dental . . . We treat patients, both pregnant women about to give birth . . . up to pediatric, giving full immunization schedules for children going to school and doing some of their school physicals. Also we do some of their chronic care. We have a huge problem with diabetes, hypertension, malnutrition. . . . [W]e address . . . adults and children. Tr. 146-7. Occasionally Caridad patients come from as far away as Polk County. The great bulk of the patients work or reside in Palm Beach County at the time of their visit to Caridad. Dr. Raborn postulated that 90% of them come from within a 15- mile radius of the center. For the most part, Caridad patients come from wherever inexpensive housing is available in different parts of Palm Beach County. It is unclear from the record, however, where in the County many of them originate and in what precise proportion they come from any one part of the county. Much of the evidence on the locus of Caridad patients presented by Bethesda's opponents focused on data that showed a larger portion of the Hispanic population to reside east of the Turnpike and closer to existing hospitals rather than the proposed WBCH site. But this data did not include undocumented workers, who make up a substantial part of Caridad's patients, and did not include many migrant workers even if they have appropriate work papers. As further explained by Dr. Raborn, "migrant workers . . . look for shared housing, rental housing, where three or four people can be in an apartment, or where they can put a trailer on property." Tr. 167. While there is a regular population of migrant workers in the Lake Worth area close to I-95 that frequently seek services at the Caridad Clinic, many of the migrants are housed in areas further west. Dr. Raborn observed, "especially when [the migrants] are working on crops . . . you . . . see more trailers . . . out as far as 441." Tr. 166. In short, data of where the patients originated, even if made available to Caridad, would likely be unreliable because of the nature of the patients; migrant workers are not normally in any one place for any substantial length of time. As for access by the Hispanic population in general, the evidence demonstrated that existing hospitals have programs and services in place intended to address cultural and language differences between English-speaking and Spanish-speaking populations. Many of these efforts to accommodate speakers of Spanish are required by law. The Caridad Clinic, on the other hand, does not focus so much on the Hispanic population at large in the Subdistrict, however, as it does on the segment of the Spanish-speaking population that, as the name of its sponsor suggests, consists of migrant workers. As one would expect some of these patients are undocumented. With regard to this underserved population, Caridad serves as an appealing alternative because, in the words of Dr. Raborn, "they are welcomed, there is no cast of suspicion on them." Tr. 168. In addition, Caridad will qualify a patient for treatment up to 200% of the federal poverty line. They can be working, therefore, and still receive care. At BMH inpatient admissions from Caridad Clinic are always accepted. But, however close it relationship with the clinic historically and because of present personnel configurations, Bethesda has no special contractual relationship with Caridad. In addition to Bethesda's support, Delray and JFK are chief supporters of the clinic and all of the hospitals in Palm Beach County support the clinic to some degree. Still, there are a number of factors that favor the likelihood that the proposed project will increase to access to hospital services, particularly emergency rooms services, for Spanish-speaking migrant workers and undocumented immigrant laborers. First, the medical staff at BMH have consistently supported Caridad Clinic and its patients in the past. In addition to the extensive experience with Caridad of the Chief of the Medical Staff at BMH, BMH's Medical Director, Dr. Biehl, works as a liaison between Caridad Clinic and the BMH medical staff to coordinate necessary testing and surgical procedures for Caridad Clinic patients. Two studies published since the February 2004 hearing address the special needs of the Hispanic population in terms of access to health care services, such as cultural issues and language barriers that can impede access to care. Bethesda addresses those special needs and facilitates access to care by providing interpreters for non-English speaking Hispanic patients (as do the existing providers who oppose the application in this proceeding), as well as multi-lingual instructions and educational materials as required by law. The recent studies also found that the Hispanic population is less likely to seek and receive basic health care services. Bethesda addresses that special need by providing a number of special programs for Caridad Clinic and Hispanic patients, such as adult and pediatric wellness programs, multi-lingual prenatal classes at Caridad Clinic, and a diabetes resource center at Bethesda Health City. Establishment of the proposed WBCH at its selected site, because of its proximity to the clinic, will assist in addressing the special needs of patients from Caridad Clinic for hospital and emergency services. Two of the biggest health-related issues for the population served by Caridad Clinic are transportation to Palm Beach County hospitals from the western parts of the County and overcrowded emergency rooms. Once at the Caridad Clinic, patients now must travel significant distances to access an existing hospital. And they may have to travel a significant distance from wherever they reside in the county if they do not go to the clinic first. Complicating their situation is a lack of regular public bus transportation available from the Caridad Clinic or anywhere else in West Boynton to existing hospitals. Bethesda's proposed WBCH will be approximately 1 1/2 miles from Caridad Clinic. Caridad Clinic will be much closer to WBCH than to any existing hospital, and that adjacency will increase access to emergency room and some in-patient services for those who utilize the Clinic. Bethesda intends to coordinate services at WBCH with Caridad Clinic and to specially train the WBCH staff with respect to the unique needs of Hispanic immigrant and migrant populations, which will help ensure that high quality of care is provided to Caridad Clinic and its patients. Bethesda's proposed WBCH is supported by Caridad Clinic. In addition to Dr. Raborn's testimony at final hearing, the previous Medical Director of Caridad Clinic, Michael E. Kasabian, M.D., and the CEO of Caridad Clinic, Mr. Pedro del Sol, submitted letters of support. For all the factors supporting the likelihood that access to hospital services, particularly emergency room services, will be increased for migrant workers and their families, there is a deficiency of some magnitude in the application's proposal from the perspective of access: access to certain in-patient services. When asked whether the Caridad Clinic is aimed at handling patients in need of inpatient services, Dr. Raborn candidly answered, "No. The fanciest technology we have are EKGs and a chest x-ray. That's about it." Tr. 161-2. Patients from Caridad Clinic, of course, require hospital-based testing on occasion (up to 20 times a month). Hospitalizations of Caridad Clinic patients for more serious conditions generate as many as 10 hospital admissions a month. These admissions from Caridad Clinic fall generally into two categories: surgical cases and cases of labor and delivery or obstetrics (OB). Between the two categories, surgical and labor and delivery, more Caridad patient hospital admissions are for labor and delivery. The proposed project with its emergency room, as with any emergency room, will provide emergency OB. But WBCH as presently proposed, should it be approved, will not have in- patient OB services. The lack of in-patient OB services when the majority of Caridad patients admitted to hospitals are OB patients diminishes the weight given to the increased access to hospital service that WBCH poses for the Hispanic migrant population in Palm Beach County Special Needs of the Elderly It is a common health planning practice to project the need for a new hospital based on the elderly population of the area to be served because the elderly are likely to use hospital services. For purposes of these findings, "elderly" are considered the age cohort 65 years and older. The Agency considers the "elderly population" growth in the West Boynton area compared to the elderly population growth elsewhere in the Subdistrict and Palm Beach County to be a factor favoring the application because it presents an opportunity for access improvement. Based on 2005 population estimates, 43.2% of the residents of the WBCH home-site zip code, 33437, are ages 65 or over, and 30.0% of the residents of the four zip code PSA are ages 65 or over. That compares to 22.2% of Palm Beach County residents and 17.7% of Florida residents. The large elderly population in the West Boynton area is projected to continue to grow steadily. The elderly (65+) population of the four zip code PSA is projected to grow from 58,812 in 2006, to 66,143 in 2011, to 74,165 in 2015. Home-site zip code 33437, alone, is projected to have 26,655 elderly residents in 2010. In contrast to the large elderly population in the West Boynton area, the population of the Wellington area and the "western communities" is much younger. (The "western communities" are generally three development areas in central Palm Beach County. North of the West Boynton area and west of the turnpike, they consist of Wellington and just to its north Royal Palm Beach, as well as an unincorporated area called The Acreage, further north still, consisting of 18,000 vested lots. See tr. 1493.) The 65+ population in Wellington zip code 33414 was only 4,084 in 2004. It is projected to grow to only 6,175 in 2011. That projected 2011 elderly population in Wellington is slightly more than one-half of the additional growth alone in the elderly population projected for the WBCH PSA over the period of time 2004-2011. Given the "much larger" elderly population in West Boynton as compared to Wellington, it is reasonable to expect a proportionately greater need for health care services by West Boynton residents than by Wellington residents. Numerous age-restricted community associations submitted letters of support for a West Boynton hospital to serve the needs of their elderly residents, and several elderly residents testified on Bethesda's behalf. Among the many supporters of Bethesda's application in the West Boynton area is Sonny Nguyen, M.D., a primary care physician. Dr. Nguyen has an office at Bethesda Health City. More than 50% of his patients are elderly (65+). Many have conditions such as chest pain, pneumonia, or abdominal pain, which require hospitalization. In emergencies, these patients generally prefer to be within 30 minutes driving time of a hospital. Many other physicians submitted letters of support for the proposed project. Barry M. Schultz, M.D., a Board- certified Geriatrician, wrote, "I feel that a hospital in West Boynton Beach is urgently needed by the ever growing elderly population in Palm Beach County." Ex. B-1D, Omissions Response, Tab D, "Medical Staff Resolution and Letters of Support." The aging population increases emergency room utilization, inpatient admission rates, and patient length of stay due to the complexity of the health problems of the elderly. Individuals 65+ tend to utilize acute care hospital services at a far higher rate than younger age groups. The national use rate for inpatient hospital services of the 65+ age category is more than four times greater than the use rate for those younger than 65. In Florida, the elderly account for almost 5 times more acute care inpatient days than those younger than 65. Fewer elderly residents will utilize more hospital services than will a larger number of younger residents. The number of patient days for elderly patients in the WBCH PSA increased from 61,596 in 2003 to 66,070 in 2004. In addition to the greater demand for inpatient services, the elderly utilize hospital emergency departments (ED) 33% more frequently than those younger than 65. When the elderly do present in an emergency department ("ED"), they are much more likely to be in a compromised state of conditions requiring "Emergent" care, meaning that the patient should be seen by a health care practitioner in less than 15 minutes. The Center for Disease Control (CDC) classifies ED patients as "Urgent" if the patient should be seen within 15-60 minutes, and as "Semiurgent" if the patient should be seen in 61-120 minutes. "Non-urgent" patients should be seen within two to 24 hours. A May 26, 2005 CDC report found that nationally, for all ages, 15.2% of ED patients were "Emergent." In contrast, 25% of ED patients age 65 or older were "Emergent." The 2004 version of the same CDC report shows in further detail that for patients 65-75 years old, 81.1% who presented in hospital ED's were either "Emergent," "Urgent," or Semiurgent," meaning they should all be seen within two hours or less. Only 7.2% of elderly ED patients in 2005 were classified as "nonurgent." In short, the elderly are prone to a wide variety of diseases and injuries that require emergency treatment ranging from "Semiurgent" to "Emergent" categorization, often followed by inpatient admission. Bethesda intends to establish a primary stroke program at WBCH that will be fully integrated with the existing stroke program at BMH. In stroke care, time is of the essence. A West Boynton hospital-based emergency service, with physicians and staff specially trained for the treatment of stroke, will be a benefit to West Boynton residents, and particularly the elderly, who are more susceptible to stroke. Bethesda's WBCH will offer a focused geriatric program and a full array of hospital-based services for the elderly, in an accessible West Boynton location. Bethesda will provide special staffing for elderly geriatric programs, and the WBCH facility will be specifically designed to enhance accessibility for elderly patients. Bethesda intends to work with OMEGA of Palm Beach County, an organization that studies the health care needs of the elderly, to determine precisely the geriatric and elderly programs to offer at WBCH. No comparable focused geriatric program currently exists at any Palm Beach County hospital. The focused geriatric program proposed by Bethesda was not proposed in its prior 2003 Application. Bethesda has developed the focused geriatric program, with the assistance of OMEGA, for the current application. The availability of accessible hospital services is particularly important for elderly patient populations due to the driving challenges that face the elderly, such as aversions to driving at night or in crowded conditions, confusion, eye- sight related issues, and diminished reaction/response times. It is reasonable to expect that the elderly may have increased difficulty navigating busy or congested roadways or intersections. Numerous Florida and national studies published since the February 2004 hearing increasingly highlight the driving challenges of the elderly. Those studies demonstrate that the elderly have more traffic accidents, take longer to adjust to lighting changes from day to night, tend to want to drive during limited times of the day and during ideal weather, and drive at a slower rate. The Florida Department of Elder Affairs reported in a 2004 report that 30% of elderly Florida residents reported limitations to their driving. A recent article published in Medical Risk Management Advisor (4th Qtr. 2004) sets forth the following "Medical Conditions That May Impair Driving" for the elderly: Vision: cataracts, diabetic retinopathy, glaucoma, macular degeneration Cardiovascular: arrhythmias, congestive heart failure, valvular disease Cerebrovascular: stroke, subarachnoid hemorrhage, syncope Neurologic: multiple sclerosis, Parkinson's disease Psychiatric: depression, anxiety disorders, psychotic illness Metabolic: hypothyroidism, hyperthyroidism, Type I-II diabetes mellitus Musculoskeletal: arthritis, abnormalities, spinal limitations Peripheral Vascular: deep vein thrombosis, aneurysm Respiratory: asthma, chronic obstructive pulmonary disease, sleep apnea Anesthesia and Surgery: use of general, local, or epidural anesthesia Renal: chronic renal failure, renal transplant JFK's witness, Dr. Luke, contended that the elderly do not begin to experience age-related driving problems until age 80, but that is not supported. Numerous studies report that age-related driving problems begin as early as 60. Dr. Luke's distinction between the "young" or "active" elderly, generally between the ages of 65 and 80, and the "frail" elderly, generally 80 and over, is not, of course, a bright line. Those over the age of 80 may be active and those between the ages of 65 and 80 may be frail. But his distinction between the active elderly and the frail elderly, whatever the appropriate division into cohorts by age, has merit. Housing in the West Boynton area is marketed to an active elderly population. In contrast to the active elderly, the frail elderly are more likely to live with others, in assisted living facilities or in nursing homes. They are not likely to live in the single-family housing units being developed in the West Boynton area. Nor are the frail elderly as likely to drive themselves or be driven by a spouse to the hospital or a hospital ED. The active elderly who live in the West Boynton area are much more likely than the frail elderly to be drivers and to drive themselves or an elderly spouse or family member to the hospital or a hospital ED. Distance and Travel Time to Existing Hospitals Distances to Existing Hospitals WBCH will be located at the intersection of State Road 7 and Boynton Beach Boulevard, approximately 2 miles west of the Turnpike, and 11 miles west of BMH. The closest existing hospital to the WBCH site is Wellington Regional, which is approximately 9 miles away. JFK, Delray, and West Boca are all approximately 12 miles from the WBCH site. PBC Fire Rescue Station No. 47 is located at the intersection of Boynton Beach Boulevard and the Turnpike in West Boynton. Station No. 47 is approximately 9.8 miles from JFK, 8.5 miles from Delray, 10.9 miles from Wellington Regional, and 10.9 miles from BMH. In the 1980's HCA, Tenet, and Universal, or their predecessor for-profit companies, established new hospitals in western Palm Beach County that were closer to existing or approved hospitals than the WBCH site is to existing hospitals. Wellington Regional and Palms West were constructed less than 4 miles apart in the "western communities" area. West Boca was constructed in southwest Palm Beach County at a location approximately 8 miles from Delray, and 7 miles from Boca Raton Community Hospital. Increasing Traffic Congestion Stemming from Population Growth and New Residential and Commercial Development There is growing and increasingly unpredictable traffic congestion in the West Boynton area and throughout Palm Beach County, due in large part to the rapid population growth and new development. The major roadways in West Boynton already carry a great deal of traffic. Peak traffic hours bring substantial congestion on the major arterial roadways in West Boynton, notwithstanding the expansion and widening of several roadway segments in the last year. Traffic is further slowed by a plethora of traffic signals, and many new signal installations are planned and funded to keep pace with the rapid residential and commercial development in the area. Rapid development in the West Boynton area has already placed a strain on the existing roadway system. Although certain segments of some roads in West Boynton have recently undergone expansion, the improvements overall are relatively few. Nearly all of the recently completed and currently funded roadway expansions are associated with large residential developments, with the roads at issue projected to be near capacity at or shortly after completion. It is reasonable to expect that the substantial increases in traffic volumes combined with the ongoing development and the proliferation of traffic signals on major arterial roadways throughout the area will result in increased and unpredictable congestion and travel times through and from West Boynton to outlying existing hospitals by 2010 unless roadway improvements are made or other measures are taken to counter traffic problems caused by growth. Evidence was presented regarding extensive recent and planned residential, commercial, and school development, all of which is accompanied by installation of new traffic signals and increased traffic congestion, along the major east-west and north-south roadways in West Boynton, including State Road 7, Lyons Road, Hagen Ranch Road, Jog Road, Military Trail, West Atlantic Avenue, Boynton Beach Boulevard, and Lantana Road. Signals are generally recognized as the primary cause of increased delay and lower speeds with respect to travel times. Signal cycle lengths (the length of time it takes for a signal to cycle from green through yellow, red, and back to green) at major intersections in Palm Beach County generally range from 90 seconds at minor intersections to 160 seconds at major intersections. The intersection of Forest Hill Boulevard and State Road 7, one of the busiest in the County, is a very congested intersection with triple left-turn lanes and a signal length of 160 seconds. Many of the signals on Boynton Beach Boulevard are also set at 160 seconds. Other than on the short segment of Boynton Beach Boulevard immediately approaching the Turnpike ramp at Jog Road, the County has not installed signal progression timing west of the Turnpike. There are no current plans for coordination of traffic signals in West Boynton. But it is likely that many, if not all, of the traffic signal cycle lengths in the West Boynton area will someday be coordinated by the County as traffic becomes more congested unless the County opts to give a roadway a CRALLS designation. For example, Forest Hill Boulevard has a CRALLS designation from the County. Such a designation indicates the roadway is a constrained facility. (A CRALLS designation is a third option under concurrency requirements, the first two being demonstration of capacity or an ability to increase the capacity to reach the appropriate level of service.) Consistent with the CRALLS designation, rather than widen the boulevard to six lanes west of State Road 7, the county has chosen to keep Forest Hill Boulevard at four lanes and to suffer the consequences. The consequences include "huge backups," tr. 1703, during the evening peak hour. Another hospital in the central part of the County, JFK, is also located on a very heavily congested roadway with a CRALLS designation, i.e., Congress Avenue. Several witnesses testified that the drive times from West Boynton locations, such as Bethesda Health City, Caridad Clinic, or residential communities both east and west of the Turnpike, to existing area hospitals often are around 30 minutes now, and on occasion, may be as long as 45 minutes or more, depending upon the time of day and traffic congestion. Even a major corridor like Interstate 95, east of the West Boynton area, can see drive times up to 40 minutes for trips along the adjacent surface roads from BMH to Delray. The traffic congestion is not limited to the West Boynton area. In 2004 and early 2005 every east/west artery in Palm Beach County was congested. Some of that congestion has been reduced by fly-overs. For example, fly-overs have now been constructed as part of Southern Boulevard over Military Trail, Haverhill Road, Jog Road and State Road 7. These fly-overs have greatly alleviated congestion on Southern Boulevard because the travelers on Southern no longer need to stop at the traffic signals at these intersections. Traffic congestion is a major concern of the Sheriff's Office because it affects incident response times. A new hospital at the corner of Hwy. 441 and Boynton Beach Boulevard will be easily accessible to many of the new developments in Palm Beach County because traffic flows much faster heading west than heading east. From the standpoint of the Sheriff's Office, the location of a hospital is a primary concern with regard to transporting patients. Along State Road 7, traffic flows faster south toward the WBCH site than northward for residents in the Lantana Road area because most of the commercial development is northward from there to the Wellington area where traffic is often congested. Increasing Delays in Accessing Hospital Emergency Services Traffic congestion and increases in drive times to existing hospitals adversely affects West Boynton patients who seek emergency services. Most individuals, including the elderly, access hospital emergency services in Palm Beach County by private car or some means other than ambulance transport, so traffic delays directly impact those patients' ED access. At JFK, for example, only about 26% of ED patients arrive by ambulance. PBC Fire Rescue supports the proposed WBCH because of the population growth in the West Boynton area, and the accompanying increasing traffic and congestion it expects. PBC Fire Rescue Station 47, which is located at the intersection of Boynton Beach Boulevard and the Turnpike and serves the West Boynton area, has experienced a steady increase in call volume in the last two years. Station 47's volume increased from 1,799 incidents for the year ending July 1, 2003, to 2,472 incidents for the year ending July 1, 2005, - - a 37% increase. Approximately 85% of those calls were medically related. Station 47 had almost 700 patient transports to hospitals for FY 2005, up from only 520 transports for FY 2003. Currently, there is no hospital located within Station 47's response zone. Station 47 units must travel out of zone and traverse the County to transport patients to existing hospitals, and then return to zone. Such transports not only take a unit out of service, but also increase response times, as surrounding stations must cover the Station 47 response area, all of which is exacerbated by the increasing traffic and congestion. As Chief Baker described, the time it takes to traverse the roadways is extensive in the morning, lunchtime, and during rush hour traffic. The longest PBC Fire Rescue average hospital transport times are calls originating in zip codes 33437 and 33467, the two western-most zip codes in the WBCH PSA, and those transport times increased from 2004 to 2005. Another factor that negatively impacts PBC Fire Rescue is the amount of time it takes a unit to turn a patient over to the receiving hospital, known as "turnover time." PBC Fire Rescue must turn a patient over to an ED physician, nurse, or paramedic, and the number one factor that delays such turnovers is bed availability in the ED, accounting for over 90% of extensive turnover times. The availability of on-call physician specialists does not affect turnover times. All the EDs in the Boynton and Delray areas are busy. The EDs are oftentimes backed-up. Turn-over times for PBC Fire and Rescue can take 45 minutes to an hour because of the presence at the hospital of more than one PBC Fire and Rescue ambulances, as well as ambulances from municipal ambulance units and private ambulance companies. From August 1, 2004, through July 31, 2005, 174 of 696 total transports from Station 47, or approximately 25%, had turnover times greater than PBC Fire Rescue's target of 15 minutes. At Delray, 733 transports, or 17% of the total transports, moreover, had turnover times greater than 20 minutes. Data from PBC Fire Rescue shows that the cumulative response, travel, and turnover time associated with transporting patients from the West Boynton area to existing hospitals exceeded 30 minutes in 2005, for all 4 WBCH PSA zip codes. Bethesda's proposed WBCH would be approximately 2.3 miles from Station 47, and would also be in closer proximity than existing hospitals to two new PBC Fire Rescue stations planned for the West Boynton area. For the vast majority of West Boynton area patient transports, PBC Fire Rescue would take the patients to WBCH, consistent with its policy of transporting patients to the closest hospital. As discussed infra, only in the case of trauma alert patients and patients who are coded as "cardiac alert suspected MI," would PBC Fire Rescue bypass WBCH for another facility. The only other bypass protocol is for "stroke alert," but WBCH is expected to be a primary stroke center. Patients at BMH, according to patient surveys conducted by Bethesda, show generally show satisfaction with the services and quality of care received at the hospital. But they also show "the trend that patients are dissatisfied with their wait times in the emergency room." Tr. 1160 Bethesda's Travel Study Bethesda presented a drive time analysis performed by its traffic engineering expert, Mr. Rennebaum. In support of Bethesda's 2003 Application, Mr. Rennebaum had conducted a general analysis of traffic conditions on Boynton Beach Boulevard from State Road 7 easterly to Military Trail. That analysis did not involve actual travel time runs. It was limited to the projection of traffic conditions based on 2003 Palm Beach County traffic counts on a single segment of roadway, i.e., Boynton Beach Boulevard between State Road 7 and Military Trail. For this application, Mr. Rennebaum assessed travel times based on travel time runs to the closest hospitals along several roadways, conducted under his direction in April 2005. He also prepared an analysis of future travel conditions, based on the travel time runs, Palm Beach County official traffic counts, and future growth projections, as well as County traffic signal installation reports. Mr. Rennebaum's new analysis also considered various factors that can reasonably be expected to contribute to increased travel time in West Boynton, such as the proliferation of traffic signals on major arterial roadways, burgeoning residential and commercial developments, seasonality, weather, accidents, and elderly driving issues. Mr. Rennebaum's analysis demonstrated that travel time from a central point in West Boynton to all surrounding hospitals was approaching 30 minutes in April 2005. One year later, in March 2006, the travel time to surrounding hospitals remained near or exceeded 30 minutes, notwithstanding roadway widenings, as more residential and commercial projects had been constructed. To conduct his travel time study, Mr. Rennebaum identified two alternate routes from the entrance of the Canyon Lakes project, then under development, to the front door entrance of each of the surrounding hospitals, i.e., Delray, JFK, BMH, Wellington Regional, and West Boca. Mr. Rennebaum chose Canyon Lakes because it is a central point in West Boynton. Further, Canyon Lakes was then the nearest existing residential development to the WBCH site. The entrance to Canyon Lakes is on Lyons Road, south of Boynton Beach Boulevard. Lyons Road does not extend southward into the West Delray area. Residents of the Canyon projects must head north on Lyons Road to Boynton Beach Boulevard to exit the area, even if they are heading to a hospital to the south, such as Delray or West Boca. In April 2005, at the time Mr. Rennebaum performed his travel time runs, no one lived in the homes being constructed in Canyon Lakes, and there was no traffic at that time, as compared to the present. Four runs were conducted on each route during both A.M. (7:30 or 8:30 start) and P.M. (4:00 or 5:00 start) peak periods to each of the hospitals, for a total of eight runs to each hospital, with the exception of Wellington Regional, for which only one day of data, or four travel runs, could be obtained. The County's internal traffic performance data collection protocol mandates that travel time measurements be taken during both the A.M. and P.M. peak hours, and that is the standard of practice for general travel time studies in Palm Beach County. It is also well established that travel time runs should be conducted Tuesday through Thursday, avoiding Mondays, Fridays, weekends, and holidays as not representative of normal traffic conditions. Mr. Rennebaum employed the "maximum car technique." He directed the drivers in his travel time study to drive with the average flow of traffic, without exceeding the speed limit. That is a reasonable methodology because during peak traffic hours in West Boynton, the major roadways are congested, and drivers likely are not able to exceed the posted speed limits. The Manual for Uniform Traffic Studies ("MUTS Manual") sets forth detailed requirements for a specific type of travel time study known as a "travel time and delay study." Travel time and delay studies are typically performed by the Florida Department of Transportation, and are used for specific technical purposes, such as signal retiming and to determine the "level of service" on a roadway. The MUTS Manual mandates very specific protocols for conducting "travel time and delay studies," and specifically states that the protocols are not appropriate for application to segments of roadways exceeding 2 miles in length. Mr. Rennebaum's travel time study was not a "travel time and delay study," and hence application of the MUTS Manual study specifications to Mr. Rennebaum's general travel time study would have been inappropriate. Mr. Rennebaum's travel time runs started near the entrance to the new Canyon Lakes project. However, an important aspect of many West Boynton area residents' drive times is the length of time that it may take simply to travel through and exit the many large and densely developed residential communities onto a major roadway. The large communities in the Ag Reserve are generally developed at two units per acre, and those to the north are 2 1/2 to 3 units per acre. Several community witnesses testified that it routinely adds up to 5 minutes, and can add up to 8 or 10 minutes to their drive time to exit their community. Furthermore, the influx of part-time residents during the "peak season" winter months results in heavier traffic and increased travel times. Palm Beach County calculates growth rates each year based on three years' prior actual traffic count data. Traffic volumes in West Boynton continue to grow, and many segments of the main arterial roadways are projected to continue to experience double-digit growth rates. Mr. Rennebaum's methodology in obtaining actual drive times to the surrounding hospitals was reasonably based on the standard of practice in Palm Beach County. Mr. Rennebaum reasonably relied on Palm Beach County Traffic Performance Standards, a report published by Palm Beach County reflecting an inventory of all approved, both un-built and under construction, projects that will impact the area roadways, as well as the County's official record of actual historic growth rates in traffic volumes on the major roadways in West Boynton in projecting future growth and congestion. The Palm Beach County Traffic Performance Standards, once updated annually, are now updated on a monthly basis just to keep pace with the rapid development in the area. Historic growth rates in traffic volume on major arterial roadways in West Boynton have ranged from 3.85% compounded annually to as high as 26% compounded. Taking into account the substantial number of newly constructed and planned residential and commercial developments in the West Boynton area, as well as West Delray and Wellington, and the substantial increase in new and planned traffic signal installations along major arterial roadways, it is reasonable to expect that traffic volume and congestion will substantially increase such that travel times from West Boynton to the closest surrounding hospitals will exceed 30 minutes by 2010. Moreover, increased congestion on the roadways is likely to have an even greater adverse effect on the ability of elderly drivers to negotiate the roadways. Travel Time Standards The Agency has not promulgated a travel time standard by rule. In the Recommended Order in Bethesda I, however, it was found that "[a] reasonable geographic access standard for persons living in an urban area is a drive time of 30 to 40 minutes to an acute care hospital." Id. at 61. This finding was accepted by the Agency in the Bethesda I Final Order. Despite its acceptance of this standard as a reasonable one in Bethesda I, and despite the conclusion of the traffic time studies by experts who testified in this hearing that drive times to hospitals from the West Boynton area that travel time is generally less than 40 minutes and rarely exceeds 40 minutes, AHCA contended at hearing that geographic access for the elderly remains a factor supporting approval. In explaining its position, AHCA offered that population growth had continued in the interior portion of Palm Beach County, including in the West Boynton area, since Bethesda I. AHCA, moreover, is obligated by its statutory mandate to plan ahead and not wait until drive times to acute care services exceed 30-40 minutes. Thus, it is reasonable to look five to ten years into the future, as the health planning witnesses did with their population projections in this case, to assess the likely traffic congestion and travel time issues. Given the reasonableness of projections of rapid growth in the future, AHCA believes it is important to plan ahead and get a hospital in a location where it is reasonable to expect that drive times are going to increase. AHCA has previously approved numerous CON applications for new hospitals even though residents of the proposed service area were well within 30 minutes' travel time of an existing hospital. For example, in the West Kendall cases, AHCA approved, through final order, two proposals for satellite hospitals in southwest Dade County (i.e., HCA West Kendall and Baptist Miami), even though off peak travel time to existing hospitals was only 12 1/2 minutes, increasing to 24 minutes during peak hours. In the Miramar case, discussed infra, AHCA approved by final order a new hospital in southwest Broward County even though most residents of the proposed service area were within 15 minutes or less of an existing acute care provider. In AHCA's SAAR approving Marion Community Hospital's proposal to construct a new 70-bed satellite hospital for HCA's Ocala Regional facility, AHCA found that the driving time to the closest existing hospital was 20 to 30 minutes. Densely populated areas, as is the case in much of the Subdistrict, are prone to unpredictable transportation problems, such as extraordinary traffic jams at all times of the day, having nothing to do with rush hour, and great unpredictability of travel times often associated with accidents. Travel time to a hospital is a particular concern for elderly patients. Many elderly patients have driving difficulties, and the longer they are on the road in an ill condition, the more danger they create for themselves and others. The 2004/2005 Hurricanes The September 2004 hurricanes that hit portions of Palm Beach County (i.e., Jeanne and Frances), and Hurricane Wilma in October 2005, were the first major hurricanes to hit the area in decades. They brought special pressures and unique circumstances to Palm Beach County health care providers that were not realized before those storms, and brought to light the vulnerability of the local health care system in responding to the needs of a large population at times of natural disaster, including the need for accessible emergency care services and the special needs of the elderly population. The 2004 and 2005 hurricanes that hit parts of Palm Beach County occurred after the February 2004 hearing. Those Category 2 hurricanes led to "surges" in hospital ED utilization throughout Palm Beach County, as accidents and storm-related injuries such as falls from ladders, contusions, sprains, and lacerations increased. Adding to the "patient surge" at hospital EDs, other health care providers in the County were rendered inoperable for days or weeks (e.g., dialysis clinics, walk-in centers, physicians' offices), and patients of those other providers had no alternative other than hospital EDs. The federal government assisted several hospitals like JFK and Boca Raton Community Hospital by setting up MASH-type ED units. BMH's ED was overwhelmed with patients for well over a week after the hurricanes. Several hospitals, such as