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 Agency for Health Care Administration should approve the application of Kindred Hospitals East, LLC, for a Certificate of Need to establish a 60-bed, long- term care hospital ("LTCH") to be located in Brevard County, one of four counties in AHCA District 7.
Findings Of Fact The Parties Kindred Hospitals East, LLC, ("Kindred" or the "Applicant") is a subsidiary of Kindred Healthcare, Inc. ("Kindred Healthcare"). Kindred Healthcare operates 84 LTCHs nationwide, including eight in the State of Florida. Twenty-four of Kindred Healthcare's LTCHs are operated by Kindred Hospitals East, LLC, including the eight in Florida. The Agency is the state agency responsible for the administration of the Certificate of Need program in Florida. See § 408.034(1), Fla. Stat., et seq. Pre-hearing Stipulation The Joint Pre-hearing Stipulation between Kindred Hospitals East, LLC, and Agency for Health Care Administration, filed May 25, 2006, contains the following: E. STATEMENT OF FACTS WHICH AREADMITTED AND WILL REQUIRE NO PROOF The CON application filed by Kindred complies with the application content and review process requirements of Sections 408.037 and 408.039, Florida Statutes (2005), and Rule 59C- 1.008, Florida Administrative Code, and the Agency's review of the application complied with the review process requirements of the above-referenced Statutes and Rule. With respect to compliance with Section 408.035(3), Florida Statutes (2005), it is agreed that Kindred has the ability to provide a quality program based on the descriptions of the program in its CON application and based on the operational facilities of the applicant and/or of the applicant's parent facilities which are JCAHO certified. With respect to compliance with Section 408.035(4), Florida Statutes (2005), it is agreed that Kindred has the ability to provide the necessary resources, including health personnel, management personnel, and funds for capital and operating expenditures, for project accomplishment and operation. With respect to compliance with Section 408.035(6), Florida Statutes (2005)it is agreed that the project is likely to be financially feasible. The parties agree there are no disputed issues with respect to Kindred's compliance with Section 408.035(8), Florida Statutes (2005), which relates to an applicant's proposed costs and methods of proposed construction for the type of project proposed. The parties agree there are no disputed issues with respect to Kindred's compliance with Section 408.035(9), Florida Statutes (2005), which relates to an applicant's proposed provision of health care services to Medicaid patients and the medically indigent. Section 408.035(10), Florida Statutes (2005), relating to nursing home beds, is not at issue with respect to the review of Kindred's CON application. With respect to compliance with Rule 59C-1.008(1)(a)-(c), Florida Administrative Code, it is agreed that Kindred complied with the letter of intent requirements contained therein. 9. Rules 59C-1.008(1)(d), (e), (h), (i), and (j) are not at issue with respect to the review of Kindred's CON applications. With respect to compliance with Rule 59C-1.008(1)(f), Florida Administrative Code, it is agreed that Kindred complied with the applicable certificate of need application submission requirements contained therein. The need assessment methodology is governed by Rule 59C-1.008(2)(e)2.a.- d., Florida Administrative Code. With respect to Rule 59C-1.008(2), Florida Administrative Code, except as to Rule 59C-1.008(2)(e)2.a-d and (2)(e)3, Florida Administrative Code, it is agreed that this provision is not applicable to this proceeding, as the Agency did not at the time of the review cycle at issue, and currently does not, calculate a fixed need pool for LTCH beds. With respect to compliance with Rule 59C-1.008(3), Florida Administrative Code, it is agreed that Kindred submitted the required filing fees. With respect to compliance with Rule 59C-1.008(4)(a)-(e), Florida Administrative Code, it is agreed that Kindred complied with the certificate of need application requirements contained therein. Rule 59C-1.008(5), Florida Administrative Code, relating to identifiable portions of a project, is not at issue with respect to the review of Kindred's CON applications. In light of the stipulation, the issues remaining generally concern: the need for Kindred's proposed facility (including the reasonableness of Kindred's need methodology and whether its need assessment conforms to AHCA rules), the accessibility of existing LTCH facilities, and the extent to which the proposal will foster competition that fosters cost-effectiveness and quality. Long-Term Care Services The length of stay in the typical acute care hospital (a "short-term hospital" or a "STACH") for most patients is four to five days. Some hospital patients, however, are in need of acute care services on a long-term basis, that is, much longer than the average lengths of stay for most patients in an short-term hospital. Patients appropriate for LTCH services represent a small but discrete sub-set of all inpatients. They are differentiated from other hospital patients. Typically, they have multiple co-morbidities that require concurrent treatment. Patients appropriate for LTCH services tend to be elderly and frail, unless they are victims of severe trauma. All LTCH patients are generally medically complex and frequently catastrophically ill. Generally, Medicare patients admitted to LTCHs have been transferred from short-term hospitals. At the LTCH, they receive a range of services, including cardiac monitoring, ventilator support, and wound care. Existing LTCHs in District 7 At the time of the CON application there were 12 LTCHs operating in Florida with a total licensed bed capacity of 805 beds. There is one existing LTCH within District 7. Another is approved and under construction. Select Specialty Hospital-Orlando, Inc. ("Select-Orlando") contains 35 beds; it was licensed in 2003. The occupancy rate for this facility for CY 2005 was 73.57 percent. Select-Orlando's history shows few discharges to Brevard County. The majority of its discharges are to Orange, Seminole, and Osceola Counties. Most of the balance are to Volusia, Lake, and Polk Counties. A second LTCH, Select Specialty-Orange, Inc., has been approved and is under construction. It will contain 40 beds. The total licensed capacity of these two LTCHs will be 75 beds. Both of the facilities are located in Orange County and are located in or near Orlando within a few miles of each other. The acuity levels of the patients in the existing LTCH are not known. There are no LTCHs in Brevard County where Kindred proposes to build and operate a new LTCH should its application be approved. Kindred's Proposal Kindred's proposal in Brevard County, AHCA District 7, is for a freestanding 60-bed LTCH, with all private rooms, including an 8-bed intensive care unit (ICU). The proposed LTCH will follow a care model template that is similar to Kindred's other LTCHs. It will be a freestanding, licensed, certified and accredited acute-care hospital with an independent self-governed medical staff under the same model as a short-term acute hospital. The majority of patients in an LTCH typically arrive after discharge from a short-term acute care hospital, most often ending their STACH stay in an ICU. Not surprisingly, Kindred projects that its proposed LTCH will receive the bulk of its referrals from STACHs in the surrounding area. Kindred's LTCH patients will be discharged to either their homes, home health care, or to another post-acute provider on the basis of patient needs, family preference, and geography. There are several levels of care provided within an LTCH such as Kindred's proposed facility. Typically, LTCHs accept stable medical patients but with catastrophically ill patients some are bound to become medically unstable. There are eight ICU beds for the medically unstable patient. Thus, Kindred's patients who undergo changes of condition (such as becoming medically unstable) can be cared for without a transfer, unlike in skilled nursing facilities or comprehensive medical rehabilitation hospitals facilities not suited for the medically unstable patient. The goal of an LTCH is to take acute care hospital patients and provide them with a higher level of medical rehabilitation than they would receive in an STACH, and rehabilitate them so that they can be transferred home, or to a rehab hospital, or to a nursing facility. The "medical rehabilitation" of an LTCH addresses system failures and dependence on machines. This is different from the rehabilitation that takes place in an inpatient or outpatient rehab center, where patients usually have suffered an injury or trauma to a muscular or bone system, and their care is based on physical medicine rather than internal medicine. The Orlando Metropolitan Area and Brevard County In evaluating markets that may need an LTCH, Kindred looks at established metropolitan areas the boundaries of which are determined on the basis of population concentrations and commuting data. District 7 contains most of the metropolitan area associated with the city of Orlando (the "Orlando Metropolitan Area"). Like District 7, the Orlando Metropolitan Area has a presence in four counties. But the counties are different. The Orlando Metropolitan Area encompasses all or part of Orange, Osceola, Seminole, (shared with AHCA District 7) and a county that is not in District 7: Lake County. In addition to the three counties it shares with the Orlando Metropolitan Area, District 7 includes Brevard County. At hearing, Mr. Wurdock explained the following about the Orlando Metropolitan Area: When we talk about the Orlando area, we are not just talking about Orange County. Orange County, Osceola County, and Seminole County are all part of the Orlando metro area. That means they're an integrated economic unit based on commuting patterns. Lake County is also part of [the Orlando metropolitan area.] . . . [W]hen we looked at . . . Orange, Osceola and Seminole and ran an analysis . . ., we found . . . there was a need for approximately 180 more beds beyond the . . . 35 that currently existed. So even after you take out the 40 under construction, there is still a really huge need [in the Orlando metropolitan area.] Tr. 56-57. That Brevard County is not part of the Orlando Metropolitan Area is a consideration in this case. Kindred's evaluation also showed two other factors about Brevard County that distinguish it from the Orlando Metropolitan Area. First, it does not have adequate access to long-term care hospitals. Second, it's population with a significant number of seniors and a high number of discharges from STACHs makes it one of the few markets of its size that does not have at least one LTCH. As Mr. Wurdock continued at hearing: Brevard County has a population of more than a million people and it's got more than 100,000 seniors and they have six short term hospitals that produce more than 60,000 discharges a year. . . . [T]here are very few markets of that size in this country that do not have at least one long term hospital . . . Tr. 57. These two factors led Kindred to pursue the application that is the subject of this proceeding. Kindred's decision to pursue a CON for an LTCH in District 7 also stemmed from the interest of Brevard County physicians who had referred patients to Kindred facilities in Fort Lauderdale and Green Cove Springs in Duval County, a government unit consolidated with the city of Jacksonville. This interest was also supported by evidence that showed a predominate north/south referral pattern along the I-95 corridor. Patients in Brevard County STACHs appropriate for LTCH services are referred to facilities in Duval County (north) and Fort Lauderdale (south), but generally not to the lone District 7 LTCH in Orlando. The number of short-term acute hospitals in an area affects the decision of whether to locate a facility in a particular market. The presence of STACHs in a market is significant because the vast majority of an LTCH's patients are transfers from STACHs. The growing senior population (persons aged 65 and over) in Brevard County was also a factor; the elderly population is a large constituent of an LTCH's patient base. Dr. Richard Baney, who practices with Melbourne Internal Medicine Associates, the largest physician- practice group in Brevard County, holds privileges at Holmes Regional Medical Center, and is familiar with the various health care facilities of all types in Brevard County, including hospitals, inpatient rehabilitation hospitals, and nursing homes. Dr. Baney anticipates serving as either an attending or consulting physician if the Kindred facility in Brevard is approved, as do several of the other physicians in his group, including some "intensivists" such as pulmonologists, critical-care physicians, and cardiologists. Dr. Baney's physician group consists of 45 primary care physicians, including internists, family practitioners and pediatricians. The group also includes OB/GYNs, neurologists, medical sub-specialists such as cardiologists, pulmonologists, endocrinologists, hematologists, and oncologists. Among the oncologists are radiological oncologists. There are general surgeons in the group, surgery sub-specialists, including vascular surgeons, and ENT (ear, nose, and throat) physicians. Dr. Baney summed up his opinion on the need for an LTCH in Brevard County as follows: In our area we have excellent acute- care hospitals, and we have a good network located throughout the area of subacute rehab facilities, as well as nursing homes, and then home care, and then eventually a patient is home. What we don't have in this area is a long-term acute-care facility that would handle the more significantly ill patients who need more intensive medical and nursing and physical therapy support. Right now those patients that would normally benefit from this type of facility have to dwell in the hospital for . . . weeks and weeks at a time until they achieve a point of stability where they can be moved into a subacute rehab. What this does in turn is clog up the hospital beds, ICU beds in particular, and every year we have at our large acute-care hospitals here at Holmes patients who are being quartered in the . . . auditorium at the hospital, in the hallways of the emergency room, since the hospital gets just overwhelmed with patients and cannot move them out. Certainly I believe a facility in this area would have no trouble being able to fill that need of taking many of these patients who need this kind of care out of the [STACH] into a better, more efficient setting. Also, we don't have any place that's nearby that patients and their families can go for this kind of care. . . . [I]t's really not logistically feasible for patients and their families to go 80, 90 miles away or further to . . . have their care for this type of duration. Kindred No. 7, Deposition of Richard Baney, Jr., M.D., at 10-11. When asked about the difficulty presented by the distance to the LTCHs in Fort Lauderdale and Duval County, Dr. Baney answered with regard to one of his patients that administratively there a few if any problems. The problem is for the family: But the family was very hesitant to allow their father to be transported . . . 150, 180 miles away and be there for weeks or months while they were recovering. They were quite resistant to the idea of him so far away, since the family would have to travel back and forth. Eventually they overcame that and the patient did go . . . to the facility down south. * * * But it was quite a hurdle that we had to get over. Id., p. 16, 17. Aside from the logistical problems faced by the families whose loved one is a potential patient at an LTCH at great distance from home, Dr. Baney's testimony accentuates another factor faced by potential LTCH patient in Brevard County. This is a factor favoring approval of an LTCH application recently recognized by AHCA when it approved Select-Orange, a second LTCH in the Orlando Metropolitan Area dominated by two large hospital organizations. Similar to the Orlando area, Brevard County STACHs, for the most part, belong to one of two hospital organizations predominate in the area. Brevard County's Two Main Hospital Organizations There are two main hospital organizations in Brevard County: the Health First system and the Wuesthoff system. Health First includes Holmes Regional Medical Center; Palm Bay Community Hospital, which is about 90 beds; and Cape Canaveral Hospital, which is also about 90 beds, in the central part of the county. Palm Bay is a large community about 15 miles south of Melbourne. Cape Canaveral is about 20 miles from Melbourne, and Rockledge is about 15 miles from Melbourne. The Wuesthoff system consists of Wuesthoff Rockledge and Wuesthoff Melbourne. Wuesthoff Rockledge is a 267-bed acute care facility with 32 ICU beds, 8 cardiac surgery beds, and an active emergency room that sees about 1,500 visits a month. Wuesthoff Melbourne is a 115-bed facility with a 12-bed ICU and an active ER of around 800 visits a month. Wuesthoff currently refers LTCH patients- primarily long-term ventilator patients-to Kindred's facilities in Fort Lauderdale and near Jacksonville. When Wuesthoff refers a patient to Kindred, it calls Kindred's intake coordinator who journeys to Wuesthoff to review the patient's records, meet with the family, and determine if the patient can be placed. Only if a physician from the LTCH signs an admission order concurring that the patient is clinically appropriate for admission to an LTCH is the patient transferred. Often, however, because the Kindred facilities are so far away, just as Dr. Baney pointed out, the families do not want to move the patient out of Wuesthoff. This resistance continues despite increased education about the benefit of LTCHs to potential LTCH patients. LTCH Education When an LTCH comes into a market, an education process begins. It begins with the physicians, and with the case managers and social workers in the STACH. Kindred educates these professionals about what an LTCH is, what its services are, and where it fits into the continuum of care. Kindred's Admission and Patient Evaluation Processes Kindred does not admit every patient that falls within the diagnoses that might produce LTCH-appropriate patients. Patients are pre-assessed before admission using what is nationally known as Interqual criteria for hospital admissions. That set of criteria is based on severity of the patient's illness and the intensity of services required to treat the patient, and then a review committee at the LTCH makes a clinical determination whether or not the patient is appropriate for LTCH services. The sole way that a patient gets referred to a Kindred Hospital is through a physician order. Before a patient comes to a Kindred Hospital, a physician has determined that to the best of his or her judgment the patient requires continued care at the level of an acute care hospital and that the patient's course of treatment will be prolonged. A physician from a Kindred Hospital must write the admission order, concurring that it is appropriate for that patient to be in an LTCH. Prior to obtaining that physician order, potential candidates for transfer are identified through the STACH case management staff, with the assistance of the LTCH staff. The STACH medical staff, nurses, or other personnel initiate the request for Kindred to visit the patient, interview the family, talk with the STACH attending physician, and make a determination of whether transfer and care at Kindred is clinically appropriate. Kindred gathers information on a potential patient to assist in making the admission determination using individuals in the field known as "clinical liaisons," who are primarily licensed registered nurses. The clinical liaison gathers the information, but does not make the ultimate determination as to whether to admit the patient to a Kindred facility. The ultimate determination for admission is made by the physician who will be seeing the patient at the Kindred facility. In order to comply with Medicare reimbursement requirements, Kindred employs such safeguards to make sure only appropriate patients are admitted. Medicare reviews the patients treated into the hospital, and it can and does reduce payment for "short stay outliers" who do not stay at least five-sixths of the geometric mean of the length of stay (GMLOS) for the patient's diagnosis. Mathematically, however, LTCHs will always have some patients who are short stay outliers. Even if GMLOSs rise as result of the elimination of short stay patients, between 35 and 40 percent of patients will always be "short stay outliers" under CMS's current definition. They will just be hospitalized for a stay that is short relative to a longer length of stay. Kindred LTCHs utilize criteria that assure that patients, once admitted, have sufficient severity of illness and need sufficient intensity of service to continue to warrant acute care. Case managers in LTCHs apply discharge screens to patients as they near completion of their LTCH care plan to help physicians make a judgment of when they are ready to be transferred either home or to a lower level of post-acute care. Kindred's CON application included a utilization review plan, using an example from Kindred Hospital North Florida. Every hospital has a utilization review plan designed to assure that appropriate care is given to patients. It serves an oversight function for medical care, nursing care, medication administration, and any other area where resources are expended on behalf of the patient. A PPS for LTCHs Effective October 1, 2002, the federal Centers for Medicare and Medicaid Services (CMS) established a prospective payment system for LTCHs. Through this system, CMS recognizes the patient population of LTCHs as separate and distinct from the populations treated by providers of short-term acute care or other post short-term acute care providers. Under the system, each patient is assigned an LTCH DRG, indicating that the patient's diagnosis is within a certain Diagnostic Related Group. The LTCH is reimbursed the pre-determined payment rate for that DRG, regardless of the cost of care. The creation of separate DRGs for LTCH patients is the mark of the federal government's recognition of the validity of LTCH services and the distinct place occupied by LTCHs in the continuum of care based on the high level of LTCH patient acuity. Despite this recognition, concerns about the identification of patients that are appropriate for LTCH services have been voiced both at the federal level and at the state level. With the rise in LTCH applications over the last several years, AHCA has been consistent in voicing those concerns, particularly when it comes to LTCH population levels of acuity. Acuity The Agency is not convinced that there is not significant overlap between the LTCH patient population and the population of patients served appropriately in healthcare settings other than LTCHs. The Agency has reached the conclusion that there are options (other than an LTCH in Brevard County) available to patients targeted by Kindred. The options depend on such matters as physician preference and the availability of long-term care hospitals in a given geographic area. Kindred answers the concerns, in part, with evidence that relates to acuity. A "case mix index" for the hospital is a measure of its average resource consumption. Resource consumption can be viewed as a surrogate measure of complexity and severity of illness, so case mix index is often cited as a readily available measure of patient acuity. Using that indicator, the case mix index of Kindred hospitals is high compared to the entire LTCH industry, and is higher than the average case mix index for STACHs. The APR/DRG system is a way to further refine the variation of patients' acuity within a DRG. The system assigns not only a DRG, but a severity of illness on a scale of one (minor severity) to four (extreme severity). Using that tool with the Kindred data base (as well as the federal MedPAR data base) confirms that the distribution of severe and extreme severity of illness is skewed toward LTCH patients, meaning that there are more patients with higher severity of illnesses in LTCHs than in STACHs. As is to be expected, and one would hope if LTCHs are appropriately serving their niche in the continuum of care, this is consistent with the empirical observation that patients in LTCHs, are more sick than those in STACHs. A third measure of patient acuity routinely used in Kindred hospitals is an APACHE score, which is a combination of physiologic derangement and concurrent illnesses. The average Kindred patient has an APACHE score of about 45, whereas the average critical care patient in all STACHs has a score about two-and-a-half points higher. Thus, Kindred's LTCHs treat a severely ill population only a few points, on the APACHE measure, below that of critical care units in STACHs across the country. The Agency does not, by rule or order, define the level of acuity at which LTCH patients should be for admission. Information on acuity level of patients in STACHs is not available through the State's health statistics data base, nor is any information that would allow an LTCH applicant to undertake an acuity analysis of potential patients. AHCA acknowledges that it has no reason to believe that Kindred admits lower-acuity patients with the least need for resources among those in LTCH- appropriate DRGs. Family Hardship In those markets that do not have LTCHs, STACH patients typically have no choice of treatment but to stay in the STACHs, unless they are willing to travel long distances. As Dr. Baney pointed out in his deposition testimony, many patients who could benefit from an LTCH are not inclined to travel long distances. One reason is that the patients' families are not able to commute that distance. If the patient is going to be in an LTCH for weeks or months, it creates a hardship on the family to have their loved one that far away. The family either loses contact with their loved one or they actually have to relocate to where the loved one is and abandon their home temporarily. The need for family presence and involvement is more than just an emotional matter of patient and family preference. Families are involved in the treatment of a patient in a long-term care hospital, not only through their presence in the hospital but also because they will participate in patient care after the patient leaves the LTCH. Families have to learn how to get the patients out of bed, feed them, and possibly suction them. The families would be taught how to care for their family members once they leave the LTCH, by nursing and therapy staff, teaching them exercises for the patient, how to regulate the oxygen, and giving medications. Differences between LTCHs and Other Providers LTCHs and STACHs do not have the same purpose, and the gap is widening between the two. Over the last 20 years, STACHs have evolved into settings that are very good at stabilizing patients, diagnosing their conditions, and developing treatment plans. Most admissions to the medical ward of an STACH come in through the emergency room where patients are so acute, so unstable, that emergency care is required to stabilize the patient. In their role as diagnostic centers, STACHs provide imaging and laboratory services, and then develop a treatment plan based on the diagnostic work-up performed. STACHs have moved away from the function of carrying out a treatment plan. This is borne out by shrinking STACH lengths of stay over the last 20 years, which now average four to six days. As a result, STACHs have limited capability to provide a prolonged treatment plan for patients with multiple co-morbidities. In contrast, LTCHs do not hold themselves out to be diagnostic or stabilization centers. They have developed expertise in caring for the small subset of patients that require a prolonged treatment plan. A multi-disciplinary physician- based care plan is provided in LTCHs that is not provided in STACHs or other post-acute settings. LTCH patients meet hospital level criteria, and if there is no LTCH readily accessible to provide a hospital-level discharge option for these patients, then the STACH has no option but to keep them, and manage their treatment and costs as best they can. LTCHs take care of those patients who need to be in a hospital, but for whom reimbursement is not adequate for STACHs to treat. The reimbursement system is driving this to a great extent, because of the incentives it gives to discharge patients as quickly as possible. Not every STACH patient needs LTCH care; as a rule of thumb, about one percent of all non-obstetric patients are potentially LTCH-appropriate. Ms. Woods, Vice President for Wuesthoff Health System which operates STACHs in Brevard County, testified in deposition that Wuesthoff's ICUs in Wuesthoff hospitals often retain patients who could be placed in an LTCH. As the Wuesthoff ICUs remain full, the ability to move patients through the hospital, from the emergency department through the ICU, is significantly impacted. While long-term care hospitals take a team approach to getting patients weaned from ventilators or getting them to a rehab involvement, an acute care hospital ICU deals more with acute crisis situations, such as an acute MI (myocardial infarction) or an acute blood clot to the lungs, or someone who has acute sepsis or infection. The roles that LTCHs play have a significant impact on acute care hospitals such as Wuesthoff. If an acute care hospital has to maintain a patient for 30 to 60 days on a ventilator in order to get them weaned or to meet their needs, that poses the potential to interfere with the acute care hospital from meeting the needs of the community, such as patients who are coming in the emergency room with acute conditions. Most of the stays in Wuesthoff's ICU beds, for example, are five to seven days; they are trauma patients, surgery patients that need support and critical care, and patients coming in with major infections. When ICU beds are unavailable, these patients are being held in the emergency departments; it stops the patient flow if the beds in a community hospital are taken up from a long-term ventilator patient. SNFs and LTCHs are different both in intent and execution. SNFs are appropriate for patients whose primary needs are nursing, who are stable and unlikely to change, and who do not require very much medical intervention. Conversely, LTCHs, being licensed and accredited as acute care hospitals, are appropriate when daily medical intervention is required. LTCHs are able to respond to changes in conditions and changes in care plans much better than SNFs because LTCHs have access to diagnostics, laboratory, radiology, and pharmacy services. Further, there are no skilled nursing facilities in Brevard County that operate beds for ventilator dependent patients, nor are there hospital-based skilled nursing units ("HBSNUs"). Using Kindred's own nursing data base, which consists of 250 SNFs across the country, and Kindred's LTCH data base, consisting of 75 LTCHs, Kindred has discovered that that overlap in patient condition is very small. Where there is overlap, it tends to be at the ends of care in LTCHs and the beginning of care in SNFs. This progression makes sense, since SNFs are a common discharge destination for LTCH patients. LTCHs and rehab hospitals are also distinctly different. Rehab hospitals are geared for people with primarily neurologic or musculoskeletal orthopedic issues, and are driven with a care model based on physical medicine rather than internal medicine; LTCH care requires the oversight of an internist rather than a physical medicine doctor. While rehab is a concurrent component of LTCH care, the patient in an LTCH cannot tolerate the three hours per day of therapy required for admission to rehab hospitals due to their medical conditions. In fact, a common continuum of care is for an LTCH patient to receive treatment and improve to the point where they can tolerate three hours of rehab and so be transferred to a rehab hospital. There is one acute rehab center in Brevard County, and it does not take ventilator-dependent patients. There are no hospital based skilled nursing units in Brevard County. There are no skilled nursing facilities in Brevard County that can accommodate ventilator-independent patients. Often ventilator-dependent patients also have IV antibiotics and tube feedings, and these are complicated conditions that a nursing home will not treat. LTCH care cannot be provided through home health care, because, by definition, LTCH patients meet criteria for inpatient hospitalization. Home health care is designed for patients who are very stable and have such a limited medical need that it can be administrated by a visiting nurse or by families. This is in sharp contrast to an LTCH patient where many hours a day of nursing, respiratory, and other therapies are required under the direct care of a physician. On the basis of regulation alone, STACHs could provide LTCH care. They generally do not do so because they have evolved into centers of stabilization, diagnosis, and initiating a treatment plan. Case studies bear out that when patients who made very little progress in STACHs are transferred to LTCHs, where the multidisciplinary approach takes over from the diagnostic focus, the patients improve in both medical and physical well-being. Those patients that would normally benefit from an LTCH have to dwell in the hospital for weeks until they achieve a point of stability where they can be moved in to a subacute facility; instead of continuing to move efficiently down the continuum they remain in the "upper end of the stream." This, in turn, may overwhelm the short-term acute care hospital, particularly in its ICU, resulting in patients being quartered in the auditorium at the hospital and in the hallways of the emergency room. The LTCHs available along the east coast of Florida in Fort Lauderdale or Jacksonville are at a distance from Brevard County that is an obstacle to referral of a Brevard County patient. Having a long-term care hospital in Brevard County would enhance the continuum of services available to Brevard County residents. On the other end of the referral process from Dr. Baney is Rita DeArmond, the clinical liaison for Kindred Hospital Fort Lauderdale. Her duties include, "patient evaluations on potential admissions to [Kindred Fort Lauderdale], which also involves meeting with families and educating the families, . . . case managers, . . . physicians and other people in the community about our hospital and long-term acute care hospitals in general." Kindred No. 8, at 5. She serves "Palm Beach County, the area around Lake Okeechobee [Okeechobee and Hendry Counties], Martin County, . . ., St. Lucie County, Indian River County and Brevard County." Id. at 11. In Ms. DeArmond's experience in dealing with potential long-term care hospital patients and their families not in the immediate vicinity of an LTCH, the willingness of those patients to travel great distances is the biggest hurdle for the patients admission to an LTCH. Most of the patients and their spouses are elderly, and they do not tend to travel long distances, or on the interstate. Being faced with traveling hundreds of miles round-trip to visit a loved one is very distressing to most of them. Not only would potential Brevard County LTCH patients be more likely to avail themselves of LTCH services if there were an LTCH in Brevard County but so would patients in other counties. For example, according to Ms. DeArmond, Lawnwood Regional Medical Center in Fort Pierce, a St. Lucie County STACH, and Sebastian River Medical Center, an STACH in Indian River County, would definitely send potential LTCH patients to an LTCH in Brevard County rather than the current closest LTCH, Kindred Fort Lauderdale. Having an LTCH would be a positive impact for other Brevard County STACHs as well. For example, Wuesthoff would not experience the backup in its emergency department and in its ICU beds, especially in the winter time where there is a high census due to more cases of pneumonia in the winter. If a patient who might be clinically appropriate for an LTCH remains in the ICU in an acute care hospital such as Wuesthoff, that patient does not receive the same care that he or she would receive at an LTCH. Acute care hospitals do not provide the medical rehabilitation work that LTCH's do, such as a plan of care just for the rehab of ventilator patients. An acute care hospital can deal with the pneumonia, and can wean the patient, but does not have the same plans or care or the same focus that an LTCH does with those types of patients. If the patient does not go to an LTCH, they will stay in the acute care hospital using the hospital resources. Wuesthoff has had patients there up to 65 days. The hospitals and physicians visited by Kindred- Fort Lauderdale clinical liaison Ms. DeArmond on a regular basis are located in Brevard County in District 7, as well as Indian River and St. Lucie counties. The hospitals within Brevard County that she contacts include Holmes Regional and Wuesthoff Melbourne Hospital; within Indian River County, Indian River Memorial Hospital in Vero Beach and Sebastian River Medical Center, and within St. Lucie County, St. Lucie Medical Center in Port St. Lucie and Lawnwood Hospital in Fort Pierce. In gathering letters of support that were submitted with Kindred's CON application for a long-term care hospital in Brevard County, Ms. DeArmond met with case managers and physicians and informed them of Kindred's intention to apply for a CON to build a hospital in Brevard County. The physicians and case managers who provided letters of support had previously referred patients to Kindred Hospital in Fort Lauderdale, so they were familiar with the services that Kindred can offer in an LTCH. It is reasonable to assume that such physicians and case managers would refer patients to a Kindred LTCH in Brevard County, if approved. MedPAC Concerns In denying Kindred's application, AHCA relied on reports issued to Congress annually by the Medicare Payment Advisory Committee (MedPAC) that discuss the placement of Medicare patients in appropriate post-acute settings. The June 2004 MedPAC report state the following about LTCHs: Using qualitative and quantitative methods, we find that LTCHs' role is to provide post-acute care to a small number of medically complex patients. We also find that the supply of LTCHs is a strong predictor of their use and that acute hospitals and skilled nursing facilities are the principal alternatives to LTCHs. We find that, in general, LTCH patients cost Medicare more than similar patients using alternative settings but that if LTCH care is targeted to patients of the highest severity, the cost is comparable. AHCA Ex. 7, at 121. The June 2004 MedPAC report, therefore, concludes that LTCHs should "be defined by facility and patient criteria that ensure that patients admitted to these facilities are