Wellington Regional, JFK, and certain Tenet hospitals, suffered substantial damage. Tenet's West Boca Hospital sustained significant damage in the aftermath of Hurricane Wilma, and contemplated evacuating its patients. Tenet's Good Samaritan Hospital was evacuated. Due to power outages during Hurricane Wilma, surgeries were performed at JFK without air conditioning, which increases the likelihood of infections. Wellington Regional sustained approximately $6 million in damage from Hurricane Frances in late 2004. Palm Beach County has not yet encountered a Category 3 hurricane like Hurricane Katrina that hit New Orleans in 2005, which forced the evacuation and closure of several Tenet and Universal hospitals or a Category 5 hurricane like Andrew in Dade County in 1992. It is now recognized by Palm Beach County disaster preparedness planners and key planners around the nation that more hospital facilities are needed in heavily populated areas to provide "patient surge capacity" and to account for possible closures and evacuations of other area hospitals in the direct path of a hurricane. The Trauma Agency Director for the Palm Beach County Health Care District, Dr. Davis, testified that with respect to the County's disaster plan for hurricanes, the County needs more "surge capacity." Rather than build a new hospital with a new ED, however, the priority for increasing surge capacity adequately is to expand emergency rooms in existing hospitals and increase hospital bed capacity as part of improving through- put of patients admitted to the hospital from the ER. While the best way of improving patient surge capacity in the event of a disaster is to improve capacity at existing hospital, WBCH would improve access to ED services for the elderly in the West Boynton Area at a time of patient surges caused by county-wide disasters. There are other advantages in case of disaster to approval of WBCH. The availability of another Bethesda System hospital, located more inland, will be of great assistance if a major hurricane were to force closure of BMH, which is located close to the Atlantic coast. For example, during the recent hurricanes, patients and staff were evacuated from Tenet's Good Samaritan Hospital, a hospital located close to the Atlantic coast in West Palm Beach, to another Tenet hospital, St. Mary's, located farther inland. A new Bethesda facility in West Boynton would also facilitate Bethesda's ability to relocate patients and staff to an inland hospital, if necessary. As the newest hospitals in Palm Beach County are about 20 years old, none has been constructed to comply fully with recent Florida hurricane-resistant building codes. Bethesda's WBCH will be designed and constructed in 100% compliance with all current building codes, and in particular those related to hurricane protection and wind-borne debris protection. Community Support Bethesda's proposed WBCH has received extensive grass roots support from residents, community organizations, and public officials from the West Boynton area, as well as the unanimous support of the County Board of Commissioners for a land use change and for the addition of workforce housing near the WBCH facility. COBWRA, a not-for-profit organization of 83 residential associations representing 85,000 to 100,000 residents located in the West Boynton area, supports Bethesda's application. COBWRA members are adult, age-restricted communities, meaning that one resident per unit must be age 55 or older, and no residents may be under age 18. Approximately 62% of COBWRA's member residents are seniors. COBWRA represents the interests of all West Boynton area residents in working to improve and maintain the area's health care facilities, public safety, cultural outlets, traffic flow, educational opportunities, and parks and recreational facilities. It is COBWRA's position that the absence of an acute care hospital with hospital-based emergency services is one of the greatest challenges to the quality of life in the West Boynton community. As the West Boynton area continues to develop rapidly with the increasing traffic volumes, traffic delays are making it increasingly difficult for area residents, many of whom are elderly, to travel out of their community to access hospital and emergency services at distant existing hospitals. There are 74 COBWRA residential associations which submitted letters of support for the WBCH application. COBWRA's president, Ms. Sandra Greenberg, testified in support of Bethesda's proposed WBCH at the final hearing. Mr. Gerald Rosenberg, Chairman of the Macular Disease Association of Boynton Beach, a support group for visually impaired individuals, testified in favor of Bethesda's proposed WBCH. As expressed in its April 11, 2005 letter of support, the Macular Disease Association supports the development of a West Boynton area hospital. Bethesda's proposed WBCH also is supported by PBC Fire Rescue and the Palm Beach County Sheriff's Office. Battalion Chief Nigel Baker of PBC Fire Rescue, who was the Chief of Battalion 4, which covers the West Boynton area, from 2002 through July 2005, submitted a letter of support and testified on Bethesda's behalf at the final hearing. Palm Beach County Sheriff Ric Bradshaw submitted a letter in support, and Leslie Shriberg, the Community Relations Coordinator of the Palm Beach County Sheriff's Office, testified by deposition in support of Bethesda's application. Neither PBC Fire Rescue nor the Palm Beach County Sheriff's Office offered support for the prior West Boynton hospital applications of Bethesda and JFK. Dr. Luke, a JFK health planning witness, agreed that community support for Bethesda's proposed WBCH is a factor to be considered, testifying as follows: "The public input is a legitimate part of the [CON] process. I don't think it should ever be the sole determining factor, but I certainly would think that it ought to be weighed in the balance." Tr. 7310. While the desires of the local community should be considered, as Dr. Luke suggests, most lay persons are not in a position to evaluate how the delivery of medical services will be affected by the construction of a new hospital. Closer proximity does not necessarily equate to higher quality of medical care. For example, if a patient requires multiple sophisticated medications, ICU care, infectious disease care, cardiology or neurology care, then that patient's care is likely to be better at a larger facility like Delray, BMH or JFK. Furthermore, some patients suffering heart attacks who are not taken by ambulance to the hospital and who were close to a satellite hospital in the West Boynton Area could go the satellite hospital and then require transfer. The time delay could affect the outcome of the patient's treatment. Likewise, patients who suffer strokes and who would benefit from the JFK interventionist program may reach an outcome that is less optimal if they seek treatment at WBCH rather than at JFK. Private Rooms/Quality of Care Unlike in February 2004, private patient rooms have now become the standard in construction of new or expanded hospitals. In March 2006, the American Institute of Architects ("AIA") published new guidelines for hospital construction that require all private room construction. Those guidelines are based on recent studies, unavailable at the February 2004 hearing, finding that private patient rooms lead to improved patient quality of care and safety. The new AIA guidelines are being incorporated in Florida's building code and will be the mandate for all new construction by Fall 2006. BMH, JFK, Wellington Regional, and Palms West all have recently completed or soon will complete construction projects involving all private rooms. Each of those hospitals, however, still has numerous semi-private rooms. Delray also has numerous semi-private rooms. Only 102 out of 350 beds at Delray are in private rooms. The remaining 70% or so are in semi-private rooms. Unlike other Palm Beach County hospitals, a recent bed addition made by Delray consisted of a majority of beds in semi-private rooms. In the 31-bed addition, only 8 are in private rooms. Of course, semi-private rooms can usually be converted to private rooms if the census so warrants. But the lack of all private rooms in existing facilities has a negative effect either on quality of patient care or, if converted to private rooms temporarily, then a potential negative effect on utilization. In its CON Application No. 9558, Palms West, an HCA hospital, cited the following as a special circumstance justifying the need for more beds: The medical needs of the patients (isolation, reverse air-flow, privacy, gender, etc.) make it necessary to utilize a semi-private room as a private room thus artificially reducing the number of available beds without changing the licensed capacity or adjusting the occupancy rate to account for the unavailable bed. P. 2 of Ex. 5 to Ex. B-62 (Rohan Depo.) Also see Ex. B-62 at 22-23. Bethesda proposes that all 80 WBCH beds be in private rooms. Development of WBCH, moreover, will enable Bethesda to convert all of the remaining 67 semi-private rooms at BMH to private rooms. Utilization, BMH Expansion and Impact of WBCH Extent of utilization of existing health care facilities and health services. Each of the parties' hospitals is well utilized. Utilization is generally at its highest during the peak season months of January through March. In fact, each of the parties has experienced capacity constraints during these peak months recently. The peak season is lengthening. It has begun to stretch into April. Area hospitals are often crowded during weekdays. Need indicated by capacity constraints during peak months is balanced, however, by a decline in average acute bed occupancy decline in the Subdistrict since 2002. Preceded by an increase of 71.9% to 77.3% (2000 to 2001) and a second increase from 77.3% to 78.2% (2001 to 2002), average acute bed occupancy fell to 75% in 2003 and then fell again in 2004 to 73.8%. Given the increase in population and patient days, the decline in acute bed occupancy from 2002 to 2004 is attributable to an increase in the acute bed inventory of the Subdistrict. Over the five years of 2000, 2001, 2002, 2003, and 2004, occupancy rates in the District did not perfectly parallel the rates in the Subdistrict but were similar. They, too, indicate a decline in more recent years. Beginning with an occupancy rate of 63.9% in 2000, the District occupancy rate rose to 67% in 2001, and then fell each successive year, to 66%, 65.5%, and 64.5%. The fall in the rates in the presence of increases in population, demand for acute care hospital services and patient days, just as in the case of the Subdistrict, is due to an increase in acute care bed inventory. The increase in acute bed inventory has been accompanied by a moderation in the rate of growth in acute patient days in both the District and the Subdistrict. For example, from 2000 to 2001, acute care patient days in the Subdistrict increased by approximately 32,200 patient days. The following year, 2002, the volume of patient days increased by approximately 7,900 patient days from 2001 so that the rate of growth was down considerably. In 2003 the increase over 2002 was 2,929, another drop in the rate of growth of increase in patient days. In 2004 the increase over 2003 was down again, albeit only slightly, to 2,853, a stabilization in the rate of growth. Observation Days While occupancy rates and the rate of growth in patient days have declined recently, the activities of short- term acute care hospitals have diversified in recent years. For example, the hospitals participating in this proceeding now provide many more outpatient services than they did a few years ago. They also have increasing numbers of observation patients. A change since the February 2004 hearing is the increase in observation patients experienced by all parties. Around July 2004, the Centers for Medicare and Medicaid Services ("CMS") changed the certification and payment requirements for inpatient admissions. As a result, hospitals have seen a dramatic increase in the number of medical observation, or "23- hour," patients, whose conditions do not qualify for inpatient admission, but who are not in a condition to be discharged. For example, BMH observation patient days increased from 3,759 in FY 2003, to 4,897 in FY 2004, to 5,125 in FY 2005. In April 2005, BMH had an estimated 608 observation patient days, equating to an average of 20 observation patients each day occupying an inpatient bed. With such a high number of observation patients, BMH may have up to as many as 50 inpatient beds tied up at any one time with observation patients. None of the party hospitals has a separate observation unit, so observation patients typically must be placed in a licensed inpatient bed. However, observation patients are not counted in a hospital's annual acute care occupancy. Accordingly, recent reported trends in acute care occupancy do not present the complete picture as to the actual utilization of a hospital's licensed beds. A 75% inpatient occupancy level, therefore, which traditionally was considered optimal occupancy, now may be too high for optimal service and bed availability. Constraints to BMH Expansion Bethesda claims that it has capacity constraints at the BMH site that keep it from adding new beds. There is, in fact, no realistic possibility that Bethesda could acquire additional land bordering the existing BMH campus for expansion of that facility. Expansion of the existing boundaries of BMH's campus is not an option either. Bethesda's claim of inability to expand its facility on site at the existing BMH campus, however, is not as certain. Subsequent to the denial of its prior application, after Bethesda had argued in Bethesda I that it is not able to expand the BMH site, Bethesda obtained approval to begin a new open heart surgery program. A heart institute is now under construction that will add almost 80,000 square feet to the existing Bethesda campus. The plans for the institute involve adding a couple of stories over the existing hospital and a new four-story wing. Construction drawings for the institute were submitted in November of 2005 after the application in this case which claims inability to expand. Furthermore, at the hearing in Bethesda I, Bethesda minimized the impact of the proposed transfer of beds on occupancy at the main campus by claiming that it could terminate its existing contracts with Hospice of North Palm Beach and with respiratory services if it needed more beds. These contracts had been entered because of excess capacity at BMH. Patients in those units could be treated, moreover, at long-term acute care hospitals or free-standing hospices. Bethesda's assertions with regard to the contracts were accepted in Bethesda I. Bethesda has not initiated any efforts since to terminate the contracts. It has not asked its design team to look at design issues for conversion of the hospice or ventilator units into private acute-care beds. Nor has it done any other investigation into converting the beds to alleviate the space constraints it claims. In Bethesda I, the following finding was made: "Bethesda also presented evidence regarding its inability to add new beds at Bethesda Memorial because of physical and/or cost constraints, but that evidence was not persuasive." Bethesda I Recommended Order, p. 52. Under the circumstances of this case, that is the evidence presented and the findings of fact of this order, Bethesda's contention of inability to expand on the BMH site is not accepted. Bethesda's claim of inability to expand stands in stark contrast to the plans of other hospitals that participated in this proceeding. Each hospital opposing Bethesda's application has found it necessary to add more inpatient beds in recent years. Unlike BMH, each expects to construct even more bed capacity soon. The increases in bed capacity at WRMC, JFK, and Delray have been accompanied with other improvements dictated by health care planning. They show intent to make attempt to meet the health care needs of the Subdistrict's growing population. WRMC WRMC has developed a Facility Master Plan, based on projected hospital utilization by department, to guide construction and development of services and to ensure the capacity on its campus to meet the future needs of acute care patients in western Palm Beach County through 2011 and beyond. Within the past five years, WRMC has built a 30,000 square foot tower in front of and integrated with the main hospital for the purpose of relocating obstetrics and ICU, at a cost of $10m. The new tower contains 18 labor rooms, 10 level II NICU beds and 16 ICU beds, doubling the size of the earlier ICU and tripling the size of the labor and delivery suites. The layout of the new tower allows ample throughput capacity for patients who need ICU level services and ensures that neonatologists are available 24/7 for OB and the NICU. In 2000, WRMC purchased and placed in service a new Siemens Primus IRMT linear accelerator in the Cancer Center, at a cost of $2.5m. In 2001, the Outpatient Diagnostic Center was opened at a cost of $4.5m. In 2002, WRMC completed and opened three new operating rooms with associated recovery rooms, a short stay surgical waiting room for family, and a new admitting department, at a cost of $4.5m. In August 2004, WRMC added 22 additional acute care beds to its inventory by converting existing space in the hospital. In 2006, a parking garage was completed at a cost of $4.5m. During the next three fiscal years and as part of its five-year master plan for expanding WRMC's physical plant and acute care services for the residents of existing and future communities in west central and southern Palm Beach County, WRMC will: Double the size of the Cancer Center at a cost of $10m, of which $8.5m will be spent in 2006. Commencement of construction is imminent and will be completed in one year. The expanded Center will add a third linear accelerator, a third vault and associated exam rooms. Upgrade the central plant (equipment which provides air conditioning and emergency power) and classroom space. A third emergency power generator will be added. Classrooms are currently and the new classrooms will be, available to the public free of charge for healthcare informational seminars and support groups. The project costs of $250k will be incurred and the project will be completed in 2006. Double the size of the Emergency Department, adding 20 rooms and beds to total 40 E.D. beds. The project includes expansion of the adjacent inpatient imaging department. The total cost will be $16m, of which $6m will be spent in 2006. Construction will commence in June 2006 and take 1 year to complete. The construction will be phased to ensure continued operation of the E.D. during construction. In 2008, open a 15-bed NICU level III unit in renovated space. The initial development costs budgeted in 2006 are $100k. Construct a bed tower with 4 floors. The first floor will accommodate relocated ancillaries and remaining 3 floors will accommodate 40 acute care beds each, for a total of 120 new beds. The tower is designed to add an additional floor which would bring the capacity to 180 beds. The tower will be located to the rear of and integrated with the existing main hospital building and ancillaries, but will not need to duplicate existing ancillaries such as imaging, laboratory, admissions, cafeteria, and other service departments of the hospital. The approved budget is $22m, of which $2.5m will be spent in 2006. Construction is scheduled to commence in June of 2007. The tower is architecturally and functionally complementary to the main hospital and will be joined to the most recently completed front tower by a skybridge. WRMC, Inc., has sufficient land remaining on its campus for expansion. In September 2004, it annexed its campus into the Village of Wellington to ensure that it can expand its physical plant and services to meet the future acute care needs of the western Palm Beach communities. The main hospital, parking garage, and Cancer Center occupy only 15 of 56 acres owned by WRMC. Although some medical office buildings also occupy additional space, WRMC has ample room on its campus to expand its hospital. The County has approval authority for traffic impacts but the recent annexation of WRMC's site plan into the Village of Wellington should expedite future land use and building permitting for WRMC's projects. The Cancer Center and ED expansions have received County traffic concurrency approval. The capital budget total cost of each and all the aforementioned projects have been approved by UHS, Inc., WRMC, Inc.'s parent. Conservatively assuming the new WRMC bed tower will be 120 beds (instead of its potential 180), WRMC will be increasing its capacity overall from 153 to 278 beds, and will be opening a $22m new 120-bed acute care tower in point of time before Bethesda proposed to open an $82m new 80-bed acute care hospital less than 9 miles south of WRMC. Of the two approaches, WRMC's cost effective master planning represents the more appropriate incremental response to community growth in the west Boynton area. The additional 120 acute care beds which will be added to WRMC will also have less impact on existing nurse and physician shortages. WRMC already has, for example, an equipped and staffed cafeteria, central plant, laboratory, admissions department, emergency department and all the professional staff in those departments. A new hospital would have to hire the core staff for all those basic and ancillary services (the basic staff necessary whether there is only one or 40 patients in the hospital). The new bed tower at WRMC will not require a duplication of core staffing, but only the incremental professional and service staff for the beds. JFK JFK has the ability to expand in order to increase the services it offers and the number and types of patients it can treat. The hospital anticipates adding 36 beds in existing shelled-in space on its fifth floor in 2007. It also has room to add another 36 beds in its northwest tower. The existing hospital building can be expanded vertically in certain areas to accommodate additional beds, and JFK is exploring the possibility of purchasing land adjacent to its campus to the north, which would permit JFK to expand its physical campus further. Delray Delray is actively engaged in adding beds and services in its campus. In December 2005, 31 additional beds were added. Delray is adding a new central energy plant scheduled to be completed in July 2006, at a cost of approximately $1.1m. The energy plant is being added to accommodate expansion of the emergency department scheduled for May 2006 through May 2007; the addition of two major pieces of imaging equipment in the radiology department; a new 64-slice CT scanner; and a new 3.0 TASLA MRI. Additional building construction will also be necessary to house the new MRI, scheduled to come online in early 2007. Delray's emergency department expansion will increase the number of treatment rooms from 24 to 36, will include three distinct trauma rooms and a fast track area for efficient treatment of lower acuity patients and will have ancillary services in or proximal to the emergency department to achieve a rapid turnaround time with test results for emergency patients. The anticipated cost of the emergency department expansion is $8.4m. Other planned improvements at Delray include enhancing the radiology department to include a PACs digital imaging equipment system, which will improve the efficiency of diagnostic imaging, adding electrophysiology to its cardiac department, renovating the hospital pharmacy and installing hurricane windows. Delray typically spends approximately $12m- $15m per year on expansions and capital improvements. Delray has the ability to add beds through additional expansion or renovation on its campus. It has no plans at this time, however, to add beds at its facility. After the addition of 31 beds in December 2005, the hospital's occupancy level did not rise. The addition of 100 beds at Boca Community Hospital and the opening in approximately one year of interventional cardiology and open heart surgery programs at both Boca Raton Community Hospital and BMH, will likely reduce census levels at Delray and JFK and create additional capacity at each of those hospitals. Of Delray's 298 medical/surgical beds, 233 are equipped with telemetry equipment. Forty-two of the telemetry beds are the result of a recent conversion of 42 orthopedic surgery beds to a 42-bed telemetry unit at a cost of approximately $260,000. This conversion was done in part to improve patient flow from the emergency department into inpatient beds. All indications are that existing hospitals in South Palm Beach County are presently providing access and meeting the acute care needs of residents in the same PSA/SSA which Bethesda proposes to serve with its new hospital. Bethesda's opponents are making appropriate investments to meet the needs of the future population in those PSA/SSAs. The same conclusions apply when peak seasonal utilization patterns are examined. During peak occupancy, January 1-March 31st for each of the three years 2002-2004 inclusive, the average occupancy of acute care beds declined steadily and flattened in 2005, in both the District and Subdistrict 9-5. The rate of increase in licensed bed capacity is keeping pace and most often exceeds the increase in demand and utilization. When the new beds planned at Delray, JFK, and WRMC are added, it is reasonable to expect that peak season utilization will drop below 80%, a level that is considered manageable and not uncommon for peak season in South Florida. Impact of Proposed WBCH on Existing Hospitals Positive Impact on BMH A benefit associated with the development of WBCH will be improved efficiency and quality of care at BMH. The transfer of 80 beds from BMH to WBCH will allow Bethesda to convert BMH's large number of semi-private rooms to private rooms. Semi-private, two-bed rooms often may be used for only a single patient due to patient isolation/infection control concerns. An analysis of patient isolation days at BMH conducted in 2005, demonstrates that between 15% and 20% of the total patient days at BMH are patients who require isolation due to infection control concerns. Moreover, the number of isolation days at BMH has been increasing steadily over the last 2 to 3 years. Gender issues also limit the use of semi-private beds. In addition, BMH's many semi-private rooms have in turn led to bottlenecks in the ED, caused in large part by the inability to get patients who have been admitted through the ED to an inpatient bed. By redistributing certain patient volumes from BMH to the satellite, BMH will then be able to convert its remaining 67 semi-private rooms to private rooms, thereby eliminating the existing bottlenecks created by semi-private rooms and also improving the quality of care for all patients who otherwise would have been assigned to a semi-private room. Also, the average length of stay for ED patients should be substantially reduced. Bethesda cannot solve the ED patient backlog problems simply by adding telemetry beds. The problems have continued to escalate even after some telemetry beds were added. The large number of semi-private rooms is the problem. Impact to Opponents from Loss of Patients in the WBCH Service Area WBCH will have a minimal impact on Wellington Regional, JFK, and Delray in terms of projected lost patients per day. Delray's analysis showed that of the projected Year 1 average daily census ("ADC") of WBCH of 31.9 inpatients, 17.2 of those patients would be taken from other hospitals. (Ex. Delray-12 Tab 32). The remainder would be generated by population growth within the WBCH service area or redistributed from BMH, and thus would have no adverse impact. On rebuttal, Mr. Carroll demonstrated that Delray's analysis shows a very minimal loss by each of the opponents of patients from the WBCH service area. Of the 17.2 patients taken from all other hospitals, 10%, or 1.7 patients, are projected to come from outside of the WBCH total service area, leaving only 15.5 patients from within the WBCH service area who would be taken away from existing hospitals. Applying each opponent hospital's existing market share in the WBCH service area to those 15.5 patients, the result is a projected loss to JFK of only 3.8 patients (1.1% of JFK's ADC); a loss to Delray of only 3.1 patients (1.2% of Delray's ADC); and a loss to Wellington Regional of only 1.3 patients (1.4% of Wellington Regional's ADC). Effect of Population Growth On rebuttal, Mr. Carroll performed an analysis showing that the projected population growth in each opponent hospital's own service area will generate sufficient additional new patient volume to more than offset any potential impact resulting from the loss of patients from WBCH's service area. Wellington Regional's PSA, which Mr. Carroll defined as the area from which Wellington Regional draws 75% of its inpatients, consistent with the federal Stark law guidelines for defining a hospital's "geographic area," is projected to have a net resident population growth of 51,259 from 2005 to 2010. Applying the state-wide acute care use rate and Wellington Regional's current market share in its PSA to that additional population growth results in an additional 1,168 patients to Wellington Regional in 2010, which is approximately ten times the 135 patients that Mr. Davidson projected to be lost to WBCH. JFK's PSA, as defined by JFK's health care consultants, Healthcare Concepts, is projected to have a net resident population growth of 19,560 from 2005 to 2010. Applying the state-wide acute care use rate and JFK's current market share in its PSA to that additional population growth results in an additional 1,136 patients to JFK, which is approximately twice the lost patients calculated by JFK's witness Dr. Luke. Mr. Weiner's projection of JFK's inpatient occupancy supports Mr. Carroll's conclusion that the growing population in JFK's own service area will offset any potential loss of patients to WBCH. Mr. Weiner projects that JFK's occupancy rate for 460 beds, which includes 36 new beds projected to be opened in 2007, will be 79.32% in 2010 and 80.71% in 2011. In other words, Mr. Weiner projects that JFK, even after adding more beds, will have a higher occupancy rate after the opening of WBCH than it had in 2005. Delray's PSA, defined by Delray's own CEO as the area within a five-miles radius of the hospital, is projected to have a net resident population growth of 15,235 from 2005 to 2010. Applying the state-wide acute care use rate and Delray's current market share in its PSA to that additional population growth results in an additional 623 patients to Delray in 2010, which exceeds the number of lost patients calculated by Mr. Greene. Had Mr. Carroll utilized broader service areas for Wellington Regional, JFK, and Delray in his analysis, such as the ones defined by the opponents' health planning witnesses, the number of additional patients available to those hospitals from their own service areas would have been greater based on population growth in a larger area. Thus, Mr. Carroll's analysis is a conservative approach. While Mr. Greene projected that incremental growth in the WBCH total service area will generate a need for 71 additional non-tertiary acute care beds, neither he nor Ms. Greenberg performed an analysis of bed need that would be generated by incremental population growth over the next five years in either BMH's or the opposing parties' service areas, as was performed by Mr. Carroll. In the Recommended Order in the North Port HMA case (DOAH Case Nos. 04-2723, 04-3027, 04-3417), which was adopted by AHCA, the ALJ found it reasonable to take into account population growth in the existing hospitals' service areas in determining potential adverse impact, and to consider whether new patient volume there would offset any potential adverse impact due to patients lost from the applicant's service area. Other Issues Related to Adverse Impact Wellington Regional WBCH will have no material adverse impact on Wellington Regional. A significant change since the February 2004 hearing has been the operating and financial position of Wellington Regional. At that time, the ALJ found that Wellington Regional was one of the lowest utilized facilities in south Palm Beach County, with an occupancy rate for the year ending June 30, 2002, of 64.27% for 121 beds, and that Wellington Regional had an "accumulated deficit" of $22 million as of 2000. That finding was based upon the Audited Financial Statements of Wellington Regional, as an operating division, which are consistent with its AHCA Actual Reports, and not on the separate Audited Financial Statements of Wellington Regional Medical Center, Inc. Mr. Davidson presented evidence of rapidly improving conditions at Wellington Regional since the February 2004 hearing, with its occupancy rate increasing from 68.5% in 2002, to 74.7% in 2003, and to 75.9% in 2004. Delray's witness, Mr. Greene, testified that Wellington Regional's occupancy rate had "grown considerably," even with the addition of 22 beds in 2005. Bethesda witness William Cleverley, Ph.D., presented an analysis of the trends in the financial operating performance of Wellington Regional that shows vast improvement since the February 2004 hearing. Wellington Regional's accumulated deficit (or equity), based on the Audited Financial Statements for the operating division, improved from a negative $22 million in 2000, as reported in the February 2004 hearing, to a positive $29 million in 2003, and a positive approximately $32 million in 2004. Wellington Regional's Medicare Cost reports, filed with the federal government, likewise show that Wellington Regional reported substantial positive equity, i.e., no accumulated deficit, in 2003 and 2004. Moreover, in 2003 and 2004, Wellington Regional's return on equity, i.e., after-tax net income divided by ending equity, which is a primary measure of the financial performance of a hospital, was at a level on average with most investor- owned hospitals, and significantly higher than most not-for- profit hospitals. Wellington Regional's return on equity in 2003 (14.64%) and 2004 (16.19%) was approximately twice that of Bethesda (7.4%) for those years. In sum, Wellington Regional now has strong financial equity and operating performance. Wellington Regional has added acute care beds since the February 2004 hearing, and it has plans for another major expansion in the near future. In August 2004, a mere months after the February 2004 Hearing, where Wellington Regional opposed Bethesda's and JFK's proposals for West Boynton area hospitals asserting that no need existed, and prior to Judge Wetherell's September 2004 Recommended Order, Wellington itself sought a CON exemption from AHCA to add 22 acute care beds. On July 30, 2004, Wellington Regional filed with the Village of Wellington an application for annexation to expand its facility to support an additional 180 patient beds. Part of the justification for Wellington Regional's site plan is as follows: As illustrated by the conceptual master plan submitted with this application, both the Wellington Regional Hospital and associated medical office space will continue to expand to meet the growing needs of the residents of the Town of Wellington and west central Palm Beach County communities. Wellington Regional has definite plans to begin construction in 2007, on a new bed tower that will add 120 acute care beds. Consistent with Wellington Regional's position that it serves west central Palm Beach County, rather than southern areas such as West Boynton, the WBCH home site zip code, 33437, generates only 1.6% of Wellington Regional's adult discharges, and generates the fewest discharges of any of the zip codes included by Mr. Davidson in his expansive Wellington Regional service area. The financial adverse impact on Wellington Regional from WBCH asserted at hearing is minimal compared to Wellington Regional's 2005 and budgeted 2006 financial operating statistics. Mr. Davidson calculated that Wellington Regional would lose approximately $974,000 in net income in Year 1 due to WBCH, which is minimal compared to Wellington Regional's income from operations of $18.6 million in 2004, $23.5 million in 2005, and budgeted $30.7 million in 2006. Wellington Regional had extremely healthy operating margins of 18.4% in 2004, and 19.5% in 2005. Moreover, Wellington Regional's parent, Universal, is already committed to fund over $53 million in new projects at Wellington Regional, and has substantial financial resources available to support Wellington Regional, as necessary. Universal's net cash increased from $393 million in 2004, to $425 million in 2005, to an expected $475 to $500 million in 2006. In addition, in 2005 Universal received approximately $131 million in after-tax gains from discontinued operations, including the sales of two hospitals. JFK WBCH will have minimal adverse impact on JFK. There is no extensive overlap in the area that traditionally is served by JFK and the area that will be served by WBCH. Two of the zip codes in WBCH's PSA, zip codes 33437 (home-site) and 33436, are not included in the JFK primary service area it relies upon for its strategic planning purposes, as reflected in a recent map prepared for it by its regular strategic consultant, Healthcare Concepts. . JFK's projections of adverse impact are based on a calculation of lost cases performed by Dr. Luke, and an assessment of the financial impact of those lost cases performed by Mr. Weiner. As to the first step, Dr. Luke's calculations were not reliable due to a number of flaws in his analysis that undermine his projections. JFK's projections of financial adverse impact similarly were not reliable due to a number of flaws in Mr. Weiner's analysis that undermine his projections. Based on Mr. Weiner's projections, JFK still would have a very strong EBDITA income after the opening of WBCH and the OHS programs at BMH and Boca Raton Community Hospital. Mr. Weiner projected that JFK's 2013 EBDITA would be $78,532,538. Thus, even if Mr. Weiner's full calculation of impact materialized, JFK's 2013 EBDITA still would be in excess of $53 million. Furthermore, Mr. Weiner's financial impact analysis did not account for the significant growth in OHS procedures and other cardiovascular volumes anticipated by JFK. JFK has budgeted 828 OHS procedures in 2006, an increase of approximately 120 cases over its 2005 OHS volume. Those additional OHS cases will have a positive contribution of approximately $2.5 million in 2006, increasing each year to approximately $3.24 million in 2013. Adding in the additional contribution margin expected from growth in therapeutic caths, diagnostic caths, and other cardiovascular cases, the additional projected contribution margin based on total cardiovascular volume growth is approximately $17.5 million in 2013, which should be taken into account in determining any adverse impact. The conclusion that the approval of WBCH, in addition to recently approved OHS programs at BMH and Boca Raton, will "imperil the financial survival or viability of [JFK] going forward," tr. 6113, is not supported by the evidence. JFK's parent, HCA, is experiencing levels of profitability that are significantly above averages for investor-owned hospital companies. It is undisputed that HCA is a very strong, prosperous investor-owned hospital company. Considering the strong financial health of HCA, it cannot reasonably be concluded that JFK would be in financial peril from the approval of WBCH. In fact, JFK internally reported an operating loss in 2004 after intercompany expenses, yet HCA still charged JFK a management fee of over $21 million, signifying that at the corporate level JFK was not considered to be in financial peril. Moreover, JFK's plan to add 36 new beds in 2007, is inconsistent with any notion that it will be in financial peril in the near future, or that it truly expects to have any excess capacity as a result of the new BMH and Boca Raton services. Delray Bethesda's proposed WBCH will not have a material adverse impact on Delray. Delray's contribution margin financial adverse impact analysis projected that it would have an after-tax loss of income of approximately $1.08 million to $1.32 million attributable to WBCH. The projected impact is overstated. Even so, the projected loss pales in comparison to Delray's $77,828,436 contribution margin in 2004. If the loss of