medically complex and have a good chance of improvement." Id. Despite the above language in the June 2004 MedPAC report, discussion in the SAAR of portions of the MedPAC report shows that AHCA may have misread some of the subtleties of the MedPAC findings. The MedPAC report makes statements that LTCHs and SNFs substitute for one another. While there is some gross administrative data to support that hypothesis, that conclusion cannot yet be drawn due to limitations in data and the wide variation of patient conditions that may be represented by a single administrative grouping such as a DRG. An example of patients in different settings who would appear to be similar are those under DRG-475, which means they were on ventilator life support for at least 96 hours. Such patients may be discharged in conditions that vary greatly. These conditions range from an "alert, talking patient, no longer on life support," to a patient who is "not on life support but is making no progress." There is no administrative data that describes patients at the time of their discharge. MedPAC analysis, therefore, lacks the data to determine why some of those patients went to a higher versus a lower level of care. The SAAR also concludes, based on a letter from the MedPAC Chairman, that LTCH patients cost more on average than patients in other settings. This conclusion is based on an analysis that is unable to differentiate patients within a DRG based on their severity at the time of discharge. The limitation in the DRG is that it is designed to describe the patient's need at the time of admission rather than discharge, so the DRG classification alone does not identify whether the patient was healthy or ill at the time of discharge. Furthermore, MedPAC found that patients who tended to be more severe based on DRG assignment tended to be cared for at similar cost between LTCHs and other settings. In fact, for the tracheostomy patient, which is the extreme of severity and complexity, there was evidence of lower cost of care for patients whose case included an LTCH stay. MedPAC Chairman Glenn Hackbaith, in his March 20, 2006 letter, agreed that CMS's proposed change to the short stay outlier policy was "too severe"; that it affects a "substantial percentage of LTCH patients"; and that it would continue to affect a large percentage of admissions "regardless of the admission policies of LTCHs." MedPAC's March 2006 Report to Congress notes that the total Medicare payments to LTCHs nationwide -- $3.3 billion in 2004 -- represented less than one percent of all Medicare spending. Need Analysis in the Absence of an AHCA Need Methodology The Agency does not have a rule that sets out a formula for determining the need for LTCH beds. Accordingly, AHCA does not publish a fixed need pool for LTCH beds. As the parties agree, this case is governed, therefore, by Florida Administrative Code Rule 59C- 1.008(2)(e)2.a-d (the "Needs Assessment Rule"). Application of the Needs Assessment Rule makes Kindred responsible for demonstrating need through a needs assessment methodology that covers specific criteria listed by the rule as detailed below, following the sections of this Order devoted to Kindred's Need Methodology and AHCA's criticisms of it. Kindred's Need Methodology Kindred bases its need methodology (the "Kindred Methodology") in this case on long-stay patients in short- term hospitals. A description of the Kindred Methodology, supported and proved by the testimony of Mr. Wurdock at hearing, appears in Kindred's CON application under a section entitled "Bed Need Analysis," see Exhibit K-1, at 14. It begins with the statement: "Long-term care hospital bed need can be estimated directly based on the acute care discharges and days occurring in the market." Id. There follows a chart that lists the six Brevard County STACHs and shows the number of patient discharges in the six months ending March 2004 and the patient days for the same period. These total 68,710 and 309,704, respectively. To identify the number of patient days appropriate for LTCH care, the Kindred Methodology takes into account patient diagnosis at discharge, patient age and length of stay. Some types of patients (burn patients, obstetric and pediatric patients or behavioral patients) are not appropriate for LTCH admission. Likewise, patients with short-term rehabilitation diagnoses typically are not appropriate for LTCH care. The first step in the Kindred Methodology, therefore, is to identify and omit those diagnoses which represent patients not appropriate for long-term care admission. Those include all DRGs in the Major Diagnostic Categories (MDC) of 13-Female Reproductive System; 14-Pregnancy, Childbirth and Puerperium; 15- Newborns and Other Neonates; 19-Mental Diseases and Disorders; 20-Alcohol and Substance Abuse; 22-Burns; and 23-Factors Influencing Health Status. Two additional groups of DRGs are omitted by the Kindred Methodology: DRGs specific to patients less than 18 years of age and DRGs for organ transplant patients who are usually required to remain in the STACH for specialized care. The end result of the first step in the Kindred Methodology is a list of 387 short-term acute care DRGs ("LTCH Referral DRGs") that represent patients who potentially could be eligible for LTCH admission. The Kindred Methodology's second step is to identify discharges that are assigned to one of the LTCH Referral DRGs and are aged 18 or older and whose length of stay exceeds a threshold number of days. This threshold is described in the application as follows: The length of stay threshold is defined in terms of the national geometric mean length of stay (GeoMean). That statistic is calculated annually by the federal Centers for Medicare and Medicaid Services (CMS) for each DRG. The number of long-term hospital patients and patient days is affected by the timing of the referrals. Referrals usually occur after the patient's length of stay has become longer than average. It is commonly accepted that many patients who stay in the acute care hospital beyond the geometric mean length of stay would be best cared for in a specialized, long- term environment. Therefore, in this analysis it is assumed that referral to Kindred Hospital Brevard will occur five days after a patient has passed their DRG-specific geometric mean length of stay. This allows time for patient assessment and transfer arrangements. Another important factor affecting the potential number of long-term hospital patients and patient days is the length of time a patient stays in the LTCH. In order to qualify for Medicare certification, long-term care hospitals must maintain a minimum average length of stay of twenty-five days or greater among their Medicare patients. Admission criteria, therefore, are used to minimize the number of Medicare patients requiring just a few days of care. To reflect this in the analysis, patients are considered to be LTCH appropriate only if they would have a long-term hospital length of stay of ten days or more. Exhibit K-1, at 16. Discharged patients, therefore are considered appropriate for LTCH care by the Kindred Methodology if they are discharged from a Brevard County STACH, are at least 18 years of age, are assigned to one of the 387 Referral DRGs, and have a hospital length of stay that exceeds the geometric mean by at least 15 days, the sum of a referral period of five days and an LTCH minimum length of stay of ten days. The third step in the Kindred Methodology is to sum the potential LTCH days produced by the appropriate patients. For these patients, potential LTCH days include all days after the "'transfer day' (i.e., all days that exceed the GeoMean + five days)." Id. For the 12-month period ending March 2004, this calculation yielded approximately 18,400 hospital days in the six Brevard County hospitals, for an average daily census (ADC) of 50.4. The fourth step in the Kindred Methodology is to identify the number of patient days that are leaving Brevard County for LTCH care, due to the absence of an LTCH in the county. During the 12-month period ending in March 2004, 41 Brevard County residents were discharged from Kindred Hospital North Florida in Green Cove Springs and Kindred Hospital Fort Lauderdale. Those patients received 2,229 days of LTCH care, equaling an average daily census of 6.1. Adding that to the 50.4 ADC un-served patients in Brevard County, yields a potential LTCH ADC of 56.5. The fifth step is to account for population growth. This is especially important when there is rapid growth in senior population as there is in Brevard County. According to AHCA projections, the population 65 and over will increase 9.2 percent during the next five years, while the total population will increase 10.8 percent. It is appropriate to increase LTCH ADC at least by 9.2 percent during this time period, since the proposed project will not open until 2007 at the earliest, and will not achieve full utilization until at least 2011. This step produces an LTCH ADC of 61.7. The sixth and final step is to calculate LTCH "bed need" by assuming 85 percent occupancy. Dividing the LTCH ADC of 61.7 by 0.85 yields a bed need of 72 LTCH beds. The Kindred Methodology does not account for the five percent or more of referrals that come from sources other than LTCHs such as nursing homes. Nor does it take into account the admissions from Indian River County currently served by Kindred Hospital Fort Lauderdale, some of which are sure to come to the proposed project if approved. AHCA Criticism The methodology is criticized by AHCA on the bases, among others, that it does not account for beds available elsewhere in District 7, and that it determines need solely within Brevard County, a departure from the statutory mandate which requires Agency review of CON applications with regard to "availability, quality of care, accessibility, and extent of utilization of existing health care facilities in the service district of the applicant." § 408.035(2), Fla. Stat. (emphasis supplied). The Agency's argument with regard to the un- utilized beds at the one existing LTCH in District 7, Select-Orlando, is undermined by recent action of the agency in approving a second Select facility in Orange County, a 40-bed freestanding facility: Select Specialty Hospital-Orange, Inc. ("Select-Orange"). The Agency approved the 40-bed Select-Orange facility, not open at the time of hearing, by way of a Settlement Agreement (the "Select-Orange Settlement Agreement") with the applicant. The two parties to the agreement, AHCA and Select-Orange, jointly stated in that document: [T]he Agency, in recognizing that there are two distinct health systems in the Orlando area, believes that this LTCH is needed for the Orlando Regional Healthcare System due to that unique situation . . . Kindred Ex. 4, at 2. The two distinct health systems in the Orlando area are Orlando Regional Healthcare System, Inc., which has a number of STACHs in the Orlando area including Orlando Regional Medical Center (ORMC), a tertiary medical facility with more than 500 beds, and the Adventist Health System, Inc. (Adventist), a hospital organization with a nationwide presence that as of 2002 operated seven acute care campus systems under a single license held by Adventist d/b/a Florida Hospital in the Orlando Metropolitan Area. See Orlando Regional Healthcare System, Inc. vs. AHCA, Case No. 02-0449 (DOAH November 18, 2002), pp. 8-10. The Select-Orange Settlement Agreement was entered in the midst of administrative litigation over AHCA's preliminary agency action with regard to a CON application. The meaning and impact of AHCA's statement quoted above from the Select-Orange Settlement Agreement were not fully elaborated upon at hearing by any direct evidence. Kindred established through the testimony of Mr. Wurdock and through cross-examination of Ms. Rivera that although Select-Orange was originally approved as a "hospital-in- hospital" or "HIH," that Select-Orange obtained a modification of its CON to become a freestanding facility. Had the facility remained an HIH, federal regulations would have limited the percentage of Medicare referrals that could come from its host hospital, ORMC. As a freestanding facility, Select-Orange has no such limitations. It can fill its beds with referrals from ORMC. Whatever the impact of the freestanding nature of Select-Orange, the Agency's recognition of the unique situation in the Orlando area created by two distinct health systems, such that there is support for a new LTCH when the existing LTCH has available beds, gives rise in this case to an inference in Kindred's favor. If two distinct hospital systems in the Orlando area can support the addition of 40 LTCH beds, then it is highly likely that Brevard County can support a 60-bed LTCH. The county is not a part of the Orlando Metropolitan Area. LTCH referral patterns are north-south along the I-95 corridor (not to Select-Orlando). There are geographic and roadway access issues from Brevard County to the Orlando area demonstrated by commuting patterns that exclude Brevard County from the Orlando Metropolitan Area. And most significantly, the methodology reasonably established need for more than 60 beds in Brevard County. The Needs Assessment Rule The need for any health care service or program regulated by CON Law for which AHCA has not provided a specific need methodology by rule is governed by Florida Administrative Code Rule 59C-1.008(2)(e)(the "Need Assessment Rule"), which states in part: . . . If an agency need methodology does not exist for the proposed project: . . . 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 exist, 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 when they are inconsistent with the applicable statutory and rule criteria: Population demographics and dynamics; Availability, utilization and quality of like services in the district, subdistrict or both; Medical treatment trends; Market conditions; and Competition. The Agency does not publish a fixed need pool for LTCH beds because it does not have a specific need formula or methodology for LTCH beds. The Agency, furthermore, has not provided Kindred with any policy upon which to determine need in this case. Accordingly, Kindred used its own methodology for determining need in Brevard County and elsewhere in the district (the Orlando Metropolitan Area). Finally, since no agency policy exists with regard to an LTCH need methodology, Kindred is required to prove the existence of need for its proposed project on the basis of the five categories of criteria (referred to in the rule as "topics") listed in sub-paragraphs "a. through e.," of paragraph 2., in subsection (2)(e) of the Rule. Population Demographics and Dynamics In assessing an area's population and demographics for the purpose of evaluating LTCH need, special attention is paid to the elderly population because the majority of LTCH patients are Medicare patients. The elderly are also more likely to produce LTCH patients because they are more likely to be medically complex and catastrophically ill with co-morbidities and dependent on medical equipment like ventilators. Brevard County, while home to only an approximate one-quarter of District 7's population, accounts for more than a third of its seniors. While Brevard County's elderly population is experiencing average or slightly below average growth in relation to the rest of the state, there is no question that Brevard County's elderly population is on the increase and reasonably projected to increase in the future. Availability, Utilization, and Quality of Like Services in the District "[B]y definition, putting a long term hospital in Brevard County will increase accessibility [make LTCH services more available] because . . . the people in Brevard County will no longer have to go all the way to Orlando, or Jacksonville, or Ft. Lauderdale for [LTCH] care." Tr. 48. Mr. Wurdock elaborated on the point of district availability at hearing: We did look at the entire district. . . . [T]here [are] only four counties in the district, three of which orbit around the Orlando and then there is the Palm Bay/Melbourne metropolitan area, which is Brevard. And when we looked at the district as a whole, what we discovered was that there is a need really for two new long term hospitals in the district. There is clearly a need for another one in Orlando [beyond the existing Select- Orlando and the approved not yet operating Select-Orange] and there is also a need for one in Brevard County. . . . [You] could build . . . two new long term care hospitals, both of them in Orlando, but that doesn't . . . make . . . sense when you've got a very large concentration of seniors significantly removed from the Orlando area with six short term hospitals in . . . [Brevard C]ounty comprising essentially its own market. So logically, you . . . put one long term hospital in Brevard and then another long term hospital in Orlando. Tr. 48-49. The presence of six STACHs in Brevard County and the large senior population is significant. The closest LTCH is Select-Orlando more than an hour's drive away. The distance to Select-Orlando and Select-Orange's future site from the municipality in which Kindred proposes to site its proposed LTCH, Melbourne, is more than 60 miles, in a direction not favored by Brevard County residents oriented to driving north or south along the I-95 corridor, but not to the west into the Orlando Metropolitan Area. Furthermore, and most significantly, family members rarely fully understand and accept that their catastrophically ill elderly loved one should be shipped 60 miles away when the patient is in a hospital with a good reputation. Their resistance to a referral at such a distance is unlikely to increase utilization at the Orlando area LTCHs no matter how convinced are their physicians and other clinical practitioners that such a move is required for better care. Medical Treatment Trends LTCHs are recognized as a legitimate part of the health care continuum by the federal government and CON approvals of LTCHs in Florida have been on the upswing throughout this decade. At the federal level, in recognition of their treatment of a small but important subset of patients, Medicare has adopted LTCH DRGs, that is, DRGs specific to LTCHs, for reimbursement under Medicare's PPS. At the state level, the Agency recognizes that "[t]he trend is for LTCHs to be increasingly used to meet the needs of patients in other settings who for a variety of reasons are better served in LTCHs." Respondent Agency for Health Care Administration's Proposed Recommended Order, at 15. This recognition is made by AHCA despite MedPAC's concerns, many of which were tempered and adequately addressed by Kindred in this proceeding. Market Conditions At first blush, market conditions might not seem to favor Kindred's application. The occupancy rate in the District indicates that there are available beds. In AHCA's view, the occupancy rate at the one existing LTCH in District 7, the 35-bed Select-Orlando facility, an H-I-H in a converted nursing home at Florida Hospital Orlando, is not optimal. Select-Orlando opened in 2003, only a few years ago, and it is operating at a high occupancy rate that is approaching optimal. Kindred, moreover, did not confine its need case to its Brevard County methodology. It also presented evidence of need in the Orlando Metropolitan Area consisting, in part, of the three other counties in District 7. Competition While the Agency asserts that it did not give competition much weight in this application, AHCA has not taken the position that Kindred's proposed facility would not foster competition. Having an LTCH in Brevard County would foster competition in the traditional sense in that the only LTCHs in the District, one existing and one approved, are those of Select Medical Corporation, Kindred's chief competitor. A Reasonable Methodology for Brevard County In short, Kindred's methodology is reasonable for determining need in Brevard County and it appropriately includes the topics required by the Needs Assessment Rule. The Agency's argument that there is no need for LTCH beds in Brevard County when there are LTCH beds available elsewhere in the district is defeated by its approval of the Select-Orange facility. Whether Kindred's methodology in this case carries the day for Kindred, given the Agency's approach on a district-wide basis to the need for LTCHs, is addressed in the section of this Order devoted to conclusions of law.
Recommendation Based on the foregoing Findings of Facts and Conclusions of Law, it is recommended that the Agency for Health Care Administration issue CON No. 9835 to Kindred Hospitals East, LLC, for a 60-bed, long-term acute care hospital in AHCA Health Planning Service District 7, to be located in Brevard County. DONE AND ENTERED this 29th day of November, 2006, 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 29th day of November, 2006. COPIES FURNISHED: Alan Levine, Secretary Agency for Health Care Administration Fort Knox Building III, Mail Stop 3 2727 Mahan Drive, Suite 3116 Tallahassee, Florida 32308 Christa Calamas, General Counsel Agency for Health Care Administration Fort Knox Building III, Mail Stop 3 2727 Mahan Drive, Suite 3116 Tallahassee, Florida 32308 Richard Shoop, Agency Clerk Agency for Health Care Administration Fort Knox Building III, Mail Stop 3 2727 Mahan Drive Tallahassee, Florida 32308 M. Christopher Bryant, Esquire Oertel, Fernandez, Cole & Bryant, P.A. 301 South Bronough Street Tallahassee, Florida 32302 Sandra E. Allen, Esquire Agency for Health Care Administration Fort Knox Building III, Mail Stop 3 2727 Mahan Drive Tallahassee, Florida 32308
The Issue The issue is whether the Agency should approve the Certificate of Need applications filed by Bethesda and/or JFK, each of which proposes to establish an 80-bed satellite hospital in the West Boynton area of Acute Care Subdistrict 9-5.
Findings Of Fact The Parties (1) Bethesda Bethesda operates Bethesda Memorial, which is a 362-bed not-for-profit hospital in Boynton Beach. Bethesda also operates Bethesda Health City, which is a “medical mall” located in the West Boynton area of South Palm Beach County. As a not-for-profit community-based health care organization, Bethesda’s mission is to provide quality health care services to the residents of South Palm Beach County that it serves regardless of their ability to pay. Bethesda Memorial opened in 1959 as a public hospital under the ownership of Palm Beach County’s former hospital taxing district. Bethesda Memorial was reorganized in 1984 as a private not-for-profit hospital owned by Bethesda. Bethesda Memorial provides tertiary-level care. Bethesda Memorial’s 362 licensed beds include 347 general medical-surgical (med-surg) acute care beds and a 15-bed Level II and Level III neonatal intensive care unit (NICU). A 28-bed comprehensive medical rehabilitation (CMR) unit will open at Bethesda Memorial in 2005, increasing the hospital’s licensed capacity to 390 beds. Not all of Bethesda Memorial’s licensed beds are available for general patient use; 14 of the beds are leased to a hospice program and 14 of the beds are operated under contract as a special care unit (SCU). The hospice lease and the SCU contract run through 2005. Even though the hospice lease and SCU contract have been profitable ventures for Bethesda, several Bethesda witnesses testified that those agreements would not be renewed if Bethesda Memorial needs those 28 beds to accommodate its general patients after its capacity is reduced through the transfer of 80 beds to its proposed satellite hospital; however, as of the date of the hearing, Bethesda had not taken any formal steps to terminate those agreements. It is unclear how the patients that are currently being served in the hospice unit and SCU would be served in the community if Bethesda terminates the agreements. Bethesda Memorial also has a 10-bed “VIP” unit that is generally available only to patients that have contributed at least $50,000 to Bethesda’s charitable foundation and are willing to pay an up-front $750.00 per day charge for the room; however, the beds in the VIP unit can be and have been utilized by other patients when all of the other beds in the hospital are full. Bethesda Memorial has a high-volume obstetrics (OB) program and an active emergency department (ED). Bethesda Memorial also offers a number of specialized programs including a comprehensive cancer program, a pediatrics program, a diagnostic cardiac catheterization program, and a wide variety of outpatient services. Bethesda Memorial is a well-utilized facility; its overall occupancy rate was 73.25 percent from July 2001 though June 2002. Bethesda Memorial does not currently offer interventional cardiology services or open heart surgery, but it has been attempting to get CON or legislative approval to offer those services for the past several years because of their profitable nature. Bethesda Memorial has designated, shelled-in space in its hospital for those services if it ever gets the necessary approvals. The evidence was not persuasive that there are physical or other constraints that would preclude further incremental bed expansions at Bethesda Memorial or that would make such expansions cost-prohibitive. Bethesda recently purchased property adjacent to Bethesda Memorial and was able to get that property rezoned from residential to hospital use. It is unclear how large that property is and what use, if any, Bethesda has planned for that property. Bethesda also owns 1.4 acres of vacant property that is several blocks from Bethesda Memorial. The property is not currently zoned for hospital use, and because it is somewhat isolated from Bethesda Memorial, Bethesda intends to sell the property rather than develop it. Bethesda Memorial is accredited by the Joint Commission on Accreditation of Healthcare Organizations (JCAHO). Bethesda Health City is a 135,000 square foot “medical mall” or “hospital without beds” that opened in 1995. The facility is located in the West Boynton area at the intersection of Hagan Ranch Road and Boynton Beach Boulevard, just east of the Florida Turnpike. Bethesda Health City offers services such as diagnostic imaging, outpatient rehabilitation, radiation therapy, and a woman’s center. The facility has offices for approximately 20 physician groups, and it also provides community outreach services targeted to the large senior population in the West Boynton area. Bethesda Health City was established to help Bethesda Memorial capture patients from the growing West Boynton area, and it has done so. There is capacity to add an additional 30,000 to 40,000 square feet of space to Bethesda Health City, and Bethesda intends to expand the facility whether or not its proposed satellite hospital is approved. Bethesda Health City provides Bethesda a significant physical presence in the West Boynton area. The facility has contributed to Bethesda Memorial’s significant and stable market share in the West Boynton area. In addition to Bethesda Memorial and Bethesda Health City, Bethesda administers a charitable foundation whose primary purpose is to fund Bethesda Memorial’s capital acquisitions and improvements. The foundation has considerable assets and is in the midst of a $100 million capital campaign through which it has already raised approximately $37 million. Bethesda Memorial experienced considerable and constant growth in its admissions and patient days between 1997 and 2003; its admissions grew by 45 percent and its patients days grew by 44 percent over that period. Bethesda Memorial is financially sound. It has substantial cash reserves and it is well-rated by the financial markets. The evidence was not persuasive that Bethesda’s current or long-term financial situation is distressed. Unlike other not-for-profit hospitals in District 9, Bethesda Memorial is a profitable hospital. Between 1997 and 2002, Bethesda Memorial’s operating income averaged approximately $5.5 million and in 2003, its operating income was approximately $7 million. In each of those years, the hospital also had significant non-operating revenues such that its total revenues over expenses during that period averaged approximately $10 million. The Bethesda system as a whole is also profitable. It had operating income of $2.4 million in 2002 and $2.1 million in 2001. Bethesda Memorial and the Bethesda system did not perform as well financially as JFK, Delray, or Wellington between 1997 and 2002; each of those hospitals had higher returns on assets, returns on equity, and total margin over that period than did Bethesda Memorial and Bethesda, and JFK and Delray had considerably more operating income over that period than did Bethesda Memorial. Bethesda Memorial’s CMR unit is projected to have a positive financial impact on Bethesda starting in 2005, and if approved, Bethesda Memorial’s open heart surgery program is also projected to have a positive impact on Bethesda’s long-term financial condition. (2) JFK JFK is owned by HCA, Inc. (HCA). HCA is nationwide, for-profit hospital chain. JFK is a 424-bed for-profit hospital in Atlantis, which is a small municipality in the Lake Worth area. JFK provides tertiary-level care. JFK is the most highly utilized hospital in District 9, and one of the most highly utilized hospitals in the state. JFK’s annual occupancy rate was 89.96 percent between July 2001 and June 2002, JFK is one of thee HCA hospitals in Palm Beach County. The others are Columbia and Palms West, both of which are in North Palm Beach County, Subdistrict 9-4. JFK operated as a not-for-profit hospital for approximately 30 years until it was purchased by HCA in 1996. Approximately $120 million of the purchase price paid by HCA was used to establish a charitable foundation, the Quantum Foundation, which funds a variety of health-related projects in the South Palm Beach County area. The services provided at JFK include orthopedics, cancer services, interventional cardiology and open heart surgery, neurologic services, and internal medicine. JFK does not offer pediatric or OB services. HCA has made significant capital improvements at JFK since it acquired the hospital. The community image of the hospital and the morale of its employees has significantly improved since the acquisition by HCA. JFK is accredited by JCAHO. JFK recently received a CON to add 36 beds, which will increase its licensed capacity to 460 beds. The beds will be located in shelled-in space on the fifth floor of JFK’s south tower, but they have not yet been brought on-line. JFK’s recently-constructed northwest tower was engineered so that an additional two floors can be added to that tower in the future, which would allow JFK to add 36 more beds. The evidence was not persuasive that there are physical or other constraints that would preclude further incremental bed expansions at JFK beyond the 72 beds identified above. JFK is attempting to acquire a long-term lease for 19 acres across the street from its hospital that would be used for parking and medical office buildings. If that property is leased and developed, JFK may be able to free-up additional space for future bed expansions; however, the record does not establish the likelihood of the lease being consummated, the amount of space that might be freed-up if that property was developed, or any of the costs associated therewith. JFK recently constructed a medical office building in the West Boynton area that includes a wound care center and a diabetes center. That facility is on Jog Road, north of Boynton Beach Boulevard. Aside from the medical office building, JFK had not formally targeted the West Boynton area for expansion; its most recent strategic plan did not mention the prospect of locating a satellite hospital in that area. (3) Delray Delray is owned by Tenet Healthcare Corporation (Tenet). Tenet is a nationwide, for-profit hospital chain. Tenet operates four hospitals in Palm Beach County in addition to Delray, including West Boca Medical Center (West Boca) in South Palm Beach County, and Good Samaritan, St. Mary’s, and Palm Beach Gardens in North Palm Beach County. Delray is a 372-bed for-profit hospital in Delray Beach. Delray is located approximately 2.5 miles south of Atlantic Boulevard. Delray is in zip code 33484, but it is near the eastern boundary of zip code 33446. Delray opened in 1982, and is accredited by JACHO. Delray provides tertiary-level care. Delray is located on a “campus” that includes the hospital building, a 53-bed in-patient psychiatric facility known as Fair Oaks Pavillion (Fair Oaks), and a 90-bed CMR facility known as Pinecrest Rehabilitation Hospital. There is a separately-licensed 120-bed nursing home located adjacent to the campus. Delray’s 372 licensed beds include the 53 in-patient psychiatric beds at Fair Oaks, which is approximately 200 yards from Delray’s main hospital. Delray has added 108 beds to its hospital since 1996. Even with those bed additions, Delray remains a very highly utilized facility; its annual occupancy rate between July 2001 and June 2002 was 82.32 percent. Delray shelled-in space for an additional 31 beds as part of a recent expansion of its ED and ambulatory care unit. Delray intends to put those beds into service as soon as it can. Delray has the ability to further expand its hospital beyond the 31 beds planned for the shelled-in space. It already has local government approval for a total of 616 beds on its campus. The services provided at Delray include general medical and surgery services, trauma, interventional cardiology, open heart surgery, in-patient psychiatric services, orthopedics, and neurosurgery, with a special focus on chronically-ill elderly patients. Delray does not provide OB services. Delray has been the only provider of in-patient psychiatric services in South Palm Beach County since October 2001 when Bethesda Memorial discontinued its program. Delray has been a state-designated Level II trauma center since 1991, which requires it to have a neurosurgeon, trauma surgeon, and other specialists and specialized equipment available at all times. Delray receives funding from the local health district to help offset a large portion of the costs associated with providing its trauma services. Delray leases space in a medical office building in the West Boynton area where it provides diagnostic imaging, mammography, and laboratory services. Delray’s service area includes zip codes 33437, 33446, and 33467, which are being targeted by Bethesda and JFK with their proposed satellite hospitals. Delray is currently, and historically has been a very profitable hospital. It reported a “total margin” of approximately $32.9 million on its May 2002 “Prior Year Report” filed with the Agency,4 and it reported operating income of $40.5 million in its audited financial statements for fiscal year 2003. (4) Wellington Wellington is owned by Universal Health System (Universal). Universal is a nationwide, for-profit hospital chain. Wellington is a 121-bed for-profit hospital in the northwestern portion of South Palm Beach County. Wellington is located in zip code 33414, approximately 2.5 miles south of Southern Boulevard at the intersection of State Road 7 (also known as U.S. Highway 441) and Forest Hill Boulevard. Wellington opened in 1986 as an osteopathic hospital, and approximately 25 percent of its current medical staff is osteopathic physicians. Wellington is accredited by JCAHO and the American Osteopathic Association. Wellington provides tertiary-level care. Wellington is easily accessible from Forest Hill Boulevard and State Road 7, and the hospital is served by the Palm Beach County bus system, which has a stop in Wellington’s parking lot. Wellington has made substantial capital improvements to its hospital over the past five years. Those improvements were designed to enhance the hospital’s efficiency in serving its current patients and also to anticipate future patient demand. Wellington owns 29 acres of property adjacent to the 26-acre site on which the hospital is located. The adjacent property is currently undeveloped and it is available for future expansions of Wellington. Wellington’s chief executive officer (CEO) testified that Wellington has a site plan approved for its undeveloped property and that it has “vested concurrency” for the future development of that property; however, that testimony was not corroborated (as was the case with Delray’s approved master plan) and therefore is not persuasive. The services at Wellington include an ED, an OB program, general medical and surgical care, an orthopedic unit, a comprehensive cancer center, a wound care center, a cardiology program with a dedicated cardiovascular intensive care unit, and an outpatient diagnostic center. Wellington’s OB program includes 18 labor rooms, 19 post-partum rooms and a 10-bed Level II NICU. Wellington delivers approximately six babies per day and has the capacity to deliver up to 15 babies per day. Wellington’s utilization has steadily grown over the years, but it is still one of the lowest utilized facilities in South Palm Beach County; its annual occupancy rate was 64.27 percent between July 2001 and June 2002. Wellington derives approximately 90 percent of its patients from a geographic area bounded by Military Trail on the east, the Loxahatchee National Wildlife Refuge on the west, Okeechobee Boulevard to the north, and Boynton Beach Boulevard to the south. That area includes zip codes 33414, 33437, 33463, and 33467, which are being targeted by Bethesda and JFK with their proposed satellite hospitals. Wellington has teaching and training programs for physician assistants and certified nurse anesthetists under contracts with Florida International University and Florida Atlantic University. Wellington also has a family practice residency/internship teaching program for osteopathic doctors that is affiliated with Lake Erie School of Osteopathic Medicine, and a three-year dermatology teaching program. When Wellington was established in 1986, there was very little population in the western portion of South Palm Beach County to support the hospital. As a result, the hospital was unprofitable in its early years, and by 2000, it had accumulated a deficit of $22 million. Wellington’s financial performance has improved significantly in the past several years, but it still has a large accumulated deficit. Wellington is relying on its ability to retain or increase its market share in the growing West Boynton area in order to remain profitable and eliminate its accumulated deficit. (5) Agency The Agency is the state agency responsible for administering the CON program and licensing hospitals and other health care facilities. Application Submittal and Review and Preliminary Agency Action Bethesda and JFK each filed CON applications with the Agency in the first “hospital beds and facilities” batching cycle of 2003. Each application sought to establish a new 80- bed satellite hospital in the West Boynton area of South Palm Beach County, Subdistrict 9-5. The fixed need pool published by the Agency for the applicable batching cycle identified a need for zero acute care beds in Subdistrict 9-5. There were no challenges to the