income materialized, Delray would not be imperiled. In late 2005, Delray added 31 acute care beds, with full knowledge that the Bethesda and Boca OHS programs had received approval in early 2005, and were coming on line, and also that Bethesda's WBCH has been preliminarily approved by AHCA. Delray's decision to incur the costs of construction and staffing of the new patient beds indicates that Delray does not truly expect the new projects at other hospitals to leave it with any material excess bed capacity. Subsection (3) Subsection (3) of the CON Statutory Review Criteria is: "The ability of the applicant to provide quality of care and the applicant's record of providing quality of care." Bethesda has a record of providing high quality of care to the patients it serves. BMH is fully accredited by the Joint Commission on Accreditation of Health Care Organizations ("JCAHO") and it offers a number of high-quality specialty programs at BMH for the benefit of its patients. Among the high-quality specialty programs at BMH is a stroke program. Developed as the first JCAHO-certified Primary Stroke Program in Palm Beach County, the program is directed by Mark Brody, M.D., a Board-certified neurologist. Dr. Brody arrived at BMH approximately nine years ago after serving as Medical Director of the Stroke Investigational Research Program at Scripps Memorial Hospital in San Diego, California. Upon arrival, he immediately began to develop a program at BMH to treat acute stroke. Today, BMH's Stroke Program is recognized as a "Center of Excellence." It offers treatment protocols based on standards outlined by the National Stroke Association and the Stroke Division of the American Heart Association; full-time ED stroke and neurosurgery coverage and specialized ED protocols to respond quickly to acute stroke; specialized training of nursing staff; preventive stroke education; stroke-specific discharge planning; and extensive stroke-related research and clinical trials. BMH's Stroke Program under the guidance of Dr. Brody is an excellent program for the assessment, management, and treatment of stroke with tissue plasminogen activator ("TPA"), a drug that removes blood clots from blocked arteries. With respect to the treatment of acute stroke, administration of TPA is the standard of care and almost always the treatment of choice. TPA must be administered within three hours from the onset of stroke symptoms. Accordingly, time is of the essence. Stroke care must be available around the clock. BMH recently opened a CMR program which will compliment its stroke program and benefit stroke patients by allowing rehabilitation to take place with personnel who know the original diagnosis and mechanism of the stroke. Such continuity of care has been shown to lead to better outcomes. BMH also conducts a high quality cancer program. Its Cancer Care Center, accredited by the Commission on Cancer of the American College of Surgeons and by the American College of Radiology for achievement of high practice standards in the Center for Radiation Oncology, provides a full complement of diagnostic and therapeutic services for cancer patients. Dr. Roger Brito, a Board-certified medical oncologist, hematologist, and cancer blood specialist, worked with BMH to develop its Cancer Care Center into a premier program. Closely linked to BMH's cancer program is its hematology program. Together, BMH's cancer and hematology programs treat a wide range of patients, including those suffering from solid tumors (e.g., breast cancers, colon cancers, or lung cancers), lymphomas, cancers of the blood and blood disorders, and anemias. The majority of the patients treated in the cancer and hematology programs are geriatric patients. Key components to BMH's cancer and hematology programs are its extensive research and clinical trials. BMH and its physicians continually search for new or improved treatment protocols to benefit patients in the community. The Bethesda Vascular Institute utilizes a multi- disciplinary approach to treat a wide range of vascular disorders. Dr. Miguel Lopez-Viego, a Board-certified general and vascular surgeon, serves as the Medical Director of the Vascular Institute. His group treats a wide range of patients and conditions at BMH, including a variety of cancers, aortic aneurysms, peripheral vascular disease, and basically the full range of surgical issues short of neurosurgery and cardiac surgery. Bethesda uses state-of-the-art equipment and has introduced some types of advanced equipment into the Subdistrict. For example, BMH's Radiology Department has one of the first Picture Archiving Communication Systems ("PACS") that Siemens installed in the country, and it serves as a "show site" for Siemens PACS. A PACS system captures radiology images digitally and allows those images to be viewed and interpreted at any number of remote terminals or via the internet. BMH's PACS system has dramatically improved efficiency, turnaround times, and quality of care. Further examples of Bethesda's commitment to providing state-of-the-art equipment are the various radiology and imaging modalities available at BMH and Bethesda Health City, including three 1.5T MRI systems, three multi-slice CT scanners, top-of-the-line ultrasound equipment, and a combination PET/CT scanner. Ability to Provide Quality of Care at WBCH The ALJ in Bethesda I made the following finding: [T]he proposed satellite hospitals [JFK's and Bethesda's] will offer a more narrow range of services than the existing tertiary hospitals presently serving the area. This is significant because the elderly, who make [up] a large portion of the West Boynton area and who are more likely to have co- morbidities or more complex medical needs, are generally better served in a hospital offering tertiary services and more complete care. Bethesda I Recommended Order at 35, paragraph 221. Whether elderly or not, patients with co-morbidities or more complex medical needs are generally better served in a hospital offering tertiary services and more complete care. The evidence in this case supports the finding quoted above from Bethesda I to the extent that the elderly, particularly the "frail" elderly, are more likely to have co-morbidities and complex medical needs than the general population. But the evidence in this case does not support the finding that the elderly as a group are generally better served in hospitals offering tertiary services. To the contrary, the "active" elderly (the pre-dominant demographic group in the population in the West Boynton area) in need of hospital services are not more likely to need tertiary hospital services and the complete care that community hospitals do not offer than they are to need the care available at a community hospital. Like most patients in the general population admitted to acute care hospitals, a sizeable bulk of patients among the active elderly admitted to hospitals, will not need services beyond proper diagnosis and stabilization. Proper diagnosis and stabilization are functions performed adequately in a community hospital setting. There are certainly occasions when patients admitted to community hospitals must be transferred to hospitals that provide more complete care. With regard to these patients, however, more often than not transfers take place under conditions that are not emergent, requiring immediate attention and treatment. Community hospitals or a satellite hospital like WBCH can adequately diagnose and stabilize these patients and then transfer them, if necessary, for appropriate services not available at the community hospital. On the other hand, WBCH will not have the ability to provide quality of care to the patient who presents in emergent need of tertiary services and the complete care not available at a community hospital. The ability of Bethesda to provide quality of care at WBCH must be considered in relation to prospective patients under two categories: a.) patients in need of emergent care requiring services that would not be offered at WBCH, and b.) other patients. Emergency Patients In Need of Service Not Offered at WBCH For patients with complicated problems and complex medical needs who present at WBCH and who would need to be transferred immediately because of the emergency nature of the situation, the delay in care that would be entailed would most often not be in the patient's interest. These patients will be better served where they can receive aggressive state-of-the-art advanced and tertiary treatment at one of the facilities set up to offer such treatment. In the Subdistrict, these include three hospitals operated by three of the parties to this proceeding: JFK, BMH, and Delray. The primary example of a patient in need of tertiary services and care more complete than what WBCH will offer is a patient who has a cardiac condition that requires emergency angioplasty rather than a scheduled angioplasty. There have been significant changes recently in the delivery of health care to patients with cardiac conditions. The standard of care has evolved for certain types of heart attacks to be treated with emergency angioplasty, which can only be done at a facility with an open heart program. Consistent with this evolution, Emergency Medical Services ("EMS") are instructed to bypass the closest hospital for these types of patients in order to deliver them to a cardiac center that can provide appropriate treatment. EMS patients assessed to potentially need emergency angioplasty, if instructions are followed, will not be taken to WBCH. Those served by EMS, therefore, will not be affected by delay that would be entailed with presenting at WBCH's ER. In other words, WBCH will not be a "trap," as denominated by JFK for patients in need of emergency angioplasty who are transported to the hospital by EMS. Patients for whom WBCH could be a "trap," are those who are in need of high-level care such as emergency angioplasty and who arrive at WBCH by their own means rather than by ambulance. They are very likely to suffer adverse impacts by the delay in receiving appropriate advanced treatment. The emergency room at WBCH would not have the necessary equipment, technology, experience or subspecialties to treat the patient. Transfer to a more appropriate hospital would most often entail significantly more delay than would the longer drive to that hospital in the first place. Other Patients WBCH will afford better quality of care to other patients (those not in emergent need of medical services not offered at WBCH). These patients will include the elderly in West Boynton who do not have co-morbidities or complex medical needs and the undocumented alien population served by the Caridad Clinic not in need of OB services. They will benefit from one or the other of: a new, focused geriatric program for the elderly at WBCH; from the addition of another ED in south Palm Beach County; and from the likely availability of a new, more accessible primary stroke program in the western part of Palm Beach County. In addition, there will be improvement in quality of care in the Subdistrict from Bethesda's conversion to all private rooms both at BMH and at WBCH and from the benefits to the entire Bethesda System, its patients, and the West Boynton community of the availability of an additional, newly constructed hospital providing more access and more surge capacity for the public during hurricanes. It is reasonably expected that the same high quality of patient care as currently provided at BMH will be afforded in the services to be offered at Bethesda's proposed WBCH, which will be staffed by the same medical staff as BMH. Also, a number of nurses, technicians, and therapists who currently work at BMH will be available to staff WBCH, and WBCH will be operated by the same management team, including clinical department managers. The approval of WBCH will allow Bethesda to extend to the West Boynton population the benefits of BMH's JCAHO- accredited primary stroke program in a more convenient location. BMH's existing stroke program will be integrated into the new WBCH, with Dr. Brody serving as Medical Director of the program at both locations. Most of the groundwork, such as regulatory work, training, investigational protocols, and staffing resources is in place at BMH, and will be readily transferable to the new WBCH. Bethesda intends to seek JCAHO certification, and the credible evidence shows that WBCH likely will be qualified as a Primary Stroke Center. The availability of the stroke program at WBCH will enhance access to quality care for West Boynton residents, and particularly the elderly. As previously discussed, time is of the essence in treating acute stroke. A West Boynton area stroke center will improve the chances of a rapid, accurate diagnosis of the mechanism of a West Boynton patient's stroke, and taking urgent appropriate measures, by physicians and staff with expertise in the field, to treat the patient, possibly through the administration of intravenous TPA. A stroke program closer to the center of greater population growth in the West Boynton area will facilitate shorter times for intervention and greater chances for interventional treatment. There is no such primary stroke program at any of the existing hospitals in the rapidly growing western portions of south and central Palm Beach County. It also is expected that Bethesda will extend its cancer and hematology programs to WBCH. Dr. Brito testified that 30% of his current patients are from the West Boynton area, and that the percentage is steadily increasing. Accordingly, locating Bethesda's cancer and hematology programs in the West Boynton area will benefit a significant number of patients. Cancer patients and patients with advanced blood disorders tend to be elderly. Often elderly patients are hesitant to travel what they perceive as significant distances for regular treatments, which can lead to more acute problems, such as tumor growth, and the necessity for more complex treatments. For such patients who require hospitalization, increased travel times to the hospital can correlate to prolonged hospitalizations or negative outcomes. Therefore, a more accessible WBCH would benefit the elderly who do not have co-morbidities or complex medical needs that require more complete care than will be offered at WBCH. Extension of Bethesda's cancer program to WBCH, which will be more accessible to West Boynton area cancer patients, will benefit Bethesda's cancer research and clinical trials as it will enable Bethesda to enroll more patients in those trials. The improvement in quality of care that a satellite hospital in the West Boynton area will provide the bulk of its patients was an argument JFK made in Bethesda I. JFK's Position in Bethesda I JFK itself in 2003 applied for a similar bed-size satellite hospital to be located in West Boynton west of the Turnpike, without OHS/interventional cardiology services or specialized neurological services. The HCA/JFK organization and several of its witnesses then expressed the opinion that such a community hospital was needed and would provide quality care. In terms of resources and scope of services, there is nothing about JFK's prior proposal that is different from Bethesda's current proposal. In a public hearing before the Treasure Coast Health Council, the Chief Medical Officer at JFK described the reasons he supported a satellite hospital in the West Boynton area. Among his comments were these: We're told, well, maybe we don't really need a hospital in the West Boynton Beach area because it's really no more than thirty minutes to any of the existing facilities. I am a middle-aged driver of a sports car. Trust me, when I reach Boynton Beach Boulevard and Jog Road every morning, it takes me more than thirty minutes to drive at sixty miles and [sic] hour, in and out of traffic, just to get to JFK Medical Center. * * * I'm also not a 75-year old individual having chest pain on my drive. I'm not somebody who's worried that their spouse, or somebody else they really care about, is very ill and in a hospital . . . When I moved to Florida, . . . 1991 . . . Boynton Beach Boulevard and Jog Road was where I used to go to buy cherries and tomatoes. I meant, that what it was. There was nothing there. The growth has been absolutely staggering. So I mean, there is no question in my mind that this is an area with just absolutely mind boggling growth. And as we all know as well, the majority of the residents who live there tend to be elderly. * * * [T]he area of medicine that we've made the most progress on [is cardiac.] We now have ... angioplasty . . . there are now new stints [sic] . . . which essentially don't clog again . . . [t]here have been advances in bypass surgery. * * * So there have been huge, huge advances. * * * [T]hese are dramatic . . . [s]o what do you want? You want a hospital that's going to be near you, that is going to have an area of excellence in the most likely area that you are going to be sick. What is that area? The area is in cardiac disease. * * * I think there's absolutely no question the need is there. The population growth is staggering. The majority of the people moving in are already elderly. Elderly people get sick, they need facilities. You've also heard arguments that these hospitals won't be full-service. But that's okay because you don't need to have every hospital in South Florida offering heart surgery. What you need is expertise and excellence in the care of these diseases. At least 90 percent of patients coming into hospital with a vascular problem do not require bypass surgery, do not require ablations of abnormal heart rhythms. What they require is proper diagnosis, stabilization, and they'll do fine in a community care setting. That's what they need. Ex. B-132, Depo. Ex. 1-ID, at 53-56 (emphasis supplied.) With regard to ER issues, the same witness then explained the importance of accessible community hospitals: It doesn't matter how many beds we add at JFK Medical Center. There is still going to be 30, 40, 50 patients in the ER. The need is there. The population is getting older. The population is getting sicker. And they require medical services. The most facilitative approach, the best way to deal with this issue, is to have a community hospital that is able to provide primary care for the majority of patients in your community, and then, if you require more expertise or you need the next level of care, an easy way to facilitate that care in a certain institution of excellence. Ex. B-132, Depo. Ex. 1 p. 58. This testimony is consistent with the testimony of Dr. Lopez-Viega and others that quality of care will improve for a significant number of elderly patients in the West Boynton area because of less delay in diagnosis and treatment, less stress for them and a reduction in the pressure on medical personnel. These include the victims of stroke. Stroke The Subdistrict facility of optimum care for stroke is JFK. Its recent development of specialty neuroradiological services and recruitment of Dr. Jaffe, an interventional neuroradiologist, who offers an extremely high level of care to stroke victims not available elsewhere in the Subdistrict, is the high point of its stroke program. One of only four interventional neuroradiologists in all of southeast Florida, Dr. Jaffe is Board-certified in radiology diagnostics. He also holds a certificate of added qualification in interventional neuroradiology, the minimally invasive treatment of vascular diseases of the central nervous system. Interventional neuroradiology employs the practice of inserting into an artery delicate tube-like structures (catheters) guided by radiological-type images. These images include ionizing radiation such as fluoroscope, "whether it be ultrasound, CAT scans, [or] MR, in order to guide catheters for therapeutic purposes." Tr. 3675. The field encompasses traditional surgical methods that used to be done via open procedures . . . now done via catheters and via image guidance." Id. Dr. Jaffe sees patients with acute stroke, bleeding in the brain or a blockage of an artery in the body, or in Dr. Jaffe's words, "a multitude of patients with different disease processes." Id. But JFK's pre-eminence in stroke care in the Subdistrict does not reduce the quality of care benefits that Bethesda's WBCH, with its accredited stroke program, will bring to the West Boynton community. Stroke is the interruption of blood flow to parts of the brain often because of blood clot. It is potentially devastating to the patient. Administration of Tissue Plasminogen Activator ("TPA"), a medication given by vein which flows through the body to the site of the stroke-causing blood clot with clot- dissolving capability, will be available at WBCH. Capable of being administered in an emergency room where stroke victims often present, it is the standard of care for treating stroke patients. While TPA has the capacity to reverse the effects of a potentially devastating stroke, it has its limitations. For example, there is usually only a three-hour window during in which administration of TPA can be effective. In contrast, the intra-arterial procedures performed by the interventional neuroradiologist is often effective beyond the three-hour window. In the case of posterior circulation occlusions, the procedure may extend the window of effective treatment up to 12 hours. There is also risk associated with the administration of TPA, mainly that its blood-thinning capability will induce bleeding in the patient that could be serious, even fatal. There are other limitations. TPA must be administered by a trained subspecialist, usually a neurologist. There are a limited number of trained neurologists practicing in the Subdistrict. But they constitute a multiple of the interventional neuroradiologists: one, in the person of Dr. Jaffe. There are, in fact, only four interventional neuroradiologists in all of Southeast Florida. The three in addition to Dr. Jaffe are one in Miami, one in Hollywood and one who "volleys through hospitals [in] Broward [County.]" Tr. 3677. There are no more than four in the rest of the state: one in Orlando, two in Gainesville and perhaps one in Naples. The implication for patients as the result of the few trained interventional neuroradiologist in the state is that the therapy of interventional neuroradiology is not available to most patients, either at all or in a timely manner. In addition to the extension of the time-duration window of treatment, the intra-arterial procedures performed by Dr. Jaffe can have tremendous benefits and greater effect than TPA. But the administration of TPA, is a safer and more simple system than the intra-arterial procedure performed by the interventional neuroradiologist. The pressures are different between the two procedures. An intravenous medication such as TPA allows for diffusion throughout the body to the clot. It is not invasive as is the insertion of catheters guided by radiology to the point of the clot employed by an interventional neuroradiologist. Like the intra-arterial procedures performed by Dr. Jaffe, the administration of TPA has a degree of morbidity. It must be administered with great care by appropriately trained personnel. But it can be routinely done in an emergency room or other part of the hospital. In contrast, the intra-arterial procedure performed by the interventional neuroradiologist is a procedure that must be conducted in an operating room by a team of specialists and medical personnel. In sum, at least at present, the administration of TPA is simpler, much more available and carries fewer risks than the intra-arterial procedures performed by Dr. Jaffe. JFK: Not a Full Service Provider While JFK has the pre-eminent program in the Subdistrict it is not a full service provider of hospital services. It routinely must transfer patients to other hospitals or facilities for services or procedures not available at JFK. It does not provide OB, NICU, or specialized pediatric services, and such patients who arrive at JFK's ED must be transferred to another facility. JFK also lacks a CMR program, so patients, such as stroke patients, who need such rehabilitation services must be transferred to another facility. JFK does not have a full range of imaging services, as it has closed its PET service and has not yet implemented a PACS system. Importantly, legislation passed in 2004 prohibiting the establishment of specialty hospitals, indicating the Legislature's preference for general med-surg hospitals over specialty hospitals. JFK's health planning witness conceded that JFK's position that specialty services should be concentrated in a limited number of high volume hospitals would support a preference for specialty hospitals, contrary to the policy inherent in the Legislature's moratorium on specialty hospitals. Subsection (4) Subsection 4 of the CON Review Criteria Statutes is "[t]he availability of resources, including health personnel, management personnel, and funds for capital and operating expenditures, for project accomplishment and operation." § 408.035(4), Fla. Stat. Health Personnel Physicians The proposed WBCH will share the same medical staff that now covers BMH. The BMH medical staff includes more than 500 physicians covering 30 to 40 different subspecialty areas. Approximately 126 physicians have joined BMH's medical staff since November 2, 2002. Of that number of relocating physicians, 2.5% were actively recruited by Bethesda. BMH's medical staff will be able to provide physician resources necessary to cover services offered at WBCH. There is a problem in Palm Beach County, however, with a shortage of specialists for ER call. The problem has existed for some time. With regard to the issue, the Bethesda I Recommended Order found the following: Because of malpractice and other concerns, it is becoming increasingly difficult for hospitals to attract physicians who are willing to take ER calls. The Palm Beach County Medical Society and the CEOs of the existing hospitals in the county met as recently as December 2003 to discuss the problems related to ER call coverage: however, as of the date of the hearing, the problem still existed and was severe. * * * The problem of ER call coverage is most significant in specialties such as neurosurgery, hand surgery, urology, OB, and ear/nose/throat. Several of the hospitals in South Palm Beach County, including Wellington and Delray, have begun to pay physicians, and particularly specialty physicians to take ER call. 263. Adding a new hospital in South Palm Beach County will exacerbate this problem in several respects. First, it will add another hospital to the ER call rotations of the physicians who chose to obtain privileges at the satellite hospital, thereby increasing the prospect of a physician being on call at more than one hospital at the same time. Second, it will make it even more difficult or costly for existing hospitals to obtain call coverage by the specialty physicians that are already in short supply. Bethesda I Recommended Order, at 69-70. The efforts of the Palm Beach County Medical Society and hospital CEOs referred-to in the Bethesda I Recommended Order have continued in the interim. In 2004, a study commissioned by the Palm Beach County Medical Society was made public. The study, entitled, "Specialist On-Call Coverage of Palm Beach County Emergency Departments" (see Dr. Butz depo #2, attached to WRMC Ex. 30), was conducted by MDContent. Among the principals of MDContent is David A. Butz, Ph.D., Co-Director of the Center for Healthcare Economics at the University of Michigan, and an expert economist. Issues examined by MDContent included "shortages in staffing of on-call schedules in Palm Beach County emergency departments." WRMC Ex. 30, p. 17. The study concluded that there is a severe and growing shortage of physician specialists to take on-call coverage of Palm Beach County emergency departments. The shortage was determined to be due to a number of factors including high malpractice insurance and exposure to lawsuits. One of the factors causing the shortage is unusual in relation to the nation and the rest of Florida: the aging of the physician population in Palm Beach County and the relatively small percentage of MDs in the county who have received medical degrees since 1990. The report also found that among physicians who responded to surveys analyzed by MDContent un-reimbursed care in the ED is problematic for physicians as malpractice liability. Three recommendations were made in the report for solving the shortage. The first was to form a management committee. A management committee has been formed. The second recommendation was to investigate clinical repercussions of the shortages in on-call specialty care. The management committee took action on this recommendation. Medical specialties were identified in which the shortages were particularly acute: hand surgery, neurosurgery (the two highest priorities) and high risk obstetrics. Orthopedics, ENTs, general surgeons and opthalmologists were added to the list, as well as some sub-specialists like pulmonologists to deal with high-risk ventilator patients. The third recommendation was for hospitals in the healthcare district to provide compensation for ED on-call coverage. Implementation of the third recommendation as begun to improve the situation particularly with regard to ED call coverage in neurosurgery. No hospital in the County had 24/7 neurosurgery call coverage at the time of the February 2004 hearing. Neurosurgery ED call coverage has improved substantially since the February 2004 hearing, mainly because Palm Beach County hospitals, like Broward hospitals, Dade hospitals, and Orlando hospitals, started to compensate neurosurgeons for providing ED call coverage, either with stipends or through employment arrangements. In at least the case of one neurosurgeon recently recruited, the physician's liability insurance is being covered under the arrangement. In addition, beginning in the spring of 2004, the Health Care District started subsidizing compensation of neurosurgery call coverage at the trauma hospitals, Delray and St. Mary's, which improved the trauma circumstances in the County. At the time of the final hearing in this matter, BMH, Delray, and JFK all had 24/7 neurosurgery ED call coverage in place. BMH, with the advice of a national consulting firm, established, effective April 1, 2006, a comprehensive compensation program for ED call coverage, much like the program at Boca Raton Community Hospital. Bethesda already had 24/7 coverage for most specialties when it implemented the program, and plans for implementation of the program enabled Bethesda immediately to secure 24/7 ED call coverage for neurosurgery. BMH has added two additional neurosurgeons to its staff, who, together with Dr. Nair, provide full 24/7 coverage for BMH's ED and will also cover the WBCH ED when it opens. The Bethesda compensation program is a "system-wide" program, so there will not be any additional costs for providing ED call coverage for the proposed WBCH. Delray started paying neurosurgeons for ED call coverage in April 2004, and has had full 24/7 neurosurgery ED coverage every day since August 2004. JFK obtained full neurosurgery ED call coverage in March/April 2005, through neurosurgeons employed by an HCA affiliate, who also now cover Jupiter Medical Center. Following the success of its compensation program for neurosurgeons, Delray has also put an ED compensation program in place for all but 2 of 17 specialties. Likewise, JFK provides compensation for ED coverage to a number of physician specialists in addition to neurosurgeons, such as neurologists, cardiac surgeons, OB/GYNs, and cardiologists, through compensation arrangements, employment arrangements, or exclusive contract arrangements. JFK's CEO testified that JFK serves the public as a good steward by providing compensation to specialists to ensure access to ED care. The other specialty in Palm Beach County that was found to be most problematic, hand surgery, is currently being addressed by a program developed cooperatively by the ED Management Group, which was formed by County hospitals, the Palm Beach County Medical Society, and the Health Care District. The MDContent study report assumed that few new physicians were being recruited to Palm Beach County. To the contrary, a substantial number of new physicians, many from outside of the State, have joined the medical staffs of all the party hospitals since the February 2004 hearing. Evidence was presented at hearing that Palm Beach County does not have significant issues recruiting physicians. Dr. Michael Lakow, a JFK cardiologist, testified that most of the candidates his group interviews are from the Northeast, so Palm Beach County offers a lower cost of living and the benefit of no state income tax. Another recruiting benefit is the Palm Beach County weather, which was a primary reason that Dr. Jaffe, who recently relocated from Pennsylvania, elected to practice at JFK as opposed to a hospital in Mississippi or Georgia. The availability of a new hospital in the growing, more affluent West Boynton area, moreover, will only improve Bethesda's ability to recruit more physicians into Palm Beach County to join Bethesda's medical staff. The new physicians will not be limited solely to practicing at a safety net hospital located in the east. The MDContent report found that Palm Beach County suffered from the lack of sufficient residency opportunities, which impacted physician recruitment. Since the report, however, a new medical school has opened in Palm Beach County, at Florida Atlantic University ("FAU"), and local hospitals such as BMH and JFK plan to offer residency positions to FAU students. The problem of the shortage of on-call specialists, therefore, is now better defined than it was in Bethesda I. Steps, such as providing improved compensation, have been taken by some hospitals, particularly with regard to neurosurgery. Recruiting of physicians has improved in Palm Beach County. These steps are helping to ease the shortage. The problem is not solved, however, nor will it be in the near term. If the recommendation of MDContent and Dr. Butz are implemented, the shortage of ED on-call physicians in certain specialties will not end in the next five years. In the long term, however, implementation of the recommendations have the potential to resolve the shortage. The shortage of on-call physicians in the specialties identified by the management committee, moreover, will not be helped by the addition of WBCH and its ED. While WBCH's ED should be adequately served by on-call specialists through arrangements with BMH, the presence of WBCH's ED will not help the shortage in the Subdistrict or Palm Beach County. As Dr. Butz opined, "the burden on physicians of staffing a 13th emergency department in Palm Beach County [WBCH's] cannot but make the shortage worse." WRMC Ex. 30, p. 45. AHCA's position with respect to such ED call coverage issues is that specialist on-call availability is not a reason to deny a satellite hospital application. AHCA believes the shortage to be a short-term issue, and expects market forces to correct it, as in the case of the nursing shortage experienced five years ago. The effect of market forces and the implementation of recommendations with potential to solve the shortage remain to be seen, of course. As AHCA maintains, the shortage, as one factor to be weighed in the CON balancing process, is not by itself a reason to deny the application. But the exacerbation of the shortage in the Subdistrict and the County caused by the addition of WBCH is a factor that weighs against approval. Nurses and Technicians Notwithstanding a general nursing shortage in past years, Florida is witnessing a downward trend in nurse vacancy rates, as reported in the January 2005 FHA report. According to the FHA report, which JFK's HR witness acknowledged as a resource for determining nursing vacancies statewide, Florida's nurse vacancy rates have decreased from 15.6% in 2001, to 8.2% in 2004. BMH's nurse vacancy rate for its med-surg, ICU, OR, and ED nursing positions is 9%. BMH's nursing turnover rate is 9.5%, while at the time of its 2003 Application, its nursing turnover rate was 12% to 13%. BMH has been able to staff adequately all of its beds and services. BMH maintains a higher nurse-to-patient ratio than the opponents' for-profit hospitals, which, in turn, contributes to a higher quality of care. Further, higher nurse- to-patient ratios limit the stress on existing staff, which reduces staff turnover. Bethesda has not experienced nurses turning down employment due to the housing costs in south Florida. At the request of Palm Beach County, Bethesda will provide affordable work force housing on the campus of WBCH. In addition, affordable work force housing, such as Winsberg Farms, and town homes, such as Briella Town Homes near Bethesda Health City, currently exist or are being developed in the West Boynton area. JFK likewise is considering a plan to provide affordable housing near the JFK campus. BMH will be able to provide adequate nursing staff and technicians at WBCH, as set forth in Schedule 6A of its application, in part by relocating some of its existing staff from BMH, thereby reducing the recruiting requirements for the new facility. The salaries projected for the WBCH as shown on Schedule 6A are reasonable. Despite voicing nurse shortage concerns, all opponents have recently added acute care beds and new or expanded services, and all have been able to add the necessary accompanying staff. Moreover, Wellington Regional and JFK plan to add more beds in the near future, which is inconsistent with their stated concerns regarding staffing difficulties. JFK claims to have faced difficulties in recruiting and retaining radiology technicians. BMH, however, has not faced any such difficulties, in part because BMH operates an on- campus school for radiology technicians. To encourage students to join its staff, BMH waives tuition for students who agree to work at BMH for one year following graduation. The success of BMH's approach is apparent, as the number of employed radiology technicians at BMH has increased from one in 2003, to 37. From the 2005 graduating class alone, 4 students took employment at BMH as X-ray technicians and 3 students joined its CT program. Further enhancing Bethesda's ability to attract and retain radiology technicians is its investment in state-of-the- art radiology equipment, including a PACS system, which JFK does not have. Additionally, Bethesda's radiology group has been much more stable than the JFK group. The new WBCH would have a positive impact on the ability of the radiology group serving Bethesda to recruit new radiologists. Bethesda also has had success in recruiting therapists, such as those recruited for BMH's new 28-bed CMR unit, which is staffed with 4 physical therapists and 7 occupational therapists, who are in addition to the 33 physical therapists and 18 occupational therapists employed to serve inpatients at BMH. Management Personnel The applicant, Bethesda, holds the license of BMH, and it will also be the license holder of WBCH. The proposed WBCH will be operated as a true satellite facility, with BMH and WBCH having a single set of bylaws, rules and regulations, a single management team, a single, unified medical staff, and a single emergency call schedule. With the corporate management infrastructure to operate the satellite hospital already in place locally, at BMH, the duplication of overhead costs for executive management, financial, planning, purchasing, and human resources expertise will be avoided. Bethesda also will be able to avoid duplication of costly IT equipment, computer services, purchasing services, and storage services, which are already available for the proposed WBCH's operations. Further, Bethesda will be able to share and build upon very expensive IT equipment; an existing PACS System; communications equipment; and the like that already exist at BMH and Bethesda Health City, thereby avoiding substantial costs that would otherwise have to be incurred for a new stand-alone hospital. Funds for Capital and Operating Expenditures Bethesda's listing of all capital projects (Schedule 2), availability of sources of funds to fund project expenditures (Schedule 3), and ability to fund capital and operating expenditures are not in dispute. In the Joint Prehearing Stipulation, the parties stipulated as follows: Bethesda can obtain sufficient financing to cover the projected total project costs, including development, construction, equipping, initial capital, and operating expenses for start up of the proposed satellite hospital. Consistent with the above stipulations, Schedules 1, 2, 3, 9, and 10 of Bethesda's CON application/Omissions Response are not in dispute, and the information and projections contained therein are adequate and reasonable. Subsection (6) Subsection (6) of the CON Review Criteria Statute is: "[t]he immediate and long-term financial feasibility of the proposal." § 408.035(6), Fla. Stat. The proposed WBCH will be financially feasible in the immediate and long term. The evidence in support of this finding includes (a) the applicant's projected utilization over a four-year "ramp-up" period, which is conservative in light of the utilization that can be expected in a service area with a large, elderly, and rapidly growing population base; (b) the existing draw of patients from the West Boynton area already being experienced by the Bethesda System coupled with established physician referral patterns among Bethesda's medical staff; and (c) reasonable financial forecasts in the application, which were prepared by Tribrook with input from Bethesda's Chief Financial Officer ("CFO"). Projected Utilization Section 5 of AHCA's CON application form calls for the "Applicant's" projected inpatient utilization in the first two years. As it is the "applicant" here, Bethesda System presented in Section 5 inpatient utilization projections, not only for the WBCH satellite but also for the System as a whole for the first two years. As shown by the projections for the WBCH satellite, there are 11,853 projected inpatient days in Year 1 and 15,936 projected inpatient days in Year 2, resulting in inpatient occupancy rates of 40.6% and 54.6%, respectively. Those are conservative projections, as AHCA observed in the SAAR, in that Bethesda is already providing more patient days of non-tertiary, non-perinatal services of the nature to be provided at WBCH to residents from the proposed PSA than WBCH is expected to provide in total in Year 2. The CON application also included utilization projections through Year 4, which are reasonable. As noted in the Schedule 5 Assumptions, details regarding the utilization projections and extending the forecast through Year 4 are set forth in Schedule B Item E of the application. In Year 4, WBCH is reasonably expected to have 21,743 inpatient days for an average daily census of 59.6 patients and an occupancy rate of 74.5. The utilization projections for WBCH are reasonably and conservatively based on the existing population in the proposed service area as well as projected population growth; the Palm Beach County acute care services use rate for selected discharges of the type to be provided at WBCH; an appropriate projected average length of stay ("ALOS") for the WBCH satellite; and a conservative market penetration for the demand assessment. A projected use rate was based on the County use rate for acute care services for non-tertiary inpatient services (i.e., DRG's) of a type appropriate for a general medical/surgical acute care hospital with the range of services expected to be offered at WBCH, as derived from AHCA data. The County use rate for the selected non-tertiary services is 102.3 discharges per thousand population. The adoption of the County use rate is conservative, as the proposed service area use rate is higher, i.e., approximately 110 discharges per thousand. The use rate adopted for the utilization projections is based upon selected non-tertiary medical/surgical acute care DRG's and excludes inpatient obstetrics (OB) and newborn services; interventional cardiology (e.g., open heart surgery, angioplasty, and stents); diagnostic cardiac catheterization; transplant programs; multi-systems trauma; and inpatient mental health services. The list of non-tertiary inpatient services that will be available at WBCH still includes more than 400 DRG's, and generally is not in dispute. While OB-related services typically represent the highest number of inpatient discharges from a given service area, they rank substantially lower in terms of actual patient days and also are not a major source of emergency visits. Multi-systems trauma and interventional cardiology services such as open heart surgery represent a small proportion of total hospital discharges. It is likely that some of the excluded types of inpatient services will be provided on an emergency basis in WBCH's ED. For example, mental health services (Baker Act) are now provided in substantial volumes in BMH's ED even though BMH does not have an inpatient psychiatric service. Further, like Delray and JFK, WBCH can be expected to provide pediatric services on both an inpatient and emergency basis, even though no dedicated pediatric unit is proposed. At the time that the 2005 CON application was filed, it was expected that the second year, or planning horizon, would be 2010. Thus, the use rate of 102.3 was applied to the projected service area population for four years of operations beginning in 2009, which yields a total of 29,687 inpatient discharges in the selected DRG's from residents of the proposed service area in 2009, increasing to 32,803 discharges in 2012. Bethesda reasonably estimated WBCH market penetrations in each of the six service area zip codes. For example, in the early ramp-up years, estimated market shares initially range from an estimate of 13% (Year 1) to 17% (Year 2) to 20% (Year 3) in WBCH's home site zip code of 33437. That is conservative as compared to Wellington Regional's 25% market share of non-tertiary discharges in its home site zip code of 33414. Lesser market shares were estimated by Bethesda for the satellite in the other four zip codes, including only 2% (33414) and 3% (33446), respectively, in Year 2 in the two secondary service area zip codes. Bethesda's medical staff has not historically developed substantial physician referral patterns from the secondary service area, and its physicians can be expected to have the same referral patterns initially with respect to WBCH. Hospital market share is a function of several factors including physician referral patterns, site, proximity, services, location of BMH and Bethesda Health City, and location of other hospitals. However, physician referral patterns is a particular key factor in the health planning analysis. As JFK's physician development director acknowledged, physician referral patterns have always been "very important" and are a "major driver" of a hospital's market share in an area. Combining the estimated market shares for the six zip codes, Bethesda's application conservatively assumed a 7.8% overall market share of the entire proposed service area for WBCH's first year, 10.2% in Year 2, and increasing to 13.0% by Year 4. The projected service area market share is applied to the total projected discharges for each year of operation to get the projected service area discharges for WBCH. Bethesda then reasonably assumed an "in-migration" factor for WBCH of approximately 10%, representing out-of-area admissions from non-permanent residents or "snowbirds"; admissions from zip codes adjacent to the proposed service area; and all other admissions from throughout the County or elsewhere. Finally, to determine the number of anticipated inpatient days, Bethesda reasonably assumed a conservative ALOS for WBCH of 4.6 days. The projected ALOS is less than the actual 4.7 ALOS for non-tertiary discharges from WBCH's proposed PSA and from its entire service area. The projected ALOS for WBCH patients is also less than the ALOS of non-tertiary inpatients from both the PSA and the entire service area who are served at BMH, whose medical staff with similar physician referral patterns will staff WBCH. Moreover, WBCH's projected ALOS is lower than the ALOS of 4.9 for non-tertiary services for all inpatients served at BMH. By applying the projected 4.6 ALOS to the projected total discharges each year, Bethesda then arrived at the projected inpatient days set forth in the CON application, which are reasonable inpatient utilization projections. WBCH's financial forecasts also are built upon projections of revenues for outpatient services such as ED visits, observation visits, outpatient surgery, and imaging services. Utilization of such hospital outpatient services by patients from the proposed service area has increased substantially in the last two years. As set forth in Bethesda's CON application and detailed at final hearing, hospital ED visits by residents of the proposed service area are projected at 107,385 in 2009, and to increase to 118,659 by 2012. WBCH's ED market shares are reasonably projected to grow from 11.6% to 18.2% during that four-year period. Hospital market shares are typically somewhat higher for ED than for inpatient services. The projections lead to a reasonable forecast of WBCH ED visits, ranging from 12,421 in Year 1 to 21,583 in Year 4. Schedule 5 of the CON application also includes projections of inpatient utilization for the System overall, after completion of the satellite project. Total inpatient days are projected for the System at 107,151 in Year 2. Not all WBCH patients are expected to be new patients for the Bethesda System. The CON application includes a table detailing the impact of redistribution, or "cannibalization," of the satellite on BMH, and the net impact of the redistribution after accounting for annual population growth. The net impact will be a redistribution of 766 patient admissions from the main campus to the satellite in Year 1, and a redistribution of 979 admissions in Year 2. Redistribution of patients from BMH is expected to end thereafter as the physicians at WBCH establish new referral patterns. Bethesda's projections of redistribution and overall System utilization, as set forth in the CON application and supported at hearing, are reasonable. Financial Forecasts Schedule 7A of the CON application sets forth revenue and payer mix assumptions and projections for the WBCH satellite and for the applicant, i.e., the Bethesda System as a whole, for the first two years of operation as called for in AHCA's CON application forms. The net operating revenue projections from Schedule 7A carry over to Schedule 8A of the CON application, which includes in the right hand column of AHCA's CON application forms revenue, expense, and net income assumptions and projections for the WBCH satellite for the first two years of operation. Furthermore, Bethesda also included in Schedule 8A a Summary Operating Statement and a Sources and Uses of Funds statement in which the applicant extended the financial assumptions to include four years of projected revenues, expenses, net income, and cash flow for the proposed satellite hospital. As shown in Schedule 8A and the Summary Operating Statement, positive net income in the amount of $2,228,882 is forecast for the WBCH satellite in Year 2, and the satellite's net income is projected to increase each year, as utilization ramps up, to $7,620,912 by Year 4. Further, a positive cash flow of $1,932,062 is forecast for the satellite in Year 2, increasing to $4,804,294 by Year 4. The financial forecasts set forth in the CON application are reasonable and indicate the financial feasibility of the satellite hospital project. Wellington Regional's financial witness, Mr. Davidson, has previously testified that a CON applicant which shows a positive net income in the second year or in the early years is financially feasible. Mr. Davidson does not dispute Bethesda's projection of positive net income for WBCH in Year 2 and each year thereafter. In light of delays occasioned by the pending appeal proceedings, Tribrook performed a sensitivity simulation to test the effect of a one-year delay in project start-up to 2010 under the same financial assumptions that were applied in the CON application, taking into account the most recent utilization data and inflating project costs another year, in order to advise Bethesda management as to the effect of the delay on financial feasibility of the project. The sensitivity analysis indicates that the satellite would still begin generating positive net income and cash flow in the new planning horizon Year 2 (i.e., 2011), and that the satellite's net income would grow each year thereafter. The sensitivity analysis supports the conclusion drawn from the projections in the CON application, i.e., that the satellite project is financially feasible in the immediate and long term. Bethesda also demonstrated in Schedule 8A of the CON application that the Bethesda System as a whole generates a net profit in each of the first two years of the satellite's operation after taking into account the full impact of the satellite and the redistribution (i.e., cannibalization) of patients from BMH on revenue, expenses, and income, and the System begins to benefit overall by Year 2. As indicated in the left-hand column (col. 7) in Schedule 8A, the entire System including the satellite project is projected to generate a net profit of $11,480,857 in Year 2, and that takes into account the impact of patients redistributed from BMH to WBCH. In the middle column (col. 9), labeled "Without This Project," the System is projected to generate only $8,536,428 in net profit in Year 2 if the satellite project is not approved. The financial forecasts were prepared by Mr. Carroll (Tribrook) with the active input of, and review by, Bethesda's CFO, Ms. Aqualina, who opined that the forecasts in Schedules 7A and 8A are reasonable and include accurate financial projections. Bethesda has "strong managers," including the CFO and financial management team. Ms. Aqualina's opinion as to the reasonableness of Schedules 7A and 8A, which contain the financial forecasts for the WBCH satellite project and for its impact on the System as a whole, adds further credibility to the financial pro formas. Subsection (7) Subsection (7) of the CON Statutory Review Criteria is "[t]he extent to which the proposal will foster competition that promotes quality of care and cost effectiveness." §408.035(7), Fla. Stat. Competition generally forces hospitals to increase quality to remain viable in a market. It should also force them to operate in a more cost-effective manner. One way of looking at competition among hospitals is through data that reveals market share. Hospital market share is a measure of hospital usage by residents of an area. It demonstrates "patient destination patterns" (tr. 5298) for hospital services. The market for acute care hospital services in the PSA and SSA proposed by Bethesda (the "Proposed Service Area") is highly competitive. The four hospitals participating in this proceeding, all separately-owned, are the primary competitors for the inpatient and outpatient markets in the Proposed Service Area. In the PSA, JFK, BMH and Delray are clear leaders over WRMC. Together the four dominate the PSA. For example, with regard to acute patient days delivered to the residents of the PSA in 2004, the market share of the four hospitals was nearly 80%. The four provide ample choice for persons seeking acute care and emergency medical services in the West Boynton Area. At the same time, none of the four competitors has a dominant market share in the four zip codes that comprise the PSA. In other words, the West Boynton area enjoys a competitive balance for hospital services. The competitive relationship of the four in the PSA was shown to be in balance in Bethesda I on the basis of three years of market share data. The years are 2000 to 2002. The percentages of the PSA discharges attributable to each of the four (their market shares) were illustrated in a table in the Recommended Order: JFK Bethesda Delray Wellington 2000 31.7% 23.2% 10.6% 6.1% 2001 30.1% 24.0% 11.2% 6.9% 2002 28.8% 23.9% 11.4% 7.7% Bethesda I, Recommended Order at 32. The annual totals of the percentages of market shares attributable to each hospital were 71.6% (2000), 72.2% (2001) and 71.8% (2002) for an average of the three years at approximately 71.87%. The Recommended Order further found, "the competitive balance that currently exists in the West Boynton market is expected to continue unless something disrupts that balance, such as the approval of a new hospital in the area." Id., at 32-33. Disruption of this competitive balance and the negative impact of a new Bethesda hospital in the West Boynton area among the factors in Bethesda I that was determined to outweigh any improvement in access to hospital services that residents of the West Boynton area would have enjoyed had Bethesda's application been granted. Health care markets are dynamic. Dynamics in health care markets make competitive balance difficult to sustain over a lengthy period of time. But data in 2004 not considered in Bethesda I showed the four hospitals to be in the same order with regard to market share in the PSA from highest to lowest (JFK, Bethesda, Delray and WRMC) that the hospitals had been in between 2000 and 2002. Furthermore, the percentages for 2004 of market share in the PSA were within or not much outside the range of market share for the period that indicated competitive balance in Bethesda I, 2000 to 2002: 33.5% for JFK (1.8% higher than its high in 2000), 24.7% for Bethesda (0.7% higher than its high in 2001), 14.1% for Delray (2.7% higher than its high in 2002) and 6.2% for WRMC (0.1% above its low in 2000). The market share for the four hospitals totals 75.8%, nearly 4% higher than the average of the 2000-2002 period but consistent with the higher market share values for JFK, Bethesda and in particular, for Delray. Thus, the competitive balance between the four hospitals in the PSA found in Bethesda I continued forward as expected at least through 2004. There are, however, other perspectives from which to examine the state of competition between the four hospitals and the impact that a successful application in this case will have on competition. Among these are market shares with regard to non-tertiary services (all that WBCH intends to offer) in the Proposed Service Area (the PSA and the SSA), a six zip code area rather than just the four zip code area of the PSA; consideration of the effect on competition in the Subdistrict of not just the four hospitals but also their affiliates; the greater leverage in bargaining with employers and managed care contractors possessed by hospitals that, unlike Bethesda, are part of national for-profit hospital chains with multiple hospitals in an area; and, the value of location -- a hospital in the West Boynton area -- that will enhance patient choice and thereby tend to sharpen competition in the Subdistrict, even if it skews the competitive balance in the PSA toward Bethesda. The dynamic nature of the West Boynton area market for hospital services is indicated by the percent change in market share of non-tertiary discharges in the Proposed Service Area from 2002 to 2004. The third page of Delray Exhibit 12, which covers five hospitals (Palms West, Boca Raton Community, Good Samaritan, St. Mary's and West Boca) shows these changes. The most dramatic changes are for WRMC, which had a 23.4% increase in non-tertiary discharges for the six zip Code area and Good Samaritan which had an 18.4% drop. The exhibit reveals changes for the other three hospital participants: a 9.7% percentage decrease for JFK, a 5.8% decrease for BMH and a 7.1% increase for Delray. In the case of WRMC, found in Bethesda I as the hospital in the Subdistrict most likely to suffer the most from adverse impacts from approval of either the JFK or Bethesda application, its increase was from 6.9% to 8.6%, a mere increase of 1.7% of the total market share. The dramatic appearance of the percentage increase with regard to WRMC was explained as due to "the effect of arithmetic on small numbers." Tr. 5300. Still, with regard to Wellington, it was conceded that its improvement in market share had to be regarded as "fairly significant." Id. JFK's market share of non-tertiary discharges in the proposed service area declined from 2002 to 2004, primarily in zip codes where WRMC gained. However, JFK's decline was more than offset by the gain at JFK's sister HCA hospital, Palms West, which enjoyed a 13.2% increase in non-tertiary market share in the same area from 2002 to 2004, ranking second only to Wellington Regional's dramatic gain. Palms West, moreover, expects its market share of its own service area to grow "quite dramatically" over the next few years. BMH was the only hospital other than JFK whose non- tertiary market share of the proposed service area declined from 2002 to 2004. BMH's market share also dropped in the proposed PSA from 2003 to 2004. JFK still had the highest non-tertiary market share (24.9%) of any hospital in the proposed service area for the 12- month period ended March 31, 2005, and the combined non-tertiary market shares of HCA-affiliated hospitals is, of course, even higher (34.2%). Also, JFK's 33.55% market share of non-tertiary patient days in the WBCH PSA in 2004 remains the highest of any individual hospital for the proposed PSA. BMH ranked second at 25.04% of PSA patient days. WRMC's percentage increase coupled with the other changes in market shares exhibited by Delray Exhibit 12 do little to disturb the competitive balance among the Subdistrict's three leading hospitals, JFK, BMH and Delray. But the market should continue to exhibit its dynamism. WRMC and Palms West, "up and comers," tr. 5302, are expected to increase their gains shown by the 2002-2004 data. Furthermore, whether Bethesda's application is approved or not, competition will increase in the area because of the addition of new open heart programs in the Subdistrict at BMH and Boca Raton Community, a new comprehensive rehab program and an improved stroke program at Bethesda. Competition is generally understood by healthcare planners to be more effective in improving quality of care than it is in holding down costs and improving cost-effectiveness. Nonetheless, improving cost-effectiveness is a goal in which competition has a role. Bethesda is the only party without a hospital in the rapidly growing western portion of Palm Beach County and therefore is unable to compete as effectively when it comes to price with the hospital systems that have a presence in the western portion of the County. All existing hospitals in western Palm Beach County, with the exception of the remote, impoverished area served by Glades General, are owned by national for-profit hospital chains, i.e., HCA (Palms West), Universal (WRMC), and Tenet (West Boca). Thus, employers and managed care companies cannot currently offer any employees and policyholders who live in western parts of the county with the choice of a geographically accessible hospital operated by the Bethesda System or any other community not-for-profit system. The HCA and Tenet systems, which own JFK and Delray, respectively, are in particularly strong positions to bargain for high prices and rates with large employers and managed care companies because of their ownership of multiple hospitals located throughout Palm Beach County and south Florida, which assures access for more employees and policyholders, wherever they reside. HCA has three Palm Beach County hospitals and 13 South Florida acute care hospitals in its Florida East Division. Tenet has five Palm Beach County acute care hospitals and 14 hospitals in the south Florida region. Those for-profit systems currently enjoy dominant market shares, both on a county-wide basis and in the proposed WBCH service area. Tenet and HCA- affiliated hospitals have market shares of 36.5% and 25.4%, respectively, of all hospital inpatient discharges reported for residents of Palm Beach County, while Bethesda's county-wide market share is only 10.7%. The concentration of multiple affiliated hospitals in the same geographic region enjoyed by Tenet and HCA is desirable for hospitals and hospital business organizations from several perspectives. It is of assistance in contracting with managed care payers. See Ex. B-73P at 5-6, where Tenet states in a recent Form 10-K filing with the Securities and Exchange Commission ("SEC") that "[s]trong concentrations of hospital beds within geographic areas help us contract more successfully with managed care payers." It reduces management, marketing and other expenses. It aids, moreover, in efficient utilization of resources. Consistent with the position of its parent organization, Delray stated in a 1998 CON application that Tenet Healthcare Corporation (Tenet) provides a broad range of support services in the areas of administration, clinical support, purchasing, data processing, and a variety of other activities. Tenet is continuously evaluating means of improving the efficiency of its facilities in a specific geographic area through the sharing of resources. For example, Broward and Palm Beach hospitals are served by a centralized business office that reduces the total overhead expenses of the participating hospitals. Tenet is also developing managed care systems that will link its hospitals together in south Florida. Ex. B-75F, at 78. The CEO's of Tenet's 14 hospitals in south Florida meet regularly at its Fort Lauderdale office to discuss issues such as managed care contracting, and a Tenet employee of the regional Tenet office is the chief negotiator on managed care contracts for all of those hospitals, including Delray. Similarly, an individual in HCA's Florida East Division supervises a team of people who negotiate all the managed care agreements for all 13 HCA hospitals in southeast Florida. When it comes to managed care contracting that affects JFK, JFK's CEO and CFO(just as the other HCA hospital CEOs and CFOs in the region) work through HCA's managed care support personnel in the HCA divisional office in Broward County. The advantageous bargaining strength of HCA and Tenet is reflected in high charge structures at JFK and Delray. Lower charges and managed care rates benefit self-pay patients, insured patients whose co-pays are based on a percentage of charges, insured patients who must pay deductibles before payment is made by the insurer, and employers and employees who pay insurance premiums. Conversely, disproportionately high charges lead to high Medicare "outlier" payments by the federal government (and taxpayers) to hospitals with high charges, such as Delray, because Medicare outliers are measured by charges. The proposed satellite hospital will give consumers in West Boynton "a new choice of location." If the proposed satellite's market share exceeds Bethesda's current share of the service area, as it should, competing hospitals will have to either increase quality and services and/or decrease prices in order to overcome the advantage gained by location. The most likely outcome will be an increase in quality of care. Subsection (8) Subsection (8) of the CON Review Criteria Statute is, "[the costs and methods of the proposed construction, including the costs and methods of energy provision and the availability of alternative, less costly, or more effective methods of construction." § 408.035(8), Fla. Stat. In the Joint Prehearing Stipulation, the parties stipulated as follows: Bethesda Healthcare System, Inc. can build the proposed satellite hospital on the land northeast of the intersection of Boynton Beach Boulevard and State Road 7 (a/k/a Hwy. 441), which it has purchased and currently owns, for the projected total project costs of approximately $82.4 million. The architectural schematics, project completion schedule, design narratives, and code compliance information set forth in Bethesda's CON application are reasonable. Consistent with the above stipulations, Schedules 1, 2, 3, 9, and 10 of Bethesda's CON application/Omissions Response are not in dispute, and the information and projections contained therein are adequate and reasonable. Subsection (9) Subsection (9) of the CON Review Criteria Statute is "[t]he applicant's past and proposed provision of health care services to Medicaid patients and the medically indigent." § 408.035(9), Fla. Stat. Bethesda has a "track record" of providing substantial services to Medicaid patients and the medically indigent. BMH's Medicaid and charity care percentages exceed the averages for both the Subdistrict and the District as a whole. About 10.9% of documented Palm Beach County residents live below the federal poverty level. In the Subdistrict, however, 13.7% of documented residents east of Military Trail have incomes below the federal poverty level, while only 6.2% of those to the west fall in that category. In Palm Beach County, 16.8% of documented residents live in households with annual incomes below $20,000, and another 17.1% of the households have incomes below $35,000. Bethesda has traditionally been the key provider of services to the Medicaid and medically indigent population of south Palm Beach County in part because of its location. The percentages of low income households in BMH's eastern core service area are substantially higher than the County averages. BMH's "core service area" is defined for this purpose to be its primary service area zip codes other than the more western zip codes of 33436, 33437, and 33463. In contrast, the percentages of low income households in WBCH's service area are substantially lower than the County averages. Individuals with annual family income levels below $35,000 are much more likely to be uninsured, and the level of uninsured population is especially high as family income levels drop to $20,000 or less. The disproportionately higher level of uninsured families in BMH's eastern core service area impacts the utilization of that hospital by the uninsured and their needs for safety net hospital services. Comparisons with the other hospitals in the Subdistrict reveals the extent of Bethesda's service to Medicaid patients and the medically indigent. Bethesda serves significantly more Medicaid patients than any other hospital in the Subdistrict, including area facilities with higher bed counts. Bethesda has clearly demonstrated a commitment toward serving lower income people including Medicaid, and AHCA looks favorably on such a demonstrated commitment. In fact, AHCA has followed a policy of giving significant weight to an applicant's historical provision of high volumes of Medicaid and indigent patients. BMH accounted for 45.4% of all Medicaid inpatient admissions in the Subdistrict from 1999 to 2004. JFK accounted for 20.1% of Subdistrict Medicaid admissions, even though it is a larger hospital than BMH. The other parties, WRMC (12.0%) and Delray (3.9%), accounted for less. Bethesda's Medicaid admissions continue to increase. During the two-year period after the filing of the 2003 Bethesda application i.e., from 2002 to 2004, Medicaid/Medicaid HMO admissions increased from 19.1% to 24.2% of Bethesda's total inpatient admissions. Further, Bethesda is the only party whose total number of Medicaid admissions was higher in 2005 than in 2002, except for Delray, and Bethesda still serves more than five times as many Medicaid inpatients as Delray, whose Medicaid utilization remains the lowest in the Subdistrict. JFK's Medicaid admissions declined substantially from 2002 to 2005, and Wellington Regional's Medicaid volume was flat. BMH's Medicaid admissions include OB patients. The applicable statutory review criterion does not distinguish between types of Medicaid patients. While "moms and babies" may be the more common type of Medicaid patient, the greater Medicaid spending is associated with the patients who are highly disabled, extremely ill, frail and elderly, and/or medically complex. Despite the fact that a majority of BMH's Medicaid inpatients are OB patients, a majority of the inpatients in beds at BMH on any given day are the more costly medical-surgical and ICU patients. The ALOS for the latter types of patients is much longer than for OB patients. BMH serves almost four times as many non-OB, non- newborn Medicaid inpatients as Wellington Regional. Excluding perinatal cases, JFK ranks second to BMH in terms of Medicaid utilization. However, BMH still provides 63% more care to non- perinatal patients than does JFK. BMH also provides a substantial and rapidly increasing amount of charity care. BMH's internal hospital guidelines for classifying and documenting indigent patients as "charity care" patients are the same guidelines that are required in AHCA's Florida Hospital Uniform Reporting System Manual ("FHURS Manual"), pursuant to Florida Administrative Code Rule 59E-5.101(5), to be used for classifying and reporting care to "medically indigent patients" as "charity care" or "uncompensated charity care." In 2002, BMH's charity care amounted to about $16.2 million, which equated to 2.9% of BMH's total patient revenues. The total amounts and relative percentages of charity care at BMH have grown each year thereafter, to about $21.5 million (3.1%) in 2003; $27.8 million (3.7%) in 2004; and $32.7 million (3.9%) in 2005. Thus, BMH's charity care has increased substantially since the 2003 Bethesda application was filed. It has increased about 100% since 2002, and about 50% in the last two years. Prior to its reorganization from tax district hospital to private not-for-profit status in 1984, Bethesda received substantial tax subsidies to support the provision of indigent care. However, since the Palm Beach County Health Care District ("Health Care District") was formed in 1988, the only compensation received by Bethesda has been relatively minimal fee-for-service reimbursement for certain qualified Health Care District patients. Health Care District payments amounted to $2.4 million in FY 2003, and declined to less than $2.0 million in FY 2004 and FY 2005. Further, Bethesda returns $1.0 million of those payments each year pursuant to a settlement agreement with the Health Care District related to litigation regarding Bethesda's ownership. On the other hand, the creation of the Health Care District allows all hospitals to be reimbursed through and indigent care subsidy for care to patients who meet the District's indigency standards. The subsidy helps to ensure that indigent patients are able to receive medical care from any hospital in the county. To that end, the Health Care District and its subsidies provide a county-wide "safety net" for indigent patients. Still, BMH provides more charity care than any other hospital in the Subdistrict. During 1999 through 2004, BMH provided 42% of the total charity care reported by the six hospitals in the Subdistrict. WRMC reported $3.3 million in charity care in 2004, 1.0% of its total patient revenues. It provided $2.5 million in 2005. JFK's charity care amount of $11.7 million in 2004 represented 0.9% of its total patient revenues of about $1.25 billion. Delray ranks second in reported charity care among Subdistrict hospitals. Charity care, moreover, is a statistic based on "charges" pursuant to the FHURS Manual. A comparison of charity care reported by one hospital whose charge structure is substantially higher than another's will not present an "apples-to-apples" comparison. When compared with a hospital with substantially lower charges, a hospital with high charges, such as Delray (relative to BMH's charges) will appear to be providing more charity care than it is in relation to the lower charge hospital. BMH is one of few Florida hospitals exempt from Medicaid inpatient cost limits because it qualifies as an "11% provider" of Medicaid and charity under a state designation. JFK does not qualify. BMH also now qualifies as a Medicare Disproportionate Share Hospital. To qualify, more than 15.0% of inpatient days must be for Medicaid patients or documented low income citizens who qualify for Supplemental Security Income (SSI). BMH's Medicare inpatient disproportionate share percentage has increased since 2003, when it was 12.85%. Bethesda included a condition in its application that it will provide a minimum of 5.0% of patient days at the WBCH satellite to Medicare/Medicaid HMO and charity care patients, although it projects that utilization of the satellite by such patients will actually be higher. Medicaid and charity care utilization is projected to be lower at the satellite than at BMH due to demographics, but BMH is expected to continue to have high Medicaid and charity care utilization. The project will provide a more favorable payor mix for SBHD that, in turn, will enhance its ability to continue to fulfill its historic commitment to provision of care to the indigent within the South Broward Hospital District. AHCA recognized such a finding to weigh in favor of approving a project proposed by an applicant. Columbia Hospital Corp. of South Broward, d/b/a Westside Regional Medical Center v. AHCA and South Broward Hospital District, d/b/a Memorial Hospital Miramar, DOAH Case Nos. 01-2891 et al., Recommended Order p. 66 (July 3, 2002), AHCA Final Order (Sept. 30, 2002) (Ex. B-74E). On the other hand, a similar argument made in Bethesda I was described as an institution-specific justification and given no weight by the ALJ or AHCA toward approval of the application. Bethesda makes the argument that it "needs" WBCH in order to remain financially viable. The evidence, however, is not persuasive that Bethesda's long-term financial viability is at risk or even that Bethesda is at risk of losing market share in the West Boynton area if its application is not approved. Bethesda's "Spin-down Analysis" makes the case for its need for WBCH to continue its service of Medicaid patients and the indigent at its present rate. It does not, however, include consideration of Bethesda's comprehensive medical rehabilitation program and the approval of its new open heart surgery program. Both these programs have low Medicaid utilization. They will alter Bethesda's payor mix significantly toward the upside. The Spin Down Analysis is flawed. There are other bases for concluding that Bethesda did not make its case with regard to the need for WBCH in order for Bethesda to change its payor mix and be able to continue its high service of Medicaid and indigent patients. The Spin Down Analysis is at odds with Schedule 8 in the application. Neither Bethesda's CEO or CFO has informed its board or financial institutions that lend to it of the bleak financial projections provided in the analysis. Bethesda made the same type of argument in Bethesda I, yet its financial performance in recent years has been solid. Subsection (10) Subsection (10) of the CON Review Criteria Statute (relating to nursing home beds) is not at issue in this proceeding.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a final order be entered by the Agency for Health Care Administration that approves CON Application No. 9838. DONE AND ENTERED this 5th day of April, 2007, in Tallahassee, Leon County, Florida. S DAVID M. MALONEY Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 5th day of April, 2007. COPIES FURNISHED: Dr. Andrew C. Agwunobi, Secretary Agency for Health Care Administration Fort Knox Building III, Suite 3116 2727 Mahan Drive Tallahassee, Florida 32308 Craig H. Smith, General Counsel Agency for Health Care Administration Fort Knox Building III, Suite 3431 2727 Mahan Drive Tallahassee, Florida 32308 Richard Shoop, Agency Clerk Agency for Health Care Administration Fort Knox Building III, Suite 3431 2727 Mahan Drive Tallahassee, Florida 32308 Michael O. Mathis, Esquire Sandra Allen, Esquire Agency for Health Care Administration Fort Knox Building III, Suite 3431 2727 Mahan Drive Tallahassee, Florida 32308 John H. Parker, Esquire David Fenstermacher, Esquire Parker, Hudson, Rainer & Dobbs, LLP 1500 Marquis Two Tower 285 Peachtree Center Avenue, Northeast Atlanta, Georgia 30303 Robert A. Weiss, Esquire Karen Putnal, Esquire Parker, Hudson, Rainer & Dobbs, LLP The Perkins House, Suite 200 118 North Gadsden Street Tallahassee, Florida 32301 Stephen A. Ecenia, Esquire J. Stephen Menton, Esquire Rutledge, Ecenia, Purnell & Hoffman, P.A. 215 South Monroe Street, Suite 420 Post Office Box 551 Tallahassee, Florida 32302-0551 C. Gary Williams, Esquire Dylan Rivers, Esquire Ausley & McMullen 227 South Calhoun Street Post Office Box 391 Tallahassee, Florida 32302 Robert D. Newell, Jr., Esquire David Terry, Esquire Newell & Terry, P.A. 817 North Gadsden Street Tallahassee, Florida 32303-6313
The Issue Whether the Certificate of Need (CON) Application No. 9610, filed by St. Joseph's Hospital to establish a new 76-bed acute care satellite hospital in Hillsborough County, through the transfer of 76 acute care beds from the existing St. Joseph's Hospital, should be approved.