published fixed need pool. The letters of intent and CON applications filed by Bethesda and JFK for their respective satellite hospitals were timely filed and complied with all of the technical submittal requirements in the governing statutes and rules. JFK’s letter of intent was filed within the “grace period” (see Florida Administrative Code Rule 59C-1.008(1)(d)2.) in direct response to Bethesda’s earlier-filed letter of intent. There is nothing inherently improper about a “grace period” letter of intent, and very little significance has been given to the responsive nature of JFK’s proposal in the comparative evaluation of the CON applications. A public hearing was held on the applications by the local health council on April 24, 2003.5 Presentations were made at the public hearing in support of and in opposition to the applications. The opposition came primarily from a representative of Delray; the support came from representatives of Bethesda and JFK and several residents of the West Boynton area. The reasons offered by the speakers for their opposition or support of the applications were essentially the same as those presented at the hearing, and no independent significance has been given to the testimony and “evidence” presented at the public hearing. Bethesda’s and JFK’s applications were comparatively reviewed by the Agency in accordance with the Agency’s rules and standard procedures. On June 13, 2003, the Agency issued its State Agency Action Report (SAAR) based upon its comparative review of the applications. The SAAR recommended approval of Bethesda’s application and denial of JFK’s application. The Agency’s published notice of intent to approve Bethesda’s application and to deny JFK’s application in the June 27, 2003, edition of the Florida Administrative Weekly as required by statute and Agency rule. The Agency reaffirmed its preliminary decisions on the applications through the hearing testimony of Jeffrey Gregg, the Bureau Chief of the Agency’s CON program. The petitions for administrative hearing challenging the Agency’s preliminary decisions on the CON applications at issue in this proceeding were all timely filed. Acute Care Subdistricts 9-4 and 9-5 The Agency calculates the inventory of acute care beds on a subdistrict basis, and it considers CON applications for additional acute care beds on a subdistrict basis. Palm Beach County is in District 9, which is divided into five subdistricts. Only two of the subdistricts, 9-4 and 9-5, are relevant in this case. Subdistrict 9-4 is North Palm Beach County, and Subdistrict 9-5 is South Palm Beach County. The dividing line between the two subdistricts is Southern Boulevard. There are six existing acute care hospitals in Subdistrict 9-5: Bethesda Memorial, JFK, Delray, Wellington, West Boca, and Boca Raton Community Hospital (Boca Community). Boca Community and Bethesda are the only not-for- profit hospitals in Subdistrict 9-5; the others are for-profit hospitals. The service area of Palms West, which is located on Southern Boulevard in Subdistrict 9-4, includes portions of Subdistrict 9-5 and the West Boynton area. The utilization of hospital services in Subdistrict 9- 5 has historically been higher than the utilization of hospital services in Subdistrict 9-4. In calendar year 2002, for example, the average occupancy rate of the Subdistrict 9-5 hospitals was 78.2 percent as compared to 55.6 percent for the Subdistrict 9-4 hospitals; and during the “peak season” of January through March 2002, the average occupancy rates were 88.4 percent in Subdistrict 9-5 and 62 percent in Subdistrict 9-4. The West Boynton Area The West Boynton area is an unincorporated area of South Palm Beach County. Its approximate boundaries are Congress avenue on the east, the Loxahatchee National Wildlife Reserve on the west, the L-30 canal (which is several miles north of Atlantic Avenue) on the south, and Hypoluxo Road on the north. The West Boynton area roughly corresponds to the geographic area that is included in zip codes 33436, 33437, 33463, and 33467. The Florida Turnpike, which runs north-south, roughly bisects the West Boynton area. The Turnpike is not a geographic barrier between the east and west portions of the West Boynton area, but it served as the de facto boundary of the urban service area until approximately 10 years ago when significant amounts of development began to “jump” the Turnpike. Boynton Beach Boulevard is the primary east-west road in the West Boynton area, although there are several other east- west arterial roads within the area including Lantana Road and Hypoluxo Road. Other major east-west roads in close proximity to the West Boynton area are Forest Hill Boulevard, Lake Worth Road, and Atlantic Avenue. There are several major north-south roads in the West Boynton area in addition to the Turnpike, including Jog Road, Hagen Ranch Road, and State Road 7. State Road 7 is the westernmost major north-south road in South Palm Beach County. As a result of local zoning restrictions, very little development in the West Boynton area is or will be west of State Road 7. The 2002 population of the West Boynton area, as defined by the four zip codes identified above, was approximately 156,000. There are seasonal variations in the population, but they are not as significant as the seasonal variations in the population of the more easterly portions of Palm Beach County. The population of the West Boynton area is projected to grow to approximately 181,000 by 2007, which corresponds to an annual growth rate of approximately 3.1 percent per year. That growth rate is higher than the annual growth rate projected over that period for the state as a whole (1.6 percent), Palm Beach County (two percent), and District 9 (1.9 percent). Approximately 89 percent of the 2003 population of the West Boynton area was located to the east of the Turnpike. The portion of the West Boynton area to the west of the Turnpike is projected to grow at a considerably faster rate through 2008 than the area to the east of the Turnpike, which is consistent with the extensive amount of residential development that is underway or approved in the West Boynton area west of the Turnpike. In 2002, approximately 28.6 percent of the residents of the West Boynton area were in the age 65 and older (“65+”) age cohort. That percentage is higher than the percentages in that age cohort for the state as a whole (17.5 percent), Palm Beach County (22.5 percent), or District 9 (22.5 percent). The 65+ age cohort is projected to remain the largest segment of the West Boynton area population through 2008. A large number of the existing residential communities and the communities under development in the West Boynton area are retirement communities that are deed-restricted to persons over the age of 55, which contributes to the higher percentage of the population in the 65+ age cohort currently and projected in the future. The West Boynton area is more affluent than and offers a better payer-mix than the existing service areas of Bethesda Memorial and JFK. As compared to the existing service areas of those hospitals, the West Boynton area has a lower percentage of uninsured residents, a higher percentage of Medicare and insured residents, a lower percentage of households with annual incomes below $20,000, and a higher percentage of households with annual incomes above $60,000. There is currently healthy competition in the West Boynton area for acute care services. That competition includes each of the four hospital parties in this case as well as several other hospitals. JFK, Bethesda, Wellington, and Delray, collectively accounted for approximately 72 percent of the discharges from the West Boynton area in calendar years 2000, 2001, and 2002. The percentage of the West Boynton area discharges attributable to each of those hospitals or, stated another way, the hospitals' market shares in the West Boynton area over that period are as follows6: 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% There is no credible evidence that there will be any significant changes in those relative market shares over the five-year planning horizon applicable to the applications at issue in this case if a new hospital is not approved in the West Boynton area. Stated another way, 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. As discussed below, if either of the proposed satellite hospitals are approved, the market share of the approved hospital will increase to the detriment of the other hospitals. There is considerable community support for a new hospital in the West Boynton area from the residents of that area, as reflected in the letters of support included in the CON applications, the testimony at the local public hearing on the applications, and the deposition testimony from area residents and the related exhibits introduced at the hearing. The community support is not, on balance, directed to the approval of Bethesda's proposed satellite hospital over JFK’s proposed satellite hospital, or vice versa; it is simply for the expeditious approval of a hospital. Need for OB Services in the South Palm Beach County and/or the West Boynton Area There are currently four OB programs in Subdistrict 9-5. The programs are at Bethesda Memorial, Wellington, West Boca, and Boca Community. The evidence is not persuasive that an additional OB program is needed in Subdistrict 9-5. Indeed, Dr. Samuel Kaufman, an OB/GYN who has practiced in the area for many years, testified credibly that the four existing OB programs in the subdistrict are just now beginning to do enough deliveries to be efficient. There was no persuasive evidence that there are accessibility problems at the existing OB programs because of their utilization rates. Indeed, the OB unit at Wellington has the capacity to handle up to an additional nine deliveries per day. Each of the existing OB programs offers Level II and/or Level III NICU services, which is typically referred to as “NICU backup.” It is not feasible to provide NICU backup at a low-volume OB program such as the 10-bed OB unit proposed in JFK’s satellite hospital. It is important to have NICU backup because it is not uncommon for high-risk OB patients to unexpectedly present to the hospital and, in such circumstances, it is better for the child to have NICU services at the hospital where he or she is delivered rather than having to be transferred to another hospital. The standard of care in South Palm Beach County requires NICU backup and, based upon malpractice liability concerns, some OB/GYNs will not deliver babies at a hospital that does not have NICU backup. OB is among the top ten discharges in the proposed service area of JFK’s satellite hospital, which is not uncommon around the state; however, because of the lower average length of stay (ALOS) associated with an OB admission, the high number of discharges does not correlate to a large number of patient days in the service area. The population group that is most likely to utilize OB services is females between the ages of 15 and 44 (hereafter “the Female 15-44 age cohort”). Only 16 percent of the 2002 population of the West Boynton area was in the Female 15-44 age cohort, and that cohort is projected to grow at a slower annual rate (2.3 percent) than the population of the West Boynton area as a whole (3.1 percent) through 2007.7 The relatively small portion of the population in the Female 15-44 age cohort is consistent with the data showing the highest percentage of the population in the West Boynton area in the 65+ age cohort. It is also consistent with the testimony and evidence regarding the number of existing and planned deed- restricted retirement communities in the West Boynton area. The logic of including an OB unit in the proposed JFK satellite hospital is undercut by the recent closure of the OB unit at Columbia. According to Columbia’s CEO, Columbia’s OB unit was closed in 2002 because it “was a small unit” with a low volume, because the service area from which Columbia was drawing its patients was predominately elderly, and because there were several other hospitals within close proximity to Columbia that had larger OB units with NICU backup. Based upon those factors, Columbia’s CEO concluded that “there was no real community need to do OB” and that “it just didn’t make sense” to do OB. The same factors exist in the West Boynton area and, as a result, the comments of Columbia’s CEO are equally applicable to the inclusion of an OB unit in the proposed JFK satellite hospital. The Proposed Satellite Hospitals (1) Bethesda West Bethesda’s application, CON 9659, proposes to establish an 80-bed satellite hospital in the West Boynton area by de-licensing 80 beds at Bethesda Memorial and then transferring those beds to the proposed satellite hospital. The transfer of beds proposed in Bethesda’s application will not increase the inventory of acute care beds in either District 9 or Subdistrict 9-5. The 80-bed increase at Bethesda West will be offset by the 80-bed decrease at Bethesda Memorial, both of which are in Subdistrict 9-5. The beds transferred to Bethesda West will come from double-occupancy rooms, thereby allowing Bethesda Memorial to convert those rooms to private rooms. The conversion to private rooms will create efficiencies at Bethesda Memorial by eliminating gender-based or disease-based conflicts between patients that often arise with double-occupancy rooms. The transfer of 80 beds to Bethesda West will reduce Bethesda Memorial’s licensed capacity to 282 beds. That figure includes the 15 NICU beds, the 14 hospice beds, and the 14-bed SCU; therefore, after the bed transfer, Bethesda Memorial will have only 239 beds available for general patient use. Bethesda Memorial is projected to have 80,630 patient days (excluding NICU and CMR patient days) in Bethesda West’s second year of operation.8 That equates to an ADC of 221 patients and an occupancy rate of 92.4 percent for the 239 beds available for general patient use. If the hospice lease and the SCU contract are not renewed in 2005, then Bethesda Memorial would have 267 beds available for general patient use and its occupancy rate would be 82.7 percent. The non-renewal of the hospice lease and the SCU contract would not add new acute care beds to Subdistrict 9- 5 because those beds are still considered to be acute care beds for purposes of the Agency's bed inventory for the subdistrict, even though they are currently designated for specific purposes. With an annual occupancy rate of 92.4 percent or even 82.7 percent, there would likely be days on which Bethesda Memorial’s occupancy rate would exceed 100 percent. This is not an uncommon occurrence at the hospitals in Subdistrict 9-5, particularly during the “peak season” of January through March. Bethesda Memorial could operate efficiently and provide high quality care with an occupancy rate of 82.7 percent or 92.4 percent without adding new beds. Indeed, JFK and Delray each have similar occupancy rates (and even higher occupancy rates during the “peak season”), and it is undisputed that they provide high quality care. Because the addition of new acute care beds at an existing hospital is no longer linked to the hospital’s occupancy rate, Bethesda Memorial (like any other existing hospital) is free to add new acute care beds whenever it chooses to do so; however, the evidence was not persuasive that Bethesda will, in fact, add new beds at Bethesda Memorial after the bed transfer to Bethesda West notwithstanding the resulting high utilization rate at Bethesda Memorial.9 Bethesda West will include 68 general med-surg beds, 12 critical care beds, a full service ED, and related ambulatory and outpatient services. All of the beds at Bethesda West will be in private rooms. Bethesda West will not offer OB services or dedicated pediatric services, and it will not include a cardiac catheterization lab. Bethesda West will be in a new 190,130 square foot building. The space plan for Bethesda West is reasonable, and its design complies with all applicable building and construction codes. The projected timetable for construction and completion of Bethesda West is also reasonable. Bethesda West will be located at the intersection of Boynton Beach Boulevard and State Road 7, which is approximately two miles west of the Turnpike. That location is three miles from Bethesda Health City, eight to nine miles from Wellington, and ten to 11 miles from Delray, JFK, and Bethesda Memorial. Bethesda West could not be collocated with Bethesda Health City because there is not enough property at that location to construct a satellite hospital with the necessary parking facilities. Bethesda has contracted to purchase 54 acres of property at the intersection of Boynton Beach Boulevard and State Road 7 known as the “Amestoy Property.” The purchase price of the Amestoy Property was $110,000 per acre. Bethesda intends to develop Bethesda West on approximately 30 acres of the Amestoy Property and then lease or sell the remainder of the property for the development of medical office buildings. A 30-acre site is adequate for the proposed 80-bed satellite hospital, although it may inhibit future expansion. Bethesda West intends to utilize the same medical staff as Bethesda Memorial; however, Bethesda has not discussed the issue with its medical staff as a whole10 nor has it developed specific plans to implement its dual-staffing approach. Bethesda West will share management and administrative support services with Bethesda Memorial rather than duplicating those services. The total cost of Bethesda West is $73.8 million. The primary service area (PSA) for Bethesda West consists of zip codes 33436, 33437, 33463, and 33467, which roughly correspond to the boundaries of the West Boynton area. The hospital’s secondary service area (SSA) includes zip codes 33414 and 33446. There is significant overlap in the proposed service area of Bethesda West and the current service area of Bethesda Memorial; four of the six zip codes in Bethesda West’s service area are in Bethesda Memorial’s service area. There is also significant overlap between the proposed service area of Bethesda West and the service areas of Delray, Wellington, and JFK; each of the zip codes in Bethesda West’s proposed service area is also within the service area of at least two of those hospitals. Bethesda West is projected to have 10,430 patient days in its first year of operation and 14,570 patient days in its second year of operation. Those patient days equate to ADCs of 29 and 40, and occupancy rates of 35.7 percent and 49.9 percent in the first and second years of operations. By the fourth year of operation, Bethesda West is projected to have an ADC of 56, which equates to an occupancy rate of 65.2 percent. These occupancy rates are reasonable, as is the “ramp up” concept on which they are based. The projected utilization at Bethesda West is based upon an ALOS of 4.6 days. That ALOS was derived from information in the Agency’s in-patient database for residents of the West Boynton area who received in-patient services of the kind that would be offered at Bethesda West. It is a reasonable ALOS.11 The projected utilization assumes that Bethesda West will have an overall market share of 7.5 percent in its service area in the first year of operation, and that Bethesda West’s overall market share will increase to 13.5 percent by its fourth year of operation. Bethesda West is not projected to have a market share of greater than 15 percent in any individual zip code until its third year of operation. The utilization and market shares projected for Bethesda West are reasonable and attainable based upon the demographics and projected population growth in the West Boynton area. Bethesda West is projected to take patients from the hospitals that currently serve the West Boynton area, including Bethesda Memorial. Bethesda's application projects that 3,040 patients from Bethesda Memorial will be “redistributed” to, or “cannibalized” by Bethesda West in Bethesda West’s first year of operation and that the number will increase to 4,530 patients in Bethesda West's second year of operation. The remainder of Bethesda West’s projected patient days – 7,390 in its first year of operation and 10,040 in its second year of operation – will come from patients who are currently being served by an existing hospital or from growth in the service area. In addition to these projected in-patient admissions, Bethesda West is projected to have outpatient registrations ranging from 22,440 (first year of operation) to 46,310 (fourth year of operation) and ED visits ranging from 8,990 (first year of operation) to 19,720 (fourth year of operation). The projected outpatient registrations and ED visits are reasonable and attainable. Some of the outpatient registrations at Bethesda West will come at the expense of Bethesda Health City because it is currently providing some of the same outpatient services that are proposed for Bethesda West. There is no persuasive evidence quantifying the number of Bethesda West’s outpatient registrations that would have otherwise gone to Bethesda Health City, nor is there any persuasive evidence quantifying the financial impact of the redistribution of those outpatients. (2) Proposed JFK Satellite Hospital JFK’s application, CON 9660, proposes to establish an 80-bed satellite hospital in the West Boynton area by de- licensing 80 beds at Columbia and then transferring those beds to the proposed JFK satellite hospital. Columbia is located in Subdistrict 9-4 and, like JFK, it is an HCA hospital. The bed transfer proposed by JFK will increase the inventory of acute care beds in Subdistrict 9-5 by 80 beds, but the bed inventory in District 9 will remain the same; the 80-bed increase in Subdistrict 9-5 at JFK’s proposed satellite hospital will be offset by an 80-bed decrease in Subdistrict 9-4 at Columbia. Columbia has 250 licensed beds, of which 150 are acute care beds, 12 are skilled nursing beds, and 88 are psychiatric beds. Columbia’s acute care beds include a 20-bed intensive care unit/critical care unit (ICU/CCU), but only 10 of those beds are currently being used. The 12-bed skilled nursing unit is not currently being used. The acute care beds at Columbia are not well- utilized. In calendar year 2002, the utilization rate for Columbia’s 150 acute care beds was only 40 percent and during the “peak season” in 2002, the utilization rate of those beds was only 47.6 percent. The proposed bed transfer would enable Columbia to convert its existing semi-private rooms to private rooms, but according to Columbia’s CEO, to do so Columbia would also need to convert its 12 skilled nursing beds to acute care beds. JFK’s CON application did not make reference to that necessary bed conversion. The conversion of the 12 skilled nursing beds to acute care beds may require Agency approval, which Columbia had not requested as of the date of the hearing. If the bed conversions described by Columbia’s CEO did not occur, the utilization rate of the 70 remaining acute care beds at Columbia after the transfer will likely exceed 80 percent on an annual basis and, during the “peak season,” the occupancy rate will likely exceed 100 percent. Indeed, applying the number of patient days at Columbia in calendar year 2002 to 70 beds results in an annual occupancy rate of 85.7 percent and an occupancy rate of 102 percent in the “peak season.” Under the pre-2004 law, those occupancy rates would allow Columbia to add beds without CON review, and Columbia’s CEO testified that she would take steps to add beds at Columbia if necessary based upon the facility’s occupancy rates after the bed transfer. There is no credible evidence that JFK planned to construct a satellite hospital in the West Boynton area prior to February 2003. The proposal was not included in any of JFK’s strategic or business plans prior to that date. There is also no credible evidence that the Columbia planned to de-license any beds at its facility prior to the CON application at issue in this proceeding; Columbia’s long-term business plan includes the beds that are being transferred to JFK’s proposed satellite hospital. The decision to de-license and transfer 80 beds from Columbia was made by HCA officials, not Columbia’s management team. The proposed JFK satellite hospital will include 60 general med-surg beds, a 10-bed OB unit, a 10-bed ICU/CCU, a full-service ED, and surgical suites. The hospital will provide radiation oncology services, diagnostic cardiac catheterization services, and outpatient psychiatric services, and all of its beds will be in private rooms. In addition to the 80 beds described above, the proposed JFK satellite hospital will have a 12 “observation” beds in private rooms. The observation beds will be sized and equipped in the same manner as the general med-surg beds. As a result, the proposed JFK satellite hospital will effectively have 92 beds even though it will only be licensed for 80 beds. The proposed JFK satellite hospital will be in a new 195,195 square foot building. The space plan for the hospital is reasonable, and its design complies with all applicable building and construction codes. The projected timetable for construction and completion of the hospital is also reasonable. The proposed JFK satellite hospital will be located at the intersection of Boynton Beach Boulevard and the Turnpike on a 50-plus acre site known as the “Mazzoni Property.” That location is eight to nine miles from Delray and Bethesda Memorial, and 11 to 12 miles from Wellington and JFK. JFK has offered to purchase the Mazzoni Property for $130,000 per acre, but as of the date of the hearing, it had not entered into a contract to purchase the property. Bethesda had been in negotiations for the purchase of the Mazzoni Property at a similar price before it settled on, and entered into a contract to purchase the Amestoy Property. Like Bethesda, JFK intends to develop medical office buildings on its site in addition to the proposed satellite hospital. The size of the Mazzoni Property is adequate for those purposes. JFK intends to utilize its medical staff to cover the proposed satellite hospital; however, there is no credible evidence in the record detailing how the dual-staffing would work. The proposed JFK satellite hospital will share some of its management and administrative support services with JFK, but not to the same extent as those services are shared between Bethesda West and Bethesda Memorial. Indeed, the proposed JFK satellite hospital was planned and staffed as a “stand alone economic entity.” The total cost of the proposed JFK satellite hospital is approximately $109.8 million. The service area of JFK’s proposed satellite hospital is considerably larger than the service are of Bethesda West. The PSA consists of zip codes 33437, 33467, 33446, and 33484; the SSA consists of zip codes 33436, 33463, 33414, 33413, 33445, 33496, and 33498. There is significant overlap between the service area of the proposed JFK satellite hospital and the existing service areas of Bethesda, Delray, Wellington, and JFK; each of the zip codes in the proposed service area is within the service area of at least two of those hospitals. Zip codes 33437 and 33467 are expected to generate over 92 percent of the patients for the proposed JFK satellite hospital. The inordinately high number of patients that these two zip codes are expected to generate calls into question the reasonableness of service area defined by JFK, or at least the relevance of the SSA. The proposed JFK satellite hospital is projected to have 20,851 patient days in its first year of operation and 21,576 patient days in its second year of operation, which equate to ADCs of 57 and 59 and occupancy rates of 71.4 percent and 73.7 percent. By the fifth year of operation, the proposed JFK satellite hospital is projected to have an occupancy rate of percent. The projected utilization of the proposed JFK satellite hospital was based on an ALOS of 3.9 days. That figure is reasonable. See Endnote 11. To achieve the projected utilization, the proposed JFK satellite hospital will have to immediately achieve inordinately high market shares in its two primary zip codes, 33437 and 33467. Indeed, the CON application projects that the proposed JFK satellite hospital will have a 27 percent market share in zip code 33437 and a 24 percent market share in zip code 33467. It is unreasonable to expect that a new, start-up hospital will be able achieve the market share or utilization rates projected by JFK for its proposed satellite hospital even though it will be affiliated with JFK, which has an established market reputation in the area. Instead, similar to other new hospitals, the proposed JFK satellite hospital will likely have a “ramp up” period before it achieves its target market penetration and/or utilization. The 10-bed OB unit at the proposed JFK satellite hospital is projected to have an ADC of 6 in each of the first two years of operation, and approximately one half of the admissions are projected to come from zip code 33467. That zip code has fewer residents in the Female 15-44 age cohort than does zip code 33463, which is in the West Boynton area but is in the SSA of the proposed JFK satellite hospital. The utilization of the OB unit assumes market shares of 65 percent in zip code 33437, which is the zip code where the proposed JFK satellite hospital will be located (i.e., its “home zip code”), and 60 percent in the adjacent zip code 33467. Those market shares are not inherently unreasonable for OB services since OB patients are more likely to utilize a facility closer to their home; however, the market shares are materially higher than the market shares that the established programs at Palms West (45 percent) and Wellington (41 percent) have in their home zip codes. The market shares proposed for the other zip codes in the proposed JFK satellite hospital’s service area are also somewhat higher than would be expected, particularly for a start-up OB program, but they are not inherently unreasonable. Even though the OB market shares assumed by JFK are not inherently unreasonable, they are unrealistic under the circumstances of this case because the OB unit at the proposed JFK satellite hospital will not have NICU backup, which is the standard of care in South Palm Beach County, and it is unlikely that obstetricians will refer their patients to the proposed satellite hospital when other hospitals with NICU backup (e.g., Wellington and Bethesda Memorial) are available in close proximity to the West Boynton area. The patient days for the OB unit were projected based upon a population-based use rate rather than based upon a fertility rate applied to the Female 15-44 age cohort. Because the Female 15-44 age cohort is growing at a slower rate than the population as a whole, JFK’s methodology had the effect of overstating the OB patient days and the ADC of the OB unit. The fertility rate methodology is a more reasonable approach under the circumstances of this case. That methodology results in an ADC of only two to four patients in the OB unit at the proposed JFK satellite hospital, which is a more reasonable projection and is more consistent with the largely elderly demographic of the West Boynton area. In sum, the projected utilization of the proposed JFK satellite hospital is overstated, particularly in the first two years of operation, as a result of the unrealistic market shares projected for the hospital’s two primary zip codes and the overstated projection of OB patient days in the West Boynton area. The proposed JFK satellite hospital is projected to take patients from the hospitals that currently serve the West Boynton area, including JFK. JFK projects that approximately 40 percent of its patients will be “cannibalized” by the proposed JFK satellite hospital, which is a materially higher percentage than that projected for Bethesda West in its first (29.1 percent) and second (31.1 percent) years of operation. The remainder of the proposed JFK satellite hospital’s admissions will come from patients who are currently being served by an existing hospital or from growth in the service area. In addition to the projected in-patient admissions discussed above, the proposed JFK satellite hospital is expected to have outpatient registrations and ED visits; however, the number of registrations and visits is not expressly projected in the application. Accordingly, it cannot be determined whether those projections are reasonable or not.12 Institution-specific Justifications for the Proposed Satellite Hospitals Other than the prospect of enhancing access to acute care services for residents of the West Boynton area (see Part I(1)(b) below), the primary justifications offered by Bethesda and JFK for their respective satellite hospitals were institution-specific. The primary justification offered by Bethesda for the establishment of Bethesda West was its need to maintain or increase its market share of the favorable payer-mix in the West Boynton area in order to ensure its long-term financial viability. Although the evidence establishes that the West Boynton area has a more favorable payer-mix than Bethesda Memorial’s current service area, the evidence was not persuasive that Bethesda’s long-term financial viability is at risk or that it is at risk of losing market share in the West Boynton area if it is not allowed to construct Bethesda West. 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. The primary justification offered by JFK for the establishment of its proposed satellite hospital was its inability to expand its current facility to accommodate patients coming from the West Boynton area or elsewhere; however, the preponderance of the evidence fails to support that claim because, as of the date of the hearing, JFK still had the ability to add at least 72 more beds to its existing facility, including 36 beds without any additional construction. Impact of the Proposed Satellite Hospitals on the Existing Hospitals in Subdistrict 9-5 The evidence is not persuasive that Bethesda West or the proposed JFK satellite hospital can achieve their in-patient utilization projections through population growth in their projected service areas alone. Instead, the evidence establishes that the proposed satellite hospitals will achieve their projected utilization primarily by taking patients who are currently being served by, or would otherwise be served by one of the existing hospitals in Subdistrict 9-5. Bethesda West and the proposed JFK satellite hospital are each projected to “cannibalize” patients from Bethesda Memorial and JFK, respectively; however, they will also take patients “out of the hide” of Delray, Wellington, and each other. The projected growth in the West Boynton area will result in the existing hospitals having more patient days in the future than they currently have, whether or not either of the satellite hospitals is approved; however, the approval of either of the proposed satellite hospitals will result in the existing hospitals losing some of the growth-related admissions that they would have otherwise captured. It is appropriate to consider the loss of those growth-related admissions as part of the impact analysis because the market shares in the West Boynton area and the service areas of the proposed satellite hospitals have been relatively stable over the past several years, and it is reasonable to expect that absent a significant change of circumstances (such as the approval of a satellite hospital in the area) the existing hospitals would continue to maintain their respective market shares into the future.13 The most persuasive analysis of the impact on the existing providers of the approval of the proposed satellite hospitals is that prepared by Wellington’s health planner, Thomas Davidson (Exhibit W-4). Based upon Mr. Davidson’s analysis, the number of admissions that the existing providers would lose because of Bethesda West in its first two years of operation are as follows: Year 1 Year 2 Delray 377 512 Wellington 138 187 JFK 554 752 Based upon Mr. Davidson’s analysis, the number of patient days that the existing providers would lose because of the proposed JFK satellite hospital in its first two years of operation are as follows: Year 1 Year 2 Delray 1,035 663 Wellington 735 615 Bethesda 1,638 1,178 These lost admissions and patient days constitute a substantial adverse impact on the existing hospitals, as does the loss of income resulting from the lost admissions and patient days. The proposed JFK satellite hospital will have a slightly greater adverse financial impact on Wellington than will Bethesda West, primarily because of the OB program and larger service proposed for the JFK satellite hospital; the proposed JFK satellite hospital and Bethesda West will have materially similar adverse financial impacts on Delray. The overall effect of the lost admissions, patient days, and the resulting loss of income is greater on Wellington than it is on any of the other hospitals because Wellington has historically been less profitable than the other hospitals. There are other adverse impacts on the existing providers, including the increases in costs and/or potential impacts to quality of care resulting from the exacerbation of the emergency room (ER) call shortage of specialty physicians discussed below; however, there is no persuasive evidence quantifying those impacts. Comparative Evaluation of the CON Applications Based Upon the Applicable Statutory and Rule Criteria There is no credible evidence to justify the approval of two 80-bed hospitals in the West Boynton area. As a result, if either of the proposed satellite hospitals is to be approved, it should be the one that best satisfies the applicable statutory and rule criteria. Statutory Criteria – Section 408.035, Florida Statutes (2003)14 Subsection (1): Need in Relation to the District Health Plan15 The applicable provisions of the Local Health Plan for District 9 are as follows: Priority shall be given to area hospitals, which can show a commitment to, or historical record of service to Medicaid/indigent, handicapped and underserved population groups. Priority shall be given to applicants who can document cost containment practices in their facilities. Cost containment practices, such as sharing services with other area hospitals, enhances efficient resource utilization and assists in avoiding duplication of services. Priority shall be given to an applicant who proposes to use existing space rather than new construction, including space created by previous voluntary de- licensure of underutilized or unused beds and/or through transfer of beds within a subdistrict. As more fully discussed below in connection with Section 408.035(11), Florida Statutes, the first preference weighs in favor of Bethesda based upon its historical record of service to Medicaid and charity patients, which is marginally better than JFK’s record, and its commitment to provide five percent of the patient days at Bethesda West to Medicaid and charity patients, which is more realistic than JFK’s 10 percent commitment; however, the weight associated with this preference is minimal in light of the demographics of the West Boynton area, which is generally more wealthy and, hence, less likely to generate significant Medicaid or charity care patient days. As to the second preference, the record does not “document” any material cost containment practices at JFK or Bethesda Memorial. JFK and Bethesda each intend to use their existing medical staffs to cover their proposed satellite hospitals as a cost-containment effort; however, Bethesda has proposed a greater degree of integration (and, hence, less duplication) in the administrative functions at Bethesda West and Bethesda Memorial than did JFK at is proposed satellite hospital. Thus, the second preference also marginally weighs in favor of Bethesda. As to the third preference, both applicants are proposing new construction rather than the use of existing space. Although JFK is proposing the de-licensure of underutilized beds at Columbia, it is not using the space created by those beds for its proposed satellite hospital as the rule preference contemplates. The beds that Bethesda is transferring to Bethesda West are not underutilized and they are being transferred to a new to-be-constructed facility rather than to existing space. In sum, the local health plan preferences marginally weigh in favor of the approval of Bethesda’s application over JFK’s application. Subsections (2) and (7): Availability, Quality of Care, etc. of Existing Facilities and Enhancing Access The primary justification offered by the applicants for their respective proposed satellite hospitals (other than the hospital-specific issues discussed above) is that the facility will "enhance access" to acute care services for residents of the West Boynton area. More specifically, the applicants contend that the establishment of a new hospital in the West Boynton area will address an “access” problem that exists or soon will exist in the area. As discussed below, this contention is not supported by the preponderance of the evidence. In the CON context, “access” is typically evaluated from the vantage points of programmatic, financial, cultural, and geographic access. “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. Programmatic access concerns arise when specific programs or services are not available for patients that need them, or when the quality of care provided in the existing programs is inadequate. 