Findings Of Fact Agency for Health Care Administration AHCA is the single state agency responsible for administration of the CON program in Florida, pursuant to Section 408.034, Florida Statutes (2003). AHCA reviewed SJH's application to build a new, 76-bed, satellite hospital and preliminarily approved it. St. Joseph's Hospital, Inc. SJH is a Florida not-for-profit corporation, licensed to operate three existing hospitals on a single urban campus in District 6 including St. Joseph's Hospital, St. Joseph's Women's Hospital, and Tampa Children's Hospital. Although SJH has unused bed capacity, it is licensed to operate 883 beds distributed among its three hospitals and is one of Florida's largest acute care, safety-net providers. SJH has approximately 1,200 physicians on its active or senior active medical staff. The main adult SJH facility offers a full range of adult medical and surgical specialties and subspecialties, including adult open heart surgery, comprehensive oncology treatment and therapy, interventional radiology, inpatient psychiatric services, comprehensive neurological and orthopedic services, pulmonary rehabilitation, and hyper-baric services, including wound care. It is accredited by the Joint Commission of Health Care Organizations (JCAHO). St. Joseph's Women's Hospital is the only free-standing women's hospital in Florida, and is comprised of 234 acute care beds. It offers a comprehensive array of women's acute care medical and surgical services, including obstetrics, and Level II and Level III Neonatal Intensive Care Unit (NICU) services. St. Joseph's Women's Hospital provides the highest number of births among all District 6 obstetrics providers, with over 6,000 births in 2001. Tampa Children's Hospital is comprised of 111 medical/surgical pediatric rooms, and offers comprehensive pediatric and pediatric specialty services, including pediatric intensive care and pediatric open heart surgery. Tampa Children's Hospital's medical staff includes over 80 pediatric specialists practicing in 20 specialties and sub-specialties. SJH is a member of BayCare Health System which operates seven independent, affiliated hospitals in the Tampa Bay area. BayCare Health System coordinates quality standards among its member hospitals, promotes community access to health care, and facilitates joint operating efficiencies through combined purchasing, economies of scale, and consolidation of duplicative, non-patient-care services, such as administration, human resources, information management, and financial services. SJH is affiliated with and jointly manages South Florida Baptist Hospital (SFBH), a 147-bed primary acute care hospital in Plant City, Florida, in eastern Hillsborough County. SFBH provides Level I obstetrics services. SJH and SFBH operate under a single chief medical officer and board of directors, and utilizes similar policies and procedures. SFBH is accredited by JCAHO with high standing, and is certified by the Medicare and Medicaid programs. University Community Hospital, Inc. University Community Hospital, Inc., is another hospital provider in District 6. It is a not-for-profit entity licensed to operate UCH Fletcher and UCH Carrollwood. UCH Fletcher is a 431-bed Class I general hospital that provides a full range of acute care hospital services, including open heart surgery, obstetrics, and Level II and Level III NICU services. It is located in the southeastern portion of the SJH satellite proposed service area and has unused bed capacity. UCH Carrollwood is a 120-bed primary acute care hospital located in North Tampa. It provides ICU and medical/surgical services, but not obstetrics. It too has unused bed capacity. Tampa General Hospital TGH is an 846-bed Class I general hospital located in South Tampa on Davis Island. It is a not-for-profit hospital that provides a comprehensive range of services, including general acute care, organ transplant, open heart surgery, and NICU care. It is a designated teaching hospital and a Level I trauma and burn treatment center. TGH is an important safety- net hospital and a large provider of Medicaid and indigent care. SJH Proposal SJH proposes to establish a 76-bed, acute care satellite hospital in North Hillsborough County on a site acquired twenty years ago. It seeks to transfer 76 acute care beds from the SJH Main urban campus to the new suburban hospital site. The proposed location is in an area of rapid population growth where SJH annually draws 8,000 admissions. The SJH satellite will be integrated with and function as a satellite of SJH Main. It will incorporate state-of-the art technology, including the Path Speed Picture Archive & Communications System (PACS) that is currently in use at SJH enabling physicians at the satellite facility to simultaneously review digital diagnostic images and medical records with physicians at SJH Main. The SJH satellite will be a primary acute care facility with obstetrics, and will not duplicate the tertiary or other specialized services provided at SJH Main. Since acquiring the site for the proposed satellite, SJH has established several outpatient, primary care, and home health services in the satellite proposed service area. HealthPoint Medical Group, a physician group affiliated with and managed by SJH, and comprised of approximately 56 physicians, currently has three offices in the proposed service area and plans to expand. SJH also operates two outpatient imaging centers in the area. The SJH proposal seeks to enhance access to acute care and emergency medical services for SJH's existing patients residing in the proposed service area and serve future population growth in the rapidly developing northwest Hillsborough County area. It seeks to alleviate some of the volume in the SJH Main ER, allow for conversion of semi-private rooms to private rooms, and mitigate parking congestion. Relevant Statutory Criteria Section 408.035(1), Florida Statutes (2003). The need for SJH proposed satellite hospital project in relation to the applicable district health plan. The review of SJH's proposal does not involve the traditional calculation and determination of need for the 76 beds proposed at the satellite since the applicant intends to transfer existing beds within the sub-district. The Agency's fixed need pool determination does not apply to SJH's proposal, nor is SJH required to demonstrate "not-normal" circumstances for approval. However, need is reviewed in relation to the local district health plan. The District 6 Local Health Plan (LHP) identifies six factors applicable to proposed bed transfers. First, the plan considers whether a transfer will help indigent patients. Although the transfer may slightly enhance access to the poor, there is minimal access problems for indigent patients. Second, the plan considers whether a bed transfer is needed so an existing hospital can meet licensure standards. SJH is not seeking to meet any new licensure standards. The third factor is whether a bed transfer includes a proposed reduction in excess bed capacity. SJH is reducing excess bed capacity in the downtown area of Tampa and transferring beds to a growing area with increasing demand. The fourth factor considered in the LHP is whether a bed transfer adversely impacts a disproportionate provider of Medicaid/indigent care by taking away paying patients. While the transfer may reduce, to some degree, paying patient volume at TGH, the transfer will increase the volume at SJH, another safety net provider. The fifth factor is whether the proposed bed transfer will improve the existing hospital's physical plant. SJH Main, and its patients will benefit from the ultimate renovation, increased space and single patient rooms. Finally, the plan considers whether the bed transfer is more cost-efficient than improving the existing hospital. The options are incomparable. SJH is seeking to construct a satellite hospital and expand its market area, not merely transfer beds to an existing facility. It is unknown and virtually incalculable whether the proposed satellite facility will be more cost-efficient than an improvement to the existing hospital. Section 408.035(2), Florida Statutes. The availability, quality of care, accessibility and extent of utilization of existing facilities and health services in the service district. Undoubtedly, health services exist and are available in the service district. In fact, nearly all of the residents of SJH's proposed service area live within 45 minutes of an existing hospital. However, Northwest Hillsborough County is experiencing rapid growth. Many of its major roads and arteries are already congested and overcapacity. The expected growth in the proposed service area will inevitably aggravate the problem. More importantly, despite the fact that virtually all of the residents in the proposed service area live within 45 minutes of an existing hospital, the population growth is affecting health care delivery. Hospital departments, including many of the emergency rooms, are experiencing similar congestion and acute care patients often wait several hours for treatment upon arrival. UCH is experiencing capacity constraints. The demand for general acute care and emergency room services in the area is high and reasonably expected to increase throughout the foreseeable future. UCH Fletcher has experienced significant growth in utilization since 1999, and UCH Carrollwood has experienced consistent gains over the same time period. During the first four months of 2003, UCH Fletcher operated near 75 percent capacity overall, and 85 percent capacity in its general medical/surgical beds. Moreover, the hospital ER was at or near capacity. UCH Fletcher's ER, which is comprised of 39 beds, experienced 65,000 patient visits in 2002 and exceeded 70,000 visits in 2003. During peak periods, Fletcher ER patients have often been required to wait in the ER six to eight hours for an inpatient bed. UCH's birth volume has also increased with the rapid population growth in the service area and is less affected by seasonal residents. In fact, UCH recently built a new women's center and expanded its obstetrics capacity to accommodate between 3,000 and 3,500 births annually and projects it will achieve 3,100 births by the end of 2004, and operate at 90 percent of capacity. SJH also experiences capacity issues. SJH Main is completely comprised of semi-private rooms. It's composition makes it less attractive and competitive in the market and less able to maximize its utilization of existing acute care beds. However, SJH Main experiences a huge demand for emergency services at its urban campus. The emergency department is one of the busiest in Florida and increasing each year. In 2002, SJH treated 104,000 ER patients, approximately 300 each day, and nearly 18,000 of those treated originated from the satellite hospital's proposed service area. SJH's emergency department is a large, urban ER with 58 beds. It is organized into separate patient treatment areas, including a 23-bed adult treatment area, an eight-bed pediatric treatment area with a separate ER entrance, a four-bed adult psychiatric emergency treatment area, a 13-bed First Care unit, and a ten-bed Clinical Decision Unit. While SJH historically has provided excellent quality of care in its ER, its increasing volumes often result in patients receiving or waiting for treatment in corridors while more critical patients occupy the ER treatment rooms. In peak season, hallways are temporarily used for patient care. SJH has actively sought to improve the delivery of emergency care. It invested substantial capital towards improvements and expansion of its existing ER. It established a unique service known as "First Care," that provides quick emergency care to less critical ER patients, such as patients with sore throats, sprains, and simple lacerations. It created a ten-bed Clinical Decision Unit to supplement the existing ER by converting hospital space adjacent to the ER into a permanent nursing unit. In addition, it increased ER staffing and physician coverage, and implemented protocols to improve the ER receiving and treatment processes. Despite its efforts, the SJH ER continues to experience difficulties with extremely high patient volume. In addition to the capacity constraints at UCH and in SJH's ER, ER bypass in Hillsborough County presents additional problems for emergency personnel, providers, and patients. Hospital bypass or diversion occurs when a hospital requests that emergency medical transport teams bypass the hospital's ER because the hospital lacks capacity to treat additional patients or categories of emergency patients. In response to the increasing problems associated with hospital ER bypass, the Hillsborough County Trauma Agency established a committee to analyze the situation, establish protocols, and recommend solutions. In addition, Hillsborough County implemented an Internet-based system whereby hospitals electronically place themselves on and off bypass without a dispatcher. Hospital ER bypass adversely impacts the availability and accessibility of acute care services, particularly emergency services in Northwest Hillsborough County. The credible evidence demonstrates that hospitals in Hillsborough County go on bypass as often as every day during peak season, and frequently several hospitals are concurrently on bypass. Of the hospitals in Northwest Hillsborough County, UCH Fletcher and UCH Carrollwood together had the highest incidence of hospital bypass in the first six months of 2003. In an effort to minimize the problems associated with transport, Hillsborough County Fire Rescue (HCFR) tracks all of its calls. It provides all Advanced Life Support emergency transport services in the county and responds to approximately 55,000 emergency calls annually, or about 4,300 calls each month. Approximately half, or 27,000 calls annually, originate in HCFR's Northwest Hillsborough County area and nearly 10,000 of those calls result in transport of a patient to an acute care facility. HCFR currently has 12 stations in Northwest Hillsborough County and is scheduled to open four additional stations in the northwest area in the near future. Hospital ER bypass is an obstacle for HCFR that causes delays in transport, emergency care, and return to service. The applicant's proposed satellite facility will improve access to patients in need of emergency services in Northwest Hillsborough County and alleviate some of the capacity problems at UCH and SJH, as well as problems caused by frequent or extended periods of hospital ER bypass. Section 408.035(3), Florida Statutes. The ability of SJH to provide quality of care and its record of quality of care. Pursuant to the parties' stipulation, SJH's record of providing quality of care at its existing hospital is applicable, but not in dispute. SJH's ability to provide quality of care at the proposed new satellite hospital is in dispute. In general, SJH has consistently provided excellent quality of care in the provision of a sophisticated range of services. It is accredited by JCAHO and certified by the Medicare and Medicaid programs. It has received consistent recognition for its provision of high quality of care and has been awarded the Consumer Choice Award in health care in Tampa for eight consecutive years. SJH's proposed satellite hospital will be able to provide excellent quality of care and serve the vast majority of patients seeking acute care and emergency services. SJH's proposed satellite hospital will enhance access and quality of care for residents of the Northwest Hillsborough County area. Although it will not provide tertiary services, emergency patients will receive immediate, high-quality care at the facility. In addition, the smaller subset of emergency patients requiring immediate tertiary-level services will continue to have access to the tertiary hospital providers. In fact, HCFR has developed sophisticated transport protocols designed to ensure that all patients are safely delivered to the appropriate facility as efficiently as possible, and HCFR paramedics are highly skilled and trained to assess the condition of each patient. In addition, the evidence indicates that SJH will provide high-quality Level I obstetrics services at its satellite facility. While the opponents assert that the proposed program will not match the quality or scope of obstetric services provided at SJH and UCH, the evidence indicates that the SJH obstetrical program will not be sub-par or beneath the standard of care in the area. While an on-site NICU program is clearly preferable, the need for quality Level I obstetric providers is not obviated. SJH will provide quality obstetrical care. Moreover, SJH's existing quality management policies, protocols, and processes will be instituted at the satellite hospital. It will be operated under the same quality management personnel team currently responsible for quality at SJH Main. Section 408.035(4), Florida Statutes. The need in the service district for special health care services reasonably and economically accessible in adjoining areas. AHCA and SJH demonstrated that that the proposed satellite does not intend to offer nor impact special health care services that may be reasonably and economically accessible in adjoining areas. The criterion is not applicable. Section 408.035(5), Florida Statutes. The needs of research and educational facilities, including, but not limited to, facilities with institutional training programs and community training programs of health care practitioners and for doctors of osteopathic medicine and medicine at the student, internship, and residency training levels. This criterion is not applicable. Section 408.035(6), Florida Statutes. The availability of resources, including health personnel, management personnel, and funds for capital and operating expenditures for project accomplishment and operation. The evidence demonstrates that SJH has the necessary resources and experience to provide quality health and management personnel to the satellite hospital. While there is some shortage of available nurses in Florida, including the Tampa area, the vacancy rate at SJH, including RNs and staff positions, is consistently below the state average. SJH has a well-developed nurse recruitment and retention program and has achieved steady increases in the retention rate of its RNs. Management has developed a flexible pool of employed nurses enabling it to maintain appropriate and cost-effective staffing based on patient day levels. In addition, SJH has successfully recruited and retained an enormous number of recent nurse graduates as well as experienced nurses without resorting to the use of agency or contract nurses. It is also working closely with several local colleges to increase nursing enrollment. SJH will develop, recruit, and retain necessary staff to implement its proposal. While SJH competes with other hospitals for nursing personnel, the proposed satellite will have little impact on competing hospitals. UCH and TGH have consistently been able to obtain sufficient nursing staff to provide high-quality care at their facilities. UCH and TGH have impressive R.N. retention rates and are well below the state and national averages. Finally, SJH has sufficient funds for capital and operating expenditures to complete and operate the proposed satellite hospital. SJH will provide half of the $75 million project cost and finance the balance through the BayCare system. 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. In many ways, the SJH satellite hospital will enhance access to acute care and emergency services for the vast majority of patients residing in its proposed service area. First, commuting time will significantly decrease. Annually, the satellite's proposed service area supplies SJH Main with over 8,000 admissions from residents who endure significant traffic congestion and lengthy delays. Commuting time from the residential neighborhoods in the proposed service area to SJH Main has nearly doubled over the past ten years and is currently 45 minutes to an hour. The reliable travel time evidence demonstrates that the SJH satellite will significantly reduce travel times to acute care services for residents in Northwest Hillsborough County, including those in the Cheval, Northdale, Ehrlich Road, Lutz, and Lake Magdelane residential areas. Second, SJH's satellite hospital will significantly enhance patient access to emergency care and relieve pressure on the UCH Fletcher and SJH Main ERs. The SJH Main ER annually treats nearly 18,000 patients who originate from the satellite's proposed service area. It is reasonable to expect many of those patients to be redirected to the SJH satellite. Third, the SJH satellite proposal will provide another point of delivery access to HCFR and facilitate faster service to ER patients and improve "back-in-service" times for HCFR. Fourth, the availability of another ER in Northwest Hillsborough County will minimize the adverse effects of hospital bypass, and likely reduce the frequency of bypass by diverting volume from existing ERs. Fifth, the relocation of 76 acute care beds from SJH Main to the satellite will enable SJH to convert many of its underutilized, semi-private rooms into more usable, attractive, private rooms. Finally, redirection of volume from the urban SJH Main campus to a satellite campus in a high-growth, suburban area will reduce traffic congestion, minimize parking problems, save time, and save lives. Section 408.035(8), Florida Statutes. The immediate and long-term financial feasibility of the proposal. With respect to the project's short-term financial feasibility, SJH demonstrated that it can immediately finance the construction and implementation of the proposed satellite hospital project and meet its existing capital obligations. The satellite proposal is immediately financially feasible. With respect to the satellite's long-term financial feasibility, while the opponents argue that SJH's projected volumes, revenues, and expenses are inaccurate and unreasonable, SJH, on balance, sufficiently proved that the proposed satellite is financially feasible. Specifically, SJH's utilization projections are reasonable. As its basis for the projections, SJH relied on the expected population growth in the proposed service area and its historic levels of similar service in that area. Without doubt, the satellite's proposed service area, located in the northwest sector of Hillsborough County, is a region of rapid population growth and development. The population in the proposed service area has increased by 35 percent over the past ten years and is projected to grow much faster over the next three years. The area is being invaded by young adults, and the demand for obstetric services is dramatically increasing. SJH's historic levels of similar service in the area are persuasive. According to the un-refuted evidence, nearly 8,000 patient admissions, or 20 percent of SJH's existing inpatient volume, originated from the SJH satellite proposed service area, and 18,000 ER patient visits, or 17 percent of the entire SJH Main ER volume, derived from the proposed service area in 2002. In addition, SJH's strong presence in the proposed service area has enabled it to capture 32 percent of the patient days originating in the proposed service area. Given the existing patient days and expected population growth in the area, after culling out the tertiary and dissimilar services that the satellite will not provide, it is reasonable to expect that there will be over 121,000 available patient days in the proposed service area in 2007. The evidence also demonstrates that it is reasonable to expect the new satellite hospital to capture 40 percent of the patient days otherwise served at SJH Main. Moreover, given its market position, it is not unreasonable to expect the satellite to capture 15 percent of the available pool of non- tertiary patient days in the proposed service area by the second year of operation. In addition, SJH can expect 7.5 percent of the satellite patient days to originate from outside the service area thereby providing it with a reasonable projected utilization of nearly 20,000 patient days. Although the opponents argue otherwise, the evidence demonstrates that SJH's projected revenues are also reasonable. Again, SJH based the satellite's projected revenues, with some minor errors, on historic revenues for non-tertiary, non- specialty patients at SJH Main and conservatively assumed that it will achieve 90 percent of the 19,688 patient day utilization projections, or 17,800 patient days. After multiplying the financial-class-specific patient revenue per patient day by the financial-class-specific incremental patient days at the satellite facility, and applying a three percent annual inflation factor, the satellite reasonably expects approximately $1,604 in net revenue per adjusted patient day. The figure is consistent with the projected net revenue per adjusted patient day of $1,832 at SJH Main, $1,672 at UCH Fletcher, $1,432 at UCH Carrollwood and $1,408 at SFBH. SJH's projected expenses for its satellite hospital are also reasonable. SJH modeled its projections on similar historical expenses and determined that it will incur fewer maintenance expenses at the new hospital facility. Its pro forma allowances for plant operations and non-labor expenses per adjusted patient day are reasonable and consistent with the actual experience of UCH, UCH Carrollwood, Helen Ellis, Suncoast, SFBH, and Tampa General hospitals. SJH's staffing projection for new FTEs is also reasonable. The redirection of patient volume from SJH Main to the satellite will enable SJH to transfer some of its experienced FTEs to the satellite. New FTEs will be hired at the 2001 area market average salary rate for new registered nurses annually inflated by three percent. With respect to the reasonableness and appropriateness of SJH's pro forma, the opponents also argue that SJH fatally failed to include financial projections for the satellite on a stand-alone basis and, thereby, made it impossible to determine its long-term financial feasibility. The opponents assertions, while interesting, are not persuasive. AHCA's CON application forms require applicants to demonstrate the financial impact of the proposed project on the CON applicant. Within Schedules 7a and 8a of its application, SJH reasonably demonstrated the satellite's effect on SJH. Specifically, the first presented set of Schedules 7a and 8a entitled "Main" demonstrates SJH without the satellite hospital and provides a clear current baseline financial position for SJH. The second presented set of Schedules 7a and 8a, entitled "Satellite Hospital," demonstrates the projected financial benefit to SJH and the incremental increase in patient days when the satellite hospital is operational. SJH appropriately demonstrated the incremental financial benefit of the proposed project to the applicant, SJH. Furthermore, SJH's pro forma illustrate that even with an immediate loss in revenues to SJH arising from the transfer of patient days from SJH Main to the satellite, the project will generate revenues in excess of expenses in the long term. Logically, and obviously understood in the application pro forma, had SJH included a third pro forma showing the positive financial gain to the satellite relating to the additional revenues from the cannibalized patient days, the overall project would have shown even greater profitability. SJH's pro forma include and account for all revenues and expenses associated with implementation and operation of the satellite hospital. Moreover, AHCA supports SJH's method of presentation of the financial pro forma information in its CON application, and argues that it meets the Agency's requirements and is consistent with the method employed by other approved CON applicants. In light of the evidence, SJH's proposed satellite hospital project will achieve long-term financial feasibility. Section 408.035(9), Florida Statutes. The extent to which the project will foster competition that promotes quality and cost effectiveness. SJH's proposed satellite hospital will foster competition that promotes quality and cost effectiveness without significantly adversely affecting existing providers. The evidence demonstrates that the opponents will remain strongly competitive. Specifically, TGH is financially secure and will not be placed at material risk by the satellite hospital. While TGH is a safety-net provider and relies, in-part, on government funding, it achieved a net profit of $10.8 million in 2001, $56.2 million in 2002, and $25.7 million through May 2003, annualized to approximately $40 million. It also increased its admissions 10 percent from 2000 to 2002 and expects further gains. Furthermore, TGH marginally serves the rapidly developing area where the satellite will draw most of its patients. In fact, TGH receives less than one percent of its non-tertiary admissions in six of the nine ZIP codes which comprise SJH's proposed service area. TGH's projected adverse impact by the satellite hospital is overstated and unreliable. It is based on a contribution margin of $5,997 per adjusted admission and is completely inconsistent with SJH's margin for 2001 of $2,664, UCH Fletcher's contribution margin of $2,367, and UCH Carrollwood's contribution margin of $2,622. Similarly, UCH will experience only minor adverse effect from the satellite. UCH is financially strong and has limited capacity to absorb the anticipated growth in demand for acute care services. Although UCH's net profit numbers have fluctuated from 2001 through the second quarter of 2002, UCH is expecting a net profit greater than $5 million in 2003 and a net profit of $7.3 million in 2004. In addition, its inpatient admissions increased seven percent from 2000 to 2002. UCH's loss projections are patently overstated. It erroneously used a 4.2 average length of stay and exaggerated its projected lost admissions by nearly 20 percent. It admitted that the satellite would have its lowest admissions in the service area in the ZIP codes proximate to UCH, yet argued the satellite would draw admissions equally from all zip codes in the proposed service area including those immediately adjacent to UCH. It admitted that its obstetrical program will remain near capacity when the satellite is actually constructed, but argued that the satellite will substantially drain obstetric patients away. Although the satellite will inevitably draw some admissions away from UCH and TGH, the projected growth in patient days in the service area will offset any potential material adverse impact. The satellite will foster healthy competition, promote cost effectiveness, and provide faster quality health care in the area. Section 408.035(10), Florida Statutes. The costs and methods of the proposed construction, including the costs and methods of energy provision and the availability of alternative, less costly, or more effective methods of construction. On balance, the proposed costs and methods of construction are reasonable. The construction of the proposed satellite facility is projected to cost $49,560,000, or $652,105 per bed, which includes a 15 percent construction contingency. The satellite is expected to cost $175 per gross square foot and is reasonable, given the existing range in the area. While the total per bed "project cost" is nearly $1 million, as shown in Schedule 9, Line S, the figure is misleading. It includes nearly $20 million in equipment and other expensive, non-construction cost items. SJH also plans to construct a medical office building and imaging center prior to construction of the hospital. Upon completion of the hospital, a portion of the square footage of the imaging center will be integrated with the hospital, at minimal cost, and serve as the inpatient radiology department. SJH has committed to construct the building and has obtained the necessary permits. Although it is not CON reviewable, the construction cost for the facility, approximately $155 per square foot, is reasonable. Finally, the proposed architectural design for the satellite hospital is reasonable and satisfies applicable building codes. It consists of three medical-surgical pods of 16 beds each, one 14-bed intensive care pod, one 14-bed obstetrics pod, and one 16-bed observation pod. While the non- integrated, designed facility is rather large given its bed capacity, approximately 211,000 gross square feet, the satellite will consist of all private rooms and allow for future addition of licensed beds without major expansion or new construction. The design provides easy access and convenient parking. Notwithstanding the reasonableness of the construction costs and design, the opponents argue that there are less costly alternatives. First, the project could be rejected and the community could resort to the status quo. Given the evidence, including emergency data, denial is unreasonable. Second, the applicant could build a freestanding ER and/or an additional non-urgent care facility and minimize some of the existing problems. Given the evidence, including population trends and existing providers, the limited approach is unreasonable. Third, the applicant could be approved to build a scaled down version of its proposal. Although the facility is appropriate and reasonable as proposed in the application, a scaled down facility is clearly a less costly method of construction. However, there is insufficient evidence to determine whether a smaller version is a reasonable alternative. Section 408.035(11), Florida Statutes. The applicant's past and proposed provision of health care services to Medicaid patients and the medically indigent. SJH has an impressive record of service to Medicaid patients and the medically indigent. It has long been recognized as a "safety net" provider of acute care services. In 2002, nearly 19 percent of SJH's total patient days were rendered to Medicaid-eligible patients. SJH also provides $40 million each year in uncompensated services to the community. It is a voluntary participant in the Hillsborough County Health Plan that provides funding for medically indigent or uninsured patients who do not qualify for Medicaid benefits. Consistent with its commitment to the community, SJH has conditioned approval of its CON on providing at least 15.6 percent of the satellite patient days to Medicaid and charity patients. Section 408.035(12), Florida Statutes. The applicant's designation as a Gold Seal Program nursing facility pursuant to s. 400.235, when the applicant is requesting additional nursing home beds at that facility. This criterion is not applicable.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a final order be issued to approve the application. DONE AND ENTERED this 20th day of July, 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 20th day of July, 2004. COPIES FURNISHED: Lori C. Desnick, Esquire Agency for Health Care Administration Fort Knox Building III, Suite 3431 2727 Mahan Drive Tallahassee, Florida 32308 James C. Hauser, Esquire R. Terry Rigsby, Esquire Metz, Hauser & Husband, P.A. Post Office Box 10909 Tallahassee, Florida 32302 Elizabeth McArthur, Esquire Radey, Thomas, Yon & Clark, P.A. 313 North Monroe Street, Second Floor Post Office Box 10967 Tallahassee, Florida 32301 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 Kenneth W. Gieseking, Esquire Agency for Health Care Administration 2727 Mahan Drive, Mail Station 3 Tallahassee, Florida 32308 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 Fort Knox Building, Suite 3116 2727 Mahan Drive Tallahassee, Florida 32308 Alan Levine, Secretary Agency for Health Care Administration Fort Knox Building, Suite 3431 2727 Mahan Drive Tallahassee, Florida 32308
Conclusions THIS CAUSE comes before the Agency For Health Care Administration (the "Agency") concerning Certificate of Need ("CON") Application No. 10131 filed by The Shores Behavioral Hospital, LLC (hereinafter “The Shores”) to establish a 60-bed adult psychiatric hospital and CON Application No. 10132 The entity is a limited liability company according to the Division of Corporations. Filed March 14, 2012 2:40 PM Division of Administrative Hearings to establish a 12-bed substance abuse program in addition to the 60 adult psychiatric beds pursuant to CON application No. 10131. The Agency preliminarily approved CON Application No. 10131 and preliminarily denied CON Application No. 10132. South Broward Hospital District d/b/a Memorial Regional Hospital (hereinafter “Memorial”) thereafter filed a Petition for Formal Administrative Hearing challenging the Agency’s preliminary approval of CON 10131, which the Agency Clerk forwarded to the Division of Administrative Hearings (“DOAH”). The Shores thereafter filed a Petition for Formal Administrative Hearing to challenge the Agency’s preliminary denial of CON 10132, which the Agency Clerk forwarded to the Division of Administrative Hearings (‘DOAH”). Upon receipt at DOAH, Memorial, CON 10131, was assigned DOAH Case No. 12-0424CON and The Shores, CON 10132, was assigned DOAH Case No. 12-0427CON. On February 16, 2012, the Administrative Law Judge issued an Order of Consolidation consolidating both cases. On February 24, 2012, the Administrative Law Judge issued an Order Closing File and Relinquishing Jurisdiction based on _ the _ parties’ representation they had reached a settlement. . The parties have entered into the attached Settlement Agreement (Exhibit 1). It is therefore ORDERED: 1. The attached Settlement Agreement is approved and adopted as part of this Final Order, and the parties are directed to comply with the terms of the Settlement Agreement. 2. The Agency will approve and issue CON 10131 and CON 10132 with the conditions: a. Approval of CON Application 10131 to establish a Class III specialty hospital with 60 adult psychiatric beds is concurrent with approval of the co-batched CON Application 10132 to establish a 12-bed adult substance abuse program in addition to the 60 adult psychiatric beds in one single hospital facility. b. Concurrent to the licensure and certification of 60 adult inpatient psychiatric beds, 12 adult substance abuse beds and 30 adolescent residential treatment (DCF) beds at The Shores, all 72 hospital beds and 30 adolescent residential beds at Atlantic Shores Hospital will be delicensed. c. The Shores will become a designated Baker Act receiving facility upon licensure and certification. d. The location of the hospital approved pursuant to CONs 10131 and 10132 will not be south of Los Olas Boulevard and The Shores agrees that it will not seek any modification of the CONs to locate the hospital farther south than Davie Boulevard (County Road 736). 3. Each party shall be responsible its own costs and fees. 4. The above-styled cases are hereby closed. DONE and ORDERED this 2. day of Meaich~ , 2012, in Tallahassee, Florida. ELIZABETH DEK, Secretary AGENCY FOR HEALTH CARE ADMINISTRATION
The Issue Whether Certificate of Need (CON) Application No. 9992, filed by Sun City Hospital, Inc., d/b/a South Bay Hospital to establish a 112-bed replacement hospital in Riverview, Hillsborough County, Florida, satisfies, on balance, the applicable statutory and rule review criteria for approval.