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. Indeed, the proposed satellite hospitals 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 of 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. Similarly, it is reasonable to expect that many physicians will continue to admit their patients to the larger tertiary hospitals rather than shifting those patients to a satellite hospital that provides a more narrow range of services. “Financial access” refers to the extent to which persons have access to health care services without regard to their ability to pay. The evidence was not persuasive that there are any financial access problems in Subdistrict 9-5 or the West Boynton area that the proposed satellite hospitals will address. None of the existing hospitals that serve the West Boynton area have policies or practices that discourage indigent patients from seeking care at their facilities and, in any event, the low- income population makes up a relatively small portion of the West Boynton area. Cultural access” refers to the extent to which certain persons cannot or do not access the existing facilities due to cultural factors such as race, ethnicity, and national origin. Cultural access was not advanced by Bethesda or JFK as a basis for the approval or their respective applications. “Geographic access” refers to the physical accessibility of the existing facilities or services in a subdistrict taking into account population density, distance and time of travel, and geographic barriers or other impediments to access. Geographic access has been referred to as a “foundation of health planning.” Bethesda and JFK focus primarily on the projected growth of the West Boynton area and the road congestion that comes with that growth as the basis for their contention that there is, or soon will be a access problem for residents of the West Boynton area; Bethesda states in its PRO (at page 29) that "[g]eographic access is at the heart of [its] proposal." 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. Under that standard, there is currently no geographic access problem for residents of the West Boynton area. Indeed, there are as many as 12 hospitals within a 30-minute drive of the West Boynton area, and a “fair number” of residents have access to four hospitals -– Bethesda, JFK, Wellington, and Delray -- within a 15 to 20-minute drive time.16 All of the hospitals within the 30-minute drive time offer tertiary-level care, and a number of them offer OB services. There are no physical geographic barriers that limit access to the existing hospitals by residents of the West Boynton area. Indeed, there are a number of different major north-south and east-west roads that residents have to chose from when accessing the existing hospitals, and most of those roads have at least four lanes. The major roads in the West Boynton area have expanded along with growth of the population in the area, and they are expected to continue to do so. The infrastructure plan adopted by Palm Beach County includes continued road expansions and improvements over the planning horizon applicable to this case, and developers are often required to widen or otherwise improve the roads as a condition of the approval of new development. There is insufficient evidence that the current travel times are significantly different for the elderly population in the area. The anecdotal testimony offered by various Bethesda witnesses was not persuasive. The evidence was not persuasive that the travel times will be materially higher over the applicable five-year planning horizon. The analysis and opinion presented by Bethesda’s traffic engineer on this issue was not persuasive.17 The concurrency analysis performed by Bethesda’s traffic engineer only assessed Boynton Beach Boulevard; it did not assess any of the other major roads between the West Boynton area and the existing hospitals. Moreover, the analysis focused on the level of service (LOS) on various segments of Boynton Beach Boulevard, as measured by the projected number of trips on those segments in 2007; it did not quantify the increase in travel time along that road, if any, resulting from the reduction in the LOS which the analysis showed. The hospitals in Subdistrict 9-5 are some of the most highly-utilized hospitals in the state; however, the evidence was not persuasive that the high utilization at these hospitals has caused any access problems for residents of the West Boynton area, either for general acute care services or for OB services. 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. An additional 67 beds can be added to the bed inventory of Subdistrict 9-5 without any additional construction; JFK has shelled-in space for 36 new beds and Delray has shelled-in space for 31 new beds. Additionally, Delray has a master plan that has been approved by Palm Beach County that will allow it to add as many as 123 more beds on its current campus as needed, and Wellington also has plenty of space on the undeveloped property adjacent to its hospital to add more beds as needed. Having a hospital in the West Boynton area might be more convenient for residents of that area west of the Turnpike, at least in those instances where the patient is able to receive all of the necessary care at that hospital; however, convenience alone is not valid basis for the approval of a new hospital, particularly where there are as many as 12 tertiary-level hospitals within a 30-minute drive of the West Boynton area. In sum and on balance, the criteria in Subsections 408.035(2) and (7), Florida Statutes, weigh strongly against approval of either application. Indeed, despite the relatively high utilization rates at the existing hospitals in Subdistrict 9-5, the preponderance of the evidence fails to establish that there currently are, or that over the applicable planning horizon there will be any material deficiencies in the availability, quality of care, or accessibility of the existing hospitals in the subdistrict that would warrant the approval of a new hospital in the West Boynton area at this time. Subsection (3): Ability of Applicant to Provide Quality of Care The parties do not dispute the quality of care provided at any of the existing hospitals in Subdistrict 9-5, and the evidence affirmatively demonstrates that a high quality of care is currently provided at Bethesda Memorial, JFK, Delray, and Wellington. Bethesda and JFK each intend to rely on their existing medical staff, at least in part, to staff their respective satellite hospitals. As a result, the quality of care provided at the satellite hospitals will also be good, but it will be less than ideal in several respects. First, neither satellite hospital will offer interventional cardiology services, which is, or is becoming the standard of care for treating heart attack patients that present to the hospital’s ED. Second, JFK’s proposed satellite will offer OB services without NICU backup, which is below the standard of care in South Palm Beach County. Accordingly, the criterion in Section 408.035(3), Florida Statutes, weighs against the approval of either application. Subsection (4): Special Health Care Services The parties stipulated that this criterion is inapplicable, and in any event, the criterion was deleted by Chapter 2004-383, Laws of Florida, effective July 1, 2004. Subsection (5): Educational Facilities and Training Programs18 Neither JFK nor Bethesda Memorial is a teaching hospital, and neither is proposing educational or training programs at its proposed satellite hospital. The evidence was not persuasive that Wellington’s teaching programs will be adversely affected by the approval of either of the proposed satellite hospitals. The criterion in Section 408.035(5), Florida Statutes, does not materially weigh in favor of or against the approval of either of the applications. Subsection (6): Availability of Resources and Personnel for Operations The parties stipulated that Bethesda and JFK each have the ability to fund the capital and operating expenditures for their proposed satellite hospitals. The reasonableness of the financing-related costs proposed by Bethesda and JFK in their respective applications is also not in dispute. Delray and Wellington argue that neither Bethesda nor JFK will be able to adequately staff their proposed satellite hospitals due to physician and nurse shortages in South Palm Beach County and/or that the staffing of the proposed satellite hospitals will make it more difficult and costly for the existing hospitals in Subdistrict 9-5 to staff certain programs. Bethesda and JFK challenge the adequacy of each other’s staffing projections. As more fully discussed below, the evidence is not persuasive that the staffing projected for either of the proposed satellite programs is inadequate; however, the evidence establishes that the approval of either program would exacerbate physician shortages in Subdistrict 9-5 in certain specialties. Bethesda West’s staffing projections include 242.8 full-time equivalents (FTEs) in the first year of operation and 294.5 FTEs in the second year of operation. The staffing projections for the proposed JFK satellite hospital include FTEs in the first year of operation and 448.5 FTEs in the second year of operation. The disparity in the staffing levels primarily results from the higher occupancy rate projected at the proposed JFK satellite hospital, which is projected to be 71.4 percent in the first year of operation. By contrast, the occupancy rate at Bethesda West is projected be 35.7 percent in the first year of operation and then “ramp up” to approximately 69 percent by the fourth year of operation. The staffing levels at each of the proposed satellite hospitals are reasonable based upon the ADCs projected and the services to be provided at each hospital. Indeed, the staffing levels are comparable when viewed as a ratio of staff to projected ADC; the ratios at Bethesda West are 8.37 and 7.36 in the first two years of operation, and the ratios at the proposed JFK satellite hospital for its first two years of operation are 7.74 and 7.60. The evidence is not persuasive that Bethesda West’s staffing projections are understated or that they fail to include nursing and other positions necessary to ensure high quality care is provided. Nor is the evidence persuasive that the salaries projected for Bethesda West’s staff are understated. The evidence is not persuasive that the staffing projections for the proposed JFK satellite hospital are inherently unreliable based upon the manner in which they were prepared or as a result of the proxy that was used as a basis of the projections. There is a nursing shortage statewide and in South Palm Beach County, but it is not as severe as it has been in the past. Indeed, it is significant that despite the large number of beds added over the past five years at the various hospitals in South Palm Beach County, those beds have been adequately staffed with nurses and ancillary clinical personnel. JFK and Bethesda Memorial have each been successful in recruiting nursing staff despite the nursing shortage. They each have implemented innovative programs to aid in their recruiting efforts and to reduce their turnover and vacancy rates, and those programs are expected to be utilized at the proposed satellite hospitals. JFK and Bethesda Memorial each use “traveler” and per-diem nurses to supplement their full time nursing staffs, which is not uncommon in South Palm Beach County. Typically, a physician who has privileges at a hospital is required to be on ER call on a rotational basis. Many physicians have privileges at more than one hospital in South Palm Beach County, which means that they are responsible for providing ER call coverage at more than one hospital. 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. It is possible for a physician to be providing ER calls to more than one hospital at the same time. This can become a serious problem if the physician is attending to a patient at one hospital when he or she is called to the ER at another hospital. 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. 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 hospitals, 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. It is unlikely that OB/GYNs will admit their patients to the small OB unit at the proposed JFK satellite hospital. OB/GYNs typically try to keep all of their patients in one hospital because it makes it easier on them to do rounds and to respond quickly to emergency situations, and because the OB unit at the proposed JFK satellite hospital will not have NICU backup, it is unlikely that many OB/GYNs will choose that hospital as the one where they admit the bulk of their patients. In sum, the staffing levels for each of the proposed satellite hospitals are reasonable and appropriate for the services being offered at the hospitals, the projected staffing costs at each of the proposed satellite hospitals are also reasonable and appropriate, and JFK and Bethesda will be able to staff their respective satellite hospitals at the levels projected; however, the proposed satellite hospitals will exacerbate the shortage of specialty physicians in South Palm Beach County and will make it more difficult for the existing hospitals to get specialty physicians for ER call coverage. Accordingly, the criterion in Section 408.035(6), Florida Statutes, weighs against the approval of either application, and between the competing applications, this criterion does not materially weigh in favor of either application over the other. Subsection (8): Financial Feasibility The parties did not seriously contest the short-term financial feasibility of either of the proposed satellite hospitals, and the preponderance of the evidence establishes that both of the proposed satellite hospitals are financially feasible in the short-term; both applicants have the ability to fund the construction and initial capital needs of their respective projects in conjunction with the other capital projects listed on Schedule 2 of their respective CON applications. The long-term financial feasibility of each of the proposed satellite hospitals is in dispute. The general rule for assessing the long-term financial feasibility of a CON project is if the project will at least break even by the end of the second year of operation, then the project is financially feasible in the long-term; if, however, the project continues to show a loss in the second year of operations and it is not demonstrated that the project will reach a break-even point within a reasonable period of time, then the project is not financially feasible in the long-term. As more fully discussed below, Bethesda West is financially feasible in the long-term, but the proposed JFK satellite hospital is not. Accordingly, the criterion in Section 408.035(8), Florida Statutes, weighs in favor of approval of Bethesda’s application over JFK’s application. Bethesda West Schedule 8A of Bethesda's application projects that Bethesda West will generate a net loss of $3.7 million in its first year of operation and a net profit of $1.7 million in its second year of operation. The financial projections for Bethesda West were based upon conservative utilization projections, which leads a reasonable projection of operating income. The financial projections for Bethesda West are not defective based upon an overstatement of the “other operating revenue” or an understatement of the depreciation expense projected by Bethesda. The testimony of Bethesda’s expert financial witnesses is accepted over the testimony of the other financial experts on these issues. The financial projections for Bethesda West are not defective based upon understatements in land costs, construction costs, equipment costs of staffing projections. The testimony of Bethesda’s experts related to these issues is accepted over the testimony of the other experts. As discussed above, Bethesda West will “cannibalize” 3,040 and 4,530 patient days from Bethesda Memorial in its first and second years of operation. The financial impact of this “cannibalization” on Bethesda Memorial is a loss of $1.4 million and $2.1 million in the first and second years of Bethesda West’s operation. The income loss from “cannibalization” is not accounted for on Schedule 8A. Although the patient days used to calculate the “per patient day” figures in the middle two columns of that schedule take into account the “cannibalized” patient days, the dollar amounts shown in those columns do not. On this issue, the testimony of Delray’s financial expert is more logical and persuasive than the testimony of Bethesda’s financial expert. When the losses from “cannibalization” are taken into account, the approval of Bethesda West will have a negative impact on the Bethesda system of $5.1 million in its first year of operation and $400,000 in its second year of operation, which are consistent with the figures shown in Exhibit B-2 (pages 48 and 54). Even so, the system will show a net income of $300,000 and $5.6 million in the first two years of Bethesda West’s operation. The impact of the “cannibalization” on Bethesda Memorial is projected to decrease as Bethesda West becomes more established. At the same time, the profitability of Bethesda West is projected to increase as its census grows. Thus, by the third year of its operation, Bethesda West is projected to have a positive impact on the Bethesda system of $2.2 million (i.e., $4.1 million in net income at Bethesda West less $1.9 million in “cannibalization” from Bethesda Memorial). Bethesda West will not have a negative impact on Bethesda’s cash flow after its first year of operation. On this issue, the testimony of Bethesda’s expert is more persuasive than the testimony of the other financial experts. Accordingly, Bethesda West is financially feasible in the long-term. Proposed JFK Satellite Hospital Schedule 8A of JFK's application projects that its proposed satellite hospital would generate a net loss of $1.2 million in its first year of operation and a net loss of $392,000 in its second year of operation. Over the next three years, however, JFK projects its satellite hospital to generate net income from operations of $509,000, $1.5 million, and $2.5 million. The financial projections in JFK’s application were based upon overly-aggressive occupancy rates, both in the facility as a whole and in the small OB unit without NICU backup. As a result, the resulting financial projections are not reasonable. JFK’s application does not include any analysis of the financial impact on Columbia of the transfer of 80 beds to the satellite hospital, nor does it include any analysis of the impact of the “cannibalization” of JFK’s patient days that would necessarily occur if JFK’s proposed satellite was approved. As a result, the financial impact of JFK’s proposed satellite hospital, in the words of one of JFK’s financial experts, is “probably incomplete.” As a result of the unreasonable utilization projections and the incomplete presentation of the financial impact of the “cannibalization” of JFK’s patient days, JFK failed to establish that its proposed satellite hospital is financially feasible in the long-term. Subsection (9): Fostering Competition that Promotes Cost-effectiveness Neither of the proposed satellite hospitals will foster competition that proposes cost-effectiveness. The West Boynton market currently has healthy competition for the acute services proposed for the satellite hospitals, and there is no dominant provider of those services. Locating a new hospital in the West Boynton area will have the long-term effect of increasing the market share of the provider that operates the new hospital to the detriment of the other providers that are currently competing in that market. In this regard, the approval of a new hospital in the West Boynton area would adversely affect the competitive balance that currently exists in that area and which is projected to continue over the planning horizon. The approval of either of the proposed satellite hospitals would also adversely affect cost-effectiveness by exacerbating the shortage of specialty physicians and other qualified staff in the subdistrict, which in turn would require existing hospitals to raise salaries, benefits and other expenses in order to remain competitive. The approval of Bethesda West would have less of an adverse impact on competition and cost-effectiveness than would the approval of JFK’s proposed satellite hospital for several reasons. First, Bethesda West does not duplicate as many administrative services as does JFK’s proposed satellite hospital. Second, JFK currently has a higher market share in the West Boynton area than does Bethesda or any other hospital, which means that the competitive balance would be tipped to a greater extent if JFK’s satellite hospital was approved. Third, the approval of the JFK satellite would give HCA four hospitals in Palm Beach County and increase its leverage in physician and staff recruitment and the negotiation of HMO contracts. Accordingly, the criterion in Section 408.035(9), Florida Statutes, weights against the approval of either application; however, on balance between the two applications, this criterion favor’s Bethesda’s application over JFK’s application. Subsection (10): Costs and Methods of Construction The costs and methods of energy provision at the proposed satellite hospitals is not in dispute. Although the proposed satellite hospitals are similar in size, the total project costs included in the CON applications are significantly different. The $73.8 million total project cost for Bethesda West equates to a cost of $922,700 per bed. The $109.8 million total project cost for JFK’s proposed satellite hospital equates to a cost of $1.37 million per bed. The portion of the total project costs for each of the proposed satellite hospitals attributable directly to “construction” is materially similar. Bethesda West’s construction costs are approximately $34.2 million, or $180 per square foot; the construction costs for the proposed JFK satellite hospital are $40.9 million, or $210 per square foot. The estimated construction costs for each of the proposed satellite hospitals are within the range of reasonableness that can be gleaned from the testimony of the various hospital construction experts. JFK’s cost is towards the higher end of the range, and Bethesda’s cost is towards the lower end of the range. The primary differences in the total project costs are in the land purchase prices, the site preparation costs, and the equipment costs. The land purchase price included in Bethesda’s application was $4.2 million, which was based upon a 30 to 40- acre site. The land purchase price included in JFK’s application was $8 million, which was based upon a 50-acre site. Bethesda acquired the 54-acre Amestoy Property for $110,000 per acre. At $110,000 per acre, the $4.2 million attributed by Bethesda to land purchase price would be sufficient to acquire 38.2 acres, which is more than adequate for the 80-bed Bethesda West facility. Consistent with the estimate in the CON application, JFK has made an offer to purchase the 50-plus acre Mazzoni Property for $130,000 per acre. The total land purchase price in each application, and the actual cost-per-acre of the Amestoy and Mazzoni Properties are reasonable. The site development costs included in Bethesda’s application were $3.75 million, or $125,000 per acre for the 30 acres on which Bethesda West will be located. The site development costs included in JFK’s application were $6.5 million, or $150,000 per acre for the 50 acres on which JFK’s proposed satellite hospital will be located. The site development costs for each project include on-site and off-site utility (e.g., water and sewer) and roadway work, geotechnical and environmental remediation costs, stormwater retention, landscaping, and concurrency impact fees. Each of the proposed sites is relatively flat and was formerly agricultural property and, as a result, there are not expected to be any unusual costs associated with the development of either site. Bethesda West will be located further west than the proposed JFK satellite hospital and, as a result, its “radius of influence” includes fewer congested roadway links than does the proposed JFK satellite hospital; but, the Amestoy Property where Bethesda West will be located is farther away from the existing utility lines than the Mazzoni Property where the proposed JFK satellite hospital will be located. Thus, even though the cost of running utilities to Bethesda West will likely be higher than the cost of running utilities to the proposed JFK satellite hospital, the currency impact fees for Bethesda West will likely be lower than the currency impact fees for the proposed JFK satellite hospital; and, on balance, the overall per-acre and total site development costs included in each of the applications are reasonable. Bethesda’s application included equipment costs of approximately $16 million, all of which was attributable to movable equipment. The cost of fixed equipment was included in the estimated construction costs as part of the building contract. JFK’s application included total equipment costs of approximately $34.2 million. That amount was broken into fixed equipment not in the building contract ($13.9 million), movable equipment ($17.8 million), and information systems ($2.4 million). Some, but not all of the difference between the equipment cost estimates are attributable to the additional services –- e.g., OB and diagnostic cardiac catheterization –- that will be provided at the proposed JFK satellite hospital but not at Bethesda West. Additionally, some of the difference are attributable to the 12 "observation" rooms at the proposed JFK satellite hospital that are being equipped in the same manner as the hospital’s general med-surg beds. When compared on an “apples to apples” basis, the total equipment costs for Bethesda West are not materially different than the total equipment costs for the proposed JFK satellite hospital. JFK is proposing to provide more specialized equipment than Bethesda in areas such as the surgical suites and the ICU/CCU and more information technology (IT) equipment; however, the evidence is not persuasive that such specialized equipment or the IT equipment is necessary to provide high quality care or that the absence of such equipment will adversely affect the quality of care at Bethesda West. The $16 million in equipment costs at Bethesda West, which equates to approximately $200,700 per bed, is reasonable for the level and type of services that will be provided at Bethesda West. The evidence is not persuasive that Bethesda’s equipment costs are understated even though its costs are considerably less than the equipment costs proposed by JFK. If anything, JFK has over-equipped its proposed satellite hospital with specialized equipment resulting in the higher equipment costs included in JFK’s CON application.19 Although the more expensive proposed JFK satellite hospital offers some benefits, such as a larger site to facilitate future expansions and more specialized equipment in some areas, those benefits are outweighed by the additional $35 million costs associated with that facility as compared to Bethesda West. This cost saving is particularly significant since each of the proposed facilities is supposed to be a satellite of a larger, tertiary hospital rather than a stand- alone community hospital. The evidence was not persuasive that Bethesda Memorial and JFK have physical constraints that will limit their ability to add beds at their existing facilities in a cost- efficient manner. Even if the construction of a satellite hospital were the most cost-efficient way for Bethesda Memorial and JFK to add beds, the evidence was not persuasive that it is the most cost-efficient way to add beds from the perspective of the entire health care system of Subdistrict 9-5. Indeed, there are less costly methods of adding new beds to the subdistrict than the construction of a new 80-bed hospital for $73.8 million or $109.8 million. For example, 36 additional beds can be added at JFK and 31 additional beds can be added at Delray in shelled-in space that has already been constructed. The incremental cost of constructing space for additional bed expansions at Delray and Wellington would also be less than the construction costs of the proposed satellite hospitals. In sum, because there are less costly ways to add beds to the subdistrict than the construction of a new hospital, the criterion in Section 408.035(10), Florida Statutes, weighs against the approval of either application; however, between the two applications, this criterion weighs in favor of the approval of Bethesda’s application over JFK’s application since its proposed satellite hospital will cost approximately $35 million less and will provide effectively the same services in similar physical space. Subsection (11): Medicaid and Indigent Care Bethesda characterizes itself as a “safety net” hospital because its Medicaid and charity care percentages typically exceed the averages for Subdistrict 9-5 and District 9 as a whole, and because Bethesda Memorial provides the largest percentage of the Medicaid and charity care provided by all of the hospitals in Subdistrict 9-5. There is no statutory or rule provision that would support Bethesda’s designation of itself as a “safety net” provider. Moreover, the significance of Bethesda’s characterization of itself as a “safety net” hospital is diminished by the fact that the Palm Beach County Health Care District (District) reimburses all hospitals in the county through an indigent care subsidy for care provided to patients that 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 and, to that end, provides a county-wide “safety net” for such patients. The subsidies paid by the District do not cover the full cost of indigent care provided by the hospital, nor does the total amount of subsidies received by a hospital directly correlate to the total amount of indigent care provided by the hospital. Thus, it is not dispositive that JFK received the largest amount of subsidies from the District over the past several years or that JFK received approximately $1.6 million more in subsidies from the District in 2003 than did Bethesda. JFK recently qualified as a “disproportionate share provider,” which means that at least 15 percent of its patient days are attributed to Medicaid or supplemental security income patients. As a disproportionate share provider, JFK receives incrementally larger reimbursements from Medicaid for the provision of indigent care. Bethesda is not currently a disproportionate share provider although it has been in the past. None of the hospitals in South Palm Beach County have policies or practices that discourage Medicaid or uninsured patients. Bethesda Memorial, JFK, Wellington, and Delray each accept patients without regard to their ability to pay. Bethesda and JFK conditioned the approval of their respective CON applications on the provision of a specified percentage of patient days to Medicaid and charity patients. The percentage committed to by JFK (10 percent) is higher than the percentage committed to by Bethesda (five percent). The percentages of Medicaid and charity care committed to by the applicants may be difficult to achieve as a result of the demographics of the West Boynton area. Indeed, the more favorable payer-mix in the West Boynton area was a significant factor, and in Bethesda’s case it was the primary motivating factor for the establishment a new hospital in that area. Bethesda Memorial and JFK each have a history of providing significant levels of Medicaid and charity care at their existing hospitals. The hospitals are each located in areas with large indigent populations, which significantly contribute to the high level of indigent care that they provide. Bethesda Memorial has historically provided a larger amount of Medicaid care than has JFK in terms of a percentage of patient days, e.g., 16.1 percent verses 7.3 percent in 2001. Those percentages each exceed the Subdistrict 9-5 average of 6.3 percent. Bethesda Memorial has also historically provided a larger amount of charity care than has JFK in terms of dollars (e.g., $16.2 million verses $5.2 million in 2002) and in terms of a percentage of charges (e.g., 3.7 percent verses 0.4 percent in 2001 and 2.9 percent verses 0.6 percent in 2002). The Subdistrict 9-5 average for 2001 was 1.4 percent. These comparisons are somewhat skewed because a large portion of Bethesda’s indigent care is attributable to Bethesda Memorial’s high-volume, well-established OB and neonatal programs which tend to be “magnets” for uninsured patients. When only like-services are considered, the utilization of JFK and Bethesda Memorial by Medicaid and indigent patients is similar. JFK provides a significant amount of care to “self- pay” patients (e.g., $43.5 million in 2002), which JFK attempted to equate to charity care. Although there is often overlap between self-pay and charity care patients, the evidence was not persuasive that there is a direct correlation urged by JFK in this case. For example, JFK’s internal definitions of self-pay and charity care patients are markedly different and considerably more liberal than the Agency’s definition of charity care patients for reporting purposes. Bethesda makes a $1 million per year “contribution” to the District to help fund the District’s indigent care program. That contribution was required as part of the settlement of litigation arising out of Bethesda’s conversion from a public hospital to a private not-for-profit hospital and, as a result, it cannot be fairly characterized as additional evidence of Bethesda’s commitment to serving indigent patients. Even though both applicants demonstrated a history of and commitment to serving Medicaid and indigent patients, the criterion in Section 408.035(11), Florida Statutes, weighs in favor of Bethesda because the level of Medicaid and charity care historically provided by Bethesda Memorial is higher than that provided by JFK. On balance with the other statutory and rule criteria, the criterion in Section 408.035(11), Florida Statutes, is not given significant weight because Bethesda has committed to providing a lower percentage of Medicaid and charity care patient days at Bethesda West than JFK committed to at its proposed satellite hospital, and because the demographics of the West Boynton area make it unlikely that a significant level of indigent care will be provided at either of the proposed satellite hospitals. Subsection (12): Designation as a Gold Seal Nursing Facility The parties stipulated that this criterion is inapplicable because neither applicant is proposing additional nursing home beds. (2) Rule Criteria – Florida Administrative Code Rules 59C-1.030(2) and 59C-1.038(6) The criteria in Florida Administrative Code Rule 59C- 1.030(2) are subsumed in the statutory criteria discussed above 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. For the same reasons that the CON applications do not satisfy those statutory criteria, they do not satisfy the related criteria in Florida Administrative Code Rule 59C-1.030(2). Under Florida Administrative Code Rule 59C- 1.038(6)(a), priority is given to applicants with “a documented history of providing services to medically indigent patients or a commitment to do so.” This priority weighs in favor of Bethesda for the reasons discussed above in connection with Section 408.035(11), Florida Statutes. Under Florida Administrative Code Rule 59C- 1.038(6)(b), priority is given to applications that “meet the need for additional acute care beds in a particular service through the conversion of existing underutilized beds.” This priority does not materially weigh in favor either application over the other; the underutilized beds at Columbia that JFK proposes to transfer to its satellite hospital are in a different subdistrict, and the beds that Bethesda proposes to transfer from Bethesda Memorial to its proposed satellite hospital are not underutilized beds in light of the historical occupancy rate at Bethesda Memorial.
Recommendation Based upon the foregoing findings of fact and conclusions of law, it is RECOMMENDED that the Agency issue a final order denying Bethesda’s CON application No. 9659 and also denying JFK’s CON application No. 9660. DONE AND ENTERED this 29th day of September, 2004, in Tallahassee, Leon County, Florida. S T. KENT WETHERELL, II 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 29th day of September, 2004.
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 Whether the certificate of need application to convert 30 acute care beds to 30 adult psychiatric beds at Broward General Medical Center meets the statutory and rule criteria for approval.