Findings Of Fact The Parties A. South Bay South Bay is a 112-bed general acute care hospital located at 4016 Sun City Center Boulevard, Sun City Center, Florida. It has served south Hillsborough County from that location since its original construction in 1982. South Bay is a wholly-owned for-profit subsidiary of Hospital Corporation of America, Inc. (HCA), a for-profit corporation. South Bay's service area includes the immediate vicinity of Sun City Center, the communities of Ruskin and Wimauma (to the west and east of Sun City Center, respectively), and the communities of Riverview, Gibsonton, and Apollo Beach to the north. See FOF 68-72. South Bay is located on the western edge of Sun City Center. The Sun City Center area is comprised of the age- restricted communities of Sun City Center, Kings Point, Freedom Plaza, and numerous nearby senior living complexes, assisted- living facilities, and nursing homes. This area geographically comprises the developed area along the north side of State Road (SR) 674 between I–75 and U.S. Highway 301, north to 19th Avenue and south to the Little Manatee River. South Bay predominantly serves the residents of the Sun City Center area. In 2009, Sun City Center residents comprised approximately 57% of all discharges from SB. South Bay had approximately 72% market share in Sun City Center zip code 33573. (Approximately 32% of all market service area discharges came from zip code 33573.) South Bay provides educational programs at the hospital that are well–attended by community residents. South Bay provides comprehensive acute care services typical of a small to mid-sized community hospital, including emergency services, surgery, diagnostic imaging, non-invasive cardiology services, and endoscopy. It does not provide diagnostic or therapeutic cardiac catheterization or open-heart surgery. Patients requiring interventional cardiology services or open-heart surgery are taken directly by Hillsborough County Fire Rescue or other transport to a hospital providing those services, such as Brandon Regional Hospital (Brandon) or SJH, or are transferred from SB to one of those hospitals. South Bay has received a number of specialty accreditations, which include accreditation by the Joint Commission on Accreditation of Healthcare Organizations (JCAHO), specialty accreditation as an advanced primary stroke center, and specialty accreditation by the Society for Chest Pain. South Bay has also received recognition for its quality of care and, in particular, for surgical infection prevention and outstanding services relating to heart attack, heart failure, and pneumonia. South Bay's 112 licensed beds comprise 104 general medical-surgical beds and eight Intensive Care Unit (ICU) beds. Of the general medical-surgical beds, 64 are in semi-private rooms, where two patient beds are situated side-by-side, separated by a curtain. Forty-eight are in private rooms. Semi- private rooms present challenges in terms of infection control and patient privacy, and are no longer the standard of care in hospital design and construction. Over the years, SB has upgraded its hospital physical plant to accommodate new medical technology, including an MRI suite and state-of-the-art telemetry equipment. South Bay is implementing automated dispensing cabinets on patient floors for storage of medications and an electronic medication administration record system that provides an extra safety measure for dispensing medications. Since 2009, SB has implemented numerous programmatic initiatives that have improved the quality of care. South Bay is converting one wing of the hospital to an orthopedic unit. In 2001, South Bay completed a major expansion of its ED and support spaces, but has not added new beds. Patients presenting to the ED have received high quality of care and timely care. Since 2009, SB has improved its systems of care and triage of patients in the ED to improve patient flow and reduce ED wait times. Overall, South Bay has a reputation of providing high- quality care in a timely manner, notwithstanding problems with its physical plant and location. South Bay's utilization has been high historically. From 2006 to 2009, SB's average occupancy has been 79.5%, 80.3%, 77.2%, and 77.7%, respectively. Its number of patient discharges also increased in that time, from 6,190 in 2006 to 6,540 in 2009, at an average annual rate increase of 1.9%. (From late November until May, the seasonal months, utilization is very high, sometimes at 100% or greater.) Despite its relatively high utilization, SB has also had marginal financial results historically. It lost money in 2005 and 2007, with operating losses of $644,259 in 2005 and $1,151,496 in 2007 and bottom-line net losses of $447,957 (2005) and $698,305 (2007). The hospital had a significantly better year in 2009, with an operating gain of $3,365,113 and a bottom- line net profit of $2,144,292. However, this was achieved largely due to a reduction in bad debt from $11,927,320 in 2008 to $7,772,889 in 2009, an event the hospital does not expect to repeat, and a coincidence of high surgical volume. Its 2010 financial results were lagging behind those of 2009 at the time of the hearing. South Bay's 2009 results amount to an aberration, and it is likely that 2010 would be considerably less profitable. South Bay's marginal financial performance is due, in part, to its disproportionate share of Medicare patients and a disproportionate percentage of Medicare reimbursement in its payor mix. Medicare reimburses hospitals at a significantly lower rate than managed care payors. As noted, SB is organizationally a part of HCA's West Florida Division, and is one of two HCA-affiliated hospitals in Hillsborough County; Brandon is the other. (There are approximately 16 hospitals in this division.) Brandon has been able to add beds over the past several years, and its services include interventional cardiology and open-heart surgery. However, SB and Brandon combined still have fewer licensed beds than either St. Joseph's Hospital or Tampa General Hospital, and fewer than the BayCare Health System- affiliated hospitals in Hillsborough in total. South Bay's existing physical plant is undersized and outdated. See discussion below. Whether it has a meaningful opportunity for expansion and renovation at its 17.5-acre site is a question for this proceeding to resolve. South Bay proposes the replacement and relocation of its facility to the community of Riverview. In 2005, SB planned to establish an 80-bed satellite hospital in Riverview, on a parcel owned by HCA and located on the north side of Big Bend Road between I-75 and U.S. Highway 301. SB filed CON Application No. 9834 in the February 2005 batching cycle. The application was preliminarily denied by AHCA, and SB initially contested AHCA's determination. South Bay pursued the satellite hospital CON at that time because of limited availability of intercompany financing from HCA. By the time of the August 2007 batching cycle, intercompany financing had improved, allowing SB to pursue the bigger project of replacing and relocating the hospital. South Bay dismissed its petition for formal administrative hearing, allowing AHCA's preliminary denial of CON Application No. 9834 to become final, and filed CON Application No. 9992 to establish a replacement hospital facility on Big Bend Road in Riverview. St. Joseph's Hospital St. Joseph's Hospital was founded by the Franciscan Sisters of Allegany, New York, as a small hospital in a converted house in downtown Tampa in 1934. In 1967, SJH opened its existing main hospital facility on Martin Luther King Avenue in Tampa, Florida. St. Joseph's Hospital, Inc., a not-for-profit entity, is the licensee of St. Joseph's Hospital, an acute care hospital located at 3001 West Martin Luther King, Jr., Boulevard, Tampa, Florida. As a not-for-profit organization, SJH's mission is to improve the health care of the community by providing high- quality compassionate care. St. Joseph's Hospital, Inc., is a Medicaid disproportionate share provider and provided $145 million in charity and uncompensated care in 2009. St. Joseph's Hospital, Inc., is licensed to operate approximately 883 beds, including acute care beds; Level II and Level III neonatal intensive care unit (NICU) beds; and adult and child-adolescent psychiatric beds. The majority of beds are semi-private. Services include Level II and pediatric trauma services, angioplasty, and open-heart surgery. These beds and services are distributed among SJH's main campus; St. Joseph's Women's Hospital; St. Joseph's Hospital North, a newer satellite hospital in north Tampa; and St. Joseph's Children's Hospital. Except for St. Joseph's Hospital North, these facilities are land-locked. Nevertheless, SJH has continued to invest in its physical plant and to upgrade its medical technology and equipment. In February 2010, SJH opened St. Joseph's Hospital North, a state-of-the-art, 76-bed satellite hospital in Lutz, north Hillsborough County, at a cost of approximately $225 million. This facility is approximately 14 miles away from the main campus. This followed the award of CON No. 9610 to SJH for the establishment of St. Joseph's Hospital North, which was unsuccessfully opposed by University Community Hospital and Tampa General Hospital, two existing hospital providers in Tampa. Univ. Cmty. Hosp., Inc., d/b/a Univ. Cmty. Hosp. v. Agency for Health Care Admin., Case Nos. 03-0337CON and 03-0338CON. St. Joseph's Hospital North operates under the same license and under common management. St. Joseph's Hospital, Inc., is also the holder of CON No. 9833 for the establishment of a 90-bed state-of-the-art satellite hospital on Big Bend Road, Riverview, Hillsborough County. These all private beds include general medical-surgical beds, an ICU, and a 10-bed obstetrical unit. On October 21, 2009, the Agency revised CON No. 9833 with a termination date of October 21, 2012. This project was unsuccessfully opposed by TG, SB, and Brandon. St. Joseph's Hosp., Inc. v. Agency for Health Care Admin., Case No. 05-2754CON, supra. St. Joseph's Hospital anticipates construction beginning in October 2012 and opening the satellite hospital, to be known as St. Joseph's Hospital South, in early 2015. This hospital will be operating under SJH's existing license and Medicare and Medicaid provider numbers and will in all respects be an integral component of SJH. The implementation of St. Joseph's Hospital South is underway. SJH has contracted with consultants, engineers, architects, and contractors and has funded the first phase of the project with $6 million, a portion of which has been spent. The application for CON No. 9833 refers to "evidence- based design" and the construction of a state-of-the-art facility. (The design of St. Joseph's Hospital North also uses "evidence-based design.") St. Joseph's Hospital South will have all private rooms, general surgery operating rooms as well as endoscopy, and a 10-bed obstetrics unit. Although CON No. 9833 is for a project involving 228,810 square feet of new construction, SJH intends to build a much larger facility, approximately 400,000 square feet on approximately 70 acres. St. Joseph's Hospital Main's physical plant is 43 years old. The majority of the patient rooms are semi–private and about 35% of patients admitted at this hospital received private rooms. Notwithstanding the age of its physical plant and its semi–private bed configuration, SJH has a reputation of providing high quality of care and is a strong competitor in its market. St. Joseph's Hospital, Inc., has two facility expansions currently in progress at its main location in Tampa: a new five-story building that will house SJH neonatal intensive care unit, obstetrical, and gynecology services; and a separate, two-story addition with 52 private patient rooms. Of the 52 private patient rooms, 26 will be dedicated to patients recovering from orthopedic surgery, and will be large enough to allow physical therapy to be done in the patient room itself. The other 26 rooms will be new medical-surgical ICU beds at the hospital. At the same time that SJH expands its main location, it is pursuing a strategic plan whereby the main location is the "hub" of its system, with community hospitals and health facilities located in outlying communities. As proposed in CON Application No. 9610, St. Joseph's Hospital North was to be 240,000 square feet in size. Following the award of CON No. 9610, SJH requested that AHCA modify the CON to provide for construction of a larger facility. In its modification request, SJH requested to establish a large, state- of-the-art facility with all private patient rooms, and the desirability of private patient rooms as a matter of infection control and patient preference. AHCA granted the modification. St. Joseph's Hospital, Inc., thereafter planned to construct St. Joseph's Hospital North to be four stories in height. The plan was opposed. St. Joseph's Hospital, Inc., offered to construct a three-story building, large enough horizontally to accommodate the CON square footage modification. The offer was accepted. St. Joseph's Hospital, Inc., markets St. Joseph's Hospital North as "The Hospital of the Future, Today." The hospital was constructed using "evidence-based design" to maximize operational efficiencies and enhance the healing process of its residents –- recognizing, among other things, the role of the patient's family and friends. The facility's patient care units are all state-of-the-art and include, for example, obstetrical suites in which a visiting family member can spend the night. A spacious, sunlit atrium and a "healing garden" are also provided. The hospital's dining facility is frequented by community residents. In addition, SJH owns a physician group practice under HealthPoint Medical Group, a subsidiary of St. Joseph's Health Care Center, Inc. The group practice has approximately 19 different office locations, including several within the service area for the proposed hospital. The group includes approximately 106 physicians. However, most of the office locations are in Tampa, and the group does not have an office in Riverview, although there are plans to expand locations to include the Big Bend Road site. St. Joseph's Hospital, Inc., anticipates having to establish a new medical staff for St. Joseph's Hospital South, and will build a medical office building at the site for the purpose of attracting physicians. It further anticipates that some number of physicians on SB's existing medical staff will apply for privileges at St. Joseph's Hospital South. St. Joseph's Hospital, Inc., is the market leader among Hillsborough County hospitals and is currently doing well financially, as it has historically. For 2010, St. Joseph's Hospital Main's operating income was approximately $78 million. Organizationally, SJH has a parent organization, St. Joseph's Health Care Center, Inc., and is one of eight hospitals in the greater Tampa Bay area affiliated with BayCare. On behalf of its member hospitals, BayCare arranges financing for capital projects, provides support for various administrative functions, and negotiates managed care contracts that cover its members as a group. St. Joseph's Hospital characterizes fees paid for BayCare services as an allocation of expenses rather than a management fee for its services. In 2009, SJH paid BayCare approximately $42 million for services. St. Joseph's Hospital is one of three BayCare affiliates in Hillsborough County. The other two are St. Joseph's Hospital North and South Florida Baptist Hospital, a community hospital in Plant City. St. Joseph's Hospital South would be the fourth BayCare hospital in the county. Tampa General The Hillsborough County Hospital Authority, a public body appointed by the county, operated Tampa General Hospital until 1997. In that year, TG was leased to Florida Health Sciences Center, Inc., a non-profit corporation and the current hospital licensee. Tampa General is a 1,018-bed acute care hospital located at 2 Columbia Drive, Davis Island, Tampa, Florida. In addition to trauma surgery services, TG provides tertiary services, such as angioplasty, open-heart surgery, and organ transplantation. Tampa General operates the only burn center in the area. A rehabilitation hospital is connected to the main hospital, but there are plans to relocate this facility. Tampa General owns a medical office building. Tampa General is JCAHO accredited and has received numerous honors. Tampa General provides high-quality of care. Approximately half of the beds at TG are private rooms. Tampa General's service area for non-tertiary services includes all of Hillsborough County. Tampa General is also the teaching hospital for the University of South Florida's College of Medicine. As a statutory teaching hospital, TG has 550 residents and funds over 300 postgraduate physicians in training. Tampa General is the predominant provider of services to Medicaid recipients and the medically indigent of Hillsborough County. It is considered the only safety-net hospital in Hillsborough County. (A safety net hospital provides a disproportionate amount of care to indigent and underinsured patients in comparison to other hospitals.) A high volume of indigent (Medicaid and charity) patients are discharged from TG. In 2009, the costs TG incurred treating indigent patients exceeded reimbursement by $56.5 million. Approximately 33% of Tampa General's patients are Medicare patients and 25% commercial. Tampa General has grown in the past 10 years. It added 31 licensed acute care beds in 2004 and 82 more since SB's application was filed in 2007. In addition, the Bayshore Pavilion, a $300-million project, was recently completed. The project enlarged TG's ED, and added a new cardiovascular unit, a new neurosciences and trauma center, a new OB-GYN floor, and a new gastrointestinal unit. Facility improvements are generally ongoing. Tampa General's capital budget for 2011 is approximately $100 million. In 2010, TG's operating margin was approximately $43 million and a small operating margin in 2011. AHCA AHCA is the state agency that administers the CON law. Jeff Gregg testified that during his tenure, AHCA has never preliminarily denied a replacement hospital CON application or required consideration of alternatives to a replacement hospital. Mr. Gregg opined that the lack of alternatives or options is a relevant consideration when reviewing a replacement hospital CON application. T 468. The Agency's State Agency Action Report (SAAR) provides reasons for preliminarily approving SB's CON application. During the hearing, Mr. Gregg testified, in part, that the primary reasons for preliminary approval were issues related to quality of care "because the facility represents itself as being unable to expand or adapt significantly to the rapidly changing world of acute care. This is consistent with what [he has] heard about other replacement hospitals." T 413. Mr. Gregg also noted that SB focused on improving access "[a]nd as the years go by, it is reasonable to expect that the population outside of Sun City Center, the immediate Sun City Center area, will steadily increase and improve access for more people, and that's particularly true because this application includes both a freestanding emergency department and a shuttle service for the people in the immediate area. And that was intended to address their concerns based upon the fact that they have had this facility very conveniently located for them in the past at a time when there was little development in the general south Hillsborough area. But the applicant wants to position itself for the expected growth in the future, and we think has made an excellent effort to accommodate the immediate interests of Sun City Center residents with their promises to do the emergency, freestanding emergency department and the shuttle service so that the people will continue to have very comfortable access to the hospital." T 413-14. Mr. Gregg reiterated "that the improvements in quality outweigh any concerns that [the Agency] should have about the replacement and relocation of this facility; that if this facility were to be forced to remain where it is, over time it would be reasonable to expect that quality would diminish." T 435. For AHCA, replacement hospital applications receive the same level of scrutiny as any other acute care hospital applications. T 439-40. South Bay's existing facility and site South Bay is located on the north side of SR 674, an east-west thoroughfare in south Hillsborough County. The area around the hospital is "built out" with predominantly residential development. Sun City Center, an age-restricted (55 and older) retirement community, is located directly across SR 674 from the hospital as well as on the north side of SR 674 to the east of the hospital. Other residential development is immediately to the west of the hospital on the north side of SR 674. See FOF 3-6. Sun City Center is flanked by two north-south arterial roadways, I-75 to the west and U.S. Highway 301 to the east, both of which intersect with SR 674. The community of Ruskin is situated generally around the intersection of SR 674 and U.S. 41, west of I-75. The community of Wimauma is situated along SR 674 just east of U.S. Highway 301. South Bay is located in a three-story building that is well–maintained and in relatively good repair. The facility is well laid out in terms of design as a community hospital. Patients and staff at SB are satisfied with the quality of care and scope of acute care services provided at the hospital. Notwithstanding current space limitations, and problems in the ICU, see FOF 77-82, patients receive a high quality of care. One of the stated reasons for replacement is with respect to SB's request to have all private patient rooms in order to be more competitive with St. Joseph's Hospital South. South Bay's inpatient rooms are located within the original construction. The hospital is approximately 115,800 square feet, or a little over 1,000 square feet per inpatient bed. By comparison, small to mid-sized community hospitals built today are commonly 2,400 square feet per inpatient bed on average. All of SB's patient care units are undersized by today's standards, with the exception of the ED. ICU patients, often not ambulatory, require a higher level of care than other hospital patients. The ICU at SB is not adequate to meet the level of care required by the ICU patient. SB's ICU comprises eight rooms with one bed apiece. Eight beds are not enough. As Dr. Ksaibati put it at hearing: "Right now we have eight and we are always short . . . double . . . the number of beds, that's at least [the] minimum [t]hat I expect we are going to have if we go to a new facility." T 198-99 (emphasis added). The shortage of beds is not the only problem. The size of SB's ICU rooms is too small. (Problems with the ICU have existed at least since 2006.) Inadequate size prohibits separate, adjoining bathrooms. For patients able to leave their beds, therefore, portable bathroom equipment in the ICU room is required. Inadequate size, the presence of furniture, and the presence of equipment in the ICU room creates serious quality of care issues. When an EKG is conducted, the nurse cannot be present in the room. Otherwise, there would be no space for the EKG equipment. It is difficult to intubate a patient and, at times, "extremely dangerous." T 170. A major concern is when a life-threatening problem occurs that requires emergency treatment at the ICU patient's bedside. For example, when a cardiac arrest "code" is called, furniture and the portable bathroom equipment must be removed before emergency cardiac staff and equipment necessary to restore the function of the patient's heart can reach the patient for the commencement of treatment. Comparison to ICU rooms at other facilities underscores the inadequate size of SB's ICU rooms. Many of the ICU rooms at Brandon are much larger -- more than twice the size of SB's ICU rooms. Support spaces are inadequate in most areas, resulting in corridors (at times) being used for inappropriate storage. In addition, the hospital's general storage is inadequate, resulting in movable equipment being stored in mechanical and electrical rooms. Of the medical-surgical beds at SB, 48 are private and 64 are semi-private. The current standard in hospital design is for acute care hospitals to have private rooms exclusively. Private patient rooms are superior to semi-private rooms for infection control and patient well-being in general. The patient is spared the disruption and occasional unpleasantness that accompanies sharing a patient room –- for example, another patient's persistent cough or inability to use the toilet (many of SB's semi-private rooms have bedside commodes). Private rooms are generally recognized as promoting quality of care. South Bay's site is approximately 17.5 acres, bordered on all sides by parcels not owned by either SB or by HCA- affiliated entities. The facility is set back from SR 674 by a visitor parking lot. Proceeding clockwise around the facility from the visitor parking lot, there is a small service road on the western edge of the site; two large, adjacent ponds for stormwater retention; the rear parking lot for ED visitors and patients; and another small service road which connects the east side of the site to SR 674, and which is used by ambulances to access the ED. Dedicated parking for SB's employees is absent. A medical office building (MOB), which is not owned by SB, is located to the north of the ED parking lot. The MOB houses SB's Human Resources Department as well as medical offices. Most of SB's specialty physicians have either full or part-time offices in close proximity to SB. Employee parking is not available in the MOB parking lot. Some of SB's employees park in a hospital-owned parking lot to the north of the MOB, and then walk around the MOB to enter the hospital. South Bay's CEO and management employees park on a strip of a gravel lot, which is rented from the Methodist church to the northeast of the hospital's site. In 2007, as part of the CON application to relocate, SB commissioned a site and facility assessment (SFA) of the hospital. The SFA was prepared for the purpose of supporting SB's replacement hospital application and has not been updated since its preparation in 2007. The architects or engineers who prepared the SFA were not asked to evaluate proposed options for expansion or upgrade of SB on-site. However, the SFA concludes that the SB site has been built out to its maximum capacity. On the other hand, the SFA concluded that the existing building systems at SB met codes and standards in force when constructed and are in adequate condition and have the capacity to meet the current needs of the hospital. The report also stated that if SB wanted to substantially expand its physical plant to accommodate future growth, upgrades to some of the existing building systems likely would be required. Notwithstanding these reports and relative costs, expansion of SB at its existing site is not realistic or cost- effective as compared to a replacement hospital. Vertical expansion is complicated by two factors. First, the hospital's original construction in 1982 was done under the former Southern Standard Building Code, which did not contain the "wind-loading" requirements of the present-day Florida Building Code. Any vertical expansion of SB would not only require the new construction to meet current wind-loading requirements, but would also require the original construction to be retrofitted to meet current wind-loading requirements (assuming this was even possible as a structural matter). Second, if vertical expansion were to meet current standards for hospital square footage, the new floor or floors would "overhang" the smaller existing construction, complicating utility connections from the lower floor as well as the placement of structural columns to support the additional load. The alternative (assuming feasibility due to current wind-loading requirements) would be to vertically stack patient care units identical to SB's existing patient care units, thereby perpetuating its undersized and outdated design. Vertical expansion at SB has not been proposed by the Gould Turner Group (Gould Turner), which did a Master Facility Plan for SB in May 2010, but included a new patient bed tower, or by HBE Corporation (HBE). Horizontal expansion of SB is no less complicated. The hospital would more than double in size to meet the modern-day standard of 2,400 square feet per bed, and its site is too small for such expansion. It is apparent that such expansion would displace the visitor parking lot if located to the south of the existing building, and likely have to extend into SR 674 itself. South Bay's architectural consultant expert witness substantiated that replacing SB is justified as an architectural matter, and that the facility cannot be brought up to present-day standards at its existing location. According to Mr. Siconolfi, the overall building at SB is approximately half of the total size that would normally be in place for a new hospital meeting modern codes and industry standards. The more modest expansions offered by Gould Turner and HBE are still problematic, if feasible at all. Moreover, with either proposal, SB would ultimately remain on its existing 17.5-acre site, with few opportunities to expand further. Gould Turner's study was requested by SB's CEO in May 2010, to determine whether and to what extent SB would be able to expand on-site. (Gould Turner was involved with SB's recent ED expansion project area.) The resulting Master Facility Plan essentially proposes building a new patient tower in SB's existing visitor parking lot, to the left and right of the existing main entrance to SB. This would require construction of a new visitor parking lot in whatever space remained in between the new construction and SR 674. The Master Facility Plan contains no discussion of the new impervious area that would be added to the site and the consequential requirement of additional stormwater capacity, assuming the site can even accommodate additional stormwater capacity. This study also included a new 12-bed ICU and the existing ICU would be renovated into private patient rooms. For example, "[t]he second floor would be all telemetry beds while the third floor would be a combination of medical/surgical, PCU, and telemetry beds." In Gould Turner's drawings, the construction itself would be to the left and to the right of the hospital's existing main entrance. Two scenarios are proposed: in the first, the hospital's existing semi-private rooms would become private rooms and, with the new construction, the hospital would have 114 licensed beds (including two new beds), all private; in the second, some of the hospital's existing semi-private rooms would become private rooms and, with the new construction, the hospital would have 146 licensed beds (adding 34 beds), of which 32 would be semi-private. South Bay did not consider Gould Turner's alternative further or request additional, more detailed drawings or analysis, and instead determined to pursue the replacement hospital project, in part, because it was better not to "piecemeal" the hospital together. Mr. Miller, who is responsible for strategic decisions regarding SB, was aware of, but did not review the Master Facility Plan and believes that it is not economically feasible to expand the hospital. St. Joseph's Hospital presented testimony of an architect representing the hospital design/build firm of HBE, to evaluate SB's current condition, to provide options for expansion and upgrading on-site, and to provide a professional cost estimate for the expansion. Mr. Oliver personally inspected SB's site and facility in October 2010 and reviewed numerous reports regarding the facility and other documents. Mr. Oliver performed an analysis of SB's existing physical plant and land surrounding the hospital. HBE's analysis concluded that SB has the option to expand and upgrade on-site, including the construction of a modern surgical suite, a modern 10-bed ICU, additional elevators, and expansion and upgrading of the ancillary support spaces identified by SB as less than ideal. HBE's proposal involves the addition of 50,000 square feet of space to the hospital through the construction of a three-story patient tower at the south side of the hospital. The additional square footage included in the HBE proposal would allow the hospital to convert to an all-private bed configuration with either 126 private beds by building out both second and third floors of a new patient tower, or to 126 private beds if the hospital chose to "shell in" the third floor for future expansion. Under the HBE proposal, SB would have the option to increase its licensed bed capacity 158 beds by completing the second and third floors of the new patient tower (all private rooms) while maintaining the mix of semi-private and private patient rooms in the existing bed tower. The HBE proposal also provides for a phased renovation of the interior of SB to allow for an expanded post-anesthesia care unit, expanded laboratory, pharmacy, endoscopy, women's center, prep/hold/recovery areas, central sterile supply and distribution, expanded dining, and a new covered lobby entrance to the left side of the hospital. Phasing of the expansion would permit the hospital to remain in operation during expansion and renovation with minimal disruption. During construction the north entrance of the hospital would provide access through the waiting rooms that are currently part of the 2001 renovated area of the hospital with direct access to the circulation patterns of the hospital. The HBE proposal also provides for the addition of parking to bring the number of parking spaces on-site to 400. The HBE proposal includes additional stormwater retention/detention areas that could serve as attractive water features and, similar to the earlier civil engineering reports obtained by SB, proposes the construction of a parking garage at the rear of the facility should additional parking be needed in the future. However, HBE essentially proposes the alternative already rejected by SB: construction of a new patient tower in front of the existing hospital. Similar to Gould Turner, HBE proposes new construction to the left and right of the hospital's existing lobby entrance and the other changes described above. HBE's proposal recognizes the need for additional stormwater retention: the stand of trees that sets off the existing visitor parking lot from SR 674 would be uprooted; in their place, a retention pond would be constructed. Approval of the Southwest Florida Water Management District (SWFWMD) would be required for the proposal to be feasible. Assuming the SWFWMD approved the proposal, the retention pond would have to be enclosed by a fence. This would then be the "face" of the hospital to the public on SR 674. HBE's proposal poses significant problems. The first floor of the three-story component would be flush against the exterior wall of the hospital's administrative offices, where the CEO and others currently have windows with a vista of the front parking lot and SR 674. Since the three-story component would be constructed first in the "phased" construction, and since the hospital's administration has no other place to work in the existing facility, the CEO and other management team would have to work off-site until the new administrative offices (to the left of the existing hospital lobby entrance) were constructed. The existing main entrance to the hospital, which faces SR 674, would be relocated to the west side of the hospital once construction was completed in its entirety. In the interim, patients and visitors would have to enter the facility from the rear, as the existing main entrance would be inaccessible. This would be for a period of months, if not longer. For the second and third floors, HBE's proposal poses two scenarios. Under the first, SB would build the 24 general medical-surgical beds on the tower's second floor, but leave the third floor as "shelled" space. This would leave SB with a total of 106 licensed beds, six fewer than it has at present. Further, since HBE's proposal involves a second ICU at SB, 18 of the 106 beds are ICU beds, leaving 88 general medical-surgical beds. By comparison, SB currently has 104 general medical- surgical beds, meaning that it loses 16 general medical-surgical beds under HBE's first scenario. In the second scenario, SB would build 24 general medical-surgical beds on the third floor as well, and would have a total of 126 licensed beds. Since 18 of those beds would be ICU beds, SB would have 108 general medical-surgical beds, or only four more than it has at present. Further, the proposal does not make SB appreciably bigger. The second and third floors in HBE's proposal are designed in "elongated" fashion such that several rooms may be obscured from the nursing station's line of sight by a new elevator, which is undesirable as a matter of patient safety and security. Further, construction of the second and third floors would be against the existing second and third floors above the lobby entrance's east side. This would require 12 existing private patient rooms to be taken out of service due to loss of their vista windows. At the same time, the new second and third floors would be parallel to, but set back from, existing semi- private patient rooms and their vista windows along the southeast side of the hospital. This means that patients and visitors in the existing semi-private patient rooms and patients and visitors in the new private patient rooms on the north side of the new construction may be looking into each other's rooms. HBE's proposal also involves reorganization and renovation of SB's existing facility, and the demolition and disruption that goes with it. To accommodate patient circulation within the existing facility from the ED (at the north side of the hospital) to the new patient tower (at the south side of the hospital), two new corridors are proposed to be routed through and displace the existing departments of Data Processing and Medical Records. Thus, until the new administrative office space would be constructed, Data Processing and Medical Records (along with the management team) would have to be relocated off-site. Once the new first floor of the three-story component is completed, the hospital's four ORs and six PACU beds will be relocated there. In the existing vacated surgical space, HBE proposes to relocate SB's existing cardiology unit, thus requiring the vacated surgical space to be completely reconfigured (building a nursing station and support spaces that do not currently exist in that location). In the space vacated by the existing cardiology unit, HBE proposed expanding the hospital's clinical laboratory, meaning extensive demolition and reconfiguration in that area. The pharmacy is proposed to be relocated to where the existing PACU is located, requiring the building of a new pharmacy with a secure area for controlled substances, cabinets for other medications, and the like. The vacated existing pharmacy is in turn proposed to be dedicated to general storage, which involves still more construction and demolition, tearing out the old pharmacy to make the space suitable for general storage. HBE's proposal is described as a "substantial upgrade" of SB, but it was stated that a substantial upgrade could likewise be achieved by replacing the facility outright. This is SB's preference, which is not unreasonable. There have been documented problems with other hospital expansions, including patient infection due to construction dust. South Bay's proposal South Bay proposes to establish a 112-bed replacement hospital on a 39-acre parcel (acquired in 2005) located in the Riverview community, on the north side of Big Bend Road between I-75 and U.S. Highway 301. The hospital is designed to include 32 observation beds built to acute care occupancy standards, to be available for conversion to licensed acute care beds should the need arise. The original total project cost of $215,641,934, calculated when the application was filed in October 2007 has been revised to $192,967,399. The decrease in total project cost is largely due to the decrease in construction costs since 2007. The parties stipulated that SB's estimated construction costs are reasonable. The remainder of the project budget is likewise reasonable. The budgeted number for land, $9,400,000, is more than SB needs: the 39-acre parcel is held in its behalf by HCA Services of Florida, Inc., and was acquired in March 2005 for $7,823,100. An environmental study has been done, and the site has no environmental development issues. The original site preparation budgeted number of $5 million has been increased to $7 million to allow for possible impact fees, based on HCA's experience with similar projects. Building costs, other than construction cost, flow from the construction cost number as a matter of percentages and are reasonable. The equipment costs are reasonable. Construction period interest as revised from the original project budget is approximately $4 million less, commensurate with the revised project cost. Other smaller numbers in the budget, such as contingencies and start-up costs, were calculated in the usual and accepted manner for estimated project costs and are reasonable. South Bay's proposed service area (PSA) comprises six zip codes (33573 (Sun City Center), 33570 (Ruskin), 33569 (Riverview), 33598 (Wimauma), 33572 (Apollo Beach), and 33534 (Gibsonton)) in South Hillsborough County. These six zip codes accounted for 92.2% of SB's discharges in 2006. The first three zip codes, which include Riverview (33569), accounted for 76.1% of the discharges. Following the filing of the application in 2007, the U.S. Postal Service subdivided the former zip code 33569 into three zip codes: 33569, 33578, and 33579. (The proposed service area consists of eight zip codes.) The same geographic area comprises the three Riverview zip codes taken together as the former zip code 33569. In 2009, the three Riverview zip codes combined accounted for approximately 504 to 511/514 of SB's discharges, with 589 discharges in 2006 from the zip code 33569. Of SB's total discharges in 2009, approximately 8 to 9% originated from these three zip codes. In 2009, approximately 7,398 out of 14,424 market/service-area discharges, or approximately 51% of the total market discharges came from the three southern zip codes, 33573 (Sun City Center), 33570 (Ruskin), and 33598 (Wimauma). Also, approximately 81% of SB's discharges in 2009 originated from the same three zip codes. (The discharge numbers for SB for 2009 presented by St. Joseph's Hospital and SB are similar. See SB Ex. 9 at 11 and SJH Ex. 4 at 8-9. See also TG Ex. 4 at 3-4.) In 2009, SB and Brandon had an approximate 68% market share for the eight zip codes. See FOF 152-54 and 162-65 for additional demographic data. St. Joseph's Hospital had an approximate 5% market share within the service area and using 2009-2010 data, TG had approximately 6% market share in zip code 33573 and an overall market share in the three Riverview zip codes of approximately 19% and a market share of approximately 23% in zip code 33579. South Bay's application projects 37,292 patient days in year 1; 39,581 patient days in year 2; and 41,563 patient days in year 3 for the proposed replacement hospital. The projection was based on the January 2007 population for the service area as reflected in the application, and what was then a projected population growth rate of 20.8% for the five-year period 2007 to 2012. These projections were updated for the purposes of hearing. See FOF 246-7. The application also noted a downturn in the housing market, which began in 2007 and has continued since then. The application projected a five-year (2007-2012) change of 20.8% for the original five zip codes. At hearing, SB introduced updated utilization projections for 2010-2015, which show the service area population growing at 15.3% for that five-year period. South Bay's revised utilization projections for 2015- 2017 (projected years 1-3 of the replacement hospital) are 28,168 patient days in year 1; 28,569 patient days in year 2; and 29,582 patient days in year 3. The lesser utilization as compared with SB's original projections is partly due to slowed population growth, but predominantly due to SB's assumption that St. Joseph's Hospital will build its proposed satellite hospital in Riverview, and that SB will accordingly lose 20% of its market share. The revised utilization projections are conservative, reasonable, and achievable. With the relocation, SB will be more proximate to the entirety of its service area, and will be toward the center of population growth in south Hillsborough County. In addition, it will have a more viable and more sustainable hospital operation even with the reduced market share. Its financial projections reflect a better payor mix and profitability in the proposed location despite the projection of fewer patient days. Conversely, if SB remains in Sun City Center, it is subject to material operating losses even if its lost market share in that location is the same 20%, as compared to the 30 to 40% it estimates that it would lose in competition with St. Joseph's Hospital South. South Bay's medical staff and employees support the replacement facility, notwithstanding that their satisfaction with SB is very high. The proposal is also supported by various business organizations, including the Riverview Chamber of Commerce and Ruskin Chamber of Commerce. However, many of the residents of Sun City Center who testified opposed relocation of SB. See FOF 210-11. South Bay will accept several preconditions on approval of its CON application: (1) the location of SB on Big Bend Road in Riverview; (2) combined Medicaid and charity care equal to 7.0% of gross revenues; and (3) operating a free- standing ED at the Sun City location and providing a shuttle service between the Sun City location and the new hospital campus ("for patients and visitors"). SB Ex. 46, Schedule C. In its SAAR, the Agency preliminarily approved the application including the following: This approval includes, as a component of the proposal: the operation of a freestanding emergency department on a 24-hour, seven-day per week basis at the current Sun City location, the provision of extended hours shuttle service between the existing Sun City Center and the new campuses to transport patients and visitors between the facilities to locations; and the offering of primary care and diagnostic testing at the Sun City Center location. These components are required services to be provided by the replacement hospital as approved by the Agency. Mr. Gregg explained that the requirement for transport of patients and visitors was included based on his understanding of the concerns of the Sun City Center community for emergency as well as routine access to hospital services. Notwithstanding the Agency statement that the foregoing elements are required, the Agency did not condition approval on the described elements. See SB Ex. 12 at 39 and 67. Instead, the Agency only required SB, as a condition of approval, to provide a minimum of 7.0% of the hospital's patient days to Medicaid and charity care patients. (As noted above, SB's proposed condition says 7.0% of gross revenues.) Because conditions on approval of the CON are generally subject to modification, there would be no legal mechanism for monitoring or enforcement of the aspects of the project not made a condition of approval. If the Agency approves SB's CON application, the Agency should condition any approval based on the conditions referenced above, which SB set forth in its CON application. SB Ex. 12 at 39 and 67. See also T 450 ("[The Agency] can take any statement made in the application and turn that into a condition," although conditions may be modified.1 St. Joseph's Hospital and Tampa General are critical of SB's offer of a freestanding ED and proposed shuttle transportation services. Other than agreeing to condition its CON application by offering these services, SB has not evaluated the manner in which these services would be offered. South Bay envisions that the shuttle service (provided without charge) would be more for visitors than it would be for patients and for outpatients or patients that are ambulatory and able to ride by shuttle. Other patients would be expected to be transported by EMS or other medical transport. As of the date of hearing, Hillsborough County does not have a protocol to address the transport of patients to a freestanding ED. South Bay contacted Hillsborough County Fire Rescue prior to filing its CON application and was advised that they would support SB's establishment of a satellite hospital on Big Bend Road, but did not support the closure and relocation of SB, even with a freestanding ED left behind. See FOF 195-207. At hearing, SB representatives stated that SB would not be closed if the project is denied. Compliance with applicable statutory and rule criteria Section 408.035(1): The need for the health care facilities and health services being proposed The need for SB itself and at its current location is not an issue in this case. That need was demonstrated years ago, when SB was initially approved. For the Agency, consideration of a replacement hospital application "diminishes the concept of need in [the Agency's] weighing and balancing of criteria in this case." There is no express language in the CON law, as amended, which indicates that CON review of a replacement hospital application does not require consideration of other statutory review criteria, including "need," unless otherwise stipulated. Replacement hospital applicants, like SB, may advocate the need for replacement rather than expansion or renovation of the existing hospital, but a showing of "need" is still required. Nevertheless, institution-specific factors may be relevant when "need" is considered. The determination of "need" for SB's relocation involves an analysis of whether the relocation of the hospital as proposed will enhance access or quality of care, and whether the relocation may result in changes in the health care delivery system that may adversely impact the community, as well as options SB may have for expansion or upgrading on-site. In this case, the overall "need" for the project is resolved, in part, by considering, in conjunction with weighing and balancing other statutory criteria, including quality of care, whether the institution-specific needs of SB to replace the existing hospital are more reasonable than other alternatives, including renovation and whether, if replacement is recommended, the residents of the service area, including the Sun City Center area, will retain reasonable access to general acute care hospital services. The overall need for the project has not been proven. See COL 360-70 for ultimate conclusions of law regarding the need for this project. Section 408.035(2): 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 The "service district" in this case is acute care subdistrict 6-1, Hillsborough County. See Fla. Admin. Code R. 59C-2.100. The acute care hospital services SB proposes to relocate to Big Bend Road are available to residents of SB's service area. Except as otherwise noted herein with respect to constraints at SB, there are no capacity constraints limiting access to acute care hospital services in the subdistrict. The availability of acute care services for residents of the service area, and specifically the Riverview area, will increase with the opening of St. Joseph's Hospital South. All existing providers serving the service area provide high quality of care. Within the service district as a whole, SB proposes to relocate the existing hospital approximately 5.7 linear miles north of its current location and approximately 7.7 miles using I-75, one exit north. South Bay would remain in south Hillsborough County, as well as the southernmost existing health care facility in Hillsborough County, along with St. Joseph's Hospital South when it is constructed. The eight zip codes of SB's proposed service area occupy a large area of south Hillsborough County south of Tampa (to the northwest) and Brandon (to the northeast). Included are the communities of Gibsonton, Riverview, Apollo Beach, Ruskin, Sun City Center, and Wimauma. The service area is still growing despite the housing downturn, with a forecast of 15.3% growth for the five-year period 2010 to 2015. The service area's population is projected to be 168,344 in 2015, increasing from 145,986 in 2010. The service area is currently served primarily by SB, which is the only existing provider in the service area, and Brandon. For non-tertiary, non-specialty discharges from the service area in 2009, SB had approximately 40% market share, including market share in the three Riverview zip codes of approximately 10% (33569), 6% (33578), and 16% (33579). Brandon had approximately 28% of the market in the service area, and a market share in the three Riverview zip codes of approximately 58% (33569), 46% (33578), and 40% (33579). Thus, SB and Brandon have approximately a 61% market share in the Riverview zip codes and approximately a 68% market share service area-wide. The persuasive evidence indicates that Riverview is the center of present and future population in the service area. It is the fastest-growing part of the service area overall and the fastest-growing part of the service area for patients age 65 and over. Of the projected 168,334 residents in 2015, the three Riverview zip codes account for 80,779 or nearly half the total population. With its proposed relocation to Riverview, SB will be situated in the most populous and fastest-growing part of south Hillsborough County. At the same time, it will be between seven and eight minutes farther away from Sun City Center. In conjunction with St. Joseph's Hospital South when constructed, SB's proposed relocation will enhance the availability and accessibility of existing health care facilities and health services in south Hillsborough County, especially for the Riverview-area residents. However, it is likely that access will be reduced for the elderly residents of the Sun City Center area needing general acute care hospital services. St. Joseph's Hospital and Tampa General contend that: (1) it would be problematic to locate two hospitals in close proximity in Riverview (those being St. Joseph's Hospital South and the relocated SB hospital) and (2) SB's relocation would deprive Sun City Center's elderly of reasonable access to hospital services. St. Joseph's Hospital seems to agree that the utilization projections for SB's replacement hospital are reasonable. Also, St. Joseph's Hospital expects St. Joseph's Hospital South to reach its utilization as projected in CON Application No. 9833, notwithstanding the decline in population growth and the proposed establishment of SB's proposed replacement hospital, although the achievement of projected utilization may be extended. There are examples of Florida hospitals operating successfully in close proximity. The evidence at hearing included examples where existing unaffiliated acute care hospitals in Florida operate within three miles of each another; in two of those, the two hospitals are less than one-half mile apart. These hospitals have been in operation for years. However, some or all of the examples preceded CON review. There are also demographic differences and other unique factors in the service areas in the five examples that could explain the close proximity of the hospitals. Also, in three of the five examples, at least one of the hospitals had an operating loss and most appeared underutilized. One such example, however, is pertinent in this case: Tallahassee Memorial Hospital and Capital Regional Medical Center (CRMC) in Tallahassee, which are approximately six minutes apart by car. CRMC was formerly Tallahassee Community Hospital (TCH), a struggling, older facility with a majority of semi-private patient rooms, similar to South Bay. Sharon Roush, SB's current CEO, became CEO at TCH in 1999. As she explained at hearing, HCA was able to successfully replace the facility outright on the same parcel of land. TCH was renamed CRMC and re-opened as a state-of-the-art hospital facility with all private rooms. The transformation improved the hospital's quality of care and its attractiveness to patients, better enabling it to compete with Tallahassee Memorial Hospital. St. Joseph's Hospital and Tampa General also contend that SB's relocation would deprive Sun City Center's elderly of reasonable access to hospital services. When the application was filed in 2007, Sun City Center residents in zip code 33573 accounted for approximately 52% of all acute care discharges to SB and SB had a 69% market share. By 2009, Sun City Center residents accounted for approximately 57% of all SB discharges and SB had approximately 72% market share. Approximately half of the age 65-plus residents in the service area reside within the Sun City Center area. This was true in 2010 and will continue to be true in 2015. The projected percentage of the total population in the Sun City Center zip code over 65 for 2009-2010 is approximately 87%. This percentage is expected to grow to approximately 91% by 2015. Sun City Center also has a high percentage of residents who are over the age of 75. Demand for acute care hospital services is largely driven by the age of the population. The age 65-plus population utilizes acute-care hospital services at a rate that is approximately two to three times that of the age 64 and younger population. South Bay plans to relocate its hospital from the Sun City Center zip code 33573 much closer to an area (Riverview covering three zip codes) that has a less elderly population. Elderly patients are known to have more transportation difficulties than other segments of the population, particularly with respect to night driving and congested traffic in busy areas. Appropriate transportation services for individuals who are transportation disadvantaged typically require door-to- door pickup, but may vary from community to community. At the time of preliminary approval of SB's proposed relocation, the Agency was not provided and did not take into consideration data reflecting the percentage of persons in Sun City Center area who are aged 65 or older or aged 75 and older. The Agency was not provided data reflecting the number of residents within the Sun City Center area who reside in nursing homes or assisted living facilities. In general, the 2010 median household incomes and median home values for the residents of Sun City Center, Ruskin, and Gibsonton are materially less than the income and home values for the residents from the other service areas. Freedom Village is located near Sun City Center and within walking distance to SB. Freedom Village is comprises a nursing home, assisted living, and senior independent living facilities, and includes approximately 120 skilled nursing facility beds, 90 assisted living beds, and 30 Alzheimer's beds. Freedom Village is home to approximately 1,500 people. There are additional skilled nursing and assisted living facilities within one to two miles of SB comprising approximately an additional 400 to 500 skilled nursing facility beds and approximately 1,500 to 2,000 residents in assistant or independent living facilities. Residents in skilled nursing facilities and assisted living facilities generally require a substantial level of acute- care services on an ongoing basis. Many patients 65 and older requiring admission to an acute-care facility have complex medical conditions and co-morbidities such that immediate access to inpatient acute care services is of prime importance. Area patients and caregivers travel to SB via a golf cart to access outpatient health care services and to obtain post-discharge follow-up care. Although there are some crossing points along SR 674, golf carts are not allowed on SR 674 itself, and the majority of Sun City Center residents who utilize SB in its existing location do not arrive by golf cart -– rather, they travel by automobile. The Sun City Center area has a long–established culture of volunteerism. Residents of Sun City Center provide a substantial number of man-hours of volunteer services to community organizations, including SB. Among the many services provided by community volunteers is the Sun City Center Emergency Squad, an emergency medical transport service that operates three ambulances and provides EMT and basic life support transport services in Sun City Center 24-hours a day, seven days a week. The Emergency Squad provides emergency services free of charge, but charges patients for transport which is deemed a non-emergency. Most patients transported by the Emergency Squad are taken to the SB ED. It is customary for specialists to locate their offices adjacent to an acute-care hospital. Most of the specialty physicians on the medical staff of SB have full-time or part-time offices adjacent to SB. The location of physician offices adjacent to the hospital facilitates access to care by patients in the provision of care on a timely basis by physicians. The relocation of SB may result in the relocation of physician offices currently operating adjacent to SB in Sun City Center, which may cause additional access problems for local residents. In 2009, the SB ED had approximately 22,000 patient visits. Approximately 25% of the patients that visit the South Bay ED are admitted for inpatient care. South Bay recently expanded its ED to accommodate approximately 34,000 patient visits annually. The average age of patients who visit the South Bay ED is approximately 70. Patients who travel by ambulance may or may not experience undue transportation difficulties as a result of the proposed relocation of SB; however, patients also arrive at the South Bay ED by private transportation. But, most patients are transported to the ED by automobile or emergency transport. In October 2010, the Board of Directors of the Sun City Center Association adopted a resolution on behalf of its 11,000 members opposing the closure of SB. The Board of Directors and membership of Federation of Kings Point passed a similar resolution on behalf of its members. Residents of the Sun City Center area currently enjoy easy access to SB in part because the roadways are low-volume, low-speed, accessible residential streets. SR 674 is the only east-west roadway connecting residents of the Sun City Center area to I-75 and U.S. Highway 301. The section of SR 674 between I-75 and U.S. Highway 301 is a four-lane divided roadway with a speed limit of 40-45 mph. To access Big Bend Road from the Sun City Center area, residents travel east on SR 674 then north on U.S. Highway 301 or west on SR 674 then north on I-75. U.S. Highway 301 is a two-lane undivided roadway from SR 674 north to Balm Road, with a speed limit of 55 mph and a number of driveways and intersections accessing the roadway. (Two lanes from Balm Road South, then widened to six lanes from Balm Road North.) U.S. Highway 301 is a busy and congested roadway, and there is a significant backup of traffic turning left from U.S. Highway 301 onto Big Bend Road. A portion of U.S. Highway 301 is being widened to six lanes, from Balm Road to Big Bend Road. The widening of this portion of U.S. Highway 301 is not likely to alleviate the backup of traffic at Big Bend Road. I-75 is the only other north-south alternative for residents of the Sun City Center area seeking access to Big Bend Road. I-75 is a busy four-lane interstate with a 70 mph speed limit. The exchange on I-75 and Big Bend Road is problematic not only because of traffic volume, but also because of the unusual design of the interchange, which offloads all traffic on the south side of Big Bend Road, rather than divide traffic to the north and south as is typically done in freeway design. The design of the interchange at I-75 in Big Bend Road creates additional backup and delays for traffic seeking to exit onto Big Bend Road. St. Joseph's Hospital commissioned a travel (drive) time study that compared travel times to SB's existing location and to its proposed location from three intersections within Sun City Center. This showed an increase of between seven and eight minutes' average travel time to get to the proposed location as compared to the existing location of SB. The study corroborated SB's travel time analysis, included in its CON application, which shows four minutes to get to SB from the "centroid" of zip code 33573 (Sun City Center) and 11 minutes to get to SB's proposed location from that centroid, or a difference of seven minutes. The St. Joseph's Hospital travel time study also sets forth the average travel times from the three Sun City Center intersections to Big Bend Road and Simmons Loop, as follows: Intersection Using I-75 Using U.S. 301 South Pebble Beach Blvd. and Weatherford Drive 12 min. 17 secs. 14 min. 19 secs. Kings Blvd. and Manchester Woods Drive 15 min. 44 secs. 20 min. 39 secs. North Pebble Beach Blvd. and Ft. Dusquesna Drive 13 min. 15 secs. 15 min. 41 secs. The average travel time from Wimauma (Center Street and Delia Street) to Big Bend Road and Simmons Loop was 15 minutes and 16 seconds using I-75 and 13 minutes and 52 seconds using U.S. Highway 301, an increase of more than six minutes to the proposed site. The average travel time from Ruskin (7th Street and 4th Avenue SW) to Big Bend Road and Simmons Loop was 15 minutes and 22 seconds using U.S. 41 and 14 minutes and 15 seconds using I-75, an increase of more than five minutes to the proposed site. Currently, the average travel time from Sun City Center to Big Bend Road using U.S. Highway 301 is approximately to 16 minutes. The average travel time to Big Bend Road via I-75 assuming travel with the flow of traffic is approximately 13 minutes. The incremental increase in travel time to the proposed site for SB for residents of the Sun City Center area, assuming travel with the flow of traffic, ranges from nine to 11 minutes. For residents who currently access SB in approximately five to 10 minutes, travel time to Big Bend Road is approximately 15 to 20 minutes. As the area develops, traffic is likely to continue to increase. There are no funded roadway improvements beyond the current widening of U.S. Highway 301 north of Balm Road. Most of the roadways serving Sun City Center, Ruskin, and Wimauma have a county-adopted Level of Service (LOS) of "D." LOS designations range from "A" to "F", with "F" considered gridlock. Currently, Big Bend Road from Simmons Loop Road (the approximate location of SB's propose replacement hospital) to I-75 is at LOS "F" with an average travel speed of less than mph. Based on a conservative analysis of the projected growth in traffic volume, SR 674 east of U.S. Highway 301 is projected to degrade from LOS "C" to "F" by 2015. By 2020, several additional links on SR 674 will have degraded to LOS "F." The LOS of I-75 is expected to drop to "D" in the entirety of Big Bend Road between U.S. Highway 301 and I-75 is projected to degrade to LOS "F" by 2020. The Hillsborough County Fire Rescue Department (Rescue Department) opposes the relocation of SB to Big Bend Road. The Rescue Department supports SB's establishment of a satellite hospital on Big Bend Road, but does not support the closure of SB in Sun City Center. The Rescue Department anticipates that the relocation of SB will result in a reduction in access to emergency services for patients and increased incident response times for the Rescue Department. The Rescue Department would support a freestanding ED should SB relocate. David Travis, formerly (until February 2010) the rescue division chief of the Rescue Department, testified against SB's proposal. The basis of his opposition is his concern that relocating the hospital from Sun City Center to Riverview would tend to increase response times for rescue units operating out of the Sun City Center Fire Station. The term response time refers to the time from dispatch of the rescue unit to its arrival on the scene for a given call. Mr. Travis noted that rescue units responding from the Sun City Center Fire Station would make a longer drive (perhaps seven to eight minutes) to the new location in Riverview to the extent that hospital services are needed, and during the time of transportation would necessarily be unavailable to respond to another call. However, Mr. Travis had not specifically quantified increases in response times for Sun City Center's rescue units in the event that SB relocates. Further, SB is not the sole destination for the Rescue Department's Sun City Center rescue units. While a majority of the patients were transported to SB, out of the total patient transports from the greater Sun City Center area in 2009, approximately one-third went to other hospitals other than SB, including St. Joseph's Hospital, Tampa General, and Brandon. The Rescue Department is the only advanced life support (ALS) ground transport service in the unincorporated areas of Hillsborough County responding to 911 calls. The ALS vehicles provide at least one certified paramedic on the vehicle, cardiac monitors, IV medications, advanced air way equipment, and other services. The Rescue Department has two rescue units in south Hillsborough County - Station 17 in Ruskin and Station 28 in Sun City Center. (Station 22 is in Wimauma, but does not have a rescue unit.) Stations 17 and 28 run the majority of their calls in and around the Sun City Center area, with the majority of transports to the South Bay ED. The Rescue Department had 3,643 transports from the Sun City Center area in 2009, with 54.5% transports to SB. If SB is relocated to Big Bend Road, the rescue units for Stations 17 and 28 are likely to experience longer out-of- service intervals and may not be as readily available for responding to calls in their primary service area. The Rescue Department seeks to place an individual on the scene within approximately seven minutes, 90% of the time (an ALS personnel goal) in the Sun City Center area. Relocation of SB out of Sun City Center may make it difficult for the Rescue Department to meet this response time, notwithstanding the proximity of I-75. A rapid response time is critical to providing quality care. The establishment of a freestanding ED in Sun City Center would not completely alleviate the Rescue Department's concerns, including a subset of patients who may need to be transported to a general acute care facility. There are other licensed emergency medical service providers in Hillsborough County, with at least one basic life support EMS provider in Sun City Center. The shuttle service proposed by SB may not alleviate the transportation difficulties experienced by the patients and caregivers of Sun City Center. Also, SB has not provided a plan for the scope or method of the provisional shuttle services. Six residents of Sun City Center testified against SB's proposed relocation to Riverview, including Ed Barnes, president of the Sun City Center Community Association. Mr. Barnes and two other Sun City Center residents (including Donald Schings, president of the Handicapped Club, Sun City Center) spoke in favor of St. Joseph's Hospital's proposed hospital in Riverview at a public land-use meeting in July 2010, thus demonstrating their willingness to travel to Riverview for hospital services. Mr. Barnes supported St. Joseph's Hospital's proposal for a hospital in Riverview since its inception in 2005, when St. Joseph's Hospital filed CON Application No. 9833 and thought that St. Joseph's Hospital South would serve the Sun City Center area. There are no public transportation services per se available within the Sun City Center area. Volunteer transportation services are provided. In part, the door-to-door services are provided under the auspices of the Samaritan Services, a non-profit organization supported by donations and staffed by Sun City Center volunteers. It is in doubt whether these services would continue if SB is relocated. There is a volunteer emergency squad using a few vehicles that responds to emergency calls within the Sun City Center area, with SB as the most frequent destination. Approval of SB's project will not necessarily enhance financial access to acute care services. The relocation of SB is more likely than not to create some access barriers for low- income residents of the service area. The relocation would also be farther away from communities such as Ruskin and Wimauma as there are no buses or other forms of public transportation available in Ruskin, Sun City Center, or Wimauma. However, it appears that the Sun City Center residents would travel not only to Riverview, but north of Riverview for hospital services following SB's relocation, notwithstanding the fact that Sun City Center residents are transportation- disadvantaged. The Hillsborough County Board of County Commissioners recently amended the Comprehensive Land-Use Plan and adopted the Greater Sun City Center Community Plan, which, in part, lists the retention of an acute care hospital in the Sun City Center area as the highest health care planning priority. For Sun City Center residents who may not want to drive to SB's new location, SB will provide a shuttle bus, which can convey both non-emergency patients and visitors. South Bay has made the provision of the shuttle bus a condition of its CON. As noted herein, the CON's other conditions are the establishment of the replacement hospital at the site in Riverview; combined Medicaid and charity care in the amount of 7.0% of gross revenues; and maintaining a freestanding ED at SB. SB Ex. 46, Schedule C. Section 408.035(3): The ability of the applicant to provide quality of care and the applicant's record of providing quality of care South Bay has a record of providing high quality of care at its existing hospital. It is accredited by JCAHO, and also accredited as a primary stroke center and chest pain center. In the first quarter of 2010, SB scored well on "core measures" used by the Centers for Medicare and Medicaid Services (CMS) as an indicator of the quality of patient safety. South Bay received recognition for its infection control programs and successfully implemented numerous other quality initiatives. Patient satisfaction is high at SB. AHCA's view of the need for a replacement hospital is not limited according to whether or not the existing hospital meets broad quality indicators, such as JCAHO accreditation. Rather, AHCA recognizes the degree to which quality would be improved by the proposed replacement hospital -– and largely on that basis has consistently approved CON applications for replacement hospitals since at least 1991. See FOF 64-66. South Bay would have a greater ability to provide quality of care in its proposed replacement hospital. Private patient rooms are superior in terms of infection control and the patient's general well-being. The conceptual design for the hospital, included in the CON application, is the same evidence- based design that HCA used for Methodist Stone Oak Hospital, an award-winning, state-of-the-art hospital in San Antonio, Texas. Some rooms at SB are small, but SB staff and physicians are able, for the most part, to function appropriately and provide high quality of care notwithstanding. (The ICU is the exception, although it was said that patients receive quality of care in the ICU. See FOF 77-82.) Most of the rooms in the ED "are good size." Some residents are willing to give up a private room in order to have better access of care and the convenience of care to family members at SB's existing facility. By comparison, the alternative suggested by St. Joseph's Hospital does not use evidence-based design and involves gutting and rearranging roughly one-third of SB's existing interior; depends upon erecting a new patient tower that would require parking and stormwater capacity that SB currently does not have; requires SB's administration to relocate off-site during an indeterminate construction period; and involves estimated project costs that its witnesses did not disclose the basis of, claiming that the information was proprietary. South Bay's physicians are likely to apply for privileges at St. Joseph's Hospital South. Moreover, if SB remains at its current site, it is reasonable to expect that some number of those physicians would do less business at SB or leave the medical staff. Many of SB's physicians have their primary medical offices in Brandon, or otherwise north of Sun City Center. Further, many of the specialists at SB are also on staff at Brandon. St. Joseph's Hospital South would be more convenient for those physicians, in addition to having the allure of a new, state-of-the-art hospital. South Bay is struggling with its nursing vacancy rate, which was 12.3% for 2010 at the time of the hearing and had increased from 9.9% in 2009. The jump in nursing vacancies in 2010 substantially returned the hospital to its 2008 rate, which was 12.4%. As with its physicians, SB's nurses generally do not reside in the Sun City Center area giving its age restrictions as a retirement community; instead, they live further north in south Hillsborough County. In October 2007 when the application was filed, SB had approximately 105 employees who lived in Riverview. It is reasonable to expect that SB's nurses will be attracted to St. Joseph's Hospital South, a new, state-of-the-art hospital closer to where they live. Thus, if it is denied the opportunity to replace and relocate its hospital, SB could also expect to lose nursing staff to St. Joseph's Hospital South, increasing its nursing vacancy rate. Section 408.035(4): The availability of resources, including health personnel, management personnel, and funds for capital and operating expenditures, for project accomplishment and operation The parties stipulated that Schedule 2 of SB's CON application was complete and required no proof at hearing. South Bay will not have to recruit nursing or physician staff for its proposed replacement hospital. Its existing medical and nursing staff would not change, and would effectively "travel" with the hospital to its new location. Conversely, the replacement hospital should enhance SB's ability to recruit specialty physicians, which is currently a challenge for SB in its existing facility. The parties stipulated to the reasonableness of SB's proposed staffing for the replacement hospital as set out in Schedule 6A, but SJH and TG contend that the staffing schedule should also include full-time equivalent positions (FTEs) for the freestanding ED that SB proposes to maintain at its existing hospital. This contention is addressed in the Conclusions of Law, concerning application completeness under section 408.037, at COL 356-57. South Bay has sufficient funds for capital and operating expenditures for project accomplishment and operation. The project cost will be underwritten by HCA, which has adequate cash flow and credit opportunities. It is reasonable that SB's project will be adequately funded if the CON is approved. Section 408.035(5): The extent to which the proposed services will enhance access to health care for residents of the service district The specific area that SB primarily serves, and would continue to serve, is the service area in south Hillsborough County as identified in its application and exhibits. The discussion in section IV.B., supra, is applicable to this criterion and incorporated herein. With its proposed relocation to Riverview, SB will be situated in the most populous and fastest-growing part of south Hillsborough County; will be available to serve Sun City Center, Ruskin, and Wimauma; and will be between seven and eight minutes farther away from Sun City Center than it is at present. However, while the relocated facility will be available to the elderly residents of the Sun City Center area, access for these future patients will be reduced from current levels given the increase in transportation time, whether it be by emergency vehicle or otherwise. Section 408.035(6): The immediate and long-term financial feasibility of the proposal Immediate or "short-term" financial feasibility is the ability of the applicant to secure the funds necessary to capitalize and operate the proposed project. The project cost for SB's proposed replacement hospital is approximately $200 million. The costs associated with the establishment and operation of the freestanding ED and other services were not included in the application, but for the reasons stated herein, were not required to be projected in SB's CON application. South Bay demonstrated the short-term financial feasibility of the proposal. The estimated project cost has declined since the filing of the application in 2007, meaning that SB will require less capital than originally forecast. While Mr. Miller stated that he does not have authority to bind HCA to a $200 million capital project, HCA has indicated that it will provide full financing for the project, and that it will go forward with the project if awarded the CON. Long-term financial feasibility refers to the ability of a proposed project to generate a profit in a reasonable period of time. AHCA has previously approved hospital proposals that showed a net profit in the third year of pro forma operation or later. See generally Cent. Fla. Reg. Hosp., Inc. v. Agency for Health Care Admin. & Oviedo HMA, Inc., Case No. 05-0296CON (Fla. DOAH Aug. 23, 2006; Fla. AHCA Jan. 1, 2007), aff'd, 973 So. 2d 1127 (Fla. 1st DCA 2008). To be conservative, SB's projections, updated for purposes of hearing, take into account the slower population growth in south Hillsborough County since the application was originally filed. South Bay also assumed that St. Joseph's Hospital South will be built and operational by 2015. The net effect, as accounted for in the updated projections, is that SB's replacement hospital will have 28,168 patient days in year 1 (2015); 28,569 patient days in year 2 (2016); and 29,582 patient days in year 3 (2017). That patient volume is reasonable and achievable. With the updated utilization forecast, SB projects a net profit for the replacement hospital of $711,610 in 2015; $960,693 in 2016; and $1,658,757 in 2017. The financial forecast was done, using revenue and expense projections appropriately based upon SB's own most recent (2009) financial data. Adjustments made were to the payor mix and the degree of outpatient services, each of which would change due to the relocation to Riverview. The revenue projections for the replacement hospital were tested for reasonableness against existing hospitals in SB's peer group, using actual financial data as reported to AHCA. St. Joseph's Hospital opposed SB's financial projections. St. Joseph's Hospital's expert did not take issue with SB's forecasted market growth. Rather, it was suggested that there was insufficient market growth to support the future patient utilization projections for St. Joseph's Hospital South and SB at its new location and, as a result, they would have a difficult time achieving their volume forecasts and/or they would need to draw patients from other hospitals, such as Brandon, in order to meet utilization projections. St. Joseph's Hospital's expert criticized the increase in SB's projected revenues in its proposed new location as compared to its revenues in its existing location. However, it appears that SB's payor mix is projected to change in the new location, with a greater percentage of commercial managed care, thus generating the greater revenue. South Bay's projected revenue in the commercial indemnity insurance classification was also criticized because SB's projected commercial indemnity revenues were materially overstated. That criticism was based upon the commercial indemnity insurance revenues of St. Joseph's Hospital and Tampa General, which were used as a basis to "adjust" SB's projected revenue downward. St. Joseph's Hospital and Tampa General's fiscal-year 2009 commercial indemnity net revenue was divided by their inpatient days, added an inflation factor, and then multiplied the result by SB's year 1 (2015) inpatient days to recast SB's projected commercial indemnity net revenue. The contention is effectively that SB's commercial indemnity net revenue would be the same as that of St. Joseph's Hospital and Tampa General. There is no similarity between the three hospitals in the commercial indemnity classification. The majority of SJH's and TG's commercial indemnity net revenue comes from inpatients rather than outpatient cases; whereas the majority of SB's commercial indemnity net revenue comes from outpatient cases rather than inpatients. This may explain why SB's total commercial indemnity net revenue is higher than SJH or TG, when divided by inpatient days. The application of the lower St. Joseph's Hospital-Tampa General per-patient-day number to project SB's experience does not appear justified. It is likely that SB's project will be financially feasible in the short and long-term. Section 408.035(7): The extent to which the proposal will foster competition that promotes quality and cost-effectiveness South Bay and Brandon are the dominant providers of health care services in SB's service area. This dominance is likely to be eroded once St. Joseph's Hospital South is operational in and around 2015 (on Big Bend Road) if SB's relocation project is not approved. The proposed relocation of SB's facility will not change the geography of SB's service area. However, it will change SB's draw of patients from within the zip codes in the service area. The relocation of SB is expected to increase SB's market share in the three northern Riverview zip codes. This increase can be expected to come at the expense of other providers in the market, including TG and SJH, and St. Joseph's Hospital South when operational. The potential impact to St. Joseph's Hospital may be approximately $1.6 million based on the projected redirection of patients from St. Joseph's Hospital Main to St. Joseph's Hospital South, population growth in the area, and the relocation of SB. Economic impacts to TG are of record. Tampa General estimates a material impact of $6.4 million if relocation is approved. Notwithstanding, addressing "provider-based competition," AHCA in its SAAR noted: Considering the current location is effectively built out at 112 beds (according to the applicant), this project will allow the applicant to increase its bed size as needed along with the growth in population (the applicant's schedules begin with 144 beds in year one of the project). This will shield the applicant from a loss in market share caused by capacity issues and allow the applicant and its affiliates the opportunity to maintain and/or increase its dominant market share. SB Ex. 12 at 55. AHCA's observation that replacement and relocation of SB "will shield the applicant from a loss in market share caused by capacity issues" has taken on a new dimension since the issuance of the SAAR. At that time, St. Joseph's Hospital did not have final approval of CON No. 9833 for the establishment of St. Joseph's Hospital South. It is likely that St. Joseph's Hospital South will be operational on Big Bend Road, and as a result, SB, at its existing location, will experience a diminished market share, especially from the Riverview zip codes. In 2015 (when St. Joseph's Hospital proposes to open St. Joseph's Hospital South), SB projects losing $2,669,335 if SB remains in Sun City Center with a 20% loss in market share. The losses are projected to increase to $3,434,113 in 2016 and $4,255,573 in 2017. It follows that the losses would be commensurately more severe at the 30% to 40% loss of market share that SB expects if it remains in Sun City Center. St. Joseph's Hospital criticized SB's projections for its existing hospital if it remains in Sun City Center with a 20% loss in market share; however, the criticism was not persuasively proven. It was assumed that SB's expenses would decrease commensurately with its projected fewer patient days, thus enabling it to turn a profit in calendar year 2015 despite substantially reduced patient service revenue. However, it was also stated that expenses such as hospital administration, pharmacy administration, and nursing administration, which the analysis assumed to be variable, in fact have a substantial "fixed" component that does not vary regardless of patient census. South Bay would not, therefore, pay roughly $5 million less in "Administration and Overhead" expenses in 2015 as calculated. To the contrary, its expenses for "Administration and Overhead" would most likely remain substantially the same, as calculated by Mr. Weiner, and would have to be paid, notwithstanding SB's reduced revenue. The only expenses that were recognized as fixed by SJH's expert, and held constant, were SB's calendar year 2009 depreciation ($3,410,001) and short-term interest ($762,738), shown in the exhibit as $4,172,739 both in 2009 and 2015. Other expenses in SJH's analysis are fixed, but were inappropriately assumed to be variable: for example, "Rent, Insurance, Other," which is shown as $1,865,839 in 2009, appears to decrease to $1,462,059 in 2015. The justification offered at hearing, that such expenses can be re-negotiated by a hospital in the middle of a binding contract, is not reasonable. St. Joseph's Hospital's expert opined that SB's estimate of a 30 to 40% loss of market share (if SB remained in Sun City Center concurrent with the operation of St. Joseph's Hospital South) was "much higher than it should be," asserting that the loss would not be that great even if all of SB's Riverview discharges went to St. Joseph's Hospital South. (Mr. Richardson believes the "10 to 20 percent level is likely reasonable," although he opines that a 5 to 10% impact will likely occur.) However, this criticism assumes that a majority of the patients that currently choose SB would remain at SB at its existing location. The record reflects that Sun City Center area residents actively supported the establishment of St. Joseph's Hospital South, thus suggesting that they might use the new facility. Further, SB's physicians are likely to join the medical staff of St. Joseph's Hospital South to facilitate that utilization or to potentially lose their patients to physicians with admitting privileges at St. Joseph's Hospital South. Tampa General's expert also asserted that SB would remain profitable if it remained in its current location, notwithstanding the establishment of St. Joseph's Hospital South. It was contended that SB's net operating revenues per adjusted patient day increased at an annual rate of 5.3% from 2005 to 2009, whereas the average annual increase from 2009 to 2017 in SB's existing hospital projections amounts to 1.8%. On that basis, he opined that SB should be profitable in 2017 at its existing location, notwithstanding a loss in market share to St. Joseph's Hospital South. However, the 5.3% average annual increase from 2005 to 2009 is not necessarily predictive of SB's future performance, and the evidence indicated the opposite. Tampa General's expert did not examine SB's performance year-by-year from 2005 to 2009, but rather compared 2005 and 2009 data to calculate the 5.3% average annual increase over the five-year period. This analysis overlooks the hospital's uneven performance during that time, which included operating losses (and overall net losses) in 2005 and 2007. Further, the evidence showed that the biggest increase in SB's net revenue during that five-year period took place from 2008 to 2009, and was largely due to a significant decrease in bad debt in 2009. SB Ex. 16 at 64. (Bad debt is accounted for as a deduction from gross revenue: thus, the greater the amount of bad debt, the less net revenue all else being equal; the lesser the amount of bad debt, the greater the amount of net revenue all else being equal.) The evidence further showed that the 2009 reduction in bad debt and the hospital's profitability that year, is unlikely to be repeated. Overall, approval of the project is more likely to increase competition in the service area between the three health care providers/systems. Denial of the project is more likely to have a negative effect on competition in the service area, although it will continue to make general acute care services available and accessible to the Sun City Center area elderly (and family and volunteer support). Approval of the project is likely to improve the quality of care and cost-effectiveness of the services provided by SB, but will reduce access for the elderly residents of the Sun City Center area needing general acute care hospital services who will be required to be transported by emergency vehicle or otherwise to one of the two Big Bend Road hospitals, unless needed services, such as open heart surgery, are only available elsewhere. For example, if a patient presents to SB needing balloon angioplasty or open heart surgery, the patient is transferred to an appropriate facility such as Brandon. The presence of an ED on the current SB site may alleviate the reduction in access somewhat for some acute care services, although the precise nature and extent of the proposed services were not explained with precision. If its application is denied, SB expects to remain operational so long as it remains financially viable. Section 408.035(8): The costs and methods of the proposed construction, including the costs and methods of energy provision and the availability of alternative, less costly, or more effective methods of construction The parties stipulated that the costs and methods of the proposed construction, including the costs and methods of energy provision, were reasonable. St. Joseph's Hospital and Tampa General did not stipulate concerning the availability of alternative, less costly, or more effective methods of construction, and take the position that SB should renovate and expand its existing facility rather than replace and relocate the facility. Whether section 408.035(8) requires consideration (weighing and balancing with other statutory criteria) of potential renovation costs as alternatives to relocation was hotly debated in this case. For the reasons stated herein, it is determined that this subsection, in conjunction with other statutory criteria, requires consideration of potential renovation versus replacement of an existing facility. St. Joseph's Hospital offered expert opinion that SB could expand and upgrade its existing facility for approximately $25 million. These projected costs include site work; site utilities; all construction, architectural, and engineering services; chiller; air handlers; interior design; retention basins; and required movable equipment. This cost is substantially less than the approximate $200 million cost of the proposed relocation. It was proven that there are alternatives to replacing SB. There is testimony that if SB were to undertake renovation and expansion as proposed by SJH, such upgrades would improve SB's competitive and financial position. But, the alternatives proposed by SJH and TG are disfavored by SB and are determined, on this record, not to be reasonable based on the institutional- specific needs of SB. Section 408.035(9): The applicant's past and proposed provision of health care services to Medicaid patients and the medically indigent Approval of SB's application will not significantly enhance access to Medicaid, charity, or underserved population groups. South Bay currently provides approximately 4% of its patient days to Medicaid beneficiaries and about 1% to charity care. South Bay's historic provision of services to Medicaid patients and the medically indigent is reasonable in view of its location in Sun City Center, which results in a disproportionate share of Medicare in its current payor mix. South Bay also does not offer obstetrics, a service which accounts for a significant degree of Medicaid patient days. South Bay proposes to provide 7% of its "gross patient revenue" to Medicaid and charity patients as part of its relocation. South Bay's proposed service percentage is reasonable. Section 408.035(10): The applicant's designation as a Gold Seal Program nursing facility pursuant to s. 400.235, when the applicant is requesting additional nursing home beds at that facility The parties stipulated that this criterion is not applicable.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a final order be entered denying CON Application No. 9992. DONE AND ENTERED this 8th day of August, 2011, in Tallahassee, Leon County, Florida. S CHARLES A. STAMPELOS 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 8th day of August, 2011.
The Issue The issue in this case is whether the Certificate of Need (CON) application No. 9757 filed by Select Specialty Hospital - Marion, Inc. (Select) for the establishment of a 44-bed free standing Long-Term Care Hospital (LTCH) in Agency for Health Care Administration (Agency or AHCA) Service District 6, in Polk County, should be approved.