Findings Of Fact The North Broward Hospital District (NBHD) is a special taxing district established by the Florida Legislature in 1951 to provide health care services to residents of the northern two-thirds of Broward County. NBHD owns and operates four acute care hospitals: Coral Springs Medical Center, North Broward Medical Center, Imperial Point Medical Center (Imperial Point), and Broward General Medical Center (Broward General). NBHD also owns and/or operates primary care clinics, school clinics, urgent care centers, and a home health agency. FMC Hospital, Ltd., d/b/a Florida Medical Center (FMC) is a 459-bed hospital with 74 inpatient psychiatric beds, 51 for adults separated into a 25-bed adult unit and a 26-bed geriatric psychiatric unit, and 23 child/adolescent psychiatric beds. FMC is a public Baker Act receiving facility for children and adolescents and operates a mental health crisis stabilization unit (CSU) for children and adolescents. FMC also operates separately located facilities which include a partial hospitalization program, an adult day treatment program, and a community mental health center. At Florida Medical Center South, FMC operates another day treatment program and partial hospitalization program. The Agency for Health Care Administration (AHCA) is the state agency which administers the certificate of need (CON) program for health care services and facilities in Florida. The NBHD applied for CON Number 8425 to convert 30 acute care beds to 30 adult psychiatric beds at Broward General. Broward General operates approximately 550 of its total 744 licensed beds. It is a state Level II adult and pediatric trauma center and the tertiary referral center for the NBHD, offering Level II and III neonatal intensive care, pediatric intensive care, cardiac catheterization and open heart surgery services. Broward General has 68 adult psychiatric beds and is a public Baker Act receiving facility for adults. Public Baker Act receiving facilities have state contracts and receive state funds to hold involuntarily committed mental patients, regardless of their ability to pay, for psychiatric evaluation and short-term treatment. See Subsections 394.455(25) and (26), Florida Statutes. Although they serve different age groups, both FMC and Broward General are, by virtue of contracts with the state, public Baker Act facilities. When a Baker Act patient who is an indigent child or adolescent arrives at Broward General, the patient is transferred to FMC. FMC also typically transfers indigent Baker Act adults to Broward General. At Broward General, psychiatric patients are screened in a separate section of the emergency room by a staff which has significant experience with indigent mental health patients. If hospitalization is appropriate, depending on the patient's physical and mental condition, inpatient psychiatric services are provided in either a 38-bed unit on the sixth floor or a 30- bed unit on the fourth floor of Broward General. In July 1995, Broward General also started operating a 20-bed mental health CSU located on Northwest 19th Street in Fort Lauderdale. Prior to 1995, the County operated the 19th Street CSU and 60 CSU beds on the grounds of the South Florida State Hospital (SFSH), a state mental hospital. Following an investigation of mental health services in the County, a grand jury recommended closing the 60 CSU beds at SFSH because of "deplorable conditions." In addition, the grand jury recommended that the County transfer CSU operations to the NBHD and the South Broward Hospital District (SBHD). As a result, the SBHD assumed the responsibility for up to 20 CSU inpatients a day within its existing 100 adult psychiatric beds at Memorial Regional Hospital. The NBHD assumed the responsibility for up to 40 CSU inpatients a day, including 20 at the 19th Street location. The additional 20 were to be redirected to either the 68 adult psychiatric beds at Broward General or the 47 adult psychiatric beds at Imperial Point. CSU services for adult Medicaid and indigent patients in the NBHD service area were transferred pursuant to contracts between the NBHD and Broward County, and the NBHD and the State of Florida, Department of Children and Family Services (formerly, the Department of Health and Rehabilitative Services). Based on the agreements, the County leases the 19th Street building in which Broward General operates the CSU. The County also pays a flat rate of $1.6 million a year in monthly installments for the salaries of the staff which was transferred from the County mental health division to the NBHD. The County's contract with the NBHD lasts for five years, from December 1995 to September 2000. Either party may terminate the contract, without cause, upon 30 days notice. The State contract, unlike that of Broward County, does not provide a flat rate, but sets a per diem reimbursement rate of approximately $260 per patient per day offset by projected Medicaid revenues. The State contract is renewable annually, but last expired on June 30, 1997. The contract was being re-negotiated at the time of the hearing in November 1997. Based on actual experience with declining average lengths of stay for psychiatric inpatients, the contract was being re-negotiated to fund an average of 30, not a maximum of 40 patients a day. If CON 8425 is approved, NBHD intends to use the additional 30 adult psychiatric beds at Broward General to meet the requirements of the State and County contracts, while closing the 19th Street CSU and consolidating mental health screening and stabilization services at Broward General. NBHD proposes to condition the CON on the provision of 70 percent charity and 30 percent Medicaid patient days in the 30 new beds. By comparison, the condition applicable to the existing 68 beds requires the provision of 3 percent charity and 25 percent Medicaid. When averaged for a total of 98 beds, the overall condition would be 23.5 percent charity and 26.5 percent Medicaid, or a total of 51 or 52 percent. The proposed project will require the renovation of 10,297 gross square feet on the fourth floor of Broward General at a cost of approximately $450,000. The space is currently an unused section of Broward General which contains 42 medical/surgical beds. Twelve beds will be relocated to other areas of the hospital. The renovated space will include seclusion, group therapy, and social rooms, as well as 15 semi- private rooms. Twelve of the rooms will not have separate bathing/showering facilities, and seven of those will also not have toilets within the patients' rooms. Need in Relation to State and District Health Plans - Subsection 408.035(1)(a), Florida Statutes The District 10 allocation factors include a requirement that a CON applicant demonstrate continuously high levels of utilization. The applicant is given the following evidentiary guidelines: patients are routinely waiting for admissions to inpatient units; the facility provides significant services to indigent and Medicaid individuals; the facility arranges transfer for patients to other appropriate facilities; and the facility provides other medical services, if needed. Broward General does not demonstrate continuously high utilization by having patients routinely waiting for admission. Broward General does meet the other criteria required by allocation factor one. The second District 10 allocation factor, like criterion (b) of the first, favors an applicant who commits to serving State funded and indigent patients. Broward General is a disproportionate share Medicaid provider with a history of providing, and commitment to continue providing, significant services to Medicaid and indigent patients. In fact, the NBHD provides over 50 percent of both indigent and Medicaid services in District 10. See also Subsection 408.035(1)(n), Florida Statutes. Allocation factor three for substance abuse facilities is inapplicable to Broward General which does not have substance abuse inpatient services. Allocation factor 4 for an applicant with a full continuum of acute medical services is met by Broward General. See also Rule 59C-1.040(3)(h), Florida Administrative Code. Broward General complies with allocation factor 5 by participating in data collection activities of the regional health planning council. The state health plan includes preferences for (1) converting excess acute care beds; (2) serving the most seriously mentally ill patients; (3) serving indigent and Baker Act patients; (4) proposing to establish a continuum of mental health care; (5) serving Medicaid-eligible patients; and (6) providing a disproportionate share of Medicaid and charity care. Broward General meets the six state health plan preferences. See also Rule 59C-1.040(4)(e)2., Florida Administrative Code, and Subsection 408.035(1)(n), Florida Statutes. Broward General does not meet the preference for acute care hospitals if fewer than .15 psychiatric beds per 1000 people in the District are located in acute care hospitals. The current ratio in the District is .19 beds per 1,000 people. Rule 59C-1.040(4)(3)3, Florida Administrative Code, also requires that 40 percent of the psychiatric beds needed in a district should be allocated to general hospitals. Currently, approximately 51 percent, 266 of 517 licensed District 10 adult inpatient psychiatric beds are located in general acute care hospitals. On balance, the NBHD and Broward General meet the factors and preferences of the health plans which support the approval of the CON application. See also Rule 59C- 1.040(4)(e)1. and Rule 59C-1.030, Florida Administrative Code. Numeric Need The parties stipulated that the published fixed need pool indicated no numeric need for additional adult inpatient psychiatric hospital beds. In fact, the numeric need calculation shows a need for 434 beds in District 10, which has 517 beds, or 83 more than the projected numeric need. In 1994- 1995, the District utilization rate was approximately 58 percent. The NBHD asserts that the need arises from "not normal" circumstances, specifically certain benefits from closing the 19th Street CSU, especially the provision of better consolidated care in hospital-based psychiatric beds, and the establishment of a County mental health court. The NBHD acknowledges that AHCA does not regulate CSU beds through the CON program and that CSU beds are not intended to be included in the calculation of numeric need for adult psychiatric beds. However, due to the substantial similarity of services provided, NBHD contends that CSU beds are de facto inpatient psychiatric beds which affect the need for CON- regulated psychiatric beds. Therefore, according to the NBHD, the elimination of beds at SFSH and at the 19th Street CSU require an increase in the supply of adult psychiatric beds. The NBHD also notes that approval of its CON application will increase the total number of adult psychiatric hospital beds in Broward County, but will not affect the total number of adult mental health beds when CSU and adult psychiatric beds are combined. After the CSU beds at SFSH closed, the total number of adult mental health beds in the County has, in fact, been reduced. NBHD projected a need to add 30 adult psychiatric beds at Broward General by combining the 1995 average daily census (ADC) of 48 patients with its assumption that it can add up to 10, increasing the ADC to 58 patients a day in the existing 68 beds. Based on its contractual obligation to care for up to 40 CSU inpatients a day, the NBHD projects a need for an additional 30 beds. The projection assumed that the level of utilization of adult inpatient psychiatric services at Broward General would remain relatively constant. With 40 occupied beds added to the 48 ADC, NBHD predicted an ADC of 88 in the new total of 98 beds, or 90 percent occupancy. The assumption that the ADC would remain fairly constant is generally supported by the actual experience with ADCs of 48.1, 51.5, and 45.8 patients, respectively, in 1995, 1996, and the first seven months of 1997. NBHD's second assumption, that an ADC of 40 CSU patients will be added is not supported by the actual experience. Based on the terms of the State and County contracts, up to 20 CSU patients have already been absorbed into the existing beds at the Imperial Point or Broward General, which is one explanation for the temporary increase in ADC in 1996, while up to 20 more may receive services at the 19th Street location. In 1996 and 1997, the ADC in the 19th Street CSU beds was 15.3 and 14.2, respectively, with monthly ranges in 1997 from a high of 17 in April to a low of 12 in June. The relatively constant annual ADCs in psychiatric and CSU beds are a reflection of increasing admissions but declining average lengths of stay for psychiatric services. The NBHD also projects that it will receive referrals from the Broward County Mental Health Court, established in June 1997. The Court is intended to divert mentally ill defendants with minor criminal charges from the criminal justice system to the mental health system. Actual experience for only three months of operations showed 7 or 8 admissions a month with widely varying average lengths of stay, from 6 to 95 days. The effect of court referrals on the ADC at Broward General was statistically insignificant into the fall of 1997. Newspaper reports of the number of inmates with serious mental illnesses do not provide a reliable basis for projecting the effect of the mental health court on psychiatric admissions to Broward General, since it is not equipped to handle violent felons. One of Broward General's experts also compared national hospital discharge data to that of Broward County. The results indicate a lower use rate in Broward County in 1995 and a higher one in 1996. That finding was consistent with the expert's finding of a growth in admissions and bed turnover rate which measures the demand for each bed. The expert also considered the prevalence of mental illness and hospitalization rates. The data reflecting expected increases in admissions, however, was not compared to available capacity in the County nor correlated with declining lengths of stay. The District X: Comprehensive Health Plan 1994 includes an estimate of the need for 10 CSU beds per 100,000 people, or a total of 133 CSU beds needed for the District. FMC argues that the calculation is incorrect because only the adult population should be included. Using only adults, FMC determined that 116 CSU beds are needed which, when added to 434 adult psychiatric beds needed in the February 1996 projection, gives a bed need for all mental health beds of 550. That total is less than the actual combined total number of 567 mental health beds, 517 adult psychiatric beds plus 50 CSU beds in 1995. Whatever population group is appropriate, the projection of the need for CSU beds is not reliable based on the evidence that, since the end of 1995, CSU services have been and, according to NBHD, should continue to be absorbed into hospital- based adult psychiatric units. For the same reason, the increase in adult psychiatric bed admissions from 1995 to 1996 does not establish a trend towards increasing psychiatric utilization, but is more likely attributable to the closing of CSU beds at SFSH. FMC's expert's comparison of data from three selected months in two successive years is also not sufficient to establish a downward trend in utilization at the 19th Street CSU, neither is the evidence of a decline in ADC by one patient in one year. Utilization is relatively static based on ADCs in existing Broward County adult psychiatric beds and in CSU beds. FMC established Broward General's potential to decrease average lengths of stay by developing alternative non-inpatient services as FMC has done and Broward General proposes to do. See Finding of Fact 37. Based on local health council reports, FMC's data reflects a rise in the ADC at Broward General to 52.7 in 1996, and a return to 46 in the first seven months of 1997. Using a 14.2 ADC for the 19th Street CSU, FMC projects that Broward General will reach an ADC of approximately 60 in the first year of operations if the CON is approved, not 88 as projected. Broward General acknowledged its capacity to add 10 more patients to the ADC without stress on the system. Having already absorbed 20 of up to 40 CSU patients at Imperial Point and Broward General in 1996 and 1997 resulting in an ADC of 48, and given the capacity to absorb 10 more, the NBHD has demonstrated a need to accommodate an ADC of 10 more adult psychiatric patients at Broward General, or a total ADC of 68 patients. The need to add capacity to accommodate an additional 10 patient ADC was not shown to equate to a need for 30 additional beds, which would result in an ADC of 68 patients in 98 beds, or 69 or 70 percent occupancy. Special Circumstances - Rule 59C-1.040(4)(d) The psychiatric bed rule provides for approval of additional beds in the absence of fixed numeric need. The "special circumstance" provision applies to a facility with an existing unit with 85 percent or greater occupancy. During the applicable period, the occupancy at Broward General was 74.15 percent. However, occupancy rates have exceeded 95 percent in the CSU beds on 19th Street. If up to 20 patients on 19th Street are added to the 48 ADC at Broward General, the result is that the existing 68 beds will be full. A full unit is operationally not efficient or desirable and allows no response to fluctuations in demand. Therefore, the state has established a desirable standard of 75 percent occupancy for psychiatric units, a range which supports the addition of 10 to 15 psychiatric beds at Broward General. Available Alternatives - Subsection 408.035(1)(b) and (d), Florida Statutes, and Rule 59C-1.040(4)(e)4., Florida Administrative Code The psychiatric bed rule provides that additional beds will "not normally" be added if the district occupancy rate is below 75 percent. For the twelve months preceding the application filing, the occupancy rate in 517 adult psychiatric beds in District 10 was approximately 58 percent. FMC's expert noted that each day an average of 200 adult psychiatric beds were available in District 10. Broward General argues that the occupancy rate is misleading. Five of the nine facilities with psychiatric beds are freestanding, private facilities, which are ineligible for Medicaid participation. Historically, the freestanding hospitals have also provided little charity care. One facility, University Pavilion, is full. Of the four acute care hospitals with adult psychiatric beds, Memorial Hospital in the SBHD, is not available to patients in the NBHD service area. Imperial Point, the only other NBHD facility with adult psychiatric beds, is not available based on its occupancy rate for the first seven months of 1997 of approximately 81 percent, which left an average of 9 available beds in a relatively small 47-bed unit. That leaves only Broward General and FMC to care for Medicaid and indigent adult psychiatric patients. FMC is the only possible alternative provider of services, but Broward General was recommended by the grand jury and was the only contract applicant. The occupancy rate in FMC's 51 adult beds was approximately 80 percent in 1995, 73 percent in 1996, and 77 percent for the first seven months in 1997. FMC has reduced average lengths of stay by having patients "step down" to partial hospitalization, day treatment and other outpatient services of varying intensities. The same decline in average lengths of stay is reasonably expected when Broward General implements these alternatives. Adult psychiatric services are also accessible in District 10 applying the psychiatric bed rule access standard. That is, ninety percent of the population of District 10 has access to the service within a maximum driving time of forty- five minutes. The CSU license cannot be transferred to Broward General. Broward County holds the license for CSU beds which, by rule, must be located on the first floor of a building. Although Broward General may not legally hold the CSU license and provide CSU services on the fourth floor of the hospital, there is no apparent legal impediment to providing CSU services in psychiatric beds. Quality of Care - Subsection 408.035(1)(c), Florida Statutes and Rule 1.040(7), Florida Administrative Code Broward General is accredited by the Joint Commission on Accreditation of Health Care Organizations. The parties stipulated that Broward General has a history of providing quality care. Broward General provides the services required by Rule 59C-1.040(3)(h), Florida Administrative Code. Services Not Accessible in Adjoining Areas; Research and Educational Facilities; Needs of HMOs; Services Provided to Individuals Beyond the District; Subsections 408.035(1)(f),(g),(j), and (k), Florida Statutes Broward General does not propose to provide services which are inaccessible in adjoining areas nor will it provide services to non-residents of the district. Broward General is not one of the six statutory teaching hospitals nor a health maintenance organization (HMO). Therefore, those criteria are of no value in determining whether this application should be approved. Economics and Improvements in Service from Joint Operation - Subsection 408.035(1)(e), Florida Statutes The consolidation of the psychiatric services at Broward General is reasonably expected to result in economies and improvements in the provision of coordinated services to the mentally ill indigent and Medicaid population. Broward General will eliminate the cost of meal deliveries and the transfer of medically ill patients, but that potential cost-saving was not quantified by Broward General. Staff and Other Resources - Subsection 408.035(1)(h), Florida Statutes The parties stipulated that NBHD has available the necessary resources, including health manpower, management personnel, and funds to implement the project. Financially Feasibility - Subsection 408.035(1)(h) and (i), Florida Statutes The parties stipulated that the proposed project is financially feasible in the immediate term. The estimated total project cost is $451,791, but NBHD has $500,000 in funds for capital improvements available from the County and $700,000 from the Florida Legislature. As stipulated by the parties, NBHD has sufficient cash on hand to fund the project. Regardless of the census, the County's contractual obligation to the NBHD remains fixed at $1.6 million. The State contract requires the prospective payment of costs offset by expected Medicaid dollars. If the number of Medicaid eligible patients decreases, then state funding increases proportionately. The state assumed that 20 percent of the patients would qualify for Medicaid, therefore it reimburses the per diem cost of care for 80 percent of the patients. One audit indicated that 30 percent of the patients qualified for Medicaid, so that State payments for that year were higher than needed. The State contract apparently makes no provision to recover excess payments. The application projects a net profit of $740,789 for the first year of operations, and a net profit of $664,489 for the second year. If the State contract with NBHD is renewed to contemplate an average of 30 patients per day as opposed to up to 40 patients per day, then annual revenue could be reduced up to $400,000. Projected net profit will, nevertheless, exceed expenses when variable expenses are reduced correspondingly. If 20 state funded patients are already in psychiatric beds, and 20 more could be transferred from 19th Street, the result is an ADC of 68. Based on the funding arrangements, there is no evidence that the operation of a total of 98 beds could not be profitable, even with an ADC of 68, although it would be wasteful to have 30 extra beds. Impact on Competition, Quality Assurance and Cost-Effectiveness - Subsection 408.035(1)(l), Florida Statutes With a maximum of 68 inpatients or more realistically, under the expected terms of a renegotiated State contract, 58 to 60 inpatients in 98 beds, Broward General will reasonably attempt to expand the demand for its inpatient psychiatric services. Within the NBHD's legal service area, one-third of adult psychiatric patients not admitted to Broward General are admitted to FMC. Assuming a proportionate impact on competitors, FMC's expert projected that one-third of approximately 30 unfilled beds at Broward General will be filled by patients who would otherwise have gone to FMC. The projection of a loss of 9 patients from the ADC of FMC is reasonably based on an analysis showing comparable patient severity in the most prevalent diagnostic category. Given the blended payor commitment of approximately 51 or 52 percent total for Medicaid and charity in 98 beds, Broward General will be able to take patients from every payor category accepted at FMC. The loss of 9 patients from its ADC can reduce revenues by $568,967 at FMC. The impact analysis is reasonably based on lost patient days since most payers use a per diem basis for compensating FMC. For example, although Medicare reimbursement is usually based on diagnosis regardless of length of stay, it is cost-based for the geriatric psychiatric unit. Net profit at FMC, for the year 1996-1997, was expected to be approximately $4.5 million. FMC will also experience increased costs in transporting indigent patients from FMC to Broward General for admission and treatment. Because of the additional distance, the cost to transfer indigent patients is $20 more per patient from FMC to Broward General than it is from FMC to the 19th Street CSU. FMC typically stabilizes indigent adult psychiatric inpatients, then transfers them to either the 19th Street CSU or Broward General. From March through September of 1997, FMC transported approximately 256 indigent patients from FMC to the 19th Street CSU. In terms of quality assurance, the consolidation of psychiatric services at Broward General will allow all patients better access to the full range of medical services available at Broward General. The NBHD's operation of the 19th Street CSU is profitable. Approval of the CON application should reasonably eliminate all costs associated with operation of the 19th Street facility, and shift more revenues from the State and County contracts to Broward General. Some savings are reasonably expected from not having meal deliveries to 19th Street or patient transfers for medical care. The NBHD did not quantify any expected savings. Costs and Methods of Construction - Subsection 408.035(1)(m), Florida Statutes Broward General will relocate 12 of 42 medical/surgical beds and convert 30 medical/surgical beds to 30 adult psychiatric beds on one wing of the fourth floor, which is currently unused. Fifteen semi-private medical/surgical patient rooms will be converted into semi-private adult psychiatric rooms. Existing wards will be converted to two social rooms, one noisy and one quiet. With the removal of the walls of some offices, the architect designed a group therapy room. An existing semi-private room will be used as a seclusion room. Of the fifteen semi-private rooms, twelve will not have bathing or showering facilities and seven will not have toilets within the patients' rooms. At the time the hospital was constructed, the state required only a lavatory/sink in each patient room. AHCA's architect agreed to allow Broward General to plan to use central bathing and toilet facilities to avoid additional costs and diminished patient room sizes. Because the plan intentionally avoids construction in the toilets, except to enlarge one to include a shower, there is no requirement to upgrade to Americans With Disabilities Act (ADA) standards. Therefore, the $23,280 construction cost contingency for code compliance is adequate. Although the projected construction costs are reasonable and the applicable architectural code requirements are met, the design is not the most desirable in terms of current standards. Patient privacy is compromised by the lack of toilets for each patient room. Past and Proposed Provision of Services to Promote a Continuum of Care in a Multi-level System - Subsection 408.035(1)(o), Florida Statutes Broward General is a tertiary acute care facility which provides a broad continuum of care. Because it already operates the CSU and provides CSU services in adult psychiatric beds, the proposal to relocate patients maintains but does not further promote that continuum of care. Broward General's plan to establish more alternatives to inpatient psychiatric care does promote and enhance its continuum of care. Capital Expenditures for New Inpatient Services - Subsection 408.035(2), Florida Statutes Broward General is not proposing to establish a new health service for inpatients, rather it is seeking to relocate an existing service without new construction. The criteria in this Subsection are inapplicable. Factual Conclusions Broward General did not establish a "not normal" circumstance based on the grand jury's findings and recommendations. The grand jury did not recommend closing 19th Street facility. Broward General did generally establish not normal circumstances based on the desirability of consolidating mental health services at Broward General to provide a single point of entry and to improve the quality of care for the 19th Street facility patients. Broward General failed to establish the need to add 30 beds to accomplish the objective of closing the 19th Street facility. Although the existing beds at Broward General may reasonably be expected to be full as a result of the transfer of 19th Street patients, the addition of 30 beds without sufficient demand results in an occupancy rate of 69 or 70 percent, from an ADC of 68 patients in 98 beds. Broward General has requested approximately twice as many beds as it demonstrated it needs. Broward General's CON application on balance satisfies the local and state health plan preferences. In general, FMC is the only alternative facility in terms of available beds, but is not the tax-supported public facility which the grand jury favored to coordinate mental health services. Broward General meets the statutory criteria for quality of care, improvements from joint operations, financial feasibility, quality assurance, cost-effectiveness, and services to Medicaid and indigent patients. The proposal is not the most desirable architecturally considering current standards. More importantly, Broward General did not demonstrate that it can achieve its projected occupancy without an adverse impact on FMC. The NBHD proposal will add too many beds to meet the targeted state occupancy levels in relatively a static market. Broward General's application does not include a partial request for fewer additional beds which would have allowed the closing of 19th Street, while maintaining some empty beds for demand fluctuations and avoiding an adverse impact on FMC.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Agency for Health Care Administration deny the application of the North Broward Hospital District for Certificate of Need Number 8425 to convert 30 medical/surgical beds to 30 adult psychiatric beds at Broward General Medical Center. DONE AND ENTERED this 21st day of April, 1998, in Tallahassee, Leon County, Florida. ELEANOR M. HUNTER Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 Filed with the Clerk of the Division of Administrative Hearings this 21st day of April, 1998. COPIES FURNISHED: Sam Power, Agency Clerk Agency for Health Care Administration Fort Knox Building 3 2727 Mahan Drive, Suite 3431 Tallahassee, Florida 32308-5403 Paul J. Martin, General Counsel Agency for Health Care Administration Fort Knox Building 3 2727 Mahan Drive, Suite 3431 Tallahassee, Florida 32308-5403 Paul Vazquez, Esquire Agency For Health Care Administration Fort Knox Building 3 2727 Mahan Drive, Suite 3431 Tallahassee, Florida 32308-5403 Stephen A. Ecenia, Esquire R. David Prescott, Esquire Rutledge, Ecenia, Underwood, Purnell & Hoffman, P.A. Post Office Box 551 Tallahassee, Florida 32302-0551 David C. Ashburn, Esquire Gunster, Yoakley, Valdes-Fauli & Stewart, P.A. 215 South Monroe Street, Suite 830 Tallahassee, Florida 32301
The Issue Whether the Certificate of Need application of the South Broward Hospital District (CON 9459) to establish a 100-bed hospital in Health Planning District 10, Broward County, should be granted by the Agency for Health Care Administration?