Findings Of Fact The Parties AHCA. The Agency for Health Care Administration is the state agency authorized to evaluate and render final determinations on CON applications pursuant to Section 408.034(1), Florida Statutes.2 Select. Select Specialty Hospital-Marion, Inc. is the applicant in this proceeding. Select is a wholly-owned subsidiary of Select Medical Corporation, which operates approximately 99 LTCHs in 27 states. LTCH Services Generally. An LTCH is defined by statute and Agency rule as "a hospital licensed under chapter 395 which meets the requirements of 42 C.F.R. s. 412.23(e) and seeks exclusion from the Medicare prospective payment system for inpatient hospital services." LTHCs are licensed as acute care hospitals, but are clearly different. In Florida, existing LTCHs can add beds without undergoing CON review. Approximately 93 to 96 percent of LTCH patients are admitted from short-term acute care hospitals. LTCHs are a part of the continuum of care that runs from hospitals to post-acute care facilities such as nursing homes, skilled nursing facilities (SNFs), hospital-based skilled nursing units (SNUs), and comprehensive medical rehabilitation (CMR) facilities. LTCHs are designed to serve patients that would otherwise have to be maintained in a traditional acute care hospital (often in the ICU), or be moved to a traditional post- acute care facility where the patient may not receive the level of care needed. Patients with co-morbidities, complex medical conditions, severe injuries due to trauma, or frailties due to age are typically appropriate LTCH patients, particularly if the patient would otherwise remain in the ICU of a traditional acute care hospital. For such patients, an LTCH is likely the most appropriate setting from both a financial and patient-care standpoint. There is a distinct population of patients who, because of the complexity or severity of their medical condition, are best served in an LTCH. However, there is an overlap between the population of patients that can be served in an LTCH and the population of patients that could also be well-served in the ICU of an acute care hospital or a traditional post acute care setting with ventilator capability. SNFs, SNUs, CMR facilities, and home health care are not appropriate for the typical LTCH patient because the patient's acuity level and medical/therapeutic needs are higher than those generally treated in those settings. Unlike traditional post- acute care settings, which typically do not admit patients who still require acute care, the core patient-group served by LTCHs are patients who require considerable acute care through daily physician visits and intensive nursing care in excess of seven hours of direct nursing care per patient day and remain at an LTCH for an average length of stay (ALOS) of 25 days or greater. (Depending on the Diagnostic Related Group (DRG) category for a particular diagnosis, generally, the ALOS for a short-term acute care hospital patient is between three and five days.) It is important for an LTCH patient that the family be involved in the treatment and the continued care of the patient after the patient has been discharged to home or to another level of care on the continuum, such as an SNF/SNU or CMR. Select offers four basic care programs: pulmonary, wound care, neurotrauma, and medically complex. At Select facilities, patients are screened prior to admission to an LTCH to determine whether they are appropriate for admission. InterQual is a set of proprietary criteria used by Select to determine whether patients are suitable candidates for admission to an LTCH or another form of care. CON Application and Preliminary Agency Action Select applied for a CON to establish a 44-bed free- standing LTCH in Polk County, one county located in District 6. The facility will consist of 48,598 GSF of new construction. The total project cost is estimated at $14,373,624. The application was complete, and according to prehearing stipulations, the only reason that the application was denied and the issue in the case at hand is need. Select has the burden of proving that there is a need for the LTCH in District 6. Select agreed, as a condition for approval of its application, to provide 2.8 percent of patient days for Medicaid and charity care. The Agency's review of CON application No. 9757 complied with statutory and regulatory requirements. The Agency's review of CON application No. 9757 resulted in the issuance of a State Agency Action Report (SAAR) on June 10, 2004, which recommended the denial of CON application No. 9757 based on Select's failure to demonstrate a need for the proposed facility. District 6 and Polk County Demographics The population of District 6 as of July 2005 was 2,084,339 and is projected to increase nine percent to 2,272,017 by July 2010. This population is dispersed throughout five counties comprising District 6: Polk, Hillsborough, Hardee, Manatee, and Highlands. This includes a population of 354,327 in the age cohort 65+ (the age group eligible for Medicare) and is projected to increase by 15.94 percent by July 2010. This age group contains the patients that are mainly served by LTCHs, as more than 75 percent of admissions to an LTCH are elderly (65+). The population of Polk County in July 2005 was 532,100, projected to increase by eight percent by July 2010 and 103,257 for the 65+ age cohort, projected to increase by 15.13 percent by July 2010. There are two LTCHs that currently serve District 6. Both are operated by Kindred and have a combined 175 LTCH beds.3 According to AHCA data, Polk County residents were discharged from an LTCH in Florida 505 times in the years 2000 to 2005 (first three quarters). Of those 505 LTCH discharges, a total of 452, or 89.5 percent, were from a Kindred facility4 in Hillsborough County. AHCA 3.5 However, this data does not indicate which hospital or other facility the patient may have been referred from, which may be significant. For example, the patients could have been discharged from hospitals or other facilities other than a Polk County hospital/facility. Notwithstanding, this data shows that from year 2002 to 2005, Polk County residents have accessed the LTCHs in Hillsborough County. Also, aside from an upward, unexplained spike in 2002, the utilization numbers are relatively flat. Kindred Hospital - Bay Area - Tampa (Kindred Bay Area) operates 73 licensed LTCH beds and is located one county west of Polk County, in Hillsborough County. It is located approximately one (1) hour away from Winter Haven, which is Select's proposed site in the central area of Polk County. From July 2004 through June 2005, the total occupancy of Kindred Bay Area was at 62.20 percent. From July 2002 to June 2003, the total occupancy for this facility was 67.15 percent. Kindred Hospital - Central Tampa (Kindred Central Tampa) is also located in Hillsborough County, approximately one (1) hour away from Winter Haven.6 From July 2004 through June 2005, the total occupancy of Kindred Central Tampa was 67.37 percent. From July 2002 thru June 2003, the total occupancy for this facility was 77.03 percent. Select's sister facility, Select-Orlando, approved for 40 LTCH beds, is located in AHCA Service District 7 in Orange County, which is northeast of Polk County. (Select Specialty Hospital - Orlando is also located in District 7, operating 35 licensed LTCH beds with occupancy for the year ending June 2005 of 75.83 percent.) In the years 2003-2005 (2003 was the first year the facility was operational), Polk County residents were discharged from the Select-Orlando facility 38 times. This is approximately 7.5 percent of the total Polk County patients discharged. In 2005, only one Polk County resident was discharged from a facility other than the two Kindred facilities or the Select Orlando facility. For July 2004 to June 2005, the occupancy for all LTCHs in the State of Florida was 66.91 percent and 65.21 percent for District 6. From July 2002 to June 2003, the occupancy for all LTCHs in the State of Florida was 73.23 percent and 72.91 percent for District 6. There has been a decline in utilization of LTCHs on a statewide and district-wide (District 6) basis. Select presented letters of support for the LTCH facility in Polk County, including letters from local hospital administration and physicians. See, e.g., S 2, Volume I, Tab 2 at 38-43 and Tab 4; S 2, Volume II, Tabs 7 and 8. Select's Analysis of Need The Agency has not adopted a need methodology for LTCH services. There is no published fixed need pool for LTCHs. Select examined population estimates for Polk County and surrounding areas; the number of acute care hospital beds in the area; the number of LTCH beds in the area; discharge data from area acute care hospitals; the types of patients treated at acute care hospitals; the lengths of stays of the patients treated at those hospitals; and input from local hospital personnel and physicians. Select started its analysis of need on a district-wide basis, but ultimately defined its primary service area as Polk County. T 131-134, 156-157. (Select defined its primary service areas as an area within a 20 mile radius.) Select used four methods to establish the need for the LTCH in Polk County: Extended length of stay analysis GMLOS (Geometric Mean Length of Stay) + 15 days analysis Long-stay short-term acute care versus LTCH penetration analysis UB-92 patient discharge analysis (Polk County) An extended length of stay analysis involves analyzing discharges by DRG from Polk County hospitals to arrive at the top DRGs experienced by these hospitals. This analysis will exclude lengths of stays under 25 days, patients under the age of 14, substance abuse diagnosis, obstetric diagnosis, newborn diagnosis, psychiatric diagnosis, and rehabilitation diagnosis. The total amount of discharges is multiplied by the anticipated length of stay for an LTCH patient (the analysis can be done statewide or using a national average) and then divided by 365 to arrive at an average daily census of patients. Select analyzed Polk County discharges that matched the criteria above and came up with 644 patients, which was multiplied by 40.6 (Florida average LTCH stay at time of application) in one calculation and 33 (national average LTCH stay at time of application) in a second calculation, before dividing by 365 in both to arrive at an average daily census (ADC). Using 40.6 as the average length of stay (ALOS), there is an ADC of 72. With an average occupancy of 72 percent, there is a need for 96 beds in Polk County. Using 33 as the ALOS, there is an ADC of 58 and a need for 77 beds in Polk County at 75 percent occupancy. Select LTCHs have a 28-day ALOS, which yields an average daily census of 49.4 with a bed need for 66 beds in Polk County at 75 percent occupancy. The GMLOS + 15 analysis involves looking at geometric mean lengths of stays for individual DRGs that begin at eight (8) days, excluding obstetrics, psychological, substance abuse, and rehab patients, and then calculating how many of these patients stayed 15 days past their GMLOS for the particular DRG. The number of patients is then multiplied by the ALOS for Florida and the nation and a bed need is determined.7 Using this analysis and data for the 12 months ending September, 2003, Select contends that there were 823 patients who would have exceeded their GMLOS by 15 days. Using 40.6 as the Florida average LTCH stay, results in an ADC of 92. Operating at 75 percent occupancy yields a need for 122 beds. Using 33 days as the national average LTCH stay, results in an ADC of 74. Operating at 75 percent occupancy, yields a net need for 99 beds in Polk County. (Using calendar year 2004 data and the same ALOS of 33 days and occupancy of 75 percent, yields a net need in Polk County for 130 beds. Select's GMLOS + 15 analysis also yields a positive net bed need for Polk County exceeding the 44-beds requested, using an ALOS of 30 and 28 and either 2003 or 2004 data.) S 6 at pages 8-10; T 149-151. Select also used the GMLOS + 15 methodology to predict need for additional LTCH beds on a county-wide basis (for the five counties within District 6) and a district-wide basis. Using 2003 data and 33 days as the average LTCH stay, there is a projected net need for 305 beds district-wide operating at 75 percent occupancy. (A net need for additional LTCH beds is also shown when either 2003 or 2004 data is used with ALOSs of 30 and 28.) S 6 at 8-10. When applied to Hillsborough County, using different patient days and GMLOS + 15 case numbers, but the same occupancy percentages, the GMLOS + 15 methodology reflects a net LTCH bed need for Hillsborough County. For example, using 2003 and 2004 data, a 28 ALOS, and a 75 percent occupancy level, the methodology yields a net bed need of 99 beds in Hillsborough County. Id. A net bed need also is calculated for Hillsborough County when an adjustment is made to the data for severity. S 6 at 11-13. (Select's "most conservative position", using a "capture rate analysis of severity adjusted matters," yields a negative bed need for Hillsborough County and a much lower district-wide net bed need than the other GMLOS + 15 analyses described herein. Select suggests that this analysis understates need. S 6 at 14.) Notwithstanding the overall favorable bed need analysis discussed above, as noted herein, the occupancy levels at the Kindred facilities in Hillsborough County have been declining in recent years and are below the 75 percent occupancy level. Absent persuasive evidence that residents of Hillsborough County are being deprived of access to LTCH services, it appears that Select's net bed need projections for Hillsborough County and District 6 are overstated. Select did not prove (by use of its GMLOS + 15 analysis or otherwise) that there is a need for additional LTCH beds in District 6. GMLOS + 7 was also discussed by Select, but is too aggressive for purposes of LTCH planning. The third method of comparing patients in Polk County who had a long stay (24+ days) in a Short Term Acute Care (STAC) facility versus those who went to an LTCH does not produce an actual bed need number, but instead provides evidence of a need for an LTCH in a particular area. Select contends that the application of this method shows that there is a lack of access to the other facilities in District 6 and there is a need for an LTCH facility in Polk County. An analysis of UB-92 patient discharge data involves pulling the uniform billing records for each patient and looking at the severity adjustment of the long stay patients. The information is available on the AHCA database. (According to Mr. Gregg, UB-92 data "would be one of the best sources that one could use to define severity and eliminate some patients from this length of stay group." T 382.) The DRG alone will not take into account co-morbidities, but the UB-92 will. The analysis of UB-92 data does not compute a specific bed need, but may show that the existence of need. Both parties contend that using the GMLOS + 15 method is the most accurate. Using the GMLOS + 15 method quoted above, Select determined that there was a need for a 44-bed LTCH facility in Polk County and District 6. Issues Regarding Need Analysis There are some problems with the GMLOS + 15 method for determining need. One problem is the inflated length of stay of 40.6 days used in the application. Other problems include the assumption of 100 percent capture of eligible patients and the assumption that any patient who stays 15 days over their GMLOS would be eligible for LTCH services, which is not necessarily true. There have been numerous recent approvals for LTCHs in the State of Florida, and some of these new facilities will impact the capacity numbers of the already existing facilities.8 Proper patient identification is a concern of the Agency with regard to overlap with other suitable services. The Agency contends that using the UB-92 forms is a more accurate way of determining which patients are most suitable for LTCH services. LTCH patients cost Medicare more than patients in other settings. The Medicare Payment Advisory Commission (MedPAC) was established to advise Congress on issues that affect the Medicare program. The Agency introduced into evidence Chapter 5 of the June 2004 MedPAC report into evidence, which concentrated on "Defining long-term care hospitals". AHCA 5; see also AHCA 6 and 7. The Agency has been concerned with the identification of patients who are in need of LTCH services as compared with patients who would be better suited in a post-acute care setting, such as a SNU/SNF or CMR facility. The June 2004 MedPAC report stated in part that LTCH services are for a small number of medically complex patients and that acute hospitals and SNFs are the principal alternatives to an LTCH. The report also contends that LTCH supply is a strong predictor of their use. In other words, according to Mr. Gregg, LTCHs "are a supplier-induced demand." T 317. Travel Patterns and Family/Physician Involvement Patient, family, and physician preferences have always been a part of health care planning. They affect both availability and accessibility. Families and other care givers play a critical role regarding the delivery of care to LTCH patients. The elderly are a special population with special needs. They commonly have to manage multiple problems, including financial difficulties, drug management, transportation logistics, and sometimes fragile mental and physical conditions. Older patients, as care givers, also have a more difficult time driving, especially over longer distances. Medical experts have opined that having an LTCH over one hour away from the patient population in Polk County (the Winter Haven area) is not geographically accessible for the elderly needing LTCH services in Polk County. Further, while primary care physicians may choose to travel to an LTCH to continue to serve their patients, in reality, this does not generally occur when the LTCH is a fair distance from their usual practice area. Select believes the travel patterns from Polk County to Hillsborough County, where the two LTCHs in District 6 are located, show that there is a need for one in the Winter Haven area of Polk County. Although the travel patterns and the travel time to the current facilities may make it inconvenient for the patient or the families, the benefits of LTCH care greatly outweigh this inconvenience. Need on a Subdistrict vs. District Level The Agency reviews the need for additional LTCHs on a district-wide basis. S 12 at 52-54. The fact that there are existing facilities already in District 6 that are being underutilized is a counterargument for "need" in District 6. Select conducted the majority of its needs analysis on a subdistrict level. If a CON application for an LTCH could be reviewed and approved on a subdistrict level, here using Polk County alone, Select would be able to satisfy the need requirement, based, in part, on the number of acute care beds in Polk County, the lack of any LTCH beds in Polk County, travel and accessibility-related issues, population trends, and the county-wide health care provider support for the facility.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Agency issue a final order denying Select Specialty Hospital - Marion, Inc.'s CON application No. 9757. DONE AND ENTERED this 11th day of July, 2006, in Tallahassee, Leon County, Florida. S CHARLES A. STAMPELOS Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 11th day of July, 2006.
The Issue The issue in these proceedings is whether HRS should grant petitioners' application for a certificate of need to build a 100-bed general acute care hospital in Deltona, Florida. The parties have stipulated to the applicants' ability to staff the proposed facility and that no issue remains as to the criteria set forth in Section 381.494(6)(c)(3), (5), (6), (7), (10), (11), and , Florida Statutes (1983).
Findings Of Fact Petitioners propose to "transfer" 100 beds from Daytona Beach General Hospital (DBGH) in Subdistrict 4 of District 4 to Deltona, which lies in Subdistrict 5 of District 4; and have agreed to "delicensure" of an additional 50 beds at DBGH (for a total of 150) if their application for a certificate of need (CON) to build in Deltona is granted. Saxon General Hospital, Inc. (Saxon) is a wholly owned subsidiary of Daytona Beach General Hospital, Inc., which operates DBGH. HCA's Central Florida Regional Hospital (CFRH), is located outside of District 4 altogether in Sanford, which is in Seminole County. Baker, Clay, Duval, Flagler, Nassau, St. Johns and Volusia Counties make up HRS District 4, the domain of the Health Planning Council of Northeast Florida, Inc. District 4 as a whole has more hospital beds than it needs. The present controversy concerns medical/surgical hospital beds in the two southern subdistricts of District 4, Subdistricts 4 and 5. Flagler County and Volusia County east of Little Haw Creek and Deep Creek comprise Subdistrict 4 of District 4. Deland, Deltona, Orange City and DeBary are in Subdistrict 5 of District 4, which is congruent with Volusia County west of Little Haw Creek and Deep Creek. See Appendix. THE DISTRICT PLAN The Health Planning Council of Northeast, Florida, Inc. has adopted a district health plan, Petitioner's Exhibit No. 6, but the plan has not been promulgated as a rule. HRS, but not CFRH, has admitted that petitioners' proposal is consistent with the district health plan. Among the policies stated in the plan is the following: If the district as a whole has a surplus of acute care hospital beds but the subdistrict has a substantial shortage, or if beds are not available or accessible within 30 minutes travel time in an urban county or 45 minutes travel time in a rural county to at least 90 percent of the county's residents, the state should consider the need for more beds on a subdistrict basis. (Reference: Chapter 10-5.11(23)(i) of the Florida Administrative Code.) Given the provisions as outlined above and so long as there is an overall surplus of hospital beds in the district, it is the policy of the Health Planning Council not to support approval of additional beds within a subdistrict until it can be clearly demonstrated by the circumstances that the number of beds needed in the subdistrict is substantial. With respect to subdistrict five, the plan makes the following recommendation: Within the framework of the most appropriate planning for the entire West Volusia-East Seminole County area, the State Office of Community Medical Facilities could give consideration to the transfer of acute care beds from within the district to the Deltona area--so long as the total number of licensed beds in the district does not increase. Any applicant to open hospital beds and other hospital services in Deltona should take into consideration the general needs of the Deltona area population. The Health Planning Council of Northeast Florida, Inc. adopted this recommendation with the specific purpose of declaring itself neutral as between then competing applications to build a hospital in Deltona. BED NEED BY RULE HRS has by rule specified a need for 195 medical/surgical, 18 intensive and cardiac care, ten obstetric and eight pediatric beds in Subdistrict 4 for the year 1988. Rule 10-16.005(1)(b) Petitioner's Exhibit No. 37, codified as Rule 10-17.005(1)(b), Florida Administrative Code. This represents 23 fewer medical/surgical beds than are presently licensed or authorized, but three more medical/surgical beds than are presently available in fact; the same number of intensive and coronary care beds as are presently available; two fewer obstetric and three fewer pediatric beds than are presently available in Subdistrict 5. Excess capacity in Subdistrict 4 is even more pronounced, according to Rule 10-17.005(1)(b), Florida Administrative Code. This HRS rule specifies a need for 911 medical/surgical, 122 intensive and coronary care, 26 obstetric and 33 pediatric beds in Subdistrict 4 for the year 1988. These figures represent a projected excess of 254 medical/surgical, 14 intensive and cardiac care, four obstetric and 35 pediatric, licensed or approved beds for Subdistrict 4 in 1988, assuming no more beds are licensed, approved, delicensed or disapproved, in the interim. BEDS IN PLACE In District 4's Subdistrict 4, there are seven general acute care hospitals. Bunnell Community Hospital, with 81 licensed or approved beds, is the only hospital in Flagler County. The other six are clustered along the coast between Ormond Beach and New Smyrna Beach. Licensed and approved beds aggregate 1,165 medical/surgical, 136 intensive and cardiac care, 30 obstetric and 68 pediatric for Subdistrict4. Not all of these beds are actually available for occupancy, however. DBGH, for example, is licensed at 297 beds but had only 115 beds available for use on average between October 1, 1980, and September 30, 1981. (At the time of hearing, its average daily census was 50 patients.) There are only two existing hospitals in District 4's Subdistrict 5, Fish Memorial Hospital (Fish) and West Volusia Memorial Hospital (West Volusia), both of which are located in or near Deland, an older population center in western Volusia County to the north of Deltona. West Volusia, which is further than Fish from the emerging Deltona-DeBary-Orange City population center in the southwestern part of the county, has 162 beds, of which 128 are medical/surgical; eleven are intensive or cardiac care; twelve are obstetric and eleven are pediatric. West Volusia had a 1983 average occupancy rate, based on 139 medical/surgical and intensive and coronary care beds, of 67 percent. During fiscal year 1981, most of West Volusia's admissions were of persons from Deland, but 22.34 percent of the total came from DeBary, Deltona and Orange City. Fish has 97 licensed beds, but only 71 are available for use. Of these, 64 are medical/surgical, and the remaining seven beds are devoted to cardiac and intensive care. Fish's physical plant is older and in need of replacement or rehabilitation. The Fish Memorial Hospital physical plant is a composite structure which is the result of three decades of renovation and add-on construction. * * * As a result, much of the facility does not comply with current building codes, the recommendations of the Joint Commission for Accreditation of Hospitals (JCAH) or current patient care management practices. An internal survey was begun to identify and quantify the extent of work necessary to bring the entire physical plant into compliance with all applicable codes or standards. The survey included all major components of the physical plant or hospital-wide systems that will have to be replaced or repaired within the next three year period just to maintain the current facility operations as a comparison to the replacement cost. The survey identified over thirty projects, ranging between $4,000 and $1,500,000 each. Furthermore, these direct costs do not account for interruption of medical services to the community residents, nonproductive staff time due to phasing of renovation, and patient inconveniences during construction. Intervenor's Exhibit No. 1., p.1. Rehabilitation would involve direct costs of some $4,500,000.00. In July, August and September of 1980, Fish had 105 admissions of persons residing in the Deltona and DeBary-Orange City census division, or 22.9 percent of its total admissions. In the same months the year before 87 admissions or 23 percent of the total was attributable to the Deltona and DeBary-Orange City census divisions. The great majority of Fish's patients came from the Deland census division during both periods. Fish's 1983 average occupancy rate was 46.7 percent, but, at time of hearing, occupancy was at 80 percent. Licensed at 226 beds, CFRH had about 200 beds staffed at the time of the hearing, including ten pediatric and nine obstetrical beds. (T. 592) CFRH's average occupancy was 72 percent for January and February of 1984, down from 76.9 percent for the same period last year. During the two months preceding the hearing, CFRH was on "red flag" status. No admissions were allowed, unless approved by the chief of staff; but no true emergencies were turned away. Some 34.8 percent of CFRH's admissions are of people who reside in the Deltona- DeBary-Orange City area or elsewhere in Volusia County. CFRH meets most of the need for medical/surgical beds attributable to the population in southwestern Volusia County. (Testimony of Scott) Most people living in the Deltona-DeBary- Orange City area who need hospitalization leave the county, in order to be admitted at intervenor CFRH. ACCESSIBILITY The evidence did not establish what proportion of the population of Subdistrict 5, if any, is further than 30 minutes' driving time from the nearest hospital at present, or what proportion would be in the future. Petitioners' expert measured travel times from central points in DeBary, Orange City, Sanford and Deland to area hospitals and to the site proposed for a new hospital, with the following results: West Volusia Fish Memorial Central Florida Proposed Memorial Hospital Regional Daytona Beach TO: Hospital (Central (West Sanford) General (North Deland) (Saxon Blvd. Deland) at 1-4) (A) (B) (C) (D) DeBary 32.2 26.4 18.2 14.9 Orange 28.6 22.8 26.3 17.7 City Deltona 36.8 31.0 24.6 11.5 Sanford 51.6 44.9 17.1 33.7 Deland 20.7 14.9 41.7 32.6 In computing these averages, peak travel times were weighted equally with other travel times measured in December of 1983, and January and February of 1984. One route to Sanford and CFRH from Deltona entails crossing a drawbridge. It takes Beverly Spitz "20 minutes just to get out of Deltona," with its winding roads and abundance of elderly drivers. Mary Lou Foster takes 29 to 45 minutes to drive from her Deltona home to CFRH. John Schmeltz can do it in "about 25 minutes." In February of 1982, When Mrs. Schmeltz passed out, the ambulance he summoned took 22 minutes to arrive. John Mosley made the drive from his Deltona home to CFRH in 25 minutes, but that was the night he thought his wife had had a heart attack and he "averaged over 100 miles an hour." (T. 204) "[A]t night . . . you realize just how far it is." (T. 211) Clyde Mann's testimony to the effect that the remoteness of existing hospitals had cost lives went unchallenged. Mary Meade, a registered nurse, reported that the Deltona area "ha[s] lost several patients, several people" (T. 216) in the time it takes to get to a hospital. Bernie Levine, a public witness, testified that there were "constant people dying. They didn't make it to the hospital." (T. 210) A hospital in Deltona would significantly improve access for the people of Deltona, and would also improve access for residents of Orange City and DeBary, albeit less dramatically. FINANCIAL FEASIBILITY The parties stipulated that land is available for the project, and that projected construction costs are reasonable. Daytona Beach General Hospital, Inc. (DBGH, Inc.) plans to lend its subsidiary Saxon General Hospital, Inc. $4,159,700; and petitioners plan to borrow the remaining $12,569,000 necessary to build the hospital, at 13 percent, repayable over a 25 year period, with the new hospital serving as collateral. DBGH, Inc. had "[a]pproximately one-million-three, one-million-four" (T. 245) on hand which could be devoted to construction of a new hospital in Deltona, at the time of hearing. The remaining "equity," $2,900,000 or so, is to be raised by sales of DBGH, Inc.'s common stock. Of the 2,000,000 shares of common stock authorized, Daytona Beach General Hospital, Inc. has issued 600,000. The hope is that additional shares can be issued and sold at $15 a share, which is about five times as much as the stock is currently trading for over the counter. John E. Kaye and Jackson B. Bragg, the osteopaths who between them own 405,000 shares of DBGH, Inc. common, each plan to guarantee purchase of another $1,400,000 worth of DBGH, Inc. common stock, when it is issued. The net worth statements of each man came in as exhibits at hearing, for the purpose of showing their supposed ability to honor such a guarantee. Aside from the DBGH, Inc. stock, however, neither man had sufficient net assets, and this assumes the accuracy of their financial statements, which listed as assets $253,000 in unsecured receivables of unstated age. Cars and boats were valued at cost, as was a pick-up truck ($3,000) while real estate was apparently valued at somebody's idea of market. Between them, the two doctors purport to have $150,000 worth of household furniture. For obvious reasons, no accountant's name appeared on these documents. The doctors have an agreement between them to the effect that neither sells DBGH, Inc. stock unless the other also sells. Their unaudited statements put the value of DBGH, Inc. stock at $20 a share. A few days after the Daytona Beach News Journal reported that "HCA had lost the right to purchase Fish," (T. 264) Robert E. Hardison, Jr. of HCA spoke to Drs. Kaye and Bragg and told them "he realized it was futile to try to continue seeking a CON for Deltona adding new beds unless he could get some existing beds from [DBGH] and move them to Deltona." (T. 266) Mr. Hardison asked Drs. Bragg and Kaye what they would be willing to sell their stock for but did not offer to buy it. Shortly before the hearing they were offered $25 a share for all their holdings on condition the prospective buyer could arrange financing, and on condition that Saxon receive a certificate of need. This price is almost certainly higher than could be gotten in the market for shares which would not give the buyer a controlling interest in DBGH, Inc. One Milton W. Pepper appeared at hearing and testified without contradiction that, in the event a certificate of need issued, he was willing and able to invest approximately $1,500,000 "in the beginning. . . and make arrangements for the additional $5,000,000 if necessary." Drs. Kaye and Bragg may lose control of the corporate petitioners in the process, but there is every reason to believe that money to build a hospital would be available. After raising a quarter of the project cost, DBGH, Inc. proposes to lend that sum to Saxon, at one percent above prime. Although this arrangement would mean that the money was "debt" as between the subsidiary and its parent, outside financers would apparently treat the money as equity. Loy D. Deloney, an underwriter for Stephens, Inc., "the ninth-ranking investment banking firm in the country in terms of equity," knows "of at least 10 major financial institutions that would be interested in" providing long-term financing, if the CON issues. The future holds many uncertainties for hospitals, but whether this money could be repaid and whether a new hospital would be otherwise feasible financially depends finally on how many patients it would serve. POPULATION GROWTH FORECAST The population of census tracts 908, 909, 910.02, 910.03 and 910.04, in which Deltona, Orange City and DeBary are located, is projected to increase by some 11,000 persons between 1984 and 1989, when the population in this part of southwestern Volusia County is expected to be 48,789. Of the projected 1989 population of census tracts 908, 909, 910.02, 910.03, 910.04, eleven thousand one hundred twenty-four persons are expected to be over 65 and eleven thousand one hundred twenty-four persons are expected to be less than 65 but older than Some three fifths of Deltona's present population (about 26,000) is over 55 years old. EFFICIENT UTILIZATION LIKELY IN SUBDISTRICT Even without the lure of a hospital, physicians have opened offices in southwest Volusia County. Seven specialists on the medical staff at CFRH have part-time practices in the Deltona-DeBary-Orange City area. A half dozen family practice physicians practice in the area full-time. They admit to hospital an average of 50 patients daily, 80 percent of them to CFRH. Before HCA abandoned its application for a certificate of need to "transfer Fish's beds" and build a new 97-bed hospital in Deltona, it caused a health service study to be done by John Short & Associates. CFRH offered the study as evidence at hearing. Intervenor's Exhibit No. 1. The CFRH study looked at the western area of Volusia County, as a whole, including Deland, and concluded that 1987 would see 12,686 medical/surgical discharges of residents of western Volusia County. The CFRH study calculated the average length of a patient's stay in hospital at 7.03 days. CFRH's own evidence shows, therefore, that 89,183 medical/surgical patient days attributable to the population of the DeBary-Orange City, Deland and Deltona census districts can be expected in 1987. CFRH's administrator, James D. Tesar, predicted that CFRH "could lose 80 percent of its admissions from the area including Deltona, Geneva, DeBary, Osteen, and Orange City," if Saxon built a new hospital in Deltona. In 1983, CFRH admissions from these Volusia County communities totalled 3,150. If a new hospital in Deltona did indeed change patient flow to the extent Mr. Tesar warns is possible, there would still be 630 admissions annually to CFRH of residents leaving southwest Volusia County for hospitalization. If west Volusia Countians' admissions drop to 630 at CFRH, CFRH will be supplying only 4,429 patient days (630 X 7.03) to residents of West Volusia County. In that case, some 84,754 medical/surgical patient days will have to be accommodated in 1987 by hospitals within Subdistrict Five (or outside the subdistrict at hospitals other than CFRH). In 1987, to the extent patient days attributable to southwest Volusia County residents admitted to pediatric or obstetric beds at CFRH exceed patient days at CFRH attributable to Subdistrict Five residents living outside Deltona, Geneva, DeBary, Osteen and Orange City, 84,754 would be an understatement. Dividing patient days by the number of days in a year (84,754/365) yields an average daily medical/surgical census of 232. Medical/surgical beds are put to good use when they are full 80 percent of the time, almost all health planners agree. In order to accommodate an average daily census of 232 at an 80 percent average occupancy rate, 290 medical/surgical beds will be needed as early as 1987. Only 192 medical/surgical beds are now open in Subdistrict Five. Chances are good that 292 hospital beds in Subdistrict Five could be used efficiently long before the spring of 1989. IMPACT OUTSIDE SUBDISTRICT A new 100-bed hospital in Deltona could operate consistently with efficient utilization of the medical/surgical beds already open in Subdistrict Five, even if the new hospital achieved 80 percent average occupancy as early as 1987 but only by diverting patients from CFRH. The effect on CFRH would be significant, but temporary, since population growth would ensure its efficient utilization once again within two to four years of the 1986 opening of a 100-bed hospital in Deltona. All along, CFRH's loss of patients to a new Deltona hospital would be offset to some extent by ongoing population growth in Seminole County where CFRH is located. CFRH's own application for a certificate of need was granted on the theory that a new hospital of CFRH's size was needed just to serve the population of Seminole County. Petitioners' expert concluded that CFRH, Fish and West Volusia had had only 1,139 more medical/surgical patient days to split among themselves in 1983 than they could be expected to have in 1988, with a 100-bed hospital in its second year of operation in Deltona. DBGH's surrender of the right to open 150 additional beds would have no immediate economic impact; the effect would be to reduce excess capacity in Subdistrict Four, but on paper only. No beds would be closed, no staff dismissed, no expenses pared. But, if petitioners' efforts to obtain a CON for a new hospital in Deltona fail, they intend to expend $10,000,000 for renovation of DBGH, a project for which they already have a CON. This would inevitably mean recovering additional costs from payers for hospital care in Subdistrict Four. Like the Deltona proposal, the renovation proposal contemplates some reduction in beds in Subdistrict Four, although fewer: "50-some-odd." (T. 293) The 150 bed reduction in approved beds in Subdistrict Four contemplated by the pending application would mean that, if and when new hospital beds are needed in Subdistrict Four, they could be added wherever they are needed rather than being added at DBGH whenever management decrees.
Recommendation Upon consideration of the foregoing, it is RECOMMENDED: That HRS grant petitioners' application for a certificate of need to construct a 100-bed acute care general hospital in Deltona. DONE and ENTERED this 9th day of July, 1984, in Tallahassee, Florida. ROBERT T. BENTON II Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32301 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 9th day of July, 1984. APPENDIX * * NOTE: APPENDIX to this Recommended Order is a map which is available for review in the Division's Clerk's Office. COPIES FURNISHED: F. Philip Blank, Esquire 241 East Virginia Street Tallahassee, Florida 32301 Ronald L. Book, Esquire Sparber, Shevin, Shapo & Heilbroner 30th Floor AmeriFirst Building One Southeast Third Avenue Miami, Florida 33131 James M. Barclay, Esquire 1317 Winewood Blvd. Building 2, Suite 256 Tallahassee, Florida 32301 Thomas A. Sheehan, III, Esquire Jon C. Moyle, Esquire Donna Stinson, Esquire, and Thomas M. Beason, Esquire, of Moyle, Jones & Flanigan Post Office Box 3888 West Palm Beach, Florida 33402 David Pingree, Secretary Department of HRS 1323 Winewood Blvd. Tallahassee, Florida 32301