Findings Of Fact The Parties AHCA The Agency for Health Care Administration is the state agency with the authority to review and issue Certificates of Need in Florida. SBHD, the Applicant The applicant in this proceeding is South Broward Hospital District ("SBHD" or the "District"). Created by the Legislature in 1947 "at the request of voters to meet the healthcare needs of the South Broward community" (District No. 2, Vol. 1, pg. 7), SBHD is a special taxing district. The District receives tax revenues in order to support SBHD as the health care provider of last resort in South Broward County with a long demonstrated history of serving medically indigent patients. Id. From its inception in 1947 to today with the support of local tax revenue, the mission of SBHD has remained unchanged: to provide health care to all residents of the community regardless of ability to pay. There are three acute care hospitals in the "Memorial Health Care System" operated by SBHD: Memorial Regional, Memorial Pembroke Pines and Memorial West. These three hospitals make the District the dominant provider of health services in south Broward County. The District's market share of admissions to hospitals located in south Broward County is 85%. The other 15% of hospital admissions are to Hollywood Medical Center. (These percentages do not account for admissions of South Broward County residents to hospitals outside of the borders of SBHD.) Memorial Regional Hospital, a Medicaid disproportionate provider, is located 13.6 miles from the proposed Miramar hospital site. Without question, the predominant provider of care to indigent patients in south Broward County, Memorial Regional is licensed for 489 acute care beds. Memorial Regional had an acute care occupancy rate of 76.5% in 2000. From time-to-time in recent years, it has experienced unacceptably high occupancies particularly within individual units. It presently has patient care units that often operate above capacity, resulting in patient flow problems within the hospital. Memorial West Hospital, located 5.7 miles from the proposed Miramar site, is currently licensed for 164 acute care beds. It had an acute care occupancy rate of 88.9% in 2000. Memorial West currently operates 14 "labor-delivery- recovery" observation beds ("LDR" beds) that are not among the hospital's licensed beds. The hospital has recently received a CON for 36 additional beds to be utilized for acute care and further authorization via a CON exemption to add another 16 beds licensed for acute care provided certain occupancy levels are achieved. These additional 52 licensed beds are projected to become operational in 2002. Furthermore, Memorial West is adding 36 additional LDR beds and 20 acute care observation beds and doubling the size of its emergency room. When the expansion is complete, Memorial West will have 216 acute care beds, 20 acute care observation beds and 50 LDR beds. As matters stood at the time of hearing, peak occupancies in some departments at Memorial West such as obstetrics, routinely exceeded 100%. With the additional beds slated for opening in 2002, demand for acute care services in southwest Broward County will continue to produce high occupancy rates at Memorial West. It is reasonably projected that the growth in demand for acute care services in southwest Broward County with the additional beds will cause Memorial West to operate at 87% occupancy in 2005 and 99% occupancy in 2010 unless the hospital proposed by SBHD for Miramar is built. Memorial West opened in 1992 as a 100-bed hospital, in part fulfilling SBHD's vision to expand services into what was then projected to be a rapidly growing southwest part of the county, a suburban area more affluent than the District as a whole. Approved by AHCA's predecessor, SBHD's strategy in opening Memorial West was to gain access to this more affluent suburban market in order to help off-set the rising care of indigent care. The strategy has worked. Memorial West has made a profound contribution to the financial success and viability of the District. In 2001, Memorial Hospital West accounted for almost half of the District's bottom line profit. The profitability of Memorial West has allowed the District to continue to provide growing levels of indigent care, while at the same time decreasing tax millage rates. In fact, the millage rates levied by the District have decreased three times since Memorial West opened. During this same period of decreasing millage rates, the District has been able to increase its ratio of uncompensated care to tax revenues from 3-1 to 5-1. The District's third hospital, Memorial Hospital Pembroke was leased by the District for the first time in 1995. Now leased until June 2005 from HCA, Inc., HCA announced its intention at hearing to re-take the facility so that the District will lose Memorial Pembroke as one of its hospitals at the expiration of the lease. Licensed for 301 beds, Memorial Pembroke is located 10.6 miles from the proposed Miramar site. Memorial Pembroke's occupancy rate from July 1999 to June 2000 was 26.2%. This low rate of occupancy is due, at least in part, to significant physical plant constraints and deficiencies. Although licensed for 301 beds, the physical plant can only reasonably support 149 beds. When its daily census reaches 140 patients, the hospital's operational and support systems begin to fail. Prior to 1995, Memorial Pembroke was operated by a series of for-profit owners. Just as it does now, Memorial Pembroke suffered from chronically low utilization under all prior management. Before the District leased the facility from Columbia-HCA, the hospital had become stigmatized in the community; many patients and physicians were reluctant to use it. Due to a number of factors (some tangible, such as an out-of-date physical plant - others intangible) that stigma continues today. The District has invested considerable management and financial resources to improve the quality of care, the condition of the facility and the community reputation of Memorial Hospital Pembroke. Because the hospital serves as a "safety valve" for the high utilization at the District's other hospitals, especially Memorial West, Memorial Pembroke's census between 1995 and 2000 has been on the rise. Nonetheless, the facility continues to be regarded as a "second tier" hospital and to suffer a stigma within the community. Whatever the source of the stigma afflicting Memorial Pembroke, it is unlikely that occupancy rates at Memorial Pembroke will dramatically improve unless significant and substantial investment is made in the hospital. It does not make sense for SBHD to make such an investment since it will lose the facility in three years. Whether HCA will make the investment required to cure the facilities utilization woes remains an open question. (See paragraphs 103 and 104, below.) Through the three hospitals in the Memorial Healthcare system, Regional, West and Pembroke, and a number of clinics that are off-campus, the District provides a full range of health care services to residents of south Broward County. These include: general acute care; tertiary care; adult and pediatric trauma care under trauma center designation; a specialty children's hospital designated by the state as a Children's Medical Services provider for children with special needs for cardiac care, hematology and oncology, and craniofacial services; outpatient services; and primary care services. The District is the only provider, moreover, of many health care services within the boundaries of the South Broward Hospital District, all of Broward County south of SW 36th Street. (The North Broward Hospital District includes all of Broward County north of SW 36th Street.) These services include obstetrics, pediatrics, neonatal intensive care, adult and pediatric trauma at a Level I trauma center, and teen pregnancy prevention and education. Consistent with its mission, the District also operates the only system of primary care clinics for the indigent in the South Broward Hospital District. The District is clearly the safety net provider of acute care hospital and other services for south Broward residents. In 1999, the District provided 5.9% of its total revenue or approximately $63 million in charity care and 5.4% or approximately $58 million to Medicaid recipients. During the same time period, Cleveland Clinic in terms of total revenue provided 1% charity care and 1.8% to Medicaid recipients while Westside provided 0.6% charity and 2.3% Medicaid. In dollars worth of care devoted to indigent and Medicaid patients, SBHD provides over ten times more Medicaid and indigent care than Cleveland Clinic and Westside combined. Tax revenues, although supportive of the District's ability to maintain its mission, do not come close to compensating the District in full for the care it provides to charity and indigent patients. In fact, the District expends five dollars in uncompensated care for every dollar of tax revenue it receives. Still, as a significant source of income to the District, these tax dollars contribute to SBHD's robust financial health. Cleveland Clinic Cleveland Clinic Hospital is owned by TCC Partners, a partnership between the Cleveland Clinic Foundation and Tenet Healthcare Systems. Originally located in northeast Broward County in Pompano Beach, Cleveland Clinic obtained approval in 1997 to relocate its 150 beds to Weston near the intersection of I-75 and Arvida Parkway. Operation at the site of the relocation began in July of 2001. The new site is within one of the ten-zip codes SBHD has chosen as the proposed primary service area for its new hospital in Miramar, but it is outside the South Broward Hospital District. The new site of Cleveland Clinic is in the North Broward Hospital District, 1.5 miles to the north of the boundary line between the two hospital districts that divides Broward County into two distinct health care markets. Cleveland Clinic has an established history as a regional and national tertiary referral center. It is also an advanced research and education facility that benefits from the outstanding reputation of the Cleveland Clinic Foundation and the hospitals under its umbrella. Cleveland Clinic is not a typical community hospital. It follows a distinctive model of medicine based on a multi- disciplinary approach and a closed medical specialty staff. The medical staff is open to community primary care physicians but not to community specialists or sub-specialists. All of the specialists on its staff are salaried employees of the Cleveland Clinic. This means that physician specialists who are not employees of the Clinic do not have privileges to admit or treat patients at the Cleveland Clinic Hospital. The Cleveland Clinic offers tertiary acute care services, such as kidney transplantation and open-heart surgery. It also provides specialty services in colorectal surgery, voiding dysfunction and limb reattachment. Among its specialty programs are an adult spine program, an acute stroke program, an epilepsy clinic, and an orthopedic center of excellence in sports medicine. At the time of hearing and since opening, Cleveland Clinic's average daily census has been approximately 44 patients. Westside Founded 26 or so years ago in what was then considered western Broward Count from the standpoint of population (hence its name), Westside is a 204-bed acute care hospital. Slightly less than nineteen miles from the proposed Miramar site, the site of the hospital is "now somewhat central [to Broward County]" (Westside No. 39, p. 8), given the location of the population today and the growth that has occurred to the west of Westside. Westside, like Cleveland Clinic, is in the North Broward Hospital District. It is located in the City of Plantation on West Broward Boulevard. Among the variety of acute care services offered by Westside is open heart surgery ("OHS"). The OHS program, implemented two years ago has increased the hospital's occupancy rate to a near 70%. (In 2000, the hospital had an acute care occupancy rate of 69.3%). The occupancy rate is expected to increase as the open heart surgery program expands and matures. Recent capacity constraints in the ICU, for example, led to a capital project to expand the unit "about a year and a half ago." (Id. at 13). With regard to questions about whether the hospital had experienced capacity constraints or "bottlenecks" in units, Michael Joseph, the chief executive officer of Westside, answered this way: We did in tele, and that's when we did the overflow on the fifth floor. So at this time we are -- in the peak season of March, from time to time, sure. But on the annualized basis, we are in the 75 percent occupancy level. And sometimes there [are other issues] that all hospitals go through. (Id., at 14). At the time of Mr. Joseph's deposition, October 23, 2001, for the most recent year the average daily census has been "in the 175 range." (Id.) At present, therefore, Westside's occupancy is close to ideal. Westside is financially strong. It had strong financial performance in 2000 and at the time of hearing was expected to perform strongly in 2001. Replication of West Faced with both the potential loss in 2005 of Memorial Pembroke and the high occupancies at Memorial Regional and Memorial West, SBHD began investigating the opportunity to replicate the Memorial West model of success. During the investigation, the District came to believe what it suspected from obvious signs: there is a large and growing population to be served in the Miramar area. Although land was limited, the District was able to purchase within the City of Miramar a 138-acre parcel. The parcel is the site of the subject under consideration in this proceeding as detailed in CON Application 9459: SBHD's proposed project. SBHD's Proposed Project The District proposes to construct a 100-bed acute care hospital at the intersection of SW 172nd Avenue and Pembroke Road. The site is a large one. It has sufficient land available to serve ultimately as a "health park" with medical office buildings, outpatient facilities, and additional health care related facilities typical of a modern medical campus. If, on the other hand, the District decides it is in its best interest to "sell off balances" (tr. 486) of the property, it retains that option. The hospital will provide basic acute care services and be composed of 80 adult medical/surgical, 8 pediatric, and 12 obstetric beds. On the third floor, the hospital will have 28 observation status beds, in addition to its 100 licensed beds. The design of the hospital is cost efficient. It meets all license and life safety code requirements. All patient rooms are private and meet the square footage requirements of AHCA's license standards. The hospital design, costs, and methods of construction are reasonable. The project has several goals. First, it is intended to provide increased access to affordable and quality health care for the residents of southwestern Broward County. Second, the project will allow Memorial Regional and Memorial West the opportunity to decompress and operate at reasonable and efficient occupancies into the foreseeable future without the operational problems caused by the current over-utilization. Third, the project will replace the loss of Memorial Pembroke. Finally, the project will give the District a second financial "engine that drives the train" (tr. 141) in the manner of Memorial West. The project will enable the District to maintain its financial strength and viability and continue to serve so effectively as the safety net provider for the indigent in South Broward County. Stipulated Facts In their prehearing stipulation, filed on October 31, 2001, the parties stipulated to the following: On January 26, 2001, AHCA published a fixed need pool for zero additional acute care beds in District 10, Broward County, for the January 2001 batching cycle. The South Broward Hospital District ("SBHD" or "District") timely and properly filed a Letter of Intent, initial CON Application, and Omissions Response in the batching cycle. On May 16, 2001, AHCA filed a Notice of Intent to issue the CON together with a State Agency Action Report ("SAAR") recommending approval of the CON for the proposed hospital. AHCA's Notice of Intent to approve the CON for the proposed hospital was challenged by Cleveland Clinic and Westside. Hollywood Medical Center ("HMC") also filed a petition challenging the preliminary approval but later withdrew as a party from these proceedings. Broward County has been divided by the Florida Legislature into two hospital taxing districts. The SBHD includes all areas of the county south of SW 36th Street, and the North Broward Hospital District ("NBHD") includes all areas north of the demarcation line. SBHD, Cleveland Clinic, and Westside each have a history of providing high quality of care. All of SBHD's hospital facilities are JCAHO accredited. Accordingly, the quality of care provided by these parties is not at issue in this proceeding except as it may be impacted by staffing issues. The proposed staffing and salary projections included on Schedule 6 of CON Application No. 9459 are reasonable and are not in dispute, although the parties specifically preserved the right to present evidence concerning the SBHD's ability to recruit the staff projected, and whether the projected salaries will cause or accelerate the loss of staff at existing hospitals. The parties agree that the SBHD has available management personnel and funds for capital and operating expenditures. However, Petitioners assert that the District's use of such resources for this project is neither wise nor prudent and is not in keeping with appropriate health planning principles. The parties agree that the SBHD has a history of providing health care services to Medicaid patients and the medically indigent. (Section 408.035(11), Florida Statutes.) However, Petitioners do not agree that proposed Miramar Hospital can meet the levels of charity care proposed in the application for the Miramar Hospital. With regard to Schedule 1 of the Application, the parties stipulate that the Land Costs (lines 1-11) are reasonable and are not disputed; and the Project Development Costs (lines 26-31) are reasonable and not disputed. The parties agree that Schedule 3 of the Application (sources of funds) is reasonable and not disputed. The SBHD does not contest Petitioners standing in this proceeding. At hearing, the parties stipulated that SBHD has the ability to recruit and retain the staff needed for the proposed hospital. The parties also stipulated that the SBHD has in place the staff recruitment and retention programs described at pages 132-139 of the CON application. The stipulation at hearing did not preclude either Westside or Cleveland Clinic from presenting evidence with respect to the impact of the SBHD's recruitment on other programs and other hospitals. No Numeric Need As indicated by the AHCA Bed Utilization Data for CY 2000, the occupancy rate in Broward County was 48.42%. There is, moreover, a surplus of 1,786 beds. This surplus has been increasing over time and has grown by nearly 60 beds between the January 2001 and July 2001 planning horizons. The hospitals within the District's proposed primary service area had an occupancy rate of 53% in the July 2001 planning horizon and a surplus of 456 beds, a number "somewhat proportionate to the distribution of patient days as well as licensed beds within the district." (Tr. 1639.) If the 152 non- functional beds at Memorial Pembroke are deducted from the surplus then the surplus is 304 beds. Not surprisingly therefore, the Agency's fixed need formula for acute care beds produced a fixed need of zero beds in Health Planning District 10 for the January 2001 batching cycle. (Broward County composes all of Health Planning District 10). The fixed need pool of zero was published by the Agency in January of 2001. Again in July 2001, AHCA published a fixed need for zero acute care beds in Health Planning District 10. In light of the zero fixed need pool, SBHD bases its application for the proposed Memorial Hospital Miramar on "not normal circumstances." Not Normal Circumstances "Not normal circumstances" are not defined or limited by statute or rule. Nonetheless, a number of "not normal" circumstances have been recognized repeatedly by AHCA . These recognized "not normal circumstances" are generally grouped into categories of access, quality and cost-effectiveness. None of them are present in this case. "There [are] no financial access, geographic access or clinical access circumstances [in this case] that rise to the level of not-normal circumstances." (Tr. 1633). Nor are there any quality or cost-effectiveness deficiencies claimed by the District in its application. The District bases its claim of "normal circumstances" on eight factors. They are: 1) explosive population growth; 2) a mal-distribution of beds within the health planning district; the effects of not having a hospital facility in the area proposed; 4) continued and projected high occupancies at nearby hospitals; 5) inability to expand inpatient capacity at the nearby hospitals with high occupancy rates; 6) the limited functionality and uncertain future of one of the hospitals that might serve the area where the new hospital is proposed to be located; 7) the increasing retraction of access for residents to other hospitals; and, 8) the need to assure that the applicant will remain a strong competitor able to fulfill its unique role and mission that would be served by granting the application. Population Growth Broward County is one of the fastest growing counties in the United States. "According to the census 2000 data, [over the last decade] it was the fastest growing county in all of the United States based on total population gain . . . ." (Tr. 617.) The population growth was spurred in the latter part of the previous decade by the devastation wreaked by Hurricane Andrew in 1992. The hurricane's south Dade County victims used insurance proceeds to move to southwest Broward County. This migration helped to produce growth in southwest Broward County at a faster rate than the county as whole in the decade of the nineties. Growth in pockets of southwest Broward during this period of time has been phenomenal. For example, Pembroke Pines population increased 109 percent between 1990 and 2000. For the same time period, the population of Miramar (now the second fastest growing municipality in Florida) increased 78 percent. This growth was more than just steady during the 10 years before 2000; as the decade proceeded, the growth rate accelerated. In short, it is not a misnomer to describe the population increase in southwest Broward County and the Miramar area during the last decade as "explosive." (Tr. 626) With its attendant residential and commercial development, it has transformed southwest Broward County from a rural community into a suburban one. Population growth in southwest Broward County is expected to continue into the future. Substantial land in the area is under development or is available for residential development. By 2006, the population is projected to grow to 337,000, from the 2000 population of 289,000. This rate, while not comparable to the explosive rate in some pockets of the county in the last decade, is not insignificant. By way of contrast, the projected growth rate of 16.7% over the next five years in southwest Broward compares to a projected rate for the county as a whole of 8.4% and for Florida of 7.1%. In and of itself, the projected population growth in southwest Broward County is not a "not normal" circumstance. However one might characterize the projected growth rate in southwest Broward County, moreover, the acute care hospital bed need rule takes population into account in its calculations and projections. But, the bed need formula does not take into account the significant number of beds at Memorial Pembroke that are not functional. Nor does it take into account that Cleveland Clinic is not a typical community hospital. Nor does it take into account other factors such as that Memorial West and Memorial Regional are experiencing capacity problems or the division of the health planning district into two hospital taxing districts recognized as distinct medical markets, a recognition out of the ordinary for health planning districts in Florida. A geographical fact pertinent to arguments made by Cleveland Clinic and Westside with regard to the location of the population is that Memorial Miramar's proposed primary service area is divided by Interstate 75, a north-south primary travel corridor. On a percentage basis, there is faster population growth projected for areas west of I-75. But for the foreseeable future, the actual number of people populating the area west of I-75 will remain less than the number east of I-75. The area west of I-75, with the exception of one zip code in which a retirement center has been built, has a younger projected population that should produce lower use rates and average lengths of stay in hospitals than the area east of I-75. The support these facts lend to the District's opponent's arguments that bed need is greater east of I-75 than west is diminished by the absence of any hospitals west of I-75 in the South Broward Hospital District and the presence of four hospitals in the hospital district east of the interstate. Distribution of Beds Consistent with the recognition by the Legislature, AHCA, and its predecessor state agency, north and south Broward County are two distinct medical markets demarcated by the division of the county into two hospital districts. There are 3.52 beds per 1000 population in the North Broward Hospital District, 2.35 in the south. A greater number of under-utilized acute care beds are located in the northern half; a greater percentage of highly utilized hospitals are located in the southern half. Of the four hospitals located in south Broward County, both Memorial Regional and Memorial West had average annual occupancies in excess of 80% in the calendar year 2000. By contrast, of the 13 hospitals located in the northern half of the County, none had occupancy in excess of 80%, and only one had an average annual occupancy in excess of 70%. These statistics point toward an over-distribution within the health planning district of beds in the north and an under-distribution in the south. At the same time, beds are distributed between the two hospital districts in approximate proportion to the number of patient days experienced by each. In 2000, NBHD had 71% of the patient days for District 10 and 73% of the acute care beds. As one might expect, therefore, the relationship between patient days and acute care beds during the same period was similar for the SBHD: 28.9% of the patient days for District 10 and 27% of the beds. An analysis of bed to population ratio is only meaningful when occupancy rates are also considered. Occupancy rates are mixed in the south part of the county: very high for some, especially Memorial West, and very low for Memorial Pembroke. This breadth of this disparity is unusual. Effects of No Hospital in Miramar Thirty to 60 minutes to reach an acute care hospital is a reasonable driving time in an urban area. There are five existing acute care facilities within 30 minutes of southwest Broward County. In fact, most of the residents in Memorial Miramar's proposed service area are within 15 minutes or less of an existing acute care facility. Nonetheless, without a hospital in Miramar, residents must leave their immediate community to gain access to acute care services. As a matter of sound health planning, "[n]ot every city, town or hamlet can or should have its 'own' hospital." So correctly posit Cleveland Clinic and Westside. See pgs. 13-14, Cleveland Clinic and Westside PRO. But as the City Manager of Miramar wrote, "[t]he addition of a new hospital is one of the last missing links in the City [of Miramar]'s master plan . . . The city is looking to build the best possible future for its residents." District Ex. 2, Attachment G. A new hospital in Miramar would not only be a featured complement of the City of Miramar's plans for the future, it would also enhance access to acute care services and address access concerns caused by skewed utilization among the SBHD hospitals due to the unusual state of affairs at Memorial Pembroke and the high demand at West. Of great concern is that residents of southwest Broward County in need of emergency services are sometimes not able to gain access to those services at Memorial West, the closest available hospital. Memorial West operates the third busiest Emergency Department in Broward County with 65,000 visits in 2001. In Calendar Year 2000, Memorial West's emergency room went on diversion 123 times, averaging 7.7 hours per diversion. In the first months of 2001, the hospital went on diversion 89 times, with an average diversion time of 16.3 hours. These diversions have a dual effect. They mean that patients wait longer for beds. They also mean that providers of emergency medical services in ambulances are forced out of the community for extended periods of time unable to render services within the community that may be needed during that time. Diversions at Memorial West are becoming more and more problematic. Wait times are getting longer; the total time on diversion is growing. At first blush, the problems appear to be less significant at Memorial West than they might be elsewhere in District 10 because of its low "emergency room visits to hospital admissions" ratio. The Health Planning District average shows that about 20% of emergency room patients are admitted to the hospital. At Memorial West, the ratio is 8.7%, the lowest in the County. While normally this might reflect that patients visiting Memorial West have a lower acuity than patients visiting emergency rooms district-wide, the lower ratio for Memorial West is due, at least in part, to the high volume of pediatric patients seen at West who are transferred to Joe DiMaggio's Children's Hospital. The pediatric transfers, in the words of Frederick Michael Keroff, M.D., a Board-certified emergency physician who has worked in hospital emergency departments in South Florida for 24 years, create a false sense of what is actually being seen on the adult side of the emergency room department. On the adult side . . . [the ratio] varies somewhere between 12 and 16 and a half percent which is comparable with any other facility. . . . [W]hen you mix in such a large pediatric population into the adult population, obviously it dilutes out the number and drops [the ratio] down . . . . (Tr. 2568.) A solution to emergency room diversion at Memorial West and an alternative to the construction of Memorial Miramar proposed by Cleveland Clinic and Westside is more SBHD urgent care centers in the Miramar area. SBHD operates seven urgent care centers. Of these seven, the proposed Miramar PSA has only one. Additional urgent care centers more readily accessible in the 10 zip code area that comprises Memorial Miramar's PSA might reduce the number of visits to the ER at Memorial West. But they might not. Patients don't self-triage when they are presented with a problem. They go to the hospital. [Triage is a medical decision.] Patients usually come to the hospital, even [with] urgent care centers down the block, because they don't know what the problem is and they allow the hospital to make the decision about what the problem is. (Tr. 2571.) Additional urgent care centers would not solve the problem created when diversion is a result of the lack of acute care beds for Memorial West ER patients who need to be admitted to the hospital for treatment beyond that provided in the ER. Cleveland Clinic hospital is not likely to offer much of an alternative. Because of the closed nature of the Cleveland Clinic specialty staff, it will not be a hospital of choice for community physicians in the South Broward Hospital District. Nor will it be a hospital of choice for patients able to elect the hospital at which to seek emergency services. It is apparent from the demand on Memorial West, despite the number of beds and other emergency departments within acceptable reach, that a Memorial West-type facility is what the residents of southwest Broward County prefer and opt for even if it means they have will have to wait for emergency services. In cases of patients transported from southwest Broward County via ambulances forced to go to Cleveland Clinic in Weston to deliver patients in need of emergency services, the transport presents difficulties of their own. It is not efficient management of emergency services due to their very nature to require ambulances to leave their service areas. There are no clear solutions to the problems emergency room diversions present for patients, their families, physicians, and the emergency medical system in general in southwest Broward County other than construction of new acute care hospital in Miramar. Construction of a new acute care hospital in Miramar will help to alleviate the high occupancies and emergency room diversions currently experienced at Memorial West. It will reduce disruptions to Miramar residents and will provide an easily accessible alternative to southwest Broward County residents, thereby enhancing access to emergency services. High Occupancy Rates at West and Regional The current and reasonably-projected high occupancies at Memorial West and Memorial Regional are extraordinary circumstances for a health planning district with as many excess beds as District 10. The calculation under AHCA's formula for hospital bed need for the January 2001 batching cycle yielded an excess of 1,717 beds. Calculation by the Agency using the same formula for the July 2001 batching cycle showed an excess of 1,786 beds or 59 more excess beds than just six months earlier. The import of these results was described at hearing by Scott Hopes, Westside's expert health planner: Obviously when you have a situation like this, the default is a zero published fixed need which is what was published. But the importance here is that there are so many excess beds. And if you look also on the line [of Westside Ex. 23] that deals with occupancy rate, the occupancy rate is about 48 percent, and it hasn't varied much between the six-month period. In fact, the occupancy rate in Broward County has been under 50 percent for some quite sometime. (Tr. 2076-7). It is extraordinary that a health planning district with so many excess beds would also have two hospitals, Memorial West and Memorial Regional, with capacity problems. Memorial West, by any standard, is a successful hospital. Since it opened in 1992, the inpatient volume there has tripled. Opening as a 100-bed facility, Memorial West now has 184 licensed beds, an expansion aimed to meet the demand for its services. As alluded to elsewhere in this order, because there are often not enough available acute care beds at Memorial West, some patients have to wait in the ER six hours or more. It is not unusual for more than 40 patients to wait at one time. Despite these conditions, patients, when offered the opportunity for a transfer to another hospital, rarely accept the offer. More often than not the patients do not wish to go. The reputation of Memorial Hospital West, the loyalty factor, if you will, to Memorial, to the medical staff, the patients want to remain at the facility. (Testimony of Memorial West Administrator Ross, Tr. 152-3.) Memorial West plans expansion but even with its current planned bed expansion, it is reasonable to expect it to reach unacceptably high occupancy rates by 2006 if Memorial Miramar is not built. Furthermore, the only obstetric programs in south Broward are at Memorial West and Memorial Regional. Memorial West performed 4,400 births last year, and its obstetrics unit often operates in excess of 100% occupancy. The only constraint on additional births at West is the limited physical capacity of the facility. Memorial Regional experienced even more births last year than West with about 5,000 deliveries. Memorial Regional is operating at or exceeding its functional capacity in other departments. The current medical/surgical occupancy at Memorial Regional is approximately 80% year round. Some units experience much higher occupancies. The intensive care unit's occupancy frequently exceed 100%, as does the cardiac telemetry unit. In certain medical/surgical units, peak occupancy is as high as 125%. Memorial Regional's capacity to handle its high patient volume is limited by certain factors. Semi-private rooms are limited to use by members of the same sex. As a tertiary facility, there are specialty patients who must be served by nurses trained in that patient's specialty, with appropriate monitoring equipment. Without approval of Memorial Hospital Miramar, Memorial Regional will reach 85% occupancy by 2008 and 88% occupancy by 2010. These occupancy rates create an inefficient and untenable environment in which to deliver the mix of specialized and tertiary services offered by Memorial Regional. The overcrowding at Memorial West and Memorial Regional is dramatic and continuing. There are simply more patients seeking care at these hospitals than the hospitals can serve appropriately. This overcrowding exists despite the excess of acute care beds within the health planning district. In sum, despite the plentiful nature of the number of acute care beds in the health planning district, a need exists to either decompress Memorial Regional and Memorial West by some means such as the proposed new hospital in Miramar or to expand one or both of the two hospitals by way of new construction or conversion of LDR and observation beds. A decompression alternative to the new hospital is to transfer beds from existing hospitals to create a satellite hospital. Because of high occupancy rates at West and Regional and because Pembroke's lease will expire in 2005, transfer of existing beds is not a feasible option. That leaves expansion, as the only alternative to a new hospital in Miramar. Cleveland Clinic and Westside argue there are ample opportunities at the two hospitals for expansion. Expansion New Construction In pre-CON application evaluation, SBHD commissioned a study from Gresham, Smith and Partners, an architecture firm. The firm studied the three Memorial facilities to determine whether expansion of the acute care bed complement at any of them was feasible. In a "Memorial Health System Facility Expandability and Master Plan Review Report" the firm concluded that it was clearly not feasible to expand either Memorial Pembroke or Memorial Regional and there were problems with expanding Memorial West. With significant problems including its aged plant and its uncertain future, expansion at Memorial Pembroke would not be cost-effective. It would cost $31 million in capital improvements to maintain Pembroke's functional capacity at 149 beds. If the present location of nursing administration, hospice and other necessary services were moved out of the hospital, the hospital's function could be expanded to 215 beds. No evidence was presented with regard to the advisability of moving those services or the additional costs associated with this alternative. HCA's willingness to make the investment necessary to renovate the facility at Pembroke was not supported by any specifics. HCA's announced its intention, "to take the hospital back at the end of the lease and run it," (tr. 1511-2) but, in fact, the company has not taken any action to evaluate the potential for assuming operation of the hospital in 2005. Nor has it even begun the process it must go through before final decisions are made. The overarching intention to "re-take the hospital and run it," at this point in time, does not mean HCA will be willing to make the investment necessary to renovate the facility either during the term of SBHD's lease or afterward. It still needs to "do a very detailed discounted cash flow analysis to make a final decision on the investment needed and the return on that investment." (Tr. 1514.) Memorial Pembroke's uncertain future makes it an unlikely candidate for expansion. However unlikely such a result, with the problems that afflict Memorial Pembroke, there is, moreover, no guarantee that HCA's intended analysis will convince it even to continue operation of the hospital. Memorial Regional has different problems from Memorial Pembroke. It takes up an entire block surrounded by residential property and parking garages. There is almost no opportunity for growth on the site. Of the few areas that could be expanded vertically, only one would be conducive to bed addition. "[I]t is so remote, it doesn't tie back to the main nursing care areas." (Tr. 482.) Expansion at Regional would also be plagued with concurrency problems and zoning issues. Of the three hospitals, Memorial West presents the best option for expansion. A facility master plan for Memorial West provides for the addition of a patient tower on the north side of the facility ("the north tower"). The addition of the north tower could add as many as 50 beds to Memorial West at a cost substantially less than the construction of Memorial Miramar. Still, SBHD's architects, Smith and Gresham, concluded that expansion of the size necessary to alleviate the overcrowding at West was not cost-effective. The force of the Smith and Gresham opinion is tempered by the firm's standing to benefit financially to a much more significant degree if Memorial Miramar is built than if the planned-for tower is constructed to add 50 beds to Memorial West. But the opinion is not groundless. Put simply, construction of an additional tower at West is no simple solution to its capacity problems. The tower was planned for maternal services but like the minimal opportunity for expansion at Regional, it would be "remote from the rest of the nursing function . . . [it would, moreover] trigger huge upgrades to the infrastructure." (Tr. 480.) The hospital site is constricted already because of additions that have almost completely built out the campus. A new north tower would add inefficiencies in hospital operations because of the increase in travel distance for materials delivery and meeting the dietary needs of patients. Despite the master plan for growth, an improvement the size of the north tower would begin to turn West into another Memorial Regional: a huge hospital, overdeveloped for its site. The improvement, like every improvement thereafter, would require patient shuffles and disruptions in patient care. Like Memorial Regional, expansion at West, too, would have concurrency issues and could create a land use dispute with neighbors, the outcome of which is uncertain. In light of these obstacles, SBHD prefers the option of constructing the new hospital in Miramar over expansion at West. There is, however, in the view of SBHD's opponents, another option for expansion of existing facilities: conversion of LDR and observation beds. Expansion through conversion of LDR and Observation Beds Cleveland Clinic and Westside contend that another option to relieve overcrowding is conversion of observation and LDR beds to acute care hospital beds. But these beds are used to meet the need of observation and maternity service patients. There are patients who need closely supervised medical care but whose care has not been determined to require admission to the hospital. Observation patients, sometimes referred to as "23 hour" patients, may suffer from various conditions, including chest pain, fever, abdominal pain, rectal bleeding or nausea. Given the high number of births at Memorial West, many obstetrical patients present at the hospital in "false labor" or for antipartum testing, complications of pregnancy, or symptoms that should be treated as observation or on an inpatient basis. It would be impractical for Memorial West to convert observation and maternity service beds, whether existing or still planned for, to inpatient acute care beds. If these beds were converted, Memorial West would find itself once again in its present straits of not enough beds for observation purposes particularly for obstetrical patients for whom there is little choice where to obtain obstetrical services in the South Broward Hospital District. Limited Functionality and Uncertain Future of Memorial Pembroke Memorial Pembroke has undergone seven ownership changes since it first opened. Perceived as a hospital where neither patients nor physicians want to go, it has suffered from a stigma within the community. Even with recent gains in utilization, it achieved an occupancy rate of only 24% in calendar year 2000. Pembroke suffers from physical and infrastructure limitations that reduce its functional bed capacity to 149 beds. Its mechanical and heating, ventilation and air conditioning systems are outdated and inadequate. For example, a primary generator is vented to the outside by a 6-foot hole in the ceiling. The electrical panels are at absolute capacity. The first floor has an outdated, plenum air return with no ducts in the ceiling. The generators have transfer switches that require them to be turned on manually. Facilities management personnel are reluctant to do so for safety reasons. The semi-private patient rooms at Pembroke are too small for modern care and do not have adequate space for the monitors, IV equipment, pumps and other technology required by today's health care delivery system. Many rooms do not have showers. The hospital has a number of three bed wards woefully outdated by the standards of modern care. It would cost $31 million in capital improvements to simply maintain Pembroke's functional capacity at 149 beds, to upgrade the facility to bring it into compliance with existing code and to otherwise modernize inadequacies. Whether Pembroke will continue to operate after 2004 is unknown. While HCA stated its intention to do so, it has not made a final decision to assume operations. It still needs to conduct a financial analysis sufficiently detailed to determine whether the necessary expenditures to bring the hospital up to par are practical. Any capital investment by HCA in excess of $1 million requires the approval of HCA's national office, approval that has not yet been provided. The level of capital investment required at Memorial Pembroke is significant and it cannot be assumed that HCA will make this investment. (See paragraph 89, above.) Increasing Retraction for Access in SW Broward Of the three hospitals located within the ten zip codes that constitute southwest Broward County: Memorial West, Memorial Pembroke and Cleveland Clinic, each poses some manner of access impediment for the residents of the area. Memorial West is overcrowded. Memorial Pembroke's future is uncertain, its present clouded by significant physical plant problems and stigma that keeps its occupancy low. Cleveland Clinic's distinctive character, its closed specialty staff and its regional, national and international draw discourages utilization by southwest Broward residents seeking routine acute care hospital services at a community hospital. The Cleveland Clinic medical staff is open to community primary care physicians. "[W]ith the qualification that if there's a specialty for some reason that is not adequately manned, the clinic can go out and contract with community physicians to provide the services" (District No. 55, p. 39), the Cleveland Clinic medical staff is not open to community specialists or sub-specialists. Its specialty and sub- specialty staff, therefore, is closed. The medical staff building, moreover, located on the campus is also closed to community practitioners even to those primary care physicians with privileges at the hospital to manage their patients care. Like the specialty medical staff, the building is restricted to Cleveland Clinic salaried specialists. Due to the closed nature of the specialty staff at Cleveland Clinic, any patient admitted to the Cleveland Clinic hospital will be seen by a Cleveland Clinic physician. This sets up reluctance on the part of community physicians to use the Cleveland Clinic hospital. As expressed by the hospital's CEO, "it's sometimes difficult to convince a primary care physician that he needs to change his referral patients, so yes, there is some concern [about the willingness of community physicians to utilize the hospital]." Id., p. 40. In multiple prior CON applications approved by AHCA, Cleveland Clinic projected that up to 30% of its patients would come from outside Broward County and that it would draw patients from throughout Broward County, rather than having a more traditional, limited service area typical of a community hospital. Patient origin data for Cleveland Clinic when at its old location in Pompano Beach shows the hospital, unique among Broward County hospitals, has a broad county-wide, regional and national draw. While all other hospitals in Broward County can identify fewer than 25 zip codes that generate the first 75% of patient admissions in 1999, 60 zip codes generated the first 75% of Cleveland Clinic's admissions. Similarly, while all other hospitals in Broward County can identify fewer than 25 zip codes that generate the first 90% of their patient admissions in 1999, the first 90% of patient admissions at Cleveland Clinic's hospital were generated by no less than 287 zip codes. Cleveland Clinic presented evidence of its intention to be available to the local community. It has marketed in Broward County by means of newspaper and television advertisements and various community programs. It has also conducted outreach and training programs with the emergency medical service providers in the Broward County area, not only to improve the quality of care for the patients of Broward County but also to educate the emergency medical service providers about Cleveland Clinic. The patient origin data for Cleveland Clinic's first three months of operation in Weston, however, verifies its continued broad draw. This data shows that within Broward County, only 30% of patients originated within the 9 southwest Broward zip codes that Cleveland Clinic identifies as its "immediate service area"; the other 70% of its patients come from outside the immediate service area. Cleveland Clinic is not a typical community hospital. Its previous CON applications have been granted in part on its unique characteristics. Whether its image or persona will change with the move to Weston to attract more patients from southwest Broward County is an open question. Given its nature and the focus of the health care it is likely to deliver, however, it is not likely that it will be utilized regularly by residents of southwest Broward County seeking routine hospital care either because not their hospital of choice or because of community physician referral patterns. h. Assurance that SBHD Can Fulfill its Mission The final "not normal" circumstance relied on by SBHD relates to the affluence of the patients in southwest Broward County and the profits that are reasonably expected to be generated by virtue of the proposed hospital's location in this affluent area. The expected profits will both subsidize SBHD's charity care and support its ability to be competitive. The importance of SBHD remaining competitive and able to serve the indigent in Broward County was explained at hearing by Jeffrey Gregg, Chief of AHCA's Bureau of Health Facility Regulation: [A]s a major indigent care provider for the State of Florida, [SBHD is] providing a service that extends far and wide that benefits everyone. In our state we have indigent care concentrated in relatively few facilities … [I]t is a very important resource that needs to be nurtured and protected to the greatest extent possible because it is fragile and vulnerable. We have many uninsured people in the state, somewhere between two and three million. It is reasonable to expect now with the economic downturn that we are going to be seeing an increase in uninsured people, so the value of hospitals that function as safety net providers is . . . very important. (Tr. 1240-1). This rationale supported the District's CON application for Memorial West. Because of SBHD's financial success to which Memorial West has been a major contributor, SBHD has achieved a significant degree of financial stability in this day of decreasing reimbursements, managed care, and increased health care costs. It is not contested that its financial position is sound. For fiscal year 2002, SBHD was running ahead of revenue and profit projections at the time of hearing. Nonetheless, if hospitals are constrained and the payor mix becomes less favorable, financial conditions can change quickly. Only three years ago, the District posted an $18 million debt. The capacity constraints at Memorial West will limit its ability to generate additional profits. At the same time, the District must accept all charity care patients. This requirement coupled with capacity constraints has the potential for an unfavorable payor mix for the District. The addition of Memorial Miramar will help to ensure that the District maintains its strong market position and will sustain a favorable payor mix. The profits expected to be generated by Memorial Miramar will ensure that the District can continue to provide care to the indigent without raising, and perhaps by lowering, the tax rate for the tax payers of Broward County. The Proposed Primary Service Area The District's proposed primary service area ("PSA") is a 10 zip code area in southwest Broward County. It excludes zip codes in Dade County that might have been included as well as the eight easternmost zip codes in south Broward County. Usually a set of contiguous towns or minor subdivisions or zip codes that represent a substantial majority of a hospital's patients, there is no single way of defining a hospital's primary service area. Some health planners use a region from which 75% of the patients come but a range of 60 to 80 percent is not unreasonable. There are other approaches to defining primary service areas: zip codes, for example, in which a threshold level of market share was achieved or that account for a minimum percentage of the hospital's patients. While one method may be more usual than another, any of a number of ways of defining a PSA may be reasonable. Cleveland Clinic's health planner, Ms. Patricia Greenberg sees Dr. Finarelli's PSA for the Miramar hospital as not rational from the perspective of health planning. The zip codes Dr. Finarelli chose include a number that are to the east of Memorial West. Ms. Greenberg asserts that it is unlikely that patients will drive from the east past Memorial West in order to reach Memorial Miramar. It would have made much more sense, in her view, for the PSA to have included three zip codes to the north of the PSA in western Broward County: zip codes 33327, 33326 and 33325. But these zip codes, entirely within North Broward Hospital District, are not South Broward Hospital District zip codes. Nor are three other zip codes that Ms. Greenberg sees for the Miramar PSA as more rational choices than zip codes east of Memorial West that Dr. Finarelli chose. Ms. Greenberg's other choices outside Dr. Finarelli's PSA are not only not in the hospital district, they are not in AHCA Health Planning District 10. They are in Dade County. Determinations of bed need do not always rise and fall on the selection of the primary service area. To the contrary, as Dr. Finarelli stated at hearing, "[h]ow and where the boundaries are drawn between the primary and secondary service area is less important [than] making sure that any analysis of bed need and demand incorporates both the primary and secondary service areas." (Tr. 724). This statement loses its potency, however, and the import of the choice of the primary service area is raised in light of the population-based bed need projections made by Dr. Finarelli within the PSA in support of the application. Population Based Bed Need Projections within the PSA Dr. Finarelli conducted a standard population based bed need analysis to determine the gross bed need within the PSA selected for the proposed hospital. His bed need calculations were computed separately for adult medical, surgical, pediatric and obstetric beds. The assumptions used by Dr. Finarelli were reasonable and appropriate. The level of detail in Dr. Finarelli's model was described by another of SBHD's expert health planners who testified in this case, Mr. Balsano and who has been qualified as an expert in health planning and health care financial feasibility approximately 20 times over the last decade, as the most detailed model he had ever seen. Dr. Finarelli's analysis accounted for the current and projected population as well as the current and projected hospital discharge rate per 1000 population within the PSA. Multiplying the population (in thousands) by the discharge rate yields the total number of current and projected hospital discharges by PSA residents for the planning horizon. The total number of hospital discharges was then multiplied by an appropriate average length of stay ("ALOS") to determine the total number of current and projected patient days by PSA residents. The total patient days were divided by 365 (days in the year) to arrive at the current and projected hospital average daily census ("ADC"). Finally, the ADC was divided by the desired 75% occupancy rate to arrive at a gross bed need for the PSA. The calculations result in a projected need in the 2006 planning horizon for a total of 457 acute care beds; including 386 adult medical surgical, 25 pediatric, and 46 obstetric beds. Based only on projected population growth within the PSA, there will be an incremental gross bed need for 75 acute care beds; 67 medical/surgical, 3 pediatric and 5 obstetric. Existing Inventory and Bed Supply The three hospitals located within the 10 zip code PSA have a total of 667 licensed acute care beds, existing or approved. Including the 36 approved and 16 conditionally approved beds at West, Memorial West has 216 beds. Memorial Pembroke has 301 and there are 150 licensed beds at Cleveland Clinic. This total, however, is "simply not a reasonable or realistic measure of how many beds in those three hospitals are truly available to the residents of Southwest Broward County . . . ." (Tr. 837-8.) Patient origin statistics and representations made by Cleveland Clinic in its certificate of need applications bear out that it is not a typical community hospital. Appropriate to its mix of tertiary services and its focus on education and research, it has a broad service area reaching far beyond Broward County. Consistent with the nature of the hospital, in its first three months of operation at Weston, 35% of its patients came from outside Broward County and only 16% have come from southwest Broward County or the 10 zip code PSA used by SBHD in its application for the Miramar hospital. Based on available data and information, it is reasonable to project that Cleveland Clinic will draw approximately 26% of its patients from within Memorial Miramar's PSA. It is reasonable, therefore, to allocate 26% of Cleveland Clinic's 150 beds to meet the population based demand for adult medical surgical beds in the PSA, for a net contribution of approximately 40 beds. With its functional capacity of 149 beds, it is not reasonable to consider all of the 301 beds at Memorial Pembroke. Fifty-four percent of its patients come from within the Memorial Pembroke PSA. The product of 149 beds multiplied by 54% is approximately 80 beds available to meet the population-based demand of the residents of southwest Broward County. There is, moreover, some doubt about whether any beds will be available at Memorial Pembroke after the expiration of SBHD's lease with HCA. Given the stigma Memorial Pembroke suffers and its uncertain future, an estimate of 80 beds is a reasonable projection for the number of beds at the hospital available to meet the needs of the residents of southwest Broward County. With 65% of its patients coming from within the proposed PSA for the Miramar Hospital, Memorial West is the hospital of choice for the residents of the proposed PSA. With 186 adult medical surgical beds, 120 meet the needs of patients coming from Miramar's PSA. Thus, there are approximately 240 adult medical surgical beds (120 at West, 80 at Pembroke and 40 at Cleveland Clinic) available to meet the projected need of 386 adult medical surgical beds in the 2006 planning horizon. Subtracting the 240 beds from the 386 needed yields a net need of 146 beds to serve residents of the Miramar PSA. Although some patients will continue to seek services outside the PSA, Dr. Finarelli's projection that there is a sufficient net need to support the 80 adult medical surgical beds proposed at Memorial Miramar is reasonable. Building Memorial Miramar will help reduce the percentage of people who leave the area for acute inpatient adult medical surgical services from its current level of about 50% to approximately 25%. This will improve access to health care for the residents of southwest Broward County. Memorial West is the only provider of obstetrical services in southwest Broward County, and only one of two in all of south Broward (the other being Memorial Regional). Both Memorial West and Memorial Regional are operating above capacity in their obstetrical units. In calendar year 2000, Memorial West's 24-bed obstetric unit operated at 130% occupancy. Hollywood Medical Center recently closed its obstetric unit thereby increasing the pressure on Memorial Regional and Memorial West to provide services to area patients. With a projected gross need for 46 obstetric beds in the planning horizon, there is a net need for at least 22 more obstetric beds. The proposed 12-bed unit at Memorial Miramar will help to meet that need. Memorial Hospital West's 6-bed pediatric unit is the only unit of its kind in southwest Broward County. The only other provider of pediatric services in all of south Broward is Memorial Regional's Joe DiMaggio Children's Hospital. Dr. Finarelli reasonably projects that one-half of the pediatric patient beds needed in southwest Broward would continue to be filled by Joe DiMaggio's Children Hospital. This leaves a net need for at least 7 pediatric beds in southwest Broward; the proposed 8-bed unit at Memorial Miramar will fill that need. Patient Days, Utilization and Market Share Projections To project utilization and market shares for the proposed hospital, Dr. Finarelli used a geographic area comprised of 28 zip codes that represent the primary and secondary service areas of the proposed hospital. The areas are expected to account for 90% of the hospital's admissions. The 28 zip codes were divided by Dr. Finarelli into four geographic clusters: the 10 zip code PSA or "Southwest Broward", 9 zip codes in "Other South Broward", 3 zip codes in "North Broward" and 6 zip codes in north Dade County or "Select North Dade." Based on historical and current data and market trends, Dr. Finarelli assigned current and projected inpatient market shares in each zip code cluster to each hospital in south Broward County and to select hospitals in north Broward County and north Dade County, with and without the existence of Memorial Hospital Miramar. He also assigned market shares and projected patient days separately by service category for adult medical/surgical, obstetric and pediatric services. Dr. Finarelli's market share assumptions for the proposed hospital were as follows: for Southwest Broward County in the Adult Service Category, 6% and 18%, in OB, 7% and 20%, in Pediatrics, 7% and 20%, all for the years 2005 and 2010, respectively; for Other South Broward County, in the Adult Service Category, 0.3% and 1%, for OB, 0.3% and 1%, for pediatrics, 0% and 0%, all for the years 2005 and 2010, respectively; for North Broward in the Adult Service Category, 0.6% and 2%, for OB, 0.8% and 3% and for pediatrics, 0.8% and 3%, all for the years 2005 and 2010, respectively; and for Select North Dade, in the Adult Service Category, 0.8% and 2.5%, for OB, 1% and 3%, and for pediatrics, 0.8% and 2.5%, all for the years 2005 and 2010, respectively. Taking into account available data and projected trends in each of the zip code clusters, these market share projections are reasonable. Dr. Finarelli applied his market share assumptions to overall projections of hospital discharges for each zip code cluster to arrive at the projected number of discharges for the proposed hospital in its first and second year of operation. He included an additional 9% to 10% in projected discharges to account for patients admitted from outside the 28 zip codes, such as patients from areas elsewhere in Broward, Dade, other parts of Florida and out of state. It is typical for hospitals in Broward County to receive approximately 10% of patients from outside of their primary and secondary service areas. By multiplying the projected number of hospital discharges by a reasonable length of stay for each category of service, Dr. Finarelli arrived at his projections of patient days. His "average length of stay" assumption was less than the District average. These calculations demonstrate that Memorial Miramar will have total acute care utilization of 19,958 patient days in its first full year of operation, and 25,503 patient days in its second full year of operation. Dr. Finarelli's projections of market shares, admissions and patient days for the new hospital appear to be reasonable. The Statutory Criteria Section 408.035, Florida Statutes, provides the review criteria for CON applications. The parties agree that subsections (3) and (4) are not in dispute. Section 408.035(1) concerns whether the proposed project is supported by and consistent with the applicable district health plan (the "Plan"). The Plan contains recommendations, preferences and priorities. The majority of the preferences and priorities contained in the Plan are not applicable to this application. The Plan recommends that there should be a reduction of licensed beds in Broward County until a ratio of 4.0 beds per 1,000 population is less than 4.0 beds per thousand and/or an overall occupancy rate of 85% is achieved. Although the bed population ratio is less than 4.0 beds per thousand, the annual occupancy rate is below 50%. This criterion, quite obviously, is not met by SBHD. But its importance diminishes in light of the "not normal" circumstances in support of the application, particularly the overcrowding at Memorial West and Regional. The Plan states that "priority consideration for initiation of new acute care services or capital expenditures shall be given to applicants with a documented history of providing services to medically indigent patients or a commitment to do so." SBHD promises to provide 3.21% of gross revenue for charity care and 4.14% of its patient days for Medicaid patients at Memorial Pembroke. These figures are not unattainable. Memorial West provided 3.2% of its revenues toward charity care in the most recent year. The effect of the expiration of SBHD' lease without renewal at Memorial Pembroke may increase pressure on Memorial Miramar's charity care services. On the other hand, in light of Memorial West's history in meeting its charity care commitment and the relative affluence of the Miramar's PSA, there is some question as to whether Memorial Miramar can meet the commitment contained in the application. West has fallen far short of its 7.0% commitment. Less than 1% of its admissions were charity care admissions between 1997 and 2000 and only 2.6% of its gross revenues were for charity care in 1999, for example. Whatever West's experience bodes for Miramar's future, it is clear that SBHD has a documented history of providing services to the medically indigent. It is committed, moreover, to do so throughout the hospital district whether it achieves its commitment at Memorial Miramar or not. The preferences of the Plan related to the provision of care for the indigent is clearly met by SBHD. Section 408.035(2) addresses 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. There is no problem with quality of care in the district. The extent of utilization of all the facilities in the district is not high. Nonetheless, there is an access problem that constitutes not normal circumstances. Memorial West, in particular, is overcrowded. A new hospital in Miramar will enhance access for the residents of the hospital district who want to access one of the District's hospitals and so directly meets the criterion in Section 408.035(7), the "extent to which the proposed services will enhance access to health care for residents of the service district." Section 408.035(5) addresses the needs of research and educational facilities including facilities with institutional training programs and community training programs for health care practitioners at the student, internship and residency training levels. The District's affiliation with medical schools provides some satisfaction with this criterion but on balance, SBHD receives little credit under this criterion. Section 408.035(6), Florida Statutes is "[t]he availability, of resources, including health personnel, management personnel, and funds for capital and operating expenditures, for project accomplishment and operation." The parties stipulated that SBHD has the ability to recruit and retain the staff needed for the proposed hospital. Cleveland Clinic and Westside argue that SBHD's recruitment of staff will have a detrimental impact on existing providers. A shortage of skilled nurses and other allied professionals exists nationally, in Florida and in Dade and Broward Counties. The nursing shortage has intensified in recent years due to the decline in the number of licensed nurses further compounded by a drop in the number of nurses enrolled in nursing schools. As a result it has become increasingly difficult for hospitals to fill nursing vacancies. In order to ensure adequate staffing in the midst of the nursing shortage, especially during the peak season of late fall and the winter months, Westside and Cleveland Clinic are forced to utilize "agency" or "pool" nursing personnel. These nurses command higher wages than non-agency nursing personnel. The District's application projects a need for 128 registered nurses who will be full-time employees ("FTE"s). This need increases to 167. New hospitals are usually able to attract staff from other facilities who prefer to work with new equipment in a new setting. Recruitment of personnel to staff the Miramar Hospital will come at the expense of existing providers such as Cleveland Clinic and Westside. Subsection (8) of the Review Criteria is "[t]he immediate and long-term financial feasibility of the proposal." The District has the financial resources to construct the hospital and meet start-up costs. There was no challenge to SBHD's demonstration of short-term financial feasibility. Projections of revenues and expenses were based on SBHD experience at Memorial West and its other hospitals. These projections are reasonable. Based on Dr. Finarelli's patient day projections, showing a net profit of $1.6 million in year 2, the project is feasible in the long-term. Subsection (9) of the Review Criteria is "[t]he extent to which the proposal will foster competition that promotes quality and cost-effectiveness." Aside from the impact the new facility will have on Cleveland Clinic and Westside's ability to recruit and retain staff, the evidence failed to show that either Cleveland Clinic or Westside would suffer significant impact if SBHD's application is approved. No matter which experts projections of lost case volume are accepted, both Cleveland Clinic and Westside should generate substantial net profits. The future of Memorial Pembroke, after the expiration of the current lease, is too speculative to factor into the impact to HCA. Subsection (10) of the Review Criteria relates to the costs and methods of the proposed construction. The District satisfies this criterion. (See paragraph 34, above). Subsection (11) addresses the applicant's past and proposed provision of health care services to Medicaid patients and the medically indigent. As stated above, while there is legitimate doubt whether or not SBHD can meet the conditions it proposes in its application, there is no question about its past provisions of services to Medicaid patients and the medically indigent. Rule Criteria There are two rule criteria that relate to the application. Rule 59C-1.038, acute care bed priority considerations and Rule 59C-1030, additional review criteria. Under the Rule 59C-1.038 there are two priorities, only the first of which (documented history of providing services to medically indigent patients or a commitment to do so) is applicable. Stated in the disjunctive, just as its corollary statutory criterion, SBHD clearly meets the criterion based on its documented history regardless of the case Cleveland Clinic and Westside present relative to doubts based on the history of condition compliance at Memorial West. The criteria in Rule 59C-1.030 generally address the extent to which there is a need for a particular service and the extent to which the service will be accessible to underserved members of the population. The application did not identify an underserved segment of the population that is in need of the services proposed for Memorial Miramar. As for the remainder of the criteria under the rule, there is a need for the proposed project as concluded below in this order's conclusions of law.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Agency for Health Care Administration grant South Broward Hospital District's CON Application 9459 to establish a 100-bed acute care hospital in southwest Broward County. DONE AND ENTERED this 3rd day of July, 2002, in Tallahassee, Leon County, Florida. DAVID M. MALONEY Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 3rd day of July, 2002. COPIES FURNISHED: C. Gary Williams, Esquire Michael J. Glazer, Esquire Ausley & McMullen 227 South Calhoun Street Post Office Box 391 Tallahassee, Florida 32302 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 Parker, Hudson, Rainer & Dobbs, LLP The Perkins House, Suite 200 118 North Gadsden Street Tallahassee, Florida 32301 F. Philip Blank, Esquire Geoffrey D. Smith, Esquire Blank, Meenan & Smith, P.A. 204 South Monroe Street Post Office Box 11068 Tallahassee, Florida 32302-3068 George N. Meros, Jr., Esquire Michael E. Riley, Esquire Gray, Harris & Robinson, P.A. Post Office Box 11189 Tallahassee, Florida 32302 Gerald L. Pickett, Esquire Agency for Health Care Administration 2727 Mahan Drive Building Three, Suite 3431 Tallahassee, Florida 32308-5403 William Roberts, Acting General Counsel Agency for Health Care Administration 2727 Mahan Drive Building Three, Suite 3431 Tallahassee, Florida 32308-5403 Virginia A. Daire, Agency Clerk Agency for Health Care Administration 2727 Mahan Drive Building Three, Suite 3431 Tallahassee, Florida 32308-5403
The Issue Whether the Agency for Health Care Administration (AHCA or the Agency) should approve the application for certificate of need (CON) 7700 filed by Miami Beach Healthcare Group, LTD. d/b/a Miami Heart Institute (Miami Heart or MH).
Findings Of Fact The Agency is the state agency charged with the responsibility of reviewing and taking action on CON applications pursuant to Chapter 408, Florida Statutes. The applicant, Miami Heart, operates a hospital facility known as Miami Heart Institute which, at the time of hearing, was comprised of a north campus (consisting of 273 licensed beds) and a south campus (consisting of 258 beds) in Miami, Florida. The two campuses operate under a single license which consolidated the operation of the two facilities. The consolidation of the license was approved by CON 7399 which was issued by the Agency prior to the hearing of this case. The Petitioner, Mount Sinai, is an existing health care facility doing business in the same service district. On February 4, 1994, AHCA published a fixed need pool of zero adult inpatient psychiatric beds for the planning horizon applicable to this batching cycle. The fixed need pool was not challenged. On February 18, 1994, Miami Heart submitted its letter of intent for the first hospital batching cycle of 1994, and sought to add twenty adult general inpatient psychiatric beds at the Miami Heart Institute south campus. Such facility is located in the Agency's district 11 and is approximately two (2) miles from the north campus. Notice of that letter was published in the March 11, 1994, Florida Administrative Weekly. Miami Heart's letter of intent provided, in pertinent part: By this letter, Miami Beach Healthcare Group, Ltd., d/b/a Miami Heart Institute announces its intent to file a Certificate of Need Application on or before March 23, 1994 for approval to establish 20 hospital inpatient general psychiatric beds for adults at Miami Heart Institute. Thus, the applicant seeks approval for this project pursuant to Sections 408.036(1)(h), Florida Statutes. The proposed capital expenditure for this project shall not exceed $1,000,000 and will include new construction and the renovation of existing space. Miami Heart Institute is located in Local Health Council District 11. There are no subsdistricts for Hospital Inpatient General Psychiatric Beds for Adults in District 11. The applicable need formula for Hospital General Psychiatric Beds for Adults is contained within Rule 59C-1.040(4)(c), F.A.C. The Agency published a fixed need of "0" for Hospital General Psychiatric Beds for Adults in District 11 for this batching cycle. However, "not normal" circumstances exist within District which justify approval of this project. These circumstances are that Miami Beach Community Hospital, which is also owned by Miami Beach Healthcare Group, Ltd., and which has an approved Certificate of Need Application to consol- idate its license with that of the Miami Heart Institute, has pending a Certificate of Need Application to delicense up to 20 hospital inpatient general psychiatric beds for adults. The effect of the application, which is the subject of this Letter of Intent, will be to relocate 20 of the delicensed adult psychiatric beds to the Miami Heart Institute. Because of the "not normal" circumstances alleged in the Miami Heart letter of intent, the Agency extended a grace period to allow competing letters of intent to be filed. No additional letters of intent were submitted during the grace period. On March 23, 1994, Miami Heart timely submitted its CON application for the project at issue, CON no. 7700. Notice of the application was published in the April 8, 1994, Florida Administrative Weekly. Such application was deemed complete by the Agency and was considered to be a companion to the delicensure of the north campus beds. On July 22, 1994, the Agency published in the Florida Administrative Weekly its preliminary decision to approve CON no. 7700. In the same batch as the instant case, Cedars Healthcare Group (Cedars), also in district 11, applied to add adult psychiatric beds to Cedars Medical Center through the delicensure of an equal number of adult psychiatric beds at Victoria Pavilion. Cedars holds a single license for the operation of both Cedars Medical Center and Victoria Pavilion. As in this case, the Agency gave notice of its intent to grant the CON application. Although this "transfer" was initially challenged, it was subsequently dismissed. Although filed at the same time (and, therefore, theoretically within the same batch), the Cedars CON application and the Miami Heart CON application were not comparatively reviewed by the Agency. The Agency determined the applicants were merely seeking to relocate their own licensed beds. Based upon that determination, MH's application was evaluated in the context of the statutory criteria, the adult psychiatric beds and services rule (Rule 59C-1.040, Florida Administrative Code), the district 11 local health plan, and the 1993 state health plan. Ms. Dudek also considered the utilization data for district 11 facilities. Mount Sinai timely filed a petition challenging the proposed approval of CON 7700 and, for purposes of this proceeding only, the parties stipulated that MS has standing to raise the issues remaining in this cause. Mount Sinai's existing psychiatric unit utilization is presently at or near full capacity, and MS' existing unit would not provide an adequate, available, or accessible alternative to Miami Heart's proposal, unless additional bed capacity were available to MS in the future through approval of additional beds or changes in existing utilization. Miami Heart's proposal to establish twenty adult general inpatient psychiatric beds at its Miami Heart Institute south campus was made in connection with its application to delicense twenty adult general inpatient psychiatric beds at its north campus. The Agency advised MH to submit two CON applications: one for the delicensure (CON no. 7474) and one for the establishment of the twenty beds at the south campus (CON no. 7700). The application to delicense the north campus beds was expeditiously approved and has not been challenged. As to the application to establish the twenty beds at the south campus, the following statutory criteria are not at issue: Section 408.035(1)(c), (e), (f), (g), (h), (i), (j), (k), (m), (n), (o) and (2)(b) and (e), Florida Statutes. The parties have stipulated that Miami Heart meets, at least minimally, those criteria. During 1993, Miami Heart made the business decision to cease operations at its north campus and to seek the Agency's approval to relocate beds and services from that facility to other facilities owned by MH, including the south campus. Miami Heart does not intend to delicense the twenty beds at the north campus until the twenty beds are licensed at the south campus. The goal is merely to transfer the existing program with its services to the south campus. Miami Heart did not seek beds from a fixed need pool. Since approximately April, 1993, the Miami Heart north campus has operated with the twenty bed adult psychiatric unit and with a limited number of obstetrical beds. The approval of CON no. 7700 will not change the overall total number of adult general inpatient psychiatric beds within the district. The adult psychiatric program at MH experiences the highest utilization of any program in district 11, with an average length of stay that is consistent with other adult programs around the state. Miami Heart's existing psychiatric program was instituted in 1978. Since 1984, there has been little change in nursing and other staff. The program provides a full continuum of care, with outpatient programs, aftercare, and support programs. Nearly ninety-nine percent of the program's inpatient patient days are attributable to patients diagnosed with serious mental disorders. The Miami Heart program specializes in a biological approach to psychiatric cases in the diagnosis and treatment of affective disorders, including a variety of mood disorders and related conditions. The Miami Heart program is distinctive from other psychiatric programs in the district. If the MH program were discontinued, the patients would have limited alternatives for access to the same diagnostic and treatment services in the district. There are no statutes or rules promulgated which specifically address the transfer of psychiatric beds or services from one facility owned by a health care entity to another facility also owned by the same entity. In reviewing the instant CON application, the Agency determined it has the discretion to evaluate each transfer case based upon the review criteria and to consider the appropriate weight factors should be given. Factors which may affect the review include the change of location, the utilization of the existing services, the quality of the existing programs and services, the financial feasibility, architectural issues, and any other factor critical to the review process. In this case, the weight given to the numeric need criteria was not significant. The Agency determined that because the transfer would not result in a change to the overall bed inventory, the calculated fixed need pool did not apply to the instant application. In effect, because the calculation of numeric need was inapplicable, this case must be considered "not normal" pursuant to Rule 59C-1.040(4)(a), Florida Administrative Code. The Agency determined that other criteria were to be given greater consideration. Such factors were the reasonableness of the proposal, the ability to afford access, the applicant's ability to provide a quality program, and the project's financial feasibility. The Agency determined that, on balance, this application should be approved as the statutory and other review criteria were met. Although put on notice of the other CON applications, Mount Sinai did not file an application for psychiatric beds at the same time as Miami Heart or Cedars. Mount Sinai did not claim that the proposed delicensures and transfers made beds available for competitive review. The Agency has interpreted Rule 59C-1.040, Florida Administrative Code, to mean that it will not normally approve an application for beds or services unless the statutory and rule criteria are met, including the need determination criteria. There is no list of circumstances which are routinely considered "not normal" by the Agency. In this case, the proposed transfer of beds was, in itself, considered "not normal." The approval of Miami Heart's application would allow an existing program to continue. As a result, the overhead to maintain two campuses would be reduced. Further, the relocation would allow the program to continue to provide access, both geographically and financially, to the same patient service area. And, since the program has the highest utilization rate of any adult program in the district, its continuation would be beneficial to the area. The program has an established referral base for admissions to the facility. The transfer is reasonable for providing access to the medically under-served. The quality of care, while not in issue, would be expected to continue at its existing level or improve. The transfer would allow better access to ancillary hospital departments and consulting specialists who may be needed even though the primary diagnosis is psychiatric. The cost of the transfer when compared to the costs to be incurred if the transfer is not approved make the approval a benefit to the service area. If the program is not relocated, Medicaid access could change if the hospital is reclassified from a general facility to a specialty facility. The proposed cost for the project does not exceed one million dollars. If the north campus must be renovated, a greater capital expenditure would be expected. The expected impact on competition for other providers is limited due to the high utilization for all programs in the vicinity. The subject proposal is consistent with the district and state health care plans and the need for health care facilities and services. The services being transferred is an existing program which is highly utilized and which is not creating "new beds." As such, the proposal complies with Section 408.035(1)(a), Florida Statutes. The availability, quality of care, efficiency, appropriateness, accessibility, extent of utilization, and adequacy of like and existing services in the district will not be adversely affected by the approval of the subject application. The proposed transfer is consistent with, and appropriate, in light of these criteria. Therefore, the proposal complies with Section 408.035(1)(b), Florida Statutes. The subject application demonstrates a full continuum of care with safeguards to assure that alternatives to inpatient care are fully utilized when appropriate. Therefore, the availability and adequacy of other services, such as outpatient care, has been demonstrated and would deter unnecessary utilization. Thus, Miami Heart has shown its application complies with Section 408.035(1)(d), Florida Statutes. Miami Heart has also demonstrated that the probable impact of its proposal is in compliance with Section 408.035(1)(l), Florida Statutes. The proposed transfer will not adversely impact the costs of providing services, the competition on the supply of services, or the improvements or innovations in the financing and delivery of services which foster competition, promote quality assurance, and cost-effectiveness. Miami Heart has taken an innovative approach to promote quality assurance and cost effectiveness. Its purpose, to close a facility and relocate beds (removing unnecessary acute care beds in the process), represents a departure from the traditional approach to providing health care services. By approving Miami Heart's application, overhead costs associated with the unnecessary facility will be eliminated. There is no less costly, more efficient alternative which would allow the continuation of the services and program Miami Heart has established at the north campus than the approval of transfer to the south campus. The MH proposal is most practical and readily available solution which will allow the north campus to close and the beds and services to remain available and accessible. The renovation of the medical surgical space at the south campus to afford a location for the psychiatric unit is the most practical and readily available solution which will allow the north campus to close and the beds and services to remain available and accessible. In totality, the circumstances of this case make the approval of Miami Heart's application for CON no. 7700 the most reasonable and practical solution given the "not normal" conditions of this application.
Recommendation Based on the foregoing, it is, hereby, RECOMMENDED: That the Agency for Health Care Administration enter a final order approving CON 7700 as recommended in the SAAR. DONE AND RECOMMENDED this 5th day of April, 1995, in Tallahassee, Leon County, Florida. JOYOUS D. PARRISH Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 5th day of April, 1995. APPENDIX TO RECOMMENDED ORDER, CASE NO. 94-4755 Note: Proposed findings of fact are to contain one essential fact per numbered paragraph. Proposed findings of fact paragraphs containing multiple sentences with more than one statement of fact are difficult to review. In reviewing for this case, where all sentences were accurate and supported by the recorded cited, the paragraph has been accepted. If the paragraph contained mixed statements where one sentence was an accurate statement of fact but the others were not, the paragraph has been rejected. Similarly, if one sentence was editorial comment, argument, or an unsupported statement to a statement of fact, the paragraph has been rejected. Proposed findings of fact should not include argument, editorial comments, or statements of fact mixed with such comments. Rulings on the proposed findings of fact submitted by Petitioner, Mount Sinai: Paragraphs 1 through 13 were cited as stipulated facts. Paragraph 14 is rejected as irrelevant. With regard to paragraph 15 it is accepted that Miami Heart made the business decision to move the psychiatric beds beds from the north campus to the south campus. Any inference created by the remainder of the paragraph is rejected as irrelevant. Paragraph 16 is rejected as irrelevant. Paragraph 17 is rejected as irrelevant. Paragraph 18 is accepted. Paragraph 19 is rejected as irrelevant. Paragraph 20 is rejected as contrary to the weight of the credible evidence. Paragraph 21 is rejected as contrary to the weight of the credible evidence. Paragraph 22 is accepted. Paragraph 23 is rejected as irrelevant. Paragraph 24 is accepted. Paragraph 25 is rejected as repetitive, or immaterial, unnecessary to the resolution of the issues. Paragraph 26 is rejected as irrelevant or contrary to the weight of the credible evidence. Paragraph 27 is rejected as comment or conclusion of law, not fact. Paragraph 28 is accepted but not relevant. Paragraphs 29 and 30 are accepted. Paragraphs 31 through 33 are rejected as argument, comment or irrelevant. Paragraph 34 is rejected as comment or conclusion of law, not fact. Paragraph 35 is rejected as comment or conclusion of law, not fact, or irrelevant as the FNP was not in dispute. Paragraph 36 is rejected as irrelevant. Paragraph 37 is rejected as repetitive, or comment. Paragraph 38 is rejected as repetitive, comment or conclusion of law, not fact, or irrelevant. Paragraph 39 is rejected as argument or contrary to the weight of credible evidence. Paragraph 40 is accepted. Paragraph 41, 42, and 43 are rejected as contrary to the weight of the credible evidence and/or argument. Paragraph 44 is rejected as argument and comment on the testimony. Paragraph 45 is rejected as argument, irrelevant, and/or not supported by the weight of the credible evidence. Paragraph 46 is rejected as argument. Paragraph 47 is rejected as comment or conclusion of law, not fact. Paragraph 48 is rejected as comment, argument or irrelevant. Paragraph 49 is rejected as comment on testimony. It is accepted that the proposed relocation or transfer of beds is a "not normal" circumstance. Paragraph 50 is rejected as argument or irrelevant. Paragraph 51 is rejected as argument or contrary to the weight of credible evidence. Paragraph 52 is rejected as argument or contrary to the weight of credible evidence. Paragraph 53 is rejected as argument, comment or recitation of testimony, or contrary to the weight of credible evidence. Paragraph 54 is rejected as irrelevant or contrary to the weight of credible evidence. Paragraph 55 is rejected as irrelevant, comment, or contrary to the weight of credible evidence. Paragraph 56 is rejected as irrelevant or argument. Paragraph 57 is rejected as irrelevant or argument. Paragraph 58 is rejected as contrary to the weight of credible evidence. Paragraph 59 is rejected as irrelevant. Paragraph 60 is rejected as contrary to the weight of credible evidence. Paragraph 61 is rejected as argument or contrary to the weight of credible evidence. Paragraph 62 is rejected as argument or contrary to the weight of credible evidence. Paragraph 63 is accepted. Paragraph 64 is rejected as irrelevant. Mount Sinai could have filed in this batch given the not normal circumstances disclosed in the Miami Heart notice. Paragraph 65 is rejected as irrelevant. Paragraph 66 is rejected as comment or irrelevant. Paragraph 67 is rejected as argument or contrary to the weight of credible evidence. Paragraph 68 is rejected as argument or irrelevant. Paragraph 69 is rejected as argument, comment or irrelevant. Paragraph 70 is rejected as argument or contrary to the weight of credible evidence. Rulings on the proposed findings of fact submitted by the Respondent, Agency: Paragraphs 1 through 6 are accepted. With the deletion of the words "cardiac catheterization" and the inclusion of the word "psychiatric beds" in place, paragraph 7 is accepted. Cardiac catheterization is rejected as irrelevant. Paragraph 8 is accepted. The second sentence of paragraph 9 is rejected as contrary to the weight of credible evidence or an error of law, otherwise, the paragraph is accepted. Paragraph 10 is accepted. Paragraphs 11 through 17 are accepted. Paragraph 18 is rejected as conclusion of law, not fact. Paragraphs 19 and 20 are accepted. The first two sentences of paragraph 21 are accepted; the remainder rejected as conclusion of law, not fact. Paragraph 22 is rejected as comment or argument. Paragraph 23 is accepted. Paragraph 24 is rejected as argument, speculation, or irrelevant. Paragraph 25 is accepted. Rulings on the proposed findings of fact submitted by the Respondent, Miami Heart: Paragraphs 1 through 13 are accepted. The first sentence of paragraph 14 is accepted; the remainder is rejected as contrary to law or irrelevant since MS did not file in the batch when it could have. Paragraph 15 is accepted. Paragraph 16 is accepted as the Agency's statement of its authority or policy in this case, not fact. Paragraphs 17 through 20 are accepted. Paragraph 21 is rejected as irrelevant. Paragraph 22 is rejected as irrelevant. Paragraphs 23 through 35 are accepted. Paragraph 36 is rejected as repetitive. Paragraphs 37 through 40 are accepted. Paragraph 41 is rejected as contrary to the weight of the credible evidence to the extent that it concludes the distance to be one mile; evidence deemed credible placed the distance at two miles. Paragraphs 42 through 47 are accepted. Paragraph 48 is rejected as comment. Paragraphs 49 through 57 are accepted. COPIES FURNISHED: Tom Wallace, Assistant Director Agency for Health Care Administration The Atrium, Suite 301 325 John Knox Road Tallahassee, Florida 32303 Sam Power, Agency Clerk Agency for Health Care Administration The Atrium, Suite 301 325 John Knox Road Tallahassee, Florida 32303 R. Terry Rigsby Geoffrey D. Smith Wendy Delvecchio Blank, Rigsby & Meenan, P.A. 204 S. Monroe Street Tallahassee, Florida 32302 Lesley Mendelson Senior Attorney Agency for Health Care Administration 325 John Knox Road, Suite 301 Tallahassee, Florida 32303-4131 Stephen Ecenia Rutledge, Ecenia, Underwood, Purnell & Hoffman, P.A. 215 South Monroe Street Suite 420 Tallahassee, Florida 32302-0551
The Issue The Petitioner, St. Joseph's Hospital, Inc., d/b/a St. Joseph's Hospital (Petitioner, Applicant, or St. Joseph's) filed Certificate of Need (CON) Application No. 9833 with the Agency for Health Care Administration (Agency or AHCA). The application seeks authority to establish a 90-bed acute care satellite hospital in southeastern Hillsborough County, Florida. St. Joseph's intends to transfer 90 acute care beds from its existing location in Tampa to the new facility. The issue in this case is whether the Agency should approve the CON application.
Findings Of Fact The Parties AHCA is the state agency charged with the responsibility of administering the CON program for the state of Florida. The Agency serves as the state heath planning entity. See § 408.034, Fla. Stat. (2007). As such, it was charged to review the CON application at issue in this proceeding. AHCA has preliminarily denied St. Joseph's CON application No. 9833. The Petitioner is the applicant for the CON in this case. The Petitioner is a not-for-profit organization licensed to operate St. Joseph's Hospital, a general acute care facility located in the urban center of Tampa, Florida. It was originally founded by a religious order and has grown from approximately 40 beds to a licensed bed capacity of 883 beds. St. Joseph's provides quality care in a comprehensive range of services. Those services include tertiary and Level II trauma services. St. Joseph's provides services to all patients regardless of their ability to pay. To meet its perception of the growing healthcare needs of the greater Hillsborough County residents, St. Joseph's has proposed to construct a satellite hospital on a site it purchased in the mid-1980s. According to St. Joseph's, the satellite hospital, together with its main campus, would better address the growing community needs for acute care hospital services. To that end, St. Joseph's filed CON application No. 9833 and seeks approval of its satellite facility. It proposes to transfer 90 of its acute care beds from its current hospital site to the new satellite facility. The main hospital will offer support services as may be necessary to the satellite facility. Tampa General is an 877-bed acute care hospital located on Davis Island in urban Tampa, Florida. Prior to 1997, it was a public hospital operated by the Hillsborough County Hospital Authority but has since been operated and managed by a non- profit corporation, Florida Health Sciences, Inc. Tampa General provides quality care in a wide range of services that include tertiary and Level I trauma. Tampa General addresses the medical needs of its patients without consideration of their ability to pay. It is a "safety net" provider and is the largest provider of services to Medicaid and charity patients in the AHCA District 6/Subdistrict 1. Medicaid has designated Tampa General a "disproportionate share" provider. Tampa General is also a teaching hospital affiliated with the University of South Florida's College of Medicine. Recently, Tampa General has undergone a major construction project that brings on line a new emergency trauma center as well as additional acute care beds, a women's center, a cardiovascular center and a digestive diagnostic and treatment center. Tampa General opposes the CON request at issue. South Bay and Brandon also oppose St. Joseph's CON application. South Bay is a 112-bed community acute care hospital located in Sun City Center, Florida. South Bay has served the community for about 25 years and offers quality care but does not provide obstetrical services primarily because its closest population and patient base is a retirement community restricted to persons over 55 years of age. In contrast, Brandon is an acute care hospital with 367 beds located to South Bay's north in Brandon, Florida. Brandon provides quality care with a full range of hospital services including obstetrics, angioplasty, and open-heart surgery. Brandon also has neonatal intensive care (NICU) beds to serve Level II and Level III needs. It is expected that Brandon could easily add beds to its facility as it has empty "shelled-in" floors that could readily be converted to add 80 more acute care beds. Both Brandon and South Bay are owned or controlled by Hospital Corporation of America (HCA) and are part of its West Florida Division. The Proposal St. Joseph's has a wide variety of physicians on its medical staff. Those physicians currently offer an array of general acute care services as well as medical and surgical specialties. St. Joseph's provides Levels II and III NICU, open heart surgery, interventional radiology, primary stroke services, oncology, orthopedic, gynecological oncology, and pediatric surgical. Based upon its size, reputation for quality care, and ability to offer this wide array of services, St. Joseph's has enjoyed a well-deserved respect in its community. To expand its ties within AHCA's District 6/Subdistrict 1 healthcare community, St. Joseph's affiliated with South Florida Baptist Hospital a 147-bed community hospital located in Plant City, Florida. This location is east of the main St. Joseph Hospital site. Further, recognizing that the growth of greater Hillsborough County, Florida, has significantly increased the population of areas previously limited to agricultural or mining ventures, St. Joseph's now seeks to construct a community satellite hospital located in the unincorporated area of southeastern Hillsborough County known as Riverview. The Petitioner owns approximately 50 acres of land at the intersection of Big Bend Road and Simmons Loop Road. This parcel is approximately one mile east of the I-75 corridor that runs north-south through the county. In relation to the other parties, the proposed site is north and east of South Bay, south of Brandon, and east and south of Tampa General. South Florida Baptist Hospital, not a party, is located to the north and farther east of the proposed site. The size of the parcel is adequate to construct the proposed satellite as well as other ancillary structures that might compliment the hospital (such as medical offices). If approved, the Petitioner's proposal will provide 66 medical-surgical beds, 14 beds within an intensive care unit, and 10 labor and delivery beds. All 90 beds will be "state-of- the-art" private rooms along with a full-service emergency department. The hospital will be fully digital, use an electronic medical record and picture archiving system, and specialists at the main St. Joseph's hospital will be able to access images and data at the satellite site in real time. A consultation would be, theoretically, as close as a computer. In reaching its decision to seek the satellite hospital, St. Joseph's considered input from many sources; among them: HealthPoint Medical Group (HealthPoint) and BayCare Health System, Inc. (BayCare). HealthPoint is a physician group owned by an affiliate of St. Joseph's. HealthPoint has approximately 80 physicians who operate 21 offices throughout Hillsborough County. All of the HealthPoint physicians are board certified. At least five of the HealthPoint offices would have quicker access to the proposed satellite hospital than to the main St. Joseph's Hospital site. The HealthPoint physicians support the proposal so that their patients will have access to, and the option of choosing, a St. Joseph facility in the southeastern part of the county. BayCare is an organization governed by a cooperative agreement among nonprofit hospitals. Its purpose is to assist its member hospitals to centralize and coordinate hospital functions such as purchasing, staffing, managed care contracting, billing, and information technology. By cooperatively working together, its members are able to enjoy a cost efficiency that individually they did not enjoy. The "synergy" of their effort results in enhanced quality of care, efficient practices, and a financial savings to their operations. The proposed St. Joseph's satellite would also share in this economy of efforts. Understandably, BayCare supports the proposal. Review Criteria Every new hospital project in Florida must be reviewed pursuant to the statutory criteria set forth in Section 408.035, Florida Statutes (2007). Accordingly, the ten subparts of that provision must be weighed to determine whether or not a proposal meets the requisite criteria. Section 408.035(1), Florida Statutes (2007) requires that the need for the health care facilities and health services being proposed be considered. In the context of this case, "need" will not be addressed in terms of its historical meaning. The Agency no longer calculates "need" pursuant to a need methodology. Therefore, looking to Florida Administrative Code Rule 59C-1.008, requires consideration of the following pertinent provisions: ...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. According to St. Joseph's, "need" is evidenced by a large and growing population in the proposed service area (PSA), sustained population growth that exceeds the District and state average, highly occupied and seasonally over capacity acute care beds at the existing providers, highly occupied and sustained increases in demand for hospital services, a scarcity of emergency medical service resources within the PSA compounded by budget cuts, increases in traffic congestion and travel times to the existing hospitals, the lack of a nonprofit community hospital near the proposed site, and the lack of local obstetrical services. In this case the Petitioner has identified the PSA as a 10 zip code area with 7 being designated the "primary" area of service (PSA) and 3 zip codes to the north being identified as the "secondary" area of service (SSA). The population of this PSA is projected to reach 322,913 by the year 2011 (from its current 274,696). All parties used Claritas data to estimate population, the PSA growth, and various projections. Claritas is a conservative estimator in the sense that it relies on the most recent U. S. census reports that may or may not track the most recent growth indicators such as building starts or new home sales. Nevertheless, if accurate, the estimated 17.5 percent population growth expected in the new satellite hospital's PSA exceeds the rate of growth estimated for AHCA District 6 as well as the projected State of Florida growth rate. From the 7 primary zip codes within the PSA alone the area immediately adjacent to the subject site is estimated to grow by 14,900 residents between 2006 and 2011. Over the last 20 years the PSA has developed from rural farming and mining expanses with scattered housing and trailer parks to an area characterized by modern shopping centers, apartment complexes, housing subdivisions, churches, libraries, and new schools. Physicians in the area now see as many as 60 patients per day and during the winter peak months may admit up to 20 patients per week to hospitals. Travel times from the southern portion of the PSA to St. Joseph's Hospital, Tampa General, or Brandon, can easily exceed 30 minutes. Travel times to the same providers during "rush" or high traffic times can be longer. All of the opponent providers have high occupancy rates and experience seasonal over capacity. During the winter months visitors from the north and seasonal residents add significant numbers to the population in Hillsborough County. These "snow birds" drive the utilization of all District 6/Subdistrict 1 hospitals up. Further, increased population tends to slow and congest traffic adding to travel times within AHCA District 6/Subdistrict 1. Both Brandon and Tampa General have recently added beds to address the concerns of increased utilization. Additionally, Tampa General has expanded its emergency department to provide more beds. South Bay has elected to not increase its bed size or emergency department. South Bay has experienced difficulty staffing its emergency department. When faced with capacity problems, South Bay "diverts" admissions to other hospitals. When the emergency rooms of the Opponent providers are unable to accommodate additional patients, the county emergency transport is diverted to other facilities so that patients have access to emergency services. During the winter season and peak flu periods this diversion is more likely to occur. Another hospital in the southeastern portion of the county, within St. Joseph's satellite PSA, would alleviate some of the crowding. More specifically, South Bay's annual occupancy rate in 2006 was 80.1 percent. For the first seven months of 2007, South Bay's average occupancy rate was 88.4 percent. These rates indicate that South Bay is operating at a high occupancy. Operating at or near capacity is not recommended for any hospital facility. Long term operation at or near occupancy proves to be detrimental to hospital efficiencies. Similarly, Brandon operates at 70 percent of its bed capacity. Even though it has recently added beds it intends to add more beds to address continuing increases in admissions. Brandon's emergency room is also experiencing overcrowded conditions. When Brandon's emergency room diverts patients their best option may be to leave District 6/Subdistrict 1 for care. Tampa General is a large complex and its emergency department has been expanded to attempt to address an obvious need for more services. It is unknown whether the new emergency department will adequately cure the high rates of diversion Tampa General experienced in 2007. New beds were added and an improved emergency department was designed and constructed with the expectation that Tampa General's patients would be better served. Based upon Tampa General's expansion and its projected growth, Tampa General could experience an occupancy rate over 75 percent by 2011. If so, Tampa General could easily return to the utilization problems previously experienced. There are no obstetrical services offered south of Brandon in AHCA District 6/Subdistrict 1. The proposed St. Joseph's satellite hospital would offer obstetrics and has designated a 10-bed unit to accommodate those patients. There are no nonprofit hospitals south of Brandon in AHCA District 6/Subdistrict 1. The proposed St. Joseph's satellite hospital would offer patients in the PSA with the option of using such a hospital. Section 408.035(2), Florida Statutes (2007), requires the consideration of 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. As previously stated, all of the parties provide quality care to their patients. Although delays in emergency departments may inconvenience patients, the quality of the medical care they receive is excellent. Similarly, hospital services are available and can be accessed in AHCA District 6/Subdistrict 1. The parties provide a full range of healthcare service options that address the medical and surgical needs of the residents of AHCA District 6 Subdistrict 1. An additional hospital would afford patients with another choice of provider in the southeastern portion of the county. The St. Joseph satellite hospital would afford such patients with a hospital option within 30 minutes of the areas within the PSA. This access would promote shorter wait times and less crowded facilities. Section 408.035(3), Florida Statutes (2007), mandates review of CON applications in light of the ability of the applicant to provide quality of care and the applicant's record of providing quality of care. As previously stated St. Joseph's has a well-deserved reputation for providing quality care within a wide range of hospital services to its patients. It is reasonable to expect the satellite hospital would continue in the provision of such care. The management team and affiliations established by St. Joseph's will continue to pursue quality care to all its patients regardless of their ability to pay. Section 408.035(4), Florida Statutes (2007), considers the availability of resources for project accomplishment and operation. Resources that must be considered include healthcare personnel, management personnel, and funds for capital and operating expenditures. St. Joseph's has the resources to accomplish and operate the satellite hospital proposed. St. Joseph's has a successful history of recruiting and retaining healthcare personnel and management personnel. The estimates set forth in its CON application for these persons were reasonable and conservative. Salaries and benefits for healthcare personnel and management personnel should be within the estimated provisions set forth in the application. Although there is a nationwide shortage of nursing personnel and physicians in certain specialties, St. Joseph's has demonstrated it has a track record of staffing its facility to meet appropriate standards and provide quality care. There is no reason to presume it will not be similarly successful at the satellite facility. St. Joseph's has also demonstrated it has the financial ability to construct and operate the proposed satellite hospital. The occupancy rates projected for the new hospital will produce a revenue adequate to make the hospital financially feasible. Further, if patients who reside closer to the satellite facility use it instead of the main St. Joseph Hospital, a lower census at the main hospital will not adversely impact the financial strength of the organization. There will be adequate growth in the healthcare market for this PSA to support the new facility as well as the existing providers. It must be noted, however, that construction costs for the satellite hospital will exceed the amounts disclosed by the CON application. Some of the increases in cost are significant. For example, the estimate for the earthwork necessary for site preparation has risen from $417,440 to $1,159,296. Additionally, most of the unit prices for construction have gone up dramatically in the past couple of years. Hurricanes and the resulting increased standards for building codes have also driven construction costs higher. More stringent storm water provisions have resulted in higher construction costs. For this project it is estimated the storm water expense will be $500,000 instead of the original $287,000 proposed by the CON application. In total these increases are remarkable. They may also signal why development in AHCA's District 6/Subdistrict 1 has slowed since the CON application was filed. Regardless, St. Joseph's should have the financial strength to construct and operate the project. Section 408.035(5), Florida Statutes (2007), specifies that the Agency must evaluate the extent to which the proposed services will enhance access to health care for residents of the service district. In the findings reached in this regard, the criteria set forth in Administrative Code Rule 59C-1.030(2) have been fully considered. Those provisions are: (2) Health Care Access Criteria. The need that the population served or to be served has for the health or hospice services proposed to be offered or changed, and the extent to which all residents of the district, and in particular low income persons, racial and ethnic minorities, women, handicapped persons, other underserved groups and the elderly, are likely to have access to those services. The extent to which that need will be met adequately under a proposed reduction, elimination or relocation of a service, under a proposed substantial change in admissions policies or practices, or by alternative arrangements, 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. 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. AHCA does not require a CON applicant to demonstrate that the existing acute care providers within the PSA are failing in order to approve a satellite hospital. Also, AHCA does not have a travel time standard with respect to the provision of acute care hospital services. In other words, there is no set geographical distance or travel time that dictates when a satellite hospital would be appropriate or inappropriate. In fact, AHCA has approved satellite hospitals when residents of the PSA live within 20 minutes of an existing hospital. As a practical matter this means that travel time or distance do not dictate whether a satellite should be approved based upon access. With regard to access to emergency services, however, AHCA does consider patient convenience. In this case the proposed satellite hospital will provide a convenience to residents of southeastern Hillsborough County in terms of access to an additional emergency department. Further, physicians serving the growing population will have the convenience of admitting patients closer to their residences. Medical and surgical opportunities at closer locations is also a convenience to the families of patients because they do not have to travel farther distances to visit the patient. Patients and the families of patients seeking obstetrical services will also have the convenience of the satellite hospital. Patients who would not benefit from the convenience of the proposed satellite hospital would be those requiring tertiary health services. Florida Administrative Code Rule 59C- 1.002(41) defines such services as: (41) Tertiary health service means a health service which, due to its high level of intensity, complexity, specialized or limited applicability, and cost, should be limited to, and concentrated in, a limited number of hospitals to ensure the quality, availability, and cost effectiveness of such service. Examples of such service include, but are not limited to, organ transplantation, specialty burn units, neonatal intensive care units, comprehensive rehabilitation, and medical or surgical services which are experimental or developmental in nature to the extent that the provision of such services is not yet contemplated within the commonly accepted course of diagnosis or treatment for the condition addressed by a given service. In terms of tertiary health services, residents of AHCA District 6/Subdistrict 1 will continue to use the existing providers who offer those services. The approval of the St. Joseph satellite will not adversely affect the tertiary providers in AHCA District 6/Subdistrict 1 in terms of their ability to continue to provide those services. The new satellite will not compete for those services. Tampa General has a unique opportunity to provide tertiary services and will continue to be a strong candidate for any patient in the PSA requiring such services. As a teaching hospital and major NICU and trauma center, Tampa General offers specialties that will not be available at the satellite hospital. If non-tertiary patients elect to use the satellite hospital, Tampa General should not be adversely affected. Tampa General has performed well financially of late and its revenues have exceeded its past projections. With the added conveniences of its expanded and improved facilities it will continue to play a significant roll in the delivery of quality health care to the residents of the greater Tampa area. Section 408.035(6), Florida Statutes (2007) provides that the financial feasibility of the proposal both in the immediate and long-term be assessed in order to approve a CON application. In this case, as previously indicated, the utilizations expected for the new satellite hospital should adequately assure the financial feasibility of the project both in the immediate and long-term time frames. Population growth, a growing older population, and technologies that improve the delivery of healthcare will contribute to make the project successful. The satellite hospital will afford PSA residents a meaningful option in choosing healthcare and will not give any one provider an unreasonable or dominant position in the market. Section 408.035(7), Florida Statutes (2007) specifies that the extent to which the proposal will foster competition that promotes quality and cost-effectiveness must be addressed. AHCA's District 6/Subdistrict 1 enjoys a varied range of healthcare providers. From the teaching hospital at Tampa General to the community hospital at South Bay, all demonstrate strong financial stability and utilization. A new satellite hospital will promote continued quality and cost-effectiveness. As a member of the BayCare group the satellite will benefit from the economies of its group and provide the residents of its PSA with quality care. Physicians will have another option for admissions and convenience. Section 408.035(8), Florida Statutes (2007), notes that 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 should be reviewed. The methodology used to compute the construction costs associated with this project were reasonable and accurate at the time prepared. The costs, however, are not accurate in that most have gone up appreciably since the filing of the CON application. No more effective method of construction has been proposed but the financial soundness of the proposal should cover the increased costs associated with the construction of the project. The delays in resolving this case have worked to disadvantage the Applicant in this regard. Unforeseeable acts of nature, limitations of building supplies, and increases inherent with the passage of time will make this project more costly than St. Joseph's envisioned when it filed the CON application. Further, it would be imprudent to disregard the common knowledge that oil prices have escalated while interest rates have dropped. These factors may also impact the project's cost. Section 408.035(9), Florida Statutes (2007), provides that the applicant's past and proposed provision of health care services to Medicaid patients and the medically indigent should be weighed in consideration of the proposal. St. Joseph's has a track record of providing health care services to Medicaid patients and the medically indigent without consideration of any patient's ability to pay. The satellite hospital would be expected to continue this tradition. Moreover, as a provision of its CON application, St. Joseph's has represented it will provide 12.5 percent of its patient days to Medicaid/Medicaid HMO/Charity/Indigent patients. 57 Section 408.035(10), Florida Statutes, relates to nursing home beds and is not at issue in this proceeding. The Opposition The SAAR set forth the Agency's rationale for the proposed denial of the CON application. The SAAR acknowledged that the proposal had received 633 letters of support (80 from physicians, 365 from St. Joseph employees, and 191 from members of the community); that funding for the project would be available; that the short-term position, long-term position, capital requirements, and staffing for the proposal were adequate; that the project was financially feasible if the Applicant meets its projected occupancy levels; that the project would have a marginally positive effect on competition to promote quality and cost-effectiveness; and that the construction schedule "seems to be reasonable" for the project. Notably in opposition to the CON application, the SAAR represented that: It is not clear that projected population growth for this area will outpace the ability of subdistrict facilities to add beds to accommodate population growth. The subdistrict's most recent average utilization rate was 63.40 percent, and an additional facility has already been approved for this applicant in this county for the purpose of handling forecasted growth. Growth projected for females aged 15-44 is not significantly higher for the county than for the district or state, and it is not demonstrated that need exists for obstetric services in the subdistrict. The foregoing analysis did not credit the projected population growth for the PSA applicable to this proposal heavily. The population growth expected for the PSA will support the utilization necessary for the proposed project. Applying the Agency's assessment, all existing hospital providers could add beds to meet "need" for a Subdistrict and thereby eliminate the approval of any satellite community facility that would address local concerns. Also, South Bay has conceded it will not add beds at its location. Additionally, the SAAR stated: While both South Bay Hospital and Brandon Regional Hospital have occupancy rates such that the introduction of a competing facility would not likely inhibit their abilities to maintain operations, the same cannot be stated for Tampa General Hospital, the only designated Disproportionate Share Hospital in this subdistrict. Any impact on Tampa General Hospital as a result of the proposed project would likely be negative, limiting Tampa General's ability to offset its Medicaid and charity care services. The applicant facility does not currently have a significant presence in the proposed market, and would have to gain market share in this PSA in order to meet its projected occupancy levels. Much of the market share gained by the applicant with the proposed facility would likely be at the expense of existing facilities in this area, most notably Tampa General due to its lower occupancy level and higher Medicaid and charity care provisions. In reaching its decision, the Agency has elected to protect Tampa General from any negative impact that the proposed satellite hospital might inflict. Tampa General has invested $300 million in improvements. It is a stand-alone, single venue hospital that has not joined any group or integrated system. It relies on its utilization levels, management skill and economies of practice to remain solvent. Tampa General considers itself a unique provider that should be protected from the financial risks inherent in increased competition. It is the largest provider of services to indigent patients in AHCA District 6/Subdistrict. Brandon opposes the proposed satellite hospital in part because it, too, has expanded its facility and does not believe additional beds are needed in AHCA District 6/Subdistrict 1. Nevertheless when a related facility sought to establish a satellite near the St. Joseph's site, Brandon supported the project. Brandon provides excellent quality of care and has a strong physician supported system. It will not be adversely affected in the long run by the addition of a satellite hospital in St. Joseph's PSA. Similarly, South Bay opposes the project. South Bay will not expand and does not provide obstetric services. It has had difficulty staffing its facility and believes the addition of another competitor will exacerbate the problem. Nevertheless, South Bay has a strong utilization level, a track record of financial strength, and will not likely be adversely impacted by the St. Joseph satellite. The opponents maintain that enhanced access for residents of the PSA does not justify the establishment of a new satellite hospital since the residents there already have good access to acute care services.
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. 9833 with the conditions noted. DONE AND ENTERED this 13th day of May, 2008, in Tallahassee, Leon County, Florida. J. D. PARRISH 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 13th day of May, 2008. COPIES FURNISHED: Richard J. Shoop, Agency Clerk Agency for Health Care Administration 2727 Mahan Drive, Mail Station 3 Tallahassee, Florida 32308 Craig H. Smith, General Counsel Agency for Health Care Administration Fort Knox Building, Suite 3431 Tallahassee, Florida 32308 Holly Benson, Secretary Agency for Health Care Administration Fort Knox Building, Suite 3116 2727 Mahan Drive Tallahassee, Florida 32308 Stephen A. Ecenia, Esquire Richard M. Ellis, Esquire Rutledge, Ecenia, Purnell & Hoffman, P. A. 215 South Monroe Street, Suite 420 Post Office Box 551 Tallahassee, Florida 32304-0551 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 Elizabeth McArthur, Esquire Jeffrey L. Frehn, Esquire Radey, Thomas, Yon & Clark, P.A. 301 South Bronough Street, Suite 200 Post Office Box 10967 Tallahassee, Florida 32301 Karin M. Byrne, Esquire Agency for Health Care Administration 2727 Mahan Drive, Building 3 Mail Station 3 Tallahassee, Florida 32308
